|
Delaware
(State or other jurisdiction of
incorporation or organization) |
| |
8062
(Primary standard industrial
classification code number) |
| |
87-1471855
(I.R.S. employer
identification number) |
|
|
Copies to:
|
| |||
|
Thomas P. Conaghan, Esq.
Richard S. Bass, Esq. Daniel L. Woodard, Esq. McDermott Will & Emery LLP 500 North Capitol Street NW Washington, DC 20001-1531 Telephone: (202) 756-8161 |
| |
Erika L. Weinberg, Esq.
Peter M. Labonski, Esq. Keith L. Halverstam, Esq. Latham & Watkins LLP 1271 Avenue of the Americas New York, NY 10020 Telephone: (212) 906-1297 |
|
| Large accelerated filer ☐ | | | Accelerated filer ☐ | |
| Non-accelerated filer ☒ | | |
Smaller reporting company ☒
Emerging growth company ☒ |
|
|
CALCULATION OF REGISTRATION FEE
|
| ||||||||
|
Title of Each Class of
Securities to be Registered |
| | |
Proposed Maximum
Aggregate Offering Price(1)(2) |
| | |
Amount of
Registration Fee |
|
|
Common Stock, $0.001 par value per share
|
| | |
$100,000,000
|
| | |
$9,270.00
|
|
| | |
Per share
|
| |
Total
|
| ||||||
Initial public offering price
|
| | | $ | | | | | $ | | | ||
Underwriting discounts and commissions(1)
|
| | | $ | | | | | $ | | | ||
Proceeds, before expenses, to us
|
| | | $ | | | | | $ | | | ||
Proceeds, before expenses, to the selling stockholders
|
| | | $ | | | | | $ | | | |
| Morgan Stanley | | |
Piper Sandler
|
| |
SVB Leerink
|
|
| | | | | 1 | | | |
| | | | | 14 | | | |
| | | | | 49 | | | |
| | | | | 50 | | | |
| | | | | 51 | | | |
| | | | | 52 | | | |
| | | | | 53 | | | |
| | | | | 55 | | | |
| | | | | 56 | | | |
| | | | | 76 | | | |
| | | | | 91 | | |
|
Common stock offered by us
|
| | shares. | |
|
Common stock offered by the selling stockholders
|
| | shares. | |
|
Option to purchase additional shares
|
| |
We and the selling stockholders have granted to the underwriters the option, exercisable for 30 days from the date of this prospectus, to purchase up to and additional shares, respectively, of common stock at the initial public offering price, less estimated underwriting discounts and commissions.
|
|
|
Common stock to be outstanding immediately after completion of this offering
|
| |
shares (or shares if the underwriters exercise in full their option to purchase additional shares of common stock).
|
|
|
Use of proceeds
|
| |
We expect to receive net proceeds to us, after deducting estimated offering expenses and underwriting discounts and commissions, will be approximately $ million (or $ million if the underwriters exercise in full their option to purchase additional shares of common stock), based on an assumed offering price of $ per share (the mid-point of the price range set forth on the cover of this prospectus).
|
|
| | | |
We intend to use the net proceeds from this offering to fund our de novo growth strategy. We intend to use the balance of the net proceeds for general corporate purposes and working capital. See the section entitled “Use of Proceeds” in this prospectus.
|
|
| | | |
We will not receive any of the proceeds from the sale of our common stock offered by the selling stockholders.
|
|
|
Directed Share Program
|
| |
At our request, the underwriters have reserved up to shares of our common stock, or up to % of the shares offered by this prospectus, for sale at the initial public offering price to certain individuals associated with us and our Sponsor (as defined hereinafter), including our directors, officers, employees, and certain other individuals identified by management. The sales will be made at our direction by Morgan Stanley & Co. LLC and its affiliates through a directed share program. The number of shares of our common stock available for sale to the general public in this offering will be reduced to the extent that such persons purchase such reserved shares. Any reserved shares not so purchased will be offered by to the general public on the same terms as the other shares of our common stock offered by this prospectus. If purchased by our directors and officers, the shares will be subject to a -day lock-up restriction. See the section titled “Underwriting” for additional information.
|
|
|
Dividend policy
|
| |
We have no current plans to pay dividends on our common stock. See the section entitled “Dividend Policy” in this prospectus.
|
|
|
Trading Symbol
|
| |
We have applied to list our common stock on NASDAQ under the symbol “AIRS.”
|
|
|
Risk factors
|
| |
You should read carefully the “Risk Factors” section of this prospectus for a discussion of factors that you should consider before deciding to invest in shares of our common stock.
|
|
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
| | |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Consolidated Statements of Operations Data: | | | | | | ||||||||||||||||||||
Revenue
|
| | | $ | 61,108 | | | | | $ | 22,086 | | | | | $ | 62,766 | | | | | $ | 41,236 | | |
Operating expenses: | | | | | | | | | | | | | | | | ||||||||||
Cost of service
|
| | | | 20,008 | | | | | | 8,983 | | | | | | 23,471 | | | | | | 15,488 | | |
Selling, general and administrative
|
| | | | 18,990 | | | | | | 10,031 | | | | | | 23,621 | | | | | | 20,125 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | | | | | — | | | | | | — | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | | | | | 5,641 | | | | | | 4,960 | | |
Total operating expenses
|
| | | | 42,703 | | | | | | 21,747 | | | | | | 52,733 | | | | | | 40,573 | | |
Income from operations
|
| | | | 18,405 | | | | | | 339 | | | | | | 10,033 | | | | | | 663 | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | | | | | 2,456 | | | | | | 2,875 | | |
Net income (loss)
|
| | | | 16,648 | | | | | | (908) | | | | | | 7,577 | | | | | | (2,212) | | |
Pro forma income tax expense (unaudited)
|
| | | | 3,975 | | | | | | — | | | | | | 1,827 | | | | | | — | | |
Pro forma net income (loss) (unaudited)
|
| | | $ | 12,673 | | | | | $ | (908) | | | | | $ | 5,750 | | | | | $ | (2,212) | | |
Consolidated Statements of Cash Flow Data: | | | | | | ||||||||||||||||||||
Net cash provided by operating activities
|
| | | $ | 23,814 | | | | | $ | 1,683 | | | | | $ | 13,957 | | | | | $ | 4,938 | | |
Net cash used in investing activities
|
| | | | (3,149) | | | | | | (1,720) | | | | | | (3,689) | | | | | | (4,439) | | |
Net cash used in financing activities
|
| | | | (14,196) | | | | | | (2,034) | | | | | | (5,017) | | | | | | (783) | | |
Net income (loss) per Share: | | | | | | ||||||||||||||||||||
Net income (loss) per share
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Diluted
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Diluted
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Other Data: | | | | | | ||||||||||||||||||||
Adjusted EBITDA(1)
|
| | | $ | 23,784 | | | | | $ | 4,040 | | | | | $ | 17,493 | | | | | $ | 7,337 | | |
Adjusted EBITDA Margin(2)
|
| | | | 38.9% | | | | | | 18.3% | | | | | | 27.9% | | | | | | 17.8% | | |
Number of procedure rooms as of the end of the period
|
| | | | 25 | | | | | | 18 | | | | | | 23 | | | | | | 16 | | |
Number of centers as of the end of the period
|
| | | | 15 | | | | | | 11 | | | | | | 14 | | | | | | 10 | | |
Cases
|
| | | | 5,422 | | | | | | 2,169 | | | | | | 5,885 | | | | | | 3,865 | | |
Revenue per case
|
| | | $ | 11,270 | | | | | $ | 10,183 | | | | | $ | 10,665 | | | | | $ | 10,669 | | |
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
| | |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Same-center case growth
|
| | | | 110.2% | | | | | | N/A | | | | | | 9.8% | | | | | | N/A | | |
Same-center revenue per case growth
|
| | | | 9.5% | | | | | | N/A | | | | | | (0.6)% | | | | | | N/A | | |
| | |
June 30,
|
| |
December 31,
|
| ||||||||||||
| | |
2021
|
| |
2020
|
| |
2019
|
| |||||||||
Consolidated Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 16,848 | | | | | $ | 10,379 | | | | | $ | 5,128 | | |
Total current assets
|
| | | | 17,546 | | | | | | 11,563 | | | | | | 6,587 | | |
Total assets
|
| | | $ | 185,300 | | | | | $ | 179,610 | | | | | $ | 171,502 | | |
Current portion of long-term debt
|
| | | $ | 850 | | | | | $ | 400 | | | | | $ | 400 | | |
Long-term debt, net
|
| | | | 82,123 | | | | | | 32,119 | | | | | | 32,308 | | |
Total liabilities
|
| | | | 108,582 | | | | | | 55,934 | | | | | | 51,111 | | |
Total member’s equity
|
| | | $ | 76,718 | | | | | $ | 123,676 | | | | | $ | 120,391 | | |
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
| | |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Net Income (Loss)
|
| | | $ | 16,648 | | | | | $ | (908) | | | | | $ | 7,577 | | | | | $ | (2,212) | | |
Plus | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | | | | | 5,641 | | | | | | 4,960 | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | | | | | 2,456 | | | | | | 2,875 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | | | | | — | | | | | | — | | |
Pre-opening de novo and relocation costs
|
| | | | 982 | | | | | | 440 | | | | | | 879 | | | | | | 391 | | |
Restructuring and related severance costs
|
| | | | 270 | | | | | | 115 | | | | | | 115 | | | | | | 482 | | |
Sponsor management fee
|
| | | | 250 | | | | | | 250 | | | | | | 500 | | | | | | 500 | | |
Unit-based compensation
|
| | | | 172 | | | | | | 163 | | | | | | 325 | | | | | | 341 | | |
Adjusted EBITDA
|
| | | $ | 23,784 | | | | | $ | 4,040 | | | | | $ | 17,493 | | | | | $ | 7,337 | | |
Adjusted EBITDA Margin
|
| | | | 38.9% | | | | | | 18.3% | | | | | | 27.9% | | | | | | 17.8% | | |
| | |
As of June 30, 2021
|
| |||||||||
| | |
Historical
|
| |
Adjusted
|
| ||||||
Cash and cash equivalents
|
| | | $ | 16,848 | | | | | $ | | | |
Debt: | | | | | | | | | | | | | |
Term loan
|
| | | $ | 82,973 | | | | | | | | |
Member’s equity
|
| | | | 76,718 | | | | | | | | |
Total capitalization
|
| | | $ | 159,691 | | | | | $ | | | |
|
Assumed initial public offering price per share
|
| | | | | | | | | $ | | | |
|
Pro forma net tangible book value per share as of June 30, 2021
|
| | | $ | | | | | | | | | |
|
Increase in net tangible book value per share attributable to new investors in this offering
|
| | | | | | | | | | | | |
|
Pro forma and as-adjusted net tangible book value per share after this offering
|
| | | | | | | | | | | | |
|
Dilution per share to new investors
|
| | | | | | | | | $ | | | |
| | |
Shares Purchased
|
| |
Total Consideration
|
| |
Average
Price Per Share |
| |||||||||||||||||||||
| | |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||
Existing Owners
|
| | | $ | | | | | | % | | | | | $ | | | | | | % | | | | | $ | | | |||
New investors
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total
|
| | | $ | | | | | | 100% | | | | | $ | | | | | | 100% | | | | | $ | | | |
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
| | |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Consolidated Statements of Operations Data:
($ in thousands) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Revenue
|
| | | $ | 61,108 | | | | | $ | 22,086 | | | | | $ | 62,766 | | | | | $ | 41,236 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of service
|
| | | | 20,008 | | | | | | 8,983 | | | | | | 23,471 | | | | | | 15,488 | | |
Selling, general and administrative
|
| | | | 18,990 | | | | | | 10,031 | | | | | | 23,621 | | | | | | 20,125 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | | | | | — | | | | | | — | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | | | | | 5,641 | | | | | | 4,960 | | |
Total operating expenses
|
| | | | 42,703 | | | | | | 21,747 | | | | | | 52,733 | | | | | | 40,573 | | |
Income from operations
|
| | | | 18,405 | | | | | | 339 | | | | | | 10,033 | | | | | | 663 | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | | | | | 2,456 | | | | | | 2,875 | | |
Net income (loss)
|
| | | | 16,648 | | | | | | (908) | | | | | | 7,577 | | | | | | (2,212) | | |
Pro forma income tax expense (unaudited)
|
| | | | 3,975 | | | | | | — | | | | | | 1,827 | | | | | | — | | |
Pro forma net income (loss) (unaudited)
|
| | | $ | 12,673 | | | | | $ | (908) | | | | | $ | 5,750 | | | | | $ | (2,212) | | |
Consolidated Statements of Cash Flow Data: | | | | | | | | | | | | | | | | | | | | | |||||
Net cash provided by operating activities
|
| | | $ | 23,814 | | | | | $ | 1,683 | | | | | $ | 13,957 | | | | | $ | 4,938 | | |
Net cash used in investing activities
|
| | | | (3,149) | | | | | | (1,720) | | | | | | (3,689) | | | | | | (4,439) | | |
Net cash used in financing activities
|
| | | | (14,196) | | | | | | (2,034) | | | | | | (5,017) | | | | | | (783) | | |
Net income (loss) per Share: | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) per share
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Diluted
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Diluted
|
| | | | | | | | | | | | | | | | | | | |
| | |
June 30,
|
| |
December 31,
|
| ||||||||||||
| | |
2021
|
| |
2020
|
| |
2019
|
| |||||||||
Consolidated Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 16,848 | | | | | $ | 10,379 | | | | | $ | 5,128 | | |
Total current assets
|
| | | | 17,546 | | | | | | 11,563 | | | | | | 6,587 | | |
Total assets
|
| | | $ | 185,300 | | | | | $ | 179,610 | | | | | $ | 171,502 | | |
Current portion of long-term debt
|
| | | $ | 850 | | | | | $ | 400 | | | | | $ | 400 | | |
Long-term debt, net
|
| | | | 82,123 | | | | | | 32,119 | | | | | | 32,308 | | |
Total liabilities
|
| | | | 108,582 | | | | | | 55,934 | | | | | | 51,111 | | |
Total member’s equity
|
| | | $ | 76,718 | | | | | $ | 123,676 | | | | | $ | 120,391 | | |
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
|
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||||
Cases
|
| | | | 5,422 | | | | | | 2,169 | | | | | | 5,885 | | | | | | 3,865 | | |
Case growth
|
| | | | 150.0% | | | | | | N/A | | | | | | 52.3% | | | | | | N/A | | |
Revenue per case
|
| | | $ | 11,270 | | | | | $ | 10,183 | | | | | $ | 10,665 | | | | | $ | 10,669 | | |
Revenue per case growth
|
| | | | 10.7% | | | | | | N/A | | | | | | 0.0% | | | | | | N/A | | |
Number of total facilities
|
| | | | 15 | | | | | | 11 | | | | | | 14 | | | | | | 10 | | |
Number of total procedure rooms
|
| | | | 25 | | | | | | 18 | | | | | | 23 | | | | | | 16 | | |
| | |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
|
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||||
Cases
|
| | | | 4,559 | | | | | | 2,169 | | | | | | 4,074 | | | | | | 3,712 | | |
Case growth
|
| | | | 110.2% | | | | | | N/A | | | | | | 9.8% | | | | | | N/A | | |
Revenue per case
|
| | | $ | 11,149 | | | | | $ | 10,182 | | | | | $ | 10,603 | | | | | $ | 10,669 | | |
Revenue per case growth
|
| | | | 9.5% | | | | | | N/A | | | | | | -0.6% | | | | | | N/A | | |
Number of total facilities
|
| | | | 11 | | | | | | 11 | | | | | | 7 | | | | | | 7 | | |
Number of total procedure rooms
|
| | | | 18 | | | | | | 18 | | | | | | 10 | | | | | | 10 | | |
($ in thousands)
|
| |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
|
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||||
Net income (loss)
|
| | | $ | 16,648 | | | | | $ | (908) | | | | | $ | 7,577 | | | | | $ | (2,212) | | |
Plus
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | | | | | 5,641 | | | | | | 4,960 | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | | | | | 2,456 | | | | | | 2,875 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | | | | | — | | | | | | — | | |
Pre-opening de novo and relocation costs
|
| | | | 982 | | | | | | 440 | | | | | | 879 | | | | | | 391 | | |
Restructuring and related severance costs
|
| | | | 270 | | | | | | 115 | | | | | | 115 | | | | | | 482 | | |
Sponsor management fee
|
| | | | 250 | | | | | | 250 | | | | | | 500 | | | | | | 500 | | |
Unit-based compensation
|
| | | | 172 | | | | | | 163 | | | | | | 325 | | | | | | 341 | | |
Adjusted EBITDA
|
| | | $ | 23,784 | | | | | $ | 4,040 | | | | | $ | 17,493 | | | | | $ | 7,337 | | |
Adjusted EBITDA Margin
|
| | | | 38.9% | | | | | | 18.3% | | | | | | 27.9% | | | | | | 17.8% | | |
($ in thousands)
|
| |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||||||||||||||||||||||||||
|
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||||||||||||||||||||||||||||
|
Amount
|
| |
% of
Revenues |
| |
Amount
|
| |
% of
Revenues |
| |
Amount
|
| |
% of
Revenues |
| |
Amount
|
| |
% of
Revenues |
| ||||||||||||||||||||||||||
Revenue
|
| | | $ | 61,108 | | | | | | 100.0% | | | | | $ | 22,086 | | | | | | 100.0% | | | | | $ | 62,766 | | | | | | 100.0% | | | | | $ | 41,236 | | | | | | 100.0% | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of service
|
| | | | 20,008 | | | | | | 32.7% | | | | | | 8,983 | | | | | | 40.7% | | | | | | 23,471 | | | | | | 37.4% | | | | | | 15,488 | | | | | | 37.6% | | |
Selling, general and administrative
|
| | | | 18,990 | | | | | | 31.1% | | | | | | 10,031 | | | | | | 45.4% | | | | | | 23,621 | | | | | | 37.6% | | | | | | 20,125 | | | | | | 48.8% | | |
Loss on debt modification
|
| | | | 682 | | | | | | 1.1% | | | | | | — | | | | | | 0.0% | | | | | | — | | | | | | 0.0% | | | | | | — | | | | | | 0.0% | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 4.9% | | | | | | 2,733 | | | | | | 12.4% | | | | | | 5,641 | | | | | | 9.0% | | | | | | 4,960 | | | | | | 12.0% | | |
Total operating expenses
|
| | | | 42,703 | | | | | | 69.9% | | | | | | 21,747 | | | | | | 98.5% | | | | | | 52,733 | | | | | | 84.0% | | | | | | 40,573 | | | | | | 98.4% | | |
Income from operations
|
| | | | 18,405 | | | | | | 30.1% | | | | | | 339 | | | | | | 1.5% | | | | | | 10,033 | | | | | | 16.0% | | | | | | 663 | | | | | | 1.6% | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 2.9% | | | | | | 1,247 | | | | | | 5.6% | | | | | | 2,456 | | | | | | 3.9% | | | | | | 2,875 | | | | | | 7.0% | | |
Net income (loss)
|
| | | | 16,648 | | | | | | 27.2% | | | | | | (908) | | | | | | (4.1%) | | | | | | 7,577 | | | | | | 12.1% | | | | | | (2,212) | | | | | | (5.4%) | | |
Pro forma income tax expense (unaudited)
|
| | | | 3,975 | | | | | | 6.5% | | | | | | — | | | | | | 0.0% | | | | | | 1,827 | | | | | | 2.9% | | | | | | — | | | | | | 0.0% | | |
Pro forma net income (loss) (unaudited)
|
| | | $ | 12,673 | | | | | | 20.7% | | | | | $ | (908) | | | | | | (4.1%) | | | | | $ | 5,750 | | | | | | 9.2% | | | | | $ | (2,212) | | | | | | (5.4%) | | |
($ in thousands)
|
| |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||||||||||||||
|
2021
|
| |
2020
|
| | | | | | | |
2020
|
| |
2019
|
| | | | | | | ||||||||||||||
|
Amount
|
| |
Amount
|
| |
$ Change
|
| |
Amount
|
| |
Amount
|
| |
$ Change
|
| ||||||||||||||||||||
Revenue
|
| | | $ | 61,108 | | | | | $ | 22,086 | | | | | $ | 39,022 | | | | | $ | 62,766 | | | | | $ | 41,236 | | | | | $ | 21,530 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of service
|
| | | | 20,008 | | | | | | 8,983 | | | | | | 11,025 | | | | | | 23,471 | | | | | | 15,488 | | | | | | 7,983 | | |
Selling, general and administrative
|
| | | | 18,990 | | | | | | 10,031 | | | | | | 8,959 | | | | | | 23,621 | | | | | | 20,125 | | | | | | 3,496 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | | | | | 682 | | | | | | — | | | | | | — | | | | | | — | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | | | | | 290 | | | | | | 5,641 | | | | | | 4,960 | | | | | | 681 | | |
Total operating expenses
|
| | | | 42,703 | | | | | | 21,747 | | | | | | 20,956 | | | | | | 52,733 | | | | | | 40,573 | | | | | | 12,160 | | |
Income from operations
|
| | | | 18,405 | | | | | | 339 | | | | | | 18,066 | | | | | | 10,033 | | | | | | 663 | | | | | | 9,370 | | |
($ in thousands)
|
| |
Six Months Ended
June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||||||||||||||
|
2021
|
| |
2020
|
| | | | | | | |
2020
|
| |
2019
|
| | | | | | | ||||||||||||||
|
Amount
|
| |
Amount
|
| |
$ Change
|
| |
Amount
|
| |
Amount
|
| |
$ Change
|
| ||||||||||||||||||||
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | | | | | 510 | | | | | | 2,456 | | | | | | 2,875 | | | | | | (419) | | |
Net income (loss)
|
| | | | 16,648 | | | | | | (908) | | | | | | 17,556 | | | | | | 7,577 | | | | | | (2,212) | | | | | | 9,789 | | |
Pro forma income tax
expense (unaudited) |
| | | | 3,975 | | | | | | — | | | | | | 3,975 | | | | | | 1,827 | | | | | | — | | | | | | 1,827 | | |
Pro forma net income
(loss) (unaudited) |
| | | $ | 12,673 | | | | | $ | (908) | | | | | $ | 13,581 | | | | | $ | 5,750 | | | | | $ | (2,212) | | | | | $ | 7,962 | | |
|
| | |
Six Months
Ended June 30, |
| |
Fiscal Year Ended
December 31, |
| ||||||||||||||||||
($ in thousands)
|
| |
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||
Cash Flows Provided By (Used For): | | | | | | | | | | | | | | | | ||||||||||
Operating activities
|
| | | $ | 23,814 | | | | | $ | 1,683 | | | | | $ | 13,957 | | | | | $ | 4,938 | | |
Investing activities
|
| | | | (3,149) | | | | | | (1,720) | | | | | | (3,689) | | | | | | (4,439) | | |
Financing activities
|
| | | | (14,196) | | | | | | (2,034) | | | | | | (5,017) | | | | | | (783) | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | 6,469 | | | | | | (2,071) | | | | | | 5,251 | | | | | | (284) | | |
| | |
Payments due by Period
|
| |||||||||||||||||||||||||||
($ in thousands)
|
| |
Total
|
| |
Less than 1 Year
|
| |
1-3 Years
|
| |
4-5 Years
|
| |
More than 5 Years
|
| |||||||||||||||
Debt – principal(1) | | | | $ | 85,100 | | | | | $ | 838 | | | | | $ | 84,262 | | | | | $ | — | | | | | $ | — | | |
Interest expense(1)(2)
|
| | | | 12,873 | | | | | | 4,059 | | | | | | 8,813 | | | | | | | | | | | | | | |
Operating lease agreements
|
| | | | 19,992 | | | | | | 3,321 | | | | | | 8,809 | | | | | | 5,245 | | | | | | 2,617 | | |
Total
|
| | | $ | 117,965 | | | | | $ | 8,218 | | | | | $ | 101,884 | | | | | $ | 5,245 | | | | | $ | 2,617 | | |
| | |
2019
|
| |||
Expected volatility
|
| | | | 26.6% | | |
Expected term
|
| | | | 5.0 | | |
Risk-free interest rate
|
| | | | 2.27% | | |
Expected dividend yield
|
| | | | 0% | | |
|
1. Pain Management
|
| |
|
| |
Prior to the procedure, patient is given a sedative cocktail and local anesthesia via air pressure from a needleless jet injector.
*Patient remains fully awake during the procedure
|
|
|
2. Access Point Creation
|
| |
|
| |
One to three entryways are created by the jet injector, which are widened to 2mm (freckle-sized) by means of a biopsy punch.
|
|
|
3. Local Numbing
|
| |
|
| |
A thin cannula is inserted in each entryway, at which point a local numbing solution is dispersed subdermally to the target areas.
|
|
|
4. Laser Ablation
|
| |
|
| |
Laser ablation, which is the use of the heat from laser light to destroy unwanted cells, is then applied to soften the fat cells for extraction. As a byproduct of the laser’s heat, the skin in the treated area is tightened for post-surgery effects.
|
|
|
5. Fat Removal Process
|
| |
|
| |
Proprietary fat removal process uses industry accepted, FDA approved tools to grab, separate, and remove fat cells.
An FDA-approved handpiece drives cannula 1,000 times per minute in a corkscrew motion to remove fat cells, without harming surrounding tissue and structures.
The amount of fat removed via the AirSculpt® method depends on patient body size, desired outcomes and state regulations. After the procedure is complete, a piece of dry gauze is used to cover the entryway to protect against infection.
|
|
|
|
| |
|
|
|
Scottsdale, AZ
|
| |
Beverly Hills, CA
|
|
State
|
| |
City
|
| |
Number of
Procedure Rooms |
|
Arizona | | |
Scottsdale
|
| |
1
|
|
California | | |
Beverly Hills
|
| |
2
|
|
California | | |
Sacramento
|
| |
1
|
|
California | | |
San Diego
|
| |
2
|
|
Colorado | | |
Denver
|
| |
2
|
|
Florida | | |
Orlando
|
| |
2
|
|
Georgia | | |
Atlanta
|
| |
2
|
|
Illinois | | |
Chicago
|
| |
1
|
|
Minnesota | | |
Minneapolis
|
| |
2
|
|
New York | | |
New York
|
| |
2
|
|
North Carolina | | |
Charlotte
|
| |
2
|
|
Tennessee | | |
Nashville
|
| |
2
|
|
Texas | | |
Dallas
|
| |
1
|
|
Texas | | |
Houston
|
| |
1
|
|
Washington | | |
Seattle
|
| |
2
|
|
Virginia | | |
Vienna
|
| |
2
|
|
Name
|
| |
Age
|
| |
Position
|
|
Dr. Aaron Rollins
|
| |
46
|
| | Chief Executive Officer and Director | |
Adam Feinstein
|
| |
49
|
| | Non-Executive Chairman of the Board | |
Ronald P. Zelhof
|
| |
57
|
| | Chief Operating Officer and President | |
Dennis Dean
|
| |
49
|
| | Chief Financial Officer | |
Daniel Sollof
|
| |
38
|
| | Director | |
Name and Principal Position
|
| |
Year
|
| |
Salary
($) |
| |
Bonus
($)(1) |
| |
Non-Equity
Incentive Plan Compensation ($)(2) |
| |
All Other
Compensation ($)(3) |
| |
Total
($) |
| ||||||||||||||||||
Dr. Aaron Rollins
Chief Executive Officer |
| | | | 2020 | | | | | | 300,000 | | | | | | 150,000 | | | | | | 140,241 | | | | | | 8,569 | | | | | | 598,810 | | |
Ronald P. Zelhof
Chief Operating Officer and President |
| | | | 2020 | | | | | | 300,000 | | | | | | 120,000 | | | | | | — | | | | | | 13,328 | | | | | | 433,328 | | |
| | | | | | | | |
Stock Awards
|
| |||
Name
|
| |
Grant Date
|
| |
Number of
Shares or Units of Stock That Have Not Vested (#)(1) |
| |
Market Value of
Shares or Units of Stock That Have Not Vested ($)(2) |
| |||
Ronald P. Zelhof
|
| | | | 3/31/2019 | | | | | | | | |
Name
|
| |
Number of Shares
|
| |||
Morgan Stanley & Co. LLC
|
| | | | | | |
Piper Sandler & Co.
|
| | | | | | |
SVB Leerink LLC
|
| | | | | | |
Total:
|
| | | | | |
| | | | | | | | |
Total
|
| |||||||||
| | |
Per
Share |
| |
No
Exercise |
| |
Full
Exercise |
| |||||||||
Public offering price
|
| | | $ | | | | | $ | | | | | $ | | | |||
Underwriting discounts and commissions
|
| | | $ | | | | | $ | | | | | $ | | | |||
Proceeds, before expenses, to us
|
| | | $ | | | | | $ | | | | | $ | | | |||
Proceeds, before expenses, to the selling stockholders
|
| | | $ | | | | | $ | | | | | $ | | | |
| | |
Page(s)
|
| |||
Audited Financial Statements | | | |||||
| | | | F-2 | | | |
| | | | F-3 | | | |
| | | | F-4 | | | |
EBS Intermediate Parent LLC and Subsidiaries
|
| ||||||
Audited Consolidated Financial Statements | | | | | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
| | | | F-8 | | | |
| | | | F-9 | | | |
| | | | F-10 | | | |
Unaudited Interim Condensed Consolidated Financial Statements | | | | | | | |
| | | | F-23 | | | |
| | | | F-24 | | | |
| | | | F-25 | | | |
| | | | F-26 | | | |
| | | | F-27 | | |
| | |
June 30,
2021 |
| |||
Stockholder’s Equity | | | |||||
Common stock, $0.0001 par value, 1,000,000 shares authorized, 100 shares outstanding
|
| | | $ | — | | |
Accumulated paid in capital
|
| | | | 10 | | |
Stockholder receivable
|
| | | | (10) | | |
Total stockholder’s equity
|
| | | $ | — | | |
($000s)
|
| |
2020
|
| |
2019
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 10,379 | | | | | $ | 5,128 | | |
Prepaid expenses and other current assets
|
| | | | 1,184 | | | | | | 1,459 | | |
Total current assets
|
| | | | 11,563 | | | | | | 6,587 | | |
Property and equipment, net
|
| | | | 7,108 | | | | | | 4,306 | | |
Other long-term assets
|
| | | | 1,544 | | | | | | 1,339 | | |
Right of use operating lease assets
|
| | | | 17,053 | | | | | | 12,174 | | |
Intangible assets, net
|
| | | | 60,608 | | | | | | 65,362 | | |
Goodwill
|
| | | | 81,734 | | | | | | 81,734 | | |
Total assets
|
| | | $ | 179,610 | | | | | $ | 171,502 | | |
Liabilities and Member’s Equity | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 1,095 | | | | | $ | 2,114 | | |
Accrued payroll and benefits
|
| | | | 1,258 | | | | | | 534 | | |
Current portion of long-term debt
|
| | | | 400 | | | | | | 400 | | |
Deferred revenue and patient deposits
|
| | | | 3,233 | | | | | | 3,188 | | |
Accrued and other current liabilities
|
| | | | 581 | | | | | | 174 | | |
Current right of use operating lease liabilities
|
| | | | 2,890 | | | | | | 1,943 | | |
Total current liabilities
|
| | | | 9,457 | | | | | | 8,353 | | |
Long-term debt, net
|
| | | | 32,119 | | | | | | 32,308 | | |
Long-term right of use operating lease liability
|
| | | | 14,358 | | | | | | 10,450 | | |
Total liabilities
|
| | | | 55,934 | | | | | | 51,111 | | |
Commitments and contingent liabilities (Note 9) | | | | | | | | | | | | | |
Member’s equity
|
| | | | 123,676 | | | | | | 120,391 | | |
Total liabilities and member’s equity
|
| | | $ | 179,610 | | | | | $ | 171,502 | | |
($000s)
|
| |
2020
|
| |
2019
|
| ||||||
Revenue
|
| | | $ | 62,766 | | | | | $ | 41,236 | | |
Operating expenses: | | | | | | | | | | | | | |
Cost of service (exclusive of depreciation and amortization shown below)
|
| | | | 23,471 | | | | | | 15,488 | | |
Selling, general and administrative
|
| | | | 23,621 | | | | | | 20,125 | | |
Depreciation and amortization
|
| | | | 5,641 | | | | | | 4,960 | | |
Total operating expenses
|
| | | | 52,733 | | | | | | 40,573 | | |
Income from operations
|
| | | | 10,033 | | | | | | 663 | | |
Interest expense, net
|
| | | | 2,456 | | | | | | 2,875 | | |
Net income (loss)
|
| | | | 7,577 | | | | | | (2,212) | | |
Pro forma income tax expense (unaudited)
|
| | | | 1,827 | | | | | | — | | |
Pro forma net income (loss) (unaudited)
|
| | | $ | 5,750 | | | | | $ | (2,212) | | |
($000s)
|
| | | | | | |
Balance at December 31, 2018
|
| | | $ | 122,548 | | |
Distributions
|
| | | | (283) | | |
Unit-based compensation
|
| | | | 341 | | |
Net loss
|
| | | | (2,212) | | |
Other
|
| | | | (3) | | |
Balance at December 31, 2019
|
| | | | 120,391 | | |
Distributions
|
| | | | (4,617) | | |
Unit-based compensation
|
| | | | 325 | | |
Net income
|
| | | | 7,577 | | |
Balance at December 31, 2020
|
| | | $ | 123,676 | | |
($000s)
|
| |
2020
|
| |
2019
|
| ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net income (loss)
|
| | | $ | 7,577 | | | | | $ | (2,212) | | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 5,641 | | | | | | 4,960 | | |
Unit-based compensation
|
| | | | 325 | | | | | | 341 | | |
Non-cash interest expense; amortization of debt costs
|
| | | | 211 | | | | | | 226 | | |
Changes in assets and liabilities
|
| | | | | | | | | | | | |
Prepaid expense and other current assets
|
| | | | 275 | | | | | | (1,841) | | |
Other assets
|
| | | | (204) | | | | | | (635) | | |
Accounts payable
|
| | | | (1,019) | | | | | | 1,872 | | |
Deferred revenue and patient deposits
|
| | | | 45 | | | | | | 1,835 | | |
Accrued and other liabilities
|
| | | | 1,106 | | | | | | 392 | | |
Net cash provided by operating activities
|
| | | | 13,957 | | | | | | 4,938 | | |
Cash flows from investing activities | | | | | | | | | | | | | |
Purchases of property and equipment, net
|
| | | | (3,689) | | | | | | (4,439) | | |
Net cash used in investing activities
|
| | | | (3,689) | | | | | | (4,439) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Payment on term loan
|
| | | | (2,900) | | | | | | (500) | | |
Borrowings on term loan
|
| | | | 2,500 | | | | | | — | | |
Distribution to member
|
| | | | (4,617) | | | | | | (283) | | |
Net cash used in financing activities
|
| | | | (5,017) | | | | | | (783) | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | 5,251 | | | | | | (284) | | |
Cash and cash equivalents | | | | | | | | | | | | | |
Beginning of period
|
| | | | 5,128 | | | | | | 5,412 | | |
End of period
|
| | | $ | 10,379 | | | | | $ | 5,128 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 2,293 | | | | | $ | 2,683 | | |
| | |
2020
|
| |
2019
|
| |
Useful Life
|
| ||||||
Technology and know-how
|
| | | $ | 53,600 | | | | | $ | 53,600 | | | |
15 years
|
|
Trademarks and tradenames
|
| | | | 17,700 | | | | | | 17,700 | | | |
15 years
|
|
| | | | | 71,300 | | | | | | 71,300 | | | | | |
Accumulated amortization of technology and know-how
|
| | | | (8,038) | | | | | | (4,464) | | | | | |
Accumulated amortization of tradenames and trademarks
|
| | | | (2,654) | | | | | | (1,474) | | | | | |
Total intangible assets
|
| | | $ | 60,608 | | | | | $ | 65,362 | | | | | |
| | |
2020
|
| |
2019
|
| ||||||
Medical equipment
|
| | | $ | 1,955 | | | | | $ | 533 | | |
Office and computer equipment
|
| | | | 137 | | | | | | 72 | | |
Furniture and fixtures
|
| | | | 741 | | | | | | 288 | | |
Leasehold improvements
|
| | | | 5,374 | | | | | | 3,627 | | |
Less: Accumulated depreciation and amortization
|
| | | | (1,099) | | | | | | (214) | | |
Property and equipment, net
|
| | | $ | 7,108 | | | | | $ | 4,306 | | |
| | |
2020
|
| |
2019
|
| ||||||
Term loan
|
| | | $ | 33,100 | | | | | $ | 33,500 | | |
Unamortized debt issuance costs
|
| | | | (581) | | | | | | (792) | | |
Total debt, net
|
| | | | 32,519 | | | | | | 32,708 | | |
Less: Current portion
|
| | | | (400) | | | | | | (400) | | |
Long-term debt, net
|
| | | $ | 32,119 | | | | | $ | 32,308 | | |
|
2021
|
| | | $ | 400 | | |
|
2022
|
| | | | 400 | | |
|
2023
|
| | | | 32,300 | | |
|
Total maturities
|
| | | $ | 33,100 | | |
| | |
2020
|
| |
2019
|
|
Weighted-average remaining lease term
|
| |
5 years
|
| |
4.8 years
|
|
Weight average discount rate
|
| |
4.6%
|
| |
4.1%
|
|
| | |
2020
|
| |
2019
|
| ||||||
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | | | | | | | |
Operating cash outflows from operating leases
|
| | | $ | 2,540 | | | | | $ | 1,325 | | |
Right-of-use assets obtained in exchange for lease obligations: | | | | | | | | | | | | | |
Operating leases
|
| | | $ | 6,447 | | | | | $ | 8,910 | | |
Year ended December 31,
|
| | | | | | |
2021
|
| | | $ | 3,321 | | |
2022
|
| | | | 3,192 | | |
2023
|
| | | | 2,861 | | |
2024
|
| | | | 2,757 | | |
2025
|
| | | | 2,740 | | |
Thereafter
|
| | | | 5,121 | | |
Total lease payments
|
| | | | 19,992 | | |
Less: imputed interest
|
| | | | (2,744) | | |
Total lease obligations
|
| | | $ | 17,248 | | |
| | |
Unvested
Units |
| |
Weighted Average
Grant Date Fair Value of Units |
| ||||||
Outstanding at December 31, 2018 | | | | | — | | | | | | | | |
Granted
|
| | | | 12,363 | | | | | $ | 278.99 | | |
Vested
|
| | | | (347) | | | | | | 278.99 | | |
Outstanding at December 31, 2019
|
| | | | 12,016 | | | | | $ | 278.99 | | |
Vested
|
| | | | (1,167) | | | | | | 278.99 | | |
Outstanding at December 31, 2020
|
| | | | 10,849 | | | | | $ | 278.99 | | |
| | |
2019
|
| |||
Expected volatility
|
| | | | 26.6% | | |
Expected term
|
| | | | 5.0 | | |
Risk-free interest rate
|
| | | | 2.27% | | |
Expected dividend yield
|
| | | | 0% | | |
($000s)
|
| |
June 30,
2021 |
| |
December 31,
2020 |
| ||||||
Assets | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 16,848 | | | | | $ | 10,379 | | |
Prepaid expenses and other current assets
|
| | | | 698 | | | | | | 1,184 | | |
Total current assets
|
| | | | 17,546 | | | | | | 11,563 | | |
Property and equipment, net
|
| | | | 10,578 | | | | | | 7,108 | | |
Other long-term assets
|
| | | | 1,709 | | | | | | 1,544 | | |
Right of use operating lease assets
|
| | | | 15,504 | | | | | | 17,053 | | |
Intangible assets, net
|
| | | | 58,229 | | | | | | 60,608 | | |
Goodwill
|
| | | | 81,734 | | | | | | 81,734 | | |
Total assets
|
| | | $ | 185,300 | | | | | $ | 179,610 | | |
Liabilities and Member’s Equity | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 1,636 | | | | | $ | 1,095 | | |
Accrued payroll and benefits
|
| | | | 1,962 | | | | | | 1,258 | | |
Current portion of long-term debt
|
| | | | 850 | | | | | | 400 | | |
Deferred revenue and patient deposits
|
| | | | 4,998 | | | | | | 3,233 | | |
Accrued and other current liabilities
|
| | | | 1,397 | | | | | | 581 | | |
Current right of use operating lease liabilities
|
| | | | 2,899 | | | | | | 2,890 | | |
Total current liabilities
|
| | | | 13,742 | | | | | | 9,457 | | |
Long-term debt, net
|
| | | | 82,123 | | | | | | 32,119 | | |
Long-term right of use operating lease liability
|
| | | | 12,717 | | | | | | 14,358 | | |
Total liabilities
|
| | | | 108,582 | | | | | | 55,934 | | |
Commitments and contingent liabilities (Note 9) | | | | | | | | | | | | | |
Member’s equity
|
| | | | 76,718 | | | | | | 123,676 | | |
Total liabilities and member’s equity
|
| | | $ | 185,300 | | | | | $ | 179,610 | | |
($000s)
|
| |
Six Months Ended
June 30, |
| |||||||||
|
2021
|
| |
2020
|
| ||||||||
Revenue
|
| | | $ | 61,108 | | | | | $ | 22,086 | | |
Operating expenses: | | | | | | | | | | | | | |
Cost of service (exclusive of depreciation and amortization shown below)
|
| | | | 20,008 | | | | | | 8,983 | | |
Selling, general and administrative
|
| | | | 18,990 | | | | | | 10,031 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | |
Total operating expenses
|
| | | | 42,703 | | | | | | 21,747 | | |
Income from operations
|
| | | | 18,405 | | | | | | 339 | | |
Interest expense, net
|
| | | | 1,757 | | | | | | 1,247 | | |
Net income (loss)
|
| | | | 16,648 | | | | | | (908) | | |
Pro forma income tax expense
|
| | | | 3,975 | | | | | | — | | |
Pro forma net income (loss)
|
| | | $ | 12,673 | | | | | $ | (908) | | |
($000s)
|
| | | | | | |
Balance at December 31, 2019
|
| | | $ | 120,391 | | |
Distributions
|
| | | | (4,334) | | |
Unit-based compensation
|
| | | | 163 | | |
Net loss
|
| | | | (908) | | |
Balance at June 30, 2020
|
| | | $ | 115,312 | | |
Balance at December 31, 2020
|
| | | $ | 123,676 | | |
Distributions
|
| | | | (63,778) | | |
Unit-based compensation
|
| | | | 172 | | |
Net income
|
| | | | 16,648 | | |
Balance at June 30, 2021
|
| | | $ | 76,718 | | |
($000s)
|
| |
Six Months Ended
June 30, |
| |||||||||
|
2021
|
| |
2020
|
| ||||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net income (loss)
|
| | | $ | 16,648 | | | | | $ | (908) | | |
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
| | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 3,023 | | | | | | 2,733 | | |
Unit-based compensation
|
| | | | 172 | | | | | | 163 | | |
Non-cash interest expense; amortization of debt costs
|
| | | | 191 | | | | | | 106 | | |
Loss on debt modification
|
| | | | 682 | | | | | | — | | |
Changes in assets and liabilities
|
| | | | | | | | | | | | |
Prepaid expense and other current assets
|
| | | | (478) | | | | | | 560 | | |
Other assets
|
| | | | 1,384 | | | | | | (2,964) | | |
Accounts payable
|
| | | | 541 | | | | | | (829) | | |
Deferred revenue and patient deposits
|
| | | | 1,765 | | | | | | (699) | | |
Accrued and other liabilities
|
| | | | (114) | | | | | | 3,521 | | |
Net cash provided by operating activities
|
| | | | 23,814 | | | | | | 1,683 | | |
Cash flows from investing activities | | | | | | | | | | | | | |
Purchases of property and equipment, net
|
| | | | (3,149) | | | | | | (1,720) | | |
Net cash used in investing activities
|
| | | | (3,149) | | | | | | (1,720) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Payment on term loan
|
| | | | (413) | | | | | | (200) | | |
Borrowings on term loan
|
| | | | 49,995 | | | | | | 2,500 | | |
Distribution to member
|
| | | | (63,778) | | | | | | (4,334) | | |
Net cash used in financing activities
|
| | | | (14,196) | | | | | | (2,034) | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | 6,469 | | | | | | (2,071) | | |
Cash and cash equivalents | | | | | | | | | | | | | |
Beginning of period
|
| | | | 10,379 | | | | | | 5,128 | | |
End of period
|
| | | $ | 16,848 | | | | | $ | 3,057 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 1,570 | | | | | $ | 1,143 | | |
| | |
June 30,
2021 |
| |
December 31,
2020 |
| |
Useful Life
|
| ||||||
Technology and know-how
|
| | | $ | 53,600 | | | | | $ | 53,600 | | | |
15 years
|
|
Trademarks and tradenames
|
| | | | 17,700 | | | | | | 17,700 | | | |
15 years
|
|
| | | | | 71,300 | | | | | | 71,300 | | | | | |
Accumulated amortization of technology and know-how
|
| | | | (9,826) | | | | | | (8,038) | | | | | |
Accumulated amortization of tradenames and trademarks
|
| | | | (3,245) | | | | | | (2,654) | | | | | |
Total intangible assets
|
| | | $ | 58,229 | | | | | $ | 60,608 | | | | | |
| | |
June 30,
2021 |
| |
December 31,
2020 |
| ||||||
Medical equipment
|
| | | $ | 2,332 | | | | | $ | 1,955 | | |
Office and computer equipment
|
| | | | 164 | | | | | | 137 | | |
Furniture and fixtures
|
| | | | 1,016 | | | | | | 741 | | |
Leasehold improvements
|
| | | | 6,649 | | | | | | 5,374 | | |
Construction in progress
|
| | | | 2,152 | | | | | | — | | |
Less: Accumulated depreciation and amortization
|
| | | | (1,735) | | | | | | (1,099) | | |
Property and equipment, net
|
| | | $ | 10,578 | | | | | $ | 7,108 | | |
| | |
June 30,
2021 |
| |
December 31,
2020 |
| ||||||
Term loan
|
| | | $ | 84,688 | | | | | $ | 33,100 | | |
Unamortized debt issuance costs
|
| | | | (1,715) | | | | | | (581) | | |
Total debt, net
|
| | | | 82,973 | | | | | | 32,519 | | |
Less: Current portion
|
| | | | (850) | | | | | | (400) | | |
Long-term debt, net
|
| | | $ | 82,123 | | | | | $ | 32,119 | | |
|
2021
|
| | | $ | 425 | | |
|
2022
|
| | | | 850 | | |
|
2023
|
| | | | 83,413 | | |
|
Total maturities
|
| | | $ | 84,688 | | |
| | |
June 30,
2021 |
| |
June 30,
2020 |
| ||||||
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | | | | | | | |
Operating cash outflows from operating leases
|
| | | $ | 1,494 | | | | | $ | 1,146 | | |
Right-of-use assets obtained in exchange for lease obligations: | | | | | | | | | | | | | |
Operating leases
|
| | | $ | — | | | | | $ | 3,775 | | |
| Year ended December 31, | | | | | | | |
|
2021 (excluding the six months ended June 30, 2021)
|
| | | $ | 1,708 | | |
|
2022
|
| | | | 3,340 | | |
|
2023
|
| | | | 3,352 | | |
|
2024
|
| | | | 3,307 | | |
|
2025
|
| | | | 3,345 | | |
|
Thereafter
|
| | | | 5,584 | | |
|
Total lease payments
|
| | | | 20,636 | | |
|
Less: imputed interest
|
| | | | (5,020) | | |
|
Total lease obligations
|
| | | $ | 15,616 | | |
| Morgan Stanley | | |
Piper Sandler
|
| |
SVB Leerink
|
|
|
SEC registration fee
|
| | | $ | 9,270.00 | | |
|
FINRA filing fee
|
| | | $ | 14,850.00 | | |
|
Stock exchange listing fees
|
| | | | * | | |
|
Printing and engraving expenses
|
| | | | * | | |
|
Accounting fees and expenses
|
| | | | * | | |
|
Legal fees and expenses
|
| | | | * | | |
|
Transfer agent and registrar fees
|
| | | | * | | |
|
Miscellaneous fees and expenses
|
| | | | * | | |
|
TOTAL
|
| | | $ | * | | |
Exhibit
Number |
| |
Description of Exhibit
|
| |||
| | 1.1* | | | | Form of Underwriting Agreement | |
| | 3.1 | | | | | |
| | 3.2* | | | |
Form of Amended and Restated Certificate of Incorporation of the Registrant, to be in effect immediately prior to the completion of the offering
|
|
| | 3.3 | | | | | |
| | 3.4* | | | |
Form of Amended and Restated By-Laws of the Registrant, to be in effect immediately prior to the completion of the offering
|
|
| | 4.1* | | | | Specimen Common Stock Certificate evidencing the shares of Common Stock | |
| | 5.1* | | | | Opinion of McDermott Will & Emery LLP | |
| | 10.1* | | | |
Form of Indemnification Agreement by and between the Registrant and each of its directors and executive officers.
|
|
| | 10.2* | | | |
Credit Agreement by and among the Registrant, EBS Intermediate LLC, EBS Enterprises LLC, the Lenders party thereto and THL Corporate Finance, as Agent, dated October 2, 2018.
|
|
Exhibit
Number |
| |
Description of Exhibit
|
| |||
| | 10.3* | | | |
First Amendment to Credit Agreement by and among the Registrant, EBS Intermediate LLC, EBS Enterprises, LLC, the Guarantors party thereto, the Lenders party thereto and THL Corporate Finance, as Agent, dated February 10, 2020
|
|
| | 10.4* | | | |
Second Amendment and Limited Waiver to Credit Agreement by and among the Registrant, EBS Intermediate LLC, EBS Enterprises, LLC, the Guarantors party thereto, the Lenders party thereto and THL Corporate Finance, as Agent, dated April 3, 2020
|
|
| | 10.4* | | | |
Third Amendment to Credit Agreement by and among the Registrant, EBS Intermediate LLC, EBS Enterprises, LLC, the Guarantors party thereto, the Lenders party thereto and THL Corporate Finance, as Agent, dated April 3, 2020
|
|
| | 10.5* | | | |
Fourth Amendment and Limited Waiver to Credit Agreement by and among the Registrant, EBS Enterprises LLC, the Guarantors party thereto, the Lenders party thereto and First Eagle Alternative Capital Agents, Inc. (formerly known as THL Corporate Finance), as Agent, dated May 5, 2021
|
|
| | 10.6 | | | | | |
| | 10.7 | | | | | |
| | 10.8*+ | | | |
Amended and Restated Employment Agreement between EBS Enterprises, LLC and Dr. Aaron Rollins
|
|
| | 10.9*+ | | | | 2021 Equity Incentive Plan | |
| | 10.10*+ | | | |
Form of AirSculpt Technologies, Inc. RSU Award Grant Notice and Award Agreement (2021 Equity Incentive Plan) (IPO Grants)
|
|
| | 10.11*+ | | | |
Form of AirSculpt Technologies, Inc. PSU Award Grant Notice and Award Agreement (2021 Equity Incentive Plan) (IPO Grants)
|
|
| | 10.12* | | | |
Form of Registration Rights Agreement, by and between the Registrant and the Sponsor to be in effect immediately after the closing of the offering
|
|
| | 10.13*+ | | | |
Amended and Restated Employment Agreement between EBS Enterprises, LLC and Ronald Zelhof
|
|
| | 10.14* | | | |
Form of Stockholders Agreement, by and between the Registrant and the Sponsor to be in effect immediately after the closing of the offering
|
|
| | 21.1 | | | | | |
| | 23.1 | | | | | |
| | 23.2 | | | | | |
| | 23.3* | | | | Consent of McDermott Will & Emery LLP (included in Exhibit 5.1) | |
| | 24.1 | | | | |
|
Signature
|
| |
Title
|
|
|
/s/ Dr. Aaron Rollins
Dr. Aaron Rollins
|
| |
Chief Executive Officer, Director
(Principal Executive Officer) |
|
|
/s/ Dennis Dean
Dennis Dean
|
| |
Chief Financial Officer (Principal Accounting and Financial Officer)
|
|
|
/s/ Adam Feinstein
Adam Feinstein
|
| |
Non-Executive Chairman of the Board of Directors
|
|
|
/s/ Daniel Sollof
Daniel Sollof
|
| | Director | |
Exhibit 3.1
CERTIFICATE OF INCORPORATION OF
AIRSCULPT TECHNOLOGIES, INC.
The undersigned Incorporator, for the purpose of creating and organizing a corporation under the provisions of and subject to the requirements of the General Corporation Law of the State of Delaware (the “DGCL”), certifies as follows:
1. The name of the corporation is Airsculpt Technologies, Inc. (the “Corporation”).
2. The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, Wilmington, DE 19801. The name of the registered agent of the Corporation at such address is CT Corporation System.
3. The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.
4. The total number of shares of stock which the Corporation is authorized to issue is One Million (1,000,000), with a par value of $0.0001 per share.
5. The name and mailing address of the Incorporator of the Corporation is:
Name
Daniel Sollof |
Mailing Address
400 Alton Rd., Unit TH-104M
|
6. Unless and except to the extent that the bylaws of the Corporation (the “Bylaws”) shall so require, the election of directors of the Corporation need not be by written ballot.
7. To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or to its stockholders for monetary damages for any breach of fiduciary duty as a director. No amendment to, modification of, or repeal of this Paragraph 7 shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.
8. The Corporation shall indemnify, advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation or of a partnership, joint venture, trust, enterprise, or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except for claims for indemnification (following the final disposition of such Proceeding) or advancement of expenses not paid in full, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized in the specific case by the board of directors of the Corporation. Any amendment, repeal, or modification of this Paragraph 8 shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.
1 |
9. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend, or repeal the Bylaws or adopt new Bylaws without any action on the part of the stockholders; provided that any Bylaw adopted or amended by the board of directors, and any powers thereby conferred, may be amended, altered, or repealed by the stockholders.
10. The Corporation shall have the right, subject to any express provisions or restrictions contained in the Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”) or the Bylaws, from time to time, to amend, alter, or repeal any provision of the Certificate of Incorporation in any manner now or hereafter provided by law, and all rights and powers of any kind conferred upon a director or stockholder of the Corporation by the Certificate of Incorporation or any amendment thereof are conferred subject to such right.
[Signature Page Follows]
2 |
I, THE UNDERSIGNED, being the Incorporator, for the purpose of forming a corporation pursuant to the DGCL, do make this Certificate of Incorporation, hereby acknowledging, declaring, and certifying that the foregoing Certificate of Incorporation is my act and deed and that the facts herein stated are true, and have accordingly hereunto set my hand this 30th day of June, 2021.
Incorporator | ||
By: | /s/ Daniel Sollof | |
Name: Daniel Sollof |
Exhibit 3.3
BYLAWS
OF
AIRSCULPT TECHNOLOGIES, INC.
a Delaware Corporation
ARTICLE I
STOCKHOLDERS
Section 1.1. Annual Meeting.
An annual meeting of the stockholders of Airsculpt Technologies, Inc., a Delaware corporation (the “Corporation”), for the election of directors to succeed those whose term expire and for the transaction of such other business as may properly come before the meeting shall be held at the place, if any, within or without the State of Delaware, on the date and at the time that the Board of Directors of the Corporation (the “Board of Directors”) shall each year fix. Unless stated otherwise in the notice of the annual meeting of the stockholders of the Corporation, such annual meeting shall be at the principal office of the Corporation.
Section 1.2. Advance Notice of Nominations and Proposals of Business.
(a) Nominations of persons for election to the Board of Directors and proposals for other business to be transacted by the stockholders at an annual meeting of stockholders may be made (i) pursuant to the Corporation’s notice with respect to such meeting (or any supplement thereto), (ii) by or at the direction of the Board of Directors or any committee thereof, or (iii) by any stockholder of record of the Corporation who (A) was a stockholder of record at the time of the giving of the notice contemplated in Section 1.2(b), (B) is entitled to vote at such meeting and (C) has complied with the notice procedures set forth in this Section 1.2. Subject to Section 1.2(i) and except as otherwise required by law, clause (iii) of this Section 1.2(a) shall be the exclusive means for a stockholder to make nominations or propose other business (other than nominations and proposals properly brought pursuant to applicable provisions of federal law, including the Securities Exchange Act of 1934, as amended (the “Act”) and the rules and regulations of the Securities and Exchange Commission the “SEC”) thereunder) before an annual meeting of stockholders.
(b) Except as otherwise required by law, for nominations or proposals to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of Section 1.2(a), (i) the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation with the information contemplated by Section 1.2(c) including, where applicable, delivery to the Corporation of timely and completed questionnaires as contemplated by Section 1.2(c), and (ii) the business must be a proper matter for stockholder action under the General Corporation Law of the State of Delaware (the “DGCL”). The notice requirements of this Section 1.2 shall be deemed satisfied by a stockholder with respect to business other than a nomination if the stockholder has notified the Corporation of his, her or its intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Act and such stockholder’s proposal has been included in a proxy statement prepared by the Corporation to solicit proxies for such annual meeting.
(c) To be timely for purposes of Section 1.2(b), a stockholder’s notice must be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation on a date (i) not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the anniversary date of the prior year’s annual meeting or (ii) if there was no annual meeting in the prior year or if the date of the current year’s annual meeting is more than 30 days before or after the anniversary date of the prior year’s annual meeting, on or before 10 days after the day on which the date of the current year’s annual meeting is first disclosed in a public announcement. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the delivery of such notice. Such notice from a stockholder must state (i) as to each nominee that the stockholder proposes for election or reelection as a director, (A) all information relating to such nominee that would be required to be disclosed in solicitations of proxies for the election of such nominee as a director pursuant to Regulation 14A under the Act and such nominee’s written consent to serve as a director if elected, and (B) a description of all direct and indirect compensation and other material monetary arrangements, agreements or understandings during the past three years, and any other material relationship, if any, between or concerning such stockholder, any Stockholder Associated Person (as defined below) or any of their respective affiliates or associates, on the one hand, and the proposed nominee or any of his or her affiliates or associates, on the other hand; (ii) as to each proposal that the stockholder seeks to bring before the meeting, a brief description of such proposal, the reasons for making the proposal at the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws of the Corporation, the language of the proposed amendment) and any material interest that the stockholder has in the proposal; and (iii) (A) the name and address of the stockholder giving the notice and the Stockholder Associated Persons, if any, on whose behalf the nomination or proposal is made, (B) the class (and, if applicable, series) and number of shares of stock of the Corporation that are, directly or indirectly, owned beneficially or of record by the stockholder or any Stockholder Associated Person, (C) any option, warrant, convertible security, stock appreciation right or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class (or, if applicable, series) of shares of stock of the Corporation or with a value derived in whole or in part from the value of any class (or, if applicable, series) of shares of stock of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (each, a “Derivative Instrument”) directly or indirectly owned beneficially or of record by such stockholder or any Stockholder Associated Person and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of stock of the Corporation of the stockholder or any Stockholder Associated Person, (D) any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder or any Stockholder Associated Person has a right to vote any securities of the Corporation, (E) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or any Stockholder Associated Person is a general partner or beneficially owns, directly or indirectly, an interest in a general partner, (F) any performance-related fees (other than an asset-based fee) that such stockholder or any Stockholder Associated Person is entitled to based on any increase or decrease in the value of the shares of stock of the Corporation or Derivative Instruments, (G) any other information relating to such stockholder or any Stockholder Associated Person, if any, required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Act and the rules and regulations of the SEC thereunder, (H) a representation that the stockholder is a holder of record of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (I) a certification as to whether or not the stockholder and all Stockholder Associated Persons, have complied with all applicable federal, state and other legal requirements in connection with the stockholder’s and each Stockholder Associated Person’s acquisition of shares of capital stock or other securities of the Corporation and the stockholder’s and each Stockholder Associated Person’s acts or omissions as a stockholder (or beneficial owner of securities) of the Corporation, and (J) whether either the stockholder intends to deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of the Corporation’s voting shares required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the Corporation’s voting shares reasonably believed by such stockholder to be sufficient to elect such nominee or nominees or otherwise to solicit proxies or votes from stockholders in support of such proposal or nomination. For purposes of these bylaws, a “Stockholder Associated Person” of any stockholder means (i) any “affiliate” or “associate” (as those terms are defined in Rule 12b-2 under the Act) of such stockholder, (ii) any beneficial owner of any capital stock or other securities of the Corporation owned of record or beneficially by such stockholder, (iii) any person directly or indirectly controlling, controlled by or under common control with any such Stockholder Associated Person referred to in clause (i) or (ii) above, and (iv) any person acting in concert in respect of any matter involving the Corporation or its securities with either such stockholder or any beneficial owner of any capital stock or other securities of the Corporation owned of record or beneficially by such stockholder. In addition, in order for a nomination to be properly brought before an annual or special meeting by a stockholder pursuant to clause (iii) of Section 1.2(a), any nominee proposed by a stockholder shall complete a questionnaire, in a form provided by the Corporation, and deliver a signed copy of such completed questionnaire to the Corporation within 10 days of the date that the Corporation makes available to the stockholder seeking to make such nomination or such nominee the form of such questionnaire. The Corporation may require any proposed nominee to furnish such other information as may be reasonably requested by the Corporation to determine the eligibility of the proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of the nominee. The information required to be included in a notice pursuant to this Section 1.2(c) shall be provided as of the date of such notice and shall be supplemented by the stockholder not later than 10 days after the record date for the determination of stockholders entitled to notice of the meeting to disclose any changes to such information as of the record date. The information required to be included in a notice pursuant to this Section 1.2(c) shall not include any ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is directed to prepare and submit the notice required by this Section 1.2(c) on behalf of a beneficial owner of the shares held of record by such broker, dealer, commercial bank, trust company or other nominee and who is not otherwise affiliated or associated with such beneficial owner.
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(d) Subject to the amended and restated certificate of incorporation of the Corporation (the “Certificate of Incorporation”), Section 1.2(i) and applicable law, only persons nominated in accordance with procedures stated in this Section 1.2 shall be eligible for election as and to serve as members of the Board of Directors and the only business that shall be conducted at an annual meeting of stockholders is the business that has been brought before the meeting in accordance with the procedures set forth in this Section 1.2. The chairman of the meeting shall have the power and the duty to determine whether a nomination or any proposal has been made according to the procedures stated in this Section 1.2 and, if any nomination or proposal does not comply with this Section 1.2, unless otherwise required by law, the nomination or proposal shall be disregarded.
(e) For purposes of this Section 1.2, “public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable news service or in a document publicly filed or furnished by the Corporation with the SEC pursuant to Section 13, 14 or 15(d) of the Act.
(f) Notwithstanding the foregoing provisions of this Section 1.2, a stockholder shall also comply with applicable requirements of the Act and the rules and regulations thereunder with respect to matters set forth in this Section 1.2. Nothing in this Section 1.2 shall affect any rights, if any, of stockholders to request inclusion of nominations or proposals in the Corporation’s proxy statement pursuant to applicable provisions of federal law, including the Act.
(g) Notwithstanding the foregoing provisions of this Section 1.2, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business or does not provide the information required by Section 1.2(c), including any required supplement thereto, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 1.2, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
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(h) Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or any committee thereof or (2) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 1.2 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting upon such election and who complies with the notice procedures set forth in this Section 1.2. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (b) of this Section 1.2 shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(i) All provisions of this Section 1.2 are subject to, and nothing in this Section 1.2 shall in any way limit the exercise, or the method or timing of the exercise of, the rights of any person granted by the Corporation to nominate directors, which rights may be exercised without compliance with the provisions of this Section 1.2.
Section 1.3. Special Meetings; Notice.
Special meetings of the stockholders of the Corporation may be called only in the manner set forth in the Certificate of Incorporation. Notice of every special meeting of the stockholders of the Corporation shall state the purpose or purposes of such meeting. Except as otherwise required by law, the business conducted at a special meeting of stockholders of the Corporation shall be limited exclusively to the business set forth in the Corporation’s notice of meeting, and the individual or group calling such meeting shall have exclusive authority to determine the business included in such notice.
Section 1.4. Notice of Meetings.
Notice of the place, if any, date and time of all meetings of stockholders of the Corporation, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting) and the means of remote communications, if any, by which stockholders and proxy holders may be deemed present and vote at such meeting, and, in the case of all special meetings of stockholders, the purpose or purposes of the meeting, shall be given, not less than 10 nor more than 60 days before the date on which such meeting is to be held, to each stockholder entitled to notice of the meeting.
The Corporation may postpone or cancel any previously called annual or special meeting of stockholders of the Corporation by making a public announcement (as defined in Section 1.2(e)) of such postponement or cancellation prior to the meeting. When a previously called annual or special meeting is postponed to another time, date or place, if any, notice of the place (if any), date and time of the postponed meeting, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting) and the means of remote communications, if any, by which stockholders and proxy holders may be deemed present and vote at such postponed meeting, shall be given in conformity with this Section 1.4 unless such meeting is postponed to a date that is not more than 60 days after the date that the initial notice of the meeting was provided in conformity with this Section 1.4.
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When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, thereof and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting, or if after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting the Board of Directors shall fix a new record date for notice of such adjourned meeting in conformity herewith and such notice shall be given to each stockholder of record entitled to vote at such adjourned meeting as of the record date for notice of such adjourned meeting. At any adjourned meeting, any business may be transacted that may have been transacted at the original meeting.
Section 1.5. Quorum.
At any meeting of the stockholders, the holders of shares of stock of the Corporation entitled to cast a majority of the total votes entitled to be cast by the holders of all outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (“Voting Stock”), present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number is required by applicable law or the Certificate of Incorporation. If a separate vote by one or more classes or series is required, the holders of shares entitled to cast a majority of the total votes entitled to be cast by the holders of the shares of the class or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting may adjourn the meeting to another place, if any, date and time.
Section 1.6. Organization.
The Chairman of the Board of Directors or, in his or her absence, the person whom the Board of Directors designates or, in the absence of that person or the failure of the Board of Directors to designate a person, the Chief Executive Officer of the Corporation or, in his or her absence, the person chosen by the holders of a majority of the shares of capital stock entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders of the Corporation and act as chairman of the meeting. In the absence of the Secretary or any Assistant Secretary of the Corporation, the secretary of the meeting shall be the person the chairman of the meeting appoints.
Section 1.7. Conduct of Business.
The chairman of any meeting of stockholders of the Corporation shall determine the order of business and the rules of procedure for the conduct of such meeting, including the manner of voting and the conduct of discussion as he or she determines to be in order. The chairman shall have the power to adjourn the meeting to another place, if any, date and time. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of the meeting shall have the right and authority to convene and (for any or no reason) to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The chairman of the meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a nomination or matter of business was not properly brought before the meeting and if such chairman should so determine, such chairman shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
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Section 1.8. Proxies; Inspectors.
(a) At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by applicable law.
(b) Prior to a meeting of the stockholders of the Corporation, the Corporation shall appoint one or more inspectors to act at a meeting of stockholders of the Corporation and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting may, and to the extent required by applicable law, shall, appoint one or more inspectors to act at the meeting. Each inspector, before beginning the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of inspectors. The inspectors shall have the duties prescribed by applicable law.
Section 1.9. Voting.
Except as otherwise required by the rules or regulations of any stock exchange applicable to the Corporation or pursuant to any law or regulation applicable to the Corporation or its securities or by the Certificate of Incorporation or these bylaws, all matters other than the election of directors shall be determined by a majority of the votes cast on the matter affirmatively or negatively. All elections of directors shall be determined by a plurality of the votes cast.
Section 1.10. Action by Written Consent.
Except as otherwise provided in the Certificate of Incorporation, stockholders may not take any action by written consent in lieu of a meeting of stockholders.
Section 1.11. Stock Ledger.
A complete list of stockholders of the Corporation entitled to vote at any meeting of stockholders of the Corporation, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in the name of such stockholder, shall be open to the examination of any such stockholder, for any purpose germane to a meeting of the stockholders of the Corporation, for a period of at least 10 days before the meeting (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting or (ii) during ordinary business hours at the principal place of business of the Corporation; provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the 10th day before such meeting date. If the meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time and place of the meeting during the whole time thereof and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.
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Except as otherwise provided by law, the stock ledger shall be the sole evidence of the identity of the stockholders entitled to vote at a meeting and the number of shares held by each stockholder.
ARTICLES II
BOARD OF DIRECTORS
Section 2.1. General Powers and Qualifications of Directors.
The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authorities these bylaws expressly confer upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by the DGCL or by the Certificate of Incorporation or by these bylaws required to be exercised or done by the stockholders. Directors need not be stockholders of the Corporation to be qualified for election or service as a director of the Corporation.
Section 2.2. Removal; Resignation.
The directors of the Corporation may be removed in accordance with the Certificate of Incorporation. Any director may resign at any time upon notice given in writing, including by electronic transmission, to the Corporation.
Section 2.3. Regular Meetings.
Regular meetings of the Board of Directors shall be held at the place (if any), on the date and at the time as shall have been established by the Board of Directors and publicized among all directors. A notice of a regular meeting, the date of which has been so publicized, shall not be required.
Section 2.4. Special Meetings.
Special meetings of the Board of Directors may be called by the Chief Executive Officer, the President or by two or more directors then in office, and shall be held at the place, if any, on the date and at the time as he, she or they shall fix. Notice of the place, if any, date and time of each special meeting shall be given to each director either (a) by mailing written notice thereof not less than five days before the meeting, or (b) by telephone, facsimile or other means of electronic transmission providing notice thereof not less than twenty-four hours before the meeting. Any and all business may be transacted at a special meeting of the Board of Directors.
Section 2.5. Quorum.
At any meeting of the Board of Directors, a majority of the total number of directors then in office shall constitute a quorum for all purposes. For an action of the Board of Directors taken at a meeting to be valid, directors that constitute a quorum must be present (as described in Section 2.6 below) at the time that the vote on such action is taken. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, if applicable, date or time, without further notice or waiver thereof.
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Section 2.6. Participation in Meetings.
Members of the Board of Directors, or of any committee thereof, may participate in a meeting of the Board of Directors or committee thereof by means of conference telephone, video conference, or other communications equipment by means of which all directors participating in the meeting can hear each other director, and such participation shall constitute presence in person at the meeting.
Section 2.7. Conduct of Business.
At any meeting of the Board of Directors, business shall be transacted in the order and manner that the Board of Directors may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, provided a quorum is present at the time such matter is acted upon, except as otherwise provided in the Certificate of Incorporation or these bylaws or required by applicable law. The Board of Directors or any committee thereof may take action without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings, or electronic transmission or electronic transmissions, are filed with the minutes of proceedings of the Board of Directors or any committee thereof. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 2.8. Compensation of Directors.
The Board of Directors shall be authorized to fix the compensation of directors. The directors of the Corporation shall be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be reimbursed a fixed sum for attendance at each meeting of the Board of Directors, paid an annual retainer or paid other compensation, including equity compensation, as the Board of Directors determines. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of committees shall have their expenses, if any, of attendance of each meeting of such committee reimbursed and may be paid compensation for attending committee meetings or being a member of a committee.
ARTICLE III
COMMITTEES
Section 3.1. Committees of the Board of Directors.
The Board of Directors may designate a chairman of the Board of Directors (or co-chairmen) (the “Chairman”). Additionally, the Board of Directors may designate committees of the Board of Directors, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board of Directors and shall, for those committees, appoint a director or directors to serve as the member or members, designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of any member of any committee and any alternate member in his or her place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member. All provisions of this Section 3.1 are subject to, and nothing in this Section 3.1 shall in any way limit the exercise, or method or timing of the exercise of, the rights of any person granted by the Corporation with respect to the existence, duties, composition or conduct of any committee of the Board of Directors.
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ARTICLE IV
OFFICERS
Section 4.1. Generally.
The officers of the Corporation shall be elected by the Board of Directors and may consist of a Chief Executive Officer, a President, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, a Chief Financial Officer, Treasurer, one or more Assistant Treasurers and such other officers and assistant officers as may be deemed necessary or desirable by the Board of Directors. At the discretion of the Board of Directors, the Chairman of the Board of Directors may have authority as an officer of the Corporation. In its discretion, the Board of Directors may choose not to fill any office for any period as it may deem advisable. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any number of offices may be held by the same person. The compensation of officers appointed by the Board of Directors shall be determined from time to time by the Board of Directors or a committee thereof or by the officers as may be designated by resolution of the Board of Directors.
Section 4.2. Chief Executive Officer.
Unless otherwise determined by the Board of Directors, the Chief Executive Officer shall have the powers and perform the duties incident to that position. Subject to the powers of the Board of Directors and the Chairman of the Board of Directors (if applicable), the Chief Executive Officer shall be in general and active charge of the entire business and affairs of the Corporation, and shall be its chief policy making officer. The Chief Executive Officer shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or provided in these bylaws. The Chief Executive Officer is authorized to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. The Chief Executive Officer shall have general supervision and direction of all of the other officers, employees and agents of the Corporation, subject in all cases to the orders and resolutions of the Board of Directors.
Section 4.3. President.
The President shall have the powers and duties delegated to him or her by the Board of Directors or the Chief Executive Officer.
Section 4.3. Vice Presidents.
Each Vice President shall have the powers and duties delegated to him or her by the Board of Directors, the Chief Executive Officer or the President. One Vice President may be designated by the Board of Directors to perform the duties and exercise the powers of the President in the event of the President’s absence or disability.
Section 4.3. Secretary and Assistant Secretaries.
The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings of the stockholders and the Board of Directors. He or she shall have charge of the corporate books and shall perform other duties as the Board of Directors may from time to time prescribe.
Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer, the President or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary.
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Section 4.4. Chief Financial Officer, Treasurer and Assistant Treasurers.
The Chief Financial Officer shall keep or cause to be kept the books of account of the Corporation in a thorough and proper manner and shall render statements of the financial affairs of the Corporation in such form and as often as required by the Board of Directors or the Chief Executive Officer or the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the Corporation. The Chief Financial Officer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors, the Chief Executive Officer or the President shall designate from time to time. The Chief Executive Officer or the President may direct the Treasurer or any Assistant Treasurer to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors, the Chief Executive Officer or the President shall designate from time to time.
Section 4.5. Delegation of Authority.
The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.
Section 4.6. Removal.
The Board of Directors may remove any officer of the Corporation at any time, with or without cause.
Section 4.7. Action with Respect to Securities of Other Companies.
Unless otherwise directed by the Board of Directors, the Chief Executive Officer, the President or any officer of the Corporation authorized by the Chief Executive Officer or the President, shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders or equityholders of, or with respect to any action of, stockholders or equityholders of any other entity in which the Corporation may hold securities and otherwise to exercise any and all rights and powers which the Corporation may possess by reason of its ownership of securities in such other entity.
ARTICLE V
STOCK
Section 5.1. Certificates of Stock.
Shares of the capital stock of the Corporation may be certificated or uncertificated, as provided in the DGCL. Stock certificates shall be signed by, or in the name of the Corporation by, (i) the Chairman of the Board of Directors (if any) or the vice-Chairman of the Board of Directors (if any), or the President or a Vice President, and (ii) the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, certifying the number of shares owned by such stockholder. Any signatures on a certificate may be by facsimile.
Section 5.2. Transfers of Stock.
Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation (within or without the State of Delaware) or by transfer agents designated to transfer shares of the stock of the Corporation.
Section 5.3. Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to regulations as the Board of Directors may establish concerning proof of the loss, theft or destruction and concerning the giving of a satisfactory bond or indemnity, if deemed appropriate.
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Section 5.4. Regulations.
The issue, transfer, conversion and registration of certificates of stock of the Corporation shall be governed by other regulations as the Board of Directors may establish.
Section 5.5. Record Date.
(a) In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall, unless otherwise required by law, not be more than 60 nor less than 10 days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which shall not be more than 60 days prior to such other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
ARTICLE VI
INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
Section 6.1. Indemnification.
The Corporation shall indemnify, defend and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (an “Indemnitee”) who was or is made, or is threatened to be made, a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or an officer of the Corporation or, while a director or an officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, member, trustee or agent of another corporation or of a partnership, joint venture, trust, nonprofit entity or other enterprise (including, but not limited to, service with respect to employee benefit plans) (any such entity, an “Other Entity”), against all liability and loss suffered (including, but not limited to, expenses (including, but not limited to, attorneys’ fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Indemnitee in connection with such Proceeding). Notwithstanding the preceding sentence, the Corporation shall be required to indemnify an Indemnitee in connection with a Proceeding (or part thereof) commenced by such Indemnitee only if the commencement of such Proceeding (or part thereof) by the Indemnitee was authorized by the Board of Directors or the Proceeding (or part thereof) relates to the enforcement of the Corporation’s obligations under this Section 6.1.
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Section 6.2. Advancement of Expenses.
The Corporation shall to the fullest extent not prohibited by applicable law pay, on an as-incurred basis, all expenses (including, but not limited to attorneys’ fees and expenses) incurred by an Indemnitee in defending any proceeding in advance of its final disposition. Such advancement shall be unconditional, unsecured and interest free and shall be made without regard to Indemnitee’s ability to repay any expenses advanced; provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an unsecured undertaking by the Indemnitee to repay all amounts advanced if it should be ultimately determined that the Indemnitee is not entitled to be indemnified under this Section 6 or otherwise.
Section 6.3. Claims.
If a claim for indemnification (following the final disposition of such proceeding) or advancement of expenses under this Section 6 is not paid in full within 60 days after a written claim therefor by the Indemnitee has been received by the Corporation, the Indemnitee may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the Indemnitee is not entitled to the requested indemnification or advancement of expenses under applicable law.
Section 6.4. Insurance.
The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, trustee, employee, member, trustee or agent of the Corporation, or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of an Other Entity, against any liability asserted against the person and incurred by the person in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Section 6 or the DGCL.
Section 6.5. Non-Exclusivity of Rights.
The rights conferred on any Indemnitee by this Section 6 are not exclusive of other rights arising under any bylaw, agreement, vote of directors or stockholders or otherwise, and shall inure to the benefit of the heirs and legal representatives of such Indemnitee.
Section 6.6. Amounts Received from an Other Entity.
Subject to Section 6.7, the Corporation’s obligation, if any, to indemnify or to advance expenses to any Indemnitee who was or is serving at the Corporation’s request as a director, officer, employee or agent of an Other Entity shall be reduced by any amount such Indemnitee may collect as indemnification or advancement of expenses from such Other Entity.
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Section 6.7. Indemnification Priority.
As between the Corporation and any other person (other than an entity directly or indirectly controlled by the Corporation) who provides indemnification to the Indemnitees for their service to, or on behalf of, the Corporation (collectively, the “Secondary Indemnitors”) (i) the Corporation shall be the full indemnitor of first resort in respect of indemnification or advancement of expenses in connection with any Jointly Indemnifiable Claims (as defined below), pursuant to and in accordance with the terms of this Section 6, irrespective of any right of indemnification, advancement of expenses or other right of recovery any Indemnitee may have from any Secondary Indemnitor or any right to insurance coverage that Indemnitee may have under any insurance policy issued to any Secondary Indemnitor (i.e., the Corporation’s obligations to such Indemnitees are primary and any obligation of any Secondary Indemnitor, or any insurer of any Secondary Indemnitor, to advance expenses or to provide indemnification or insurance coverage for the same loss or liability incurred by such Indemnitees is secondary to the Corporation’s obligations), (ii) the Corporation shall be required to advance the full amount of expenses incurred by any such Indemnitee and shall be liable for the full amount of all liability and loss suffered by such Indemnitee (including, but not limited to, expenses (including, but not limited to, attorneys’ fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Indemnitee in connection with such Proceeding), without regard to any rights any such Indemnitee may have against any Secondary Indemnitor or against any insurance carrier providing insurance coverage to Indemnitee under any insurance policy issued to a Secondary Indemnitor, and (iii) the Corporation irrevocably waives, relinquishes and releases each Secondary Indemnitor from any and all claims against such Secondary Indemnitor for contribution, subrogation or any other recovery of any kind in respect thereof. The Corporation shall indemnify each Secondary Indemnitor directly for any amounts that such Secondary Indemnitor pays as indemnification or advancement on behalf of any such Indemnitee and for which such Indemnitee may be entitled to indemnification from the Corporation in connection with Jointly Indemnifiable Claims. No right of indemnification, advancement of expenses or other right of recovery that an Indemnitee may have from any Secondary Indemnitor shall reduce or otherwise alter the rights of the Indemnitee or the obligations of the Corporation hereunder. No advancement or payment by any Secondary Indemnitor on behalf of any such Indemnitee with respect to any claim for which such Indemnitee has sought indemnification from the Corporation shall affect the foregoing and the Secondary Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Indemnitee against the Corporation. Each Indemnitee shall execute all papers reasonably required and shall do all things that may be reasonably necessary to secure the rights of such Indemnitee’s Secondary Indemnitors under this Section 6.7, including the execution of such documents as may be necessary to enable the Secondary Indemnitors effectively to bring suit to enforce such rights, including in the right of the Corporation. Each of the Secondary Indemnitors shall be third-party beneficiaries with respect to this Section 6.7, entitled to enforce this Section 6.7. As used in this Section 6.7, the term “Jointly Indemnifiable Claims” shall be broadly construed and shall include, without limitation, any action, suit, proceeding or other matter for which an Indemnitee shall be entitled to indemnification, reimbursement, advancement of expenses or insurance coverage from both a Secondary Indemnitor (or an insurance carrier providing insurance coverage to any Secondary Indemnitor) and the Corporation, whether pursuant to Delaware law (or other applicable law in the case of any Secondary Indemnitor), any agreement or certificate of incorporation, bylaws, partnership agreement, operating agreement, certificate of formation, certificate of limited partnership or other organizational or governing documents of the Corporation or the Secondary Indemnitors or any insurance policy providing insurance coverage to any Secondary Indemnitor, as applicable.
Section 6.8. Amendment or Repeal.
Any right to indemnification or to advancement of expenses of any Indemnitee arising hereunder shall not be eliminated or impaired by an amendment to or repeal of this Section 6 after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit, proceeding or other matter for which indemnification or advancement of expenses is sought.
Section 6.9. Other Indemnification and Advancement of Expenses.
This Section 6 shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Indemnitees when and as authorized by appropriate corporate action.
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Section 6.10. Reliance.
Indemnitees who after the date of the adoption of this Section 6 become or remain an Indemnitee described in Section 6.1 will be conclusively presumed to have relied on the rights to indemnity, advancement of expenses and other rights contained in this Section 6 in entering into or continuing the service. The rights to indemnification and to the advancement of expenses conferred in this Section 6 will apply to claims made against any Indemnitee described in Section 6.1 arising out of acts or omissions that occurred or occur either before or after the adoption of this Section 6 in respect of service as a director or officer of the corporation or other service described in Section 6.1.
Section 6.11. Successful Defense.
In the event that any proceeding to which an Indemnitee is a party is resolved in any manner other than by adverse judgment against the Indemnitee (including, without limitation, settlement of such proceeding with or without payment of money or other consideration) it shall be presumed that the Indemnitee has been successful on the merits or otherwise in such proceeding for purposes of Section 145(c) of the DGCL. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
ARTICLE VII
NOTICES
Section 7.1. Notices.
Except as otherwise provided herein or permitted by applicable law, notices to directors and stockholders shall be in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the Corporation. If mailed, notice to a stockholder of the Corporation shall be deemed given when deposited in the mail, postage prepaid, directed to a stockholder at such stockholder’s address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders of the Corporation may be given by electronic transmission in the manner provided in Section 232 of the DGCL.
Section 7.2. Waivers.
A written waiver of any notice, signed by a stockholder or director, or a waiver by electronic transmission by such person or entity, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person or entity. Neither the business nor the purpose of any meeting need be specified in the waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the sole purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Corporate Seal.
The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary of the Corporation. If and when so directed by the Board of Directors, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary, Assistant Treasurer or the Chief Financial Officer.
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Section 8.2. Reliance upon Books, Reports, and Records.
Each director and each member of any committee designated by the Board of Directors of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books and records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers, agents or employees, or committees of the Board of Directors so designated, or by any other person or entity as to matters which such director or committee member reasonably believes are within such other person’s or entity’s professional or expert competence and that has been selected with reasonable care by or on behalf of the Corporation.
Section 8.3. Fiscal Year.
The fiscal year of the Corporation shall be as fixed by the Board of Directors.
Section 8.4. Time Periods.
In applying any provision of these bylaws that requires that an act be done or not be done a specified number of days before an event or that an act be done during a specified number of days before an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.
ARTICLE IX
AMENDMENTS
These bylaws may be altered, amended or repealed in accordance with the Certificate of Incorporation and the DGCL.
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CERTIFICATION OF ADOPTION OF BYLAWS
The undersigned hereby certifies that:
1. | I am the Secretary of Airsculpt Technologies, Inc., a Delaware corporation (the “Corporation”); and |
2. | The foregoing Bylaws is a true and correct copy of the Bylaws of the Corporation, as duly adopted and approved by the Board of Directors of the Corporation, effective as of June 30, 2021. |
IN WITNESS WHEREOF, I have hereunder subscribed my name this 30th day of June, 2021.
/s/ Dennis Dean | |
Dennis Dean, Secretary |
Exhibit 10.6
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement (this “Agreement”) dated as of [____________], is between [____________] (the “Professional Company”), and EBS Enterprises, LLC, a Delaware limited liability company (the “Management Company”). The Professional Company and the Management Company are collectively referred to herein as the “Parties”.
RECITALS
A. The Professional Company is engaged in the provision of professional medical services (the “Practice”) at one or more locations in the State of [____________], and the Professional Company’s professional clinical staff hold all licenses and permits necessary to engage in the Practice in the State of [____________].
B. The Professional Company desires to engage the Management Company exclusively to provide and arrange non-professional management, administrative, advisory, and back-office services to support the Professional Company’s clinical operations.
C. Capitalized terms used but not otherwise defined in this Agreement will have the respective meanings set forth in Article VIII.
AGREEMENT
The Parties hereby agree as follows:
Article
I
ENGAGEMENT AND AUTHORITY
1.1 Engagement of the Management Company. On the terms of this Agreement, the Professional Company hereby engages the Management Company, and the Management Company hereby accepts engagement by the Professional Company, exclusively to provide and/or arrange for the provision of the Management Services described in Article II to the Professional Company. The Professional Company expressly acknowledges that the Management Company may delegate to or subcontract with third parties for the performance of certain Management Services. No provision of this Agreement will or is intended to limit the right, authority or ability of the Management Company or its affiliates to contract with or provide services to any other practice, physician or other Person.
1.2 Relationship of Parties. In performing their respective duties and obligations under this Agreement, the Parties are independent contractors. The Parties will not be deemed to be joint venturers, partners or employees of each other and no provision in this Agreement or any related agreement creates or is intended to create or result in any employment, franchise, partnership or joint venture relationship between the Parties. The Parties shall not treat, for federal or applicable state, local or non-U.S. income tax purposes, this agreement or any related agreements or arrangements as giving rise to a partnership between the Professional Company and/or one or more holders of equity interests in the Professional Company, on the one hand, and the Management Company or one or more direct or indirect holders of equity interests in the Management Company, on the other hand.
1.3 Conduct of Professional Practice. The Professional Company will solely and exclusively control the provision of professional clinical services, and the Management Company will neither have nor exercise any control or discretion over the methods by which the Clinical Professionals render professional clinical services nor their independent professional judgment. Nothing in this Agreement will be construed to alter or otherwise affect the legal, ethical, or professional relationships between and among the Professional Company, the Clinical Professionals and their patients, nor does anything in this Agreement abrogate any right, privilege, or obligation arising from or related to the physician-patient relationship. If any Management Service or other act required or requested to be performed by the Management Company under this Agreement is construed or deemed to constitute the practice of medicine under, or would otherwise violate, applicable Law, such requirement or request will be deemed to be waived and inapplicable by the Parties and will not be required of or performed by the Management Company.
1.4 Facilities. The Professional Company conducts the Practice at the location(s) identified on Exhibit A to this Agreement (each a “Facility” and collectively, the “Facilities”), as such Exhibit is amended from time to time by the Management Company to reflect changes in such locations. If the Professional Company intends to directly or indirectly add any location for the Practice, then (i) the Professional Company will give reasonable (but no less than ninety (90) days) prior written notice thereof to the Management Company and provide the Management Company with information regarding the location and proposed action and timing thereof, and other information regarding such location as reasonably requested by the Management Company, (ii) unless the Management Company gives notice to the contrary to the Professional Company, if and when added, such location will be deemed automatically to be included within the definition of the Practice and Facilities and the scope of the Management Company’s engagement under this Agreement, and (iii) Exhibit A will be deemed automatically amended to reflect the addition, deletion or relocation, as applicable, of such Facility; provided that the Management Company may update and amend Exhibit A from time to time as appropriate to reflect changes in the Facilities’ locations after the date hereof.
Article
II
MANAGEMENT SERVICES
2.1 General Authority. Except to the extent prohibited by applicable Law regarding the practice of medicine and subject to the limitations set forth in this Agreement, the Management Company will provide or arrange for the provision of non-professional management, business, administrative, advisory and back-office services to support the Professional Company’s clinical operations, including the services set forth in this Article II (the “Management Services”), and the Management Company will be the Professional Company’s exclusive provider of Management Services. The foregoing notwithstanding, the Management Company will not provide any service that constitutes the practice of medicine under applicable Law or the provision of professional medical services in violation of applicable Law. The Professional Company expressly authorizes the Management Company to perform the Management Services in the manner that the Management Company deems reasonably appropriate to meet the day-to-day business needs of the Practice, including the performance of certain business office functions at locations other than the Facilities.
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2.2 Billing, Collection and Disbursements.
(a) Authorization. The Professional Company hereby authorizes the Management Company (and its subcontractors and designees) to bill and collect for all clinical services rendered by or on behalf of the Professional Company and all other amounts payable to the Professional Company, including all amounts due for all services furnished by or under the supervision of the Clinical Professionals acting for or on behalf of the Professional Company. To facilitate such billing and collection services, the Professional Company will cause the Clinical Professionals to endorse and deliver to the Professional Company promptly all payments received by them in respect of any services rendered and products sold by or on behalf of the Professional Company. The Professional Company, in accordance with applicable Law, hereby grants to the Management Company an exclusive, special power of attorney and appoints the Management Company as an exclusive and lawful agent and attorney-in-fact to:
(i) submit bills and claims for reimbursement to patients and Third-Party Payors, in the Professional Company’s name and on the Professional Company’s behalf, for the payment, reimbursement, or indemnification of services rendered and products provided to patients by or on behalf of the Professional Company;
(ii) collect all receivables for services rendered and products provided to the Professional Company’s patients by or on behalf of the Professional Company and administer the deposit of all collected amounts into Revenue Accounts;
(iii) collect all cash payments to the Professional Company (including patient co-payments, co-insurance, and deductibles and accounts receivable) for deposit into a Revenue Account;
(iv) make demand with respect to, settle, compromise, and adjust any claims and to coordinate with collections agencies to commence any suit, action or proceeding to collect upon such claims;
(v) take possession of and endorse, in the name of the Professional Company or any of the Clinical Professionals, any negotiable instrument received as payment for any services rendered or products provided by or on behalf of the Professional Company;
(vi) transfer from the Revenue Accounts and Operating Accounts, to an account designated by the Management Company amounts sufficient to pay all outstanding Management Fees, expense reimbursements, and other amounts due to the Management Company under this Agreement or the Deficit Funding Loan Agreement; and
(vii) sign negotiable instruments on the Professional Company’s behalf and to make withdrawals from the Revenue Accounts and the Operating Account to pay the Professional Company’s expenses, including outstanding Management Fees, expense reimbursements, and other amounts due to the Management Company or its Affiliates under this Agreement, the Deficit Funding Loan Agreement or otherwise, and as otherwise requested by the Professional Company.
(b) Bank Documentation. Promptly upon the Management Company’s request, the Professional Company will execute and deliver to the Management Company for further delivery to any financial institution at which any Operating Account or Revenue Account is maintained, such additional documents and instruments as may be necessary to evidence the power of attorney granted to the Management Company by the Professional Company pursuant to Section 2.2(a). So long as the Management Company has power of attorney pursuant to Section 2.2(a), the Professional Company will not take any action that interferes with the transfer of funds to the Operating Accounts from the Revenue Accounts, nor will the Professional Company or its agents remove, withdraw, or authorize the removal or withdrawal of any funds from the Revenue Accounts for any purpose except to accomplish the transfer of funds described in Section 2.2(a)(vi) and Section 2.2(a)(vii).
(c) Disbursements. The Management Company will disburse for the benefit of the Professional Company payments of expenses, fees and other amounts payable by on behalf of the Professional Company with respect to the Practice, if and to the extent the Professional Company makes funds available to the Management Company therefor (including through the Deficit Funding Loan Agreement). The Professional Company expressly authorizes the Management Company to make payment to itself or its Affiliates of any amount due to it or any of them by the Professional Company under this Agreement, the Deficit Funding Loan Agreement or otherwise.
(d) Power of Attorney. The power of attorney granted under this Section 2.2 expires on the last calendar day of the Term; provided that the power of attorney will continue in effect until the first (1st) anniversary of the end of the Term for purposes of submitting claims for and collecting receivables arising from services rendered and products provided by or on behalf of the Professional Company before the end of the Term.
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2.3 Accounts.
(a) Professional Company Accounts. The Professional Company hereby authorizes the Management Company or its representatives to establish, in the Professional Company’s name and/or for the Professional Company’s benefit, certain bank accounts, including one (1) or more designated herein as the “Revenue Account(s)” and one or more designated herein as the “Operating Account(s)”. To the extent required by applicable Law, each Revenue Account will be in the Professional Company’s name, and the Professional Company will have control over each Revenue Account. To facilitate the provision by the Management Company of revenue cycle management, disbursement and other Management Services under this Agreement for the benefit of the Professional Company, each Operating Account will be in the Management Company’s name.
(b) Revenue Accounts. All payments due in respect of services rendered and products provided by or on behalf of the Professional Company, and any other amounts payable to the Professional Company, will be directed to the Revenue Accounts. The Professional Company will enter into an agreement with a financial institution chosen by the Parties to (i) establish and service the Revenue Accounts subject to the requirements of this Agreement (including the power of attorney granted under Section 2.2) and (ii) sweep all funds from the Revenue Accounts into the Operating Accounts on a daily basis. Except in accordance with Section 5.2(b), any modification or revocation of such authorization and instructions by the Professional Company without the Management Company’s prior written consent will be in material breach of this Agreement. Except to the extent prohibited by applicable Law, the Professional Company, the Management Company, and the financial institution maintaining the Revenue Accounts will also enter into a deposit account control agreement pursuant to which such financial institution agrees to follow the Management Company’s instructions with respect to the Revenue Accounts without requiring the Professional Company’s further consent.
(c) Operating Accounts. The Management Company will use the Operating Accounts to receive funds from the Revenue Accounts and pay Professional Company expenses, amounts due under this Agreement, the Deficit Funding Loan Agreement or otherwise, and such other reimbursable expenses as the Management Company may pay on the Professional Company’s behalf. Such persons as the Management Company may designate from time to time will be authorized signatories on the Operating Accounts (“Authorized Signatories”). Except in connection with a termination of this Agreement in accordance with Section 5.2(b), any modification or revocation of such authorization and instructions by the Professional Company without the Management Company’s prior written consent will be in material breach of this Agreement.
(d) Payroll Accounts. The Management Company may, for the benefit of the Professional Company, transfer funds from the Operating Accounts to applicable payroll accounts for purposes of funding the Professional Company’s payroll needs.
(e) Accounts Generally. Should the Professional Company, in consultation with the Management Company, decide to open any new bank or other account, such account will be designated by the Management Company as a Revenue Account and subject to the corresponding requirements of Section 2.3(b). To facilitate the provision by Management Company of revenue cycle management, disbursement and other Management Services under this Agreement for the benefit of the Professional Company, the Professional Company will deposit and hold all Professional Company funds in a Revenue Account, subject to the transfer of such funds to the Operating Accounts in accordance with Section 2.3(b).
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2.4 Intellectual Property. The Management Company will permit the Professional Company to use, on a limited, non-exclusive, revocable and non-transferable basis, the following intellectual property assets (the “Intellectual Property”) during the Term solely in connection with the Practice and the Management Company’s provision of the Management Services:
(a) the Management Company’s applicable software systems and programs, as such exist and are replaced or updated from time to time, and
(b) applicable logos, trademarks, trade names, service marks, manuals and proprietary documentation developed by or for or used by the Management Company in the provision of the Management Services and support for the Professional Company’s clinical operations.
All proprietary rights, ownership, and goodwill in the Intellectual Property will inure and belong to the Management Company. Neither the license granted under this Section 2.4 nor the use by the Professional Company and its agents of the Intellectual Property creates any interest or right, express or implied, in the Intellectual Property with respect to the Professional Company beyond such limited license and right to use. The Professional Company hereby covenants not to assert any claim to any Intellectual Property and will cooperate fully with the Management Company in protecting all rights and interests of the Management Company and its Affiliates in and to the Intellectual Property. The Professional Company will not use or permit the use any of the Intellectual Property except in connection with the Practice during the Term nor in any manner that may contravene applicable Law or impair the validity or enforceability of any Intellectual Property. Concurrently with the execution and delivery of this Agreement, the Professional Company will enter into a separate Intellectual Property Use Agreement with the Management Company with respect to the Intellectual Property.
2.5 Facility Space. The Management Company will provide, lease, sublease or otherwise arrange for office space for the Facilities, and make such space available to the Professional Company for use in the provision of Practice Services by the Professional Company, subject to the terms and conditions of the applicable lease or sublease, for the lesser of the term of this Agreement or the term of the applicable lease or sublease. The Management Company will provide or arrange for telephone, utilities, Internet service, janitorial services and repairs reasonably required for each Facility.
2.6 Non-Medical Equipment, Furniture and Furnishings. The Management Company will provide or arrange for information technology, telephones, computers, software, office equipment and other non-medical business equipment, furniture and furnishings for the Practice. Such non-medical business equipment, furniture and furnishings, including replacements thereof or additions thereto, will be and remain (as between the parties hereto) the sole property of the Management Company.
2.7 Medical Equipment and Instruments. The Management Company will provide or arrange for medical equipment and instruments for the Practice. Such equipment and instruments, including replacements thereof or additions thereto, will be and will remain the sole property (as between the Parties) of the Management Company. The Management Company will use reasonable efforts to arrange for such medical equipment and instruments to be maintained in good working order and repair.
2.8 Supplies. The Management Company will provide or arrange for the provision of office and clinical supplies for the Practice.
2.9 Non-Clinical and Technical Personnel. The Management Company will provide or arrange for clerical, reception, administrative and other personnel (other than Clinical Professionals) for the Practice. The Management Company will be responsible for recruiting, training, supervising, hiring and firing such personnel; provided, however, that, to the extent required by applicable Law or Third-Party Payors, the Professional Company and its Clinical Professionals will maintain and be responsible for the training and supervision of such personnel.
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2.10 Assistance in Recruitment of Clinical Professionals. The Management Company will assist the Professional Company in recruiting potential Clinical Professionals to provide professional services on behalf of the Professional Company, subject to Section 3.2, including carrying out administrative functions such as advertising for and identifying potential candidates, checking credentials and arranging and scheduling interviews.
2.11 Marketing, Advertising and Public Relations. Subject to any limitation of applicable Law, the Management Company will advise and assist the Professional Company with, marketing, advertising and public relations services for the Practice.
2.12 Bookkeeping and Accounting Services. The Management Company will provide or arrange for the provision to the Professional Company of bookkeeping and accounting services for the Practice, including maintaining business records, implementing accounting procedures and preparing financial and management reports.
2.13 Human Resources Services. The Management Company will provide or arrange for payroll and other human resources services for the Practice. The Professional Company will provide the Management Company in a timely manner with all complete and accurate information and documentation necessary for the Management Company to provide or arrange for payroll services hereunder.
2.14 Compliance. The Management Company will advise and assist the Professional Company in taking actions reasonably necessary to help ensure that the operations of the Practice comply with applicable Law.
2.15 Practice Licenses, Registrations, Registrations and Accreditations. The Management Company will advise and assist the Professional Company in obtaining and maintaining certifications, accreditations and licenses, registrations, permits and other government authorizations for the Practice.
2.16 Contract Negotiation. To the extent permitted by applicable Law, the Management Company will advise and assist in the negotiation and administration of, on the Professional Company’s behalf, payor and other contracts, agreements and arrangements for the Practice.
2.17 Information Management and Technology Services. The Management Company will provide or arrange for information management and technology services for the Practice, including technology for patient scheduling and the storage and maintenance of files and records relating to the operation of the Practice.
2.18 Strategic Planning and Assistance. The Management Company will provide advice and assistance in strategic planning with respect to the Professional Company and the Practice.
2.19 Insurance. The Management Company will provide advice and assistance in procuring and continuing insurance coverages for the Practice.
2.20 Professional Advisors. The Management Company will assist and advise the Professional Company in obtaining legal, accounting and similar professional services for the Practice.
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2.21 Services the Management Company May Not Provide. The Management Company will not provide any of the following services to the Professional Company:
(a) assuming responsibility for the care of patients;
(b) engaging in any other activity that constitutes the practice of medicine under applicable Law or that would require the Management Company or its equityholders to have professional licensure under applicable Law regarding the practice of medicine; or
(c) providing the Professional Company or its equityholder(s) with any unlawful inducement or remuneration in exchange for recommending to patients, or referring patients for, any services.
Article
III
GENERAL OBLIGATIONS
3.1 Duty to Cooperate. The Parties acknowledge that cooperation by the Professional Company and its equityholders is critical to the performance of the Management Company’s duties and obligations under this Agreement. Accordingly, the Professional Company and its equityholders shall cooperate with the Management Company in, and will not prevent the Management Company from, providing or causing to be provided Management Services in accordance with this Agreement, and the Professional Company will, from time to time, execute and deliver any further documents, instruments and other assurances, and will take any other action consistent with the terms of this Agreement and applicable Law, that may reasonably be requested by the Management Company for purposes of effectuating this Agreement.
3.2 Clinical Professionals. The Professional Company will employ or engage all Clinical Professionals necessary to conduct, manage, and operate in a proper and efficient manner the Practice at the Facilities, and is responsible for employing or engaging, scheduling and credentialing, a sufficient number of Clinical Professionals to assure adequate clinical staffing for the Practice and Facilities. The Professional Company will also be responsible for all compensation, benefits, taxes and contributions with respect to Clinical Professionals, and will ensure that each Clinical Professional maintains (i) an unrestricted license to practice medicine or other applicable profession in the state or jurisdiction in which such Clinical Professional provides professional services on behalf of the Professional Company, and other licenses, permits, certifications, registrations or other authorizations as may be required for such Clinical Professional’s performance of such services, (ii) his or her professional skills through requisite continuing education and training, and (iii) eligibility for insurance under the professional liability policy or policies carried by or on behalf of the Professional Company. The Professional Company will further be responsible for ensuring that Clinical Professionals perform Practice Services in accordance with applicable Law and prevailing standards of care.
3.3 Business Associate Provisions. The Parties acknowledge and agree that the Professional Company is a “covered entity” (as defined in HIPAA) and the Management Company is a “business associate” (as defined under HIPAA) of the Professional Company when the Management Company provides services to the Professional Company involving “protected health information” (as defined under HIPAA) pursuant to this Agreement. Concurrently herewith, the Management Company and the Professional Company are entering into a Business Associate Agreement in substantially the form and substance of Exhibit B.
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3.4 Other Responsibilities. The Professional Company will be responsible for:
(a) (i) implementing and maintaining utilization review and quality assurance guidelines (consistent with guidelines imposed by applicable third parties), (ii) supervising and ensuring each Clinical Professional’s submission to the Professional Company of complete, accurate and timely medical records, patient charts and documentation for coding and billing services provided in the Practice, in compliance with applicable Law and Third-Party Payor requirements, (iii) supervising the taking of corrective action by Clinical Professionals when Clinical Professionals do not satisfy applicable guidelines, standards, policies, procedures or directives, (iv) credentialing of Clinical Professionals for the performance of professional services and specific procedures, and ensuring that each Clinical Professional procures and maintains all provider numbers and other credentials necessary to obtain payment or reimbursement for professional services, (v) handling impaired Clinical Professionals, and (vi) overseeing, developing, maintaining and implementing policies of a purely clinical nature (including medical records documentation, clinical communications with patients, and the determination of resources to be used for particular patients); and
(b) ensuring that (i) it prepares and files with the appropriate governmental authority all applicable annual reports and similar documentation, and (ii) that it and the Facilities and Clinical Professionals have all licenses, permits, certificates, registrations, certifications and authorizations as are necessary or appropriate to operate the Practice and offer professional services under applicable Law.
3.5 Billing Information. The Professional Company will promptly provide the Management Company with all billing information requested by the Management Company to enable the Management Company or its subcontractor or other designee to bill and collect fees, charges and reimbursements on behalf of the Professional Company. The Professional Company will procure any consents to assignments and other approvals and take any other action reasonably necessary to enable the Management Company or its subcontractor or other designee to obtain payment or reimbursement from Third-Party Payors and/or patients.
3.6 Notice of Certain Events. The Professional Company will give immediate written notice, together with all relevant documentation and a summary of relevant facts and circumstances, to the Management Company of any breach or alleged breach by the Professional Company of HIPAA or other laws regulating the privacy and/or security of individually identifiable health information or any disciplinary, malpractice, enforcement, revocation or other proceedings, inquiries, subpoenas, civil investigative demands, investigations or other actions initiated against or involving the Professional Company or any Clinical Professionals. In addition, if (during the Term or thereafter) the Professional Company receives notice of, or a request to disclose books, documents or records for, an audit, investigation or other review or any action by any Third-Party Payor or governmental authority with respect to this Agreement or any billing, reimbursement, payment, coding or provision of services or products that occurred during the Term, the Professional Company will promptly notify the Management Company in writing of the nature and scope thereof and will make available to the Management Company, upon request, all such books, documents or records.
3.7 Use of Facility Locations and Equipment. The Professional Company will not use any Facility, office space, equipment, goods, supplies, software, or services provided pursuant to this Agreement or provided pursuant to any lease, sublease or license by the Management Company, for any purpose other than the provision of professional services in the Practice. The Professional Company will comply with all applicable Law and contractual requirements governing and regulating the use of such Facilities, office space, equipment, goods, supplies, software and services.
3.8 Regulatory Matters.
(a) The Professional Company and the Clinical Professionals are free, in their sole discretion, to exercise their professional clinical judgment in the course of treating patients, and nothing in this Agreement permits the Management Company to control or impermissibly influence the professional clinical judgment of the Professional Company or any Clinical Professional.
(b) The Professional Company agrees to comply with (i) all Laws applicable to the Professional Company and all Orders by which the Professional Company is bound or to which the Professional Company is subject (including Laws and Orders relating to the practice of medicine, institutional and professional licensure, pharmacology and the securing, administering, and dispensing of drugs, devices, medicines, and controlled substances, medical documentation, medical record retention, laboratory services, unprofessional conduct, fee-splitting, referrals, billing and submission of false or fraudulent claims, claims processing, quality, safety, medical necessity, medical privacy and security, patient confidentiality and informed consent, and the hiring of employees or acquisition of services or supplies from Persons excluded from participation in any Federal Health Care Program) and (ii) the requirements of any insurance company insuring the Professional Company or the Management Company against liability for injury or accident in or on the premises of the Professional Company or the Practice.
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3.9 Books and Records. The Professional Company will retain and provide the Management Company with full and unrestricted access to its books and records (including work papers in the possession of its accountants) with respect to all transactions and the Professional Company’s financial condition, assets, liabilities, operations and cash flows.
Article
IV
COMPENSATION OF THE MANAGEMENT COMPANY AND DEFICIT FUNDING
4.1 Management Fee. The Professional Company will pay the Management Company the fee set forth in Exhibit C (collectively, the “Management Fee”) in consideration of the Management Services rendered by the Management Company. To the extent that any of the Management Services are subject to any applicable sales and use taxes, the Professional Company agrees to pay in addition to the payment of the Management Fees, the applicable sales and use taxes owing in respect of such Management Services.
(a) The Parties have determined the Management Fee to be equal to the fair market value of the Management Services, without consideration of the proximity of the Professional Company to any referral sources or the volume or value of any referrals from the Management Company or any of its Affiliates to the Professional Company or from the Professional Company to the Management Company or any of its Affiliates, that is reimbursed under any government or private health care payment or insurance program or other payor. The Management Fee is not, and is not intended to constitute, an illegal fee-splitting or impermissible profit-sharing arrangement in violation of applicable Law.
(b) Payment of the Management Fee is not conditioned upon a requirement that the Professional Company make referrals to, be in a position to make or influence referrals to, or otherwise generate business for the Management Company or any of its Affiliates or a requirement that the Management Company or any of its Affiliates make referrals to, be in a position to make or influence referrals to, or otherwise generate business for the Professional Company. The Management Fee does not include any impermissible discount, rebate, kickback, or other reduction in charge.
(c) Remittances to the Professional Company of monies collected will be made net of that portion of the Management Fee then due and owing to the Management Company pursuant to this Agreement. The Professional Company expressly authorizes the Management Company to make withdrawals or payments to itself from time to time of the Management Fee and any other amounts due or payable to the Management Company as the Management Fee or such other amounts accrue or become due or payable, from any funds made available by or held on behalf of the Professional Company or otherwise, without any notice to or further authorization from the Professional Company. The Professional Company will not be entitled to set-off or reduction in the Management Fee or other amounts because of a breach or default under this Agreement by the Management Company or otherwise.
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4.2 Expense Reimbursement. In addition to the Management Fee, the Professional Company will reimburse the Management Company as incurred for all fees, costs and expenses incurred by the Management Company for or on behalf of the Professional Company in connection with the provision of the Management Services, including (i) costs and expenses relating to the acquisition, lease, provision, maintenance, refurbishment and replacement of clinical office locations, equipment, consumables and disposables, (ii) salaries, wages, compensation, bonuses and benefits, of employees and independent contractors of the Management Company providing or arranging for Management Services to or on behalf of the Professional Company, (iii) costs and expenses incurred by or on behalf of the Management Company in obtaining or retaining the services of any specialist, consultant, professional or vendor to provide services relating to the Practice or relating to the Management Company’s duties under this Agreement, (iv) property and intangible taxes assessed against the equipment, goods and supplies provided or arranged for by the Management Company hereunder, (v) liability and other insurance, (vi) benefit plans, (vii) a reasonable allocation of the Management Company’s corporate overhead and (viii) professional dues and license fees, continuing education, and other costs, fees and expenses incurred on behalf of the Professional Company. Remittances to the Professional Company of monies collected will be made net of amounts for which the Management Company is then due to reimbursement from the Professional Company pursuant to this Agreement.
4.3 Failure to Pay. The Professional Company’s failure to pay any portion of the Management Fee or reimbursable expenses when due will be a material breach of this Agreement.
4.4 Deficit Funding Loan Agreement. If the Professional Company does not have sufficient cash to pay for its liabilities or financial obligations (including any portion of the Management Fee or reimbursable expenses owed to the Management Company hereunder), then the Management Company may, in its sole discretion, loan to the Professional Company upon request funds to enable the Professional Company to pay its liabilities and meet its financial obligations (“Advances”). Funded Advances will be added to the amounts owed by the Professional Company to the Management Company pursuant to that certain Deficit Funding Loan Agreement of even date herewith (“Deficit Funding Loan Agreement”) between the Parties and will bear interest as set forth in the Deficit Funding Loan Agreement. The Professional Company will repay funded Advances in accordance with the terms of the Deficit Funding Loan Agreement or any related promissory note.
Article
V
TERM AND TERMINATION
5.1 Initial Term; Automatic Renewals. The initial term of this Agreement begins on the date of this Agreement and ends on the tenth (10th) anniversary of the date of this Agreement, subject to earlier termination in accordance with Section 5.2 (the “Initial Term” and, together with all Renewal Terms, the “Term”). Upon expiration of the Initial Term (unless earlier terminated in accordance with Section 5.2), this Agreement will automatically renew for successive five (5) year terms (each a “Renewal Term”) unless (i) either Party delivers written notice to the other Party of its intent not to renew this Agreement at least twelve (12) months before the end of the Term or then Renewal Term, as applicable, or (ii) this Agreement is otherwise terminated in accordance with Section 5.2.
5.2 Termination. This Agreement may be terminated during the Term:
(a) by mutual, signed written agreement of the Parties;
(b) by the Professional Company with written notice to the Management Company if the Management Company materially breaches this Agreement and fails to cure such breach within one hundred eighty (180) calendar days after receiving written notice from the Professional Company describing in reasonable detail the nature of the breach (which written notice must be given within sixty (60) days following the date on which the Professional Company obtains knowledge of such material breach); provided, that, if such material breach is not reasonably capable of being cured or remedied within such one hundred eighty (180) day period due to the inherent nature of the breach, and the Management Company commences such cure within such period and acts diligently to cure such breach, then the Management Company will have such additional period of time as may be reasonably necessary to effect and complete such cure or remedy, and the Professional Company may not terminate this Agreement pursuant to this Section 5.2(b) with respect to such breach during such period or if such breach is cured during such period. If the Parties disagree as to the existence of a breach which gives rise to termination as provided in this Section 5.2(b) or whether such breach has been cured, then the Parties will resolve the disagreement in accordance with Section 9.16, and this Agreement will not be terminated pursuant to this Section 5.2(a) with respect to such material breach or alleged material breach during the period of such dispute resolution, and the Parties will continue to perform under this Agreement during such period;
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(c) by the Management Company immediately and without notice if (i) the Professional Company materially breaches this Agreement and fails to cure such breach within thirty (30) calendar days (ten (10) days with respect to the payment of money) after receiving written notice from the Management Company describing in reasonable detail the nature of the breach, (ii) the Professional Company admits in writing its inability to pay its debts generally when due, applies for or consents to the appointment of a trustee, receiver, or liquidator of all or substantially all of its assets, files a petition in voluntary bankruptcy, or makes an assignment for the benefit of creditors, or otherwise, voluntarily or involuntarily, takes or suffers action taken under any applicable Law for the benefit of debtors, except for the filing of a petition in involuntary bankruptcy against the Professional Company that is dismissed within sixty (60) calendar days thereafter, or (iii) the Professional Company or any of its equityholders is excluded, debarred, terminated or suspended from participation in any Federal Health Care Program, is indicted for, convicted of or pleads guilty or no contest to any crime punishable by imprisonment or engages in any other conduct that could reasonably be expected to impair the reputation of the Practice or the Management Company; and/or
(d) by the Management Company upon at least thirty (30) days prior written notice to the Professional Company.
5.3 Effect of Expiration or Termination.
(a) The expiration or termination of this Agreement in accordance with this Article V will automatically relieve and release each Party from the executory portion of such Party’s obligations under this Agreement; provided, however, that all obligations expressly extended beyond the Term by the terms of this Agreement (including this Article V, Article VI, Article VII, and Article IX) will survive the expiration or termination of this Agreement, and expiration or termination of this Agreement for any reason will not affect any liability or obligation that has accrued to any party hereto prior to such expiration or termination, and will not constitute an election of remedies by the Party electing to not renew or terminate this Agreement nor a waiver by any Party of any right, benefit, remedy or relief to which such Party may be entitled at Law, in equity or under this Agreement.
(b) After the expiration or termination of this Agreement, to effect an orderly wind up of the contractual relationship between the Parties:
(i) the Professional Company will pay to the Management Company promptly (but in any event within ten (10) calendar days) all Management Fees earned or accrued under this Agreement through the termination date, reimburse all reimbursable expenses incurred before the termination date and repay all Advances funded before the termination or expiration date; provided, however, that if the Management Company terminates this Agreement pursuant to Section 5.2(c) or the Professional Company terminates this Agreement in breach of this Agreement, then such payment will include the immediate payment of all Management Fees owed to the Management Company for the remainder of the Term;
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(ii) the Professional Company will immediately vacate each Facility and surrender and deliver each Facility to the Management Company, together with all improvements, equipment, furnishings, and other assets and property therein provided or made available by Management Company, in the same order and condition as when received (ordinary wear and tear excepted);
(iii) the Parties will cooperate in good faith to ensure the appropriate billing and collections for services rendered and products provided by the Clinical Professionals before the expiration or termination of this Agreement, with all such billings and collections and the use of proceeds therefrom to be billed, collected, deposited, processed and maintained by the Management Company as specified in Section 2.2 and Section 2.3;
(iv) the Professional Company will, and will cause its Affiliates, directors, managers, officers, equityholders, employees, agents, successors, and permitted assigns to, immediately cease using the Intellectual Property and will return to the Management Company all written and other tangible forms, and destroy, delete or erase all electronic forms, of Confidential Information as required under Section 6.2 promptly (but in any event within ten (10) calendar days) after the expiration or termination of this Agreement; and
(v) the Professional Company will retain and provide the Management Company with full and unrestricted access to its books and records (including work papers in the possession of its accountants) with respect to all transactions and the Professional Company’s financial condition, assets, liabilities, operations and cash flows during the Term.
(c) Upon any termination or expiration of this Agreement, subject to applicable Law (including HIPAA), the Professional Company will provide the Management Company with access, at reasonable times and upon reasonable request, to the patient records of the Professional Company that are in the Professional Company’s possession until the applicable statute of limitations for any claim that may be asserted against the Management Company arising from its provision of Management Services during the Term or the clinical operations of the Professional Company during the Term. To the extent permitted by applicable Law (including HIPAA), the Management Company may copy and retain such records of the Professional Company and use such copies for its own business purposes.
(d) The Management Company may, in its sole discretion, contract with any physician, professional entity, or other Person that operates or intends to operate a medical practice or facility in one or more of the locations or service areas in which the Professional Company is or was operating, and such Person may solicit and employ or engage any Clinical Professional and may solicit and provide care for and services to patients treated or formerly treated by or on behalf of the Professional Company (irrespective of any notice requirements or restrictive covenants with the Professional Company, which shall not apply to any such solicitation, employment, engagement or provision). Upon the request of any such Person or patient, the Management Company may, on behalf of the Professional Company, transfer to such Person for treatment purposes copies of the medical records and patient charts of any patient or former patient of the Professional Company who becomes a patient of such Person; provided, that, to the extent required by HIPAA, the applicable patient shall have authorized such transfer to such other Person. None of the foregoing actions will be deemed or construed to be tortious or in breach of any provision of this Agreement or any other agreement between the Parties or the equityholders thereof, nor any agreement between the Professional Company and any Clinical Professional.
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Article
VI
RESTRICTIVE COVENANTS
6.1 Restrictive Covenants. In the course of receiving the Management Services, the Professional Company will have access to sensitive and valuable trade secrets, proprietary information and other confidential information, including management reports, marketing studies, marketing plans, business plans, financial statements, feasibility studies, financial, accounting and statistical data, price and cost information, customer lists, employee information, forms, manuals, handbooks, contracts, policies and procedures, internal memoranda, reports, budgets and other materials, information or records of a proprietary or confidential nature (collectively, “Confidential Information”) of the Company Group, which constitute valuable business assets of the Company Group, and the use, application, or disclosure of such Confidential Information will cause substantial and possibly irreparable damage to the business and asset value of the Company Group. Therefore, as an inducement for the Management Company to enter into this Agreement and to protect the Confidential Information and other business interests of the Company Group, the Professional Company agrees to be bound by the restrictive covenants contained in this Article VI.
6.2 Confidentiality.
(a) During the Term and thereafter, the Professional Company will keep confidential and not disclose to any other Person or use for its own benefit or the benefit of any other Person the terms of this Agreement and all Confidential Information; provided that the Professional Company may disclose the terms of this Agreement and Confidential Information (i) to the Professional Company’s attorneys, accountants, and other advisors who are advising it with respect to this Agreement, but only for legitimate business purposes related to the negotiation and performance of this Agreement and with a covenant from those Persons to keep such information confidential in accordance with this Section 6.2(a) and (ii) to the extent that disclosure is required by applicable Law or Order; provided that as soon as reasonably practicable before such disclosure, the Professional Company gives the Management Company prompt written notice of such disclosure to enable the Management Company to seek a protective order or otherwise preserve the confidentiality of such information.
(b) Promptly after the expiration or termination of this Agreement, the Professional Company will either return to the Management Company or destroy, delete, or erase (with written certification of such destruction, deletion, or erasure provided to the Management Company by the Professional Company) all written, electronic, or other tangible forms of Confidential Information. After the expiration or termination of this Agreement, the Professional Company will not, and will cause its Affiliates, directors, managers, officers, equityholders, employees, agents, successors, and permitted assigns not to, retain any copies, summaries, analyses, compilations, reports, extracts or other materials containing or derived from any Confidential Information, except to the extent required by applicable Law. Such return, destruction, deletion, or erasure notwithstanding, all oral Confidential Information and the information embodied in all written Confidential Information will continue to be held confidential pursuant to the terms of this Section 6.2.
6.3 Covenant Not to Compete. During the Restricted Period, the Professional Company will not, directly or indirectly, own, manage, operate, join, control, finance, or participate in the ownership, management, operation, control or financing of, or be connected as an owner, investor, partner, joint venturer, director, limited liability company manager, employee, independent contractor, consultant, financing source or other agent of, any Person or enterprise that provides, or is seeking, planning or attempting to provide, any management, business, administrative, advisory, back-office or other services similar to any of the Management Services anywhere in or with respect to the Restricted Territory (each, a “Competitor”), or attempt or assist anyone else to do so. Nothing in this Section 6.3 prohibits the Professional Company or the Clinical Professionals from providing professional clinical services.
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6.4 Covenant Not to Solicit. During the Restricted Period, the Professional Company will not, directly or indirectly:
(a) solicit or induce or attempt to solicit or induce (including by recruiting, interviewing or identifying or targeting as a candidate for recruitment) any employee, independent contractor, officer, member of the board of directors or equivalent governing body, consultant or other personnel (whether engaged as an employee or independent contractor) of the Company Group or Supported Practice (excluding the Professional Company) who is acting in such capacity or acted in such capacity at any time within the twelve (12) month period immediately preceding the date of such solicitation, inducement or attempt (a “Company Group Associate”) to terminate, restrict or hinder such Company Group Associate’s association with any Company Group entity or any such Supported Practice interfere in any way with the relationship between such Company Group Associate and any Company Group entity, or attempt or assist anyone else to do so; provided, however, that after the termination or expiration of this Agreement, general solicitations published in a journal, newspaper or other publication or posted on an internet job site and that is not specifically directed toward or targeted at any Company Group Associate, does not reference any Company Group entity and is not on behalf of any Competitor, will not constitute a breach of the covenants in this Section 6.4(a);
(b) hire or otherwise retain or engage (or attempt to hire or otherwise retain or engage) the services of any Company Group Associate as equityholder, director, limited liability company manager, partner, officer, employee, independent contractor, licensee, consultant, advisor, agent or in any other capacity, or attempt or assist anyone else to do so; or
(c) interfere with the relationship between any Company Group entity or Supported Practice (excluding the Professional Company) and any customer, patient, referral source, Third-Party Payor, supplier, vendor, lessor, lessee, dealer, distributor, licensor, licensee, equityholder, lender, joint venturer, consultant, agent, or any other Person having a business relationship with any Company Group entity or such Supported Practice, or attempt or assist anyone else to do so.
6.5 Non-Disparagement. During the Term and thereafter, the Professional Company will not, directly or indirectly, make any disparaging, derogatory, negative or knowingly false statement about any Company Group entity or Supported Practice or any of their respective directors, managers, officers, equityholders, employees, agents (including the Management Company Representative), successors, and permitted assigns, or any of their respective businesses, operations, financial condition, or prospects, except as required by applicable Law or Order or in the course of filing a charge with a government agency or participating in its investigation.
6.6 Scope of Covenants; Equitable Relief. The Professional Company acknowledges and agrees that (i) the restrictive covenants contained in this Article VI and the territorial, time, activity, and other limitations set forth herein are commercially reasonable and do not impose a greater restraint than is necessary to protect the goodwill and legitimate business interests of the Company Group and its businesses, (ii) any breach of the restrictive covenants in this Article VI will cause irreparable injury to the Company Group and actual damages may be difficult to ascertain and would be inadequate, (iii) if any breach of any such covenant occurs, then the Management Company will be entitled to injunctive relief in addition to such other legal and equitable remedies that may be available (without the requirement to post bond or other security), and (iv) the Professional Company hereby waives the claim or defense that an adequate remedy at law exists for such a breach.
6.7 Equitable Tolling. If the Professional Company breaches any covenant in this Article VI, then the duration of such covenant will be tolled for a period of time equal to the time of such breach.
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Article
VII
INDEMNIFICATION AGAINST PROFESSIONAL LIABILITIES
7.1 Indemnification. The Professional Company will indemnify and hold harmless each member of the Company Group and its directors, managers, officers, equityholders, employees, agents (including the Management Company Representative), successors, and permitted assigns (collectively, the “Management Company Indemnified Parties”) from and against all losses, liabilities, demands, claims, actions, or causes of action, regulatory, legislative, or judicial proceedings or investigations, assessments, levies, fines, penalties, damages, costs and expenses (including reasonable attorneys’, accountants’, investigators’, and experts’ fees and expenses) incurred in connection with the defense or investigation of any claim sustained or incurred by any Management Company Indemnified Party arising from or related the provision of professional services or breach of this Agreement by the Professional Company or any of its personnel (whether employees or independent contractors).
7.2 Cooperation and Settlement. The Professional Company and the Management Company will coordinate the defense and settlement of actions by any third party in which they are named relating to or arising out of the Practice or the Management Services. To the extent consistent with insurance policies, the Professional Company will not settle an action in which both are named, unless the Management Company agrees (in its sole discretion) to the terms and conditions of the settlement.
7.3 Advancement of Expenses. During the pendency of any suit, action or proceeding with respect to which the Management Company is entitled to indemnification under this Article VII, the Professional Company will pay or reimburse the Management Company for reasonable defense expenses incurred in advance of final disposition of such suit, action or proceeding. If the Management Company ultimately is not entitled to indemnification under this Article VII, then the Management Company will promptly repay to the Professional Company the full amount of all such expenses paid or reimbursed by the Professional Company.
7.4 Other Remedies. The provisions of this Article VII are in addition to, and not in derogation of, any statutory, equitable or common law remedies that the Management Company may have with respect to this Agreement or the subject matter of this Agreement.
7.5 Survival. The Professional Company’s indemnification obligations under this Article VII will survive the termination or expiration of this Agreement.
Article
VIII
DEFINITIONS
“Advances” is defined in Section 4.4.
“Affiliate” means, with respect to a particular Person, (i) any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person, (ii) any of such Person’s spouse, siblings (by law or marriage), ancestors and descendants and (iii) any trust for the primary benefit of such Person or any of the foregoing. The term “control” means possession, direct or indirect, of the power to direct or cause the direction of the management and policies of another Person, whether through the ownership of voting securities or equity interests, by contract or otherwise.
“Agreement” is defined in the preamble to this Agreement.
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“Authorized Signatories” is defined in Section 2.3(c).
“Budget” is defined in Section 4.2.
“Business Day” means a day that is not a Saturday, Sunday, or legal holiday on which banks are authorized or required to be closed in New York, New York.
“Clinical Professionals” means all physicians and non-physician providers of Practice Services and any other Person who may only be employed or contracted by an entity owned directly or indirectly by one or more Persons licensed to practice medicine under applicable Law.
“Company Group” means the Management Company and its subsidiaries and other Affiliates.
“Company Group Associate” is defined in Section 6.4(a).
“Confidential Information” is defined in Section 6.1.
“Deficit Funding Loan Agreement” is defined in Section 4.4.
“Federal Health Care Program” means any “federal health care program” as defined in 42 U.S.C. § 1320a-7b(f), including Medicare, state Medicaid programs, state CHIP programs, TRICARE and similar or successor programs with or for the benefit of any government authority.
“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191, as amended, and its implementing regulations (45 C.F.R. parts 160-164).
“Initial Term” is defined in Section 5.1.
“Intellectual Property” is defined in Section 2.4.
“Law” means any federal, state, local, municipal, foreign, international, or multinational constitution, statute, law, rule, regulation, ordinance, code, principle of common law or treaty.
“Management Company” is defined in the preamble to this Agreement.
“Management Company Indemnified Parties” is defined in Section 7.1.
“Management Company Representative” is defined in Section 3.1.
“Management Fee” is defined in Section 4.1.
“Management Services” is defined in Section2.1(a).
“Operating Account” is defined in Section 2.3(a).
“Order” means any order, injunction, judgment, decree, ruling, assessment, or arbitration award of any government authority or arbitrator.
“Parties” is defined in the preamble to this Agreement.
“Person” means any natural individual, corporation, partnership, limited liability company, joint venture, association, bank, trust company, trust, or other entity, whether or not legal entities, or any government entity, agency, or political subdivision.
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“Practice” is defined in Recital A.
“Facilities” is defined in Recital A.
“Professional Company” is defined in the preamble to this Agreement.
“Renewal Term” is defined in Section 5.1.
“Restricted Period” means the shorter of (i) the period from the date of this Agreement until the second (2nd) anniversary of the termination or expiration of this Agreement or (ii) the longest time period after the date of this Agreement that is permitted by applicable Law if two (2) years after the termination of this Agreement is not permitted.
“Restricted Territory” means (i) each state in which any member of the Company Group then-conducts clinical operations or with respect to which any member of the Company Group has taken concrete steps to expand its clinical operations (such as through (A) development of a written business plan or presentation, (B) a corporate resolution to provide or sell services or products or incur capital expenditures or (C) a written letter of intent or term sheet regarding the provision or sale of such services or products or capital expenditures).
“Revenue Account” is defined in Section 2.3(a).
“Supported Practice” means each Person to which the Management Company or any of its Affiliates provides any non-clinical business, management, administrative, advisory, or back office services.
“Term” is defined in Section 5.1.
“Third-Party Payors” means all Federal Health Care Programs and all other state or local governmental insurance programs and private, non-governmental insurance and managed care programs with which the Professional Company contracts to provide services and products or through which the Professional Company receives reimbursements for services rendered and products provided.
Article
IX
GENERAL PROVISIONS
9.1 Practice of Medicine. Nothing in this Agreement will be interpreted as prohibiting the Professional Company or any Clinical Professional from (a) obtaining or maintaining membership on the medical staff of any hospital or health care provider, (b) obtaining or maintaining clinical privileges at any hospital or health care provider or (c) referring patients to any hospital or health care provider.
9.2 Force Majeure. Neither Party will be liable for any failure or inability to perform, or delay in performing, such Party’s obligations under this Agreement if such failure, inability, or delay arises from an extraordinary cause beyond the reasonable control of the non-performing Party; provided that such Party diligently and in good faith attempts to cure such non-performance as promptly as practicable.
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9.3 Notices. All notices and other communications required or permitted under this Agreement (a) must be in writing, (b) will be duly given (i) when delivered personally to the recipient or sent to the recipient by facsimile (with delivery confirmation retained) or (ii) one (1) Business Day after being sent to the recipient by nationally recognized overnight private carrier (charges prepaid) and (c) addressed as follows (as applicable):
If to the Professional Company: | If to the Management Company: |
[____________] |
[____________]
With a copy (which shall not constitute notice) to:
[____________]
|
or to such other respective address as each Party may designate by notice given in accordance with this Section 9.3.
9.4 Entire Agreement. This Agreement (together with the exhibits and schedules hereto, the License Agreement, the Business Associate Agreement, the Deficit Funding Loan Agreement and any other agreement(s) entered into by and between the Parties in connection with this Agreement) constitutes the complete agreement and understanding among the Parties regarding the subject matter of this Agreement and supersedes any prior understandings, agreements or representations regarding the subject matter of this Agreement.
9.5 Amendments. The Parties may amend this Agreement only pursuant to a written agreement executed by the Parties.
9.6 Non-Waiver. The Parties’ respective rights and remedies under this Agreement are cumulative and not alternative. Neither the failure nor any delay by any Party in exercising any right, power or privilege under this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. No waiver will be effective unless it is in writing and signed by an authorized representative of the waiving Party. No waiver given will be applicable except in the specific instance for which it was given. No notice to or demand on a Party will constitute a waiver of any obligation of such Party or the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement.
9.7 Assignment. The Parties may not assign this Agreement or any rights under this Agreement, or delegate any duties under this Agreement, without the prior written consent of the Management Company and the Professional Company; provided, however, that the Management Company may freely assign this Agreement or any rights under this Agreement, or delegate any duties under this Agreement without the Professional Company’s consent (a) to another Company Group entity, (b) as a collateral assignment to the Management Company’s lenders or (c) to any Person (i) into which the Management Company merges or consolidates, (ii) acquiring all or substantially all of the Management Company’s assets, or (iii) acquiring control of the Management Company by equity or membership interest purchase.
9.8 Binding Effect; Benefit. This Agreement will inure to the benefit of and bind the Parties and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, may be construed to give any Person other than the Parties and their respective successors and permitted assigns any right, remedy, claim, obligation, or liability arising from or related to this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties and their respective successors and permitted assigns.
9.9 Severability. If any court of competent jurisdiction holds any provision of this Agreement invalid or unenforceable, then the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. If any court of competent jurisdiction holds the geographic or temporal scope of any restrictive covenant contained in Article VI invalid or unenforceable, then such restrictive covenant will be construed as a series of parallel restrictive covenants and the geographic or temporal scope of each such restrictive covenant will be deemed modified (including by application of any “blue pencil” doctrine under applicable Law) to the minimum extent necessary to render such restrictive covenant valid and enforceable.
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9.10 Changes in Law. If there is a change in any applicable Law or the interpretation or application thereof, or the adoption, enactment, promulgation, issuance, rendering or interpretation or application of any new applicable Law, any of which adversely affects or are reasonably likely to adversely affect the manner in which either Party may perform or the manner in which the Management Company is compensated for its services under this Agreement or which makes or will make this Agreement or the arrangements hereunder unlawful or illegal, or if either Party provides in good faith to the other Party a written opinion from legal counsel experienced in construing contracts such as this Agreement that any provision of this Agreement violates or could reasonably be determined to violate such Laws, then the Management Company will propose a written amendment to or restatement of this Agreement or a new service arrangement or basis for compensation for the Management Services provided pursuant to this Agreement, the purpose and substance of which will be modification of only such provision or provisions so that this Agreement, as modified, complies with the applicable Law, interpretation or application, and continues to reflect, as nearly as possible, the economic arrangements and position of the Parties under this Agreement. If the Parties are unable to resolve the matter through good faith negotiations within sixty (60) days thereafter, then either Party may initiate the dispute resolution procedures set forth in Section 9.16 or the Management Company may elect to terminate this Agreement upon at least thirty (30) days prior written notice to the Professional Company.
9.11 References. The headings of Sections are provided for convenience only and will not affect the construction or interpretation of this Agreement. Unless otherwise provided, references to “Section(s)” and “Exhibit(s)” refer to the corresponding section(s) and exhibit(s) of this Agreement. Reference to a statute refers to the statute, any amendments or successor legislation and all rules and regulations promulgated under or implementing the statute, as in effect at the relevant time. Reference to a contract, instrument or other document as of a given date means the contract, instrument or other document as amended, supplemented and modified from time to time through such date.
9.12 Construction. Each Party participated in the negotiation and drafting of this Agreement, assisted by such legal and tax counsel as it desired, and contributed to its revisions. Any ambiguities with respect to any provision of this Agreement will be construed fairly as to all Parties and not in favor of or against any Party. All pronouns and any variation thereof will be construed to refer to such gender and number as the identity of the subject may require. The terms “include” and “including” indicate examples of a predicate word or clause and not a limitation on that word or clause.
9.13 Governing Law; Venue; Attorneys’ Fees. THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. Subject to the provisions of Section 9.14 hereof, all actions, suits or other proceedings with respect to this Agreement will be brought only in a court of competent jurisdiction sitting in the State of Delaware. In any civil action, arbitration or other proceeding brought to enforce the terms hereof, or to redress a breach of a term hereof, the more prevailing party will be entitled to payment from the less-prevailing party of its reasonable attorneys’ fees and expenses in addition to any damages or other relief to which it may become entitled.
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9.14 Dispute Resolution. Except as expressly provided below in this Section 9.14, any dispute, claim or controversy between the Parties arising out of or relating to this Agreement or any of the other agreements referenced herein or any of the arrangements contemplated herein or therein, whether arising in contract, tort or by statute or other Law, including but not limited to controversies or claims that arise out of or relate to this Agreement and any dispute or claim concerning the existence, validity, enforceability, interpretation, performance, breach or termination of this Agreement or such other agreements or arrangements and all claims of arbitrability (any of the foregoing, a “Dispute”) will, unless resolved by mutual written agreement of the Parties, be resolved exclusively as follows:
(a) Upon the written demand of either Party, the Dispute will be submitted to mediation administered by the American Health Lawyers Association or its successor (“AHLA”) in accordance with its rules for mediation. Representatives of the Parties with authority to settle the Dispute will participate in the mediation. The mediator will be selected and appointed in accordance with such AHLA rules, and the mediation will be conducted in New York, New York. Each Party may be represented by one or more attorneys or other selected representative(s) of its choice. Each Party will bear and pay equally the fees and expenses of AHLA and the mediator associated with the mediation, and each such party will bear its own attorneys’ fees, costs and other expenses in connection with the mediation (except as may be otherwise mutually agreed upon in writing).
(b) If no amicable resolution or settlement of the Dispute is reached during the mediation process within sixty (60) days after it commences, then upon the written demand of either Party, the Dispute will be submitted to final and binding arbitration, which will be conducted expeditiously and completed within one hundred twenty (120) days after being submitted for arbitration. The arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ et seq.). Unless otherwise agreed in writing by the Parties, the arbitration will be administered by the AHLA and conducted by a single arbitrator in accordance with the AHLA Rules of Procedure for Commercial Arbitration then in effect. The arbitrator will be selected and appointed in accordance with such AHLA rules, and the arbitration will be conducted in New York, New York. Each Party may be represented by one or more attorneys or other selected representative(s) of its choice. Each Party will bear and pay equally the fees and expenses of AHLA and the arbitrator associated with the arbitration, and each such party will bear its own attorneys’ fees, costs and other expenses in connection with the arbitration, except as may be otherwise awarded by the arbitrator as contemplated in Section 9.13. The arbitration award will be final and binding, and judgment on it may be entered by any court of competent jurisdiction. If the arbitrator determines that this Agreement or any part thereof (whether this Agreement itself or together with the other relationships between or involving the parties to this Agreement) is illegal, invalid, unenforceable, void or voidable, then the arbitrator will determine and effectuate an equitable modification of this Agreement (including a new arrangement or basis for compensation to the Management Company pursuant to the Agreement) that complies with applicable Law and that approximates as closely as possible the economic arrangements and position of the Parties hereunder.
(c) All privileges under applicable Law, including attorney-client and work-product privileges, will be preserved and protected to the maximum extent that such privileges would be protected in a federal or state court proceeding applying Delaware law. The arbitration proceedings and arbitration award will be maintained by the parties as strictly confidential, except as is otherwise required by court order or as is necessary to confirm, vacate or enforce the award and for disclosure to the respective officers, directors, managers, employees, equityholders, attorneys, accountants, lenders, acquirers and prospective lenders and acquirers (and advisors of the foregoing) of the parties hereto. The provisions of this Section 9.14 will survive expiration or other termination of this Agreement regardless of the cause of such expiration or termination. This Section 9.14 will not preclude the Management Company from seeking, or a court of competent jurisdiction from granting, a temporary restraining order, preliminary injunction, injunction, specific performance or other equitable relief to remedy any breach or to enforce applicable terms of this Agreement to compel mediation or arbitration or upon the occurrence of (i) a breach or threatened breach of this Section 9.14 or any confidentiality, non-solicitation or other restrictive covenants herein, (ii) eviction of the Professional Company from any Facility or office space or return of any property, or (iii) any attempted assignment of the Professional Company’s interests in this Agreement in breach of the provisions of this Agreement.
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9.15 Waiver of Trial by Jury. EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY DISPUTE, SUIT, ACTION, ARBITRATION OR PROCEEDING IN CONNECTION WITH ANY MATTER RELATING TO THIS AGREEMENT.
9.16 Counterparts. The Parties may execute this Agreement in multiple counterparts, each of which will constitute an original and all of which, when taken together, will constitute one and the same agreement. The Parties may deliver executed signature pages to this Agreement by facsimile or e-mail transmission. No Party may raise as a defense to the formation or enforceability of this Agreement (and each Party forever waives any such defense) any argument based on either (a) the use of a facsimile or email transmission to deliver a signature or (b) the fact that any signature was signed and subsequently transmitted by facsimile or email transmission.
9.17 Enforceability. The Parties have carefully structured this Agreement and the arrangements hereunder to comply with applicable Law, and have consulted to their satisfaction with their respective legal counsel in connection herewith. Each Party acknowledges and agrees that this Agreement and such arrangements are valid, legal and enforceable obligations of such Party, and each Party agrees that it will not make, assert, maintain or initiate, nor cause to be made, asserted, maintained or initiated, any claim, charge, demand, action, arbitration or proceeding of any type, the basis of which is, in whole or in part, that this Agreement or any other agreement referenced or contemplated herein or any portion hereof or thereof, or the relationships or arrangements created hereby or thereby, is illegal, invalid or unenforceable, or that any amount payable to the Management Company under this Agreement is unreasonable or unlawful or does not represent fair market value for the Management Services and other items provided by the Management Company. If a Party takes any action which is inconsistent with the preceding sentence, then such Party will pay all losses, damages, costs, fees and expenses (including reasonable attorneys’ fees) incurred by the other Party, including in defending or responding to such claim, charge, demand, action, arbitration or proceeding, which payment will be made promptly to such other Party upon its request.
9.18 No Warranties. The Professional Company acknowledges that the Management Company has not made and will not make any express or implied warranties or representations that the Management Services will result in any amount or level of revenue or profits to the Professional Company and that THE MANAGEMENT COMPANY MAKES NO WARRANTIES, EXPRESS OR IMPLIED, HEREUNDER, AND ALL EQUIPMENT, SOFTWARE AND OTHER ASSETS ARE PROVIDED BY THE MANAGEMENT COMPANY “AS IS,” AND ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT THERETO OR ANY SERVICES PROVIDED HEREUNDER ARE HEREBY WAIVED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
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The Parties sign this Agreement as of the date first written above.
THE PROFESSIONAL COMPANY: |
[____________] |
By: | ||
[____________] |
THE MANAGEMENT COMPANY: |
EBS Enterprises, LLC, a Delaware limited liability company
|
By: | ||
Name: | Aaron Rollins, M.D. | |
Title: | President |
[Signature Page to Management Services Agreement]
EXHIBIT A
LOCATIONS
EXHIBIT B
BUSINESS ASSOCIATE AGREEMENT
EXHIBIT C
MANAGEMENT FEE
Exhibit 10.7
CONTINUITY AGREEMENT
THIS CONTINUITY AGREEMENT (this “Agreement”) is made and entered into as of [_______], 2021 (the “Effective Date”) by and among [_______________] (the “Professional Company”), [____________], an individual licensed to practice medicine (“Owner”), and EBS Enterprises, LLC, a Delaware limited liability company (the “Management Company”, and, together with the Professional Company and Owner, the “Parties”).
RECITALS
A. Owner owns and holds one hundred percent (100%) (the “Subject Interests”) of the issued and outstanding membership interests and any other equity interests of the Professional Company (“Equity Interests”), and the Professional Company and Owner desire to enter into this Agreement to provide for continuity in the ownership and operation of the Professional Company and patient care in conformity with applicable legal requirements, for the benefit of Owner, the Professional Company and its providers, patients, employees and other constituents.
B. To facilitate such continuity, Owner and the Professional Company each desires that the Management Company assist the Professional Company and Owner as contemplated herein, as part of the administrative, business, management and back-office services provided by the Management Company under that certain Management Services Agreement, of even date herewith (as such may be amended, supplemented or restated from time to time, the “Management Services Agreement”), between the Professional Company and the Management Company, and the Management Company is willing to so assist the Professional Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
1. Mutual Covenants Regarding Interests.
(a) Interests. Owner represents and warrants to the other Parties that: (a) he or she owns all of the Subject Interests beneficially and of record, free and clear of all liens, security interests, pledges, mortgages, restrictions on transfer, rights of first refusal, voting trusts or agreements and other encumbrances (“Liens and Encumbrances”), other than under this Agreement and any restrictions on transfer under applicable state and federal laws; (b) the Subject Interests represent one hundred percent (100%) of the issued and outstanding Equity Interests of the Professional Company; (c) the Professional Company is a professional limited liability company, duly organized, validly existing and in good standing under the laws of the State of [___________] (the “State”); and (d) Owner and the Professional Company each has full and unrestricted right, power, legal capacity and authority to execute, deliver and perform under this Agreement and to sell, transfer, assign and deliver the Subject Interests as provided herein.
(b) Restrictions on Transfer. Except as provided in this Agreement or a Transfer to the Professional Company upon the occurrence of a Succession Event (as defined below), Owner agrees that he or she shall not transfer, alienate, sell, assign, pledge or otherwise dispose of or encumber (collectively, “Transfer”) all or any part of the Subject Interests or any economic interest therein, whether voluntarily or involuntary, whether for or without consideration (nor agree to do any of the foregoing). Upon the occurrence of a Succession Event (as defined below), Owner (or, as applicable, his or her Successor(s)) will hold the Subject Interests in trust for the benefit of the Successor-Owner (as defined below). Owner acknowledges and agrees that the restrictions on Transfer set forth in this Agreement are imposed to accomplish legitimate purposes of Owner and the Professional Company, and that such restrictions are not more restrictive than necessary to accomplish such purposes. The Professional Company and Owner shall not amend, supplement or restate the Professional Company’s articles of organization or incorporation, bylaws or operating agreement or other governing or organizational documents, as applicable, in any manner that would conflict with the provisions of this Agreement and the restrictions on Transfer and other Transfer provisions herein.
(c) Prohibited Transfers. Any purported or attempted Transfer of any Subject Interests other than as provided in this Agreement (a “Prohibited Transfer”) shall be invalid and void ab initio as a Transfer of such Subject Interests and the Professional Company shall not permit such Transfer or recognize on its books or records such Transfer; provided, however, that if the Professional Company is required by law to recognize any Prohibited Transfer, the transferee shall be a mere holder of such Transferred Subject Interests, and shall be subject to the provisions of this Agreement, and shall not have the right to vote or exercise any other rights of a member of the Professional Company except as required by applicable law, and any distributions with respect to such transferable Subject Interests may be applied (without limiting any other legal or equitable rights of the Professional Company or other equityholders of the Professional Company) towards the satisfaction of any debts, obligations, or liabilities for damages that the transferor or transferee of such rights may have to the Professional Company or other owners or equityholders of the Professional Company. If Owner engages or attempts to engage in a Prohibited Transfer, he or she or it shall indemnify and hold harmless the Professional Company, any other owners or equityholders of the Professional Company and the Management Company and its affiliates from all cost, liability and damage that any of such indemnified Persons may incur (including, without limitation, reasonable attorneys' fees) as a result of such Prohibited Transfer or attempted Prohibited Transfer and the enforcement of this indemnity.
(d) Restrictions on Issuance. Except as provided in this Agreement, the Professional Company agrees that it will not issue, sell or deliver any Interests, or any options, warrants, rights or other securities exercisable for, convertible into or exchangeable for any Interests or other equity interests of the Professional Company, nor merge or consolidate with any other Person, or agree to do any of the foregoing. Any issuance or purported issuance made in violation or breach of any provision of this Agreement is void ab initio, and the Professional Company shall not recognize on its books or records any issuance that violates any provision of this Agreement.
(e) Maintaining Existence. Owner will use commercially reasonable efforts to cause the Professional Company to be maintained in existence and in good standing as a professional limited liability company under the laws of the State and qualified to do business in each other state or other jurisdiction in which the Professional Company conducts business, and Owner and the Professional Company each will use his, her or its commercially reasonable efforts to maintain and preserve the business and goodwill of the Professional Company.
(f) Legend. Owner and the Professional Company each acknowledge that the certificates, if any, representing the Subject Interests, if applicable, shall contain a legend referencing the restrictions on the Transfer of such Subject Interests imposed by this Agreement, in addition to any other legend required by applicable law. All the Subject Interests shall be held subject to the provisions of this Agreement regardless of whether the Subject Interests are certificated or not, and whether any such certificate bears such legend, a similar legend or no legend at all. Such legend shall be substantially in the form of following:
THE MEMBERSHIP INTEREST REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER IMPOSED BY APPLICABLE STATE AND FEDERAL LAW AND BY THE TERMS OF A CONTINUITY AGREEMENT (A COPY OF WHICH IS ON FILE WITH THE COMPANY AND AVAILABLE WITHOUT CHARGE), AND NO TRANSFER OF THE MEMBERSHIP INTEREST REPRESENTED HEREBY OR OF ANY INTERESTS ISSUED IN EXCHANGE THEREFOR SHALL BE VALID OR EFFECTIVE UNTIL THE TERMS AND CONDITIONS OF SUCH LAWS AND SUCH AGREEMENT SHALL HAVE BEEN FULFILLED IN THE JUDGMENT OF THE COMPANY.
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2. Additional Equityholder.
(a) The Professional Company and Owner desire to add an additional equityholder of the Professional Company who could share the duties and responsibilities associated with being an equityholder of the Professional Company and in order to facilitate the continuity of the Professional Company and its operations and patient care. The Management Company agrees that, during the term and subject to the terms and conditions of the Management Services Agreement, the Management Company will reasonably assist the Professional Company in identifying an individual who is licensed to practice medicine in the State or otherwise eligible to be an equityholder of the Professional Company and who is willing to become an equityholder of the Professional Company (such individual, the “Additional Equityholder”). Such individual would become an equityholder of the Professional Company by executing and delivering each of (i) a Subscription Agreement with Practice Entity in substantially the form and substance of Exhibit A hereto (the “Subscription Agreement”), whereby he or she shall subscribe to purchase Equity Interests of the Practice Entity on the terms and conditions therein, (ii) a Continuity Agreement in substantially the form and substance of this Agreement (the “Additional Owner Continuity Agreement”), (iii) a written joinder to the Operating Agreement (as defined below) (the “Joinder”), whereby such Additional Equityholder shall become bound by and a party to such Operating Agreement as a “member” thereunder on the same basis and subject to the same terms and conditions as Owner, and (iii) remitting to the Professional Company a total purchase price of One Hundred Dollars ($100.00).
(b) If the Management Company notifies the Professional Company of an individual who is licensed to practice medicine in the State or otherwise eligible to be an equityholder of the Professional Company and who is willing to become an equityholder of the Professional Company, the Professional Company will (immediately upon the execution and delivery by such individual of the Subscription Agreement, the Joinder, the Additional Owner Continuity Agreement, and payment by or on behalf of such individual of the One Hundred Dollar ($100.00) purchase price under the Subscription Agreement) issue to such individual unrestricted units representing a membership interest of the Professional Company of the same class, series and amount as the units of membership interest held by Owner, and such individual will be immediately appointed to the board of managers of the Professional Company and, if requested by such individual, as a Vice President of Professional Company with all rights and authority associated therewith.
3. Successor-Owner. The Professional Company and Owner desire that, upon the occurrence of a Succession Event, in order to facilitate the continuity of the Professional Company and its operations and patient care, all of the Subject Interests of Owner would be transferred to a Successor-Owner who could take on duties and responsibilities attendant to being a member of the Professional Company. The Parties agree that, during the term of the Management Services Agreement, the Management Company will use commercially reasonable efforts to identify, on behalf of Owner and the Professional Company, an individual person who is licensed to practice medicine or otherwise eligible to hold the Subject Interests under applicable law and is willing to become a member of the Professional Company and accept ownership of the Subject Interests upon the occurrence of a Succession Event (such person, the “Successor-Owner”).
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4. Transfer of Interests in Certain Events. The Professional Company and Owner each desires to provide for an orderly Transfer of the Subject Interests in the event that certain events occur that could jeopardize the continuation of the Professional Company and its practice. Accordingly, the Parties agree to the following:
(a) Automatic Succession Events. All of the Subject Interests held by Owner shall be deemed to have been transferred to the Successor-Owner, without further action by Owner or the Professional Company, automatically and immediately upon the occurrence of an Automatic Succession Event; provided, however, that until the Successor-Owner shall have been identified pursuant to Section 3, Owner shall continue to hold such Subject Interests in trust for the benefit of the Successor-Owner. For purposes of this Agreement, “Automatic Succession Event” means, with respect to Owner, any of the following:
(i) Owner’s death;
(ii) Owner becoming disqualified under the laws of the State or other applicable law or the governing or organizational documents of the Professional Company to be a member or shareholder, as applicable, of the Professional Company;
(iii) termination of Owner’s employment or engagement with the Professional Company or the Management Company, whether voluntary or involuntary;
(iv) Owner’s license to practice medicine in the State is revoked, terminated, cancelled or relinquished for any reason;
(v) Owner becoming excluded, debarred, terminated or suspended from participation in Medicare, Medicaid, Medicaid waiver, CHIP, TRICARE or any other federal health care program or Owner commits an offense or engages in conduct for which such Owner is required to be excluded, debarred, terminated or suspended from participation in Medicare, Medicaid, Medicaid waiver, CHIP, TRICARE or any other federal health care program;
(vi) the filing of a petition under the bankruptcy laws of the United States or any state with respect to Owner, an assignment by such Owner for the benefit of creditors, or a receiver or trustee of such Owner’s rights or interests becoming appointed pursuant to any judicial proceeding;
(vii) Owner’s commission of, becoming indicted or arraigned for, convicted of, or pleading guilty or no contest to, any felony or any misdemeanor offense involving moral turpitude;
(viii) the assertion or filing by or on behalf of Owner of any petition, pleading, notice, document or statement causing or intended or reasonably expected to cause a judicial, administrative, voluntary or involuntary dissolution of the Professional Company, or a challenge or judicial, arbitral, administrative or other review or challenge to the enforceability, validity or legality of this Agreement, the Management Services Agreement or any credit and security agreement, license agreement or any other ancillary agreement related thereto, or any of the arrangements or agreements contemplated herein or therein, or any portion thereof;
(ix) Owner becoming adjudicated incompetent by any court of competent jurisdiction;
(x) any order being entered, or any settlement being reached, in any proceedings regarding the division of Owner’s property pursuant to a divorce or separate maintenance action, that awards or purports to award any ownership of or interest in any of Subject Interests owned or held by Owner to any Person; and/or
(xi) any Transfer or attempted or purported Transfer of the Subject Interests or any portion thereof by Owner, or any other Person, to any Person, whether voluntarily or involuntarily, by operation of law or in connection with a bankruptcy, insolvency or foreclosure proceeding, divorce or marital dissolution or otherwise.
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(b) Additional Succession Events. All of the Subject Interests held by Owner shall be deemed to have been transferred to the Successor-Owner without further action by Owner or the Professional Company, automatically and immediately upon the occurrence of both (x) any of the following events (each an “Additional Succession Event” and, together with the Automatic Succession Events, the “Succession Events”), and (y) designation of the Successor-Owner on behalf of the Professional Company pursuant to Section 3:
(i) Owner’s breach of any provision of this Agreement;
(ii) Owner’s commission of, becoming indicted or arraigned for, convicted of, or pleading guilty or no contest to, any criminal offense (other than minor traffic offenses or, as addressed in subsection (a) above, any felony or any misdemeanor offense involving moral turpitude);
(iii) Owner’s gross negligence, willful misconduct, fraud, misappropriation, embezzlement or theft with respect to the Professional Company or the Management Company or its affiliates, or Owner’s conduct, action, communication, harassment, discrimination or failure to act that is injurious, disruptive or detrimental to the Professional Company or its practice or operations or the provision of services to the Professional Company under the Management Services Agreement;
(iv) Owner’s license to practice medicine in the State or any other jurisdiction being suspended, limited or placed on probationary status for any reason, or Owner’s license to practice medicine in any jurisdiction other than the State is revoked, terminated, cancelled or relinquished for any reason;
(v) Owner’s disability or incapacity; and/or
(vi) breach by the Professional Company of the Management Services Agreement or termination of the Management Services Agreement.
(c) Notice of Succession Event. If any Succession Event described in this Section 3 shall occur, Owner (or, as applicable, his or her Successor), shall promptly give written notice of such Succession Event to the Professional Company and the Management Company, including, in reasonable detail, the circumstances of such Succession Event.
(d) Effectuation of Transfer; Delivery of any Certificates.
(i) Notwithstanding anything to the contrary herein, upon the occurrence of an Automatic Succession Event, or an Additional Succession Event and designation of the Successor-Owner pursuant to Section 3, (A) all of the Subject Interests held by Owner will be automatically and immediately transferred, or deemed to be transferred, to the Successor-Owner (and, with respect to an Automatic Succession Event, held in trust for the benefit of the Successor-Owner until the Successor-Owner shall have been designated pursuant to Section 3); (B) upon such transfer, the Owner shall immediately resign, and shall hereby be deemed to have immediately resigned as a director, manager and officer, as applicable, of the Professional Company; and (C) Owner, and any purported transferee of such Subject Interests (other than the Successor-Owner), will no longer have any rights as a holder of such Subject Interests and will not have and may not exercise any voting, economic or other rights or interests in the Professional Company or such Subject Interests (other than the right to receive payment of the Purchase Price, as defined below, in accordance with this Agreement). The Successor-Owner shall have from and after such transfer all ownership and voting rights as to such Subject Interests in accordance with this Agreement, irrespective of whether or not the Successor-Owner receives any certificate for such Subject Interests or assignment documentation and/or the Owner (or his or her Successor, as applicable) receives payment of the Purchase Price (as defined below) for such Subject Interests, or any other act or matter.
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(ii) Upon such transfer of the Subject Interests to the Successor-Owner, and the execution and delivery by such individual of a continuity agreement, and, if applicable, a consent and acknowledgement of spouse, in form and substance substantially similar to this Agreement and the attached Spousal Consent, such individual will be immediately appointed to the board of managers of the Professional Company and as an officer of the Professional Company with all rights and authority associated therewith.
(iii) Owner, on his or her own behalf and on behalf of his or her Successor(s), hereby agrees promptly to take such steps and execute and deliver an assignment agreement and such other documents, representations and warranties and stock powers as the Successor-Owner or, as attorney-in-fact, the Management Company may reasonably request to effect any transfer or closing thereof contemplated by this Agreement. Upon the transfer or at the closing thereof as contemplated in this Agreement, Owner (or, as applicable, his or her Successor(s)) shall promptly deliver or cause to be delivered to the Successor-Owner all certificates (if any) representing the Subject Interests, with each certificate endorsed in blank for transfer.
(e) Purchase Price. The purchase price for all of the Subject Interests of Owner if and when transferred to the Successor-Owner hereunder (the “Purchase Price”) shall be a total of One Hundred Dollars ($100). Payment of the Purchase Price shall be made by the Successor-Owner to Owner (or, as applicable, his or her Successor), within thirty (30) days following the transfer of such Subject Interests to the Successor-Owner. Owner’s (or, as applicable, his or her Successor’s) only remedy for the failure of the Successor-Owner to pay the Purchase Price for such Subject Interests shall be money damages, and in no way shall such failure jeopardize the temporary or permanent transfer of any rights as to the Subject Interests.
(f) Attorney-in-Fact. To facilitate the transfers contemplated in this Agreement, the Professional Company and Owner, on behalf of such Party and its or his or her successors, estate and assigns, hereby appoints the Management Company as such Party’s and its or his or her successors’, estate’s and assigns’ attorney-in-fact with full power and authority to do all things necessary to effectuate any transfers to the Successor-Owner under this Agreement, which shall survive Owner’s death, disability or incapacity.
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(g) Acknowledgment. Each of the Professional Company and Owner acknowledge and agree that:
(i) the Management Company is serving as attorney-in-fact and providing assistance and services under this Agreement at the request of the Professional Company and
Owner and for the limited purpose set forth herein in furtherance of the administrative and business support services provided by the Management Company under the Management Services Agreement;
(ii) the Professional Company, Owner and the Professional Company’s providers are solely in control of the medical practice owned and operated by the Professional Company and are solely responsible for the practice of medicine therein;
(iii) nothing in this Agreement is intended, nor shall be construed, to permit the Management Company to practice medicine, control the Professional Company or its medical practice or interfere with or control the independent professional judgement of Owner or any other physicians or healthcare professional, or take any action that is prohibited by applicable law;
(iv) the non-clinical administrative, management, business and back-office support services provided by the Management Company under the Management Services Agreement allow the Professional Company, Owner and the Professional Company’s physicians to focus more fully on the practice of medicine and provision of medical services to patients, such non-clinical services are integral to the Professional Company’s business operations, and the disruption of or interference with such non-clinical services by or on behalf of Owner would be harmful to the Professional Company and its patients; and
(v) the transfer of the Subject Interests from Owner to a Successor-Owner following the occurrence of a Succession Event in accordance with this Agreement would provide continuity in the Professional Company’s operations and patient care and would not unreasonably disrupt the Professional Company’s relationship with or ability to safely, effectively and efficiently treat its patients and bill for services rendered and products provided (it being specifically agreed that any such disruption is outweighed by the benefits to the Professional Company and its medical practice, providers and patients of such transfer of the Subject Interests to a Successor-Owner).
5. Consent of Spouse. If Owner is married on the date of this Agreement, then Owner’s spouse shall concurrently herewith execute and deliver a Consent and Acknowledgment of Spouse (“Spousal Consent”) in substantially the form and substance of Exhibit B to this Agreement, to acknowledge that the spouse’s community property interest, if any, in the Subject Interests of Owner is subject to this Agreement. If Owner marries or remarries subsequent to the date of this Agreement, then within thirty (30) days thereafter such new spouse shall make such acknowledgement by executing and delivering a Spousal Consent. This Agreement shall not be deemed to confer or convey to any such spouse any rights in any of the Subject Interests that do not otherwise exist by operation of law.
6. After Acquired Interests. Upon any dividend, distribution, split or reverse split, recapitalization, reorganization, business combination or other change affecting the Professional Company’s outstanding Equity Interests pursuant to which any new, substituted or additional Interests or other equity interests are issued to Owner by reason of any such event or transaction, or any other issuance or transfer of Subject Interests or other Equity Interests or equity interests of the Professional Company to Owner, such Interests or other equity interests shall be automatically and immediately deemed subject to this Agreement and included within the definition of the “Subject Interests” of Owner for purposes of this Agreement.
7. Term. The term of this Agreement shall commence as of the date hereof and shall terminate upon the occurrence of any of the following events: (i) written agreement to terminate this Agreement signed by or on behalf of each Party; (ii) the twenty-one (21) year anniversary of the death of Owner; or (iii) with respect to the Management Company, upon at least thirty (30) days prior written notice of such termination to the Professional Company.
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8. No Payment for Referrals; No Partnership. The Purchase Price to be paid to Owner hereunder represents the Parties’ negotiated agreement as to the fair market value of the Subject Interests and is not in any way related to or dependent upon referrals by, between or among any person. The relationship created by this Agreement is not intended to be, shall not be deemed to be, and shall not be treated as a partnership or joint venture among or between the Parties.
9. Miscellaneous.
(a) Notices. All notices and other communications required or permitted under this Agreement (i) must be in writing, (ii) will be duly given (A) when delivered personally to the recipient or sent to the recipient by facsimile (with delivery confirmation retained) or (B) one (1) Business Day after being sent to the recipient by nationally recognized overnight private carrier (charges prepaid) and (iii) addressed as follows (as applicable):
or to such other respective address as each Party may designate by notice given in accordance with this Section 9(a).
(b) Entire Agreement. This Agreement (together with Management Services Agreement) constitutes the complete agreement and understanding among the Parties regarding the subject matter of this Agreement and supersedes any prior understandings, agreements or representations regarding the subject matter of this Agreement.
(c) Amendments. The Parties may amend this Agreement only pursuant to a written agreement executed by the Parties.
(d) Non-Waiver. The Parties’ respective rights and remedies under this Agreement are cumulative and not alternative. Neither the failure nor any delay by any Party in exercising any right, power or privilege under this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. No waiver will be effective unless it is in writing and signed by an authorized representative of the waiving Party. No waiver given will be applicable except in the specific instance for which it was given. No notice to or demand on a Party will constitute a waiver of any obligation of such Party or the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement.
(e) Assignment. The Parties may not assign this Agreement or any rights under this Agreement, or delegate any duties under this Agreement, without the prior written consent of the Management Company and the Professional Company; provided, however, that the Management Company may freely assign this Agreement or any rights under this Agreement, or delegate any duties under this Agreement without the Professional Company’s and Owner’s consent (i) to any affiliate or subsidiary of the Management Company, (ii) as a collateral assignment to the Management Company’s lenders or (iii) to any Person (A) into which the Management Company merges or consolidates, (B) acquiring all or substantially all of the Management Company’s assets, or (C) acquiring control of the Management Company by equity, stock or membership interest purchase.
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(f) Binding Effect; Benefit. This Agreement will inure to the benefit of and bind the Parties and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, may be construed to give any Person other than the Parties and their respective successors and permitted assigns any right, remedy, claim, obligation, or liability arising from or related to this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties and their respective successors and permitted assigns.
(g) Severability. If any court of competent jurisdiction holds any provision of this Agreement invalid or unenforceable, then the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
(h) Changes in Law. If there is a change in any applicable law or the interpretation or application thereof, or the adoption, enactment, promulgation, issuance, rendering or interpretation or application of any new applicable law, any of which adversely affects or are reasonably likely to adversely affect the manner in which either Party may perform or which makes or will make this Agreement or the arrangements hereunder unlawful or illegal, or if any Party provides in good faith to the other Parties a written opinion from legal counsel experienced in construing contracts such as this Agreement that any provision of this Agreement violates or could reasonably be determined to violate such laws, then the Management Company will propose a written amendment to or restatement of this Agreement or a new service arrangement pursuant to this Agreement, the purpose and substance of which will be modification of only such provision or provisions so that this Agreement, as modified, complies with the applicable law, interpretation or application, and continues to reflect, as nearly as possible, the economic arrangements and position of the Parties under this Agreement. If the Parties are unable to resolve the matter through good faith negotiations within sixty (60) days thereafter, then any Party may initiate the dispute resolution procedures set forth in Section 9(l) or the Management Company may elect to terminate this Agreement upon prior written notice to the Professional Company.
(i) References. The headings of Sections are provided for convenience only and will not affect the construction or interpretation of this Agreement. Unless otherwise provided, references to “Section(s)” and “Exhibit(s)” refer to the corresponding section(s) and exhibit(s) of this Agreement. Reference to a statute refers to the statute, any amendments or successor legislation and all rules and regulations promulgated under or implementing the statute, as in effect at the relevant time. Reference to a contract, instrument or other document as of a given date means the contract, instrument or other document as amended, supplemented and modified from time to time through such date.
(j) Construction. Each Party participated in the negotiation and drafting of this Agreement, assisted by such legal and tax counsel as it desired, and contributed to its revisions. Any ambiguities with respect to any provision of this Agreement will be construed fairly as to all Parties and not in favor of or against any Party. All pronouns and any variation thereof will be construed to refer to such gender and number as the identity of the subject may require. The terms “include” and “including” indicate examples of a predicate word or clause and not a limitation on that word or clause.
(k) Governing Law; Venue; Attorneys’ Fees. THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. Subject to the provisions of Section 9(l) hereof, all actions, suits or other proceedings with respect to this Agreement will be brought only in a court of competent jurisdiction sitting in the State of Delaware. In any civil action, arbitration or other proceeding brought to enforce the terms hereof, or to redress a breach of a term hereof, the more prevailing Party will be entitled to payment from the less-prevailing Party of its reasonable attorneys’ fees and expenses in addition to any damages or other relief to which it may become entitled.
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(l) Dispute Resolution. Except as expressly provided below in this Section 9(l), any dispute, claim or controversy between the Parties arising out of or relating to this Agreement or any of the other agreements referenced herein or any of the arrangements contemplated herein or therein, whether arising in contract, tort or by statute or other Law, including but not limited to controversies or claims that arise out of or relate to this Agreement and any dispute or claim concerning the existence, validity, enforceability, interpretation, performance, breach or termination of this Agreement or such other agreements or arrangements and all claims of arbitrability (any of the foregoing, a “Dispute”) will, unless resolved by mutual written agreement of the Parties, be resolved exclusively as follows:
(i) Upon the written demand of either Party, the Dispute will be submitted to mediation administered by the American Health Lawyers Association or its successor (“AHLA”) in accordance with its rules for mediation. Representatives of the Parties with authority to settle the Dispute will participate in the mediation. The mediator will be selected and appointed in accordance with such AHLA rules, and the mediation will be conducted in New York, New York. Each Party may be represented by one or more attorneys or other selected representative(s) of its choice. Each Party will bear and pay equally the fees and expenses of AHLA and the mediator associated with the mediation, and each such Party will bear its own attorneys’ fees, costs and other expenses in connection with the mediation (except as may be otherwise mutually agreed upon in writing).
(ii) If no amicable resolution or settlement of the Dispute is reached during the mediation process within sixty (60) days after it commences, then upon the written demand of either Party, the Dispute will be submitted to final and binding arbitration, which will be conducted expeditiously and completed within one hundred twenty (120) days after being submitted for arbitration. The arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ et seq.). Unless otherwise agreed in writing by the Parties, the arbitration will be administered by the AHLA and conducted by a single arbitrator in accordance with the AHLA Rules of Procedure for Commercial Arbitration then in effect. The arbitrator will be selected and appointed in accordance with such AHLA rules, and the arbitration will be conducted in New York, New York. Each Party may be represented by one or more attorneys or other selected representative(s) of its choice. Each Party will bear and pay equally the fees and expenses of AHLA and the arbitrator associated with the arbitration, and each such Party will bear its own attorneys’ fees, costs and other expenses in connection with the arbitration, except as may be otherwise awarded by the arbitrator as contemplated in Section 9(k). The arbitration award will be final and binding, and judgment on it may be entered by any court of competent jurisdiction. If the arbitrator determines that this Agreement or any part thereof (whether this Agreement itself or together with the other relationships between or involving the Parties) is illegal, invalid, unenforceable, void or voidable, then the arbitrator will determine and effectuate an equitable modification of this Agreement that complies with applicable law and that approximates as closely as possible the economic arrangements and position of the Parties hereunder.
(iii) All privileges under applicable law, including attorney-client and work-product privileges, will be preserved and protected to the maximum extent that such privileges would be protected in a federal or state court proceeding applying Delaware law. The arbitration proceedings and arbitration award will be maintained by the Parties as strictly confidential, except as is otherwise required by court order or as is necessary to confirm, vacate or enforce the award and for disclosure to the respective officers, directors, managers, employees, equityholders, attorneys, accountants, lenders, acquirers and prospective lenders and acquirers (and advisors of the foregoing) of the Parties. The provisions of this Section 9(l) will survive expiration or other termination of this Agreement regardless of the cause of such expiration or termination. This Section 9(l) will not preclude the Management Company from seeking, or a court of competent jurisdiction from granting, a temporary restraining order, preliminary injunction, injunction, specific performance or other equitable relief to remedy any breach or to enforce applicable terms of this Agreement to compel mediation or arbitration or upon the occurrence of (i) a breach or threatened breach of this Section 9(l) or any covenants in this Agreement, or (ii) any attempted assignment of the Professional Company’s Subject Interests or interests in this Agreement in breach of the provisions of this Agreement.
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(m) Waiver of Trial by Jury. EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY DISPUTE, SUIT, ACTION, ARBITRATION OR PROCEEDING IN CONNECTION WITH ANY MATTER RELATING TO THIS AGREEMENT.
(n) Counterparts. The Parties may execute this Agreement in multiple counterparts, each of which will constitute an original and all of which, when taken together, will constitute one and the same agreement. The Parties may deliver executed signature pages to this Agreement by facsimile or e-mail transmission. No Party may raise as a defense to the formation or enforceability of this Agreement (and each Party forever waives any such defense) any argument based on either (i) the use of a facsimile or email transmission to deliver a signature or (ii) the fact that any signature was signed and subsequently transmitted by facsimile or email transmission.
(o) Enforceability. The Parties have carefully structured this Agreement and the arrangements hereunder to comply with applicable Laws, and have consulted to their satisfaction with their respective legal counsel in connection herewith. Each Party acknowledges and agrees that this Agreement and such arrangements are valid, legal and enforceable obligations of such Party, and each Party agrees that it will not make, assert, maintain or initiate, nor cause to be made, asserted, maintained or initiated, any claim, charge, demand, action, arbitration or proceeding of any type, the basis of which is, in whole or in part, that this Agreement or any other agreement referenced or contemplated herein or any portion hereof or thereof, or the relationships or arrangements created hereby or thereby, is illegal, invalid or unenforceable, or that the Purchase Price is unreasonable or unlawful or does not represent fair market value for the Subject Interests. If a Party or Parties take any action which is inconsistent with the preceding sentence, then such Party or Parties will pay all losses, damages, costs, fees and expenses (including reasonable attorneys’ fees) incurred by the other Party or Parties, including in defending or responding to such claim, charge, demand, action, arbitration or proceeding, which payment will be made promptly to such other Party or Parties upon their respective request.
(p) Inconsistencies with Operating Agreement. Notwithstanding anything in this Agreement to the contrary, to the extent there are any inconsistencies between this Agreement and the Operating Agreement with respect to the transfer of the Subject Interests upon the occurrence of an Automatic Succession Event or an Additional Succession Event: (i) during any period that there is only one member of the Professional Company, this Agreement shall control; and (ii) during any period that there is more than one member of the Professional Company and such members are subject to the Operating Agreement in the form and substance attached hereto as Exhibit C (the “Operating Agreement”), the Operating Agreement shall control.
[The remainder of this page intentionally left blank. Signature page follows.]
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IN WITNESS WHEREOF, the Parties have executed and delivered or caused to be executed and delivered this Agreement as of the day and year first written above.
PROFESSIONAL COMPANY: | ||
[________________] | ||
By: | ||
Name: [_________________] | ||
Title: Sole Member | ||
OWNER: | ||
[____________________] | ||
MANAGEMENT COMPANY: | ||
EBS Enterprises, LLC, a Delaware limited liability company | ||
By: | ||
Name: [___________________] | ||
Title: [___________________] |
[Signature Page to Continuity Agreement]
EXHIBIT A
SUBSCRIPTION AGREEMENT
See attached.
EXHIBIT B
CONSENT AND ACKNOWLEDGEMENT OF SPOUSE
The undersigned, the spouse of ___________________, an individual licensed to practice (“Owner”), joins in the execution of that certain Continuity Agreement, dated as of [___________] (the “Continuity Agreement”), by and among Owner, [_______________] (the “Professional Company”), and EBS Enterprises, LLC, a Delaware limited liability company or its permitted assignee (the “Management Company”), to evidence such spouse’s (i) acknowledgement that such spouse has reviewed the terms and conditions of the Continuity Agreement and consulted with legal, accounting, tax and other advisors to such spouse’s satisfaction, (ii) agreement that such spouse’s community interest, if any, in and to the Subject Interests (as defined in the Continuity Agreement) held by Owner is subject to and bound by the terms and conditions of the Continuity Agreement in all respects, and (iii) acknowledgement that the Continuity Agreement shall not be deemed to confer or convey to such spouse any rights in any of the Subject Interests that do not otherwise exist by operation of law.
Acknowledged and Agreed as of | ||
, 2021 | ||
Name: |
Exhibit 21.1
List of Subsidiaries of AirSculpt Technologies, Inc.
Legal Name | Jurisdiction | |
EBS Intermediate Parent LLC | Delaware | |
EBS Enterprises LLC | Delaware |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated September 10, 2021, with respect to the financial statements of AirSculpt Technologies, Inc. contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption “Experts.”
/s/ GRANT THORNTON LLP
Miami, Florida
October 5, 2021
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated July 2, 2021, with respect to the consolidated financial statements of EBS Intermediate Parent LLC contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption “Experts.”
/s/ GRANT THORNTON LLP
Miami, Florida
October 5, 2021