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EXHIBIT 10.6
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions marked by an * and [ ], have been
separately filed with the Commission.
MANAGEMENT SERVICES AGREEMENT
by and among
New Atlanta Ear, Nose & Throat Associates, P.C.,
PSC Management Corp.
and
Physicians' Specialty Corp.
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MANAGEMENT SERVICES AGREEMENT
MANAGEMENT SERVICES AGREEMENT, effective as of ________, 1996 (the
"Effective Date"), by and among NEW ATLANTA EAR, NOSE & THROAT ASSOCIATES,
P.C., a Georgia professional corporation (the "Practice"); PSC MANAGEMENT
CORP., a Delaware corporation ("Manager"); and PHYSICIANS' SPECIALTY CORP., a
Delaware corporation ("Parent").
WITNESSETH:
WHEREAS, Manager is a wholly-owned subsidiary of Parent and is in the
business of managing medical practices and providing management services to
individual physicians and physician practice groups;
WHEREAS, pursuant to an Asset Purchase Agreement dated as of November 26,
1996, between Atlanta Ear, Nose & Throat Associates, P.C. and its shareholders
and Manager (the "Asset Purchase Agreement"), Manager has purchased
substantially all the assets utilized by Practice in connection with the
medical practice conducted by Atlanta Ear, Nose & Throat Associates, P.C.
WHEREAS, subject to the terms and conditions of this Agreement, Practice
desires to engage Manager to provide to Practice management services,
facilities, personnel, equipment and supplies necessary for the medical
practice conducted by Practice, and Manager desires to accept such engagement;
WHEREAS, the basis for the financial considerations provided in this
Agreement are derived from the revenues to be generated by the medical practice
of Practice, the basis for which has been documented by Atlanta Ear, Nose &
Throat Associates, P.C. and delivered to Manager prior to the formation and
agreement of such financial considerations; and
WHEREAS, Parent joins in this Agreement to guarantee the performance by
Manager of its obligations hereunder.
NOW THEREFORE, in consideration of the premises and the covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged by the
parties to this Agreement, Practice, Manager and Parent (collectively, the
"Parties") hereby agree as follows:
SECTION 1. KEY DEFINITIONS.
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For purposes of this Agreement, the following are certain important
defined terms used in this Agreement (a complete list of defined terms is set
forth on Appendix A.
1.1 GAAP. The term "GAAP" shall mean generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants, in
statements and pronouncements of the Financial Accounting Standards Board, in
such other statements by such other entity, or other practices and procedures
as may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination. For
purposes of this Agreement, GAAP shall be applied in a manner consistent with
the practices used by Parent and Manager.
1.2 NET PRACTICE REVENUES. The term "Net Practice Revenues" shall mean
all revenues, computed on an accrual basis as defined by GAAP, (after taking
into account adjustments for uncollectible accounts, discounts, Medicare,
Medicaid, workers' compensation, professional courtesy discounts and other
write-offs) generated by or on behalf of Practice or its employees as a result
of professional medical services furnished to patients, and other fees or
income generated by such persons in their capacity as Physician Shareholders,
Practice Employees and employees of Practice, whether rendered in an inpatient
or outpatient setting and whether generated from health maintenance
organizations, preferred provider organizations, Medicare, Medicaid or rendered
to other patients, including, but not limited to, payments received under any
capitation arrangement. The term "Net Practice Revenues" shall also include
any ancillary services revenues for services provided at the Medical Offices.
1.3 PHYSICIAN EXPENSES. The term "Physician Expenses" is defined in
Section 4.1 of this Agreement.
1.4 PHYSICIAN SHAREHOLDERS. The term "Physician Shareholders" shall mean
those individuals who are duly licensed to practice medicine in the State and
who are shareholders of Practice.
1.5 PRACTICE EMPLOYEES. The term "Practice Employees" shall mean: (a)
those individuals who are duly licensed to practice medicine in the State and
who are employees of Practice (other than Physician Shareholders), or those
individuals who are otherwise under contract with Practice to provide physician
and/or medical services to patients, specifically including nurse
practitioners, certified registered nurse anesthetists, physician assistants,
Fellows, surgical assistants, certified nurse midwives, individuals with a
Masters in Social Work degree, physical therapists, and psychologists with a
Masters or a Doctorate degree; and (b) those individuals (other than those
described in Section 1.5(a)) required by law, regulatory authority or policy as
of the Effective Date, who must be billed through and by a licensed physician
and who are therefore required to be employees of the Practice.
1.6 PRACTICE EXPENSES. The term "Practice Expenses" shall mean all
expenses incurred in the operation of the medical practice of Practice at the
Medical Offices (as defined in Section 3.1) or otherwise, whether by Manager or
by Practice, including, but not limited to: (a)
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The information below marked by * and [ ] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
depreciation, amortization, salaries, benefits and other direct costs of all
employees and independent contractors of Practice (but not including salaries,
benefits or other direct costs of Practice Employees (as defined in Section
1.5) or Physician Shareholders (as defined in Section 1.4)); (b) rent and other
obligations under leases or subleases for the Medical Offices and equipment
used by Practice; (c) personal property taxes and intangible taxes assessed
against assets used by Practice (d) charitable contributions budgeted and
approved by Manager and Practice; (e) interest expense on indebtedness of or
specifically related to the medical practice of Practice, including, without
limitation, capital expenditures; (f) utility expenses relating to the Medical
Offices; (g) subject to the limitation of Section 3.18, [*] of Net Practice
Revenues (as defined in Section 1.2), such amount to be retained by Manager as
payment for its services and non-allocable costs incurred by Manager
attributable to the provision of management services; (h) other expenses
incurred by Practice or Manager in carrying out their respective obligations
under this Agreement, except as otherwise provided herein; (i) amounts paid by
Manager in reimbursement of Practice, pursuant to Section 4.1, for salaries and
benefits paid by Practice for those individuals described in Section 1.5(b);
and (j) any reserves reasonably deemed prudent by Manager for anticipated costs
or expenses of the medical practice of Practice.
The term "Practice Expenses" shall not include, among other things: (1)
any federal, state or local income taxes of Practice or Manager, or the costs
of preparing federal, state or local tax returns; (2) any salaries or benefits
payable to Practice Employees or Physician Shareholders, except as covered
under subsection (i) above; (3) physician licensure fees, board certification
fees and costs of membership in professional associations for Practice
Employees and Physician Shareholders; (4) costs of continuing professional
education for Practice Employees and Physician Shareholders; (5) costs
associated with legal, accounting and professional services incurred by or on
behalf of Practice other than as described in the first sentence of Section
3.11; (6) liability judgments assessed against Practice, Practice Employees or
Physician Shareholders in excess of policy limits; (7) direct personal expenses
of Physician Shareholders or Practice Employees of a kind which are customarily
charged to physician shareholders and practice employees (including, but not
limited to, cellular phone expenses, car allowances, costs of employees
providing personal services to particular Physician Shareholders or Practice
Employees, and like expenses personal in nature); (8) capital expenditures
except to the extent of depreciation and amortization; or (9) any costs or
expenses not designated in this Agreement as being Practice Expenses or costs
and expenses designated as the responsibility of Manager.
Practice Expenses incurred in any budget period in excess of 120% of
budgeted amounts (measured on an aggregate, not line item, basis) resulting in
more than a 20% decrease in the budgeted pre-tax income of Practice shall be
the sole obligation of Manager, unless incurrence of such expenses is approved
by the Advisory Board described in Section 2.1 below, such approval not to be
unreasonably withheld if the expenses are commercially reasonable in nature and
amount under the circumstances.
1.7 STATE. The term "State" shall mean the State of Georgia, which is
where the medical practice of Practice is located.
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SECTION 2. ADVISORY BOARD.
2.1 FORMATION AND OPERATION OF THE ADVISORY BOARD. Manager and Practice
shall establish an Advisory Board responsible for advising Manager in
connection with the development of management and administrative policies for
the overall operation of the medical practice of Practice. The Advisory Board
shall consist of four (4) members. Manager shall designate, in its sole
discretion and from time to time, two (2) members of the Advisory Board.
Practice shall designate, in its sole discretion and from time to time, two (2)
members of the Advisory Board. Except as may otherwise be provided, the act of
a majority of the members of the Advisory Board shall be the act of the
Advisory Board.
2.2 FUNCTIONS OF THE ADVISORY BOARD. The Advisory Board shall review,
evaluate and make recommendations to Practice and Manager with respect to the
following matters:
(a) Annual Budgets. All annual capital and operating budgets
prepared by Manager, as set forth in Sections 3.4 and 3.19, shall be subject to
review and approval by the Advisory Board, which shall make recommendations to
Manager with respect to proposed changes therein.
(b) Physician Employment and Recruitment. The Advisory Board shall
advise Manager and Practice with respect to the types of physicians required
for the efficient operation of the medical practice of Practice and the content
of all physician employment and recruitment contracts to be utilized by
Practice.
(c) Strategic Planning. The Advisory Board shall make
recommendations to Manager regarding the development of long-term strategic
planning objectives for Practice.
(d) Capital Expenditures. The Advisory Board shall make
recommendations to Manager regarding the priority of major capital expenditures
for the medical practice of Practice.
(e) Capital Improvements and Expansion. Any renovation and expansion
plans and capital equipment expenditures with respect to the operations of the
medical practice of Practice shall be reviewed by the Advisory Board and shall
be based, in the judgment of Manager, upon economic feasibility, physician
support, productivity and then-current market conditions.
(f) Provider and Payor Relationships. The Advisory Board shall
review and advise Manager and Practice with respect to the establishment or
maintenance of relationships with institutional healthcare providers and
payors.
(g) Ancillary Services. The Advisory Board shall review and make
recommendations to Manager and Practice regarding the provision of ancillary
services based upon the pricing, access to and quality of such services.
(h) Patient Fees, Collection Policies. At least annually, the
Advisory Board shall review and advise Manager and Practice with respect to the
fee schedule for all physicians
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and ancillary services rendered by Practice.
(i) Advertising. The Advisory Board shall advise Manager with
respect to all advertising and other marketing of services performed at the
Medical Offices of Practice, including design and erection of exterior signs.
(j) Exceptions to Inclusion in Net Practice Revenues. The Advisory
Board will review and make recommendations to Manager and Practice with respect
to the proposed exclusion of any revenue from Net Practice Revenues.
(k) Grievance Referrals. The Advisory Board shall consider, review
and make recommendations to Manager and Practice with respect to any matters
arising in connection with the operations of Practice that are not specifically
addressed in this Agreement and as to which Manager or Practice requests
consideration by the Advisory Board.
Notwithstanding any contrary provision of this Agreement, it is acknowledged
and agreed that other than as provided in Section 2.2(a), recommendations of
the Advisory Board are intended for the advice and guidance of Manager and
Practice and that the Advisory Board does not have the power to bind Manager or
Practice. Where discretion with respect to any matter is vested in Manager
under the terms of this Agreement, Manager shall have ultimate responsibility
for the exercise of such discretion, notwithstanding any recommendation of the
Advisory Board. Manager and Practice shall, however, take such recommendations
of the Advisory Board into account in good faith in the exercise of such
discretion.
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SECTION 3. OBLIGATIONS OF MANAGER.
3.1 PROVISION OF SERVICES. Practice hereby engages Manager for the term
of this Agreement, and Manager hereby accepts such engagement, to provide to
Practice the business management and services, personnel, equipment and
supplies provided for in this Section 3 (collectively "Management Services").
Manager shall provide the Management Services at the medical offices located at
those locations set forth on Exhibit 3.1, or at such other place or places as
may be agreed upon by the parties. The medical offices or such other places
at which the Management Services are to be provided are referred to as the
"Medical Offices."
3.2 MEDICAL OFFICES. Manager shall pay out of Net Practice Revenues all
rent due from the Effective Date forward with respect to the Medical Offices,
and all costs of repairs, maintenance and improvements, telephone, electric,
gas and water utility expenses, insurance, normal janitorial services, refuse
disposal and all other costs and expenses reasonably incurred in connection
with the operations of Practice including, but not limited to, related real or
personal property lease payments and expenses, taxes and insurance. Manager
shall consult with Practice with respect to the condition, use and needs of the
Medical Offices, as expanded, improved or relocated from time to time.
3.3 FURNITURE, FIXTURES AND EQUIPMENT. Manager agrees to provide or have
provided to medical offices those supplies and items of furniture, fixtures and
equipment as are determined by Manager, after consultation with Practice, to be
necessary and/or appropriate for Practice's operations at the Medical Offices
during the term of this Agreement (all such items of furniture, fixtures and
equipment are collectively referred to hereinafter as the "FFE") subject,
however, to the following conditions:
(a) Practice shall have the use of the FFE only during the term of
this Agreement and title to the FFE shall be and remain in Parent, Manager
and/or PSC at all times during such term.
(b) Manager shall be responsible for, and pay for out of Net Practice
Revenues, all repairs, maintenance and replacement of the FFE, except for
repairs, maintenance and replacement necessitated by the negligence of
Practice, its employees and agents.
3.4 FINANCIAL PLANNING AND GOALS. Manager will prepare, in consultation
with Practice, annual capital and operating budgets reflecting, in reasonable
detail anticipated revenues and sources and uses of capital for growth in the
medical practice of Practice.
3.5 BUSINESS OFFICE SERVICES. Practice hereby appoints Manager as its
sole and exclusive manager and administrator of all business functions and
services related to Practice's services during the term of this Agreement.
Without limiting the generality of the foregoing, in providing the Management
Services, Manager shall perform the following functions:
(a) Manager shall evaluate, negotiate and administer all managed care
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contracts on behalf of Practice and shall consult with Practice on all
professional or clinical matters relating thereto.
(b) Manager shall provide ongoing assessment of business activity
including product line analysis, outcomes monitoring and patient satisfaction.
(c) Manager shall be responsible for ordering and purchasing all
medical and office supplies reasonably required in the day-to-day operation of
the medical practice of Practice at the Medical Offices.
(d) Manager shall make application and negotiate for the
procurement of professional liability insurance covering persons in the
coverage amounts set forth in Section 8.1. This coverage shall be made
available to Practice. Practice, however, shall have the right to obtain
coverage from an alternative provider reasonably acceptable to Manager.
(e) Manager shall xxxx and collect from patients all professional
fees for medical services and for ancillary services performed at the Medical
Offices by Practice and Practice's employees and agents, including, but not
limited to, Physician Shareholders and Practice Employees. Practice hereby
appoints Manager for the term of this Agreement as its true and lawful
attorney-in-fact for the following purposes:
(i) To xxxx patients in Practice's name and on Practice's
behalf, and in the name and on behalf of all Physician Shareholders and
Practice Employees;
(ii) To collect accounts receivable that are generated by such
xxxxxxxx in Practice's name and on Practice's behalf, and in the name and on
behalf of all Physician Shareholders and Practice Employees;
(iii) Following receipt by Practice, to take possession of
payments from patients, Blue Shield, insurance companies, Medicare, Medicaid
and all other payors with respect to services rendered by Practice, Physician
Shareholders and Practice Employees, and Practice hereby covenants to forward
such payments to Manager for deposit;
(iv) To endorse in the name of Practice, or any Physician
Shareholder or Practice Employee, any notes, checks, money orders, insurance
payments and any other instruments received by Practice as payment of such
accounts receivable; and
(v) To collect in Practice's name and on its behalf, and in
the name and on behalf of all Physician Shareholders and Practice Employees,
all Net Clinic Revenues.
3.6 DEPOSIT OF NET PRACTICE REVENUES. During the term of this Agreement,
all Net Practice Revenues collected shall be received directly by Practice at
the Practice location, and each business day Practice will transfer all
collected Net Practice Revenues into a bank account as specifically directed by
Manager, of which Manager shall be the owner and from which Manager shall have
the sole right to make withdrawals to pay Practice Expenses and Incentive
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Compensation (as defined in Section 5.1) on a monthly basis and, at the
direction of Practice, to transfer pursuant to Section 5.2 remaining Net
Practice Revenues by the fifteenth day of each month in arrears to an account
designated by Practice from which Practice will pay Physician Expenses.
Manager shall maintain its accounting records in such a way as to clearly
segregate Net Practice Revenues from other funds of Manager. Practice and
Manager hereby agree to execute from time to time such documents and
instructions as shall be required by the Credit Facility Lender (as defined in
Section 5.4(b)) and mutually agreed upon to effectuate the foregoing
provisions and to extend or amend such documents and instructions.
3.7 REVENUE REPORTS. Manager shall maintain revenue reports, as
determined by the books and records of Manager, with respect to the operations
of Practice. Revenue reports shall reflect the total gross revenues and Net
Practice Revenues generated by or on behalf of the medial practice of Practice.
Manager shall provide Practice with monthly revenue reports and shall provide
a year-end revenue report for Practice within ninety (90) days after the end of
each calendar year.
3.8 SUPPORT SERVICES. Manager shall provide all reasonable and necessary
computer, management information, bookkeeping, billing and collection services,
accounts receivable and accounts payable management services, laundry, linen,
janitorial and cleaning services and management services to improve efficiency
and workflow systems and procedures, as determined by Manager after
consultation with Practice.
3.9 ADMINISTRATOR. Manager shall provide an Administrator to manage and
administer all of the day-to-day business functions and services of the medical
practice of Practice. The Administrator will be selected by Manager after
prior consultation with Practice, and Manager shall determine the salary and
fringe benefits of the Administrator, but shall consult with Practice with
respect thereto.
3.10 PERSONNEL. Manager shall provide such non-physician personnel as
determined by Manager, after consultation with Practice, to be reasonably
necessary for the effective operation of the medical practice of Practice at
the Medical Offices, subject, however, to the following:
(a) Manager shall provide to Practice all nurses, medical records
personnel and other medical support personnel as requested by Practice and as
shall be reasonably necessary for the operation of Practice's medical practice
at the Medical Offices. As to the nursing and non-physician medical support
personnel provided under this Section 3.10(a), Manager shall determine the
salaries and benefits of all such personnel, but shall consult with Practice
with respect thereto. Manager shall also recommend the assignment of all such
personnel to perform services at the Medical Offices; provided, however, that
Practice shall have the right to approve, based primarily on professional
competence, the assignment of all non-physician medical support personnel to
provide services at the Medical Offices and Manager shall, at Practice's
request, reassign and replace such personnel from time to time who are not, in
Practice's reasonable and good faith judgment, adequately performing the
required professional services.
(b) Manager shall provide to Practice all business office personnel
(i.e.,
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clerical, secretarial, bookkeeping and collection personnel) reasonably
necessary for the maintenance of patient records, collection of accounts
receivable and upkeep of the financial books of account to the extent that same
are required for, and directly related to, the operation of the medical
practice by Practice. As to the personnel provided under this Section, Manager
shall determine the salaries and fringe benefits of all such personnel, but
shall consult with Practice with respect thereto.
(c) In exercising its judgment with regard to personnel as provided in
Section 3.9 and this Section 3.10, Practice agrees not to discriminate against
such personnel on the basis of race, religion, age, sex, disability or national
origin.
(d) In recognition of the fact that personnel provided to Practice
under this Agreement may perform services from time to time for others, this
Agreement shall not prevent Manager from performing such services for others or
restrict Manager from so using such personnel. Manager will make every effort
consistent with sound business practices to honor the specific requests of
Practice with regard to the assignment of such personnel; provided, however,
that except for non-physician medical support personnel, Manager hereby retains
the sole and exclusive decision-making authority regarding all such personnel
assignments.
(e) If Practice requests secretarial, clerical, bookkeeping,
management and non-physician medical support personnel in addition to personnel
determined to be necessary and/or appropriate by Manager, and such personnel
and/or services are provided by mutual agreement between Manager and Practice,
all costs and expenses incurred by Manager in providing such additional
personnel shall be paid to Manager by Practice.
3.11 PROFESSIONAL SERVICES. Manager shall use reasonable efforts to
arrange for or render to Practice such business, legal and financial management
consultation and advice as may be reasonably required or requested by Practice
and directly related to the operations of Practice. Manager shall not be
responsible for any services requested by or rendered to any individual,
employee or agent of Practice not directly related to the operations of
Practice nor shall Manager be responsible for rendering any legal or tax advice
or services or personal financial services to Practice or any employee or agent
of Practice.
3.12 PATIENT AND FINANCIAL RECORDS. Manager shall maintain all files and
records relating to the operation of Practice including, but not limited to,
customary financial records and patient files. The management of all files and
records shall comply with all applicable federal, state and local laws,
statutes, rulings, orders, ordinances and regulations ("Laws"), and all files
and records shall be located so that they are readily accessible for patient
care, consistent with ordinary records management practices. Practice shall
supervise the preparation of, and direct the contents of, patient medical
records, all of which shall be and remain confidential and the property of
Practice. Manager shall have reasonable access to such records and, subject to
applicable Laws and accreditation policies, Manager shall be permitted to
retain true and complete copies of such records. Manager hereby agrees to
preserve the confidentiality of such patient medical records and to use the
information in such records only for the limited purposes necessary to perform
the Management Services and, within the limits of its responsibilities
hereunder, to ensure that
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provision is made for appropriate care for patients of Practice.
3.13 MARKETING SERVICES. Manager shall use its commercially reasonable
efforts to market the medical services provided by Practice. Such marketing
shall be undertaken in a tasteful and professional manner, shall be in
compliance with applicable Laws relating to advertising by the medical
profession, and shall be subject to review by the Advisory Board as set forth
in Section 2.2(i). The parties agree that, at the option of Manager, the
"Physicians' Specialty Corp." name may be included on any or all signage,
letterhead, professional announcements and the like relating to Practice
subject to state law restrictions on the corporate practice of medicine.
3.14 PHYSICIAN RECRUITMENT. At the request of Practice, Manager shall
perform administrative services relating to the recruitment of physicians for
Practice. Practice shall determine the need for additional physicians in
consultation with Manager. All such physicians recruited by Manager and
accepted by Practice shall be shareholders or employees of Practice (if such
physicians are hired as employees) and not of Manager. Any expenses incurred
in the recruitment of physicians shall be treated as Practice Expenses.
Practice agrees that all physicians hired by the Practice shall execute a
Physician Employment Agreement in a form approved by Manager (the "Physician
Employment Agreements"). Practice agrees not to change the form of the
Physician Employment Agreement without Manager's prior written consent.
3.15 EXPANSION OF PRACTICE. Manager will assist Practice in attempting to
add additional office-based procedures, in establishing new satellite office(s)
that are commercially reasonable and beneficial to Practice, as determined by
Practice and Manager to be beneficial to Practice, and in developing
relationships and affiliations with physicians and other specialists,
hospitals, networks, health maintenance organizations, preferred provider
organizations, etc., to assist in the continued growth and development of the
medical practice of Practice. Practice will cooperate with Manager in such
efforts and use its best efforts to assist Manager with respect thereto.
Without limiting the generality of the foregoing, Practice will not enter into
any agreements with respect to any such matters without the prior consent of
Manager.
3.16 PERFORMANCE OF BUSINESS OFFICE SERVICES. Manager is hereby expressly
authorized to perform its business office services hereunder in whatever
reasonable manner it deems appropriate to meet the day-to-day requirements of
the non-medical business functions of Practice's medical practice at the
Medical Offices. Manager may perform some or all of the business office
functions of Practice at locations other than at the Medical Offices.
3.17 FORCE MAJEURE. Manager shall not be liable to Practice for failure
to perform any of the services required under this Agreement in the event of
strikes, lockouts, calamities, acts of God, unavailability of supplies or other
events over which Manager has no control for so long as such event continues
and for a reasonable period of time thereafter.
3.18 PAYMENT OF PRACTICE EXPENSES. Manager shall pay all Practice
Expenses as they become due out of Net Practice Revenues; provided, however,
that Manager may, in the name of and on behalf of Practice, contest in good
faith any claimed Practice Expenses as to which there is any dispute regarding
the nature, existence or validity thereof. Manager shall be entitled, on a
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The information below marked by * and [ ] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
monthly basis, as a Practice Expense payable to itself, to retain from Net
Practice Revenues the amount specified in Section 1.6(g). The amounts retained
pursuant to Section 1.6(g) will not exceed [*] on an annual basis, unless
Practice expands its number of Physician Shareholders or physician Practice
Employees in connection with an asset or practice acquisition consummated by
Manager or Parent (or affiliate thereof). In such case the amount of [*] in the
preceding sentence shall be increased by an amount equal to the product of (x)
[*], (y) the trailing twelve (12) months of net practice revenues of said
acquisition target and (z) [*]. For example, an acquisition of assets by
Manager or Parent (or affiliate thereof) of a practice which has physicians join
the Practice as Physician Shareholders or Practice Employees and has trailing
twelve months net practice revenue of [*] will result in an increase in the [*]
amount described above by [*], which would result an aggregate retained amount
on an annual basis of [*] after such acquisition. Practice acknowledges and
agrees that the amount to be retained by Manager pursuant to Section 1.6(g) is
reasonable and fair, given the undertakings of Manager as set forth in this
Agreement and the other benefits and value that accrue to Practice as a result
of this Agreement.
3.19 BUDGETS.
(a) As part of the Manager's responsibilities under this Agreement,
the Manager shall prepare annual capital and operating budgets for the Practice
for each budget period in accordance with the provisions of this Section 3.19.
As used herein, a budget period means a fiscal year of Practice unless
otherwise provided.
With respect to each budget period following the initial budget
period, the Manager shall prepare and deliver a preliminary draft of each such
budget to the Advisory Board at least 30 days prior to the commencement of the
budget period to which such budget relates. The Advisory Board shall provide
any comments or suggested changes to such preliminary drafts to the Manager
within 15 days after receipt thereof. The Manager shall then submit a revised
budget to the Advisory Board for approval by the Advisory Board no later than
15 days after the end of the 15-day period referred to in the immediately
preceding sentence. The Advisory Board shall then approve or disapprove of,
but not modify or amend the budget within 15 days of receiving it. The
foregoing time periods during which drafts of the budget are to be delivered
and approved shall be subject to adjustment from time to time as determined
appropriate by the Advisory Board and Manager.
If prior to the commencement of any budget period, the Advisory
Board has not yet approved the budget, then the Manager and the Advisory Board
will work diligently in good faith to obtain such approvals, and until such
approvals are obtained, with respect to the budget, (i) as to any disputed line
items, the immediately preceding budget period's budget shall be controlling
until such time, if any as agreement is reached on the amounts to be allocated
to such disputed line items, specifically as follows: (A) non-recurring or
extraordinary items shall not be continued from the budget for the immediately
preceding budget period, (B) if the previous budget was for a budget period of
less than 12 months, it shall be annualized, (C) all items subject to an
automatic increase, such as rent and taxes, shall be budgeted at the increased
rate (D) for items such as employee salaries and benefits, the total salary and
benefits number shall be adjusted to take into account changes in the number
and classifications of employees employed or
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contracted, and (ii) as to any line items which are not in dispute, the revised
budgets submitted by the Manager shall control.
(b) The parties agree that the Manager shall have the authority and
discretion to reallocate cost and expense line items within the budget, so long
as the pre-tax income targets within such budgets are not adversely impacted.
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SECTION 4. OBLIGATIONS OF PRACTICE.
4.1 PHYSICIAN EXPENSES. Practice shall be solely responsible for the
payment, when due, of all costs and expenses incurred in connection with
Practice's operations that are not Practice Expenses ("Physician Expenses"),
including, but not limited to, insurance premiums for policies of malpractice
insurance, deductibles under such policies of malpractice insurance, any and
all costs and expenses incurred with respect to claims under such policies of
malpractice insurance, salaries and benefits, workers' compensation, retirement
plan contributions, health, disability and life insurance premiums, payroll
taxes, cellular phone and automobile expenses incurred by or in connection with
the employment of all Physician Shareholders and Practice Employees. Practice
shall be responsible for paying as a Physician Expense salaries, benefits and
other similar direct costs for all Practice Employees and Physician
Shareholders. Practice shall pay all Physician Expenses as they become due.
However, Practice shall pay the salaries and benefits for those individuals
described in Section 1.5(b), but Manager shall reimburse Practice for all such
salaries and benefits and such reimbursement amounts shall be a Practice
Expense under Section 1.6.
4.2 PROFESSIONAL STANDARDS.
(a) It is expressly acknowledged by the parties to the Agreement
that all medical services provided at the Medical Offices shall be performed
solely by physicians and allied health care professionals duly licensed to
practice medicine in the State. The professional services provided by Practice
and its Physician Shareholders and Practice Employees shall at all times be
provided in accordance with applicable ethical standards and Laws applying to
the medical profession. Practice shall at all times during the term of this
Agreement be and remain legally organized and authorized to provide medical
care and services in a manner consistent with all state and federal laws.
Practice will cooperate with Manager in taking steps to resolve any utilization
review or quality assurance issues which may arise in connection with the
medical practice of Practice. If any disciplinary actions or professional
liability actions are initiated against any Physician Shareholder or Practice
Employee, Practice shall immediately inform Manager of such action and the
underlying facts and circumstances. Practice agrees to implement and maintain
a program to monitor the quality of medical care provided by Practice, and
Manager shall render administrative assistance to Practice on an as-requested
basis to assist Practice in implementing and maintaining such program.
(b) Practice shall at all times during the term of this Agreement
assure that each physician of the Practice shall:
(i) maintain an unrestricted license to practice medicine in
the State and maintain good standing with the Medical Board of the State;
(ii) maintain a federal Drug Enforcement Administration
certificate without restrictions, to prescribe controlled substances as are
customarily prescribed by physicians practicing in Physician's practice
specialties;
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(iii) maintain hospital medical staff memberships and clinical
privileges at those facilities set forth on Part Three of Exhibit A of the
Physician Employment Agreement as amended from time to time;
(iv) perform all professional services through Practice and
in accordance with all Laws and with prevailing standards of care and medical
ethics and with practice protocols and policies as adopted from time to time by
Practice;
(v) maintain Physician's skills through continuing education
and training, including participation in those programs designated by Practice
from time to time;
(vi) maintain eligibility for insurance under the
professional liability policy or policies at a commercially reasonable cost as
determined by Practice carried by or on behalf of Practice for Physician's
practice specialties, to the extent Physician is covered by such policy or
policies pursuant to Section 5.2 of the Physician Employment Agreement;
(vii) maintain Physician's board-certified or board-eligible
status in Physician's practice specialties;
(viii) qualify and maintain Physician's qualification as a
participating provider in the Medicare and State of Georgia Medicaid programs;
(ix) abide by the Principles of Medical Ethics of the
American Medical Association and the Medical Society of the State;
(x) comply with all Laws applicable to the conduct of
Physician's activities, as well as with the articles of incorporation, bylaws
and other corporate governance documents of Practice and other rules or
regulations adopted from time to time by Practice;
(xi) promptly disclose to Practice (i) the commencement or
pendency of any legal action, administrative proceeding or investigation,
medical staff or professional disciplinary actions against Physician or (ii)
the existence of any circumstances that could reasonably be expected to form
the basis of or lead to any such action, proceeding or investigation;
(xii) abide by any guidelines adopted by Practice or any
person or entity providing management services to Practice designed to
encourage the appropriate, efficient and cost-effective delivery of medical
services, subject always to the clinical judgment of Physician, and cooperate
with and participate in all Practice programs regarding quality assurance,
utilization review, risk management and peer review;
(xiii) maintain appropriate and accurate medical records in
accordance with accepted medical standards and Practice policies with respect
to all patients evaluated and treated; and
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(xiv) satisfy such other reasonable requirements as are
established from time to time by Practice.
4.3 PROVIDER AND PAYOR RELATIONSHIPS. Practice shall advise Manager on
matters relating to the establishment or maintenance of relationships with
institutional healthcare providers and third-party payors, including, but not
limited to, managed care programs, health maintenance organizations and
preferred provider organizations. Without limiting the generality of the
foregoing, Practice shall cooperate with Manager in the development and
operation of integrated healthcare delivery systems developed from time to time
by Manager for the benefit of Manager's affiliates.
4.4 PHYSICIAN CONTRACTS AND POWERS OF ATTORNEY. (a) During the term of
this Agreement Practice shall maintain Employment Agreements substantially in
the form of Exhibit A hereto with all Physician Shareholders and other
physician practitioners employed or otherwise retained by Practice as Practice
Employees. Practice shall not amend any of the Employment Agreements or waive
any rights thereunder without the prior consent of Manager.
(b) Practice shall require all Physician Shareholders and physician
Practice Employees to execute and deliver to Manager powers of attorney,
satisfactory in form and substance to Manager, appointing Manager as
attorney-in-fact for each such Physician Shareholder and physician Practice
Employee for the purposes set forth in Section 3.5(e) to the extent authorized
by law.
4.5 RESTRICTIVE COVENANTS.
(a) Practice acknowledges and agrees that the services to be provided
by Manager hereunder are feasible only if Practice operates a vigorous medical
practice to which its Physician Shareholders and Practice Employees devote
their full time and attention (other than Physician Shareholders or Practice
Employees employed on a part-time basis with the consent of Manager which
consent will not be unreasonably withheld where it is in the best interest of
the Practice due to the approaching retirement of a physician or will not
adversely affect Net Practice Revenues). Accordingly, Practice agrees that,
during the term of this Agreement, it shall not, without the prior written
consent of Manager, establish, operate or provide physician services at any
medical office, clinic or other healthcare facility in the State which provides
services substantially similar to those offered by Practice at the Medical
Offices other than services at healthcare facilities in a manner consistent
with past practices of Practice or, prior to the date hereof, Atlanta Ear, Nose
& Throat Associates, P.C.
(b) During the term of this Agreement and for a period of eighteen (18)
months following the termination or expiration of this Agreement, Practice
shall not, in the State, alone or in conjunction with any other person or
entity, without the prior written consent of Manager, solicit or attempt to
solicit any employee, consultant, contractor or other personnel affiliated with
Manager (or who was affiliated with Manager at any point during the six months
prior to termination of this Agreement) to terminate, alter or lessen that
party's affiliation with
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Manager or to violate the terms of any agreement or understanding between such
employee, consultant, contractor or other person and Manager.
(c) If this Agreement is terminated for any reason other than by Practice
pursuant to Section 6.2 (b) below, Practice shall not for a period of eighteen
(18) months following the effective date of such termination, engage or
contract with any person, firm or entity (or group of affiliated entities) for
the provision of comprehensive management services to Practice at the Medical
Offices (or at any new or replacement medical offices of Practice in the State)
substantially of the kind contemplated by this Agreement.
(d) The intellectual and other property rights in any work product,
discoveries or inventions developed or acquired by Practice, the Physician
Shareholders or Practice Employees or any other personnel or agents of such
parties during the term of this Agreement (the "Practice IP") shall be deemed
to be owned exclusively by the Manager. The Practice hereby unconditionally
and irrevocably transfers and assigns to Manager all rights, title and interest
the Practice may currently have (or in the future may have) by operation of law
or otherwise in or to any Practice IP, including, without limitation, all
patents, copyrights, trademarks, service marks and other intellectual property
rights. Practice agrees to execute and deliver to Manager any transfers,
assignments, documents or other instruments which Manager may deem necessary or
appropriate to vest complete title and ownership of any Practice IP, and all
associated rights, exclusively in Manager. The Physician Employment Agreements
shall have a provision comparable to this paragraph (d) assigning these
Practice IP rights from the Practice physicians to Practice, in contemplation
of their reassignment from Practice to Manager as herein provided, subject only
to such exclusions as are provided in the form of Physician Employment
Agreement approved by Manager.
(e) Practice acknowledges and agrees that Manager's Trade Secrets and
Confidential Information (both as defined below) represent a substantial
investment by Manager. Practice also acknowledges and agrees that any
unauthorized disclosure or use of any of Manager's Trade Secrets or
Confidential Information would be wrongful and would likely result in immediate
and irreparable injury to Manager. Except as required in order to perform
Practice's obligations under this Agreement, Practice shall not, without the
express prior written consent of Manager, redistribute, market, publish,
disclose or divulge to any other person or entity, or use or modify for use,
directly or indirectly in any way for any person or entity: (i) any
Confidential Information during the term of this Agreement and for a period of
three (3) years after the final date of the term of this Agreement; and (ii)
any Trade Secrets at any time (during or after the term of this Agreement)
during which such information or data shall continue to constitute a "trade
secret" under applicable law. Practice further agrees to cooperate with (and
require its physicians and other personnel to comply with) any reasonable
confidentiality requirements of Manager. Practice shall immediately notify
Manager of any unauthorized disclosure or use of any of the Trade Secrets or
Confidential Information of Manager of which Practice becomes aware. For
purposes of this Agreement "Confidential Information" shall mean valuable,
non-public competitively sensitive data and information relating to Manager's,
Parent's or PSC's business other than Trade Secrets (which shall have the
meaning given that term under applicable law) that is not generally known by or
readily available to competitors of Manager, including, without
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limitations, computer software and management information systems provided by
Manager.
(f) Unless otherwise agreed by Manager in writing, Practice shall
enforce vigorously the covenants (and any liquidated damages provisions) of the
Physician Shareholders and other physician employees of Practice set forth in
the Physician Employment Agreements (which the Parties agree will be in
substantially the form of Exhibit A) with counsel approved by Manager. Practice
and such counsel shall cooperate with Manager in any such litigation and all
major litigation decisions and strategy shall be subject to approval of
Manager, and Practice shall not compromise or settle any such litigation
without Manager's approval. In the event that the Practice recovers
liquidated damages (or other damages) from any physician for breach of such a
covenant, then the Practice shall promptly remit to Manager an amount equal to
any and all such amounts so received. Manager agrees to pay the fees and
disbursements of counsel of Practice approved by it. Practice shall not take
any action that, under this Agreement, is to be taken only by Manager. The
Parties agree and the Physician Employment Agreement shall provide that the
actual losses to be suffered by Manager will be difficult to ascertain, but the
liquidated damages set forth have been arrived at after good faith effort to
estimate such losses. Practice specifically acknowledges and agrees that
Manager would not have entered into this Agreement but for Practice's covenant
to enforce the Physician Employment Agreements as provided above and that the
failure of any physician to comply with such agreements will result in Manager
suffering extensive economic damages.
(g) Manager and Practice acknowledge and agree that Manager's remedy at
law for any breach or attempted breach of the foregoing provisions may be
inadequate and that Manager shall be entitled to specific performance,
injunction or other equitable relief in the event of any such breach or
attempted breach, in addition to any other remedies which might be available at
law or in equity. If the duration, scope or geographic area contemplated by
the foregoing provisions is determined to be unenforceable by a court of
competent jurisdiction, the parties agree that such duration, scope or
geographic area shall be deemed to be reduced to the greatest scope, duration
or geographic area which would be enforceable.
4.6 PROFESSIONAL DUES AND EDUCATION EXPENSES. Practice and its Physician
Shareholders and Practice Employees, subject to Manager approval, shall be
solely responsible for all costs and expenses associated with membership in
professional associations and continuing professional education. Practice
shall ensure that each of its Physician Shareholders and Practice Employees
participates in such continuing medical education activities as are necessary
for such physicians to remain current in their respective specialties,
including, but not limited to, the minimum continuing medical education
requirements imposed by applicable laws and policies of applicable specialty
boards.
4.7 PROVISION OF SERVICES BY PRACTICE. Practice shall maintain at least
the same quality and scope of medical practice and other health care services
provided by Atlanta Ear, Nose & Throat Associates, P.C. prior to the date
hereof and shall use its reasonable good faith efforts to enhance the medical
practice of the Practice and to comply with all Practice budgets. Practice
shall engage a sufficient member of Physician Shareholders or physician
Practice
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Employees to provide services to patients of the Practice at normal
office hours at the Medical Offices and to provide coverage during all
appropriate hours of all hospitalized patients of Practice whether on any
inpatient or outpatient basis.
4.8 PHYSICIAN SHAREHOLDER AGREEMENT. Practice represents that it has
delivered to Manager a true and correct copy of the shareholder agreement
between Practice and its Physician Shareholders and will cause all new
shareholders of Practice to execute such agreement prior to becoming a
shareholder in Practice. Practice shall not amend the shareholder agreement so
as to cause the shareholder agreement to contravene or conflict with this
Agreement or the Employment Agreements between Practice and its physician
employees.
SECTION 5. INCENTIVE COMPENSATION
5.1 INCENTIVE AMOUNTS. Practice agrees that Manager shall be entitled to
incentive compensation ("Incentive Compensation") as set forth on Exhibit B.
With respect to any partial calendar years during which this Agreement is in
effect, Incentive Compensation shall be prorated according to the number of
calendar days actually elapsed during such partial calendar year. The
Incentive Compensation will be paid, as described below, in the form of monthly
draws (which will provide Manager with an amount that is estimated in
accordance with the formula set forth on Exhibit B) with an adjustment at each
year end to account for any differences between the amount of Incentive
Compensation paid as draws and the amounts calculated based on the complete
year end revenue and expense figures.
5.2 MECHANICS OF DRAWS. Following the end of each month, Manager shall
make an estimate of the collection percentage ("Estimated Collection
Percentage") for such month's gross Practice revenues. The Estimated
Collection Percentage may vary depending on historical collection percentages,
changes in fee schedules, changes in third party reimbursement, bad debt
write-offs and similar adjustments. The Estimated Collection Percentage will
then be applied to such month's gross Practice revenues, resulting in estimated
Net Practice Revenues for such month. Draws of Incentive Compensation
attributable to such month will be determined by applying the formula set forth
on Exhibit B to the excess of Net Practice Revenue over Practice Expenses and
will be paid by the 15th day of the following month. An amount equal to the
excess of Net Practice Revenues over Practice Expenses will be transferred by
Manager to Practice and used by Practice to pay Physician Expenses on such 15th
day.
5.3 RECONCILIATION.
(a) As soon as reasonably practicable, but in any event not later
than one hundred twenty (120) days after the end of each calendar year, Manager
will adjust the Estimated Collection Percentage based on actual net cash
collections attributable to the gross Practice revenues for such year and shall
determine actual Net Practice Revenues. Within forty-five (45) days after the
end of such one hundred twenty (120) day period, and based on the financial
statements prepared by Manager in good faith pursuant to Section 3.7, Manager
shall retain an amount equal to the aggregate Incentive Compensation payable
with respect to such calendar
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year, less the aggregate sum of all draws by Manager pursuant to Section 5.2
during such period.
(b) In the event that, after making the calculation contemplated by
Section 5.3(a), it is determined that draws by Manager under Section 5.2 for
the applicable calendar year exceed the amount which it is ultimately entitled
to receive with respect to such year as Incentive Compensation (an
"overdraft"), Manager shall pay the amount of such overdraft to Practice within
ninety (90) days after the end of the year. In the event Practice disagrees
with Manager's computation of Net Practice Revenues or Incentive Compensation,
it shall have the right to review, upon reasonable notice to Manager, the
documents used in determining such amounts.
5.4 ASSIGNMENT OF SECURITY INTEREST.
(a) Practice hereby irrevocably assigns and sets over to Manager
all of Practice's rights to the proceeds in the accounts receivable of the
medical practice of Practice with respect to any services rendered prior to the
effective date of expiration or termination of this Agreement and grants to
Manager the right to retain such proceeds for its own account for application
in accordance with this Agreement, and shall obtain a like assignment from all
Physician Shareholders and Practice Employees. Practice shall endorse (and
shall cause each Physician Shareholder or Practice Employee to endorse) any
payments received on account of such services to the order of Manager and shall
take such other actions as may be necessary to confirm to Manager the rights
set forth in this Section 5.4(a).
Without limiting the generality of the foregoing, it is the intent
of the parties that the assignment to Manager of the rights described in
Section 5.4(a) above shall be inclusive of the rights of Practice and the
Physician Shareholders and Practice Employees to proceeds of payment with
respect to any services rendered prior to the effective date of any expiration
or termination of this Agreement. Practice agrees and shall cause each
Physician Shareholder and Practice Employee to agree, that Manager shall retain
the right to collect any and all accounts receivable relating to any such
services rendered prior to the effective date of any such expiration or
termination ("Pre-Termination Accounts Receivable"), and that the proceeds
thereof will be transferred to Manager's account to be applied in accordance
with Section 3.6 and the other provisions of this Agreement.
(b) Practice acknowledges that Manager and Parent may, to the extent
permitted by law, grant a security interest in the Pre-Termination Accounts
Receivable and proceeds thereof to their factor(s) or lender(s) under
Manager's or Parent's working capital credit facility (whether one or more,
"Credit Facility Lender"), as in effect from time to time. Practice agrees
that such security interest of the Credit Facility Lender is intended to be a
first priority security interest and is superior to any right, title or
interest which may be asserted by Practice or any Physician Shareholder or
Practice Employee with respect to Pre-Termination Accounts Receivable or the
proceeds thereof under this Agreement. Practice further agrees, and shall
cause each Physician Shareholder and Practice Employee to agree, that, upon the
occurrence of an event which, under the terms of such working capital credit
facility, would allow the Credit Facility Lender to exercise its right to
collect Pre-Termination Accounts Receivable and apply the proceeds thereof
toward amounts due under such working capital credit facility, the Credit
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Facility Lender will succeed to all rights and powers of Manager under the
powers of attorney provided for in Sections 3.5 and 4.4 above as if such Credit
Facility Lender had been named as the attorney-in-fact therein.
(c) If, contrary to the mutual intent of Manager and Practice, the
assignment described in this Section 5.4 shall be deemed for any reason to be
ineffective, then Practice and each Physician Shareholder and Practice Employee
shall to the extent permitted by applicable Laws, effective as of the date of
this Agreement, be deemed to have granted (and Practice does hereby grant, and
shall cause each Physician Shareholder and Practice Employee to grant) to
Manager a first priority lien on and security interest in and to any and all
interests of Practice and such Physician Shareholders and Practice Employees in
any accounts receivable generated by the medical practice of Practice and its
Physician Shareholders and Practice Employees or otherwise generated through
the operations of the medical practice of Practice, and all proceeds with
respect thereto, to secure the payment to Manager hereunder of all Practice
Expenses and Incentive Compensation, and this Agreement shall be deemed to be a
security agreement to the extent necessary to give effect to the foregoing.
Practice shall execute and deliver, and cause each Physician Shareholder and
Practice Employee to execute and deliver, all such financing statements as
Manager may request in order to perfect such security interest. Practice shall
not grant (and shall not suffer any Physician Shareholder or Practice Employee
to grant) any other lien on or security interest in or to such accounts
receivable or any proceeds thereof or in or to this Agreement to any other
person or entity.
SECTION 6. TERM AND TERMINATION.
6.1 TERM. The initial term of this Agreement shall be for a period of
forty (40) years commencing on _______________, 1997 and ending on
_________________, 2037. This Agreement may be extended for separate and
successive five-year periods (each such five-year period referred to
hereinafter as an "extended term"), under such terms and conditions as stated
herein with respect to any such extended term; provided, however, that: (a)
Practice and Manager mutually agree to extend the term of this Agreement and
mutually agree upon the documents to be in effect during any such extended term
hereto, not less than sixty (60) days prior to expiration of the initial term
or extended term then in effect; and (b) Practice is not in material default
hereunder on the date of commencement of the extended term.
6.2 TERMINATION.
(a) Manager may terminate this Agreement, and have no further
liability or obligation hereunder, upon the occurrence of one or more of the
following events:
(i) Practice repeatedly fails to perform in a material respect
its material obligations hereunder and such repeated failure continues for a
period of forty-five (45) days after Practice's receipt of written notice
specifying such failure; provided, however, that if such failure cannot be
cured within forty-five (45) days, but is capable of being cured within a
reasonable period of time in excess of forty-five (45) days, then Manager shall
not be entitled to terminate this Agreement if Practice commences the cure of
such failure within the first forty-five (45) day
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period and thereafter diligently and in good faith continues to prosecute such
cure until completion; provided, further, that if Practice or any Physician
Shareholder or Practice Employee breaches Section 4.5(a) of this Agreement,
Manager may terminate this Agreement immediately upon written notice to
Practice.
(ii) Practice voluntarily files a petition in bankruptcy or
makes an assignment for the benefit of creditors or otherwise seeks relief from
creditors under any federal or state bankruptcy, insolvency, reorganization or
moratorium statute, or Practice is the subject of an involuntary petition in
bankruptcy which is not set aside within sixty (60) days of its filing.
(iii) Practice is in material breach or default under any
other written agreement with Manager, subject to any applicable notice and
cure periods provided in any such agreement.
(iv) Any representations and warranties made by Practice in
this Agreement prove to have been untrue or incorrect.
(v) If in any calendar year the licenses of 20% or more in
number of the Physician Shareholders or physician Practice Employees to
practice medicine in the State of Georgia are suspended or revoked, or are
subjected to final disciplinary action by the State Board of Medicine or any
similar body on any grounds, other than minor, immaterial or insubstantial
grounds, or die or become mentally or physically disabled and, by reason of
such disability, are in the reasonable judgment of Manager unable to conduct
medical practice on substantially the same basis as conducted prior to such
disability, or if in any calendar year 20% or more of the Physician
Shareholders retire or sell their interests in Practice and cease to practice
medicine on substantially a full-time basis as Practice Employees; provided,
however, that in any such event Practice shall have one hundred eighty (180)
days from the date on which Manager gives Practice written notice of its intent
to terminate this Agreement pursuant to this Section 6.2(a)(v) to replace the
affected physicians with other physicians satisfactory to Manager, in its
reasonable discretion; provided further, however, that Manager and Practice may
agree to bring in a locum tenens physicians to provide physician services
during such one hundred eighty (180) day period.
(vi) Manager and Practice are unable, notwithstanding
diligent efforts to do so, to agree on any modifications or amendments to the
then-current capital and operating budgets for the medical practice of Practice
which Manager reasonably deems to be necessary in light of the circumstances
then prevailing.
(b) Practice may terminate this Agreement, and have no further
liability hereunder, upon the occurrence of one or more of the following events:
(i) Manager repeatedly fails to perform in a material respect
its material obligations hereunder and such repeated failure continues uncured
for a period of forty-five (45) days after Manager's receipt of written notice
specifying such failure, provided, however, that if such failure cannot be
cured within forty-five (45) days, but is capable of being cured within a
reasonable period of time in excess of forty-five (45) days, then Practice
shall not
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be entitled to terminate this Agreement if Manager commences the cure
of such failure within the first forty-five (45) day period and thereafter
diligently and in good faith continues to prosecute such cure until completion.
(ii) Manager voluntarily files a petition in bankruptcy or
makes an assignment for the benefit of creditors or otherwise seeks relief from
creditors under federal or state bankruptcy, insolvency, reorganization or
moratorium statute, or Manager is the subject of an involuntary petition in
bankruptcy which is not set aside within sixty (60) days of its filing.
6.3 REMEDIES UPON TERMINATION.
(a) If this Agreement is terminated pursuant to Section 6.2,
Incentive Compensation shall be deemed earned through the date of termination.
Any Incentive Compensation due Manager shall be paid within thirty (30) days
after the effective date of termination. If this Agreement is terminated
pursuant to Sections 6.2(a)(i), 6.2(a)(iii), or 6.2(b)(i) of this Agreement,
the non-breaching party may pursue such other legal or equitable relief as may
be available in addition to such proration.
6.4 REPURCHASE OF EQUIPMENT AND SUPPLIES. Upon the termination of this
Agreement prior to the end of the forty (40) year initial term (other than a
termination by Practice pursuant to Section 6.2(b)(i)), Manager shall have the
right to require Practice to repurchase all or any portion of the FFE and all
then unused supplies located at the Medical Offices or purchased by Manager for
specific use at the Medical Offices (except pharmaceutical supplies), from
Manager at a repurchase price equal to the then book value of the FFE and such
unused supplies as reflected by Manager's (or Parent's) books and records of
account. Exercise of this right by Manager shall be accomplished by written
notice to Practice within thirty (30) days after the termination of this
Agreement. Such notice of exercise shall also specify a time and date for a
closing to be held to consummate such purchase and sale, such closing to be
within ninety (90) days after the termination of this Agreement at the offices
of Manager in [Atlanta, Georgia], or such other location as Manager shall
designate in such written notice. At the closing Practice shall purchase such
FFE and unused supplies from Manager hereunder by delivery of cash or
immediately available funds, against delivery of a xxxx of sale from Manager
transferring all its right, title or interest in or to same.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
7.1 REPRESENTATIONS AND WARRANTIES OF PRACTICE. Practice hereby
represents and warrants to Manager as follows:
(A) ORGANIZATION AND GOOD STANDING. Practice is a professional
corporation duly organized, validly existing and in good standing under the
laws of the State of Georgia. Practice has all necessary power to own all of
its properties and assets and to carry on its business as now being conducted.
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(B) NO VIOLATIONS. Practice has the corporate authority to execute,
deliver and perform this Agreement and all agreements executed and delivered by
it pursuant to this Agreement, and has taken all action required by law, its
Articles or Certificate of Incorporation, its Bylaws or otherwise to authorize
the execution, delivery and performance of this Agreement and such related
documents. The execution and delivery of this Agreement does not and, subject
to the consummation of the transactions contemplated hereby, will not, violate
any provisions of the Articles or Certificate of Incorporation or Bylaws of
Practice or any provisions of or result in the acceleration of, any material
obligation under any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree, to which Practice is a party, or by
which it is bound. This Agreement has been duly executed and delivered by
Practice and constitutes the legal, valid and binding obligation of Practice,
enforceable in accordance with its terms.
(C) FINANCIAL INFORMATION. Practice has hereto furnished Manager with
complete copies of certain financial information about Practice which
information is true and correct and presents fairly the financial results
experienced by Practice for the periods set forth in such information.
(D) PROFESSIONAL LIABILITY. No Physician Shareholder or physician
Practice Employee has ever (a) had his license to practice medicine in any
state or his Drug Enforcement Agency number suspended, relinquished,
terminated, restricted or revoked; (b) been reprimanded, sanctioned or
disciplined by any licensing board, or any federal, state or local society or
agency, governmental body or specialty board; (c) had entered against him final
judgment in, or settle without judgment, a malpractice or similar action for an
aggregate award or amount to the plaintiff in excess of Fifty Thousand and
No/100 Dollars ($50,000.00); or (d) had his medical staff privileges at
any hospital or medical facility suspended, terminated, restricted or revoked
other than temporary suspension for failure to timely complete medical records.
7.2 REPRESENTATIONS AND WARRANTIES OF MANAGER. Manager hereby represents
and warrants as follows:
(A) ORGANIZATION AND GOOD STANDING. Manager is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Manager has all necessary power to own all of its properties and
assets and to carry on its business as now being conducted.
(B) NO VIOLATIONS. Manager has the corporate authority to execute,
deliver and perform this Agreement and has taken all action required by law,
its Articles or Certificate of Incorporation, its Bylaws or otherwise to
authorize the execution, delivery and performance of this Agreement. The
execution and delivery of this Agreement does not and, subject to the
consummation of the transactions contemplated hereby, will not, violate any
provisions of the Articles or Certificate of Incorporation or Bylaws of Manager
or any provisions of or result in the acceleration of, any material obligation
under any mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree, to which Manager is a party, or by which it is
bound. This Agreement has been duly executed and delivered by Manager and
constitutes the
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legal, valid and binding obligation of Manager, enforceable in accordance with
its terms.
SECTION 8. INSURANCE AND INDEMNITY.
8.1 INSURANCE TO BE MAINTAINED BY PRACTICE. Practice shall provide, or
shall arrange for the provision of, and maintain throughout the entire term of
this Agreement, professional liability insurance coverage on Practice and each
of Practice's employees and agents, including, but not limited to, all
Physician Shareholders and Practice Employees, in the minimum amount of Three
Million and No/100 Dollars ($3,000,000.00) per occurrence and Five Million and
No/100 Dollars ($5,000,000.00) annual aggregate including "tail coverage" to
the extent necessary to ensure continuity of coverage. Practice shall provide
to Manager written documentation evidencing such insurance coverage. Practice
shall, at its sole cost and expense, pay the premium costs of all such
professional liability insurance coverage during the term of this Agreement.
Practice shall provide, or shall arrange for the provision of, and shall
maintain throughout the entire term of this Agreement, workers' compensation
insurance coverage on Practice and each of its employees and agents, including,
but not limited to, all Physician Shareholders and Practice Employees, in the
amounts required by law. Practice shall provide to Manager written
documentation evidencing such insurance coverage. Practice shall, at its sole
cost and expense, pay the premium costs of all such workers' compensation
insurance coverage. Manager agrees to administer and manage the above
insurance.
8.2 INDEMNIFICATION BY MANAGER. Manager shall indemnify and hold
harmless Practice, its shareholders, directors, officers, agents, employees and
other personnel from and against any and all claims, demands, liabilities,
losses, damages, costs and expenses (including reasonable attorney's fees,
court costs and other expenses incurred in defending against claims or
otherwise connected therewith) (hereinafter a "Loss" or "Losses") resulting in
any manner, directly or indirectly, from the gross negligence or intentional
acts or omissions of Manager, its directors, officers, employees, independent
contractors or agents.
8.3 INDEMNIFICATION BY PRACTICE. Practice shall indemnify and hold
harmless Manager, its shareholders, directors, officers, agents, employees and
other personnel from and against any all Losses resulting in any manner,
directly or indirectly, from the gross negligence, professional malpractice or
intentional acts or omissions of Practice, its Physician Shareholders, Practice
Employees or independent contractors.
8.4 INDEMNIFICATION PROCEDURE. Within 60 days after an indemnified
person under Section 8.2 or 8.3 (an "Indemnified Person") receives written
notice of the commencement of any action or other proceeding, or otherwise
becomes aware of any claim or other circumstance, in respect of which
indemnification or reimbursement may be sought under Section 8.2 or Section
8.3, such Indemnified Person shall notify the Party required to indemnify
hereunder (the "Indemnitor"). If any such action or other proceeding shall be
brought against any Indemnified Person, Indemnitor shall, upon written notice
given within a reasonable time following receipt by Indemnitor of such notice
from Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense
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retain separate counsel to participate in such defense. Notwithstanding the
foregoing, Indemnified Person shall have the right to employ separate counsel
at Indemnitor's expense and to control its own defense of such action or
proceeding if, in the reasonable opinion of counsel to such Indemnified Person,
(a) there are or may be legal defenses available to such Indemnified Person or
to other Indemnified Persons that are different from or additional to those
available to Indemnitor and which could not be adequately advanced by counsel
chosen by Indemnitor, or (b) a conflict or potential conflict exists between
Indemnitor and such Indemnified Person that would make such separate
representation advisable; provided, however, that in no event shall Indemnitor
be required to pay fees and expenses hereunder for more than one firm of
attorneys in any jurisdiction in any one action or proceeding or group of
related actions or proceedings. Indemnitor shall not, without the prior
written consent of any Indemnified Person, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action or
proceeding to which such Indemnified Person is a party unless such settlement
compromise or consent includes an unconditional release of such Indemnified
Person from all liability arising or potentially arising from or by reason of
such claim, action or proceeding.
8.5 KEY MAN INSURANCE. Practice agrees, and shall cause its Physician
Shareholders and Practice Employees to agree, that Manager may obtain, at its
sole expense (and not as a Practice Expense) and for its sole benefit, "key
man" life insurance policies on any or all Physician Shareholders and Practice
Employees. Neither Practice nor any Physician Shareholder or Practice Employee
shall have any right, title or interest in or to the proceeds of any such
insurance policies. Practice shall cause its Physician Shareholders and
Practice Employees to cooperate with Manager, as reasonably requested by
Manager from time to time, in obtaining any such insurance policies, including,
but not limited to, causing such Physician Shareholders and Practice Employees
to submit to such physical examinations and providing such information relating
to insurability as Manager may reasonably request from time to time.
SECTION 9. ASSIGNMENT.
The parties hereby agree that this Agreement shall not be assigned or
transferred by either party without the prior written consent of the other;
provided, however, that this Agreement may be assigned, in whole or in part, by
Manager, in its sole discretion, without the consent of Practice, to any
parent, subsidiary or affiliate of Manager or to any person or entity that
acquires all or substantially all of the assets of Manager. Any such
assignment shall not affect the guaranty by Parent of the obligations of
Manager hereunder.
SECTION 10. COMPLIANCE WITH REGULATIONS.
10.1 PRACTICE OF MEDICINE. The parties hereto acknowledge that Manager
is not authorized or qualified to engage in any activity which may be construed
or deemed to constitute the practice of medicine. Neither of the Parties shall
suggest or hold Manager out to the public as being engaged in the practice of
medicine. To the extent any act or service herein required of Manager should
be construed or deemed to constitute the practice of medicine, the performance
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of said act or service by Manager shall be deemed waived and forever
unenforceable. Practice and its Physician Employees and Practice Employees
shall be unfettered in the exercise of their professional medical judgment with
respect to matters under consideration which require the exercise of such
judgment.
10.2 SUBCONTRACTS. Pursuant to Title 42 of the United States Code and
applicable rules and regulations thereunder, until the expiration of four (4)
years after termination of this Agreement, Manager shall make available, upon
appropriate written request by the Secretary of the United States Department of
Health and Human Services or the Comptroller General of the United States
General Accounting Office, or any of their duly authorized representatives, a
copy of this Agreement and such books, documents and records as are necessary
to certify the nature and extent of the costs of the services provided by
Manager under this Agreement. Manager further agrees that if it carries out
any of its duties under this Agreement through a subcontract with a value or
cost of Ten Thousand and No/100 Dollars ($10,000.00) or more over a twelve (12)
month period with a related organization, such subcontract shall contain a
clause to the effect that until the expiration of four (4) years after the
furnishing of such services pursuant to such subcontract, the related
organization shall make available, upon appropriate written request by the
Secretary of the United States Department of Health and Human Services or the
Comptroller General of the United States General Accounting Office, or any of
their duly authorized representatives, a copy of such subcontract and such
books, documents and records of such organization as are necessary to verify
the nature and extent of such costs. Disclosure pursuant to this
Section shall not be construed as a waiver of any other legal right to which
Manager may be entitled under law or regulation.
SECTION 11. INDEPENDENT RELATIONSHIP.
11.1 INDEPENDENT CONTRACTOR STATUS.
(a) It is acknowledged and agreed that Practice and Manager are
at all times acting and performing hereunder as independent contractors.
Manager shall neither have nor exercise any control or direction over the
methods by which Practice, Physician Shareholders and Practice Employees
practice medicine. The sole function of Manager hereunder is to provide all
Management Services in a competent, efficient and satisfactory manner. Manager
shall not, by entering into and performing its obligations under this
Agreement, become liable for any of the existing obligations, liabilities or
debts of Practice unless otherwise specifically provided for under the terms of
this Agreement. In its management role, Manager will have only an obligation to
exercise reasonable care in the performance of the Management Services.
Manager shall have no liability whatsoever for damages suffered on account of
the willful misconduct or negligence of any employee, agent or independent
contractor of Practice. Each party shall be solely responsible for compliance
with all state and federal laws pertaining to employment taxes, income
withholding, unemployment compensation contributions and other employment
related statutes regarding their respective employees, agents and servants.
(b) If any court or regulatory authority shall determine that the
independent contractor relationship established hereby violates any statutes,
rules or regulations (or in the
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event that Manager, in good faith, determines that there is a material risk
that such a determination would be made by any court or regulatory authority),
then the parties will negotiate in good faith to enter into an employment
arrangement between Manager and the then-current Physician Shareholders and
Practice Employees which substantially preserves for the parties the relative
economic benefits of this Agreement. If the parties cannot reach agreement on
such an employment arrangement, Manager may terminate this Agreement upon
ninety (90) days prior written notice to Practice.
11.2 REFERRAL ARRANGEMENTS. The parties hereby acknowledge and agree
that no benefits to Practice hereunder require or are in any way contingent
upon the admission, recommendation, referral or any other arrangement for the
provision of any item or service offered by Manager or any of its affiliates,
to any patients of Practice, Practice's employees or agents.
SECTION 12. GUARANTEES.
(a) Irrevocable Guaranty by Parent. To induce Practice to execute and
deliver this Agreement, Parent hereby unconditionally and irrevocably
guarantees the Practice the full, prompt and faithful performance by Manager of
all covenants and obligations to be performed by Manager under this Agreement.
This guaranty shall be a guaranty of payment, not merely collection, and shall
be unaffected by any subsequent modification or amendment of this Agreement
whether or not Parent has knowledge of or consented to such modification or
amendment. In the event that Manager fails to fully perform all such covenants
and obligations in accordance with their terms or pay all or any part of such
sums or deliver all or any part of such property when due, Parent will perform
all such covenants and obligations in accordance with their terms or
immediately pay or deliver to Practice (or such other payee or transferee as
may be provided in any such agreement) the amount due and unpaid or the
property not delivered, as the case may be, by Manager. In the event of
bankruptcy, termination, liquidation or dissolution of Manager, this
unconditional guaranty shall continue in full force and effect. In the event
of any extension of time for payment or performance or other modification of
any guaranteed obligation or covenant, or any waiver thereof or other
compromise or indulgence with respect thereto or any release or impairment of
any security for any such obligation or covenant, or any other circumstance
which might otherwise constitute a legal or equitable discharge of a surety or
guarantor, no notice to, or consent of, Parent shall be required.
(b) Irrevocable Guaranty by Physician Shareholders. To induce Manager to
execute and deliver this Agreement, the undersigned Physician Shareholders
severally hereby unconditionally and irrevocably guarantee to Manager the full,
prompt and faithful performance by Practice of all covenants and obligations to
be performed by Practice under Sections 3.6, 4.4, 4.5, 5.4, 6.4, 8.1, 8.3,
12(b) and 14.7 of this Agreement during the term of such Physician
Shareholder's employment with Practice and for a period of five (5) years
thereafter. This guaranty shall be a guaranty of payment and performance, not
merely collection, and shall be unaffected by any subsequent modification or
amendment of this Agreement whether or not such guarantor has knowledge of or
consented to such modification or amendment. In the event that
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Practice fails to fully perform all such covenants and obligations in
accordance with their terms or pay all or any part of such sums or deliver all
or any part of such property when due, the Physician Shareholders severally
will perform all such covenants and obligations in accordance with their terms
or immediately pay or deliver to Manager (or such other payee or transferee as
may be provided in any such agreement) their pro rata share (as defined below)
of the amount due and unpaid or the property not delivered, as the case may be,
by Practice. In the event of bankruptcy, termination, liquidation or
dissolution of Practice, this unconditional guaranty shall continue in full
force and effect. In the event of any extension of time for payment or
performance or other modification of any guaranteed obligation or covenant, or
any waiver thereof or other compromise or indulgence with respect thereto or
any release or impairment of any security for any such obligation or covenant,
or any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or guarantor, no notice to, or consent of, Practice or
any other Physician Shareholder shall be required. With respect to any and all
amounts which may be due and payable to Manager hereunder, the pro rata share
of each Physician Shareholder's guaranty thereof shall be limited to the
percentage amount thereof listed in Exhibit 12(b) hereto.
SECTION 13. NAME; LICENSE. Practice agrees that it shall conduct its medical
practice under the name of, and only under the name of "Atlanta Ear, Nose &
Throat Associates, P.C.", subject to the terms of the Trademark License between
the parties of even date herewith. In the event of any termination of the
Trademark License, Practice agrees to change the name under which it conducts
its medical practice to a distinctly different name.
SECTION 14. MISCELLANEOUS.
14.1 NOTICES. Any notice required or permitted by this Agreement or
any agreement or document executed and delivered in connection with this
Agreement shall be deemed to have been served properly if hand delivered or
sent by overnight express, charges prepaid and properly addressed, to the
respective party to whom such notice relates at the following addresses:
If to Practice:
New Atlanta Ear, Nose & Throat Associates, P.C.
0000 Xxxxxxxxx Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, M.D.
Facsimile: (000) 000-0000
with a copy of each notice directed to:
Ellis, Funk, Xxxxxxxx, Xxxxxxxx & Dokson, P.C.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
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Facsimile: (000) 000-0000
If to Manager:
PSC MANAGEMENT CORP.
0000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Secretary
Facsimile: (000) 000-0000
If to Parent:
PHYSICIANS' SPECIALTY CORP.
0000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Secretary
Facsimile:(000)000-0000
with a copy of each notice directed to Manager or Parent to:
Xxxxxxx X. Xxxxx
Xxxxxxxx Xxxxxxx LLP
0000 XxxxxxxXxxx Xxxxx
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
or such other address as shall be furnished in writing by any party to the
other party. All such notices shall be considered received when hand delivered
or one business day after delivery to the overnight courier.
14.2 ADDITIONAL ACTS. Each party hereby agrees to perform any further
acts and to execute and deliver any documents which may be reasonably necessary
to carry out the provisions of this Agreement.
14.3 GOVERNING LAW. This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State applied without giving effect
to any conflicts-of-law principles.
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14.4 CAPTIONS, ETC. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement. All Addenda and Exhibits to this Agreement are hereby incorporated
into this Agreement by this reference.
14.5 SEVERABILITY. The provisions of this Agreement shall not be
severable, and if any material provision shall be determined to be invalid,
void or unenforceable in whole or in part for any reason by a court of
competent jurisdiction, Manager shall have the right to terminate this
Agreement upon five (5) business days prior written notice.
14.6 CHANGES IN REIMBURSEMENT. If Medicare, Medicaid, Blue Shield or any
other third party payor, or any other Federal, state or local laws, rules,
regulations or interpretations, at any time during the term of this Agreement,
prohibit, restrict or in any way materially and adversely change the method or
amount of reimbursement or payment for services rendered by Practice pursuant
to this Agreement or of the method of compensation for either party provided
for in this Agreement, then the parties shall amend this Agreement to provide
for payment of compensation in a manner consistent with any such prohibition,
restriction or limitation and which takes into account any materially adverse
change in reimbursement or payment from such third party payors for such
physician services, provided such amendments are consistent with the overall
economic and other objectives of the parties set forth in this Agreement.
14.7 MODIFICATIONS. This instrument contains the entire agreement of the
parties and supersedes any and all prior or contemporaneous negotiations,
understandings or agreements between the parties, written or oral, with respect
to the transactions contemplated hereby. This Agreement may not be changed or
terminated orally, but may only be changed by an agreement in writing signed by
a duly authorized officer of Manager if Manager is the party against whom
enforcement of any such waiver, change, modification, extension, discharge or
termination is sought, or by Practice if Practice is the party against whom
enforcement of any such waiver, change, modification, extension, discharge or
termination is sought. The parties expressly acknowledge that this Section
14.7 may not be waived, modified or changed by any other persons except the
Chief Executive Officer or Chief Financial Officer of Manager and Practice.
14.8 NO RULE OF CONSTRUCTION. The parties acknowledge that this
Agreement was initially prepared by Manager solely as a convenience and that
all parties and their counsel have read and fully negotiated all the language
used in this Agreement. The parties acknowledge and agree that because all
parties and their counsel participated in negotiating and drafting this
Agreement, no rule of construction shall apply to this Agreement which
construes any language, whether ambiguous, unclear or otherwise, in favor of,
or against any party by reason of that party's role in drafting this Agreement.
14.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall, together, constitute and be one and the
same instrument.
14.10 BINDING EFFECT. This Agreement shall be binding on and shall inure
to the benefit
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of the parties hereto, and their successors and permitted assigns. Subject to
the foregoing sentence, no person not a party hereto shall have any right under
or by virtue of this Agreement.
14.11 ENFORCEMENT RIGHTS. Practice acknowledges that both Practice and
Manager will be directly or indirectly affected by the enforcement of
Practice's rights against third parties and by practice's enforcement of the
rights of third parties the enforcement rights of which were delegated to
Practice by such third parties, and that Manager may need from time to time to
take legal action against third parties to enforce such rights. Therefore,
Practice hereby appoints Manager its nonexclusive true and lawful
attorney-in-fact to enforce any and all rights of Practice, other than any
rights Practice may have against Manager, and to enforce the rights of third
parties the enforcement rights of which were delegated to Practice by such
third parties, to the extent not contrary to applicable law. Practice agrees
to execute any instrument reasonably requested by Manager to evidence such
appointment or to reappoint Manager as such attorney-in-fact upon any
termination of the appointment made hereby. Such appointment is coupled with
an interest and irrevocable.
14.12 COSTS OF ENFORCEMENT. If either party files suit in any court
against the other party to enforce the terms of this Agreement against the
other party or to obtain performance by it hereunder, the prevailing party will
be entitled to recover all reasonable costs, including reasonable attorneys'
fees, from the other party as part of any judgment in such suit. The term
"prevailing party" shall mean the party in whose favor final judgment after
appeal (if any) is rendered with respect to the claims asserted in the
Complaint. "Reasonable attorneys' fees" are those attorneys' fees actually
incurred in obtaining a judgment in favor of the prevailing party.
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IN WITNESS WHEREOF, Practice, Manager and Parent have duly executed this
Agreement on the day and year first above written.
PSC MANAGEMENT CORP. NEW ATLANTA EAR, NOSE &
THROAT ASSOCIATES, P.C.
By: By:
Printed Name: Xxxxxx X. Xxxxxxxx, M.D. Printed Name: Xxxxx X. Xxxxx, M.D.
Title: Title:
PHYSICIANS' SPECIALTY CORP.
By:
------------------------------------
Printed Name: Xxxxxx X. Xxxxxxxx, M.D.
Title:
The undersigned, constituting all of the Physician Shareholders, hereby
ratify and confirm the above Agreement and agree to be bound by its terms,
including, but not limited to, the terms of Sections 3.6, 4.4, 4.5, 5.4, 6.4,
8.1, 8.3, 12(b), and 14.7 this Agreement on the basis and to the extent
provided in Section 12(b) hereof.
Xxxxx X. Xxxxx, M.D.
Xxxxxx X. Xxxxx, III, M.D.
Xxxxxxx X. Xxxxxxxx, M.D.
Xxxxx Xxxxxxx, M.D.
Xxxxx X. Xxxxx, M.D.
Xxx X. Xxxxx, M.D.
34
The information below marked by * and [ ] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
Page 34
EXHIBIT B
INCENTIVE COMPENSATION TO MANAGER
As annual Incentive Compensation, after Manager has received [*] (or such
increased amount as provided in Section 3.18) annually in the form of retained
amounts pursuant to Section 1.6(g), Manager shall receive an amount equal to
[*] of the percentage of the excess of Net Practice Revenue over Practice
Expenses which was represented by the $[*] amount (or such increased amount
pursuant to Section 3.18).
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APPENDIX A
DEFINITIONS
Defined Term Section
Asset Purchase Agreement Background
Confidential Information 4.6(e)
Credit Facility Lender 5.4(b)
Effective Date Preamble
Estimated Collection Percentage 5.2
extended term 6.1
FFE 3.3
GAAP 1.2
Incentive Compensation 5.1
Indemnified Person 8.4
key man 8.5
Laws 3.12
Management Services 3.1
Manager Preamble
Medical Offices 3.1
Net Practice Revenues 1.3
Parent Preamble
Parties Background
Physician Employment Agreements 3.14
Physician Expenses 4.1
Physician Shareholders 1.4
Practice Preamble
Practice IP 4.6(d)
Practice Employees 1.5
Practice Expenses 1.6
PSC Background
Reasonable attorneys' fees 14.11
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EXHIBIT 12(B)
The Pro rata liability of each Physician Shareholder under Section 12(b)
hereof shall be 2 times the percentage amount of the outstanding shares of
Atlanta Ear, Nose & Throat Associates, P.C. ("AENT") held by such Physician
Shareholder as of the date of execution of the Asset Acquisition Agreement
between AENT, Manager, Parent and the Physician Shareholders, as follows:
% of Shares Pro Rata Liability
Name of Physician Shareholder of AENT under 12(b)
Xxxxx X. Xxxxx, M.D.
Xxxxxx X. Xxxxx, III, M.D.
Xxxxxxx X. Xxxxxxxx, M.D.
Xxxxx Xxxxxxx, M.D.
Xxxxx X. Xxxxx, M.D.
Xxx X. Xxxxx, M.D.
