OPERATING AGREEMENT
HEALTHDRIVE MICHIGAN CORPORATION
HEALTHDRIVE CORPORATION
OPERATING AGREEMENT
HEALTHDRIVE MICHIGAN CORPORATION
HEALTHDRIVE CORPORATION
Table of Contents
Page No.
I. BACKGROUND................................................1
II. AGREEMENT................................................1
1. Obligations of HDC................................1
(a) General......................................1
(b) Claim Processing and Collection of Fees......2
(c) License of Service Xxxx......................2
(d) Extensions of Credit to H M Corp.............3
(e) Bank Accounts................................3
(f) Records and Financial Data...................4
2. Obligations of H M Corp...........................5
(a) Employment of Health Care Practitioners......5
(b) Maintenance of Insurance.....................6
(c) Compliance with Regulations..................6
(d) Quality of Care..............................6
(e) Fees.........................................6
(f) Standardized Systems.........................6
(g) Control of Podiatry Practice by H M Corp.....7
(h) Authority to Contract........................7
(i) Exclusive Supplier...........................8
3. Prohibition on Referrals..........................8
4. Expenses of H M Corp..............................8
5. Compensation of HDC...............................8
6. Term of the Agreement.............................9
7. Termination of the Agreement......................9
8. Confidential and Proprietary Information.........10
9. Non-Competition and Non-Solicitation.............11
10. General..........................................11
(a) Independent Contractor......................11
(b) Exclusivity.................................12
(c) Indemnification.............................12
(d) Prior Agreements; Amendments................12
(e) Force Majeure...............................12
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(f) Assignment; Binding Effect..................12
(g) Construction of Agreement...................13
(h) Governing Law...............................13
(i) Additional Documents........................13
(j) Headings....................................13
(k) Notices.....................................13
(l) Counterparts................................14
(m) No Podiatry Practice By HDC.................14
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OPERATING AGREEMENT
OPERATING AGREEMENT, dated as of June 19, 1998, by and between
HealthDrive Michigan Corporation, a Michigan not-for-profit taxable
corporation ("HMCorp"), and HealthDrive Corporation, a Delaware corporation
("HDC").
I. BACKGROUND
WHEREAS, HMCorp is a duly incorporated and validly existing Michigan
not-for-profit taxable corporation organized for the practice of dentistry,
optometry and podiatry;
WHEREAS, HDC provides certain services and capital and licenses its
Service Xxxx (as hereinafter defined) to those engaged in the provision of
dental, optometry and podiatry services and/or ancillary health care services at
long term care facilities and other concentrated geriatric populations ("HEALTH
CARE SERVICES") and
WHEREAS, HMCorp desires to engage HDC to provide certain services and
capital to HMCorp and its dental, optometry, podiatry and ancillary health care
personnel ("HEALTH CARE PRACTITIONERS") and to license HDC's Service Xxxx.
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
II. AGREEMENT
1. OBLIGATIONS OF HDC.
(a) GENERAL. HDC shall be exclusively responsible to provide to HMCorp the
following services required by HMCorp:
(i) Order and purchase, as an accommodation to and on behalf of
HMCorp, all dental, optometry and podiatry related and office inventory,
laundry, linen, uniforms, printing, stationary, forms, laboratory items
and supplies as are ordinary and necessary for operation of the HMCorp HDC
shall be solely responsible for the payment of applicable sales or use tax
with respect to such purchases and shall make such property available for
use by HMCorp without any additional charge therefor.
(ii) Operate and maintain HMCorp's bookkeeping and accounting
systems;
(iii) Perform all payroll and payroll accounting functions for
HMCorp; and
(iv) Administer all of HMCorp's employee benefit plans.
(b) CLAIMS PROCESSING AND COLLECTION OF FEES. HDC shall, on behalf and in
the name of HMCorp, be exclusively responsible for processing all claims and
bills, and for collecting all moneys related thereto, for Health Care Services
rendered by HMCorp In this connection, HMCorp appoints HDC for the term of this
Agreement its true and lawful agent, and shall assure that such appointment is
effective for HMCorp's Health Care Practitioners for the following purposes:
(i) To xxxx and collect on behalf of HMCorp, or any of its Health
Care Practitioners, amounts owing from patients for performance of Health
Care Services, and HMCorp hereby covenants to turn over, and require any
of its Health Care Practitioners to turn over, all such payments to HDC
for deposit as provided in Section 1(e) below;
(ii) To xxxx and collect on behalf of HMCorp, or any of its Health
Care Practitioners, amounts owing from Blue Shield plans, insurance
companies, Medicare, Medicaid, and any other third party payor for the
performance of Health Care Services, and HMCorp hereby covenants to turn
over, and require any of its Health Care Practitioners to turn over, all
such payments to HDC for deposit as provided in Section 1(e) below;
(iii) To take possession of and cause to be deposited any notes,
checks, money orders, insurance payments, and any other instruments
received in payment of accounts receivable and to deposit same as provided
in Section 1(e) below; and
(iv) To take such other actions relative to billing and collection
of fees, and related financial matters of the HMCorp as are appropriate
and consistent with the purpose of this Agreement.
In connection with its obligations under this Section 1(b), HDC shall
maintain systems and procedures reasonably necessary to prevent unlawful
maximization of revenue; PROVIDED, HOWEVER, that HDC shall not be liable for
billing practices by HMCorp or its Health Care Practitioners that unlawfully
maximize revenue to HMCorp or its Health Care Practitioners.
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(c) LICENSE OF SERVICE XXXX. HDC hereby grants to HMCorp a non-exclusive,
revocable (in accordance with the provisions of this Agreement) and
non-assignable license for the term of this Agreement to use the names
"HealthDrive," "HealthDrive Corporation" or "HDC" and all designs, logos, and
marks incorporating the same (collectively, the "SERVICE XXXX") in connection
with advertising and promotion of HMCorp, but in each instance only in the form
and manner and in combination with such other designs, schemes, characteristics,
words and the like as may from time to time be approved in advance by HDC. Upon
the expiration or termination of this Agreement, HMCorp will forthwith
discontinue the use of the Service Xxxx and thereafter shall not use or
otherwise seek the benefits of the Service Xxxx or any name, phrase, design,
logo, xxxx or the like sufficiently related to or identifiable with the Service
Xxxx as to derogate from the full and complete ownership and enjoyment of the
same by and for the benefit of HDC. Recognizing the special and unique value of
the Service Xxxx to HDC, HMCorp agrees that HMCorp shall take no action nor
permit any action to be taken which shall in any way derogate from the high
level of quality and value associated with the Service Xxxx and the ownership
and enjoyment of the same by HDC. Furthermore, HMCorp agrees that, without
limitation, a violation by HMCorp of the provisions of this Agreement relative
to the Service Xxxx will cause irreparable harm to HDC and the good will
associated with the Service Xxxx and thus HDC shall be entitled to immediate
injunctive relief (whether by way of temporary or permanent or mandatory or
prohibitive injunction) for any such violation. Notwithstanding anything in this
paragraph to the contrary, HMCorp shall not make use of the Service Xxxx in any
way which would cause a violation of the applicable guidelines established by
pertinent professional associations or the Michigan Boards of Registration in
Dentistry, Optometry and Podiatry, the Boards of Registration in Dentistry,
Optometry and Podiatry of any other jurisdiction in which Health Care Services
are provided or other applicable laws or regulations.
(d) EXTENSIONS OF CREDIT TO HMCORP. HDC hereby agrees to extend credit
to HMCorp to fund HMCorp's working capital requirements, including without
limitation amounts due to HDC pursuant to this Agreement, to the extent HDC
determines, in its sole discretion, that such Extensions of Credit are
commercially reasonable; PROVIDED, HOWEVER, that HDC shall not under any
circumstances be obligated to extend any credit to HMCorp. Such extensions of
credit shall be demand loans (each a "DEMAND LOAN") which shall be due and
payable, including the principal balance and all accrued interest, upon
thirty (30) days written notice from HDC to HMCorp. Interest on the unpaid
principal balance of each Demand Loan from time to time outstanding shall be
determined in good faith by HDC, but in no event shall exceed the annual rate
of interest announced from time to time by BankBoston, N.A. as its "base
rate" at its head office in Boston, Massachusetts plus five percent (5%), and
shall be added to outstanding principal balance on a monthly basis. The
outstanding principal amount of the Demand Loan, and any accrued interest,
shall be reflected from time to time on the books of HDC, and such entries
shall constitute definitive evidence of the amount of such principal amount
and accrued interest. HMCorp. hereby acknowledges the existence of an
outstanding principal balance and accrued interest in the amount of $_______
(the "CURRENT BALANCE") due
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and payable to HDC and agrees to use its best efforts to pay down the Current
Balance and any additional amounts of principal and accrued interest
outstanding from time to time. During any period that a principal balance or
accrued interest remains outstanding under a Demand Loan, P.C. shall not pay,
declare or set apart a dividend or distribution of any kind on any shares of
the capital stock of P.C. or make any other payment to any stockholder of
P.C., other than in respect of professional services provided to the P.C. by
such stockholder.
(e) BANK ACCOUNTS. All funds collected by HDC pursuant to this Agreement
shall be deposited as follows:
(i) All funds collected on behalf of HMCorp as a result of xxxxxxxx
to agencies responsible for making Medicare or Medicaid payments shall be
deposited in one or more bank accounts established by HDC, as agent for
HMCorp, in the joint names of HDC and HMCorp;
(ii) All funds collected on behalf of HMCorp as a result of all
xxxxxxxx, other than those referenced in subparagraph (i) above, are
hereby assigned to HDC, and shall be deposited in one or more bank
accounts established by HDC, as agent for HMCorp, in the joint names of
HDC and HMCorp or, in HDC's sole discretion, in the sole name of HDC;
(iii) HMCorp does hereby grant a first and continuing security
interest to HDC in all HMCorp's accounts receivable to secure payment of
HMCorp's obligations hereunder, including without limitation payment of
the Compensation Amount and the Demand Loans, to the maximum extent
permitted by applicable law. In the event of any monetary default by
HMCorp, HDC may exercise all the remedies available to a secured
creditor under the Uniform Commercial Code and other applicable laws,
including seizure of the collateral, notification of account debtors and
obtaining a court order for reassignment of Medicare and Medicaid
receivables to the maximum extent permitted by applicable law. HMCorp
shall execute financing statements prepared by HDC. The provisions of
this Section 1(e) shall survive termination of this Agreement until all
of HDC's fees and expenses have been paid in full.
(f) RECORDS AND FINANCIAL DATA.
(i) METHOD OF ACCOUNTING; FINANCIAL STATEMENTS. HDC shall keep
complete and accurate books and records relating to HMCorp that reflect
all revenues that HDC receives as a result of xxxxxxxx in the name of
HMCorp for Health Care Services rendered by HMCorp, and all expenses
incurred by HMCorp or HDC in maintaining the HMCorp and providing the
Health Care Services rendered by HMCorp. HDC shall allow an officer or
employee designated by HMCorp to audit and inspect these books and records
at appropriate and reasonable times and at HMCorp's sole expense.
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(ii) DATA FOR TAX RETURNS. HDC shall provide to HMCorp the financial
data necessary to enable HMCorp to prepare its annual corporate income tax
returns.
(iii) DISCLOSURE. If and to the extent required by applicable laws
and regulations, until the expiration of four (4) years after the
termination of this Agreement, HDC will make available upon a written
request from the United States Department of Health and Human Services
("HHS"), the United States Comptroller General, and their duly authorized
representatives, a copy of this Agreement and all books, records, and
documents as are necessary to certify the nature and extent of the costs
incurred by HMCorp pursuant to this Agreement, and if HDC provides such
services through a subcontract worth $10,000 or more over a twelve-month
period with a related organization, the subcontract will also contain a
clause permitting access by HHS, the United States Comptroller General,
and their representatives to books and records of the related
organization. HDC (and any such subcontractor) will promptly notify HMCorp
as and when any such request is received, and will provide HMCorp
(simultaneously with the providing of such materials to HHS) with a copy
of any materials so provided.
(iv) CONFIDENTIALITY. HDC shall preserve the confidentiality of
HMCorp's patient dental, optometry and podiatry records and use
information in such records only for the limited purposes necessary to
perform its responsibilities as set forth in this Agreement.
2. OBLIGATIONS OF HMCORP
(a) EMPLOYMENT OF HEALTH CARE PRACTITIONERS. HDC shall not provide any
personnel to HMCorp. HMCorp shall be responsible for employing Health Care
Practitioners to provide Health Care Services for HMCorp. HMCorp acknowledges
and agrees that in order to ensure the quality of services provided by HMCorp
and the economic viability of HMCorp, it will employ and contract with Health
Care Practitioners subject to the following requirements:
(i) Every Health Care Practitioner shall be fully licensed to
practice his/her specialty under the laws of the State of Michigan or such
other state in which such practitioner provides services;
(ii) As a condition to each Health Care Practitioner's employment,
including without limitation the holder of the capital stock of HMCorp
(the "STOCKHOLDER"), such Health Care Practitioner shall be required by
HMCorp to execute a non-competition and non-solicitation agreement in form
and substance acceptable to HDC prohibiting the Health Care Practitioner
from
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competing with HMCorp or HDC for the term of his employment by HMCorp and
a period of 18 months thereafter; and
(iii) HMCorp shall fix compensation and fringe benefits for
individual Health Care Practitioners; provided, however, that compensation
and benefits paid to any such Health Care Practitioner, including without
limitation the Stockholder (with respect to compensation for services
provided both to patients and HMCorp), shall not exceed the fair market
value for such services. HMCorp hereby acknowledges and agrees that HDC
has superior knowledge and experience with respect to the fair market
value of services provided by Health Care Practitioners. If a dispute
arises between HMCorp and HDC with respect to the fair market value of
services provided by a Health Care Practitioner. HMCorp hereby agrees that
HDC, in its sole discretion, shall determine fair market value. HDC shall
make such determination in good faith and based on its knowledge and
experience and the amounts paid to similarly qualified practitioners
providing similar services for HMCorp or other professional corporations
affiliated with HDC.
HMCorp further acknowledges that fixed term agreements, including
without limitation employment agreements, between HMCorp and Health Care
Practitioners are not necessarily in the best interests of patients and
patient care and may interfere with the quality of services provided by
HMCorp, and, therefore, HMCorp hereby agrees that, without the express
written consent of HDC, it shall not enter into any such agreements with the
Health Care Practitioners it employs, including without limitation the
Stockholder. HDC agrees that it shall make any determinations with respect to
fixed term arrangements in good faith and based on its knowledge and
experience in the industry.
(b) MAINTENANCE OF INSURANCE. HMCorp covenants and agrees that until the
expiration or termination of this Agreement it will maintain, or will require
each of its Health Care Practitioners to maintain, comprehensive professional
liability insurance with limits of not less than $1,000.000 per claim and with
aggregate policy limits of not less than $3,000.000 per each Health Care
Practitioner, with each of HMCorp and HDC having the right, upon request, to be
added as additional insured. HMCorp shall be responsible for all such
liabilities in excess of the limits of such insurance policies. Premiums and
deductibles with respect to such insurance policies shall be an expense of
HMCorp.
(c) COMPLIANCE WITH REGULATIONS. HMCorp shall comply and shall cause each
of its Health Care Practitioners to comply with all applicable rules and
regulations of governmental bodies having jurisdiction over the HMCorp or any of
the Health Care Practitioners.
(d) QUALITY OF CARE. HMCorp shall at all times be solely responsible for
the quality of the Health Care Services rendered by the Health Care
Practitioners, it being agreed that HDC shall have no responsibility or
liability for such services or programs.
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(e) FEES. HMCorp shall be solely responsible for setting its fees. HMCorp
warrants that it will set its fees in accordance with law and that such fees
will be neither inadequate nor excessive in light of the services to be
performed and the need to insure the economic viability of HMCorp; PROVIDED,
HOWEVER, that the foregoing shall not affect the control of the Health Care
Practice by HMCorp pursuant to Section 2(g) of this Agreement.
(f) STANDARDIZED SYSTEMS. HMCorp agrees to utilize HDC's standardized
business systems, procedures and forms (excluding clinical forms), at no charge
to HMCorp, which are intended to improve efficiency; PROVIDED that HMCorp
expressly acknowledges and agrees that it shall have no property rights in the
foregoing systems, procedures and forms and such systems, procedures and forms
shall be deemed to constitute Confidential Information within the meaning of
Section 7 of this Agreement and subject to the restrictions on use,
appropriation and reproduction of such Confidential Information provided in
Section 7 of this Agreement; AND, PROVIDED FURTHER that the foregoing shall not
affect the control of the Health Care Practice by the HMCorp pursuant to Section
2(g) of this Agreement.
(g) CONTROL OF HEALTH CARE PRACTICE BY HMCORP. Notwithstanding
anything to the contrary contained in this Agreement, the delivery of Health
Care Services shall be supervised, directed, and controlled, and all final
determinations with respect thereto shall be made, exclusively by HMCorp,
including without limitation, the following (collectively, "HEALTH CARE
PRACTICE"):
(i) employment of all Health Care Practitioners, pursuant to Section
2(a) of this Agreement;
(ii) supervision and direction of all Health Care Practitioners,
including, without limitation, assignment of patients to the Health Care
Practitioners and establishment and monitoring of peer review guidelines;
(iii) determination of the hospital supplying Health Care
Practitioners to HMCorp, if applicable;
(iv) maintenance of patient records;
(v) establishment of policies and procedures with respect to patient
acceptance; and
(vi) establishment of the hours of operation of HMCorp, scope of
services provided and fees for such services.
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In connection with its obligations under this Section 2(g), HMCorp shall
maintain systems and procedures necessary in order to prevent overutilization of
services. HDC hereby expressly disclaims any control, direct or indirect, over
activities of HMCorp constituting Health Care Practice.
(h) AUTHORITY TO CONTRACT. HMCorp shall have exclusive authority to
negotiate and enter into agreements related to Health Care Practice; PROVIDED,
HOWEVER, that (i) HMCorp shall give HDC thirty (30) days prior notice of
HMCorp's intent to execute any agreement obligating HMCorp to engage in Health
Care Practice or otherwise creating a binding legal obligation on HMCorp related
to Health Care Practice, and (ii) HMCorp shall not enter into any agreement that
does not relate to Health Care Practice without HDC's prior written consent.
HMCorp hereby approves, confirms and ratifies all agreements negotiated and
executed by HDC on HMCorp's behalf prior to the date hereof.
(i) EXCLUSIVE SUPPLIER. HMCorp hereby appoints HDC as the exclusive
supplier of the services set forth in Section 1 of this Agreement.
3. PROHIBITION ON REFERRALS. In order to ensure compliance with federal and
state statutes, laws, rules and regulations, including without limitation the
provisions of the Social Security Act commonly referred to as the "Anti-kickback
Amendments" and the regulations promulgated pursuant to the Omnibus Budget
Reconciliation Act of 1993 and 1997 commonly referred to as "Xxxxx I" and "Xxxxx
II," HDC and HMCorp hereby agree as follows:
(a) HDC and HMCorp and its Health Care Practitioners shall have no
obligation to refer patients to each other or to long term care
facilities under contract with HMCorp, and HMCorp and its Health
Care Practitioners shall have no obligation to refer patients to
other professional corporations or providers of medical, dental,
optometry, podiatry, or ancillary health care services affiliated
with HDC or long term care facilities under contract with
professional corporations affiliated with HDC; and
(b) HMCorp shall not, and shall use its best efforts to cause the Health
Care Practitioners not to, (i) provide "designated health services,"
as such term is defined under Xxxxx I and Xxxxx II, without
providing no less than 30 days prior written notice to HDC, and (ii)
refer patients to entities that provide "designated health services"
and in which HMCorp, or any of the Health Care Practitioners, have a
financial relationship, compensation arrangement, or an ownership or
investment interest.
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4. EXPENSES OF HMCORP. All expenses incurred in connection with the conduct of
HMCorp's business and the services of HDC shall, unless otherwise specified in
this Agreement, be expenses of HMCorp (and not HDC), including without
limitation those expenses described in Sections 2(a), 2(b) and 5 of this
Agreement; PROVIDED, HOWEVER, that HDC, as agent for HMCorp, shall, using funds
billed and collected pursuant to Section 1(e) above, pay all such expenses.
HMCorp agrees to have an annual audit of its financial statements by independent
auditors of recognized standing reasonably acceptable to HDC and to deliver such
audited financial statements to HDC as promptly as practicable.
5. COMPENSATION OF HDC. As consideration for the license of the Service
Xxxx, the making of the Demand Loans and the services provided by HDC, HMCorp
shall pay HDC a sum equal to the Compensation Amount (as defined below);
PROVIDED, THAT in no event shall the total compensation exceed the fair
market value of the services rendered by HDC. For purposes of this Section,
"Compensation Amount" shall mean the net of (i) all revenue minus (ii) all
expenses (excluding compensation due under this Section) of HMCorp recorded
on an accrual basis using tax accounting principles. The amount of
compensation due HDC under this Section shall be determined on a monthly
basis by HDC and shall be due and payable to HDC on the last day of every
month. Any amount not paid when due shall accrue interest at a reasonable
rate determined by HDC. The fact that interest may accrue on any unpaid
compensation due HDC shall in no way diminish HDC's right to be paid such
compensation when due. HDC may withdraw its fees directly from the bank
accounts established hereunder. In the event that P.C. makes a determination
that it believes that the Compensation Amount calculated by HDC in accordance
with the formula set forth above for any particular month exceeds the fair
market value of the services provided by HDC under this Agreement for such
month P.C. shall provide HDC with notice of such determination no later than
thirty days after the end of the month for which it believes the Compensation
Amount exceeds the fair market value of the services provided. In the event
that P.C. does not deliver such a notice within such thirty day period, P.C.
shall for all purposes under this Agreement be deemed to have agreed that the
Compensation Amount calculated by HDC for such month did not exceed the fair
market value of the services provided by HDC for that month. As soon as
reasonably practicable after the receipt of such notice, HDC and P.C. shall
form a committee (the "Fee Committee") to determine the fair market value of
the services provided by HDC during such month by majority vote. The Fee
Committee shall consist of one individual designated by HDC (the "HDC
Designee"), one individual designated by P.C. (the "P.C. Designee"), and a
third party designated by the HDC Designee and the P.C. Designee. In making
its determination, the Fee Committee shall consider the value of all of the
services provided by HDC to P.C. during such month taken as a whole, the
potential impact on P.C. of a discontinuation of the services provided by
HDC, and the fees charged by other similarly situated companies to similarly
situated medical or dental practices in HDC's industry, in addition to any
other factors that it deems relevant. Each of HDC and P.C. agree to be bound
by the good faith determination of the Fee Committee. In the event that the
Fee Committee determines that the Compensation Amount exceeds the fair market
value of the services provided during such month, HDC shall promptly refund
to P.C. the difference between the Compensation Amount and the fair market
value of the services provided, as determined by the Fee Committee.
6. TERM OF AGREEMENT. This Agreement shall be in effect from the date first set
forth above through June 19, 2038; PROVIDED, HOWEVER, that the term hereof shall
be automatically extended for additional periods of twelve (12) months each,
unless either party gives written notice as provided below to the other at least
ninety (90) days prior to the expiration of the initial term or any extended
term hereof. Upon termination of this Agreement, HDC using funds billed and
collected pursuant to Section 1(d) above shall: (i) pay any expenses accrued by
HMCorp through the termination date; (ii) collect all fees accrued to it through
the termination date, including without limitation the payment of the
Compensation Amount specified in Section 4 hereof; and (iii) collect the amounts
due under the Demand Loans specified in Section 1(b) hereof. All other
obligations of the parties shall cease as of the termination date unless
otherwise specifically provided in this Agreement; PROVIDED, HOWEVER, that
notwithstanding the foregoing, HMCorp shall be obligated to pay amounts due
pursuant to items (ii) and (iii) above in the event that funds billed and
collected pursuant to Section 1(d) above are insufficient to pay such amounts.
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7. TERMINATION OF THE AGREEMENT.
(a) Notwithstanding any of the provisions of this Agreement, if a
receiver, liquidator, or trustee of either party shall be appointed by court
order or if a petition to reorganize shall be filed against either party under
any bankruptcy, reorganization or insolvency law and shall not be dismissed
within ninety (90) days, or if either party shall file a petition in voluntary
bankruptcy or make an assignment for the benefit of creditors, then either party
forthwith may terminate this Agreement upon written notice to the other party.
(b) If HMCorp or HDC shall fail to perform obligations or observe
provisions which are material to this Agreement (in either case, a "Breach"),
HDC, in the case of a Breach by HMCorp, and HMCorp, in the case of a Breach by
HDC, may terminate this Agreement by giving thirty (30) days written notice to
the breaching party detailing the nature of the Breach, provided that the
breaching party shall not have cured the Breach within such thirty (30) day
period, or, with respect to Breaches which are not curable within such thirty
(30) day period, shall not have commenced to cure such Breach within such thirty
(30) day period and thereafter shall not have prosecuted to completion the cure
of the Breach with the exercise of due diligence.
(c) HDC may terminate this Agreement upon written notice to HMCorp at such
time as HMCorp does not qualify for any reason as a Michigan not-for-profit
taxable corporation or no longer has the necessary authorization to render
Health Care Services in the State of Michigan or any other state in which Health
Care Practitioners employed or otherwise retained by HMCorp provide such
services.
(d) HDC may terminate this Agreement upon written notice to HMCorp if the
license to practice dentistry, optometry, podiatry or any ancillary health care
service of any Health Care Practitioner is revoked or threatened to be revoked
by the applicable Board of Registration of the State of Michigan or such other
state in which such Health Care Practitioner provides services, provided that
HMCorp has not forthwith terminated such Health Care Practitioner from his or
her employment or association with the HMCorp
8. CONFIDENTIAL AND PROPRIETARY INFORMATION.
(a) HMCorp acknowledges and agrees that all business information and
materials provided to HMCorp and its affiliates by HDC pursuant to this
Agreement constitute "Confidential Information." HMCorp further agrees (i) not
to disclose, directly or indirectly, any Confidential Information to third
parties without HDC's prior written consent, (ii) not to use any Confidential
Information in any way, directly or indirectly, detrimental to HDC, and (iii) to
keep such Confidential Information confidential and ensure that HMCorp's
officers, directors, managers,
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employees and other agents and affiliates comply with the foregoing obligations;
PROVIDED THAT HMCorp may disclose Confidential Information to its officers,
directors, managers, employees and other agents and affiliates who need to know
Confidential Information for the purposes of this Agreement, it being understood
and agreed to by HMCorp that (i) such persons will be informed of the
confidential nature of the Confidential Information, and (ii) will be required
to execute instruments of adherence in form and substance acceptable to HDC
agreeing to be bound by this Section 7. HMCorp agrees to be responsible for any
breach of this Section 7 by its officers, directors, managers, employees and
other agents and affiliates. HMCorp acknowledges that the disclosure of
Confidential Information to it by HDC is done in reliance upon its
representations and covenants in this Agreement.
(b) Upon expiration or termination of this Agreement by either party for
any reason whatsoever, HMCorp shall immediately return and shall cause its
officers, directors, managers, employees and other agents and affiliates to
immediately return to HDC all Confidential Information, and HMCorp will not, and
will cause its officers, directors, managers, employees and other agents and
affiliates not to, thereafter use, appropriate or reproduce such Confidential
Information. HMCorp further acknowledges and agrees that any such use,
appropriation, or reproduction of any Confidential Information by any of the
foregoing after the expiration or termination of this Agreement will result in
irreparable injury to HDC, that the remedy at law for the foregoing would be
inadequate, and that in the event of any such use, appropriation, or
reproduction of any such Confidential Information after the termination or
expiration of this Agreement, HDC, in addition to any other remedies or damages
available to it, shall be entitled to injunctive or other equitable relief.
9. NON-COMPETITION AND NON-SOLICITATION. HMCorp hereby acknowledges and
agrees that HDC will incur substantial costs in connection with its
obligations pursuant to this Agreement and that the non-competition covenants
described hereunder are necessary for the protection of HDC, and that HDC
would not have entered in to this Agreement without the following covenants.
(a) Except as specifically agreed to by HDC in writing, HMCorp covenants
and agrees that during the term of this Agreement, and for a period of two (2)
years from the date this Agreement is terminated, other than termination by
HMCorp for cause, or expires, HMCorp shall not, directly or indirectly, own,
manage, operate, control, contract with, lend funds to, maintain an interest
whatsoever in, or be employed by, any enterprise providing capital or services
to those engaged in the provision of Health Care Services or providing any other
type of services or products to third parties substantially similar to those
offered by HDC located anywhere in the United States.
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(b) HMCorp agrees that during the term of this Agreement, and for a period
of two (2) years from the date this Agreement is terminated, other than
termination by HMCorp for cause, or expires, HMCorp shall not, (i) solicit any
employee of HDC to leave HDC or become employed by HMCorp or any entity,
business, corporation or partnership with which HMCorp is directly or indirectly
related, or (ii) solicit any of HDC's, or any professional corporation
affiliated with HDC's, customers, clients, buyers, distributors, or
manufacturers to cease doing business with HDC or to do business with HMCorp or
any entity, business, corporation or partnership with which HMCorp is either
directly or indirectly related.
10. GENERAL.
(a) INDEPENDENT CONTRACTOR. It is expressly understood and agreed by the
parties that, in providing services under this Agreement, HDC shall at all times
act as an independent contractor, not as an employee of HMCorp, and none of
HMCorp or the Health Care Practitioners shall be employees or servants of HDC.
Notwithstanding the foregoing, Xx. Xxxxxxx may serve as the Chief Executive
Officer and/or any other executive position of HDC; provided that in such
capacity he not assume any responsibilities that would constitute the practice
of dentistry, optometry, podiatry or any ancillary health care service. Further,
it is expressly understood and agreed by the parties that nothing contained in
this Agreement shall be construed to create a joint venture, partnership,
association, or other affiliation or like relationship between the parties, or a
relationship of landlord and tenant, it being specifically agreed that their
relationship is and shall remain that of independent parties to a contractual
relationship as set forth in this Agreement. In no event shall either party be
liable for the debts or obligations of the other of them except as otherwise
specifically provided in this Agreement. None of HMCorp, or any Medical
Practitioner, whether such Medical Practitioner be a member, partner, employee,
subcontractor, or otherwise, of HMCorp, shall have any claim under this
Agreement or otherwise against HDC for vacation pay, sick leave, retirement
benefits, social security, workers' compensation, disability or unemployment
benefits, incentive compensation or employee benefits of any kind.
(b) EXCLUSIVITY. In recognition of the fact that HDC or any HDC
employees may perform services from time to time for others, including
services of the type HDC provides to HMCorp under this Agreement, this
Agreement shall not prevent HDC from performing such services for others or
restrict HDC from using for such purposes any HDC employees who are
performing services under or with respect to this Agreement. The decision as
to which personnel are to be employed at what times shall be solely within
HDC's discretion.
(c) INDEMNIFICATION. (i) HMCorp agrees to indemnify and hold harmless
HDC, its shareholders, directors, officers, employees, and other affiliates
and their respective successors and assigns, harmless from and against any
and all liabilities,
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demands, claims, actions, causes of action, losses, fines, penalties, costs,
damages and expenses, including reasonable attorneys' and expert witness
fees, alleged against, sustained or incurred by any such persons arising out
of or resulting from (i) any negligent or intentional act or omission by
HMCorp or any Health Care Practitioner, (ii) any breach or default on the
part of HMCorp in the performance of this Agreement. HMCorp, upon notice from
HDC, shall resist and defend, at the expense of HMCorp, any such action or
proceeding with counsel reasonably satisfactory to HDC.
(ii) HDC agrees to indemnify and hold harmless
P.C., its shareholders, directors, officers, employees and other affiliates
and their respective successors and assigns, harmless from and against any
and all liabilities, demands, claims, actions, causes of action, losses,
fines, penalties, costs, damages and expenses, including reasonable
attorneys' and expert witness fees, alleged against, sustained or incurred by
any such persons arising out of or resulting from any negligent or
intentional misconduct by HDC in connection with the services it has agreed
to provide pursuant to Section 1(b).
(d) PRIOR AGREEMENT; AMENDMENTS. This Agreement supersedes all prior
agreements and understandings between the parties hereto with respect to the
subject matter hereof, including but not limited to that Management
Agreement, dated as of December 12, 1996, and the Operating Agreement, dated
as of May 26, 1998, between HDC and P.C., which are hereby terminated. This
Agreement may not be amended, altered, changed, or terminated orally. No
amendment, alteration, change, or attempted waiver of any of the provisions
hereof shall be binding without the written consent of both parties, and such
amendment, alteration, change, termination or waiver shall in no way affect
the other terms and conditions of this Agreement, which in all other respects
shall remain in full force.
(e) FORCE MAJEURE. HDC shall not be liable to HMCorp 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 HDC has no control, for so long as such event continues and
for a reasonable period of time thereafter, and in no event shall HDC be liable
for consequential, indirect or like damages.
(f) ASSIGNMENT; BINDING EFFECT. HDC shall have the right to assign or sell
its rights and obligations under this Agreement to any person, corporation,
partnership, or other legal entity. HMCorp shall not assign this Agreement or
its rights and obligations under this Agreement without the written consent of
HDC, which consent may be withheld in HDC's sole discretion. Any attempted
assignment by the HMCorp shall be void and of no force and effect. The
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties' successors and assigns, respectively, but this provision
shall not constitute a consent by HDC to assignment by HMCorp otherwise
prohibited by the preceding sentences.
(g) CONSTRUCTION OF AGREEMENT. The failure to insist upon strict
compliance with any of the terms, covenants or conditions herein shall not be
deemed a waiver of such terms, covenants, or conditions, nor shall any waiver or
relinquishment of any right at any one or more times be deemed a waiver or
relinquishment of such right at any other time or times.
(h) GOVERNING LAW. This Agreement has been signed by the parties under
seal in Massachusetts, and the parties agree that it shall be governed and
construed in accordance with the laws of The Commonwealth of Massachusetts to
the fullest extent permitted by law, without regard to the application of
conflict of laws rules. If
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any portion of the provisions hereof shall to any extent be invalid or
unenforceable, the remainder of this Agreement, or the application of such
portion or provisions in circumstances other than those in which it is held
invalid or unenforceable, shall not be affected thereby, and each portion or
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law.
(i) ADDITIONAL DOCUMENTS. The parties hereto shall execute such additional
documents as are reasonably required for the purpose of carrying out the intent
and purpose of this Agreement.
(j) HEADINGS. Section and paragraph headings are not part of this
Agreement and are included solely for convenience and are not intended to be
full or accurate descriptions of the contents thereof.
(k) NOTICES. Any notice hereunder shall have been deemed to have been
given only if in writing and either delivered in hand or sent by registered or
certified mail, return receipt requested, postage prepaid, or by United States
Express Mail or other commercial expedited delivery service,
(i) if intended for HDC such notice having been addressed to it at:
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx; and
(ii) if intended for HMCorp such notice having been addressed to it at:
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, M.D.
Either party hereto by like notice to the other, may designate such other
address or addresses to which notice must be sent.
(l) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all which together shall
constitute one instrument.
(m) NO HEALTH CARE PRACTICE BY HDC. It is acknowledged that HDC is not
authorized or qualified to engage in any activity which may be construed or
considered to constitute the practice of dentistry, optometry, podiatry or any
ancillary health care service To the extent any act or service of HDC under this
Agreement is construed or considered to constitute the practice of dentistry,
optometry, podiatry or any ancillary health care service, the performance of
such act or service by HDC
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shall be deemed waived and excused. If notwithstanding any waiver or excuse of
HDC's performance of an act or service as contemplated in the immediately
preceding sentence, any of the provisions of this Agreement (1) may be construed
or considered to be in material violation of any rules, regulations or policies
of the Board of Registration in Dentistry, Optometry or Podiatry (or such
ancillary health care service) of the State of Michigan, the Board of
Registration of any other jurisdiction in which the HMCorp provides Health Care
Services, or the statutes, laws, rules or regulations of the United States or
any state, governmental agency, authority, or other body having jurisdiction
over the HMCorp or the Company, or (2) may be construed or considered to impose
a substantial threat to the license to practice dentistry, optometry, podiatry,
or any ancillary health care service of any Health Care Practitioner, or to the
authorization of HMCorp to render Health Care Services, then the parties hereto
agree to use their best efforts to negotiate in good faith an amendment to this
Agreement, the purpose and substance of which shall be modification of only
those provisions giving rise to the issues set forth in clauses (1) and 2) of
this sentence so that the Agreement as modified continues to reflect, as nearly
as possible, the intent of the parties as expressed herein. If notwithstanding
negotiation in good faith as contemplated in the immediately preceding sentence,
an amendment to this Agreement cannot be agreed to that resolves the issues set
forth in clauses (1) and (2) of the preceding sentence and continues to reflect,
as nearly as possible, the intent of the parties expressed herein, this
Agreement shall terminate thirty (30) days after the date either party hereto
provides notice to the other party hereto that such circumstances exist.
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Executed as an instrument under seal as of the date first set forth
above.
HEALTHDRIVE CORPORATION HEALTHDRIVE MICHIGAN CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
---------------------------- -----------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxxx, M.D.
Office: Vice President of Finance Office: President
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