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EXHIBIT 10.13
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement") is made as of the 1st day of
August, 1997, by and between PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC., a
New Jersey corporation ("PHPNJ"), and THE PACE GROUP, INC., a Texas corporation
("Pace").
RECITALS: PHPNJ is engaged in the business of operating a physician health
maintenance organization in the State of New Jersey known as the "Physician
Healthcare Plan of New Jersey". Pace is a provider of management and consulting
services to, among other, health maintenance organizations. Since December
1996, Pace has been providing such services to PHPNJ through a contract with a
company providing management services to PHPNJ. PHPNJ has entered into that
certain Assignment and Transfer Agreement dated as of June 26, 1997 (the
"Assignment") by and among PHPNJ, Medigroup of New Jersey, Inc. ("Medigroup"),
Medigroup, Inc. and Blue Cross and Blue Shield of New Jersey, Inc. Pursuant to
the Assignment, PHPNJ has agreed to assign and transfer its right, title and
interest in and to certain contracts to Medigroup. PHPNJ has also entered into
that certain Management Services Agreement dated as of June 26, 1997 (the
"Management Agreement"), by and between PHPNJ and Medigroup pursuant to which
Medigroup has agreed to provide certain management services to PHPNJ for a
temporary period. As a result of the Assignment and the Management Agreement,
PHPNJ requires the assistance of Pace with certain transition activities. To
that end, PHPNJ wishes to engage Pace, and Pace is willing, to provide services
in support of the Transition Activities on the terms and conditions set forth
below.
NOW, THEREFORE, in consideration of the above premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pace and PHPNJ agree as follows:
1. Engagement of Pace. PHPNJ hereby engages Pace, and Pace hereby
agrees, to provide the services (the "Services") described on Exhibit A
attached hereto and made a part hereof on the terms and conditions set forth
below. Pace shall report to the Chairman of the Board of PHPNJ or other
representative designated from time to time by the Board of Directors of PHPNJ.
2. Pace Personnel. In providing the Services, Pace intends to utilize the
services of the personnel described in Section 3(b) below (the "Pace
Personnel"). The Pace Personnel will be compensated by Pace and will not be, or
be deemed or considered to be, employees or independent contractors of PHPNJ, or
joint employees or independent contractors of Pace and/or PHPNJ, for any
purpose. In the event that PHPNJ determines that the job performance of any of
the Pace Personnel is deficient. XXXXX
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may notify Pace of the nature of such job performance deficiency, and Pace
shall have ten (10) days from the date of such notice to replace such Pace
Personnel.
3. Compensation
(a) PHPNJ shall pay Pace a monthly retainer of $20,000 (the "Monthly
Retainer") by the fifth (5th) day of each month. Pace shall apply the Monthly
Retainer against any amounts billed by Pace for services provided by the Pace
Personnel during the preceding month. Such services will be billed at the rates
set forth in Section 3(b) below. To the extent that the Monthly Retainer
exceeds the amounts billed, such excess will be applied toward the next month's
Monthly Retainer. PHPNJ shall pay any amounts billed in excess of the Monthly
Retainer monthly, upon receipt of an invoice from Pace.
(b) The Pace Personnel shall consist of the following persons, who
will be billed at the rates set forth next to their names:
Xxxxx Xxxxxx $250.00 per hour
Xxxxx Xxxxxx $200.00 per hour
and of certain administrative support personnel, who will be billed at $30.00
per hour.
(c) Pace shall xxxx PHPNJ monthly for Pace's reasonable
out-of-pocket expenses incurred in providing the Services (the "Expenses").
Upon receipt of Pace's invoice, PHPNJ shall reimburse Pace for the Expenses.
The Expenses will include, without limitation, airfare (coach class), lodging,
transportation, telephone charges, facsimile, copying, mailing, postage, meals,
parking and mileage.
4. Confidentiality. Pace may have access to certain information of a
proprietary and confidential nature belonging or pertaining to PHPNJ and/or its
operations (the "Confidential Information"). Pace shall maintain the
Confidential Information in strictest confidence and shall restrict access and
dissemination of the Confidential Information to solely those of its
shareholders, partners, officers, directors, employees, independent contractors
or agents ("Agents") who reasonably have a need to know such information for
the purpose of providing the Services. Otherwise, Pace shall not disclose or
reveal the Confidential Information to any person or entity for any purpose;
provided, however, that Confidential Information may be disclosed or used to
the extent required by Applicable Law or generally and lawfully available to
the public. Pace shall take all necessary and proper precautions against
disclosure of any Confidential Information by any of its Agents in violation of
this Agreement. Pace hereby waives any and all right, title and interest in and
to the Confidential Information and will return, and cause its Related Parties
to return, all copies of such Confidential Information to PHPNJ upon the
expiration or termination of this Agreement for any
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reason. This Section shall survive the expiration or termination of this
Agreement for any reason.
5. Term and Termination. The term of this Agreement shall commence on
August 1, 1997, and, unless terminated sooner pursuant to this Agreement, shall
expire at such time as PHPNJ shall request. Either party may terminate this
Agreement upon ten (10) days prior written notice to the other party if the
other party fails to perform any of its obligations hereunder and such failure
continues for a period of thirty (30) days after written notice thereof (which
notice shall describe with particularity the default).
6. Arbitration. Any dispute between the parties arising under this
Agreement will be arbitrated in Lawrenceville, New Jersey, pursuant to the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be conducted by one arbitrator, to be selected, in good
faith, by the parties. In the event the parties cannot agree upon an
arbitrator, each party shall name one arbitrator, and the arbitrators so named
shall jointly select a third arbitrator, who will conduct the arbitration. The
award of the arbitrator shall be final and the binding upon the parties, and
judgment may be entered thereon upon the application of any party in any court
of competent jurisdiction. The parties shall bear their own costs of
arbitration and shall share equally in the cost of the arbitrator conducting
the arbitration. The provisions of this Section shall survive the termination
or expiration of this Agreement for any reason.
7. Notices. All notices hereunder shall be in writing and shall be
deemed given when hand delivered, sent by overnight courier that provides
confirmation of delivery, telefaxed with voice confirmation and receipt
confirmed, or deposited in the United States mail, certified mail, return
receipt requested, postage prepaid, addressed as follows:
To PHPNJ, at: Physician Healthcare of New Jersey, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, M.D.
Chairman of the Board
To Pace, at: The Pace Group, Inc.
00000 Xxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxx
or to such other address or to such other person as may be designated by notice
given from time to time by one party to the other.
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8. Miscellaneous. In the event that any provision of this Agreement is
for any reason held to be invalid, illegal or enforceable, in whole or in part
or in any respect, then such provision only shall be deemed null and void and
shall not affect any other provision hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions were
omitted. The headings used herein are for convenience only. This Agreement may
be executed in any number of counterparts, each of which shall be considered an
original and all of which taken together shall constitute one and the same
instrument. This Agreement constitutes the entire agreement of the parties
regarding the subject matter hereof and completely and fully supersedes any and
all other prior agreements, both written and oral, between the parties relating
to the subject matter hereof. This Agreement cannot be modified except in
writing signed by both parties. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New Jersey, without
reference to its conflict of laws rules. This Agreement shall inure to the
benefit of and shall be binding on Pace and PHPNJ and their respective
successors and permitted assigns. This Agreement may not be assigned by either
party without the prior written consent of the other party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
THE PACE GROUP, INC. PHYSICIAN HEALTHCARE PLAN OF
NEW JERSEY, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxx, M.D.
------------------------ -----------------------------
Name: Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxx, M.D.
Title: Vice President Chairman of the Board
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EXHIBIT A
SERVICES
Pace shall provide the following services to PHPNJ, including, but not limited
to:
1. Preparing and coordinating PHPNJ corporate, shareholder and provider
communications and meetings (including, without limitation, preparing and
mailing notices and other communications to shareholders, providers and the
Board of Directors of PHPNJ, preparing minutes, providing supplies, etc.)
2. Preparing and coordinating response to stock redemption requests with counsel
to PHPNJ and the Board of Directors of PHPNJ and otherwise responding to
shareholder communications after consultation with the Chairman of PHPNJ.
3. Coordinating, reviewing and assisting with the preparation of proxies and
other Securities Exchange Commission filings, including, without limitation,
providing/preparing financial data necessary for disclosure in such filings
and preparing and delivering any notices required.
4. Coordinating transition requirements of the New Jersey Department of Banking
and Insurance and the New Jersey Department of Health and Senior Services,
including, preparing and filing any reports required and coordinating the
establishment of claims reserves and the surrender of PHPNJ's Certificate of
Authority.
5. Monitoring and enforcing (at the direction of PHPNJ) Medigroup's compliance
with the Management Agreement and the performance standards set forth
therein, including, without limitation, reviewing accounts payable.
6. Preparing/providing financial data necessary for tax returns and coordinating
their filing with Ernst & Young.
7. Coordinating, reviewing and assisting with the preparation of PHPNJ's second
quarter financial report to the New Jersey state regulatory authorities,
including, but not limited to, the following activities: (i) reviewing and
adjusting the financial information, (ii) drafting a section on management
discussion and analysis, and (iii) coordinating a legal review thereof.
8. Coordinating the investment of PHPNJ's funds in accordance with the policies
of PHPNJ's Board of Directors.
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EXHIBIT A
9. Coordinating marketing activities, including contacting brokers regarding
new and existing business.
10. Preparing plan of liquidation of PHPNJ and coordinating and arranging for
the liquidation of the furniture, equipment and other assets of PHPNJ.
11. Such other services as PHP may reasonably request.
To the extent possible, Pace shall provide the Services from their offices in
Dallas, Texas; however, the Pace Personnel shall be available for on-site
meetings as needed. To the extent permitted by applicable law, all corporate
books and records of PHPNJ, except for daily operational items, shall be stored
at Pace's offices in Dallas, Texas. All PHPNJ shareholder inquiries shall be
forwarded to Pace and handled by the Pace Personnel in Dallas, Texas.
