\
OPERATING AGREEMENT
XXXXXX X. XXXXXXX, M.D., P.C.
HEALTHDRIVE CORPORATION
OPERATING AGREEMENT
XXXXXX X. XXXXXXX, M.D., P.C.
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 P.C..................3
(e) Bank Accounts................................3
(f) Records and Financial Data...................4
2. Obligations of P.C................................5
(a) Employment of Medical 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 Medical Practice by P.C...........7
(h) Authority to Contract........................7
(i) Exclusive Supplier...........................8
3. Prohibition on Referrals..........................8
4. Expenses of P.C...................................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
-i-
(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 Medical Practice By HDC..................14
-ii-
OPERATING AGREEMENT
OPERATING AGREEMENT, dated as of May 26, 1998, by and between Xxxxxx X.
Xxxxxxx, M.D., P.C., a professional corporation organized under Chapter 156A
of the Massachusetts General Laws ("P.C."), and HealthDrive Corporation, a
Delaware corporation ("HDC").
I. BACKGROUND
WHEREAS, P.C. is a duly incorporated and validly existing professional
corporation organized for the practice of medicine;
WHEREAS, HDC provides certain services and capital and licenses its
Service Xxxx (as hereinafter defined) to those engaged in the provision of
medical and/or ancillary health care services at long term care facilities and
other concentrated geriatric populations ("MEDICAL SERVICES"); and
WHEREAS, P.C. desires to engage HDC to provide certain services and
capital to P.C. and its physicians and ancillary medical personnel ("MEDICAL
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 P.C. the
following services required by P.C.:
(i) Order and purchase, as an accommodation to and on behalf of
P.C., all medical and office inventory, laundry, linen, uniforms,
printing, stationary, forms, laboratory items and supplies as are ordinary
and necessary for operation of the P.C. 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 P.C. without
any additional charge therefor.
(ii) Operate and maintain P.C.'s bookkeeping and accounting systems;
(iii) Perform all payroll and payroll accounting functions for P.C.;
and
(iv) Administer all of P.C.'s employee benefit plans.
(b) CLAIMS PROCESSING AND COLLECTION OF FEES. HDC shall, on behalf and in
the name of P.C., be exclusively responsible for processing all claims and
bills, and for collecting all moneys related thereto, for Medical Services
rendered by P.C. In this connection, P.C. appoints HDC for the term of this
Agreement its true and lawful agent, and shall assure that such appointment is
effective for P.C.'s Medical Practitioners for the following purposes:
(i) To xxxx and collect on behalf of P.C., or any of its Medical
Practitioners, amounts owing from patients for performance of Medical
Services, and P.C. hereby covenants to turn over, and require any of its
Medical 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 P.C., or any of its Medical
Practitioners, amounts owing from Blue Shield plans, insurance companies,
Medicare, Medicaid, and any other third party payor for the performance of
Medical Services, and P.C. hereby covenants to turn over, and require any
of its Medical 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 P.C. 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 P.C. or its Medical Practitioners that unlawfully maximize
revenue to P.C. or its Medical Practitioners.
(c) LICENSE OF SERVICE XXXX. HDC hereby grants to P.C. 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
-2-
(collectively, the "SERVICE XXXX") in connection with advertising and promotion
of P.C., 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, P.C. 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, P.C. agrees
that P.C. 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,
P.C. agrees that, without limitation, a violation by P.C. 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, P.C. 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
Massachusetts Board of Registration in Medicine, the Board of Registration in
Medicine of any other jurisdiction in which Medical Services are provided or
other applicable laws or regulations.
(d) EXTENSIONS OF CREDIT TO P.C. HDC hereby agrees to extend credit to
P.C. to fund P.C.'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 P.C. 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 P.C. 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. P.C. hereby acknowledges the existence of an
outstanding principal balance and accrued interest in the amount of $______
(the "CURRENT BALANCE") due 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.
(e) BANK ACCOUNTS. All funds collected by HDC pursuant to this Agreement
shall be deposited as follows:
-3-
(i) All funds collected on behalf of P.C. 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
P.C., in the joint names of HDC and P.C.;
(ii) All funds collected on behalf of P.C. 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 P.C., in the joint names of HDC
and P.C. or, in HDC's sole discretion, in the sole name of HDC;
(iii) P.C. does hereby grant a first and continuing security
interest to HDC in all P.C.'s accounts receivable to secure payment of
P.C.'s obligations hereunder to the maximum extent permitted by applicable
law. In the event of any monetary default by P.C., 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. P.C. 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 P.C. that reflect all
revenues that HDC receives as a result of xxxxxxxx in the name of P.C. for
Medical Services rendered by P.C., and all expenses incurred by P.C. or
HDC in maintaining P.C. and providing the Medical Services rendered by
P.C. HDC shall allow an officer or employee designated by P.C. to audit
and inspect these books and records at appropriate and reasonable times
and at P.C.'s sole expense.
(ii) DATA FOR TAX RETURNS. HDC shall provide to P.C. the financial
data necessary to enable P.C. 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
-4-
Agreement and all books, records, and documents as are necessary to
certify the nature and extent of the costs incurred by P.C. 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 P.C. as and when any such request is
received, and will provide P.C. (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
P.C.'s patient medical 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 P.C.
(a) EMPLOYMENT OF MEDICAL PRACTITIONERS. HDC shall not provide any
personnel to P.C. P.C. shall be responsible for employing Medical Practitioners
to provide Medical Services for P.C. P.C. acknowledges and agrees that in order
to ensure the quality of services provided by P.C. and the economic viability of
P.C., it will employ and contract with Medical Practitioners subject to the
following requirements:
(i) Every Medical Practitioner shall be fully licensed to practice
his/her specialty under the laws of the Commonwealth of Massachusetts or
such other state in which such practitioner provides services;
(ii) As a condition to each Medical Practitioner's employment,
including without limitation the holder of the capital stock of P.C. (the
"STOCKHOLDER"), such Medical Practitioner shall be required by P.C. to
execute a non-competition and non-solicitation agreement in form and
substance acceptable to HDC prohibiting the Medical Practitioner from
competing with P.C. or HDC for the term of his employment by P.C. and a
period of 18 months thereafter; and
(iii) P.C. shall fix compensation and fringe benefits for individual
Medical Practitioners; provided, however, that compensation and benefits
paid to any such Medical Practitioner, including without limitation the
Stockholder (with respect to compensation for services provided both to
patients and P.C.), shall not exceed the fair market value for such
services. P.C. hereby acknowledges and agrees that HDC has superior
knowledge and experience with respect to the fair market value of services
provided by Medical
-5-
Practitioners. If a dispute arises between P.C. and HDC with respect to
the fair market value of services provided by a Medical Practitioner, P.C.
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 P.C. or other professional
corporations affiliated with HDC.
P.C. further acknowledges that fixed term agreements, including without
limitation employment agreements, between P.C. and Medical Practitioners are
not necessarily in the best interests of patients and patient care and may
interfere with the quality of services provided by P.C., and, therefore, P.C.
hereby agrees that, without the express written consent of HDC, it shall not
enter into any such agreements with the Medical 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. P.C. covenants and agrees that until the
expiration or termination of this Agreement it will maintain, or will require
each of its Medical 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 Medical
Practitioner, with each of P.C. and HDC having the right, upon request, to be
added as additional insured. P.C. 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 P.C.
(c) COMPLIANCE WITH REGULATIONS. P.C. shall comply and shall cause each of
its Medical Practitioners to comply with all applicable rules and regulations of
governmental bodies having jurisdiction over the P.C. or any of the Medical
Practitioners.
(d) QUALITY OF CARE. P.C. shall at all times be solely responsible for the
quality of the Medical Services rendered by the Medical Practitioners, it being
agreed that HDC shall have no responsibility or liability for such services or
programs.
(e) FEES. P.C. shall be solely responsible for setting its fees. P.C.
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 P.C.; PROVIDED,
HOWEVER, that the foregoing shall not affect the control of the Medical Practice
by the P.C. pursuant to Section 2(g) of this Agreement.
(f) STANDARDIZED SYSTEMS. P.C. agrees to utilize HDC's standardized
business systems, procedures and forms (excluding clinical forms), at no charge
to P.C., which are intended to improve efficiency; PROVIDED that P.C. expressly
-6-
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 Medical Practice by the P.C. pursuant to Section 2(g) of this Agreement.
(g) CONTROL OF MEDICAL PRACTICE BY P.C. Notwithstanding anything to the
contrary contained in this Agreement, the delivery of Medical Services shall be
supervised, directed, and controlled, and all final determinations with respect
thereto shall be made, exclusively by P.C., including without limitation, the
following (collectively, "MEDICAL PRACTICE"):
(i) employment of all Medical Practitioners, pursuant to Section
2(a) of this Agreement;
(ii) supervision and direction of all Medical Practitioners,
including, without limitation, assignment of patients to the Medical
Practitioners and establishment and monitoring of peer review guidelines;
(iii) determination of the hospital supplying Medical Practitioners
to P.C., 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 P.C., scope of
services provided and fees for such services.
In connection with its obligations under this Section 2(g), P.C. 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 P.C. constituting Medical Practice.
(h) AUTHORITY TO CONTRACT. P.C. shall have exclusive authority to
negotiate and enter into agreements related to Medical Practice; PROVIDED,
HOWEVER, that (i) P.C. shall give HDC thirty (30) days prior notice of P.C.'s
intent to execute any agreement obligating P.C. to engage in Medical Practice or
otherwise creating a binding legal obligation on P.C. related to Medical
Practice, and (ii) P.C. shall not enter into any agreement that does not relate
to Medical Practice without HDC's prior
-7-
written consent. P.C. hereby approves, confirms and ratifies all agreements
negotiated and executed by HDC on P.C.'s behalf prior to the date hereof.
(i) EXCLUSIVE SUPPLIER. P.C. 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 P.C. hereby agree as follows:
(a) HDC and P.C. and its Medical Practitioners shall have no obligation
to refer patients to each other or to long term care facilities
under contract with P.C., and P.C. and its Medical 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) P.C. shall not, and shall use its best efforts to cause the Medical
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 P.C., or any of the Medical Practitioners, have a financial
relationship, compensation arrangement, or an ownership or
investment interest.
4. EXPENSES OF P.C. All expenses incurred in connection with the conduct of
P.C.'s business and the services of HDC shall, unless otherwise specified in
this Agreement, be expenses of P.C. (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 P.C., shall, using funds billed and
collected pursuant to Section 1(e) above, pay all such expenses. P.C. 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, P.C. 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
-8-
the net of (i) all revenue minus (ii) all expenses (excluding compensation due
under this Section) of P.C. 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 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.
6. TERM OF AGREEMENT. This Agreement shall be in effect from the date first set
forth above through May __, 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
P.C. 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, P.C. 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.
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 P.C. 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 P.C., and P.C., 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.
-9-
(c) HDC may terminate this Agreement upon written notice to P.C. at such
time as P.C. does not qualify for any reason as a Professional Corporation or no
longer has the necessary authorization to render Medical Services in The
Commonwealth of Massachusetts or any other state in which Medical Practitioners
employed or otherwise retained by P.C.
provide such services.
(d) HDC may terminate this Agreement upon written notice to P.C. if the
license to practice medicine or any ancillary health care service of any Medical
Practitioner is revoked or threatened to be revoked by the applicable Board of
Registration of the Commonwealth of Massachusetts or such other state in which
such Medical Practitioner provides services, provided that P.C. has not
forthwith terminated such Medical Practitioner from his or her employment or
association with the P.C.
8. CONFIDENTIAL AND PROPRIETARY INFORMATION.
(a) P.C. acknowledges and agrees that all business information and
materials provided to P.C. and its affiliates by HDC pursuant to this Agreement
constitute "Confidential Information." P.C. 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 P.C.'s officers,
directors, managers, employees and other agents and affiliates comply with the
foregoing obligations; PROVIDED THAT P.C. 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 P.C. 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. P.C. agrees to be responsible for
any breach of this Section 7 by its officers, directors, managers, employees and
other agents and affiliates. P.C. 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, P.C. 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 P.C. 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. P.C. 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
-10-
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. P.C. 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, P.C. 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 P.C. for
cause, or expires, P.C. 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 Medical 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.
(b) P.C. 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 P.C. for cause, or expires, P.C. shall not, (i) solicit any
employee of HDC to leave HDC or become employed by P.C. or any entity, business,
corporation or partnership with which P.C. 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 P.C. or any entity, business,
corporation or partnership with which P.C. 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 P.C., and none of P.C.
or the Medical 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 medicine or any ancillary medical 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
-11-
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 P.C., or any Medical
Practitioner, whether such Medical Practitioner be a member, partner, employee,
subcontractor, or otherwise, of P.C., 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 P.C. 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. (a) P.C. 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, 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 P.C. or any Medical Practitioner, (ii) any
breach or default on the part of P.C. in the performance of this Agreement.
P.C., upon notice from HDC, shall resist and defend, at the expense of P.C.,
any such action or proceeding with counsel reasonably satisfactory to HDC.
(b) 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 June 3, 1994 between HDC and P.C., which is 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 P.C. 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.
-12-
(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. P.C. 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 P.C. 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 P.C. 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 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
-13-
(ii) if intended for P.C. such notice having been addressed to it at:
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx 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 MEDICAL 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 medicine or any ancillary medical
service. To the extent any act or service of HDC under this Agreement is
construed or considered to constitute the practice of medicine or any ancillary
medical service, the performance of such act or service by HDC 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 Medicine (or such ancillary medical service) of The Commonwealth
of Massachusetts, the Board of Registration of any other jurisdiction in which
the P.C. provides Medical 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 P.C. or the Company, or (2) may be construed or
considered to impose a substantial threat to the license to practice medicine
and/or any ancillary medical service of any Medical Practitioner, or to the
authorization of P.C. to render Medical 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.
-14-
Executed as an instrument under seal as of the date first set forth above.
HEALTHDRIVE CORPORATION XXXXXX X. XXXXXXX, M.D., P.C.
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
-15-
