PROFESSIONAL BUSINESS MANAGEMENT AGREEMENT
This Professional Business Management Agreement (the "Agreement") is made
and entered into effective as of May 12, 2003, by and between EyeMasters, Inc.,
a Delaware corporation ("Professional Business Manager"), and Xxxxxxx X.
Xxxxxx, O.D. & Associates, P.C., P.C., a Georgia professional corporation (the
"Practice").
R E C I T A L S
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A. The Practice desires to engage in the provision of Professional Eye
Care Services (as defined below) to the general public in the state of Georgia
(the "Practice Area") through individual Professionals (as defined below) each
of whom is licensed to practice optometry and/or ophthalmology in Georgia and is
employed or otherwise retained by the Practice;
B. The Practice desires to provide Professional Eye Care Services to
the general public at office(s) located adjacent to certain optical retail
stores operating under the name "Doctor's VisionWorks" in Georgia and engage the
Professional Business Manager to provide management services at such offices
(such office locations, each to be listed on EXHIBIT A as attached hereto and
amended from time to time, are hereinafter referred to as the "Practice
Locations"); and
C. The Practice desires to engage Professional Business Manager to
provide facilities, equipment and such management, administrative and business
services as are necessary and appropriate for the day-to-day administration of
the non-optometric aspects of the Practice's professional eye care practice at
each of the Practice Locations, and Professional Business Manager desires to
provide such, upon the terms and conditions hereinafter set forth, for the
purpose of enhancing the cost-efficiency and quality of services rendered by the
Practice to its patients.
NOW, THEREFORE, for and in consideration of the mutual agreements, terms,
covenants and conditions contained herein and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE I
DEFINITIONS
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For the purposes of this Agreement, the following terms shall have the
following meanings ascribed thereto, unless otherwise clearly required by the
context in which such term is used:
1.1 Agreement. The term "Agreement" shall mean this instrument as
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originally executed and delivered, or, if amended or supplemented, as so amended
or supplemented.
1.2 Budget. The term "Budget" shall mean an operating budget and
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capital expenditure budget for each fiscal year as prepared in accordance with
Section 3.11(a).
1.3 Clinical Duties. The term "Clinical Duties " shall mean those
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duties of Non-Professional Personnel (as defined below) which entail directly or
indirectly assisting a Professional (as defined below) in the scheduling,
examination or care of patients in the course of providing Professional Eye Care
Services, regardless of whether the performance of such duties requires
licensure under applicable state law.
1.4 Confidential Information. The term "Confidential Information"
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shall mean any information of Professional Business Manager or the Practice, as
appropriate (whether written or oral), including all business management or
economic studies, patient lists, proprietary forms, proprietary business or
management methods, marketing data, or trade secrets of the Professional
Business Manager or of the Practice, as applicable, whether or not such
Confidential Information is disclosed or otherwise made available to one Party
by the other Party pursuant to this Agreement. Confidential Information shall
also include the terms and provisions of this Agreement and any transaction or
document executed by the Parties pursuant to this Agreement. Confidential
Information does not include any information that the receiving party can
establish (a) is or becomes generally available to and known by the public or
optometric community (other than as a result of an unpermitted disclosure
directly or indirectly by the receiving party or its affiliates, advisors, or
Representatives); (b) is or becomes available to the receiving party on a
nonconfidential basis from a source other than the furnishing party or its
affiliates, advisors or Representatives, provided that such source is not and
was not bound by a confidentiality agreement with or other obligation of secrecy
to the furnishing party of which the receiving party has knowledge; or (c) has
already been or is hereafter independently acquired or developed by the
receiving party without violating any confidentiality agreement with or other
obligation of secrecy to the furnishing party.
1.5 Executive Office Administrator. The term "Executive Office
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Administrator" shall mean the employee of Professional Business Manager having
executive authority and responsibility for the general and active management of
the Professional Business Manager.
1.6 GAAP. The term "GAAP" shall mean generally accepted United States
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accounting principles.
1.7 Management Fee. The term "Management Fee" shall mean the
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Professional Business Manager's compensation established as described in Article
V hereof.
1.8 Management Services. The term "Management Services" shall mean the
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business, administrative, and management services to be provided for the
Practice and the Office hereunder, including, without limitation, the provision
of equipment, inventory and supplies, support services, personnel (excluding
Professionals) management, administration, financial record keeping, and
reporting, and other business office services, all as reasonably contemplated by
this Agreement and which are necessary for the conduct of the Practice's
business at the Practice Locations.
1.9 Non-Professional Personnel. The term "Non-Professional
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Personnel" shall mean those individuals employed primarily at the Office who are
not Optometrists or Ophthalmologists.
1.10 Office. The term "Office" shall mean the facilities and locations
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used by the Practice with respect to the Practice Locations, all business
operations related to the Practice's optometric and/or therapeutic optometric
practice at the Practice Locations, and all related business operations of the
Practice which are to be administered by Professional Business Manager under
this Agreement.
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1.11 Office Expense. The term "Office Expense" shall mean all direct
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out-of-pocket operating and non-operating expenses incurred by the Practice or
the Professional Business Manager in the provision of Management Services to the
Office and shall include all operating and non-operating expenses incurred by
the Practice relating to the items set forth in this Section. The Professional
Business Manager shall be reimbursed by the Practice for any reasonable Office
Expense incurred by the Professional Business Manager in the provision of
services to the Practice hereunder, upon request by the Professional Business
Manager. Office Expense shall not include any Professional Business Manager
Expense, Practice Expense or Shareholder Expense or any state, local or federal
income or franchise tax. Without limitation, Office Expense shall include the
following expenses to the extent relating to the Practice Locations:
(a) comprehensive general and professional liability insurance
covering the Office, employees of the Practice in connection with the operation
of the Office and employees of Professional Business Manager in connection with
the operation of the Office;
(b) the expense of using, leasing, purchasing or otherwise
procuring and maintaining the Office premises (e.g., rent expense and related
charges);
(c) the cost of Office supplies and inventory;
(d) all expenses reflected in the budget that are not Professional
Business Manager Expenses, Practice Expenses or Shareholder Expenses;
(e) reasonable costs and expenses (to the extent not covered by
insurance) of lawsuits or claims against the Professional Business Manager or
its personnel, or the Practice, its Professional(s), or its other personnel
related to their performance of duties at the Office or their interest in assets
used in connection with the Office, provided that if any of the Professional
Business Manager or its personnel, or the Practice, its Professional(s), or its
other personnel do not prevail in the lawsuit or claim or settle the matter with
a material payment by the party (the party at "fault"), such costs and expenses
shall be deemed a Professional Business Manager Expense in the event of
Professional Business Manager's fault or the fault of its personnel and a
Practice Expense in the event of fault by the Practice, its Professional(s), or
its other personnel whereupon the Practice and such Professional(s) or other
personnel shall be jointly responsible for the immediate reimbursement of the
sums advanced by Professional Business Manager; provided further that
Professional Business Manager shall not advance such costs and expenses from the
Account if the Practice Advisory Council concludes that (i) it is unlikely that
the Professional Practice Account will be reimbursed if the party involved will
not prevail in the lawsuit or claim, or (ii) a reasonable third person would
believe that obtaining a reimbursement of the advanced sums will be difficult to
achieve; and the Parties acknowledge that nothing in this Section shall create
any liability on the part of a Professional who would otherwise be shielded from
personal liability by the corporate or limited liability structure of the
Practice; and
(f) key person life insurance premiums related to policies which
the Parties agree to acquire on the life of the Practice's Shareholders or
Professionals, whereupon any proceeds shall be paid to the Professional Practice
Account, unless the Parties agree to a specific split of the proceeds. Should
only the Practice choose to obtain key person life insurance, the Practice shall
pay all premiums as a Practice Expense and shall receive all proceeds. Further,
if only the Professional Business Manager chooses to obtain such insurance,
Professional Business Manager shall pay all premiums as a Professional Business
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Manager Expense and shall receive all proceeds. The Practice shall cause its
Shareholders and Professionals to submit to a medical examination necessary to
obtain such insurance.
Expenses contemplated in this paragraph (other than Section 1.11(f)) shall
be in the Budget or approved by the Practice Advisory Council, and where
reasonably determinable, are intended to be reasonable and customary based upon
similar relationships generally existing between national practice management
companies and practices they manage. The expenses related to individuals who
are consultants of or employed by Professional Business Manager and who provide
services benefiting the Practice with respect to the Practice Locations shall be
borne by the Professional Business Manager and the Professional Business Manager
shall not be entitled to reimbursement therefore (other than through the payment
of the Management Fee). The Parties acknowledge that certain expenses not
specifically set forth above and associated with performing the services
hereunder may benefit both Parties or be difficult or impractical to allocate
between the Parties (e.g., utility costs, telephone service costs, overhead
charges, costs of personnel (other than Professionals and Optical Technicians),
costs of marketing materials and costs of equipment provided hereunder).
Accordingly, other benefits provided to the Practice, and expenses incurred, by
the Professional Business Manager, with respect to the Practice Locations (other
than Office Expenses, Professional Business Manager Expenses, Practice Expenses
or Shareholder Expenses) shall be compensated through the payment of the
Management Fee and the Professional Business Manager shall not be entitled to
reimbursement therefore. Notwithstanding anything to the contrary herein,
unless expressly designated as a Professional Business Manager Expense, a
Practice Expense or a Shareholder Expense in this Agreement or any exhibit
thereto, all direct out-of-pocket expenses incurred by Professional Business
Manager in providing services pursuant to this Agreement shall be considered
Office Expenses.
1.12 Optical Technicians. The term "Optical Technician" shall mean
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each optical technician employed by the Professional Business Manager and
providing services at the Practice Locations.
1.13 Optometrist. The term "Optometrist" shall mean each individually
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licensed Optometrist, if any, who is employed or otherwise retained by or
associated with the Practice, and shall meet at all times the qualifications
described in Section 4.3 and Section 4.4.
1.14 Ophthalmologist. The term "Ophthalmologist" shall mean each
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individually licensed Ophthalmologist, if any, who is employed or otherwise
retained by or associated with the Practice, and shall meet at all times the
qualifications described in Section 4.3 and Section 4.4.
1.15 Parties. The term "Parties" shall mean the Practice and
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Professional Business Manager.
1.16 Permitted Shareholder Expense. The "Permitted Shareholder
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Expense" shall mean the amount equal to (i) $5,000 per Practice Location on an
annualized basis (such amount to be prorated for any partial year in which an
Practice Location operates) plus (ii) the amount of base salary (initially
$150,000 per annum) paid to the Shareholder under the President's Employment
Agreement described in Section 4.3 hereof plus the related employee benefits,
reasonable and customary professional dues, subscriptions, continuing educations
and technical training expenses (such reasonable subscriptions, continuing
education and technical training expenses not to exceed $500 per Practice
Location on an annualized basis) and related payroll taxes as contemplated in
the President's Employment Agreement. The Parties acknowledge that the amount
referenced in clause (i) of this paragraph may be, at the option of the
Practice, (A) expended by the Practice on additional benefits to be provided to
Shareholder that would not otherwise be included as an Office Expense or
Practice Expense or provided under the
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President's Employment Agreement, (B) paid to an affiliate of the Practice for
consulting or other services to the Practice, (C) paid to the Shareholder as a
bonus or compensation in addition to the base salary owed under the President's
Employment Agreement or (D) distributed to Shareholder.
1.17 Practice. The term "Practice" shall have the meaning set forth in
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the Recitals.
1.18 Practice Advisory Council. The term "Practice Advisory Council"
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shall have the meaning set forth in Section 2.6 of this Agreement.
1.19 Practice Expenses. The term "Practice Expenses" shall mean, to
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the extent relating to the Practice Locations: (a) all reasonable
non-shareholder Professionals' and Optical Technicians' salaries, benefits,
payroll taxes and other direct costs related to their services to the Practice
(including reasonable and customary professional dues, subscriptions, continuing
education and technical training expenses, and severance payments); (b) the cost
of optometric supplies (including, but not limited to, drugs, pharmaceuticals,
products, substances, items or optometric devices); (c) reasonable and customary
professional liability insurance expenses of Professionals; (d) reasonable
travel costs for continuing education, technical training and necessary business
travel for non-shareholder Professionals and Optical Technicians; (e) to the
extent not covered by insurance and subject to the advance provisions contained
herein, the defense costs and expenses of any litigation or claims brought
against the Practice, its Professionals, or its other personnel by any third
party in which the Practice, its Professionals, or its other personnel do not
prevail or the matter settles with a material payment and the Practice, its
Professionals, or other personnel are at fault, and any liability judgment or
material settlement assessed against the Practice or its Professionals or other
personnel; (f) certain equipment expenses described in Sections 3.2(c) and
3.2(d) of this Agreement; (g) interest on any funds advanced to the Practice by
Professional Business Manager to the extent that Professional Business Manager
is a net lender in accordance with the terms of this Agreement; (h) any income
taxes or franchise taxes of the Practice; and (i) consulting, accounting, or
legal fees which relate solely to the Practice or relate to a dispute with
Professional Business Manager. Notwithstanding the foregoing, the term Practice
Expenses shall specifically exclude (i) business travel requested by
Professional Business Manager, which shall be an Office Expense, (ii) any and
all compensation or expenses attributable to Shareholders, which shall be
Shareholder Expenses (except reasonable and customary expenses for malpractice
insurance which shall be a Practice Expense), (iii) "tail" insurance coverage
for Shareholders, which shall be a Shareholder Expense, or (iv) such other items
agreed to in advance in writing by the Parties hereto. During this Agreement,
for so long as a current Shareholder of the Practice is an employee of,
contractor to, or Shareholder of the Practice, such Shareholder shall be deemed
to be a Shareholder for the purposes of this definition. Such expenses are to
be approved annually in the Budget.
1.20 Practice Locations. The term "Practice Locations" shall have the
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meaning set forth in the Recitals.
1.21 Professional. The term "Professional" shall mean any Optometrist
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or Ophthalmologist.
1.22 Professional Business Manager. The term "Professional Business
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Manager" shall have the meaning set forth in the Recitals hereto.
1.23 Professional Business Manager Expense. The term "Professional
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Business Manager Expense" shall mean an expense or cost incurred by the
Professional Business Manager, for which the
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Professional Business Manager is financially liable and is not entitled to
reimbursement from the Practice. Professional Business Manager Expense shall
specifically include: (a) any income or franchise taxes of the Professional
Business Manager; (b) the expense of providing, leasing, purchasing or otherwise
procuring and maintaining the Office equipment, including depreciation in the
case of furniture and equipment as provided in Section 3.2(c) and 3.2(d); (c)
costs and expenses of the employees of the Professional Business Manager that
provide services at the Offices, (d) utility costs, telephone costs, marketing
materials and corporate overhead charges, and (e) any other expenses or costs
that are not reasonable and customary reimbursements based upon a national
practice management company's usual arrangement with a practice it manages.
1.24 Professional Eye Care Services. The term "Professional Eye Care
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Services" shall mean professional health care items and services, including, but
not limited to, the practice of optometry and ophthalmology, and all related
professional health care services provided by the Practice through Optometrists,
Ophthalmologists, and other professional health care providers that are retained
by or professionally affiliated with the Practice; provided, however, in no
event shall Professional Eye Care Services include the direct or indirect
selling of eye glass frames, sun glasses, eyeglass lenses or prisms, contact
lenses or contact lens supplies.
1.25 Professional Practice Account. The term "Professional Practice
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Account" shall mean the bank account described in Section 3.10.
1.26 Representatives. The term "Representatives" shall mean a Party's
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officers, directors, managers, employees, or other agents.
1.27 Shareholder. The term "Shareholder" shall mean any current or
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future shareholder of the Practice.
1.28 Shareholder Expense. The term "Shareholder Expense" shall be
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limited to the following expenses: (a) Shareholders' salaries, benefits,
payroll taxes, and other direct costs as provided in the President's Employment
Agreement (including professional dues, subscriptions, continuing education
expenses, severance payments, and reasonable entertainment expenses and
reasonable travel costs for continuing education or other reasonable business
travel but excluding business travel requested by Professional Business Manager,
which shall be an Office Expense, and excluding any other expense of a
Shareholder approved as an Office Expense in advance by the Parties); (b)
"tail" coverage malpractice insurance expenses for the Shareholders and any
malpractice insurance expenses of any Professional which are in excess of those
which are customary and reasonable; and (c) consulting, accounting, or legal
fees which relate solely to the Shareholders or relate to any dispute with the
Professional Business Manager. In addition to the foregoing, "Shareholder
Expenses" shall include any non-operating expenses of the Practice, any
extraordinary or unusual expenses of the Practice, any unreasonable continuing
education expenses, entertainment expenses or travel costs and any costs or
expenses with respect to requests by the Practice that are not approved by the
Professional Business Manager (e.g., costs of additional Non-Professional
personnel at the locations, costs of marketing or advertising in excess of
advertising proposed by the Professional Business Manager). In determining
whether to approve such excess expenditures requested by the Practice, the
Professional Business Manager shall use its judgment based upon its experience
in other professional management relationships. The Practice shall reimburse
the Professional Business Manager for any Shareholder Expense incurred by the
Professional Business Manager. Unless expressly designated as a Management Fee,
a Professional Business Manager Expense, an Office Expense, or a Practice
Expense
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in this Agreement or in any exhibit hereto or in any written agreement of the
Parties, any expense incurred by the Practice shall be considered a Shareholder
Expense. Notwithstanding the above, the Practice may require certain
Professionals to pay certain expenses incurred for them specifically. Nothing in
this Section shall create personal liability on the part of the Practice's
Shareholders.
1.29 Term. The term "Term" shall mean the initial and any renewal
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periods of duration of this Agreement as described in Section 6.1.
ARTICLE II
APPOINTMENT OF PROFESSIONAL BUSINESS MANAGER
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2.1 Appointment. The Practice hereby appoints Professional Business
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Manager as its sole and exclusive agent for the management and administration of
the business functions and business affairs of the Office, and Professional
Business Manager hereby accepts such appointment, subject at all times to the
provisions of this Agreement. Notwithstanding any provisions in this Agreement
to the contrary, Professional Business Manager's duties, responsibilities and
authority hereunder shall only extend to the management of the Practice
Locations set forth on Exhibit A hereto, which may be amended from time to time
with the consent of the Practice and Professional Business Manager or as
provided in Section 6.2(c) hereof.
2.2 Authority. Consistent with the provisions of this Agreement,
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Professional Business Manager shall have the responsibility and commensurate
authority to provide Management Services for the Practice at the Practice
Locations. The Practice shall give Professional Business Manager thirty (30)
days' prior notice of the Practice's intent to execute any agreement creating a
binding legal obligation on the Practice to the extent relating to the Practice
Locations. The Parties acknowledge and agree that the Practice, through its
Professionals, shall be responsible for and shall have complete authority,
responsibility, supervision, and control over the provision of all Professional
Eye Care Services and other professional health care services performed for
patients, and that all diagnoses, treatments, procedures, and other professional
health care services shall be provided and performed exclusively by or under the
supervision of Professionals as such Professionals, in their sole discretion,
deem appropriate. Professional Business Manager shall have and exercise
absolutely no control, influence, authority or supervision over the provision of
Professional Eye Care Services.
2.3 Patient Referrals. Professional Business Manager and the Practice
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agree that the benefits to the Practice and to Professional Business Manager
hereunder do not require, are not payment for, and are not in any way contingent
upon the referral, admission, or any other arrangement for the provision of any
item or service offered by Professional Business Manager to patients of the
Practice in any facility, laboratory, center, or health care operation
controlled, managed, or operated by Professional Business Manager or upon the
referral, admission, or any other arrangement for the provision of any item or
service offered by the Practice.
2.4 Internal Decisions of the Practice. Matters involving the
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Practice's allocation of professional income among its Shareholders and the
Professional employees of the Practice, tax planning, and pension and investment
planning shall remain the responsibility of the Practice and the Shareholders of
the Practice. The Professional Business Manager may not and shall not directly
or indirectly control or attempt to control, dictate or influence, directly or
indirectly, the professional judgment, including, but not
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limited to, the level or type of care or services rendered, the manner of
practice, or the practice of the Practice or any Professional employed by the
Practice.
2.5 Practice of Optometry. The Parties acknowledge that Professional
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Business Manager is not authorized or qualified to engage in any activity that
may be construed or deemed to constitute the practice of optometry. To the
extent any act or service herein required to be performed by Professional
Business Manager should be construed by a court of competent jurisdiction or by
the Board of Optometry to constitute the practice of optometry, the requirement
to perform that act or service by Professional Business Manager shall be deemed
waived and unenforceable. Although Professional Business Manager shall provide
Non-Professional Personnel to the Practice and Professional Business Manager
shall manage the administrative aspects of their employment, all
Non-Professional Personnel shall be subject to the direction, supervision, and
control of the Practice and its Professionals in the performance of any and all
Clinical Duties and in the performance of Clinical Duties shall not be subject
to any direction or control by, or liability to, Professional Business Manager.
Professional Business Manager may not and shall not control or attempt to
control, directly or indirectly, the professional judgment, the manner of
practice, or the practice of the Practice or any Professional employed by the
Practice. In this regard, Professional Business Manager shall not attempt to
dictate, influence, or control the scope, level, or type of Professional Eye
Care Services provided to patients of the Office, the frequency of patient
contacts at the Office (except to the extent necessary to establish the Budget),
the discipline of any Professionals who are Practice employees, the fees charged
for Professional Eye Care Services provided to patients of the Office (except to
the extent necessary to establish the Budget or negotiate managed care
contracts), or any other matter that impinges on the professional judgment of
the Practice or any Professional employed by the Practice.
2.6 Formation and Operation of the Practice Advisory Council. The
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Parties hereby establish a Practice Advisory Council which shall be responsible
for advising Professional Business Manager and the Practice with respect to
developing the Office and implementing management and administrative policies
for the overall operation of the Office and for providing dispute resolution on
certain matters. The Practice Advisory Council shall consist of four (4)
members. Professional Business Manager shall designate, in its sole discretion,
two (2) members of the Practice Advisory council or may have one (1) member with
two (2) votes. The Practice shall designate, in its sole discretion, two (2)
members of the Practice Advisory Council or may have one (1) member with two (2)
votes. The Practice Advisory Council members selected by the Practice shall be
full-time Professional employees of the Practice. Each Party's representatives
to the Practice Advisory Council shall have the authority to make decisions on
behalf of the respective Party. Except as may otherwise be provided, the act of
a majority of the members of the Practice Advisory Council shall be the act of
the Practice Advisory Council, provided that the affirmative vote of the
Practice member(s) shall be required on all votes of the Practice Advisory
Council relating to or affecting the provision of Professional Eye Care
Services. The decisions, resolutions, actions, or recommendations of the
Practice Advisory Council shall be implemented by Professional Business Manager
or the Practice, as appropriate.
2.7 Duties and Responsibilities of the Practice Advisory Council. The
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Practice Advisory Council shall review, evaluate, make recommendations, and
where specifically authorized herein and permitted by law, make decisions with
respect to the following matters, to the extent relating to the Practice
Locations:
(a) Facility Improvements and Expansion. Any renovation and
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expansion plans and capital equipment expenditures with respect to the
Practice's facilities at the Practice Locations shall be
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reviewed by the Practice Advisory Council which shall make recommendations to
the Practice with respect to proposed changes therein. Such renovation and
expansion plans and capital equipment expenditures shall be based upon economic
feasibility, optometry support, productivity and then-current market conditions.
(b) Marketing and Public Relations. The Practice Advisory Council
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shall review and make recommendations to the Practice with respect to all
marketing and public relations services and programs promoting the Practice's
Professional Eye Care Services and ancillary services rendered by the Practice
at the Practice Locations.
(c) Patient Fees; Collection Policies. The Practice Advisory
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Council shall review and make recommendations to the Practice concerning the fee
schedule and collection policies for all Professional Eye Care Services and
ancillary services rendered by the Practice at the Practice Locations.
(d) Ancillary Services. The Practice Advisory Council must
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approve any new non-professional ancillary services to be rendered by the
Practice at the Practice Locations and the pricing, continuation of, access to,
and quality of such services.
(e) Provider and Payor Relationships. The Practice Advisory
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Council shall review and make recommendations to the Practice regarding the
establishment or maintenance of relationships between the Practice and
institutional health care providers and third-party payors, and the Practice
shall review and approve all agreements with institutional health care providers
and third-party payors. The Practice Advisory Council shall also make
recommendations to the Practice concerning discounted fee schedules, including
capitated fee arrangements of which the Practice shall be a party, and the
Practice shall review and approve all such capitated fee arrangements.
(f) Strategic Planning. The Practice Advisory Council may make
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recommendations to the Practice concerning development of long-term strategic
planning objectives for the Practice.
(g) Capital Expenditures. The Practice Advisory Council shall
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make recommendations to the Practice concerning the priority of major capital
expenditures, and shall review and approve any commitment to make any capital
expenditures relating to the Office involving amounts in excess of $15,000
individually, or $50,000 in the aggregate, in any one fiscal year, which amounts
may be increased from time-to-time by agreement of the Parties.
(h) Fee Dispute Resolution. At the request of Professional
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Business Manager or the Practice, the Practice Advisory Council shall make
recommendations to Professional Business Manager with respect to any dispute
concerning a set off or reduction in Management Fees.
(i) Grievances Referrals. The Practice Advisory Council shall
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consider and make recommendations to Professional Business Manager and the
Practice regarding grievances pertaining to matters not specifically addressed
in this Agreement as referred to it by Professional Business Manager or the
Practice's Board of Directors.
(j) Termination of Professional Business Manager's Personnel. The
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Practice Advisory Council shall review and approve any decision by the
Professional Business Manager to terminate any of Professional Business
Manager's personnel primarily located at the Office who occupy office manager or
high level positions.
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(k) Approval of New Offices or Dispensary. The Practice Advisory
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Council shall approve any move of any current Office location or expansion to an
additional Office location.
Except in those specific instances set forth above in which the Practice
Advisory Council has been granted the authority to make decisions binding upon
the Professional Business Manager and the Practice, it is acknowledged and
agreed that recommendations of the Practice Advisory Council are intended for
the advice and guidance of Professional Business Manager and the Practice and
that the Practice Advisory Council does not have the power to bind Professional
Business Manager or the Practice. Where discretion with respect to any matter
is vested in Professional Business Manager or the Practice under the terms of
this Agreement, Professional Business Manager or the Practice, as the case may
be, shall have ultimate responsibility for the exercise of such discretion,
notwithstanding any recommendations of the Practice Advisory Council.
Professional Business Manager and the Practice shall, however, take such
recommendations of the Practice Advisory Council into account in good faith in
the exercise of such discretion.
2.8 Professional Health Care Decisions. Notwithstanding anything herein
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to the contrary, all decisions required by applicable law to be made solely by
health care professionals will be made solely by the appropriate Professionals.
The Practice shall have ultimate and exclusive authority concerning issues
related to:
(a) Types, levels, and scope of Professional Eye Care Services to
be provided (provided, however, that the Practice Advisory Council shall have
the authority set forth in Section 2.7(d) with respect to non-professional
ancillary services);
(b) The scheduling and availability of Professional Eye Care
Services;
(c) Recruitment of Professionals to the Practice, including the
specific qualifications and specialties of recruited Professionals;
(d) Any optometric related functions;
(e) Fee schedules for Professional Eye Care Services;
(f) Frequency, volume and/or scheduling of patient encounters;
(g) The discipline of any Professionals or Non-Professional
Personnel with respect to the performance of Professional Eye Care Services or
Clinical Duties, as applicable; and
(h) Any other decisions required by applicable law to be made
solely by Professionals and not by non-Professionals.
Without limiting the generality of the foregoing, in no event shall
Professional Business Manager have any authority which will result in the
Practice, or the Professionals retained by the Practice, engaging in
Unprofessional Conduct as more specifically set forth in Section 4.4 hereof.
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2.9 Meetings of the Practice Advisory Council. The Practice Advisory
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Council shall meet on a regular basis as mutually agreed by the Parties. A
special meeting of the Practice Advisory Council may be called by Professional
Business Manager or the Practice upon two (2) weeks' notice, except in the event
of an emergency, in which case a special meeting may be called by Professional
Business Manager or the Practice upon three (3) business days' notice. Meetings
may be held telephonically or by any other means agreeable to the Parties.
ARTICLE III
OBLIGATIONS AND RESPONSIBILITIES OF BUSINESS MANAGER
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3.1 Management Services. Professional Business Manager shall provide
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all Management Services as are necessary and appropriate for the day-to-day
administration of the business aspects of the Practice's operations at the
Practice Locations, pursuant to the terms of this Agreement. Professional
Business Manager shall operate in a reasonable and customary manner with due
consideration to the Practice's past business practices and shall operate in
accordance with all applicable laws, rules and regulations which are necessary
and material to the Professional Business Manager's performance of the
Management Services. Professional Business Manager will provide in good faith
and with due diligence its services consistent with management services
generally provided in the operations of optometric practice similar in size,
type and operations in the Practice Areas. All reasonable costs and expenses
related to Professional Business Manager's duties contained in this Article III
shall be Office Expenses unless limited or excluded as an Office Expense
pursuant to the terms of this Agreement. Subject to Section 6.2(c),
Professional Business Manager hereby consents and agrees to provide all
Management Services to all Office facilities and locations at the Practice
Locations; provided, however, that during the Term of this Agreement the
Practice shall not engage any individual or entity other than Professional
Business Manager to provide Management Services to the Practice at the Practice
Locations without the consent and approval of the Practice Advisory Council.
3.2 Office, Facilities and Equipment.
-----------------------------------
(a) Professional Business Manager shall procure, for or on behalf
of the Practice, lease (or sublease agreements) for the Practice Locations that
are deemed by the Parties to be reasonable, necessary and appropriate, and the
expense associated therewith shall be an Office Expense. Professional Business
Manager shall consult with the Practice regarding the condition, use and needs
of Office facilities, offices and improvements. The Practice shall pay when due
all rents and expenses of the Office, including without limitation expenses for
leasehold or facility improvements. Such rents and expenses shall be Office
Expenses.
(b) To the extent required to provide Office space to the
Practice, Professional Business Manager shall negotiate and administer all
leases of and agreements for Office facilities at the Practice Locations on
behalf of the Practice, provided, however, that Professional Business Manager
shall consult with the Practice on all professional or clinical matters relating
thereto and that the Practice shall consent to any lease negotiated by
Professional Business Manager, which consent shall not be unreasonably withheld.
The Parties acknowledge that the initial rental payments for the Office space at
the Practice Locations shall be as set forth on Exhibit A attached hereto.
Notwithstanding any provision in this Agreement to the contrary, Professional
Business Manager shall not have any duty or obligation to negotiate or enter
into leases or subleases on behalf of the Practice with respect to Office
facilities that will have
11
terms in excess of the then current term of this Agreement and the Practice
acknowledges that such leases or subleases will be coterminous with this
Agreement.
(c) Professional Business Manager shall provide all non-health
care equipment, fixtures, office supplies, furniture and furnishings as are
reasonable and approved in the Budget for the operation of the Office and the
provision of Professional Eye Care Services at the Practice Locations. The
expense of such equipment shall be a Professional Business Manager Expense. If
the Practice wishes to choose additional equipment, which the Professional
Business Manager determines not to acquire or lease, the Practice may acquire or
lease such equipment, and the expense related thereto shall be deemed a Practice
Expense.
(d) Professional Business Manager shall provide health care
related equipment as reasonably required by the Practice with respect to the
Practice Locations. The Practice shall have final authority in all health care
equipment selections; provided, however, that if the Practice chooses to acquire
health care equipment for the Practice Locations which is not in the Budget and
which Professional Business Manager reasonably chooses not to acquire, expenses
related thereto shall be treated as a Practice Expense and such equipment shall
be owned by the Practice; provided further that following such acquisition or
lease by the Practice, if the Practice Advisory Council determines after a
period of six months of use such equipment is reasonably certain to result in
material profit to Professional Business Manager (taking into account the cost
or expense and anticipated revenues associated with such equipment) then
Professional Business Manager shall acquire such equipment from the Practice by
either (at Professional Business Manager's option), paying cash or by assuming
the liability associated with such equipment, or if such equipment is then being
leased by the Practice, by assuming such lease. In the event of such an
acquisition by Professional Business Manager, it shall reimburse the Practice
for previous expenses applied thereto. Except for equipment which Professional
Business Manager elects not to acquire or lease which is acquired or leased by
the Practice pursuant to Section 3.2(c) or (d), all health care and non-health
care equipment, other than Professional-owned automobiles, acquired for the use
of the Practice at the Practice Locations shall be owned by Professional
Business Manager and the depreciation and related capital charge shall be a
Professional Business Manager Expense. Professional Business Manager may make
recommendations to the Practice on the relationship between its health care
equipment decisions and the overall administrative and financial operations of
the Practice at the Practice Locations.
(e) Professional Business Manager shall be responsible for the
repair and maintenance of the Office, consistent with the Practice's
responsibilities under the terms of any lease or other use arrangement, and for
the prompt repair, maintenance, and replacement of all equipment other than such
repairs, maintenance and replacement necessitated by the gross negligence or
willful misconduct of the Practice, its Professionals or other personnel
employed by the Practice, the repair or replacement of which shall be a Practice
Expense and not an Office Expense. Replacement equipment shall be acquired
where Professional Business Manager in good faith determines, in consultation
with the Practice, that such replacement is necessary or where the Budget has
made allowances for such replacement subject to determination by Practice
Advisory Council in the case of disagreement.
3.3 Health Care Supplies. Professional Business Manager shall order,
----------------------
procure, purchase and provide on behalf of and as agent for the Practice all
reasonable health care supplies relating to the Practice Locations unless
otherwise prohibited by federal and/or state law. Furthermore, Professional
Business Manager shall ensure that the Office is at all times adequately stocked
with the health care supplies that are necessary and appropriate for the
operation of the Office and required for the provision of Professional Eye
12
Care Services at the Practice Locations. The ultimate oversight, supervision and
ownership for all health care supplies is and shall remain the sole
responsibility of the Practice and all costs and expenses relating to such
supplies shall be an Office Expense. As used in this provision, the term "health
care supplies" shall mean all drugs, pharmaceuticals, products, substances,
items or devices whose purchase, possession, maintenance, administration,
prescription or security requires the authorization or order of a licensed
health care provider or requires a permit, registration, certification or other
governmental authorization held by a licensed health care provider as specified
under any federal and/or state law.
3.4 Support Services. Professional Business Manager shall provide or
-----------------
arrange for all printing, stationery, forms, postage, duplication or
photocopying services, and other support services as are reasonably necessary
and appropriate for the operation of the Office and the provision of
Professional Eye Care Services therein.
3.5 Quality Assurance, Risk Management, and Utilization Review.
----------------------------------------------------------------
Professional Business Manager shall assist the Practice in the Practice's
establishment and implementation of procedures to ensure the consistency,
quality, appropriateness, and necessity of Professional Eye Care Services
provided by the Practice at the Practice Locations, and shall provide,
administrative support for the Practice's overall quality assurance, risk
management, and utilization review programs relating to the Practice Locations.
Professional Business Manager shall perform these tasks in a manner to ensure
the confidentiality and non-discoverability of these program actions to the
fullest extent allowable under state and federal law.
3.6 Licenses and Permits. Professional Business Manager shall, on
----------------------
behalf of and in the name of the Practice, coordinate all development and
planning processes, and apply for and use reasonable efforts to obtain and
maintain all federal, state and local licenses and regulatory permits required
for or in connection with the operation of the Office and the equipment
(existing and future) located at the Practice Locations, other than those
relating to the practice of optometry or the administration of drugs by
Professionals retained by or associated with the Practice. The expenses and
costs associated with obtaining and maintaining permits with respect to the
Office shall be deemed Office Expenses.
3.7 Personnel.
---------
(a) Selection and Retention of Professional Business Manager's
--------------------------------------------------------------
Personnel. Except as specifically provided in Section 4.3 of this Agreement,
------
Professional Business Manager shall, in consultation with the Practice, employ
or otherwise retain and shall be responsible for selecting, hiring, training,
supervising, and terminating, all management, administrative, technical,
clerical, secretarial, bookkeeping, accounting, payroll, billing and collection
and other personnel (excluding Professionals) as Professional Business Manager
deems reasonably necessary and appropriate for the operation of the Office at
the Practice Locations and for Professional Business Manager's performance of
its duties and obligations under this Agreement. Consistent with reasonably
prudent personnel management policies, Professional Business Manager shall seek
and consider the advice, input, and requests of the Practice in regard to
personnel matters. Professional Business Manager shall have sole responsibility
for determining the salaries and providing fringe benefits, and for withholding,
as required by law, any sums for income tax, unemployment insurance, social
security, or any other withholding required by applicable law or governmental
requirement. Professional Business Manager reserves the right to change the
number, composition or employment terms of such personnel in the future at
Professional Business Manager's discretion; provided, however, that the
termination of any of Professional Business Manager's personnel who occupy
office manager or high level positions, and are primarily located at the Office
must receive the approval of the
13
Practice Advisory Council. Professional Business Manager and the Practice
recognize and acknowledge that Professional Business Manager and personnel
retained by Professional Business Manager may from time-to-time perform services
for persons other than the Practice. This Agreement shall not be construed to
prevent or prohibit Professional Business Manager from performing such services
for others or restrict Professional Business Manager from using its personnel to
provide services to others. Professional Business Manager hereby disclaims any
liability relating to the effect of its employees on the qualification of the
Practice's retirement plans under the Internal Revenue Code, and all liabilities
for such classification shall be solely the responsibility of the Practice.
(b) Termination of Professional Business Manager's Personnel. If
---------------------------------------------------------
the Practice is dissatisfied with the services of any employee of Professional
Business Manager or any personnel under Professional Business Manager's
direction, supervision and control, at the Practice Locations, the Practice
shall consult with Professional Business Manager. Professional Business Manager
shall in good faith determine whether the performance of that employee could be
brought to acceptable levels through counsel and assistance, or whether such
employee should be relocated or terminated. All of Professional Business
Manager's determinations regarding Professional Business Manager's personnel
shall be governed by the overriding principle and goal of providing high quality
optometric and/or therapeutic optometric support services. Employee assignments
shall be made to assure consistent and continued rendering of high quality
optometric and/or therapeutic optometric support services. The Professional
Business Manager shall maintain established working relationships wherever
possible, and Professional Business Manager shall make every effort consistent
with sound business practices to honor the specific requests of the Practice
with regard to the assignment of employees. Notwithstanding that which is
contained in this Section 3.7(b), the Practice shall have the right and
obligation to determine the direction, supervision, and control of any personnel
while said personnel are involved in the performance of Clinical Duties at the
Practice Locations, including prohibiting said personnel from being involved in
the performance of Clinical Duties.
3.8 Contract Negotiations. Professional Business Manager shall
----------------------
evaluate, assist in negotiations and administer on behalf of the Practice
contracts relating to the Practice Locations that do not relate to the provision
of Professional Eye Care Services as set forth in this Agreement and/or as
approved in the Budget. To the extent permitted by law, Professional Business
Manager shall evaluate, assist in negotiations, administer and execute on the
Practice's behalf, all contractual arrangements with third parties as are
reasonably necessary and appropriate for the Practice's provision of
Professional Eye Care Services at the Practice Locations, including, without
limitation, negotiated price agreements with third-party payors, alternative
delivery systems, or other purchasers of group health care services. The
Professional Business Manager shall review and make recommendations to the
Practice regarding the establishment or maintenance of relationships between the
Practice (with respect to the Practice Locations) and institutional health care
providers and third-party payors, and the Practice shall review and approve all
agreements with institutional health care providers and third-party payors. The
Professional Business Manager shall also make recommendations to the Practice
concerning discounted fee schedules, including capitated fee arrangements of
which the Practice (with respect to the Practice Locations) shall be a party,
and the Practice shall review and approve all such capitated fee arrangements.
The Practice shall have the final authority with regard to the entry into all
such contractual arrangements relating to the provision of Professional Eye Care
Services at the Practice Locations.
3.9 Billing and Collection As an agent on behalf of and for the
------------------------
account of the Practice, Professional Business Manager shall establish and
maintain credit and billing and collection services,
14
policies and procedures, and shall use reasonable efforts to timely xxxx and
collect all fees for all billable Professional Eye Care Services provided by the
Practice, the Professionals or other personnel employed or otherwise retained by
the Practice at the Practice Locations. In connection with the billing and
collection services to be provided hereunder, and throughout the Term (and
thereafter as provided in Section 6.3), the Practice hereby grants to
Professional Business Manager an exclusive special power of attorney and
appoints Professional Business Manager as the Practice's exclusive true and
lawful agent and attorney-in-fact (which shall be deemed revoked in the event of
termination for cause by the Practice), and Professional Business Manager hereby
accepts such special power of attorney and appointment, for the following
purposes to the extent relating to the Practice Locations:
(a) To xxxx the Practice's patients, in the Practice's name using
the Practice's tax identification number and on the Practice's behalf, for all
billable Professional Eye Care Services provided by the Practice to patients at
the Practice Locations;
(b) To xxxx, in the Practice's name using the Practice's tax
identification number and on the Practice's behalf, all claims for reimbursement
or indemnification from health maintenance organizations, self-insured
employers, insurance companies, Medicare, Medicaid, and all other third-party
payors or fiscal intermediaries for all covered billable Professional Eye Care
Services provided by the Practice to patients at the Practice Locations;
(c) To collect and receive, in the Practice's name and on the
Practice's behalf, all accounts receivable generated by such xxxxxxxx and claims
for reimbursement, to administer such accounts including, but not limited to,
extending the time of payment of any such accounts; suing, assigning or selling
at a discount such accounts to collection agencies; or taking other measures to
require the payment of any such accounts; provided, however, that the Practice
shall review and approve any decision by Professional Business Manager to
undertake extraordinary collection measures, such as filing lawsuits,
discharging or releasing obligors, or assigning or selling accounts at a
discount to collection agencies. Professional Business Manager shall act in a
professional manner and in compliance with all federal and state fair debt
collection practices laws in rendering billing and collection services;
(d) To deposit all amounts collected on behalf of the Practice
into the Professional Practice Account which shall be and at all times remain in
the Practice's name. The Practice covenants to transfer and deliver to the
Professional Practice Account all funds received by the Practice from patients
or third-party payors for billable Professional Eye Care Services rendered at
the Practice Locations. Upon receipt by Professional Business Manager of any
funds from patients or third-party payors or from the Practice pursuant hereto
for billable Professional Eye Care Services rendered at the Practice Locations,
Professional Business Manager shall immediately deposit the same into the
Professional Practice Account. Professional Business Manager shall administer,
be responsible for, and be obligated to pay for all Office Expenses; provided,
however, that Professional Business Manager shall only be liable for Office
Expenses to the extent of funds in the Professional Practice Account.
Professional Business Manager shall disburse funds from the Professional
Practice Account to creditors and other persons on behalf of the Practice,
maintaining records of such receipt and disbursement of funds;
(e) To take possession of, endorse in the name of the Practice,
and deposit into the Professional Practice Account any notes, checks, money
orders, insurance payments, and any other instruments received in payment of
accounts receivable of the Practice relating to the Practice Locations; and
15
(f) To sign checks on behalf of the Practice, and to make
withdrawals from the Professional Practice Account, for payments specified in
this Agreement. Upon request of Professional Business Manager, the Practice
shall execute and deliver to the financial institution wherein the Professional
Practice Account is maintained, such additional documents or instruments as may
be necessary to evidence or effect the special power of attorney granted to
Professional Business Manager by the Practice pursuant to this Section 3.9. The
special power of attorney granted herein shall be coupled with an interest and
shall be irrevocable except with Professional Business Manager's written
consent, which shall be provided immediately in the event the Professional
Business Manager is terminated for cause pursuant to Section 6.2(a) below. The
irrevocable power of attorney shall expire when this Agreement has been
terminated, all accounts receivable payable to Professional Business Manager
pursuant to this Agreement have been collected, and all Management Fees due to
Professional Business Manager have been paid. If Professional Business Manager
assigns this Agreement in accordance with its terms, the Practice shall execute
a power of attorney in favor of the assignee in a form acceptable to
Professional Business Manager.
3.10 Maintenance of Professional Practice Account.
------------------------------------------------
(a) Power of Attorney. Professional Business Manager shall have
-------------------
access to the Professional Practice Account solely for the purposes stated
herein. In connection herewith and throughout the term of this Agreement, the
Practice hereby grants to Professional Business Manager an exclusive special
power of attorney for the purposes stated herein and appoints Professional
Business Manager as the Practice's exclusive, true, and lawful agent and
attorney-in-fact, and Professional Business Manager hereby accepts such special
power of attorney and appointment, to deposit into the Professional Practice
Account all funds, fees, and revenues received from collection by Professional
Business Manager for Professional Eye Care Services rendered to patients of the
Office, and for all other professional and Office services relating to the
Practice Locations and to make withdrawals from the Professional Practice
Account for payments specified in this Agreement and as requested from
time-to-time by the Practice. Notwithstanding the exclusive special power of
attorney granted to Professional Business Manager hereunder, the Practice may,
upon reasonable advance notice to Professional Business Manager, draw checks on
the Professional Practice Account; provided, however, that the Practice shall
neither draw checks on the Professional Practice Account nor request
Professional Business Manager to do so if the balance remaining in the
Professional Practice Account after such withdrawal would be insufficient to
enable Professional Business Manager to pay on behalf of the Practice any
Management Fee or reimbursement of any expense to which Professional Business
Manager may be entitled or any Office Expense, Practice Expense or Shareholder
Expense attributable to the operations of the Office or to the provision of
Professional Eye Care Services and/or any other obligations of the Practice to
the extent relating to the Practice Locations. The Parties acknowledge and
agree that Professional Business Manager may periodically sweep (e.g., withdraw
all funds) the Professional Practice Account for the purpose of managing the
cash of the Practice, such cash management to be in accordance with prudent cash
management practices.
(b) Payments from the Professional Practice Account. From the
---------------------------------------------------
funds collected and deposited by the Professional Business Manager in the
Professional Practice Account, the Professional Business Manager shall pay in
the following order of priority and in accordance with applicable requirements
under law or contract:
(i) any refunds owed to patients by the Practice;
16
(ii) all Office Expenses;
(iii) Practice Expenses (other than the cost of acquiring or
leasing equipment pursuant to Sections 3.2(c) and 3.2(d));
(iv) Permitted Shareholder Expenses;
(v) the past due Management Fee compensation owed to the
Professional Business Manager pursuant to Section 5.1 hereof;
(vi) the current Management Fee compensation owed to the
Professional Business Manager pursuant to Section 5.1 hereof; and
(vii) all remaining Practice Expenses and Shareholder
Expenses.
Notwithstanding the foregoing priorities of payment, the Permitted
Shareholder Expenses (other than the expenses arising out of the President's
Employment Agreement) and other Shareholder Expenses shall be paid at the end of
each consecutive 12-month period of this Agreement unless otherwise consented to
by the Professional Business Manager.
(c) Additional Documents. Upon request of Professional Business
---------------------
Manager, the Practice shall execute and deliver to the financial institution
wherein the Professional Practice Account is maintained, such additional
documents or instruments as may be necessary to evidence or effect the special
power of attorney granted to Professional Business Manager by the Practice
pursuant to this Section 3.10. The special power of attorney granted herein
shall be coupled with an interest and shall be irrevocable except with
Professional Business Manager's written consent, which shall be provided
immediately in the event the Professional Business Manager is terminated for
cause pursuant to Section 6.2(a) below. The irrevocable power of attorney shall
expire when this Agreement has been terminated, all accounts receivable payable
to Professional Business Manager pursuant to this Agreement have been collected,
and all Management Fees due to Professional Business Manager have been paid. If
Professional Business Manager assigns this Agreement in accordance with its
terms, the Practice shall execute a power of attorney in favor of the assignee
in a form acceptable to Professional Business Manager. Professional Business
Manager shall not make any withdrawal from the Professional Practice Account
unless expressly authorized in this Agreement.
(d) Payroll Account. A Practice payroll account in the name of
----------------
the Practice shall be established on behalf of the Practice for payroll to
non-shareholder Professionals of the Practice. Funds for this account shall be
received as Practice Expenses. The Practice, as employer of said
non-shareholder Professionals, and Professional Business Manager, as agent and
attorney of the Practice shall each have signing capacity to access the account
for payroll.
17
3.11 Fiscal Matters.
---------------
(a) Annual Budget. The initial annual Budget shall be agreed upon
-------------
by the parties before the execution of this Agreement. Thereafter, annually and
at least thirty (30) days prior to the commencement of each fiscal year of the
Practice, the Professional Business Manager, in consultation with the Practice,
shall prepare and deliver to the Practice a proposed Budget, setting forth an
estimate of the Practice's revenues and expenses for the upcoming fiscal year
with respect to the Practice Locations. The Practice shall review the proposed
Budget and either approve the proposed Budget or request any changes within
twenty-one (21) days after receiving the proposed Budget. Disputes concerning
the Budget shall, at the request of either party hereto, be submitted to the
Practice Advisory Council. In the event the Parties are unable to agree on a
Budget by the beginning of the fiscal year, until an agreement is reached, the
Budget for the prior year shall be deemed to be adopted as the Budget for the
current year, with each line item in the Budget (with the exception of the
Management Fee which shall be established pursuant to the terms of this
Agreement) increased or decreased by one of the following, whichever is most
appropriate relative to the particular item of income or expense: (i) the
increase or decrease from the prior year in the Consumer Price Index -
Health/Medical Services for the relevant region; or (ii) the proportionate
increase or decrease in mutually agreed upon personnel costs as measured by the
increase or decrease in full-time-equivalent personnel. The Practice Advisory
Council may revise or modify the Budget from time to time during the applicable
fiscal year to reflect changing circumstances affecting the Practice.
Additionally, notwithstanding the above, no change in an adopted Budget shall be
contrary to the terms and spirit of this Agreement nor shall it have any effect
on the Management Fee or Permitted Shareholder Expenses expressly agreed to
herein, unless approved in advance in writing by the Parties hereto.
(b) Obligations of Professional Business Manager. Professional
-----------------------------------------------
Business Manager shall use commercially reasonable efforts to manage and
administer the operations of the Office as herein provided so that the actual
revenues, costs and expenses of the operation and maintenance of the Office
during any applicable period of the Practice's fiscal year shall be consistent
with the Budget.
(c) Accounting and Financial Records. Professional Business
-----------------------------------
Manager shall establish and administer accounting procedures, controls, and
systems for the development, preparation, and safekeeping of administrative or
financial records and books of account relating to the business and financial
affairs of the Office and the provision of Professional Eye Care Services at the
Practice Locations, all of which shall be prepared and maintained in accordance
with GAAP. The Practice shall have the right to inspect such records and books
of account at its expense at any time, upon reasonable notice to Professional
Business Manager. Professional Business Manager shall prepare and deliver to
the Practice (i) within sixty (60) days of the end of each of the first three
(3) fiscal quarters in each fiscal year, and (ii) within ninety (90) days of the
end of each fiscal year, a balance sheet and a profit and loss statement
reflecting the financial status of the Practice in regard to the provision of
Professional Eye Care Services at the Practice Locations as of the end of such
period, all of which shall be prepared in accordance with GAAP consistently
applied. In addition, Professional Business Manager shall prepare or assist in
the preparation of any other financial statements or records as the Practice may
reasonably request.
18
(d) Sales and Use Taxes. Professional Business Manager and the
----------------------
Practice acknowledge and agree that to the extent that any of the services to be
provided by Professional Business Manager hereunder may be subject to any state
sales and use taxes, Professional Business Manager may have a legal obligation
to collect such taxes from the Practice and to remit the same to the appropriate
tax collection authorities. The Practice agrees to have applicable state sales
and use taxes attributable to the services to be provided by Professional
Business Manager hereunder treated as an Office Expense.
3.12 Reports and Records.
---------------------
(a) Health Care Records. All files and records relating to the
---------------------
operation of the Office, including without limitation, accounting, billing and
collection, and patient records shall at all times be and remain the property of
the Practice and shall remain under its possession, custody, and control.
Subject to the foregoing and to the extent permitted by applicable law,
Professional Business Manager shall, in consultation with the Practice,
establish, monitor, and maintain procedures and policies for the timely,
appropriate, and efficient preparation, filing, retrieval, and secure storage of
such records. Patient records shall be located at Office facilities so that
they are readily accessible for patient care. Patient records shall not be
removed from Office premises without the express written consent of the
Practice, except as specified herein. Patient records for patients not seen
within the last three years may be stored in a commercial storage facility or
other location Professional Business Manager shall designate, provided that
Professional Business Manager shall notify the Practice of the location of said
records. All such health care records shall be retained and maintained by the
Practice and the Professional Business Manager as agent for the Practice in
accordance with all applicable state and federal laws relating to the
confidentiality and retention thereof. In this regard, Professional Business
Manager shall use its best efforts to preserve the confidentiality of patient
records and shall use information contained in such records only as the agent
for the Practice only as permitted by law and for the limited purposes necessary
to perform the services set forth herein.
(b) Other Reports and Records. Professional Business Manager
----------------------------
shall timely create, prepare, and file such additional reports and records as
are reasonably necessary and appropriate for the Practice's provision of
Professional Eye Care Services at the Practice Locations, and shall be prepared
to analyze and interpret such reports and records upon the request of the
Practice.
3.13 Recruitment of the Practice's Professionals. Upon the Practice's
--------------------------------------------
request, Professional Business Manager shall coordinate, supervise or perform
all administrative services reasonably necessary and appropriate to recruit
potential Professionals to become employees of the Practice at the Practice
Locations. It will be and remain the sole and complete responsibility of the
Practice to interview, select, contract with, supervise, control and terminate
all Professionals performing Professional Eye Care Services or other
professional services at the Practice Locations.
3.14 Confidential and Proprietary Information.
-------------------------------------------
(a) Professional Business Manager agrees that it shall not
disclose any Confidential Information of the Practice to other persons without
the Practice's express written authorization, that such Confidential Information
shall not be used in any way detrimental to the Practice, and that Professional
Business Manager will keep such Confidential Information confidential and will
ensure that its affiliates and advisors who have access to such Confidential
Information comply with these nondisclosure obligations;
19
provided, however, that Professional Business Manager may disclose Confidential
Information to those of its Representatives who need to know Confidential
Information for the purposes of this Agreement, it being understood and agreed
by Professional Business Manager that such Representatives will be informed of
the confidential nature of the Confidential Information, will agree to be bound
by this Section, and will be directed by Professional Business Manager not to
disclose to any other person any Confidential Information.
(b) Notwithstanding clause (a) above, Professional Business
Manager may share, subject to the restrictions of this Section, with other
professional corporations, limited liability companies, associations,
ophthalmology and optometry practices, or health care delivery entities the
practice statistics of the Practice, including utilization review data, quality
assurance data, cost data, outcomes data, or other practice data so long as the
information provided is not precluded from being shared by applicable state or
federal law. The Practice statistics and confidential information may be
disclosed within the Practice, to managed care providers or other third party
payors for the purpose of obtaining or maintaining third party payor contracts
or reimbursements, or to financial analysts and underwriters; provided that any
disclosure outside the Practice for any purpose not related to managed care
contracting shall not identify any Professional by name without the Practice's
consent and will not disclose or divulge patient identifying information.
(c) Notwithstanding anything contained herein to the contrary,
Professional Business Manager, its employees and agents shall comply with the
requirements set forth in the HIPAA Addendum attached hereto as Exhibit 3.14.
3.15 Professional Business Manager's Insurance. Throughout the Term,
-------------------------------------------
Professional Business Manager shall, as an Office Expense, obtain and maintain
with commercial carriers, through self-insurance or some combination thereof,
appropriate workers' compensation coverage for Professional Business Manager's
employed personnel provided pursuant to this Agreement, and professional,
casualty and comprehensive general liability insurance covering Professional
Business Manager, Professional Business Manager's personnel, and all of
Professional Business Manager's equipment in such amounts, on such basis and
upon such terms and conditions as Professional Business Manager deems
appropriate but which insurance is consistent with the insurance which is
maintained by the Practice pursuant to Section 4.5 of this Agreement.
Professional Business Manager shall cause the Practice to be named as an
additional insured on Professional Business Manager's professional, casualty and
comprehensive general liability policy. Upon the request of the Practice,
Professional Business Manager shall provide the Practice with a certificate
evidencing such insurance coverage. Professional Business Manager, in agreement
with the Practice, may also carry, as an Office expense, key person life and
disability insurance on any Shareholder or Professional employee of the Practice
in amounts determined reasonable and sufficient by the Professional Business
Manager. Professional Business Manager shall be the owner and beneficiary of
any such insurance. Should only the Practice choose to obtain key person life
and disability insurance, the Practice shall pay all premiums as a Practice
Expense and shall receive all proceeds. Further, if only the Professional
Business Manager chooses to obtain such insurance, Professional Business Manager
shall pay all premiums as a Professional Business Manager Expense and shall
receive the proceeds. The Practice shall cause its Professionals to submit to a
medical examination necessary to obtain such insurance.
3.16 No Warranty or Representations. The Practice acknowledges that
---------------------------------
Professional Business Manager has not made and will not make any express or
implied warranties or representations that the Management Services provided by
Professional Business Manager will result in any particular amount or
20
level of income to the Practice. Specifically, Professional Business Manager has
not represented that its Management Services will result in higher revenues,
lower expenses, greater profits, or growth in the number of patients treated by
the Practice's Professionals.
3.17 Marketing and Public Relations. Professional Business Manager
---------------------------------
acknowledges that the Practice desires a professional public relations program
to enhance its optometric and/or therapeutic optometric practice and to extend
the Office's ability to provide Professional Eye Care Services to patients at
the Practice Locations. Subject to the Practice's written approval,
Professional Business Manager shall design and implement an appropriate public
relations program on behalf of the Practice, with appropriate emphasis on public
awareness of the availability of Professional Eye Care Services at the Practice
Locations. The public relations program shall be conducted in compliance with
applicable laws and regulations governing advertising by the ophthalmological
and optometric professions.
3.18 Acquisition of Services and Supplies. In obtaining services,
----------------------------------------
supplies and personnel for or on behalf of the Practice pursuant to this
Agreement, Professional Business Manager shall be authorized to obtain such
services, supplies and personnel from an affiliate of Professional Business
Manager provided that the Office Expenses which are incurred by or on behalf of
the Professional Business Manager shall be consistent with the expenses of
optical dispensaries similar in size, type, and operations in the area in which
the Practice operates.
ARTICLE IV
OBLIGATIONS AND RESPONSIBILITIES OF THE PRACTICE.
------------------------------------------------
4.1 Professional Services. The Practice shall diligently conduct the
----------------------
business of an optometric and/or therapeutic optometric practice, including
utilizing its capacities to the greatest extent practicable to provide
Professional Eye Care Services to patients of the Office at the Practice
Locations. The Practice shall retain that number of Professionals at the
Practice Locations as are reasonably necessary and appropriate in the sole
discretion of the Practice for the provision of Professional Eye Care Services
at the Practice Locations and shall determine their assignment and scheduled
hours of practice at the Practice Locations. The Practice shall provide
Professional Eye Care Services to the Office's patients in compliance at all
times with ethical standards, laws, and regulations applying to the optometric
and/or therapeutic optometric professions. The Practice shall ensure that each
Professional associated with or employed by the Practice to provide optometric
and/or therapeutic optometric care to the Office's patients at the Practice
Locations is licensed in each jurisdiction in which he or she provides such
services. The Practice shall establish and implement a program to monitor the
quality of Professional Eye Care Services provided at the Practice Locations
(the "Continuous Quality Improvement Program"). The Continuous Quality
Improvement Program shall be designed to promote and maintain quality care
consistent with accepted practices prevailing from time to time in the area
where each Practice Location is situated
4.2 Optometric and Therapeutic Optometric Practice. The Practice shall
----------------------------------------------
use and occupy the Office for the provision of Professional Eye Care Services
and shall comply with all applicable local rules and ordinances and all
standards of optometric and/or therapeutic optometric care. It is expressly
acknowledged by the parties that the optometric and/or therapeutic optometric
practice or practices conducted at the Office shall be conducted solely by
Professionals employed by or under contract with
21
the Practice, and no other Professional shall be permitted to use or occupy the
Office without the prior written consent of Professional Business Manager. The
Parties agree that it may be necessary from time to time for the Practice to
engage the services of part-time professionals in the Office.
4.3 Employment of Professionals; Optical Technicians. Subject to Section
----------------------------------------------------
3.13 hereof, the Practice shall be responsible for the hiring, compensation,
supervision, evaluation, and termination of all Professionals at the Practice
Locations. At the request of the Practice, Professional Business Manager shall
be available to consult with the Practice respecting such matters. The Practice
shall be responsible for the payment of such Professionals' salaries and wages,
payroll taxes, benefits, and all other taxes and charges now or hereafter
applicable to them. The Practice shall employ and contract only with licensed
Professionals who meet applicable credentialing guidelines established by the
Practice. The Practice shall not in any fiscal year contract in the aggregate
with Professionals for an amount (including the cost of associated benefits,
payroll expense, and professional liability coverage) which is greater than the
amount provided for such purpose in the Budget for such fiscal year. The
Practice represents, warrants and covenants that, if requested by the
Professional Business Manager, on or before ninety (90) days from the date of
such request, it will use its best efforts to obtain, shall in the future
obtain, and shall enforce formal written employment agreements from each of its
present full-time (an average of thirty (30) or more hours per week)
Professionals, except for the President of the Practice, and those employed in
the future in the form mutually acceptable to the Practice and the Professional
Business Manager ("Employment Agreement") containing a restrictive covenant (the
"Restrictive Covenant"). The Practice further represents, warrants and
covenants that, concurrent with the execution hereof, the President of the
Practice will enter into an Employment Agreement in the form attached as Exhibit
4.3B which agreement shall remain in force and effect during the term of this
Agreement without amendment unless terminated in accordance therewith. The
President shall devote his full time and attention to the operation of the
Practice and shall not provide optometric services other than at the Practice
Locations. The Parties acknowledge that although the Optical Technicians will be
employed by the Professional Business Manager, the primary duties of the Optical
Technicians will be to assist the Professionals with Professional Eye Care
Services. If requested by the Professional Business Manager, and the Practice
in its reasonable discretion determines that time permits, such Optical
Technicians may from time to time perform services which benefit the optical
retail location adjacent to the Practice Location, provided that during the time
the Optical Technicians are assisting with Professional Eye Care Services, the
Optical Technicians shall remain under the control and supervision of the
Practice. Notwithstanding the services that the Optical Technicians may provide
to the Professional Business Manager, the expenses incurred by the Professional
Business Manager in providing the Optical Technicians shall be Practice Expenses
for which the Professional Business Manager shall be entitled to reimbursement.
4.4 Professional Standards. As a continuing condition of Professional
-----------------------
Business Manager's obligations hereunder, each Professional and any other
Professional personnel retained by the Practice to provide Professional Eye Care
Services at the Practice Locations must (i) have and maintain a valid and
unrestricted license to practice optometry or ophthalmology in the jurisdiction
in which such Professional provides services, (ii) comply with, be controlled
and governed by, and provide Professional Eye Care Services in accordance with,
applicable federal, state and municipal laws, rules, regulations, ordinances and
orders, and the ethics and standard of care of the optometric community wherein
the Office is located, and (iii) provide on a continual basis, quality care to
its patients. Without limiting the generality of the foregoing, the Practice
shall not, and the Practice shall not permit any Professional engaged by the
Practice to, engage in activities which shall be deemed "unprofessional conduct"
within the meaning of Section 430-
22
4-.01 of the Georgia optometric code (herein referred to as "Unprofessional
Conduct"), including without limitation, the following activities:
(a) Continuing to practice optometry while suffering from any physical
or mental disease or disability which renders the further practice of
optometry dangerous to patients or the public;
(b) Habitual intemperance in the use of ardent spirits, narcotics
or stimulants to such an extent as to render the licensed doctor of optometry
unfit for the careful performance of his professional duties;
(c) The intentional making of any fraudulent, misleading, or
deceptive statement in any form of advertising connected with the practice of
optometry, including but not limited to the tactic of "bait and switch", whereby
a product or service is advertised for a specific price but the consumer must in
fact purchase additional products or product or service previously advertised;
(d) Making untruthful or improbable statements or flamboyant or
extravagant claims concerning the licensed doctor of optometry's skills which
are likely to deceive the public;
(e) Assisting any person other than another licensed doctor of
optometry or a doctor of medicine skilled in diseases of the eyes in the
prescribing or fitting of a contact lens for a patient, unless the person
so assisted is under his direct, personal supervision while upon the same
premises. In releasing a prescription for contact lens all parameters
necessary for fabrication of the lens must be included;
(f) Practicing or continuing to practice optometry under, or use in
connection with his practice of optometry, any assumed name, corporate
name, trade name, or any name other than the name under which he is
licensed to practice optometry in Georgia except as specifically permitted
under Section 430-4-.01 of the Georgia Administrative Code:
(g) Publicly displaying of the licensed doctor of optometry's name
upon or in any premises used for the practice of optometry, unless a licensed
doctor of optometry is actually present at times optometric services are
provided and unless such licensed doctor of optometry is in the practice of
optometry at such premises for a minimum of four (4) hours per week;
(h) Failing to advise each patient whenever consultation with an
optometric colleague or referral for other professional care seems
advisable;
(i) Failing to hold in professional confidence all information
concerning a patient;
(j) Exaggerating the patient's condition for the purpose of
prescribing or dispensing unnecessary optometric services;
(k) Performing any dishonorable, unethical or unprofessional conduct
likely to deceive, defraud or harm the public;
(l) Consistently misdiagnosing or consistently prescribing improper
therapy;
23
(m) Violating, attempting to violate, or conspiring to violate any
provision of the laws or rules pertaining to the practice of optometry in this
State;
(n) Failing to provide adequate safeguards against patient abandonment
as contemplated in Section 430-4-.01 of the Georgia Administrative Code.
(o) Assisting, allowing, or permitting an unlicensed person, firm,
association or corporation to practice optometry in this State;
(p) Accepting any direct or indirect payment, gift, or other
remuneration of any optometric service not actually rendered;
(q) Placing his license at the disposal or in the service or control of
any person, firm, association or corporation not licensed to practice optometry
in this State;
(r) Entering into any agreement that allows an unlicensed person, firm,
association, or corporation to control or attempt to control the professional
judgment as more specifically set forth in Section 430-4-.01 of the Georgia
Administrative Code including, without limitation, setting or attempting to
influence the professional fees of a doctor of optometry.
4.5 Practice's Insurance. The Practice shall, as a Practice Expense,
---------------------
obtain and maintain with commercial carriers chosen by the Practice appropriate
workers' compensation coverage for the Practice's employed personnel, if any,
and professional and comprehensive general liability insurance covering the
Practice and each of the Professionals involved in the provision of Professional
Eye Care Services. The comprehensive general liability coverage with respect to
each of the Professionals shall be in the minimum amount of One Million Dollars
($1,000,000) and professional liability coverage shall be in the minimum amount
of One Million Dollars ($1,000,000) for each occurrence and One Million Dollars
($1,000,000) annual aggregate. The insurance policy or policies shall provide
for at least thirty (30) days' advance written notice to the Practice from the
insurer as to any alteration of coverage, cancellation, or proposed cancellation
for any cause. Upon the termination of this Agreement for any reason, the
Practice shall continue to carry professional liability insurance in the amounts
specified herein for the shorter period of (i) the period set forth in Georgia's
statute of repose (or if no statute of repose exists, Georgia's statute of
limitations) for bringing professional malpractice claims based upon injuries
which are not immediately discoverable plus any applicable tolling periods, or
(ii) ten (10) years after termination; or if the Practice dissolves or ceases to
practice optometry, the Practice shall obtain and maintain as a Practice Expense
"tail" professional liability coverage, in the amounts specified in this Section
for the shorter period of (i) the period set forth in Georgia's statute of
repose (or if no statute of repose exists, Georgia's statute of limitations) for
bringing professional malpractice claims based upon injuries which are not
immediately discoverable plus any applicable tolling periods, or (ii) ten (10)
years. The Practice shall be responsible for paying all premiums for
Shareholder "tail" insurance coverage and such coverage shall be a Shareholder
Expense; provided, however, that the Practice may cause its Professionals to be
responsible for paying the premiums for such "tail" insurance coverage.
4.6 Confidential and Proprietary Information. The Practice agrees that
-----------------------------------------
it shall not disclose any Confidential Information of the Professional Business
Manager to other persons without Professional Business Manager's express written
authorization, such Confidential Information shall not be used in any
24
way detrimental to Professional Business Manager, and the Practice will keep
such Confidential Information confidential and will ensure that its affiliates
and advisors who have access to such Confidential Information comply with these
nondisclosure obligations; provided, however, that the Practice may disclose
Confidential Information to those of its Representatives who need to know
Confidential Information for the purposes of this Agreement, it being understood
and agreed by the Practice that such Representatives will be informed of the
confidential nature of the Confidential Information, will agree to be bound by
this Section, and will be directed by the Practice not to disclose to any other
person any Confidential Information.
4.7 Non-Competition. The Practice hereby recognizes, acknowledges, and
---------------
avers that Professional Business Manager will incur substantial costs in
providing the equipment, support services, personnel, management,
administration, and other items and services that are the subject matter of this
Agreement and that in the process of providing services under this Agreement,
the Practice will be privy to financial and Confidential Information, to which
the Practice would not otherwise be exposed. The Parties also recognize that
the services to be provided by Professional Business Manager will be feasible
only if the Practice operates an active practice to which the Professionals
associated with the Practice devote their full time and attention. The Practice
agrees, acknowledges, and avers that the non-competition covenants described
hereunder are necessary for the protection of Professional Business Manager, and
that Professional Business Manager would not have entered into this Agreement
without the following covenants:
(a) Except as specifically agreed to by Professional Business
Manager in writing, the Practice covenants and agrees that during the Restricted
Period (as hereinafter defined) other than if terminated by the Practice for
cause, the Practice shall not directly or indirectly, engage in any activity or
own (excluding ownership of less than one percent (1%) of the equity of any
publicly traded entity and excluding ownership of the common stock of
Professional Business Manager), manage, operate, control, contract with, lend
funds to, lend its name to, maintain any interest whatsoever in, or be employed
by, any enterprise (i) having to do with the provision, distribution, promotion,
or advertising of any type of management or administrative services or products
to third parties in competition with Professional Business Manager, within a
three (3) mile radius of any Practice Location; and/or (ii) offering any type of
service(s) or product(s) to third parties substantially similar to those offered
by Professional Business Manager to the Practice hereunder in competition with
Professional Business Manager within a three (3) mile radius of any Practice
Location or (iii) the sale of optical retail goods (e.g., frames, lenses and
contact lenses) within a three (3) mile radius of any Practice Location.
Notwithstanding the above restriction, nothing herein shall prohibit (i) the
Practice or any of its Shareholders from providing management and administrative
services to this or their own optometry practice after the termination of this
Agreement; (ii) the Practice or its Shareholders from contracting with a
third-party manager to provide administrative or management services for its or
their professional eye care practices after termination of this Agreement; (iii)
any of the Practice's Shareholders from providing management and administrative
services to their own optometry practices after the termination of their
employment relationship with the Practice; and (iv) such Shareholders from
contracting with a third-party manager to provide administrative or management
services for their professional eye care practices after the termination of
their employment relationship with the Practice. The term "Restricted Period"
shall mean the period commencing on the date hereof and ending as follows:
(i) if this Agreement is terminated on or before the first
anniversary hereof, the period shall end twelve (12) months after the date of
termination of this Agreement;
25
(ii) if this Agreement is terminated within the after the first
anniversary of the date hereof and prior to the second anniversary of the
date hereof, the period shall extend after the date of termination of this
Agreement for that number of days equal to the days between the date hereof
and the date of termination of this Agreement; or
(iii) if this Agreement is terminated after the second anniversary of
the date hereof, the period shall end twenty-four (24) months after the date of
termination of this Agreement.
(b) The Practice understands and acknowledges that Professional
Business Manager shall suffer severe harm in the event that the Practice
breaches any obligation of Section 4.7, in addition to any other remedies
available under this Agreement, at law or in equity, Professional Business
Manager shall be entitled to enforce this Agreement by injunctive relief and by
specific performance of the Agreement, such relief to be without the necessity
of posting a bond, cash or otherwise. Additionally, nothing in this Section
4.7(b) shall limit Professional Business Manager's right to recover any other
damages to which it is entitled as a result of the Practice's breach. The time
period for which the non-competition covenant is effective shall be extended day
for day for the time period the Practice is in violation of the non-competition
covenant. If any provision of the covenants is held by a court of competent
jurisdiction to be unenforceable due to an excessive time period, geographic
area, or restricted activity, the covenant shall be reformed to comply with such
time period, geographic area, or restricted activity that would be held
enforceable.
4.8 Name, Trademark. The Practice covenants and agrees that during the
---------------
term of this Agreement, the Practice shall conduct its professional practice at
the Practice Locations under the name of, and only under the name of "Xxxxxxx
X. Xxxxxx, O.D. & Associates, P.C." (unless otherwise consented to by
Professional Business Manager) and that such name is, or will be, duly and
timely registered, qualified, or licensed under the laws of the jurisdiction in
which they are being used. The Practice covenants and promises that the
Practice will not:
(a) take any action that is reasonably likely to result in the
loss of registration, qualification or licensure of the name;
(b) fail to take any reasonably necessary action that will
maintain the registration, qualification, or licensure current;
(c) license, sell, give, or otherwise transfer the name or the
right to use the name to any optometry practice, Optometrist, professional
corporation, professional limited liability company, office or any other entity;
or
(d) cease conducting the professional practice of the Practice
under the name.
4.9 Billing Information and Assignments; Establishment of Fees. The
-------------------------------------------------------------
Practice shall promptly provide the Professional Business Manager with all
billing and other information reasonably requested by the Professional Business
Manager to enable it to xxxx and collect the Office's fees and other charges and
reimbursement claims pursuant to Section 3.9, and the Practice shall use its
best efforts to procure consents
26
to assignments and other approvals and documents necessary to enable the
Professional Business Manager to obtain payment or reimbursement from third
parties for such fees, other charges and claims.
4.10 Provider Agreements. The Practice shall have ultimate authority
--------------------
with regard to all contractual arrangements with third parties for the
Practice's provision of Professional Eye Care Services at the Practice
Locations, and the Practice may at its sole discretion reject or otherwise
refuse to enter into any such contractual arrangement.
4.11 Tax Matters. The Practice shall prepare or arrange for the
------------
preparation by an accountant selected by the Practice of all appropriate
corporate tax returns and reports required of the Practice including such
returns and reports required with respect to the Professional Practice Account.
The costs and expenses relating to the preparation of such returns and reports
shall be deemed a Practice Expense.
4.12 Shareholders' Undertaking. The Practice shall cause to be
--------------------------
executed by all Shareholders of the Practice an undertaking in the form of
Exhibit 4.12 by such Shareholders to, among other things, agree to cause the
Practice to abide by the covenants not to compete described in Section 4.7 of
this Agreement
4.13 Limitations on Actions of the Practice. The Practice shall not
-----------------------------------------
take any of the following actions without the express prior written consent of
Professional Business Manager:
(a) Any action leading to or intended to result in the merger,
combination or consolidation of the Practice or Office with, or acquisition of
the Practice, the Office, or their businesses by, any other entity;
(b) Mortgage or encumber any of the Practice's real, personal or mixed
property as security for any indebtedness which is not contemplated by the
Budget;
(c) Pay any dividend or make any other distribution, whether in cash or
in kind, to Shareholders of the Practice, if any compensation owed by the
Practice to Professional Business Manager hereunder has not been paid in full,
and if any and all monetary obligations of the Practice to Professional Business
Manager have not been fully paid in accordance with the terms of any and all
documents governing such obligations; provided, however, that the foregoing
shall not prevent payment of Shareholder's salary, Bonus, payroll taxes thereon,
and certain Shareholder Expenses as set forth in Section 3.10(b);
(d) Dissolve or liquidate the Practice, or take any action with a view
to or likely to have the result of the dissolution or liquidation of the
Practice; or
(e) Authorize the provision of professional services such that the
income derived therefrom is not owned by the Practice; provided that no such
consent is necessary for (i) professional services performed by Professionals
during said Professionals' vacation time, or (ii) professional services
performed in connection with duties and responsibilities as a member of the
Reserves or National Guard.
4.14 Leases of Office. The Practice shall maintain and fulfill all of
-----------------
its obligations under leases or subleases of Office facilities or locations.
27
ARTICLE V
BUSINESS MANAGER'S COMPENSATION.
-------------------------------
5.1 Base Management Fee. The Practice and Professional Business
---------------------
Manager agree to the compensation set forth herein as being paid to Professional
Business Manager in consideration of a substantial commitment made by
Professional Business Manager hereunder and that such fees are fair and
reasonable. Each month Professional Business Manager shall be paid that
management fee as set forth in Exhibit 5.1 (as may be amended from time to time)
The Parties agree that in the event that additional Practice locations are
opened, or some of the Practice locations are abandoned, the management fee set
forth on Exhibit 5.1 shall be adjusted as mutually agreed upon by the Parties.
5.2 Reasonable Value. Payment of the Management Fee is not intended to
----------------
be and shall not be interpreted or applied as permitting Professional Business
Manager to share in the Practice's fees for Professional Eye Care Services or
any other services, but is acknowledged as the Parties' negotiated agreement as
to the reasonable fair market value of Professional Business Manager's
commitment to pay all Office Expenses and the fair market value of the
equipment, contract analysis and support, other support services, purchasing,
personnel, management, administration, strategic management and other items and
services furnished by Professional Business Manager pursuant to the Agreement,
considering the nature and volume of the services required and the risks assumed
by Professional Business Manager. The Practice and Professional Business
Manager recognize and acknowledge that Professional Business Manager will incur
substantial costs and business risks in undertaking to pay advance Office
Expenses and in providing the support services, personnel, marketing,
management, administration, and other items and services that are the subject
matter of this Agreement. It is the intent of the Parties that the Management
Fee reasonably compensate Professional Business Manager for the value to the
Practice of Professional Business Manager's administrative expertise, given the
considerable business risk to Professional Business Manager, in providing the
Management Services that are the subject of this Agreement.
5.3 Payment of Management Fee. To facilitate the payment of the
----------------------------
Management Fee as provided in Section 5.1 hereof, the Practice hereby expressly
authorizes Professional Business Manager to make withdrawals of the Management
Fee from the Professional Practice Account as such fee becomes due and payable
during the Term in accordance with Section 3.10(a) and after termination as
provided in Section 6.3. Professional Business Manager shall deliver to the
Practice an invoice for the Management Fee accompanied by a reasonably detailed
statement of the information upon which the Management Fee calculation is based.
5.4 Disputes Regarding Fees.
-------------------------
(a) It is the Parties' intent that any disputes regarding
performance standards of the Professional Business Manager be resolved to the
extent possible by good faith negotiation. To that end, the Parties agree that
if the Practice in good faith believes that Professional Business Manager has
failed to perform its obligations, and that as a result of such failure, the
Practice is entitled to a set-off or reduction in its Management Fees, the
Practice shall give Professional Business Manager notice of the perceived
failure and request in the notice a set-off or reduction in Management Fees.
Professional Business Manager and the Practice shall then negotiate the dispute
in good faith, and if an agreement is reached, the Parties shall
28
implement the resolution without further action. At the request of Professional
Business Manager or the Practice, the Practice Advisory Council shall make
recommendations to Professional Business Manager with respect to any dispute
concerning a set off or reduction in Management Fees.
(b) If the Parties cannot reach a resolution within a reasonable
time, the Parties shall submit the dispute to mediation to be conducted in
accordance with the American Arbitration Association's Commercial Mediation
Rules.
(c) If the mediation process fails to resolve the dispute, the
dispute shall be submitted by either Party to binding arbitration under Section
8.7.
ARTICLE VI
TERM AND TERMINATION
--------------------
6.1 Initial and Renewal Term. The Term of this Agreement will be for
--------------------------
an initial period of ten (10) years after the effective date, and shall be
automatically renewed for successive five (5) year periods thereafter, provided
that neither Professional Business Manager nor the Practice shall have given
notice of its desire not to renew this Agreement at least sixty (60) days before
the end of the initial term or any renewal term, or unless otherwise terminated
as provided in Section 6.2 of this Agreement. Notwithstanding any provision to
the contrary, the rights and obligations of the Parties with respect to any
Practice Location shall terminate upon the termination of the underlying lease
or sublease pursuant to which the Practice operates such Office.
6.2 Termination.
-----------
(a) Termination by the Practice. The Practice may immediately
------------------------------
terminate this Agreement at its discretion, upon written notice pursuant to
Section 8.3, as follows:
(i) If Professional Business Manager becomes insolvent by
reason of its inability to pay its debts as they mature; is adjudicated bankrupt
or insolvent; files a petition in bankruptcy, reorganization or similar
proceeding under the bankruptcy laws of the United States or shall have such a
petition filed against it which is not discharged within thirty (30) days; has a
receiver or other custodian, permanent or temporary, appointed for its business,
assets or property; makes a general assignment for the benefit of creditors; has
its bank accounts, property or accounts attached; has execution levied against
its business or property; or voluntarily dissolves or liquidates or has a
petition filed for corporate dissolution and such petition is not dismissed
within thirty (30) days;
(ii) If the Professional Business Manager fails to comply
with any material provision of this Agreement and does not correct such failure
within ninety (90) days after written notice of such failure to comply is
delivered by the Practice specifying the nature of the breach in reasonable
detail; or
(iii) Professional Business Manager commits any act of fraud,
misappropriation or embezzlement, or any other felony and as a result the
Professional Business Manager is unable to substantially perform under the terms
of this Agreement.
29
(b) Termination by Professional Business Manager. Upon written
------------------------------------------------
notice pursuant to Section 8.3, Professional Business Manager may immediately
terminate this Agreement at its discretion, upon thirty (30) days prior notice
for any reason, or immediately for the following reasons:
(i) The revocation, suspension, cancellation or restriction
of any Shareholders' license to practice optometry in Georgia if, in the
reasonable discretion of the Professional Business Manager, the Practice will
not be financially viable after such revocation, suspension, cancellation, or
restriction.
(ii) If the Practice becomes insolvent by reason of its
inability to pay its debts as they mature; is adjudicated bankrupt or insolvent;
files a petition in bankruptcy, reorganization or similar proceeding under the
bankruptcy laws of the United States or shall have such a petition filed against
it which is not discharged within thirty (30) days; has a receiver or other
custodian, permanent or temporary, appointed for its business, assets or
property; makes a general assignment for the benefit of creditors; has its bank
accounts, property or accounts attached; has execution levied against its
business or property; or voluntarily dissolves or liquidates or has a petition
filed for corporate dissolution and such petition is not dismissed within thirty
(30) days;
(iii) If the Practice fails to comply with any material
provision of this Agreement, or any other agreement with Professional Business
Manager, or the President fails to comply with the provisions of the President's
Employment Agreement, and does not correct such failure within thirty (30) days
after written notice of such failure to comply is delivered by Professional
Business Manager specifying the nature of the breach in reasonable detail;
(iv) If the Practice or any of the Practice's Professionals
commit any act of fraud, misappropriation or embezzlement, or any other felony
and as a result the Practice as an entire entity is unable to substantially
perform under the terms of this Agreement;
(v) If any of the material representations of the Practice
are false or incorrect when made or hereafter become materially false or
incorrect or any warranty of the Practice is materially breached; or
(vi) The Practice and the Professional Business Manager fail
to agree upon the Management Fee after the initial eighteen month period or any
subsequent one (1) year period in accordance with Exhibit 5.1 attached hereto.
(c) Individual Practice Location. Professional Business Manager may
------------------------------
terminate its obligation with regard to any individual Practice Location upon
thirty days' prior written notice to the Practice.
(d) Termination by Agreement. In the event the Practice and
--------------------------
Professional Business Manager shall mutually agree in writing, this Agreement
may be terminated on the date specified in such written agreement.
(e) Legislative, Regulatory or Administrative Change. In the
----------------------------------------------------
event there shall be a change in the Medicare or Medicaid statutes, federal
statutes, state statutes, case law, administrative
30
interpretations, regulations or general instructions, the adoption of new
federal or state legislation, a change in any third-party reimbursement system,
or any finding, ruling, or decree of any regulatory body concerning this
Agreement, any of which are reasonably likely to materially and adversely affect
the manner in which either Party may perform or be compensated for its services
under this Agreement or which shall make this Agreement or any related
agreements unlawful or unenforceable, the Parties shall immediately use their
best efforts to enter into a new service arrangement or basis for compensation
for the services furnished pursuant to this Agreement that complies with the
law, regulation, policy, finding, ruling, or decree, and that approximates as
closely as possible the economic position of the Parties prior to the change. If
the Parties are unable to reach a new agreement within thirty (30) days, this
Agreement shall be terminated upon thirty (30) days written notice by either
Party to the other.
6.3 Effects of Termination.
------------------------
(a) Obligation After Termination. Upon termination of this
-------------------------------
Agreement, as hereinabove provided, neither Party shall have any further
obligations hereunder except for
(i) obligations accruing prior to the date of termination,
including, without limitation, payment of the Management Fee relating to
services provided prior to the termination of this Agreement;
(ii) obligations, promises, or covenants set forth herein
that are expressly made to extend beyond the Term, including, without
limitation, insurance, indemnities and non-competition provisions, which
provisions shall survive the expiration or termination of this Agreement;
(iii) the obligation of the Practice described in Section
6.4; and
(iv) the obligation of the Practice to repay amounts advanced
by Professional Business Manager to the Practice.
(b) Receipt of Collections After Termination. In effectuating the
------------------------------------------
provisions of this Section 6.3, the Practice specifically acknowledges and
agrees that if this Agreement terminates pursuant to Section 6.1, 6.2(b) or
6.2(d), Professional Business Manager shall continue for a period not to exceed
ninety (90) days to exclusively collect and receive on behalf of the Practice
all cash collections from accounts receivable in existence at the time this
Agreement is terminated, it being understood that
(i) such cash collections will represent compensation to
Professional Business Manager to the extent of all outstanding obligations to
Professional Business Manager by the Practice pursuant to this Agreement for
Management Services already rendered;
(ii) Professional Business Manager shall not be entitled to
collect accounts receivable after the termination date if this Agreement is
terminated pursuant to Section 6.2(a);
(iii) the Professional Business Manager shall deduct from
such cash collections any other amounts owed to Professional Business Manager
under this Agreement, including, without limitation, ten percent (10%) of such
cash collections as its Management Fee during any period after the termination
of this Agreement while such collections are taking place and any reasonable
costs
31
incurred by Professional Business Manager in carrying out the post termination
procedures and transactions contemplated herein; and
(iv) Professional Business Manager shall remit remaining
amounts from such collection activities, if any, to the Practice.
(c) Surrender of Books After Termination. Upon the expiration or
---------------------------------------
termination of this Agreement for any reason or cause whatsoever, Professional
Business Manager shall surrender to the Practice all books and records
pertaining to the Office.
6.4 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE
------------------------
TO THE OTHER FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS,
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE PERFORMANCE OR BREACH
THEREOF, EVEN IF THE PARTIES HAVE BEEN ADVISED OF THE POSSIBILITY THEREOF;
PROVIDED, HOWEVER, THAT THE FOREGOING SHALL NOT PREVENT RECOVERY OF ACTUAL
DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT.
ARTICLE VIII
INDEMNIFICATION; THIRD PARTY CLAIMS
-----------------------------------
7.1 Indemnification by the Practice. The Practice shall indemnify and
--------------------------------
hold harmless Professional Business Manager and Professional Business Manager's
shareholders, directors, officers, agents and employees, from and against all
claims, demands, liabilities, losses, damages, costs and expenses, including
reasonable attorneys' fees, resulting in any manner, directly or indirectly,
from the negligent acts or omissions or misconduct of the Practice or its
members, Shareholders, directors, officers, employees, agents or independent
contractors, including but not limited to any such claims, demands, liabilities,
losses, damages, costs and expenses which accrued or arose prior to the date of
execution of this Agreement.
7.2 Indemnification by Professional Business Manager. Professional
----------------------------------------------------
Business Manager shall indemnify and hold harmless the Practice, and the
Practice's members, Shareholders, directors, officers, agents and employees,
from and against any and all claims, demands, liabilities, losses, damages,
costs and expenses, including reasonable attorneys' fees, resulting in any
manner, directly or indirectly, from the negligent acts or omissions or
misconduct of Professional Business Manager or its shareholders, directors,
officers, employees, agents or independent contractors, including but not
limited to any such claims, demands, liabilities, losses, damages, costs and
expenses which accrued or arose prior to the date of execution of this
Agreement
7.3 Notice of Claim for Indemnification. No claims for indemnification
-----------------------------------
under this Agreement relating to claims solely between the Parties shall be
valid unless notice of such claim is delivered to the Practice (in the case of a
claim by Professional Business Manager) or Professional Business Manager (in the
case of a claim by the Practice) within one (1) year after the Party making such
claim first obtained knowledge of the facts upon which such claim is based. Any
such notice shall set forth in reasonable detail,
32
to the extent known by the Party giving such notice, the facts on which such
claim is based and the resulting estimated amount of damages.
7.4 Matters Involving Third Parties.
----------------------------------
(a) If the Practice or Professional Business Manager receives
notice or acquires knowledge of any matter which may give rise to a claim by
another person and which may then result in a claim for indemnification under
this Agreement, then: (i) if such notice or knowledge is received or acquired
by the Practice, the Practice shall promptly notify Professional Business
Manager; and (ii) if such notice or knowledge is received or acquired by
Professional Business Manager, the Professional Business Manager shall promptly
notify the Practice; except that no delay in giving such notice shall diminish
any obligation under this Agreement to provide indemnification unless (and then
solely to the extent) the Party from whom such indemnification is sought is
prejudiced.
(b) Any Party from whom such indemnification (the "Indemnifying
Party") is sought shall have the right to defend the Party seeking such
indemnification (the "Indemnified Party") against such claim by another person
(the "Third Party Claim") with counsel of the Indemnifying Party's choice
reasonably satisfactory to the Indemnified Party so long as: (i) within fifteen
(15) days after the Indemnified Party has given notice of the Third Party Claim
to the Indemnifying Party, the Indemnifying Party notifies the Indemnified Party
that the Indemnifying Party will indemnify the Indemnified Party from and
against all adverse consequences the Indemnified Party may suffer caused by,
resulting from, arising out of or relating to such Third Party Claim; (ii) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
satisfactory to the Indemnified Party that the Indemnifying Party has the
financial resources necessary to defend against the Third Party Claim and
fulfill its indemnification obligations; (iii) the Third Party Claim seeks money
damages; (iv) settlement of, or an adverse judgment with respect to, the Third
Party Claim (other than an optometric malpractice claim) is not, in the good
faith judgment of the Indemnified Party, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Indemnified Party; and (v) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 7.4(b): (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim; (ii) the Indemnified Party
shall not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior consent of the Indemnifying
Party; and (iii) the Indemnifying Party shall not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior consent of the Indemnified Party.
(d) If any of the conditions specified in Section 7.4(b) is not
satisfied, however; (i) the Indemnified Party may defend against, and consent to
the entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it may deem advisable (and the Indemnified Party
need not consult with, or obtain any consent from, any Indemnifying Party in
connection therewith); (ii) the Indemnifying Party shall reimburse the
Indemnified Party promptly and periodically for the costs of defending against
the Third Party Claim (including reasonable attorneys' and accountants' fees and
expenses); and (iii) the Indemnifying Party shall remain responsible for any
adverse consequences the Indemnified Party may suffer caused by, resulting from,
arising out of or relating to such Third Party Claim to the fullest extent
provided in this Agreement.
33
7.5 Settlement. Except as permitted by Section 7.4, a Party shall not
----------
compromise or settle any claim for which the other Party is obligated to
indemnify it without the written consent of such Party.
7.6 Cooperation. The Indemnified Party shall make available all
-----------
information and assistance that the Indemnifying Party may reasonably request in
conjunction with assessing, defending and settling said claim.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Administrative Services Only. Nothing in this Agreement is
------------------------------
intended or shall be construed to allow Professional Business Manager to
exercise control, authority or direction over the manner or method by which the
Practice and its Professionals perform Professional Eye Care Services or other
professional health care services. The rendition of all Professional Eye Care
Services, including, but not limited to, the prescription or administration of
medicine and drugs, shall be the sole responsibility of the Practice and its
Professionals, and Professional Business Manager shall not interfere in any
manner or to any extent therewith. Nothing contained in this Agreement shall be
construed to permit Professional Business Manager to engage in the practice of
optometry, it being the sole intention of the Parties hereto that the services
to be rendered to the Practice by Professional Business Manager are solely for
the purpose of providing non-optometric management and administrative services
to the Practice so as to enable the Practice to devote its full time and
energies to the professional conduct of its professional eye care practice and
provision of Professional Eye Care Services to its patients.
8.2 Status of Independent Contractor. The Practice and Professional
-----------------------------------
Business Manager and their shareholders are not, and shall not be deemed to be
by virtue of this Agreement, joint venturers, partners, employees or agents of
each other (except as expressly provided in this Agreement). Except as may be
expressly provided herein, neither Party shall have any authority to bind the
other without the other's express written consent; and then only to the extent
of the authority conferred by such express written consent. Each Party is an
independent contractor, and each Party shall remain professionally and
economically independent of the other. In the course of the business
relationship contemplated in this Agreement only the Practice and its
Professionals shall practice optometry and/or therapeutic optometry, and they
shall do so as independent professionals with no employment relationship to
Professional Business Manager. Professional Business Manager and the Practice
agree that the Practice shall retain absolute authority to direct the
optometric, professional, and ethical aspects of its optometric and/or
therapeutic optometric practice, any authority granted herein to Professional
Business Manager concerning the business and administrative aspects of such
practice notwithstanding. Each Party shall be solely responsible for and shall
comply with all state and federal laws applicable to that Party pertaining to
employment taxes, income tax withholding, unemployment compensation
contributions, and other employment related matters.
8.3 Notices. Any notice, demand, or communication required, permitted,
-------
or desired to be given hereunder shall be deemed effectively given when in
writing and personally delivered or mailed by prepaid certified or registered
mail, return receipt requested, addressed as follows:
34
The Practice: Xxxxxxx X. Xxxxxx, O.D. & Associates, P.C.
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, O.D.
with a copy: Xxxxxx Xxxx
Kentucky Home Life Building, 17th Floor
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Professional Business Manager: EyeMasters, Inc.
00000 Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
with a copy to: Xxx & Xxxxx Incorporated
000 X. Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: J. Xxxxxx Xxxxxxx or Xxxxxx X. Xxxxx
or to such other address, or to the attention of such other person or officer,
as any party may by written notice designate.
8.4 Governing Law. This Agreement shall in all respects be governed,
--------------
interpreted and construed in accordance with the laws of the State of Georgia
without giving effect to principles of comity or conflicts of laws thereof.
8.5 Jurisdiction and Venue. Professional Business Manager and the
------------------------
Practice hereby consent to the personal jurisdiction and venue of the state and
federal courts in the judicial circuit where the Practice has its principal
corporate office, and do hereby waive all questions of personal jurisdiction and
venue, including, without limitation, the claim or defense that such courts
constitute an inconvenient forum.
8.6 Assignment. Except as may be herein specifically provided to the
----------
contrary, this Agreement shall inure to the benefit of and be binding upon the
Parties hereto and their respective legal representatives, successors, and
assigns; provided, however, that the Practice may not assign this Agreement
without the prior written consent of Professional Business Manager, which
consent may be withheld. Professional Business Manager may assign or transfer
its rights and obligations under this Agreement only in the following
situations: (a) pursuant to a merger of Professional Business Manager into
another entity or the sale of substantially all of the assets of Professional
Business Manager; (b) pursuant to the sale and/or assignment of all of this
Agreement with the Practice's consent, which shall not be unreasonably withheld;
(c) pursuant to a transfer or assignment of this Agreement to one of
Professional Business Manager's subsidiaries; affiliates, or sister corporations
or (d) pursuant to any transfer or assignment to or by any financial lender of
the Professional Business Manager, and this Agreement is subordinate to the
rights of
35
such lender. After such assignment and transfer, the Practice agrees to look
solely to such assignee or transferee for performance of this Agreement.
8.7 Arbitration. Any and every dispute of any nature whatsoever that
-----------
may arise between the Parties, whether sounding in contract, statute, tort,
fraud, misrepresentation, discrimination or any other legal theory, including,
but not limited to, disputes relating to or involving the construction,
performance or breach of this Agreement or any other agreement between the
Parties, whether entered into prior to, on, or subsequent to the date of this
Agreement, or those arising under any federal, state or local law, regulation or
ordinance, shall be determined by binding arbitration in accordance with the
then-current commercial arbitration rules of the American Arbitration
Association, to the extent such rules do not conflict with the provisions of
this paragraph. If the amount in controversy in the arbitration exceeds Two
Hundred Fifty Thousand Dollars ($250,000), exclusive of interest, attorneys'
fees and costs, the arbitration shall be conducted by a panel of three (3)
neutral arbitrators. Otherwise, the arbitration shall be conducted by a single
neutral arbitrator. The Parties shall endeavor to select neutral arbitrators by
mutual agreement. If such agreement cannot be reached within thirty (30)
calendar days after a dispute has arisen which is to be decided by arbitration,
any Party or the Parties jointly shall request the American Arbitration
Association to submit to each Party an identical panel of fifteen (15) persons.
Alternate strikes shall be made to the panel, commencing with the Party bringing
the claim, until the names of three (3) persons remain, or one (1) person if the
case is to be heard by a single arbitrator. The Parties may, however, by mutual
agreement, request the American Arbitration Association to submit additional
panels of possible arbitrators. The person(s) thus remaining shall be the
arbitrator(s) for such arbitration. If three (3) arbitrators are selected, the
arbitrators shall elect a chairperson to preside at all meetings and hearings.
The arbitrator(s), or a majority of them, shall have the power to determine all
matters incident to the conduct of the arbitration, including without limitation
all procedural and evidentiary matters and the scheduling of any hearing. The
award made by a majority of the arbitrators shall be final and binding upon the
Parties thereto and the subject matter thereof. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sec.Sec. 1-16, and
judgment upon the award rendered by the arbitrator(s) may be entered by any
court having jurisdiction thereof. The arbitrators shall have no authority to
award punitive or exemplary damages or any statutory multiple damages, and shall
only have the authority to award compensatory damages, arbitration costs,
attorney's fees, declaratory relief, and permanent injunctive relief, if
applicable. Unless otherwise agreed by the parties, the arbitration shall be
held in Dallas, Texas. This Section 8.7 shall not prevent either Party from
seeking a temporary restraining order or temporary or preliminary injunctive
relief from a court of competent jurisdiction in order to protect its rights
under this Agreement. In the event a Party seeks such injunctive relief
pursuant to this Agreement, such action shall not constitute a waiver of the
provisions of this Section 8.7, which shall continue to govern any and every
dispute between the Parties, including without limitation the right to damages,
permanent injunctive relief and any other remedy, at law or in equity.
8.8 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT WAIVES
--------------------
ANY RIGHT TO TRIAL BY JURY OF ANY DISPUTE OF ANY NATURE WHATSOEVER THAT MAY
ARISE BETWEEN THEM, INCLUDING, BUT NOT LIMITED TO, THOSE DISPUTES RELATING TO,
OR INVOLVING IN ANY WAY, THE CONSTRUCTION, PERFORMANCE OR BREACH OF THIS
AGREEMENT OR ANY OTHER AGREEMENT BETWEEN THE PARTIES, THE PROVISIONS OF ANY
FEDERAL, STATE OR LOCAL LAW, REGULATION OR ORDINANCE NOTWITHSTANDING. By
execution of this Agreement, each of the parties hereto acknowledges and agrees
that it has had an opportunity to consult with legal counsel and that he/she it
knowingly and voluntarily waives any right to a trial by jury of any dispute
pertaining to or relating in
36
any way to the transactions contemplated by this Agreement, the provisions of
any federal, state or local law, regulation or ordinance notwithstanding.
8.9 Waiver of Breach. The waiver by either Party of a breach or
------------------
violation of any provision of this Agreement shall not operate as, or be
construed to constitute, a waiver of any subsequent breach of the same or
another provision hereof.
8.10 Enforcement. In the event either Party resorts to legal action to
-----------
enforce or interpret any provision of this Agreement, the prevailing Party shall
be entitled to recover the costs and expenses of such action so incurred,
including, without limitation, reasonable attorneys' fees.
8.11 Gender and Number. Whenever the context of this Agreement
-------------------
requires, the gender of all words herein shall include the masculine, feminine,
and neuter, and the number of all words herein shall include the singular and
plural.
8.12 Additional Assurances. Except as may be herein specifically
----------------------
provided to the contrary, the provisions of this Agreement shall be
self-operative and shall not require further agreement by the Parties; provided,
however, at the request of either Party, the other Party shall execute such
additional instruments and take such additional acts as are reasonable and as
the requesting Party may deem necessary to effectuate this Agreement.
8.13 Consents, Approvals, and Exercise of Discretion. Whenever this
--------------------------------------------------
Agreement requires any consent or approval to be given by either Party, or
either Party must or may exercise discretion, and except where specifically set
forth to the contrary, the Parties agree that such consent or approval shall not
be unreasonably withheld or delayed, and that such discretion shall be
reasonably exercised.
8.14 Force Majeure. Neither Party shall be liable or deemed to be in
--------------
default for any delay or failure in performance under this Agreement or other
interruption of service deemed to result, directly or indirectly, from acts of
God, civil or military authority, acts of public enemy, war, accidents, fires,
explosions, earthquakes, floods, failure of transportation, strikes or other
work interruptions by either Party's employees, or any other similar cause
beyond the reasonable control of either Party unless such delay or failure in
performance is expressly addressed elsewhere in this Agreement. Notwithstanding
the same, the Parties hereto agree to continue this Agreement to the best degree
they can so long as reasonably possible and the Practice shall not be excused
from its obligations under Sections 4.1, 6.4 and 6.5 pursuant to this Section
8.14.
8.15 Severability. The Parties hereto have negotiated and prepared the
------------
terms of this Agreement in good faith with the intent that each and every one of
the terms, covenants and conditions herein be binding upon and inure to the
benefit of the respective Parties. Accordingly, if any one or more of the
terms, provisions, promises, covenants or conditions of this Agreement or the
application thereof to any person or circumstance shall be adjudged or rendered
to any extent invalid, unenforceable, void or voidable for any reason whatsoever
by a court of competent jurisdiction, an arbitration tribunal, a regulatory
agency, or statute, such provision shall be reformed, construed and enforced as
if such unenforceable provision had not been contained herein, and each and all
of the remaining terms, provisions, promises, covenants and conditions of this
Agreement or their application to other persons or circumstances shall not be
affected thereby and shall be valid and enforceable to the fullest extent
permitted by law. To the extent this
37
Agreement is in violation of applicable law, then the Parties agree to negotiate
in good faith to amend the Agreement, to the extent possible consistent with its
purposes, to conform to law.
8.16 Press Releases and Public Announcements. Except as otherwise
-------------------------------------------
required by law or by applicable rules of any securities exchange or association
of securities dealers, neither the Practice nor the Professional Business
Manager shall issue any press release, make any public announcement or otherwise
disclose any information for the purpose of publication by any print, broadcast
or other public media, relating to the transactions contemplated by this
Agreement, without the prior approval of the other Party.
8.17 Divisions and Headings. The division of this Agreement into
------------------------
articles, sections, and subsections and the use of captions and headings in
connection therewith are solely for convenience and shall not affect in any way
the meaning or interpretation of this Agreement.
8.18 Amendments and Execution. This Agreement and any amendments
--------------------------
hereto shall be in writing and executed in multiple copies on behalf of the
Practice by its President, and on behalf of Professional Business Manager by an
officer. Each multiple copy shall be deemed an original, but all multiple
copies together shall constitute one and the same instrument.
8.19 Licenses, Permits and Certificates. Professional Business Manager
----------------------------------
and the Practice shall each obtain and maintain in effect, at all times during
the term of this Agreement, all licenses, permits and certificates required by
law which are applicable to the performance of their respective obligations
pursuant to this Agreement.
8.20 No Third Party Beneficiaries. Except as otherwise provided
-------------------------------
herein, this Agreement shall not confer any rights or remedies upon any person
other than Professional Business Manager and the Practice and their respective
successors and permitted assigns.
8.21 Compliance with Applicable Laws. Professional Business Manager
----------------------------------
and the Practice shall comply with all applicable federal, state and local laws,
regulations, rules and restrictions in the conduct of their obligations under
this Agreement.
8.22 Language Construction. The Practice and Professional Business
----------------------
Manager acknowledge that each Party hereto and its counsel have reviewed and
revised this Agreement and agree that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting Party shall
not be employed in the interpretation of this Agreement.
8.23 Entire Agreement. With respect to the subject matter of this
-----------------
Agreement, this Agreement supersedes all previous contracts and constitutes the
entire agreement between the Parties. Neither Party shall be entitled to
benefits other than those specified herein. No prior oral statements or
contemporaneous negotiations or understandings or prior written material not
specifically incorporated herein shall be of any force and effect, and no
changes in or additions to this Agreement shall be recognized unless
incorporated herein by amendment as provided herein, such amendment(s) to become
effective on the date stipulated in such amendment(s). The Parties specifically
acknowledge that, in entering into and executing this Agreement, the Parties
rely solely upon the representations and agreements contained in this Agreement
and no others.
38
8.24 Authority. Professional Business Manager and the Practice hereby
---------
warrant and represent to each other that they have the requisite corporate
authority to execute and deliver this Agreement in their respective names.
IN WITNESS WHEREOF, the Practice and Professional Business Manager have
caused this Agreement to be executed by their duly authorized representatives,
all as of the day and year first above written.
"The Practice"
XXXXXXX X. XXXXXX, O.D., & ASSOCIATES, P.C.
By:
Xxxxxxx Xxxxxx, O.D., President
"Professional Business Manager"
EYEMASTERS, INC.
By:
Title: ____________________________________________
39
EXHIBIT A
PRACTICE LOCATIONS
Address Monthly Rental Rate
Town Mall $1,980
000 Xxxxxxx Xxxxxxx, Xxx. #000
Xxxxxxxx, XX 00000
Stonecrest $1,610
0000 Xxxxxx Xxxx Xxxx, XX 0000
Xxxxxxxx, XX 00000
Cumberland $1,880
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Northlake $1,570
0000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Perimeter $2,250
0000 Xxxxxxx Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
Gwinnet $1,680
0000 Xxxxxxxx Xxxx Xxxx, XX X00-0
Xxxxxx, XX 00000
Southlake $1,730
0000 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
North Point $2,230
0000 Xxxxx Xxxxx Xxxxxx, XX 0000
Xxxxxxxxxx, XX 00000
40
EXHIBIT 3.14
HIPAA ADDENDUM
Practice is receiving and Professional Business Manager is providing
business management services in connection with the operation of Practice,
pursuant to the terms of the Professional Business Management Agreement. This
Addendum sets forth certain terms that will apply to the relationship between
Practice ("Health Care Provider") and Professional Business Manager ("Business
Associate") including that relationship arising out of the Professional Business
Management Agreement, and which are required by the privacy regulations
promulgated pursuant to the Health Insurance Portability and Accountability Act,
as amended ("HIPAA"). The parties agree as follows:
1. DEFINITIONS. Unless otherwise specified in this Addendum, all
-----------
capitalized terms not otherwise defined shall have the meanings established for
---
purposes of Title 45, Parts 160 and 164, of the United States Code of Federal
Regulations, as amended from time to time. For purposes of clarification, the
following terms shall have the definitions as set forth herein below:
1.1 "Privacy Standards" shall mean the Standards for Privacy of
Individually Identifiable Health Information as codified in 45 CFR Parts
160 and 164.
1.2 "Security Standards" shall mean the Security Standards for the
Protection of Electronic Protected Health Information as codified in 45 CFR
Parts 160 and 164.
1.3 "Protected Health Information" or "PHI" shall mean any information,
whether oral or recorded in any form or medium: (i) that relates to the
past, present, or future physical or mental condition of an individual; the
provision of health care to an individual; or the past, present, or future
payment for the provision of health care to an individual; and (ii) that
identifies the individual, or with respect to which there is reasonable
basis to believe the information can be used to identify the individual,
and shall have the meaning given to such term in the Privacy Standards and
in the Security Standards.
2. BUSINESS ASSOCIATE OBLIGATIONS. Business Associate may receive from
--------------------------------
Health Care Provider health information that is protected under applicable state
and/or federal law, including without limitation, Protected Health Information.
Business Associate agrees not to use or disclose (or permit the use or
disclosure of) PHI in a manner that would violate the requirements of the
Privacy Standards or the Security Standards if the PHI were used or disclosed by
Health Care Provider in the same manner. Business Associate shall use
appropriate safeguards to prevent the use or disclosure of PHI other than as
expressly permitted under this Addendum.
3. USE OF PHI. Business Associate may use PHI only (i) for the purpose of
------------
performing services for Health Care Provider as such services are defined in the
Professional Business Management Agreement, and (ii) as necessary for the proper
management and administration of the Business Associate or to carry out its
legal responsibilities, provided that such uses are permitted under federal and
state law. Health Care Provider shall retain all rights in the PHI not granted
herein.
4. DISCLOSURE OF PHI. Business Associate may disclose PHI as necessary to
-------------------
perform its obligations under the Professional Business Management Agreement and
as permitted by law, provided that Business
41
Associate shall in such case: (a) obtain reasonable assurances from any person
to whom the information is disclosed that it will be held confidential and
further used and disclosed only as required by law or for the purpose for which
it was disclosed to the person or entity; (b) agree to immediately notify Health
Care Provider of any instances of which it is aware that PHI is being used or
disclosed for a purpose that is not otherwise provided for in this Addendum or
for a purpose not expressly permitted by the Privacy Standards or the Security
Standards; and (c) obtain reasonable assurances that all disclosures of PHI are
subject to the principle of "minimum necessary use and disclosure," i.e., only
the minimum PHI that is necessary to accomplish the intended purpose may be
disclosed. In addition, Business Associate may disclose PHI as required by law.
If Business Associate discloses PHI received from Health Care Provider, or
created or received by Business Associate on behalf of Health Care Provider, to
agents, including a subcontractor (collectively, "Recipients"), Business
Associate shall require Recipients to agree in writing to the same restrictions
and conditions that apply to the Business Associate under this Addendum.
Business Associate shall report to Health Care Provider any use or disclosure of
PHI not permitted by this Addendum, of which it becomes aware, such report to be
made within five (5) days of the Business Associate becoming aware of such use
or disclosure. Business Associate agrees to mitigate, to the extent practical
and unless otherwise requested by Health Care Provider in writing, any harmful
effect that is known to Business Associate and is the result of a use or
disclosure of PHI in violation of this Addendum.
5. INDIVIDUAL RIGHTS. If Business Associate maintains a Designated Record
------------------
Set on behalf of Health Care Provider, Business Associate shall (a) permit an
individual to inspect or copy PHI contained in that set about the individual
under conditions and limitations required under 45 CFR Sec. 164.524, as it may
be amended from time to time, and (b) amend PHI maintained by Business Associate
as requested by Health Care Provider. Business Associate shall respond to any
request from Health Care Provider for access by an individual within five (5)
days of such request and shall make any amendment requested by Health Care
Provider within ten (10) days of such request. The information shall be
provided in the form or format requested, if it is readily producible in such
form or format, or in summary, if the individual has agreed in advance to accept
the information in summary form. A reasonable, cost-based fee for copying PHI
may be charged. Business Associate shall accommodate an individual's right to
have access to PHI about the individual in a Designated Record Set in accordance
with the Privacy Standards set forth at 45 CFR Sec. 164.526, as it may be
amended from time to time, unless the regulation provides for a denial or an
exception expressly applies. Health Care Provider shall determine whether a
denial is appropriate or an exception applies. Business Associate shall notify
Health Care Provider within five (5) days of receipt of any request for access
or amendment by an individual. Business Associate shall have a process in place
for requests for amendments and for appending such requests to the Designated
Record Set.
6. ACCOUNTING OF DISCLOSURES. Business Associate shall make available to
---------------------------
Health Care Provider in response to a request from an individual, information
required for an accounting of disclosures of PHI with respect to the individual,
in accordance with 45 CFR Sec. 164.528, as it may be amended from time to time,
incorporating exceptions to such accounting designated under the regulation.
Such accounting is limited to disclosures that were made in the six (6) years
prior to the request and shall not include any disclosures that were made prior
to the compliance date of the Privacy Standards. Business Associate shall
provide such information necessary to provide an accounting within thirty (30)
days of Health Care Provider's request. Such accounting must be provided
without cost to the individual or to Health Care Provider if it is the first
accounting requested by an individual within any twelve (12) month period;
however, a reasonable, cost-based fee may be charged for subsequent accountings
if Business Associate informs the Health Care Provider and the Health Care
Provider informs the individual in advance of the
42
fee, and the individual is afforded an opportunity to withdraw or modify the
request. Such accounting shall be provided as long as Business Associate
maintains PHI.
7. WITHDRAWAL OF CONSENT OR AUTHORIZATION. If the use or disclosure of PHI
---------------------------------------
in this Addendum is based upon an individual's specific consent or authorization
for the use of his or her PHI, and (i) the individual revokes such consent or
authorization in writing, (ii) the effective date of such authorization has
expired, or (iii) the consent or authorization is found to be defective in any
manner that renders it invalid, Business Associate agrees, if it has notice of
such revocation or invalidity, to cease the use and disclosure of any such
individual's PHI except to the extent it has relied on such use or disclosure,
or where an exception under the Privacy Standards expressly applies.
8. RECORDS AND AUDIT. Business Associate shall make available to Health
-------------------
Care Provider and to the United States Department of Health and Human Services
or its agents, its internal practices, books, and records relating to the use
and disclosure of PHI received from, created, or received by Business Associate
on behalf of Health Care Provider for the purpose of determining Health Care
Provider's compliance with the Privacy Standards and the Security Standards or
any other health oversight agency, in a timely a manner designated by Health
Care Provider or the Secretary. Except to the extent prohibited by law,
Business Associate agrees to notify Health Care Provider immediately upon
receipt by Business Associate of any and all requests served upon Business
Associate for information or documents by or on behalf of any and all government
authorities.
9. NOTICE OF PRIVACY PRACTICES. Health Care Provider shall provide to
------------------------------
Business Associate its Notice of Privacy Practices ("Notice") when adopted and
any amendments thereafter.
10. CONFIDENTIALITY. Business Associate shall take any steps required to
---------------
(i) protect PHI from unauthorized uses or disclosures and (ii) maintain the
confidentiality and integrity of PHI. Prior to any permitted disclosure of PHI,
Business Associate shall require the person or entity to which it intends to
disclose PHI to assume all of the same duties with respect to PHI that Business
Associate has under this Addendum.
11. SECURITY. Business Associate will: implement administrative, physical,
--------
and technical safeguards that reasonably and appropriate protect the
confidentiality, integrity and availability of the electronic protected health
information that it creates, receives, maintains, or transmits on behalf of the
Health Care Provider; ensure that any agent, including a subcontractor, to whom
it provides such information agrees to implement reasonable and appropriate
safeguards to protect the information; and report any security incidents to the
Health Care Provider, in accordance with the Security Standards.
12. TERM AND TERMINATION.
----------------------
12.1 This Addendum shall commence on the Effective Date and shall remain in
effect until terminated in accordance with the terms of this Section 12;
provided, however, that any termination shall not affect the respective
obligations or rights of the parties arising under this Addendum prior to
the effective date of termination, all of which shall continue in
accordance with their terms.
43
12.2 Health Care Provider shall have the right to terminate this Addendum
for any reason upon thirty (30) days written notice to Business Associate.
12.3 Health Care Provider, at its sole discretion, may immediately terminate
this Addendum and shall have no further obligations to Business Associate
hereunder if any of the following events shall have occurred and be continuing:
(a) Business Associate shall fail to observe or perform any material
covenant or agreement contained in this Addendum for ten (10) days after
written notice thereof has been given to Business Associate by Health Care
Provider; or
(b) A violation by Business Associate of any provision of the Privacy
Standards, Security Standards, or other applicable federal or state privacy
law.
12.4 Upon the termination of the Professional Business Management Agreement,
this Addendum shall also terminate.
12.5 Upon termination, Business Associate agrees either to return to Health
Care Provider or to destroy all PHI received from Health Care Provider or
otherwise through the performance of services for Health Care Provider, that is
in the possession or control of Business Associate or its agents. In the case
of information for which it is not feasible to "return or destroy," Business
Associate shall continue to comply with the covenants in this Addendum with
respect to such PHI and shall comply with other applicable state or federal law,
which may require a specific period of retention, redaction, or other treatment.
Termination of this Addendum shall be cause for Health Care Provider to
terminate the Professional Business Management Agreement.
13. WAIVER. No provision of this Addendum or any breach thereof shall be
------
deemed waived unless such waiver is in writing and signed by the party claimed
to have waived such provision or breach. No waiver of a breach shall constitute
a waiver of or excuse any different or subsequent breach.
14. ASSIGNMENT. Neither party may assign (whether by operation or law or
----------
otherwise) any of its rights or delegate or subcontract any of its obligations
under this Addendum without the prior written consent of the other party.
Notwithstanding the foregoing, Health Care Provider shall have the right to
assign its rights and obligations hereunder to any entity that is an affiliate
or successor of Health Care Provider, without the prior approval of Business
Associate.
15. GOVERNING LAW. This Agreement shall be governed by and interpreted in
--------------
accordance with the laws of the State of Texas.
16. COUNTERPARTS. This Addendum may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
----
together shall constitute one and the same document. In making proof of this
Addendum, it shall not be necessary to produce or account for more than one such
counterpart executed by the party against whom enforcement of this Addendum is
sought.
44
EXHIBIT 4.3
PRESIDENT'S EMPLOYMENT AGREEMENT
--------------------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as of the
___ day of ____________, 2003, by and between Xxxxxxx X. Xxxxxx, O.D. &
Associates, P.C., a Georgia professional corporation (the "Company"), or its
assigns, and Xxxxxxx X. Xxxxxx, O.D. ("Executive");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive owns 100% of the ownership interest in the Company; and
WHEREAS, Executive is duly licensed to practice optometry in the State of
Georgia and desires to accept employment as an employee of the Company to
practice optometry and provide certain management services as an employee of the
Company;
WHEREAS, the Company desires to employ Executive on the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. Employment. The Company hereby employs Executive to serve as
----------
President of the Company, and Executive hereby accepts such employment, upon the
terms and conditions set forth herein.
2. Term. The term of this Agreement shall commence on the date hereof
----
(the "Effective Date") and shall terminate on day preceding the twenty-fifth
(25th) anniversary of the Effective Date, subject to earlier termination and
extension as hereinafter provided (the "Term"). Thereafter, this Agreement
shall automatically renew for successive five-year terms unless either party
gives written notice of its election not to renew at least thirty (30) days
prior to the end of the then current period. In the event of such extension,
all of the terms and conditions of this Agreement shall remain in full force and
effect.
3. Duties, Qualifications and Optometric Records. (a) During the
-------------------------------------------------
Term, Executive shall serve as the President of the Company with such title,
duties and responsibilities as established from time to time by the Board of
Directors of the Company (the "Board"), or such person who may be appointed by
the Board to oversee the operations of the Company. Such duties and
responsibilities shall include, but not be limited to, the management of the
other optometrists employed by the Company and the operations of the Company in
Georgia and such other states as the Company has operations. Executive agrees
that he will devote substantially all of his full professional time, attention
and energies to the business of the Company, and to the performance of his
duties hereunder. Executive shall not engage in the practice of optometry except
as an employee of the Company. Executive will at all times report to
the Board or such person who may be appointed by the Board to oversee the
operations of the Company and its direct and indirect subsidiaries and
affiliates. Executive shall abide by all of the Company's policies and
procedures, as may be adopted from time to time by the Company. Executive shall
maintain a valid and unrestricted license to practice optometry in each state or
other jurisdiction in which the Company provides optometry services.
(b) Executive shall, in accordance with the Company's policies, cause
to be properly prepared and filed reports of all examinations, procedures and
other professional services performed by himself and the other employees of the
Company. The ownership and right of control of all reports, records and
supporting documents prepared for and/or maintained by the Company belongs to
the Company. In addition, Executive shall promptly submit such additional
records as the Company deems to be required by any third party payors. In the
event that Executive's employment with the Company is terminated, to the extent
that Executive has any rights in such patient records, Executive agrees that
such rights will be transferred to, and the records shall remain with, the
Company, and Executive shall have no ongoing rights with respect thereto.
4. Compensation.
------------
(a) Base Compensation. During the term of this Agreement, the Company
------------------
shall pay to Executive a salary at an annual rate of $150,000 (the "Base
Salary"). The Base Salary shall be payable during the Term in substantially
equal installments not less frequently than monthly in accordance with the
Company's standard payroll policy or in such other installments as the parties
may mutually agree. The Base Salary shall be payable during the Term in
substantially equal installments not less frequently than monthly in accordance
with the Company's standard payroll policy or in such other installments as the
parties may mutually agree.
(b) Reimbursement of Expenses. The Company shall reimburse Executive,
--------------------------
in accordance with the Company's policy in effect from time to time, for all
reasonable travel, entertainment and other business expenses incurred by
Executive in the performance of his duties and responsibilities hereunder.
Notwithstanding the foregoing, Executive shall only be entitled to reimbursement
for continuing education and related expenses for only 6 days of seminars per
year and the reasonable travel and lodging related thereto.
(c) Net Payments. The amount of any gross payments provided for in
-------------
this Agreement shall be paid net of any applicable withholding required under
federal, state or local law.
5. Benefits. Executive shall be entitled to receive the benefits made
--------
available or applicable from time to time to the employees of the Company;
provided, however, that the receipt of such benefits by Executive shall be
subject to the Company's eligibility and enrollment requirements pertaining to
such benefit programs. Executive shall be eligible for four weeks paid vacation
per year in accordance with the Company's vacation policy.
6. Confidentiality and Competitive Activities.
---------------------------------------------
(a) Confidentiality. Executive acknowledges that during his employment
---------------
with the Company, the Company has and will continue to disclose to him the
confidential affairs and proprietary information of the Company and its
subsidiaries and affiliates which is developed by and belongs to the Company and
2
its subsidiaries and affiliates, including matters of a business nature such as
information about costs, profits, markets, sales, trade secrets, potential
patents and other business ideas, customer lists, supplier and vendor lists,
plans for future developments and/or acquisitions, and information of any other
kind not known within the optometric and optical professions or the optical
retail industry generally (collectively, "Confidential Matters"). Executive
further acknowledges that the Company would not hire Executive or disclose these
Confidential Matters to Executive without the promises made by Executive in this
Section 6. In light of the foregoing, Executive agrees:
(i) To keep secret all Confidential Matters and the confidential
affairs and proprietary information of any third party to whom the Company is
bound by a confidentiality agreement, and not to disclose them to anyone outside
of the Company or its subsidiaries or affiliates, or otherwise use them or use
his knowledge of them for his own benefit or for the benefit of any third party,
including, without limitation, use of the trade secrets, trade names or
trademarks of the Company, either during or after the Term, except with the
Company's prior written consent; and
(ii) To deliver promptly to the Company at the termination of the
Term, or at any time the Company may request, all memoranda, notices, records,
reports and other documents (and all copies thereof) relating to the business of
the Company or any of its subsidiaries or affiliates, including, but not limited
to, Confidential Matters, which he may then possess or have under his control.
Notwithstanding any of the foregoing, the term "Confidential Matters" does
not include information which (i) is or becomes generally available to the
public other than as a result of any disclosure by Executive or (ii) Executive
is compelled to disclose by judicial or administrative process; provided, that
in the case of any such requirement or purported requirement Executive shall
provide written notice to the Company prior to producing such information, which
notice shall be given at least ten (10) days prior to producing such
information, if practicable, so that the Company may seek a protective order or
other appropriate remedy.
(b) Competitive Activities. Executive expressly recognizes and
------------------------
acknowledges that the terms and condition of this Section 6(b) are reasonable as
to the time, area, and scope of restricted activity necessary to protect the
legitimate interests of the Company, and are not unduly burdensome to Executive.
During the Restricted Period (as hereinafter defined), Executive shall not,
directly or indirectly (whether for compensation or otherwise), alone or as
officer, director, stockholder (excepting stockholdings for investment purposes
of not more than 1% in securities of publicly held and traded companies),
partner, associate, employee, agent, principal, creditor, guarantor, trustee,
salesman, consultant, or any other capacity, take any action in or participate
with or become interested in or associated with any person, firm, partnership,
corporation or other entity whatsoever that is engaged in the optometric and/or
optical professions and/or the business of the retail sale of optical goods in
any of the geographic areas within three (3) miles of any of the practice
locations that is owned, operated or managed by the Company as of the date of
termination of employment or location in which the Company has affirmative plans
(evidenced by documentation) to commence operations as of the date of
termination of employment (such activities are hereinafter referred to as the
"Competitive Activities" and the restricted area is hereinafter referred to as
the "Restricted Area"). Notwithstanding the foregoing, Executive shall be
permitted to own and operate a single location for the purpose of operating an
optometric and/or optical practice and/or selling optical goods, provided that
such store is not affiliated with any national, regional or local optical
retailer or an optometric practice that owns and operates more than one practice
location and such store location is not within a three (3) mile radius of (i) a
location
3
that is owned, operated or managed by the Company as of the date of termination
of employment or (ii) a location in which the Company has affirmative plans
(evidenced by documentation) to commence operations as of the date of
termination of employment and Executive has actively participated in such plans.
The foregoing exceptions to the prohibitions against Competitive Activities
shall not release Executive, or waive any rights of the Company with respect to,
any of Executive's other covenants, obligations or duties hereunder including
without limitation, the provisions of Section 6(a), 6(c) and 6(d).
(c) Antisolicitation. Executive agrees that during the Restricted
----------------
Period, he will not influence or attempt to influence patients (including
customers with respect to managed care plans) of the Company or any of its
present or future direct or indirect subsidiaries or affiliates, either directly
or indirectly, to divert their business to any individual, partnership, firm,
corporation or other entity then in competition with the business of the Company
or any subsidiary or affiliate of the Company; provided this prohibition shall
not apply to general advertisements in newspapers or other widely distributed
publications, media, or mail, whether electronic or otherwise.
(d) Soliciting Employees. Executive agrees that during the Restricted
---------------------
Period, Executive shall not without the written consent of the Company, such
consent to be given only after Executive is no longer a shareholder of the
Company, directly or indirectly contact or solicit to employ or employ any of
the then current or past employees of the Company or any subsidiary or affiliate
of the Company unless such person shall have ceased to be employed by the
Company (or its subsidiary or affiliate, as the case may be) and such cessation
of employment shall have occurred at least twelve (12) months prior thereto;
provided this prohibition shall not apply to general advertisements in
newspapers or other widely distributed publications, media, or mail, whether
electronic or otherwise.
(e) The term "Restricted Period" shall mean the period commencing on
the Effective Date and ending as follows:
(i) if Executive's employment is terminated (for any reason) within
the 12-months following the date hereof, the period shall end twelve
(12) months after the date of the termination of employment;
(ii) if Executive's employment is terminated (for any reason) on or
after the first anniversary of the Effective Date and prior to the
second anniversary of the Effective Date, the period shall extend
after the date of termination of employment for that number of days
equal to the days between the date hereof and the termination of
Executive's employment; or
(iii) if Executive's employment is terminated (for any reason) on or
after the second anniversary of the Effective Date, the period shall
end twenty-four (24) months after the date of termination of
Executive's employment.
7. Remedies for Breach. In addition to the rights and remedies
---------------------
provided in Section 16, and without waiving the same, if Executive breaches, or
threatens to breach, any of the provisions of Section 6, the Company shall have
the following rights and remedies, in addition to any others, each of which
shall be independent of the other and severally enforceable:
4
(i) The right and remedy to have such provisions specifically enforced
by any court having equity jurisdiction together with an accounting for any
benefit or gain by Executive in connection with any such breach. Executive
specifically acknowledges and agrees that any breach or threatened breach of the
provisions of Section 6 will cause irreparable injury to the Company and that
money damages will not provide an adequate remedy to the Company, and
accordingly the Company shall have the right to injunctive relief in connection
with any such breach or threatened breach. Any injunction arising from the
exercise of such equity jurisdiction shall be available without the posting of
any bond or other security.
(ii) The right and remedy to require Executive to account for and pay
over to the Company all compensation, profits, monies, accruals, increments or
other benefits (hereinafter collectively the "Benefits") derived or received,
directly or indirectly, by Executive as a result of any transactions
constituting a breach of any of the provisions of Section 6, Executive hereby
agreeing to account for and pay over the Benefits to the Company.
(iii) The right to terminate Executive's employment pursuant to Section
8(c).
(iv) Upon discovery by the Company of a breach or threatened breach of
Section 6, the right to immediately suspend payments to Executive under Section
4, pending a resolution of the dispute.
If any covenant contained in Section 6 or any portion thereof is hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants contained therein, which shall be given
full effect, without regard to the invalid portions, and any court having
jurisdiction shall reform the covenant to the extent necessary to cause the
limitations contained therein as to time, geographical area and scope of
activity to be restrained to be reasonable and to impose a restraint that is not
greater than necessary to protect the goodwill and other business interest of
the Company and to enforce the covenant as reformed. The parties hereto intend
to and hereby confer jurisdiction to enforce the covenants contained in Section
6 upon the courts of any state or other jurisdiction in which any alleged breach
of any such covenant occurs. If the courts of any of one or more of such states
or other jurisdictions shall hold such covenants not wholly enforceable by
reason of the scope thereof or otherwise, it is the intention of the parties
hereto that such determination not bar or in any way affect the Company's right
to the relief provided above in the courts of any other states or jurisdictions
as to breaches of such covenants in such other respective states or
jurisdictions, the above covenants as they relate to each state or jurisdiction
being, for this purpose, severable into diverse and independent covenants. If
any court determines that such covenants are unenforceable, the Company shall be
relieved of all obligations under this Agreement and Executive shall not be
entitled to any payments which are suspended pursuant to Section 7(iv).
8. Termination of Agreement.
--------------------------
(a) Death. This Agreement shall automatically terminate upon the death
-----
of Executive. During the Term, if Executive's employment is terminated due to
his death, Executive's estate shall be entitled to receive the Base Salary set
forth in Section 4 accrued through the end of the month in which the death
occurs; provided, however, Executive's estate shall not be entitled to any bonus
payments
5
(except as otherwise provided in the applicable bonus plan) or any other
benefits (except as provided by law).
(b) Disability. If Executive is unable to perform his services by
----------
reason of mental or physical Disability (as herein defined), the Company may
terminate this Agreement at any time. Upon termination of Executive's employment
due to Disability, Executive shall be entitled to receive the Base Salary set
forth in Section 4 accrued through the date on which Executive is first eligible
to receive payment of disability benefits under the employee benefit plans as
then in effect, and if no such plan is in effect, through the month ending one
hundred eighty (180) days after onset of Disability and Executive shall not be
entitled to any bonus payments (except as otherwise provided in the applicable
bonus plan) or any other benefits (except as provided by law). The term
"Disability" shall mean an infirmity preventing Executive from performing his
duties for a period of more than three (3) consecutive months where no
reasonable accommodation is available or where a reasonable accommodation would
create an undue burden on the Company. Any question as to the existence of
Disability of Executive as to which Executive and the Company cannot agree shall
be determined in writing by a qualified independent physician mutually
acceptable to Executive and the Company. If Executive and the Company cannot
agree as to a qualified independent physician, each shall appoint such a
physician and those two physicians shall select a third who shall make such
determination in writing. The determination of Disability made in writing to
the Company and Executive shall be final and conclusive for all purposes of the
Agreement.
(c) Termination For Cause. The Company may terminate this Agreement at
---------------------
any time for "Cause" in accordance with the procedures provided below.
Termination of this Agreement for "Cause" shall mean termination upon (i) the
breach of any material provision of this Agreement by Executive, (ii) commission
(not merely an accusation) of an act punishable by imprisonment which is
reasonably likely to have a material adverse effect on the Company or interfere
with Executive's duties hereunder, (iii) willful and continued failure to
substantially perform his duties hereunder (other than as a result of total or
partial incapacity due to physical or mental illness), (iv) the engaging by
Executive in conduct that is injurious to the Company, monetarily or otherwise,
including, without limitation, embezzlement, fraud, theft, dishonesty,
misfeasance, insubordination, malfeasance, and neglect of duties, (v) violation
of the Company's ethics policy or any material violation or repeated violations
by Executive of the other policies and procedures promulgated from time to time
by the Company, (vi) current alcohol or drug abuse by Executive, (vii) the
suspension, revocation or cancellation of Employee's right to practice optometry
in any state or the District of Columbia, (viii) Executive ceases to be the sole
shareholder of the Company, or (ix) the termination of the Professional Business
Management Agreement between the Company and EyeMasters, Inc. In the event of
termination of Executive's employment for Cause, Executive shall be entitled to
receive only the Base Salary set forth in Section 4 accrued through the date of
termination and he shall not be entitled to any bonus payments or other benefits
(except as provided by law).
(d) Other Termination by the Company. The Company may terminate this
----------------------------------
Agreement at any time without "Cause" by providing thirty (30) days prior
written notice to Executive. If the Company terminates this Agreement at any
time without Cause (i.e., other than pursuant to Section 8(b) or (8(c) above) or
the Company elects not to renew the Term as provided in Section 2 hereof, the
Company shall be obligated to pay Executive, and Executive shall be entitled to
receive only, the Base Salary set forth in Section 4 accrued through the date of
termination and he shall not be entitled to any bonus payments or other benefits
(except as provided by law). Notwithstanding the notice provided by the Company,
the
6
Company, in its sole discretion, may choose to immediately terminate Executive's
employment. In that event, the Company's only obligation to Executive will be to
pay the Base Salary that Executive would have received during the notice period.
(e) Termination by Executive. Executive may terminate this Agreement
--------------------------
upon thirty (30) days prior written notice to the Company; provided, however,
Executive shall not be entitled to terminate this Agreement so long as he is a
shareholder of the Company. Termination shall be effective at the expiration of
the notice period. All obligations of the Company under this Agreement shall
end on the effective date of termination and the Company shall have no further
obligations under this Agreement, including, but not limited to payment of
salary, bonuses or any similar compensation or benefits. Notwithstanding the
notice provided by Executive, the Company, in its sole discretion, may choose to
accept Executive's resignation immediately. In that event, the Company's only
obligation to Executive will be to pay the Base Salary that Executive would have
received during the notice period.
9. Effect of Termination. Upon the termination of this Agreement,
-----------------------
whether by the expiration of the Term specified in Section 2 or pursuant to
Section 8, the rights of Executive which shall have accrued prior to the date of
such termination shall not be affected in any way. Executive shall not have any
rights which have not previously accrued upon termination of this Agreement.
10. Fees. The Company shall have the exclusive authority to determine
----
the amount and nature of all fees and the procedure for establishing the fees to
be charged patients of the Company, even though such patients might be treated
solely by Executive in the course of Executive's employment by the Company.
11. Ownership of Fees and Income. All income generated by Executive
-------------------------------
for Executive's professional services and all activities related thereto shall
belong to the Company, whether paid directly to the Company or to Executive.
Executive may be required (and agrees upon request of the Company so to do) to
render a true accounting of all transactions relating to Executive's practice
during the course of his employment.
12. Communications. All notices and other communications under this
--------------
Agreement shall be in writing and shall be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is mailed
by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the respective addresses set forth below,
or to such other addresses as either party may have furnished to the other in
writing in accordance herewith, except that notice of a change of address shall
be effective only upon actual receipt; to the Company:
__________________________________________, for the attention of the President;
and to Executive: _________________________________________________________.
13. Amendments or Additions. No amendments or additions to this
-------------------------
Agreement shall be binding or effective unless in writing and signed by all
parties hereto.
14. Binding Effect; Assignability. This Agreement shall be binding
-------------------------------
upon, and shall inure to the benefit of, Executive; the obligations of Executive
hereunder are personal, and this Agreement may not be assigned by Executive.
This Agreement is completely assignable by the Company without notice to or
consent of Executive. This Agreement shall be binding upon, and shall inure to
the benefit of, the
7
Company and shall also bind and inure to the benefit of any successor of the
Company by merger or consolidation or any assignee of all or substantially all
of its properties.
15. Headings; References. The headings used in this Agreement are
---------------------
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement. References to a "Section" when used
without further attribution shall refer to the particular sections of this
Agreement.
16. Binding Arbitration. Subject to the rights of any party to seek
---------------------
injunctive relief pursuant to Section 7 above and without waiving the same, the
parties agree that all disputes, controversies or claims that may arise among
them (including their agents and employees), arising out of or relating to this
Agreement, or the breach, termination or invalidity thereof, shall be submitted
to, and determined by, binding arbitration. Such arbitration shall be conducted
before a single arbitrator pursuant to the Commercial Arbitration Rules then in
effect of the American Arbitration Association, except to the extent such rules
are inconsistent with this Section 16. Except as otherwise provided in this
Agreement, the arbitrator shall apply the laws of the State of Georgia (without
regard to conflict of law rules) in determining the substance of the dispute,
controversy or claim and shall decide the same in accordance with applicable
usages and terms of trade. The fees of the arbitration initially shall be paid
one-half by the Company and one-half by Executive; provided, however, that the
prevailing party in any such arbitration shall be entitled to recover its
reasonable attorneys' fees, costs and expenses incurred in connection with the
arbitration. Any award pursuant to such arbitration shall be final and binding
upon the parties, and judgment on the award may be entered in any federal or
state court having jurisdiction. The obligations set forth in this Section 16
shall survive the termination of this Agreement. THE COMPANY AND EXECUTIVE EACH
KNOWINGLY AND VOLUNTARILY GIVE UP ANY RIGHT TO A TRIAL BY JURY IN CONNECTION
WITH ANY DISPUTE, CLAIM OR CONTROVERSY WHICH MAY ARISE BETWEEN THEM.
17. Miscellaneous. No provision of this Agreement may be modified,
-------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Georgia without regard to its conflicts of law
principles.
18. Surviving Provisions. The obligations of the Company under Section
--------------------
8, of Executive under Sections 3(b), 6 and 7, and of both the Company and
Executive under Section 16 shall survive the expiration of the Term of this
Agreement.
19. Entire Agreement. This Agreement shall constitute the entire
-----------------
agreement between the parties, superseding all prior agreements and all other
negotiations, letters of intent, memoranda of understandings, and
representations (if any) made by and among such parties, and may not be modified
or amended, and no waiver shall be effective, unless by written document signed
by both parties hereto. The Company and Executive have each had an opportunity
to consult with counsel of their choice
8
regarding the terms and conditions of this Agreement, and each understands the
consequences of entering into and complying with the terms and conditions of the
Agreement.
20. Pronouns. In this Agreement, the use of any gender shall be deemed
--------
to include all genders, and the use of the singular shall include the plural,
wherever it appears appropriate from the context.
21. Enforcement Costs. If any legal action or other proceeding,
------------------
including arbitration, is brought for the enforcement of this Agreement, or
because of an alleged dispute, breach, default or misrepresentation in
connection with any provisions of this Agreement, the prevailing party or
parties shall be entitled to recover reasonable attorneys' fees, court costs and
all expenses even if not taxable as court costs, incurred in that action or
proceeding, in addition to any other relief to which such party or parties may
be entitled.
22. Severability. The provisions of this Agreement shall be deemed
------------
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
23. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first above written.
XXXXXXX X. XXXXXX, O.D. & ASSOCIATES, P.C.
By_______________________________:
Xxxxxxx X. Xxxxxx, O.D., President
EXECUTIVE:
By_______________________________:
Xxxxxxx X. Xxxxxx, O.D.
9
EXHIBIT 4.12
SHAREHOLDERS' UNDERTAKING TO MAINTAIN PRACTICE'S
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CORPORATE EXISTENCE AND BE BOUND BY COVENANT
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NOT TO COMPETE
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As an inducement to the Professional Business Manager to enter into this
Professional Business Management Agreement with the Practice or as required in
the Professional Business Management Agreement, each of the undersigned
person(s), having an ownership interest in the Practice, irrevocably and
unconditionally covenants and agrees to maintain in good standing the corporate
existence of the Practice under the laws of the state of Georgia, and to cause
the Practice to abide by the restrictive covenants in Section 4.7 of the
Professional Business Management Agreement. The undersigned persons further
unconditionally covenant and agree to indemnify and hold harmless Professional
Business Manager from and against any and all claims requirements, demands,
liabilities, losses, damages, costs and expenses, including reasonable
attorneys' fees, resulting in any manner from the failure of the Practice to
remain in good standing under the laws of Georgia or the failure of the Practice
to abide by the restrictive covenants described in Section 4.7 of such
Professional Business Management Agreement, a copy of which has been delivered
to the undersigned for his review, to the extent then required by Professional
Business Manager. The undersigned acknowledges that he or she has received
adequate consideration for the execution hereof. This undertaking may be
assumed by a successor to Shareholder or Shareholders, whereupon the undersigned
shall be released to the extent of such assumption, provided that any such
successor Shareholder executes a form similar to this.
IN WITNESS WHEREOF, the undersigned(s) have executed this Shareholders'
Undertaking as of the day and year written opposite such Shareholder's name.
Date: _____________________, 2003 _______________________
Xxxxxxx X. Xxxxxx, O.D.
EXHIBIT 5.1
BASE MANAGEMENT FEE
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During the initial 18 month period of the Agreement, the Management Fee shall be
equal to $3,700 per month for each Office location in operation during such
month; provided, however, with respect to any Office location open during a
portion of such month, the monthly management fee with respect to such Office
location shall be prorated for the portion of the month such Office was in
operation. On or before the eighteenth (18th) month anniversary of the date
hereof, and on or before the end of each subsequent twelve (12) month period,
the Management Fee for the remaining term of the Agreement shall be adjusted as
may be mutually agreed to by the Parties. In the event that the Parties are
unable to agree upon the Management Fee (the period during which the Management
Fee has not been mutually agreed upon is hereinafter referred to as the
"Unresolved Period"), then the Management Fee for the previous eighteen (18)
month period or twelve (12) month period, as the case may be, shall remain in
effect until the parties are able to mutually agree upon the Management Fee for
the Unresolved Period and the Business Manager may, in its sole discretion,
terminate this Agreement at any time during such Unresolved Period in accordance
with Section 6.2 of the Agreement. Thereafter, the Management Fee may be
revised only upon the mutual agreement of both of the parties.
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