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EXHIBIT 10.47
MANAGEMENT SERVICES AGREEMENT
by and among
ENT Associates, LLP
PSC Management Corp.
and
Physicians' Specialty Corp.
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TABLE OF CONTENTS
SECTION 1. KEY DEFINITIONS........................................................................................1
1.1 GAAP.......................................................................................................1
1.2 NET PRACTICE REVENUES......................................................................................2
1.3 PHYSICIAN EXPENSES.........................................................................................2
1.4 PHYSICIAN PARTNERS.........................................................................................2
1.5 PRACTICE EMPLOYEES.........................................................................................2
1.6 PRACTICE EXPENSES..........................................................................................2
1.7 STATE......................................................................................................4
1.8 STOCK PURCHASE AGREEMENT...................................................................................4
SECTION 2. ADVISORY BOARD.........................................................................................4
2.1 FORMATION AND OPERATION OF THE ADVISORY BOARD..............................................................4
2.2 FUNCTIONS OF THE ADVISORY BOARD............................................................................5
SECTION 3. OBLIGATIONS OF MANAGER.................................................................................6
3.1 PROVISION OF SERVICES......................................................................................6
3.2 MEDICAL OFFICES............................................................................................6
3.3 FURNITURE, FIXTURES AND EQUIPMENT..........................................................................7
3.4 FINANCIAL PLANNING AND GOALS...............................................................................7
3.5 BUSINESS OFFICE SERVICES...................................................................................7
3.6 BILLING AND COLLECTIONS....................................................................................8
3.7 DEPOSIT OF NET PRACTICE REVENUES...........................................................................9
3.8 FINANCIAL REPORTS.........................................................................................10
3.9 SUPPORT SERVICES..........................................................................................10
3.10 ADMINISTRATOR............................................................................................10
3.11 PERSONNEL................................................................................................11
3.12 PROFESSIONAL SERVICES....................................................................................12
3.13 PATIENT AND FINANCIAL RECORDS............................................................................12
3.14 PHYSICIAN RECRUITMENT....................................................................................12
3.15 EXPANSION OF PRACTICE....................................................................................13
3.16 PERFORMANCE OF BUSINESS OFFICE SERVICES..................................................................13
3.17 FORCE MAJEURE............................................................................................13
3.18 PAYMENT OF PRACTICE EXPENSES AND MANAGEMENT FEE..........................................................13
3.19 BUDGETS..................................................................................................14
3.20 OTHER MANAGEMENT AGREEMENTS..............................................................................15
3.21 CONFIDENTIAL INFORMATION.................................................................................16
SECTION 4. OBLIGATIONS OF PRACTICE...............................................................................16
4.1 PHYSICIAN EXPENSES........................................................................................16
4.2 PROFESSIONAL STANDARDS....................................................................................16
4.3 PROVIDER AND PAYOR RELATIONSHIPS..........................................................................18
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4.4 PHYSICIAN CONTRACTS AND POWERS OF ATTORNEY................................................................18
4.5 RESTRICTIVE COVENANTS.....................................................................................19
4.6 PROFESSIONAL DUES AND EDUCATION EXPENSES..................................................................21
4.7 PROVISION OF SERVICES BY PRACTICE.........................................................................21
4.8 PHYSICIAN PARTNERSHIP AND EMPLOYMENT AGREEMENTS...........................................................22
SECTION 5. FINANCING MATTERS.....................................................................................22
5.1 MECHANICS OF TRANSFERS....................................................................................22
5.2 ASSIGNMENT OF SECURITY INTEREST...........................................................................23
5.3 MANAGEMENT FEES...........................................................................................24
SECTION 6. TERM AND TERMINATION..................................................................................25
6.1 TERM......................................................................................................25
6.2 TERMINATION...............................................................................................25
6.3 REMEDIES UPON TERMINATION.................................................................................28
6.4 REPURCHASE OF ASSETS......................................................................................28
6.5 EARLY TERMINATION OF AGREEMENT............................................................................29
SECTION 7. REPRESENTATIONS AND WARRANTIES........................................................................29
7.1 REPRESENTATIONS AND WARRANTIES OF PRACTICE................................................................29
7.2 REPRESENTATIONS AND WARRANTIES OF MANAGER.................................................................30
SECTION 8. INSURANCE AND INDEMNITY...............................................................................30
8.1 INSURANCE TO BE MAINTAINED BY PRACTICE....................................................................30
8.2 INDEMNIFICATION BY MANAGER................................................................................31
8.3 INDEMNIFICATION BY PRACTICE...............................................................................31
8.4 INDEMNIFICATION PROCEDURE.................................................................................31
8.5 KEY MAN INSURANCE.........................................................................................32
8.6 NO PUNITIVE OR CONSEQUENTIAL DAMAGES......................................................................32
SECTION 9. ASSIGNMENT............................................................................................32
SECTION 10. COMPLIANCE WITH REGULATIONS..........................................................................33
10.1 PRACTICE OF MEDICINE.....................................................................................33
10.2 SUBCONTRACTS.............................................................................................33
SECTION 11. INDEPENDENT RELATIONSHIP.............................................................................34
11.1 INDEPENDENT CONTRACTOR STATUS............................................................................34
11.2 REFERRAL ARRANGEMENTS....................................................................................35
SECTION 12. GUARANTEES...........................................................................................35
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SECTION 13. NAME; LICENSE........................................................................................37
SECTION 14. MISCELLANEOUS........................................................................................37
14.1 NOTICES..................................................................................................37
14.2 ADDITIONAL ACTS..........................................................................................38
14.3 GOVERNING LAW............................................................................................38
14.4 CAPTIONS, ETC............................................................................................38
14.5 SEVERABILITY.............................................................................................38
14.6 MODIFICATIONS............................................................................................38
14.7 NO RULE OF CONSTRUCTION..................................................................................38
14.8 COUNTERPARTS.............................................................................................39
14.9 BINDING EFFECT...........................................................................................39
14.10 ENFORCEMENT RIGHTS......................................................................................39
14.11 ARBITRATION.............................................................................................39
14.12 COSTS OF ENFORCEMENT....................................................................................40
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MANAGEMENT SERVICES AGREEMENT
MANAGEMENT SERVICES AGREEMENT, effective as of ____________, 1998 (the
"Effective Date"), by and among ENT ASSOCIATES, LLP, a New York professional
limited liability partnership (the "Practice"); PSC MANAGEMENT CORP., a Delaware
corporation ("Manager"); PHYSICIANS' SPECIALTY CORP., a Delaware corporation
("Parent"); and the PHYSICIAN PARTNERS who are signatories hereto for purposes
of Section 12(b) hereof.
WITNESSETH:
WHEREAS, Manager is a wholly-owned subsidiary of Parent and is in the
business of managing medical practices and providing management services to
individual physicians and physician practice groups;
WHEREAS, subject to the terms and conditions of this Agreement,
Practice desires to engage Manager to provide to Practice management services,
facilities, personnel, equipment and supplies necessary for the medical practice
conducted by Practice, and Manager desires to accept such engagement;
WHEREAS, Parent joins in this Agreement to guarantee the performance by
Manager of its obligations hereunder.
NOW THEREFORE, in consideration of the premises and the covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged by the
parties to this Agreement, Practices, Manager and Parent (collectively, the
"Parties") hereby agree as follows:
SECTION 1 KEY DEFINITIONS.
For purposes of this Agreement, the following are certain important
defined terms used in this Agreement (a list of defined terms is set forth on
Appendix A).
1.1 GAAP. The term "GAAP" shall mean generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants, in
statements and pronouncements of the Financial Accounting Standards Board, in
such other statements by such other entity, or other practices and procedures as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination. For purposes of
this Agreement, GAAP shall be applied in a manner consistent with the practices
used by Parent and Manager.
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1.2 NET PRACTICE REVENUES. The term "Net Practice Revenues" shall
mean all revenues, computed on an accrual basis as defined by GAAP, (after
taking into account adjustments for uncollectible accounts, discounts,
contractual allowances, Medicare, Medicaid, CHAMPUS, workers' compensation,
professional courtesy discounts and other write-offs) generated by or on behalf
of Practice or its employees as a result of professional medical services
furnished to patients, and other fees or income generated by such persons in
their capacity as Physician Partners, Practice Employees and employees of
Practice, whether rendered in an inpatient or outpatient setting and whether
generated from health maintenance organizations, preferred provider
organizations, Medicare, Medicaid or rendered to other patients, including, but
not limited to, payments received under any capitation or risk withhold
arrangements. The term "Net Practice Revenues" shall also include any ancillary
services (e.g., hearing aids) revenues for services provided at the Medical
Offices.
1.3 PHYSICIAN EXPENSES. The term "Physician Expenses" is defined
in Section 4.1 of this Agreement.
1.4 PHYSICIAN PARTNERS. The term "Physician Partners" shall mean
those individuals who are duly licensed to practice medicine in the State and
who are partners of Practice.
1.5 PRACTICE EMPLOYEES. The term "Practice Employees" shall mean:
(a) those individuals who are duly licensed to practice medicine in the State
and who are employees of Practice (other than Physician Partners), and those
individuals who are otherwise under contract with Practice to provide physician
and/or medical services to patients, specifically including nurse practitioners,
certified registered nurse anesthetists, physician assistants, Fellows, surgical
assistants, certified nurse midwives, individuals with a Masters in Social Work
degree, physical therapists, audiologists and similar speech, hearing and
language professionals, and psychologists with a Masters or a Doctorate degree;
and (b) those individuals (other than those described in Section 1.5(a))
required by law, regulatory authority or policy as of the Effective Date, who
must be billed through and by a licensed physician and who are therefore
required to be employees of the Practice.
1.6 PRACTICE EXPENSES. The term "Practice Expenses" shall mean all
direct expenses incurred in the operation of the medical practice of Practice at
the local central billing office serving the Practice (the "CBO") and at the
"Medical Offices" (as defined in Section 3.1), whether by Manager or by
Practice, including, but not limited to: (a) depreciation and amortization (as
hereinbelow provided), salaries, benefits and other direct costs of all
employees and independent contractors of Practice (but not including salaries,
benefits or other direct costs of "Practice Employees" (as defined in Section
1.5) or "Physician Partners" (as defined in Section 1.4)); (b) rent and other
obligations under leases or subleases for the Medical Offices, CBO, off-site
storage and equipment used by Practice (including, but not limited to, all
leases acquired or assigned in connection with the acquisition of the shares
under the "Stock Purchase Agreement", as defined in Section 1.8); (c) personal
property taxes, use taxes and intangible taxes assessed against assets used by
Practice at a Medical Office or CBO; (d) charitable contributions budgeted and
approved by Manager and Practice; (e) interest expense on indebtedness of or
specifically related to the medical practice and/or expansion of Practice,
including, without limitation, interest expense in connection with capital
expenditures, provided
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if funded by Manager such interest charge will be at the same rate as Manager's
senior borrowing rate, (f) utility expenses relating to the CBO and Medical
Offices; (g) management fees as provided in Section 5.3 in payment for its
services and non-allocable costs incurred by Manager attributable to the
provision of management services; (h) expenses associated with the termination,
freezing or other administration of the "Corporation Plans" as defined in the
Stock Purchase Agreement; (i) other expenses incurred by Practice or Manager in
carrying out their respective obligations under this Agreement, except as
otherwise provided herein; (j) amounts paid by Manager in reimbursement of
Practice pursuant to Section 4.1 for salaries and benefits paid by Practice for
those individuals described in Section 1.5(b); (k) costs of employees and agents
providing personal services to particular Physician Partners or Practice
Employees; (l) any reserves reasonably deemed prudent by Advisory Board for
anticipated costs or expenses of the medical practice of Practice; (m) the cost
of the "Mediator" to the extent provided in Section 11.1(b) below; and (n)
50% of travel and travel related expenses for a period not to exceed six (6)
months following the commencement of service under this Agreement (the
"TransitionalPeriod") for employees of Manager's corporate office for work at
the CBO and Medical Offices in connection with the integration of Practice's
operational systems with and into Manager's operational systems.
For purposes of calculating the depreciation component of Practice
Expenses under subsection (a) above, the parties agree that (i) depreciation
shall be charged on a straight-line basis in accordance with GAAP over a
seven-year period in the amount of $2,250,000 [2,400,000-150,000 for New Jersey
MSA] with respect to the depreciable personal property on the books of the
"Corporations" when acquired under the Stock Purchase Agreement (including,
without limitation, assets acquired by any such Corporation from Physicians
Domain, Inc.), and (ii) depreciation with respect to capitalized items acquired
by Manager after the date of this Agreement pursuant to Section 3.3(b) and
depreciable property acquired pursuant to acquisition of assets of other
practices which merge into or with Practice after the date of this Agreement
shall be charged as Practice Expenses on a straight-line basis in accordance
with GAAP. For purposes of calculating the amortization component of Practice
Expenses under subsection (a) above, the parties agree that amortization shall
be charged on a straight-line basis in accordance with GAAP over a 25-year
period with respect to goodwill on the books of the Corporations when acquired
under the Stock Purchase Agreement, or on the books of any other corporations or
entities acquired after the date of this Agreement with respect to other
practices which merge into or with Practice.
The term "Practice Expenses" shall not include, among other things: (1)
any federal, state or local income or corporate franchise taxes of Manager, or
the costs of preparing federal, state or local tax returns; (2) any salaries or
benefits payable to Practice Employees or Physician Partners, except as covered
under subsection (i) above; (3) physician licensure fees, board certification
fees and costs of membership in professional associations for Practice Employees
and Physician Partners; (4) costs of continuing professional education for
Practice Employees and Physician Partners; (5) costs associated with legal,
accounting and professional services incurred by or on behalf of Practice other
than as described in the first sentence of Section 3.11; (6) costs of medical
malpractice insurance for Practice, its Physician Partners and Practice
Employees, and any liability judgments assessed against Practice, Practice
Employees or Physician Partners in excess of policy limits; (7) direct personal
expenses of Physician Partners
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or Practice Employees of a kind which are customarily charged to Physician
Partners and Practice Employees (including, but not limited to, cellular phone
expenses, car allowances and like expenses); (8) capital expenditures except to
the extent of depreciation and amortization (computed as provided above); (9)
interest expense on or amortization of acquisition costs incurred by Parent or
its affiliates in connection with the acquisition of the Corporations pursuant
to the Stock Purchase Agreement; (10) interest expense on or amortization of
acquisition costs incurred by Parent or its affiliates in connection with the
acquisition of the non-medical assets of additional medical practices which are
subsequently merged with and into the Practice; (11) salaries and benefits of
CBO personnel (and related overhead) when performing services other than for
Practice as described in Section 3.10(d); (12) transition costs incurred by
Manager associated with the integration of Practice's operational systems with
and into Manager's operational systems during the Transition Period (with the
exception of 50% of travel and travel related expenses as described in
subsection (n) above; or (13) any costs or expenses not designated in this
Agreement as being Practice Expenses or costs and expenses designated as the
responsibility of Manager.
Practice Expenses incurred in any annual budget period in excess of
120% of budgeted amounts (measured on an aggregate, not line item, basis) shall
be the sole obligation of Manager, unless incurrence of such expenses is
pursuant to an acquisition, expansion, addition or other item or service
approved by the Advisory Board described in Section 2.1 below or otherwise
approved or requested by Practice, in which event such expenses shall be deemed
proper. Approval of the Advisory Board or Practice of expenses in excess of
budgeted amounts shall not be unreasonably withheld if the expenses are
commercially reasonable in nature and amount under the circumstances.
1.7 STATE. The term "State" shall mean the State of New York,
which is where the medical practice of Practice is located.
1.8 STOCK PURCHASE AGREEMENT. The term "Stock Purchase Agreement"
shall mean that certain Stock Purchase Agreement dated ___________, 1998 by and
among Parent, PSC Acquisition Corp., and the Physician Partners.
SECTION 2. ADVISORY BOARD.
2.1 FORMATION AND OPERATION OF THE ADVISORY BOARD. Manager and
Practice shall establish an Advisory Board responsible for advising Manager in
connection with the development of management and administrative policies for
the overall operation of the medical practice of Practice. The Advisory Board
shall consist of four (4) members. Manager shall designate, in its sole
discretion and from time to time, two (2) members of the Advisory Board.
Practice shall designate, in its sole discretion and from time to time, two (2)
members of the Advisory Board. Except as may otherwise be provided, the act of a
majority of the members of the Advisory Board shall be the act of the Advisory
Board.
2.2 FUNCTIONS OF THE ADVISORY BOARD. The Advisory Board shall
review, evaluate and make recommendations to Practice and Manager with respect
to the following matters:
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(a) Annual Budgets. All annual capital and operating budgets
prepared by Manager, as set forth in Sections 3.4 and 3.19, shall be subject to
review and approval by the Advisory Board, which may recommend changes therein.
(b) Physician Employment and Recruitment. The Advisory Board
shall advise Manager and Practice with respect to the types of physicians
required for the efficient operation of the medical practice of Practice and the
content of all physician employment and recruitment contracts to be utilized by
Practice. Before any binding offer of employment is extended by Practice,
Practice shall provide Manager at least fifteen (15) days prior notice.
(c) Strategic Planning. The Advisory Board shall make
recommendations to Manager regarding the development of long-term strategic
planning objectives for Practice.
(d) Capital Expenditures. The Advisory Board shall make
recommendations to Manager regarding the priority of major capital expenditures
for the medical practice of Practice.
(e) Capital Improvements and Expansion. Any renovation and
expansion plans and capital equipment expenditures with respect to the
operations of the medical practice of Practice shall be subject to the Advisory
Board's approval and shall be based, in the reasonable judgment of Manager, upon
economic feasibility, physician support, productivity and then-current market
conditions.
(f) Provider and Payor Relationships. The Advisory Board shall
review and advise Manager and Practice with respect to the establishment or
maintenance of relationships with institutional healthcare providers and payors.
(g) Ancillary Services. The Advisory Board shall review and
make recommendations to Manager and Practice regarding the provision of
ancillary services based upon the pricing, access to and quality of such
services.
(h) Collection Policies. At least annually, the Advisory Board
shall, based upon recommendations by Manager and Practice, review and adopt
collection policies for the Practice.
(i) Advertising. The Advisory Board shall advise Practice with
respect to advertising and other marketing of services including design of
signage, logo and letterhead. All such advertising and marketing shall be in
accordance with Title 8 of Article 131 of the New York Education Law and Title
IIA of Article Two of the New York Public Health Law.
(j) Exceptions to Inclusion in Net Practice Revenues. The
Advisory Board will review and make recommendations to Manager and Practice with
respect to the proposed exclusion of any revenue from Net Practice Revenues.
(k) Grievance Referrals. The Advisory Board shall consider,
review and make recommendations to Manager and Practice with respect to any
matters arising in
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connection with the operations of Practice that are not specifically addressed
in this Agreement and as to which Manager or Practice requests consideration by
the Advisory Board.
(l) Quality Assurance and Utilization Review. The Advisory
Board shall advise Manager and Practice regarding all quality assurance and
utilization review programs undertaken by Practice either independently or in
connection with any managed care contracts maintained by Practice, and Manager
shall assist the Practice in preparing, reviewing, revising and performing the
quality assurance and utilization review functions of the Practice in
consultation with the Advisory Board.
Notwithstanding any contrary provision of this Agreement, it is acknowledged and
agreed that other than as provided in Section 2.2(a), recommendations of the
Advisory Board are intended for the advice and guidance of Manager and Practice
and that the Advisory Board does not have the power to bind Manager or Practice.
Where discretion with respect to any matter is vested in Practice under the
terms of this Agreement, Practice shall have ultimate responsibility for the
exercise of such discretion, notwithstanding any recommendation of the Advisory
Board. Where discretion with respect to any matter is vested in Manager under
the terms of this Agreement, Manager shall have ultimate responsibility for the
exercise of such discretion, notwithstanding any recommendation of the Advisory
Board. Manager and Practice shall, however, take such recommendations of the
Advisory Board into account in good faith in the exercise of such discretion.
SECTION 3. OBLIGATIONS OF MANAGER.
3.1 PROVISION OF SERVICES. Practice hereby engages Manager for the
term of this Agreement, and Manager hereby accepts such engagement, to provide
to Practice the business management services, personnel, equipment and supplies
provided for in this Agreement (collectively "Management Services"). Manager
shall provide the Management Services at the medical offices leased by Manager
or its affiliate located at those locations set forth on Exhibit 3.1, as amended
from time to time to reflect such other place or places for offices as may be
agreed upon by Manager and Practice. The medical offices or such other places at
which the Management Services are to be provided are referred to as the "Medical
Offices."
3.2 MEDICAL OFFICES. Manager or its affiliate shall, subject to
Practice obtaining necessary consents, take assignment of and assume leases for
Medical Offices and facilities located at the locations described on Exhibit 3.1
and shall pay out of Net Practice Revenues or other sources all rent due from
the Effective Date forward with respect to the Medical Offices, and all costs of
repairs, maintenance and improvements, telephone, electric, gas and water
utility expenses, insurance, normal janitorial services, refuse disposal and all
other costs and expenses reasonably incurred in connection with the operations
of Practice including, but not limited to, related real or personal property
lease payments and expenses, taxes and insurance. Manager shall be responsible
for maintenance of the Medical Offices and FFE, as defined hereinafter, in good
repair, normal wear and tear excepted. Subject to Advisory Board approval of
subleases, if any, Practice shall be entitled to be the exclusive medical
provider at the Medical Offices. Manager shall consult with Practice with
respect to the condition, use and needs of the Medical Offices, as expanded,
improved or relocated from time to time. The Medical Office shall be used
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by the Practice and by the Manager in providing its services under this
Agreement to such Medical Office.
3.3 FURNITURE, FIXTURES AND EQUIPMENT. Manager agrees to provide
or have provided to Medical Offices those supplies and items of furniture,
fixtures and equipment as are customarily required for the Practice and as are
determined by Manager, and approved by Practice, to be necessary and/or
appropriate for Practice's proper and effective operations at the Medical
Offices during the term of this Agreement (all such items of furniture, fixtures
and equipment are collectively referred to hereinafter as the "FFE") subject,
however, to the following conditions:
(a) Practice shall have the use of the FFE only during the
term of this Agreement and title to the FFE shall be and remain in Parent and/or
Manager at all times during such term except as otherwise provided herein.
(b) Manager shall be responsible for, and pay for out of Net
Practice Revenues or other sources, all repairs, maintenance and replacement of
the FFE. However, repairs, replacements and new equipment, each of which costing
more than $500 will be capitalized, such that Manager shall fund same from its
own capital and charge to Practice as a Practice Expense depreciation of the
capital item on a straight line basis in accordance with GAAP and interest
expense related thereto at the interest rate charged by Manager's "Credit
Facility Lender".
3.4 FINANCIAL PLANNING AND GOALS. As provided in Section 3.19,
Manager will prepare, in consultation with Practice, annual capital and
operating budgets reflecting, in reasonable detail anticipated revenues,
expenses and sources and uses of capital for growth in the medical practice of
Practice.
3.5 BUSINESS OFFICE SERVICES. Practice hereby appoints Manager as
its sole and exclusive manager and administrator of all business functions and
services related to Practice's services during the term of this Agreement.
Without limiting the generality of the foregoing, in providing the Management
Services, Manager shall perform the following functions:
(a) Manager shall evaluate, negotiate and administer all
managed care contracts on behalf of Practice and shall consult with Practice on
matters relating thereto; provided that acceptance to participate in any or all
managed care contracts shall be decided by Practice.
(b) Manager shall provide ongoing assessment of business
activity including product line analysis, outcomes monitoring and patient
satisfaction.
(c) Manager shall be responsible for ordering and purchasing
all medical and office supplies and subject to the capital budget, equipment and
FFE reasonably required in the day-to-day operation of the medical practice of
Practice at the Medical Offices.
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(d) Manager shall make application and negotiate for the
procurement of professional liability insurance covering persons in the coverage
amounts set forth in Section 8.1. This coverage shall be made available to
Practice. Practice, however, shall have the right to obtain coverage from an
alternative provider reasonably acceptable to Manager.
3.6 BILLING AND COLLECTIONS.
(a) Subject to the provisions of Section 3.6(b) below, Manager
shall, on behalf of Practice, xxxx and collect from third party payors,
intermediaries and patients all professional fees for medical services and for
ancillary services performed at the Medical Offices by Practice and Practice's
employees and agents, including, but not limited to, Physician Partners and
Practice Employees, provided that Practice shall establish the fee schedule for
all physician and ancillary services and pharmaceutical and other (e.g., hearing
aids) items provided by Practice. Manager shall use reasonable diligence in its
efforts to collect professional fees consistent with industry practice. At its
sole cost and expense, the Practice shall have the right to periodically review
such billing procedures, and in accordance with the policies approved by the
Advisory Board, Manager will use reasonable judgment to settle and discount fees
in consultation with the Advisory Board. For the term of this Agreement,
Practice hereby grants Manager power of attorney and appoints Manager as its
true and lawful attorney-in-fact for the following purposes:
(i) To xxxx third party payors, fiscal
intermediaries and patients in Practice's name, under its provider number(s)
when obtained and on its behalf, and until such time as Practice has obtained
its provider number(s), xxxx, in the Physician Partners' and Practice Employees'
names under their respective provider numbers and on their behalf, and in
connection with such billing services Manager covenants and agrees that it will
use its best efforts to perform the billing correctly and in accordance with
applicable laws and regulations based on information that Practice and the
Physician Partners and Practice Employees provide to Manager for such purpose;
(ii) To collect accounts receivable and claims for
reimbursement that are generated by such xxxxxxxx in Practice's name and on
Practice's behalf, and in the name and on behalf of all Physician Partners and
Practice Employees;
(iii) To place such accounts for collection, settle
and compromise claims, and institute legal action for the recovery of accounts
in accordance with policies adopted by the Advisory Board;
(iv) Following receipt by Practice, to take
possession of payments from patients, insurance companies, Medicare, Medicaid
and all other payors with respect to services rendered by Practice, Physician
Partners and Practice Employees, and Practice hereby covenants to forward such
payments to Manager for deposit;
(v) To receive payments from Medicare and Medicaid,
subject to the provisions of Section 3.6(b) below;
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(vi) To take possession of and endorse in the name
of Practice, or any Physician Partner or Practice Employee, any notes, checks,
money orders, insurance payments and any other instruments received by Practice
as payment of such accounts receivable (except Medicare and Medicaid accounts
receivable, which shall be received and accounted for in accordance with Section
3.6(b) below);
(vii) To pledge the accounts receivable as
collateral or otherwise encumber the accounts receivable without the approval of
the Advisory Board or Practice (all actions with respect to any encumbering
accounts receivable involving Medicare or Medicaid shall not be inconsistent
with applicable laws and regulations relating thereto); and
(viii) If requested, to sign checks on behalf of
Practice and make withdrawals from bank accounts maintained by Manager for
payments specified in this Agreement.
(b) All amounts received in payment of Medicare, Medicaid, and
CHAMPUS accounts receivable shall be deposited into an account in the name of
and controlled by Practice (the "Physician Deposit Account") with a bank whose
deposits are insured by the Federal Deposit Insurance Corporation. The Physician
Deposit Account shall at all times be maintained and funds withdrawn in
accordance with the provisions in the Billing Agreement for Governmental
Receivables of even date herewith between Manager, Practice and Physician
Partners in the form attached hereto as Exhibit 3.6(b) and made a part hereof
(the "Billing Agreement"). The Physician Deposit Account shall be maintained by
Manager solely for the purpose of collecting amounts in payment of Medicare,
Medicaid, and CHAMPUS accounts receivable of Practice unless otherwise expressly
agreed by Manager.
3.7 DEPOSIT OF NET PRACTICE REVENUES. During the term of this
Agreement, all Net Practice Revenues collected shall be received directly by
Practice at the Medical Offices, and each business day Practice will transfer
all collected Net Practice Revenues into a bank account as specifically directed
by Manager; provided that Medicare, Medicaid and CHAMPUS collections shall be
deposited into a separate bank account in the name of Practice as provided in
the Billing Agreement. Manager shall be the owner of the account (other than the
account under the Billing Agreement) and have the sole right to make daily
transfers to its operating or other account with its "Credit Facility Lender"
(as defined in Section 5.2(b)) and to make withdrawals to pay Practice Expenses
on a monthly basis. Manager will transfer pursuant to Section 5.1 an amount
equal to the excess of Net Practice Revenues over Practice Expenses by the 25th
day of each month with respect to the preceding calendar month to an account
designated by Practice from which Practice will pay Physician Expenses and for
any other purposes Practice may determine from time to time. Any funds in the
Physician Deposit Account which are not made available to Manager due to any
revocation of its authority under the Billing Agreement shall be deemed
delivered to Practice for purposes of this section. Manager shall maintain its
accounting records in such a way as to clearly segregate the deposit of Net
Practice Revenues and the payment of Practice Expenses and other transfers from
such deposit account from other funds of Manager. Practice and Manager hereby
agree to execute from time to time such documents and instructions as shall be
required by the Credit Facility Lender and mutually agreed upon to effectuate
the foregoing provisions and to extend or amend such documents and instructions.
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3.8 FINANCIAL REPORTS.
(a) Manager shall maintain the books and records of Manager in
accordance with GAAP with respect to the operations of Practice and prepare
financial reports that reflect the total gross revenues and Net Practice
Revenues generated by each Physician, by or on behalf of the medical practice of
Practice and all Practice Expenses and other charges, if any, paid or incurred
by Manager which are charged to the Practice as Practice Expenses. Manager shall
provide Practice with monthly financial reports showing Net Practice Revenues
and Practice Expenses by the 25th day of each month with respect to the prior
month and shall provide a year-end revenue and expense report showing Net
Practice Revenues and Practice Expenses for Practice within ninety (90) days
after the end of each calendar year. Each such report shall track Net Practice
Revenues by Physician and Practice Expenses by Medical Office.
(b) In the event that the Practice disputes the financial
reports, the Practice shall have the right to retain an independent accounting
firm of its choosing to review the reports and books and records related
thereto. In the event that the chosen accounting firm, in consultation with
Manager's auditors, determines that the expenses are overstated or the revenues
are understated by more than fifteen (15%) percent of the amounts set forth in
the revenue and expense reports prepared by Manager, then Manager shall bear the
costs of retaining the chosen accounting firm. In the event that Manager is not
responsible for the costs of the chosen accounting firm pursuant to the
preceding sentence, then the Practice shall cause the costs of such accounting
firm and Managers' auditors (solely as such costs relate to Practice's review)
to be borne by the Practice. Any amount of overstatement of expenses (whether
more or less than 15%) shall be repaid by Manager within ten (10) days after
such determination.
3.9 SUPPORT SERVICES. Manager shall provide all reasonable and
necessary secretarial, reception and clerical functions, including coordination
of patient visits and scheduling of patients, computer, management information,
bookkeeping, billing and collection services, accounts receivable and accounts
payable management services, laundry, linen, janitorial and cleaning services
and management services to improve efficiency and workflow systems and
procedures, as may be required for the operation of the Practice in a manner
consistent with reasonable business practice at the office locations, as
determined by Manager after consultation with Practice.
3.10 ADMINISTRATOR. Manager shall provide an administrator located
in New York to manage and administer all of the day-to-day business functions
and services of the medical practice of Practice. The administrator will be
selected by Manager after prior consultation with Practice, and Manager shall
determine the salary and fringe benefits of the administrator, but shall consult
with Practice with respect thereto. The Practice, subject to Advisory Board
consent, shall have the right to require reassignment of the administrator if,
in its reasonable judgment, the administrator is not adequately performing the
required services. Selection of a successor administrator shall be subject to
Advisory Board approval.
3.11 PERSONNEL. Manager shall provide such non-physician personnel
as determined by Manager, after consultation with Practice, to be reasonably
necessary for the effective
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operation of the medical practice of Practice at the Medical Offices, subject,
however, to the following:
(a) Manager shall employ and/or provide to Practice all
medical records personnel and other medical support personnel as requested by
Practice and as shall be reasonably necessary for the operation of Practice's
medical practice at the Medical Offices. As to the non-physician medical support
personnel provided under this Section 3.11(a), Manager shall determine the
salaries and benefits of all such personnel, but shall consult with Practice
with respect thereto. Manager shall also recommend the assignment of all such
personnel to perform services at the Medical Offices; provided, however, that
Practice shall have the right to approve, based primarily on professional
competence and compatibility with a Medical Office, the assignment of all
non-physician medical support personnel to provide services at the Medical
Offices and Manager shall, at Practice's request, reassign and replace such
personnel from time to time who are not, in Practice's reasonable and good faith
judgment, adequately performing the required professional services. If Practice
is dissatisfied with the services of any person, the Practice shall consult with
Manager. 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 terminated.
(b) Manager shall employ and provide to Practice all business
office personnel (i.e., clerical, secretarial, bookkeeping and collection
personnel) reasonably necessary for the maintenance of patient records,
collection of accounts receivable and upkeep of the financial books of account
to the extent that same are required for, and directly related to, the operation
of the medical practice by Practice. As to the personnel provided under this
Section, Manager shall determine the salaries and fringe benefits of all such
personnel, but shall consult with Practice with respect thereto.
(c) In exercising its judgment with regard to personnel as
provided in Section 3.10 and this Section 3.11, Practice and Manager agree not
to discriminate against such personnel on the basis of race, religion, age, sex,
disability or national origin.
(d) In recognition of the fact that CBO personnel providing
services to Practice under this Agreement may perform services from time to time
for others, this Agreement shall not prevent Manager from performing such
services for others or restrict Manager from so using such personnel. Manager
will make every effort consistent with sound business practices to honor the
specific requests of Practice with regard to the assignment of such personnel;
provided, however, that except for non-physician medical support personnel as
provided in subsection (a) above, Manager hereby retains the sole and exclusive
decision-making authority regarding all such personnel assignments. In the event
any such personnel performs services in a material respect (e.g. 10% of the
time) other than for the Practice (including non-practice related services for
Manager), their salaries and benefits will be prorated accordingly and all
related CBO overhead attributable thereto, including rent, utilities and
depreciation, shall be prorated on a reasonable basis.
(e) If Practice or Physician Partners request personal
secretarial, clerical, bookkeeping, or other non-physician medical support
personnel in addition to personnel
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determined to be necessary and/or appropriate by Manager, and such additional
personnel and/or services are provided by mutual agreement between Manager and
Practice, all costs and expenses incurred by Manager in providing such
additional personnel shall be paid to Manager by Practice.
3.12 PROFESSIONAL SERVICES. Manager shall use reasonable efforts to
arrange for or render to Practice such business, legal and financial management
consultation and advice as may be reasonably required or requested by Practice
and directly related to the expansion and/or operations of Practice. Manager
shall not be responsible for any services requested by or rendered to any
individual, employee or agent of Practice not directly related to the operations
or expansion of Practice nor shall Manager be responsible for rendering any
legal or tax advice or services or personal financial services to Practice or
any employee or agent of Practice. Subject to the budget and Advisory Board
approval, Manager shall assist the Practice in its strategic planning and
development. Any advertising approved by the Advisory Board shall be tasteful
and in compliance with applicable laws and regulations.
3.13 PATIENT AND FINANCIAL RECORDS. Manager shall maintain all
files and records relating to the operation of Practice including, but not
limited to, customary financial records and patient files. The management of all
files and records shall comply with all applicable federal, state and local
laws, statutes, rulings, orders, ordinances and regulations ("Laws") including
the requirements of any managed care or other agreements, and all files and
records shall be located so that they are readily accessible for patient care,
consistent with ordinary records management practices. Practice shall be
permitted to obtain at its request and expense, copies of patient and payor
billing records on electronic media as maintained by Manager. Practice shall
supervise the preparation of, and direct the contents of, patient medical
records, all of which shall be and remain confidential and the property of
Practice. Manager shall have reasonable access to such records and, subject to
applicable Laws and accreditation policies, Manager shall be permitted to retain
true and complete copies of such records at its expense. Manager hereby agrees
to preserve the confidentiality of such patient medical records and to use the
information in such records only for the limited purposes necessary to perform
the Management Services and, within the limits of its responsibilities
hereunder, to ensure that provision is made for appropriate care for patients of
Practice.
3.14 PHYSICIAN RECRUITMENT. At the request of Practice, Manager
shall perform administrative services relating to the recruitment of physicians
for Practice. Practice shall determine the need for additional physicians in
consultation with Manager. All such physicians recruited by Manager and accepted
by Practice shall be partners or employees of Practice (if such physicians are
hired as employees) and not of Manager. Any out-of-pocket expenses incurred in
the recruitment of physicians shall be treated as Practice Expenses. Practice
agrees that all physicians hired by the Practice shall execute a Physician
Employment Agreement in a form approved by Manager (the "Physician Employment
Agreements"). Practice agrees not to change the form of the Physician Employment
Agreement in any material way without Manager's prior written consent.
3.15 EXPANSION OF PRACTICE. Manager will evaluate proposals for
Practice regarding additions to office-based procedures and establishing new
satellite office(s) that are
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commercially reasonable and beneficial to Practice, as reasonably determined by
Practice and Manager to be beneficial to Practice. Subject to Advisory Board
approval, Manager will assist practice in attempting to add ancillary services
and establishing new satellite office(s). Manager will also evaluate for
Practice upon request proposals for relationships and affiliations with
physicians and other specialists, hospitals, networks, health maintenance
organizations and preferred provider organizations. Practice will be responsible
for contacting representatives of such affiliations, hospitals, networks, and
organizations and will not enter into any agreements with respect to any such
matters without prior notice to Manager. At Practice's request, Manager will
assist Practice, in contacting representatives of such affiliations, hospitals,
networks, and organizations.
3.16 PERFORMANCE OF BUSINESS OFFICE SERVICES. Subject to the
provisions of Sections 3.10 and 3.11, Manager is hereby expressly authorized to
perform its business office services hereunder in whatever reasonable manner it
deems appropriate to meet the day-to-day requirements of the non-medical
business functions of Practice's medical practice at the Medical Offices.
Manager may perform some or all of the business office functions of Practice at
locations other than at the Medical Offices, so long as patient records remain
at the Medical Offices or off-site storage facilities that are approved by the
Advisory Board and are available for review by the Practice.
3.17 FORCE MAJEURE. Manager shall not be liable to Practice for
failure to perform any of the services required under this Agreement due to the
occurrence of an event over which Manager had or has no reasonable control,
including, but not limited to, strikes, lockouts, calamities, acts of God,
unavailability of supplies, fire, explosion, or other casualty, for so long as
such event continues and for a reasonable period of time thereafter. Manager
shall use reasonable efforts to provide services as soon thereafter as possible.
3.18 PAYMENT OF PRACTICE EXPENSES AND MANAGEMENT FEE. Manager shall
pay all Practice Expenses as they become due out of Net Practice Revenues or
otherwise; provided, however, that Manager may, in the name of and on behalf of
Practice, contest in good faith any claimed Practice Expenses as to which there
is any dispute regarding the nature, existence or validity thereof (no such
dispute however, shall relieve Manager of its obligation to provide the
Management Services as agreed herein). If Practice or Manager is charged or
assessed any late charges, fees or interest as a result of failure to timely pay
any Practice Expenses, the payment of such charges, fees or interest shall be
the responsibility of the party which caused the payment of such Practice
Expenses to be untimely. Manager shall be entitled, on a monthly basis, to pay
itself from Net Practice Revenues the amount specified in Section 5.3 as its
management fee for providing its services under this Agreement. Practice
acknowledges and agrees that the amount to be retained by Manager as its
management fee in accordance with this Agreement is reasonable and fair, given
the undertakings of Manager as set forth in this Agreement and the other
benefits and value that accrue to Practice as a result of Manager's services
under this Agreement.
3.19 BUDGETS.
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(a) As part of the Manager's responsibilities under this
Agreement, the Manager shall prepare annual capital and operating budgets for
the Practice for each budget period in accordance with the provisions of this
Section 3.19. As used herein, a budget period means a calendar year of Practice
unless otherwise provided.
With respect to each budget period following the initial
budget period, the Manager shall prepare and deliver a preliminary draft of each
such budget to the Advisory Board at least 30 days prior to the commencement of
the budget period to which such budget relates. The Advisory Board shall provide
any comments or suggested changes to such preliminary drafts to the Manager
within 15 days after receipt thereof. The Manager shall then submit a revised
budget to the Advisory Board for approval by the Advisory Board no later than 15
days after the end of the 15-day period referred to in the immediately preceding
sentence. The Advisory Board shall then approve or disapprove of, but not modify
or amend the revised budget within 15 days of receiving it. The foregoing time
periods during which drafts of the budget are to be delivered and approved shall
be subject to adjustment from time to time as determined appropriate by the
Advisory Board and Manager.
If prior to the commencement of any budget period, the
Advisory Board has not yet approved the budget or provided comments or suggested
changes to the proposed budget, then the Manager and the Advisory Board will
work diligently in good faith to obtain such approvals, and until such approvals
are obtained, with respect to the budget, (i) as to any disputed line items, the
immediately preceding budget period's budget shall be controlling until such
time, if any as agreement is reached on the amounts to be allocated to such
disputed line items, specifically as follows: (A) non-recurring or extraordinary
items shall not be continued from the budget for the immediately preceding
budget period, (B) if the previous budget was for a budget period of less than
12 months, it shall be annualized, (C) all items subject to an automatic
increase, such as rent and taxes, shall be budgeted at the increased rate (D)
for items such as employee salaries and benefits, the total salary and benefits
number shall be adjusted to take into account changes in the number and
classifications of employees employed or contracted, (ii) as to any line items
which are not in dispute, the revised budgets submitted by the Manager shall
control, and (iii) those items reasonably deemed medically necessary by Practice
shall be acquired. With respect to the initial budget for the balance of
calendar year 1998, Manager shall deliver a draft of the annual budget to the
Advisory Board within ninety (90) days of the date of this Agreement. If the
Advisory Board has not approved the budget for balance of 1998 within one
hundred twenty (120) days of the date of this Agreement, actual 1997 costs of
the Physician Partners' prior practices shall be deemed to be the "immediately
preceding budget period's budget" for purposes of this paragraph.
(b) The parties agree that the Manager shall have the
authority and discretion in its reasonable business judgment to reallocate cost
and expense line items within the budget, so long as the pre-tax income targets
within such budgets are not adversely impacted and Manager's staffing
obligations under Sections 3.9 and 3.11 are not materially adversely affected.
(c) Manager agrees that expenses of the Practice which are
shared by other practices being managed by Manager shall be allocated as
"Practice Expenses" to Practice and such other practices based on actual
expenses incurred where such expenses are directly
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identifiable by Manager or on a pro rata basis in accordance with the respective
"Net Practice Revenues" of Practice and such other practices, or such other fair
and reasonable basis as Manager may reasonably determine.
3.20 OTHER MANAGEMENT AGREEMENTS. (a) Manager agrees that during
the initial twenty-four (24) months of the term of this Agreement, Manager will
not, directly or indirectly, enter into a management agreement to provide
substantially similar management services to those provided under this Agreement
to any other otolaryngology practice (hereinafter an "Other ENT Group") located
in a restricted geographical area ("Restricted Area") as set forth on Exhibit
3.20 hereto, unless Manager shall have first offered Practice the opportunity to
merge with or acquire such Other ENT Group and Practice shall not have notified
Manager within thirty (30) days after receipt of such written offer that
Practice desires to merge with or acquire such Other ENT Group; provided,
however, that Manager shall not be required to provide any right of first offer
to Practice if there shall have occurred and be continuing an event which, with
the giving of notice or lapse of time, or both, would constitute a "Practice
Event of Default" hereunder, unless such event shall be cured within 15 days
following written notice from Manager to Practice; and provided, further, that
Practice agrees that in the event it desires to accept any such first offer,
Practice and the Physician Partners will afford the individual physician
shareholders or partners in the Other ENT Group the same economic and voting
rights in Practice as are enjoyed by the Physician Partners. In the event
Practice notifies Manager within the aforesaid 30-day period that it desires to
merge with or acquire such Other ENT Group but subsequently notifies Manager
that it no longer wishes to proceed with such transaction, then Manager shall be
entitled to pursue such transaction. Any written offer provided to Practice
under this Section 3.20 shall include sufficient financial and other information
concerning such Other ENT Group as Practice may reasonably request in order to
make an informed judgment.
(b) Manager agrees that commencing with the 25th month of the
term of this Agreement and continuing until the end of the 60th month of the
term of this Agreement, Manager will provide notice to Practice at the time it
reaches a basic understanding as evidenced by a term sheet or discussion outline
of any potential management agreement between PSC and any Other ENT Group in the
Restricted Area and will not consummate any such transaction for at least 30
days after providing Practice with notice that it has reached such understanding
with any such other ENT Group. Such notice shall identify the Other ENT Group
and PSC's estimate of its revenue run rate and overhead percentage.
(c) All information provided to Practice under this Section
3.20 shall be considered to be confidential by Practice and afforded the same
protection as Manager Confidential Information under Section 4.5(e).
3.21 CONFIDENTIAL INFORMATION. Except as required to perform its
obligations under this Agreement, Manager shall not, without the express written
consent of Practice, distribute, market, publish, or divulge to any person or
entity, or use or modify for use, directly or indirectly, any "Practice
Confidential Information" during the term of this Agreement and for a period of
three (3) years after the final date of the term of this Agreement; provided,
however, that Manager may disclose Practice Confidential Information, (i) to
Other ENT Groups which are potential acquisition partners under Section 3.20 as
approved by Practice or the Advisory Board,
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(ii) as required by law, governmental order or regulation, or by subpoena or
other legal process (provided Practice will be provided advance notice of such
disclosure in order to afford it the opportunity to seek an appropriate
protective order), (iii) in any litigation involving Practice, Manager or a
Physician Partner, and (iv) to Manager's lenders, financial advisors,
accountants, investment bankers, and attorneys. For purposes of this Agreement
"Practice Confidential Information" shall mean valuable, non-public
competitively sensitive data and information relating to Practice that is not
generally known by or readily available to competitors of Practice, including
payor and managed care contract fees and rates under exclusive arrangements of
Practice with third party payors, and Practice revenue and expense reports and
related financial information.
SECTION 4. OBLIGATIONS OF PRACTICE.
4.1 PHYSICIAN EXPENSES. Practice shall be solely responsible for
the payment, when due, of all costs and expenses ("Physician Expenses") incurred
in connection with Practice's operations that are not Practice Expenses and are
not enumerated under subsection 1, 8, 9, 10, 11, 12, or 13 of the third
paragraph of Section 1.6 (except as otherwise expressly provided in such
subsections), including, but not limited to, insurance premiums for policies of
malpractice insurance, deductibles under such policies of malpractice insurance,
any and all costs and expenses incurred with respect to claims under such
policies of malpractice insurance, salaries and benefits, workers' compensation,
retirement plan contributions, health, disability and life insurance premiums,
payroll taxes, cellular phone and automobile expenses incurred by or in
connection with the employment of all Physician Partners and Practice Employees.
Practice shall be responsible for paying as a Physician Expense salaries,
benefits and other similar direct costs for all Practice Employees and Physician
Partners. Practice shall pay all Physician Expenses as they become due. However,
Practice shall pay the salaries and benefits for those individuals described in
Section 1.5(b), but Manager shall reimburse Practice monthly, on the date such
amounts are payable, by cash transfer to Practice for all such salaries and
benefits and payroll taxes and such reimbursement amounts shall be a Practice
Expense under Section 1.6.
4.2 PROFESSIONAL STANDARDS.
(a) It is expressly acknowledged by the parties to the
Agreement that all medical services provided at the Medical Offices shall be
performed solely by physicians and allied health care professionals duly
licensed, if required, to practice medicine in the State. The professional
services provided by Practice and its Physician Partners and Practice Employees
shall at all times be provided in accordance with applicable ethical standards
and Laws applying to the medical profession. Practice shall at all times during
the term of this Agreement be and remain legally organized and authorized to
provide medical care and services in a manner consistent with all state and
federal laws. The parties will cooperate with each other in taking steps to
resolve any utilization review or quality assurance issues which may arise in
connection with the medical practice of Practice. If any disciplinary actions or
professional liability actions are initiated against any Physician Partner or
Practice Employee, Practice shall immediately inform Manager of such action and
the underlying facts and circumstances. Practice agrees to implement and
maintain a program to monitor the quality of medical care provided by Practice,
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and Manager shall render administrative assistance to Practice on an
as-requested basis to assist Practice in designing, implementing and maintaining
such program.
(b) Practice shall at all times during the term of this
Agreement use its best efforts to assure that each physician employed by the
Practice shall:
(i) maintain an unrestricted license to practice
medicine and surgery in all its branches in the State and maintain good standing
with the Medical Board of the State;
(ii) maintain a federal Drug Enforcement
Administration certificate without restrictions, to prescribe controlled
substances as are customarily prescribed by physicians practicing in Physician's
practice specialties;
(iii) maintain hospital medical staff memberships
and clinical privileges at those facilities set forth on Part Three of Exhibit A
of the Physician Employment Agreement as amended from time to time;
(iv) perform all professional services through
Practice and in accordance with all Laws and with prevailing standards of care
and medical ethics in accordance with any Employment Agreement between Practice
and Physician and with practice protocols and policies as adopted from time to
time by Practice;
(v) maintain Physician's skills through continuing
education and training, including participation in those programs designated by
Practice from time to time;
(vi) maintain eligibility for insurance under the
professional liability policy or policies at a commercially reasonable cost as
determined by Practice carried by or on behalf of Practice for Physician's
practice specialties, to the extent Physician is to be covered by such policy or
policies pursuant to Section 5.2 of the Physician Employment Agreement;
(vii) maintain Physician's board-certified or board
eligible status in Physician's practice specialties;
(viii) qualify and maintain Physician's qualification
as a participating provider in the Medicare and State of New York Medicaid
programs;
(ix) abide by the Principles of Medical Ethics of
the American Medical Association, any principles or statements or ethics adopted
by the state medical society in any state in which Physician maintains a
professional license, and the ethical principles or statements as adopted and
amended from time to time by the American Board of Otolaryngology;
(x) comply with all Laws applicable to the conduct
of Physician's activities, as well as with the articles of incorporation, bylaws
and other corporate governance documents of Practice and other rules or
regulations adopted from time to time by Practice;
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(xi) promptly disclose to Practice (i) the
commencement or pendency of any legal action, administrative proceeding or
investigation, medical staff or professional disciplinary actions against
Physician or (ii) the existence of any circumstances that could reasonably be
expected to form the basis of or lead to any such action, proceeding or
investigation;
(xii) abide by any guidelines adopted by Practice or
any person or entity providing management services to Practice designed to
encourage the appropriate, efficient and cost-effective delivery of medical
services, subject always to the clinical judgment of Physician, and cooperate
with and participate in all Practice programs regarding quality assurance,
utilization review, risk management and peer review;
(xiii) maintain appropriate and accurate medical
records in accordance with accepted medical standards and Practice policies with
respect to all patients evaluated and treated; and
(xiv) satisfy such other reasonable requirements as
are established from time to time by Practice.
4.3 PROVIDER AND PAYOR RELATIONSHIPS. Manager, upon request of
Practice, shall consult with Practice on matters relating to the establishment
or maintenance of relationships with institutional healthcare providers and
third-party payors, including, but not limited to, managed care programs, health
maintenance organizations and preferred provider organizations. Practice shall
not be required by Manager to sign up or contract with any particular provider
or payor.
4.4 PHYSICIAN CONTRACTS AND POWERS OF ATTORNEY. (a) During the
term of this Agreement, Practice shall maintain Physician Employment Agreements
substantially in the form of Exhibit A or Exhibit B hereto with all Physician
Partners and with other physician practitioners employed or otherwise retained
by Practice as Practice Employees substantially in the form of Exhibit C hereto.
(b) Practice shall require all Physician Partners and
physician Practice Employees to execute and deliver to Manager powers of
attorney, satisfactory in form and substance to Manager, appointing Manager as
attorney-in-fact for each such Physician Partner and physician Practice Employee
for the purposes set forth in Section 3.6(a) to the extent authorized by law.
4.5 RESTRICTIVE COVENANTS.
(a) Practice acknowledges and agrees that the services to be
provided by Manager hereunder are feasible only if Practice operates a vigorous
medical practice in which its Physician Partners and Practice Employees are in
private medical practice exclusively with Practice, either on a full-time or
part-time basis (to the extent part-time employment may be permitted under his
or her Physician Employment Agreement). Accordingly, Practice agrees that,
during the term of this Agreement, it shall not, without the prior written
consent of
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Manager, establish, operate or provide physician services at any medical office,
clinic or other healthcare facility in the State which provides services
substantially similar to those offered by Practice at the Medical Offices other
than services at clinics and other healthcare facilities in a manner consistent
with past practices of Practice or, prior to the date hereof, the Physician
Partners.
(b) During the term of this Agreement and for a period of
eighteen (18) months following the termination or expiration of this Agreement,
Practice shall not, in the State, alone or in conjunction with any other person
or entity, without the prior written consent of Manager, solicit or attempt to
solicit any employee or other personnel employed by Manager (or who was employed
by Manager at any point during the six months prior to termination of this
Agreement) to terminate, alter or lessen that party's affiliation with Manager
or to violate the terms of any agreement or understanding between such employee
or other person and Manager. This restriction shall not include Practice
Employees employed at a Medical Office.
(c) If this Agreement is terminated for any reason other than
by Practice pursuant to Section 6.2 (b) below, Practice shall not for a period
of eighteen (18) months following the effective date of such termination, engage
or contract with any person, firm or entity (or group of affiliated entities)
for the provision of comprehensive management services to Practice at the
Medical Offices (or at any new or replacement medical offices of Practice in the
State) substantially of the kind contemplated by this Agreement. However,
Practice may hire employees, other than employees or personnel employed or
engaged by Manager (or who were employed or engaged by Manager at any point
during the six months prior to termination of this Agreement), to provide such
services.
(d) The intellectual and other property rights in any work
product, discoveries or inventions related to the development of practice
protocols, clinical information systems, clinical coding systems, utilization
management systems or programs, and case management systems or programs)
developed or acquired by Practice, the Physician Partners or Practice Employees
or any other personnel or agents of such parties during the term of this
Agreement and all patents, copyrights, trademarks, service marks and other
intellectual property rights related thereto (the "Practice IP") shall be deemed
to be owned exclusively by the Manager. The Practice hereby unconditionally and
irrevocably transfers and assigns to Manager all rights, title and interest the
Practice may currently have (or in the future may have) by operation of law or
otherwise in or to any Practice IP. Practice agrees to execute and deliver to
Manager any transfers, assignments, documents or other instruments which Manager
may deem necessary or appropriate to vest complete title and ownership of any
Practice IP, and all associated rights, exclusively in Manager. The Physician
Employment Agreements shall have a provision comparable to this paragraph (d)
assigning these Practice IP rights from the Practice physicians to Practice, in
contemplation of their reassignment from Practice to Manager as herein provided,
subject only to such exclusions as are provided in the form of Physician
Employment Agreement approved by Manager. Other intellectual and property rights
developed or acquired by a Physician Partner or Practice Employee on his or her
own time and without use of the resources or services of Manager or Practice and
specifically excluded in such individual's employment agreement with Practice
shall not be deemed owned by Manager or Practice.
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(e) Practice acknowledges and agrees that Manager's Trade
Secrets and Manager Confidential Information (both as defined below) represent a
substantial investment by Manager. Practice also acknowledges and agrees that
any unauthorized disclosure or use of any of Manager's Trade Secrets or Manager
Confidential Information would be wrongful and would likely result in immediate
and irreparable injury to Manager. Except as required in order to perform
Practice's obligations under this Agreement and to conduct the medical practice
of the Practice, Practice shall not, without the express prior written consent
of Manager, redistribute, market, publish, disclose or divulge to any other
person or entity, or use or modify for use, directly or indirectly in any way
for any person or entity: (i) any Manager Confidential Information during the
term of this Agreement and for a period of three (3) years after the final date
of the term of this Agreement; and (ii) any Trade Secrets at any time (during or
after the term of this Agreement) during which such information or data shall
continue to constitute a "trade secret" under applicable law. Practice may
disclose Manager Confidential Information and Trade Secrets (i) as required by
law, governmental order or regulation, or by subpoena or other legal process, or
in connection with malpractice claims, or as required by third party payors
(provided Manager will be provided advance notice of such disclosure in order to
afford it the opportunity to seek an appropriate protective order), (ii) in any
litigation involving Practice, Manager or a Physician Partner or physician
Practice Employee (provided Manager will be provided advance notice of such
disclosure in order to afford it the opportunity to seek an appropriate
protective order), (iii) to Practice's attorneys, accountants or financial
advisors, and (iv) in connection with any Medicaid, Medicare or third party
payor audit or review. Practice further agrees to cooperate with (and require
its physicians and other personnel to comply with) any reasonable
confidentiality requirements of Manager. Practice shall immediately notify
Manager of any unauthorized disclosure or use of any of the Trade Secrets or
Manager Confidential Information of which Practice becomes aware. For purposes
of this Agreement "Manager Confidential Information" shall mean valuable,
non-public competitively sensitive data and information relating to Manager's or
Parent's business other than Trade Secrets (which shall have the meaning given
that term under applicable law) that is not generally known by or readily
available to competitors of Manager, including, without limitation, computer
software and management information systems provided by Manager, practice
acquisition targets, strategic expansion plans contracting and payor
negotiations, managed care contracting strategies and fees, rates, exclusions
and other payor contract features.
(f) Unless otherwise agreed by Manager in writing, Practice
shall enforce vigorously the covenants (and any liquidated damages provisions)
of the Physician Partners and other physician employees of Practice set forth in
the Physician Employment Agreements (which the Parties agree will be in
substantially the form of Exhibit A, Exhibit B, and Exhibit C) with counsel
reasonably approved by Manager. Practice and such counsel shall cooperate with
Manager in any such litigation. Practice shall not compromise or settle any such
litigation (i) for less than the liquidated damages amount set forth in the
Physician Employment Agreements or (ii) in a case where the terminating
physician employee has solicited or hired away employees of Manager or Practice
without Manager's approval, not to be unreasonably withheld. In the event that
the Practice recovers liquidated damages (or other damages or costs) from any
physician for breach of such a covenant, then the Practice shall promptly remit
to Manager an amount equal to any and all such amounts so received, net of
reasonable legal fees and litigation costs. Practice shall not take any action
that, under this Agreement, is to be taken only by Manager. The Parties
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agree and the Physician Employment Agreements shall provide that the actual
losses to be suffered by Manager and Practice will be difficult to ascertain,
but the liquidated damages set forth have been arrived at after good faith
effort to estimate such losses. Practice specifically acknowledges and agrees
that Manager would not have entered into this Agreement but for Practice's
covenant to enforce the Physician Employment Agreements as provided above and
that the failure of any physician to comply with such agreements will result in
Manager suffering extensive economic damages, but will not create any "Practice
Event of Default" hereunder.
(g) Manager and Practice acknowledge and agree that Manager's
remedy at law for any breach or attempted breach of the foregoing provisions may
be inadequate and that Manager shall be entitled to specific performance,
injunction or other equitable relief in the event of any such breach or
attempted breach, in addition to any other remedies which might be available at
law or in equity. If the duration, scope or geographic area contemplated by the
foregoing provisions is determined to be unenforceable by a court of competent
jurisdiction, the parties agree that such duration, scope or geographic area
shall be deemed to be reduced to the greatest scope, duration or geographic area
which would be enforceable.
4.6 PROFESSIONAL DUES AND EDUCATION EXPENSES. Practice and its
Physician Partners and Practice Employees shall be solely responsible for all
costs and expenses associated with membership in professional associations and
continuing professional education. Practice shall use its reasonable efforts to
ensure that each of its Physician Partners and Practice Employees participates
in such continuing medical education activities as are necessary for such
physicians to remain current in their respective specialties, including, but not
limited to, the minimum continuing medical education requirements imposed by
applicable laws and policies of applicable specialty boards.
4.7 PROVISION OF SERVICES BY PRACTICE. Practice shall use its
reasonable efforts to maintain at least the same quality and scope of medical
practice and other health care services provided by the Physician Partners prior
to the date hereof and shall use its reasonable good faith efforts to promote
the medical practice of the Practice and to comply with all Practice budgets.
Practice shall engage, in exercise of its sole discretion, a sufficient number
of Physician Partners or physician Practice Employees to provide services to
patients of the Practice at normal office hours at the Medical Offices and to
provide coverage during all appropriate hours of all hospitalized patients of
Practice whether on any inpatient or outpatient basis. Practice shall be
responsible for coding and call schedule with respect to all physicians in the
Practice.
4.8 PHYSICIAN PARTNERSHIP AND EMPLOYMENT AGREEMENTS. Practice
represents that it has delivered to Manager a true and correct copy of the
partnership agreement and Physician Employment Agreements between Practice and
its Physician Partners and will cause all new partners of Practice to execute
such agreements prior to becoming a partner (or employee) in Practice. Practice
shall not amend the partnership agreement so as to cause the partnership
agreement to contravene or conflict with this Agreement or the Physician
Employment Agreements between Practice and its physician employees. Practice
shall not waive any material rights thereunder without the prior consent of
Manager. The partners of the Practice are and shall be individual physicians.
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SECTION 5. FINANCING MATTERS
5.1 MECHANICS OF TRANSFERS. (a) Promptly following the end of each
month, Manager shall make a good faith estimate of the collection percentage
("Estimated Collection Percentage") for such month's gross Practice revenues.
The Estimated Collection Percentage may vary depending on historical collection
percentages, changes in fee schedules, changes in third party reimbursement, bad
debt write-offs and similar adjustments. The Estimated Collection Percentage
will then be applied to the gross Practice revenues generated by the Practice
for such month, resulting in estimated Net Practice Revenues for such month. An
amount equal to the excess of Net Practice Revenues over Practice Expenses for
such month will be transferred by Manager to Practice on such 25th day. If the
first transfer of funds pursuant to this Agreement occurs more than forty-five
(45) days after the Effective Date, Manager will pay Practice interest on those
funds at a rate equal to its short-term borrowing rate under Manager's senior
credit facility for each day in excess of forty-five (45) days. A final annual
accounting of actual collections, draws and payments will be delivered to
Practice by Manager on or before March 31 of each year of this Agreement with
respect to the immediately preceding calendar year and will include a detailed
financial report of income and expenses and will take into account funds
received and transferred from the Physician Deposit Account under the Billing
Agreement. Manager shall remit to Practice, the amounts, if any, due and owing
to Practice as a result of the final annual accounting on or before the
ninetieth (90th) day after the end of the calendar year. Practice may review and
dispute each such final report in accordance with the procedure set forth in
Section 3.8(b).
(b) Practice and the Physician Partners expressly acknowledge
and agree that Manager shall have the right to offset from amounts to be
transferred to Practice hereunder each month ("Amounts Available for Offset")
any amounts from time to time that are due or owing to Parent or Manager or PSC
Acquisition Corp. pursuant to Section 7.7 of the Stock Purchase Agreement, with
respect to any shortfall in the amount of "Closing Accounts Receivable"
thereunder ("A/R Shortfall Amounts"), or pursuant to Section 8.6 of the Stock
Purchase Agreement with respect to claims for indemnification under the Stock
Purchase Agreement ("Other Amounts"); provided, however, that with respect to
Other Amounts, the Amount Available for Offset shall be reduced by an amount
equal to the salaries, wages and related employee benefit costs and withholdings
of the Practice Employees for such month; and provided, further, that with
respect to Other Amounts, the Amount Available for Offset shall be limited in
accordance with the provisions of Section 8.6 and Exhibit 8.6 of the Stock
Purchase Agreement with respect to each Physician Partner's indemnification
obligations under the Stock Purchase Agreement. Any offsets for A/R Shortfall
Amounts shall not be so limited. In the event Practice disputes any such offset
the matter shall be resolved pursuant to binding arbitration under Section 14.11
below, and all Physician Partners agree to Practice arbitrating on their behalf
in such procedure any objections they may have individually.
5.2 ASSIGNMENT OF SECURITY INTEREST.
(a) Practice hereby exclusively and irrevocably assigns and
sets over to Manager all of Practice's rights to all revenue and accounts
receivable generated by the Physician Partners and Practice Employees with
respect to any services rendered while employed by
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Practice and prior to the effective date of expiration or termination of this
Agreement, except as otherwise provided in this Agreement, and grants to Manager
the right to retain such proceeds for its own account for application in
accordance with this Agreement, and shall obtain a like assignment from all
Physician Partners and Practice Employees for so long as they are employed or
engaged by the Practice; provided, that in the case of revenue and accounts
receivable generated as a result of billing for services under Medicare or
Medicaid such assignment shall only be an assignment of proceeds of accounts
receivable consistent with the provisions of applicable law. Except as otherwise
provided in Section 3.6(b) and the Billing Agreement, Practice shall endorse
(and shall cause each Physician Partner or Practice Employee to endorse) any
payments received on account of such services to the order of Manager and shall
take such other actions as may be necessary to confirm to Manager the rights set
forth in this Section 5.2(a).
Without limiting the generality of the foregoing, it is the
intent of the parties that the assignment to Manager of the rights described in
Section 5.2(a) above shall be inclusive of the rights of Practice and the
Physician Partners and Practice Employees to proceeds of payment with respect to
any services rendered prior to the effective date of any expiration or
termination of this Agreement. Practice agrees and shall cause each Physician
Partner and Practice Employee to agree, that Manager shall retain the right to
collect any and all accounts receivable and claims for reimbursement relating to
any such services rendered prior to the effective date of any such expiration or
termination ("Pre-Termination Accounts Receivable"), and that the proceeds
thereof will be transferred to Manager's account to be applied in accordance
with Section 3.6 and 3.7 and the other provisions of this Agreement and the
Billing Agreement.
In addition and as a supplement to Practice's obligations as
otherwise set forth herein, Practice shall, with all deliberate speed, apply for
and maintain in effect any and all provider and/or supplier numbers, including
but not limited to Medicare and Medicaid numbers, in Practice's name. If
Practice is unable to obtain such provider and/or supplier numbers, Practice
shall cause Physician Partners to maintain each of their provider numbers,
including but not limited to Medicare and Medicaid numbers, necessary or
appropriate to obtain payment or reimbursement for all medical services provided
by such Physician Partners and shall further cause each Physician-Partner who
provides services to the Practice to execute any and all documentation necessary
to effectuate the assignments of revenues to Manager as contemplated by this
Agreement.
(b) Practice acknowledges that Manager and Parent may, to the
extent permitted by law, grant a security interest in the Pre-Termination
Accounts Receivable and proceeds thereof to their factor(s) or lender(s) under
Manager's or Parent's working capital credit facility (whether one or more,
"Credit Facility Lender"), as in effect from time to time. Practice agrees that
such security interest of the Credit Facility Lender is intended to be a first
priority security interest and is superior to any right, title or interest which
may be asserted by Practice or any Physician Partner or Practice Employee with
respect to Pre-Termination Accounts Receivable or the proceeds thereof under
this Agreement. Practice further agrees, and shall cause each Physician Partner
and Practice Employee to agree, that, upon the occurrence of an event which,
under the terms of such working capital credit facility, would allow the Credit
Facility Lender to exercise its right to collect Pre-Termination Accounts
Receivable and apply the
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proceeds thereof toward amounts due under such working capital credit facility,
the Credit Facility Lender will succeed to all rights and powers of Manager
under the powers of attorney provided for in Sections 3.6 and 4.4 above as if
such Credit Facility Lender had been named as the attorney-in-fact therein. No
action taken by the Credit Facility Lender and no pledge to such Credit Facility
Lender shall excuse or limit Manager's obligations under this Agreement to pay
expenses when due or to provide services (including, but not limited to, any
action by Credit Facility Lender resulting in Net Practice Revenues not being
made available to Manager).
(c) If, contrary to the mutual intent of Manager and Practice,
the assignment described in this Section 5.2 shall be deemed for any reason to
be ineffective, then Practice and each Physician Partner and Practice Employee
shall to the extent permitted by applicable Laws, effective as of the date of
this Agreement, be deemed to have granted (and Practice does hereby grant, and
shall cause each Physician Partner and Practice Employee to grant) to Manager a
first priority lien on and security interest in and to any and all interests of
Practice and such Physician Partners and Practice Employees in any accounts
receivable generated by the medical practice of Practice and its Physician
Partners and Practice Employees during their employment with Practice or
otherwise generated through the operations of the medical practice of Practice
prior to the effective date of expiration or termination of this Agreement, and
all proceeds with respect thereto, to secure the payment to Manager hereunder of
all Practice Expenses, and this Agreement shall be deemed to be a security
agreement to the extent necessary to give effect to the foregoing. Practice
shall execute and deliver, and cause each Physician Partner and Practice
Employee to execute and deliver, all such financing statements as Manager may
request in order to perfect such security interest. Practice shall not grant
(and shall not suffer any Physician Partner or Practice Employee to grant) any
other lien on or security interest in or to such accounts receivable or any
proceeds thereof or in or to this Agreement to any other person or entity.
5.3 MANAGEMENT FEES.
(a) Manager shall receive Two Million Nine Hundred Eighteen
Thousand Seven Hundred and Fifty dollars ($2,918,750.00) [less New Jersey
allocation] per annum payable in equal monthly installments of $__________ for
the initial sixty month period of the term as a management fee for its services.
The per annum management fee, payable in monthly installments, shall be
increased annually commencing as of the fifth anniversary of the date of this
Agreement by a percentage equal to the percentage change in "CPIn" (as defined
below) as compared to "CPIo" (as defined below). For purposes hereof, "CPIn" is
the historical Consumer Price Index, most recently published as the final by the
Bureau of Labor Statistics, U.S. Department of Labor, For All Urban Consumers,
New York City Average, All Items, Annual Average 1982-84=100 ("CPI") as of each
anniversary of this Agreement commencing with the fifth anniversary hereof, and
"CPIo" is the CPI published as of the date which is one (1) year prior to the
date of CPIn which was used for such calculation. Upon consummation of other
medical practice or business acquisitions by Manager or its affiliate which are
merged or consolidated into or with Practice, or new businesses developed for
Practice (e.g., surgery center) or acquired in connection with a right of first
refusal as may be mutually agreed by Manager and Practice, the management fee
hereunder shall be increased based on the practice or business acquired or
developed.
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(b) Practice and Manager mutually recognize and acknowledge
that it is the intent of the parties that all management fees paid to Manager
under this Agreement be reasonable and approximate Manager's actual costs and
expenses plus a reasonable profit. Payment of the management fee is not intended
to be, and shall not be, interpreted or applied as permitting the Manager to
share in Practice's fees for professional services rendered, but is acknowledged
as the parties' negotiated agreement as to the reasonable, fair market value of
the management services being furnished by the Manager pursuant to this
Agreement, considering the nature and volume of such services.
SECTION 6. TERM AND TERMINATION.
6.1 TERM. The initial term of this Agreement shall be for a period
of forty (40) years commencing on [Effective Date], 1998 and ending on
__________, 2038. This Agreement may be extended for separate and successive
five-year periods (each such five-year period referred to hereinafter as an
"extended term"), under such terms and conditions as stated herein with respect
to any such extended term; provided, however, that Practice and Manager mutually
agree to extend the term of this Agreement and mutually agree upon the documents
to be in effect during any such extended term hereto, not less than sixty (60)
days prior to expiration of the initial term or extended term then in effect.
6.2 TERMINATION.
(a) Manager may terminate this Agreement, and have no further
liability or obligation hereunder, other than as provided in Section 6.2(c)
below, upon the occurrence of one or more of the following events (each such
event being herein called a "Practice Event of Default"):
(i) Practice fails to perform in a material respect
its material obligations hereunder and such failure continues uncured for a
period of forty-five (45) days after Practice's receipt of written notice
specifying such failure; provided, however, that if such failure cannot be cured
within forty-five (45) days, but is capable of being cured within a reasonable
period of time in excess of forty-five (45) days, then Manager shall not be
entitled to terminate this Agreement if Practice commences the cure of such
failure within the first forty-five (45) day period and thereafter diligently
and in good faith continues to prosecute such cure until completion; provided,
further, that if Practice is in material breach of Section 4.5(a) of this
Agreement, Manager may terminate this Agreement if such breach is not cured
within ten (10) days after written notice is provided to Practice.
(ii) Practice voluntarily files a petition in
bankruptcy or makes an assignment for the benefit of creditors or otherwise
seeks relief from creditors under any federal or state bankruptcy, insolvency,
reorganization or moratorium statute, or Practice is the subject of an
involuntary petition in bankruptcy which is not set aside within ninety (90)
days of its filing.
(iii) Practice is in material breach or default under
any other written agreement with Manager which expressly provides for cross
default with this Agreement,
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including the Billing Agreement, subject to any applicable notice and cure
periods provided in any such agreement.
(iv) If in any 18 month period the licenses of more
than 25% of the then total number of Physician Partners and physician Practice
Employees to practice medicine in the State of New York are suspended or
revoked, or are subjected to final disciplinary action by the State Board of
Medicine or any similar body on any grounds, other than minor, immaterial or
insubstantial grounds, or die or become mentally or physically "disabled" (as
defined in the Physician Employment Agreements), or if in any 18 month period
more than 25% of the then total number of Physician Partners and physician
Practice Employees retire or sell their interests in Practice or otherwise cease
to practice medicine on substantially the same basis as agreed to in their
respective Physician Employment Agreements as Practice Employees; provided,
however, that in any such event Practice shall have one hundred eighty (180)
days from the date on which Manager gives Practice written notice of its intent
to terminate this Agreement pursuant to this Section 6.2(a)(iv) to replace the
affected physicians with other physicians reasonably satisfactory to Manager, in
its reasonable discretion; provided further, however, that (i) Practice may
agree to bring in locum tenens physicians to provide physician services during
such one hundred eighty (180) day period, (ii) Manager will not unreasonably
withhold approval of any board certified otolaryngologist, allergist or other
physician in a related practice, approved by local hospital credentialing for
medical staff privileges.
(b) Practice may terminate this Agreement, and have no further
liability hereunder, upon the occurrence of one or more of the following events
(each such event being herein called a "Manager Event of Default"), subject,
however, in the case of an event described in subsection (b)(iii) to any
applicable standstill period under the "Debenture" (as hereinbelow defined):
(i) Manager is in material breach of its obligation
to remit to Practice the balance of Net Practice Revenues minus Practice
Expenses as required hereunder and such breach remains uncured for a period of
fifteen (15) days after receipt of written notice thereof from Practice.
(ii) Manager fails to perform in a material respect
any material obligation under this Agreement other than described in (b)(i)
above and such failure continues uncured for a period of forty-five (45) days
after Manager's receipt of written notice specifying such failure, provided,
however, that if such failure cannot be cured within forty-five (45) days, but
is capable of being cured within a reasonable period of time in excess of
forty-five (45) days, then Practice shall not be entitled to terminate this
Agreement if Manager commences the cure of such failure within the first
forty-five (45) day period and thereafter diligently and in good faith continues
to prosecute such cure until completion.
(iii) An "Event of Default" due to non-payment of
amounts then due and payable shall have occurred and shall be continuing under
that certain debenture from Manager and PSC Acquisition Corp. to Paying Agent
for the benefit of the Physician Partners dated as of even date herewith (the
"Debenture"), after giving effect to all notice and opportunity to cure periods
thereunder, and Practice and the Physician Partners under this Agreement and
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"Practice" and the "Physician-Partners" under the New Jersey MSA shall not be in
breach of any of their respective obligations to Manager or Parent.
(iv) Manager or Parent voluntarily files a petition
in bankruptcy or makes an assignment for the benefit of creditors or otherwise
seeks relief from creditors under any federal or state bankruptcy, insolvency,
reorganization or moratorium statute, or Manager or Parent is the subject of an
involuntary petition in bankruptcy or reorganization which is not set aside
within ninety (90) days of its filing.
(c) Upon termination of this Agreement for any reason:
(i) Manager shall, within ninety (90) days after
termination, deliver to Practice a final accounting in accordance with Section
3.8 for the Practice as of the date of termination and all written and
electronic data and materials including all patient charts and files, xxxxxxxx
and collections information, records, contracts and other papers or documents
which pertain to Practice, provided that Manager shall be entitled to retain
copies of any and all such material.
(ii) All indemnification provisions under this
Agreement shall remain in effect in accordance with their terms.
(iii) Practice and Manager shall coordinate an
orderly wind-up of all other matters under this Agreement including, but not
limited to, preparation by Manager of a final accounting and remittance to
Practice of all Net Practice Revenues less Practice Expenses as collected and
paid by Manager from time to time thereafter.
(d) Parent and Manager shall not be in breach or default
of their respective obligations under this Agreement (and no Manager Event of
Default shall arise) by virtue of exercising any right of offset in accordance
with the procedure set forth in Section 7.7 or 8.6 of the Stock Purchase
Agreement or Section 5.1(b) of this Agreement. Any amounts that are offset as
aforesaid but are found by arbitration under Section 14.11 below to be due and
owing by Parent or PSC Management to Practice or a Physician Partner shall be
paid to Practice not more than ten (10) days after the rendering of the
arbitration award or decision. Any such arbitration award shall include interest
at 6% per annum from the date of any such wrongful offset on the amount which
was wrongfully offset, to the date of such award or decision. Any amounts not
paid within such 10-day period shall bear interest at the rate announced or
published from time to time by NationsBank, N.A., as its prime rate, plus four
percent (4%) per annum from the date of the award or decision.
(e) The Practice agrees that it is bound by and subject to the
standstill provisions of the Debenture contained in Section 9 thereof.
Accordingly, the Practice acknowledges and agrees that during a standstill
period (as defined in the Debenture), the rights and remedies of the Practice
under and in respect of this Agreement, including without limitation, the
Practice's right to terminate this agreement pursuant to Section 6.2, may be
limited by such provisions of the Debenture.
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6.3 REMEDIES UPON TERMINATION.
If this Agreement is terminated pursuant to Section 6.2, Manager's
management fees under this Agreement shall be deemed earned through the date of
termination. Any management fees due Manager shall be paid within thirty (30)
days after the effective date of termination. If this Agreement is terminated
pursuant to Sections 6.2(a)(i), 6.2(a)(iii), 6.2(a)(iv), 6.2(b)(i), 6.2(b)(ii),
or 6.2(b)(iii) of this Agreement, the non-breaching party may pursue such other
legal or equitable relief and remedies as may be available in addition to such
proration.
6.4 REPURCHASE OF ASSETS. Upon the termination of this Agreement
prior to the end of the term of this Agreement (other than a termination by
Practice pursuant to Section 6.2(b)(i), 6.2(b)(ii) or 6.2(b)(iii)), Manager
shall have the additional right to require Practice to repurchase the FFE
located at the Medical Offices, other items of personal property purchased or
leased by Manager for specific use at the Medical Offices and all intangible
assets of Manager which are related to the Practice, including but not limited
to, leases, phones, the name "ENT Associates" and goodwill, from Manager at a
repurchase price equal to $21,619,233 minus the product of (x) $2,161,923, and
(y) the number of years of the term of the Agreement which have been completed
and for which the management fee has been paid at the time of such termination.
Exercise of this right by Manager shall be accomplished by written notice to
Practice within thirty (30) days after the termination of this Agreement. Such
notice of exercise shall also specify a time and date for a closing to be held
to consummate such purchase and sale, such closing to be within ninety (90) days
after the termination of this Agreement at the offices of Manager in New York,
or such other location as Manager shall designate in such written notice. At the
closing Practice shall purchase such assets by delivery of cash or immediately
available funds, against delivery of a xxxx of sale and other assignments and
appropriate instruments of conveyance from Manager transferring all its right,
title or interest in or to same free and clear of all liens or security
interests created by Manager or Parent; provided, however, Practice shall be
entitled to receive a credit against the amount of the repurchase price for any
outstanding amounts payable pursuant to the Debenture upon surrender of the
Debenture to Manager for cancellation. The repurchase requirements contained in
this paragraph are in addition to, and not in lieu of, any other rights and
remedies that Manager may have under any other agreements.
6.5 EARLY TERMINATION OF AGREEMENT. In addition to the foregoing,
in the event of termination of this Agreement prior to the fifth (5th)
anniversary of the Closing Date (the "Threshold Date") for any reason other than
pursuant to the provisions of Section 6.2(b), then all management fees under
Section 5.3 which would have been paid through the Threshold Date, to the extent
not yet paid, shall be immediately due and payable to Manager by the Practice.
Amounts payable pursuant to this paragraph are in addition to, and not in lieu
of, any other rights and remedies that Manager may have under any other
agreements.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
7.1 REPRESENTATIONS AND WARRANTIES OF PRACTICE. Practice hereby
represents and warrants to Manager as follows:
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(a) ORGANIZATION AND GOOD STANDING. Practice is a professional
limited liability partnership duly organized, validly existing and in good
standing under the laws of the State. Practice has all necessary power to own
all of its properties and assets and to carry on its business as now being
conducted.
(b) NO VIOLATIONS. Practice has the corporate authority to
execute, deliver and perform this Agreement, all employment agreements executed
and delivered by it pursuant to this Agreement, and the Billing Agreement, and
has taken all action required by law, its Partnership Agreement or otherwise to
authorize the execution, delivery and performance of this Agreement and such
related documents. The execution and delivery of this Agreement and the Billing
Agreement do not and, subject to the consummation of the transactions
contemplated hereby, will not, violate any provisions of the Partnership
Agreement of Practice or any provisions of or result in the acceleration of, any
material obligation under any mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree, to which Practice is a party, or
by which it is bound. This Agreement and the Billing Agreement have been duly
executed and delivered by Practice and constitute the legal, valid and binding
obligation of Practice, enforceable in accordance with their respective terms
(subject to applicable bankruptcy, insolvency, moratorium and similar laws
affecting creditors' rights generally and the general principles of equity).
Practice has and shall continue to conduct its professional activities in
accordance and in compliance with all laws and regulations applicable thereto.
7.2 REPRESENTATIONS AND WARRANTIES OF MANAGER. Manager hereby
represents and warrants as follows:
(a) ORGANIZATION AND GOOD STANDING. Manager is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Manager has all necessary power to own all of its properties
and assets and to carry on its business as now being conducted.
(b) NO VIOLATIONS. Manager has the corporate authority to
execute, deliver and perform this Agreement and the Billing Agreement, and has
taken all action required by law, its Articles or Certificate of Incorporation,
its Bylaws or otherwise to authorize the execution, delivery and performance of
this Agreement and the Billing Agreement. The execution and delivery of this
Agreement and the Billing Agreement do not and, subject to the consummation of
the transactions contemplated hereby, will not, violate any provisions of the
Articles or Certificate of Incorporation or Bylaws of Manager or any provisions
of or result in the acceleration of, any material obligation under any mortgage,
lien, lease, agreement, instrument, order, arbitration award, judgment or
decree, to which Manager is a party, or by which it is bound. This Agreement and
the Billing Agreement have been duly executed and delivered by Manager and
constitute the legal, valid and binding obligations of Manager, enforceable in
accordance with their respective terms.
(c) NO NOTICE OF DEFAULT UNDER CREDIT AGREEMENT. Parent has
not received any notice of default under that certain Credit Agreement dated as
of April 30, 1997 between Parent and NationsBank, N.A.
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SECTION 8. INSURANCE AND INDEMNITY.
8.1 INSURANCE TO BE MAINTAINED BY PRACTICE. Practice shall
provide, or shall arrange for the provision of, and maintain throughout the
entire term of this Agreement, professional liability insurance coverage on
Practice and each of Practice's employees, including, but not limited to, all
Physician Partners and Practice Employees, in the minimum amount of One Million
and No/100 Dollars ($1,000,000.00) per occurrence and Three Million and No/100
Dollars ($3,000,000.00) annual aggregate including "tail coverage" to the extent
necessary to ensure continuity of coverage. Such amounts of coverage shall be
reviewed by Advisory Board on an annual basis and may be increased by Advisory
Board to levels consistent with then current industry practices in the area of
the Practice. Practice shall provide to Manager written documentation evidencing
such insurance coverage. Practice shall, at its sole cost and expense, pay the
premium costs of all such professional liability insurance coverage during the
term of this Agreement. Practice shall provide, or shall arrange for the
provision of, and shall maintain throughout the entire term of this Agreement,
workers' compensation insurance coverage on Practice and each of its employees,
including, but not limited to, all Physician Partners and Practice Employees, in
the amounts required by law. Practice shall provide to Manager written
documentation evidencing such insurance coverage. Practice shall, at its sole
cost and expense, pay the premium costs of all such workers' compensation
insurance coverage. Manager agrees to administer and manage the above insurance.
8.2 INDEMNIFICATION BY MANAGER. Manager shall indemnify and hold
harmless Practice, its partners, members, directors, officers, agents and
employees from and against any and all claims, demands, liabilities, losses,
damages, actions, suits, costs, deficiencies and expenses (including reasonable
attorney's fees, court costs and other expenses incurred in defending against
claims through appeal or otherwise connected therewith) (hereinafter a "Loss" or
"Losses") arising or resulting in any manner, directly or indirectly, from the
gross negligence or intentional acts or omissions of Manager, its directors,
officers, employees, independent contractors or agents.
8.3 INDEMNIFICATION BY PRACTICE. Practice shall indemnify and hold
harmless Manager, its shareholders, directors, officers, agents and employees
from and against any all Losses arising or resulting in any manner, directly or
indirectly, from the gross negligence, professional malpractice or intentional
acts or omissions of Practice, its Physician Partners, Practice Employees or
independent contractors (other than Manager or PSC).
8.4 INDEMNIFICATION PROCEDURE. (a) Within 30 days after an
indemnified person under Section 8.2 or 8.3 (an "Indemnified Person") receives
written notice of the commencement of any action or other proceeding, or
otherwise becomes aware of any claim or other circumstance, in respect of which
indemnification or reimbursement is being sought under Section 8.2 or Section
8.3, such Indemnified Person shall notify the Party required to indemnify
hereunder (the "Indemnitor") in a writing which encloses a copy of any relevant
pleadings or written notice of claim served upon such Indemnified Person. Any
failure to provide such notice shall not affect an Indemnitor's obligation to
provide indemnification hereunder except to the extent of actual prejudice
suffered from such failure to provide notice. If any such action or other
proceeding shall be brought against any Indemnified Person, Indemnitor shall,
upon written
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notice given within a reasonable time following receipt by Indemnitor of such
notice from Indemnified Person, be entitled to assume the defense of such action
or proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to employ
separate counsel at Indemnitor's expense and to control its own defense of such
action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, (b) a conflict or potential conflict
exists between Indemnitor and such Indemnified Person that would make such
separate representation advisable; (c) injunctive or criminal relief is sought,
or (d) such action or proceeding threatens loss of or adverse effect on the
Indemnified Person's license to practice medicine or to participate in
government or third party payor reimbursement programs or threatens loss of
hospital privileges; provided, however, that in no event shall Indemnitor be
required to pay fees and expenses hereunder for more than one firm of attorneys
in any jurisdiction in any one action or proceeding or group of related actions
or proceedings. Indemnitor shall not, without the prior written consent of any
Indemnified Person, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding to which such
Indemnified Person is a party unless such settlement compromise or consent
includes an unconditional release of such Indemnified Person from all liability
arising or potentially arising from or by reason of such claim, action or
proceeding.
(b) If the Indemnitor fails to defend any action or proceeding
hereunder, or having commenced to defend such action or proceeding hereunder,
fails to continue such defense, the Indemnified Person may conduct the defense
of any such action or proceeding, subject to its right of indemnification
hereunder, and any settlement, compromise or final judgment made or entered into
in connection with such action or proceeding shall be binding upon the
Indemnitor as fully as though such Indemnitor had conducted such defense as
required hereby.
(c) The Indemnified Person shall cooperate fully with the
Indemnitor in connection with the litigation, arbitration, contest, compromise
and settlement of all actions and proceedings hereunder and shall make available
to Indemnitor and its agents all books, records and other information necessary
to defend, settle and investigate such actions and proceedings.
8.5 KEY MAN INSURANCE. Practice agrees, and shall cause its
Physician Partners and Practice Employees to agree, that Manager may obtain, at
its sole expense (and not as a Practice Expense) and for its sole benefit, "key
man" life insurance policies on any or all Physician Partners and Practice
Employees. Neither Practice nor any Physician Partner or Practice Employee shall
have any right, title or interest in or to the proceeds of any such insurance
policies. Practice shall cause its Physician Partners and Practice Employees to
cooperate with Manager, as reasonably requested by Manager from time to time, in
obtaining any such insurance policies, including, but not limited to, causing
such Physician Partners and Practice Employees to submit to such physical
examinations and providing such information relating to insurability as Manager
may reasonably request from time to time. Nothing set forth herein shall be
deemed a
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guaranty of insurability of any physician, or that such insurance, if any, is
obtainable at commercially reasonable rates. Each Physician Partner and Practice
Employee may purchase any such "key man" life insurance policy from the Manager
if such policy is still in effect following termination or non-renewal for any
reason of such person's Employment Agreement with Practice; provided that the
purchase price for such policy shall equal the greater of (a) $10.00, or (b) the
cash value of such policy on the last day of such person's employment by the
Practice, provided nothing herein shall obligate Manager to maintain such
insurance at any time.
8.6 NO PUNITIVE OR CONSEQUENTIAL DAMAGES. Other than for claims
based upon fraud, willful misconduct or bad faith, no party shall be liable to
any other party for indirect, punitive or consequential damages (including any
loss of revenue or profit) arising out of this Agreement.
SECTION 9. ASSIGNMENT.
The parties hereby agree that this Agreement shall not be assigned or
transferred by Manager or Practice without the prior written consent of the
other; provided, however, that this Agreement may be assigned by Manager, in its
sole discretion, without the consent of Practice, to any parent, subsidiary or
affiliate of Manager or to any person or entity that acquires all or
substantially all of the assets of Manager or Parent so long as the assignee
shall assume in writing all of Manager's obligations under this Agreement;
provided, however, any such assignment shall not affect the obligations of
Manager hereunder or the guaranty by Parent of the obligations of Manager
hereunder. Notwithstanding the foregoing, the Practice agrees and consents to
the Manager granting to the Credit Facility Lender a security interest in all of
the Manager's right, title and interest in and under this Agreement as security
for the Manager's obligations under a guaranty of all of the Parent's
indebtedness and other obligations owing to the Credit Facility Lender.
SECTION 10. COMPLIANCE WITH REGULATIONS.
10.1 PRACTICE OF MEDICINE. The parties hereto acknowledge that
Manager is not authorized or qualified to engage in any activity which may be
construed or deemed to constitute the practice of medicine. Neither of the
Parties shall suggest or hold Manager out to the public as being engaged in the
practice of medicine. To the extent any act or service herein required of
Manager should be construed or deemed to constitute the practice of medicine,
the performance of said act or service by Manager shall be deemed waived and
forever unenforceable. Practice and its Physician Employees and Practice
Employees shall be unfettered in the exercise of their professional medical
judgment with respect to matters under consideration which require the exercise
of such judgment.
10.2 SUBCONTRACTS. Pursuant to Title 42 of the United States Code
and applicable rules and regulations thereunder, until the expiration of four
(4) years after termination of this Agreement, Manager shall make available,
upon appropriate written request by the Secretary of the United States
Department of Health and Human Services or the Comptroller General of the United
States General Accounting Office, or any of their duly authorized
representatives, a copy of this Agreement and such books, documents and records
as are necessary to certify the nature
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and extent of the costs of the services provided by Manager under this
Agreement. Manager further agrees that if it carries out any of its duties under
this Agreement through a subcontract with a value or cost of Ten Thousand and
No/100 Dollars ($10,000.00) or more over a twelve (12) month period with a
related organization, such subcontract shall contain a clause to the effect that
until the expiration of four (4) years after the furnishing of such services
pursuant to such subcontract, the related organization shall make available,
upon appropriate written request by the Secretary of the United States
Department of Health and Human Services or the Comptroller General of the United
States General Accounting Office, or any of their duly authorized
representatives, a copy of such subcontract and such books, documents and
records of such organization as are necessary to verify the nature and extent of
such costs. Disclosure pursuant to this Section shall not be construed as a
waiver of any other legal right to which Manager may be entitled under law or
regulation.
SECTION 11. INDEPENDENT RELATIONSHIP.
11.1 INDEPENDENT CONTRACTOR STATUS.
(a) It is acknowledged and agreed that Practice and Manager
are at all times acting and performing hereunder as independent contractors.
Manager shall neither have nor exercise any control or direction over the
methods by which Practice, Physician Partners and Practice Employees practice
medicine. The primary obligation of Manager hereunder is to provide all
Management Services in a competent, efficient and satisfactory manner and to
remit in accordance with Section 5.1 the excess of Net Practice Revenues minus
Practice Expenses. Manager shall not, by entering into and performing its
obligations under this Agreement or any related agreements, become liable for
any of the existing obligations, liabilities or debts of Practice unless
otherwise specifically provided for under the terms of this Agreement or any
related agreements and Practice shall not, by entering into and performing its
obligations under this Agreement or related agreements, become liable for any
existing obligations, liabilities or debts of Manager unless otherwise
specifically provided for under the terms of this Agreement or any related
agreements. In its management role, Manager will have only an obligation to
exercise reasonable care in the performance of the Management Services. Neither
party will have any liability whatsoever for damages suffered on account of the
willful misconduct or negligence of any employee, agent or independent
contractor of the other party. Each party shall be solely responsible for
compliance with all state and federal laws pertaining to employment taxes,
income withholding, unemployment compensation contributions and other employment
related statutes regarding their respective employees, agents and servants.
(b) If any court or regulatory authority shall determine that
the independent contractor relationship established hereby violates any
statutes, rules or regulations (or in the event that in the written opinion of
special regulatory counsel reasonably acceptable to Manager and Practice, there
is a material risk that such a determination would be made by any court or
regulatory authority), then the parties will negotiate in good faith to enter
into an arrangement between Manager, Practice and the then current Physician
Partners and Practice Employees which substantially preserves for the parties
the relative economic benefits of this Agreement. If the parties cannot reach
agreement on such an arrangement after a period of 30 days of good faith
negotiations which shall commence after the aforesaid determination or opinion
is delivered,
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then either Practice or Manager may elect by notice to the other to require that
the parties enter into binding mediation in accordance with this Section
11.11(b) to determine such arrangement. Pursuant to any such notice of mediation
Manager and Practice shall each choose an expert possessing knowledge regarding
health care management arrangements in the State of New York, and the two
experts so chosen shall select a third expert (the "Mediator") who shall be a
lawyer or accountant with a nationally recognized firm possessing knowledge and
experience regarding health care management arrangements in the State of New
York. Following selection the Mediator shall meet with Manager and Practice and,
if the parties are still unable to agree after two (2) such meetings, the
Mediator shall propose in a writing labeled "Binding Arrangement" an arrangement
which best complies with statutes, rules and regulations and which substantially
preserves for the parties the relative economic benefits of this Agreement, and
such proposed binding arrangement shall be final and binding on the parties.
Each party shall bear the costs associated with the retention of its chosen
expert, and the costs associated with the Mediator shall be paid by Manager in a
percentage amount equal to a fraction, the numerator of which is Manager's
annual management fee for the most recent fiscal year ended, and the denominator
of which is Net Practice Revenues for such fiscal year. The balance of the
Mediator's cost shall be a Practice Expense.
11.2 REFERRAL ARRANGEMENTS. The parties hereby acknowledge and
agree that no benefits to Practice hereunder require or are in any way
contingent upon the admission, recommendation, referral or any other arrangement
for the provision of any item or service offered by Manager or any of its
affiliates, to any patients of Practice, Practice's employees or agents.
SECTION 12. GUARANTEES.
(a) Irrevocable Guaranty by Parent. To induce Practice to
execute and deliver this Agreement, Parent hereby unconditionally and
irrevocably guarantees the Practice the full, prompt and faithful performance by
Manager of all covenants and obligations to be performed by Manager under this
Agreement. This guaranty shall be a guaranty of performance and of payment, not
merely collection, and shall be unaffected by any subsequent modification or
amendment of this Agreement whether or not Parent has knowledge of or consented
to such modification or amendment. In the event that Manager fails to fully
perform any or all of such covenants and obligations in accordance with the
provisions of this Agreement (as the same may be amended), Parent will perform
all of its covenants and obligations in accordance with their terms and
immediately pay and deliver to Practice (or such other payee or transferee as
may be provided in this Agreement) the amount due and unpaid or the property not
delivered, as the case may be, by Manager. In the event of bankruptcy,
termination, liquidation or dissolution of Manager, this unconditional guaranty
shall continue in full force and effect. No extension of time for payment or
performance or other modification of any guaranteed obligation or covenant, or
any waiver thereof or other compromise or indulgence with respect thereto or any
release or impairment of any security for any such obligation or covenant, or
any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or guarantor, shall be deemed a release of Parent, and no
notice to, or consent of, Parent shall be required. Parent hereby waives (i)
promptness and diligence in collection; (ii) notice of acceptance and notice of
the incurrence of any obligation by Manager; (iii) notice of any actions taken
by Manager; (iv)
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all other notices, demands and protests of every kind in connection with the
enforcement of the obligations of Parent pursuant to this Section 12(a), the
omission of or delay of which, but for the provisions of this Section 12(a),
might constitute grounds for relieving Parent of its obligations under this
Section 12(a); (v) the right to a trial by jury of any dispute arising under, or
relating to, the guaranty set forth in this Section 12(a); (vi) any right or
claim of right to cause a marshaling of Manager's assets or to cause the
Physician Partners to proceed against any security before proceeding against
Parent hereunder; and (vii) any requirement that the Physician Partners protect,
secure, perfect or insure any security interest or lien in or on any property
subject thereto or exhaust any right or take any action against Manager or any
other person or any collateral as a precondition to the Physician Partners'
right to enforce the guaranty set forth in this Section 12(a) in accordance with
its terms. Without limiting the generality of the foregoing, Parent hereby
waives any defense to the guaranty set forth in this Section 12(a) which may
arise by reason of (A) the incapacity, lack of authority, death or disability
of, or revocation hereof by, any person or entity, (B) the failure of the
Physician Partners to file or enforce any claim against the estate (in probate,
bankruptcy or any other proceedings) of any person or entity, or (C) any defense
based upon an election of remedies by Physician Partners.
(b) Irrevocable Guaranty by Physician Partners. To induce
Manager to execute and deliver this Agreement, each of the undersigned Physician
Partners, severally unconditionally and irrevocably guarantees to Manager the
full, prompt and faithful performance by Practice of all covenants and
obligations to be performed by Practice under Sections 3.7, 4.4, 4.5, 5.2, 6.4,
6.5, 7.1(a), 7.1(b), 8.1, 8.3, and 14.11 of this Agreement during the term of
the guarantee of such Physician Partner as set forth on Exhibit 12(b) hereto.
This guaranty shall be a guaranty of payment and performance, not merely
collection, and shall be unaffected by any subsequent modification or amendment
of this Agreement whether or not such guarantor has knowledge of or consented to
such modification or amendment. In the event that Practice fails to fully
perform all such covenants and obligations in accordance with their terms or pay
all or any part of such sums or deliver all or any part of such property when
due after giving effect to any applicable grace periods, the Physician Partners
will severally perform all such covenants and obligations in accordance with
their terms or immediately pay or deliver to Manager (or such other payee or
transferee as may be provided in any such agreement) the amount due and unpaid
or the property not delivered, as the case may be, by Practice. In the event of
bankruptcy, termination, liquidation or dissolution of Practice, this
unconditional guaranty shall continue in full force and effect. In the event of
any extension of time for payment or performance or other modification of any
guaranteed obligation or covenant, or any waiver thereof or other compromise or
indulgence with respect thereto or any release or impairment of any security for
any such obligation or covenant, or any other circumstance which might otherwise
constitute a legal or equitable discharge of a surety or guarantor, no notice
to, or consent of, Practice or any other Physician Partner shall be required.
Each Physician Partner hereby waives (i) promptness and diligence in collection;
(ii) notice of acceptance and notice of the incurrence of any obligation by
Practice; (iii) notice of any actions taken by the Physician Partners or
Practice; (iv) all other notices, demands and protests of every kind in
connection with the enforcement of the obligations of Practice or Physician
Partners pursuant to this Section 12(b), the omission of or delay of which, but
for the provisions of this Section 12(b), might constitute grounds for relieving
Physician Partner of his obligations under this Section 12(b); (v) the right to
a trial by jury of any dispute arising under, or relating to, the guaranty set
forth in this Section 12(b); (vi)
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any right or claim of right to cause a marshaling of Practice's assets or to
cause Parent or Manager to proceed against any security before proceeding
against Physician Partner hereunder; and (vii) any requirement that Parent or
Manager protect, secure, perfect or insure any security interest or lien in or
on any property subject thereto or exhaust any right or take any action against
Practice or any other person or any collateral as a precondition to Parent's and
Manager's right to enforce the guaranty set forth in this Section 12(b) in
accordance with its terms. Without limiting the generality of the foregoing,
each Physician Partner hereby waives any defense to the guaranty set forth in
this Section 12(b) which may arise by reason of (A) the incapacity, lack of
authority, death or disability of, or revocation hereof by, any person or
entity, (B) the failure of Parent or Manager to file or enforce any claim
against the estate (in probate, bankruptcy or any other proceedings) of any
person or entity, or (C) any defense based upon an election of remedies. Each
Physician Partner shall be liable under this Section 12(b) only for his pro rata
share of the liability or obligation guaranteed or loss resulting from breach
based on the percentages set forth on Exhibit 12(b) hereto; provided, however,
that a Physician-Partner's individual guaranty will terminate with respect to
breaches occurring after his death or permanent "disability" (as defined in the
Physician Employment Agreements), retirement from Practice at age sixty (60) or
older, or retirement from Practice after completion of at least fifteen (15)
years of service from the date of this Agreement, or after the date set forth on
Exhibit 12(b) for any Physician Partner whose initial term of employment is ten
(10) years.
SECTION 13. NAME; LICENSE. Practice agrees that it shall conduct its
medical practice under the name of, and only under the name of "ENT Associates",
subject to the terms of the License Agreement between the parties of even date
herewith. In the event of any termination of the License Agreement, Practice
agrees to change the name under which it conducts its medical practice to a
distinctly different name unless acquired pursuant to Section 6.4.
SECTION 14. MISCELLANEOUS.
14.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile and reputable overnight courier, to the parties hereto at the
following addresses, or at such other address as either party may advise the
other in writing from time to time:
If to Manager or Parent:
PHYSICIANS' SPECIALTY CORP.
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
Telephone: (404)
with a copy of each notice directed to Manager or Parent to:
Xxxxxxx X. Xxxxx
Xxxxxxxx Xxxxxxx LLP
0000 XxxxxxxXxxx Xxxxx
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
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If to the Practice or any Physician Partner:
with a copy of each notice directed to Practice to:
Xxxx Lever
Xxxxxxx & Xxxxxxxxx LLP
Xxx Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxxxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000)000-0000
or such other address as shall be furnished in writing by any party to the other
party. All such notices shall be considered received when hand delivered or one
business day after delivery to the overnight courier.
14.2 ADDITIONAL ACTS. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement.
14.3 GOVERNING LAW. This Agreement shall be interpreted, construed
and enforced in accordance with the laws of the State applied without giving
effect to any conflicts-of-law principles.
14.4 CAPTIONS, ETC. The captions or headings in this Agreement are
made for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement. All Addenda and Exhibits to this Agreement are hereby incorporated
into this Agreement by this reference.
14.5 SEVERABILITY. In the event any term, covenant, condition,
agreement, section or provision hereof shall be deemed invalid or unenforceable
by a court of competent and final jurisdiction in the premises, the same shall
be severable and this Agreement shall not terminate or be deemed void or
voidable, but shall continue in full force and effect without such stricken
provision.
14.6 MODIFICATIONS. This instrument contains the entire agreement
of the parties and supersedes any and all prior or contemporaneous negotiations,
understandings or agreements between the parties, written or oral, with respect
to the subject matter hereof. This Agreement may not be changed or terminated
orally, but may only be changed by an agreement in writing signed by a duly
authorized officer of Manager if Manager is the party against whom enforcement
of any such waiver, change, modification, extension, discharge or termination is
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sought, or by Practice if Practice is the party against whom enforcement of any
such waiver, change, modification, extension, discharge or termination is
sought. The parties expressly acknowledge that this Section 14.6 may not be
waived, modified or changed by any other persons except the Chief Executive
Officer or Chief Financial Officer of Manager and Practice.
14.7 NO RULE OF CONSTRUCTION. The parties acknowledge that this
Agreement was initially prepared by Manager solely as a convenience and that all
parties and their counsel have read and fully negotiated all the language used
in this Agreement. The parties acknowledge and agree that because all parties
and their counsel participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes any language,
whether ambiguous, unclear or otherwise, in favor of, or against any party by
reason of that party's role in drafting this Agreement.
14.8 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall, together, constitute and be one and the
same instrument.
14.9 BINDING EFFECT. This Agreement shall be binding on and shall
inure to the benefit of the parties hereto, and their successors and permitted
assigns. Subject to the foregoing sentence, no person not a party hereto shall
have any right under or by virtue of this Agreement.
14.10 ENFORCEMENT RIGHTS. Practice acknowledges that both Practice
and Manager will be directly or indirectly affected by the enforcement of
Practice's contractual and other legal rights against Physician Partners and
Practice Employees with respect to the restrictive covenants and liquidated
damages provisions contained in the Physician Employment Agreements. Therefore,
Practice appoints Manager its nonexclusive true and lawful attorney-in-fact to
enforce any and all rights of Practice, to the extent not contrary to applicable
law, with respect to the provisions pertaining to restrictive covenants and
liquidated damages in the Physician Employment Agreements, provided that Manager
shall not exercise such enforcement rights unless it shall first provide
Practice with written notice of Manager's intent to enforce Practice's rights
and Practice shall not have commenced enforcement of its rights within five (5)
days after receipt of Manager's written notice. Practice agrees to execute any
instrument reasonably requested by Manager to evidence such appointment or to
reappoint Manager as such attorney-in-fact upon any termination of the
appointment made hereby. Such appointment is coupled with an interest and
irrevocable during the term of this Agreement.
14.11 ARBITRATION. All disputes, controversies, differences or
claims arising out of, relating to or in connection with the exercise by Parent
or Manager of a right of offset pursuant to Section 5.1 of this Agreement shall
be finally settled by binding arbitration in New York, New York pursuant to the
arbitration rules of the American Arbitration Association. Arbitration shall
take place before one arbitrator appointed in accordance with such rules. The
governing law of the arbitration shall be the law of the State of New York. Any
award or decision rendered by the arbitrator shall clearly set forth the factual
and legal basis for such award or decision. Judgment on the award or decision
rendered by the arbitrator shall be nonappealable and enforceable in any court
having jurisdiction thereof. The costs of the arbitration, including
administrative, legal and
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arbitrator fees, shall be borne by the losing party or according to the
discretion of the arbitrator if the parties disagree as to which party is the
losing party under the award or decision.
14.12 COSTS OF ENFORCEMENT. If either party files suit in any court
against the other party to enforce the terms of this Agreement against the other
party or to obtain performance by it hereunder, the prevailing party will be
entitled to recover all reasonable costs, including reasonable attorneys' fees,
disbursements and court costs, from the other party as part of any judgment in
such suit. The term "prevailing party" shall mean the party in whose favor final
judgment after appeal (if any) is rendered with respect to the claims asserted
in the complaint or any counterclaim. "Reasonable attorneys' fees" are those
attorneys' fees reasonably incurred in obtaining a final judgment in favor of
the prevailing party and in pursuing all appeals.
IN WITNESS WHEREOF, Practice, Manager and Parent have duly executed
this Agreement on the day and year first above written.
PSC MANAGEMENT CORP. ENT ASSOCIATES, LLP
By: By:
Title: Title:
PHYSICIANS' SPECIALTY CORP.
By:
Title:
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The undersigned, constituting all of the Physician Partners, hereby
execute the above Agreement solely for the purpose of confirming and agreeing to
be legally bound by their obligations under Section 12(b) hereof.
Xxxxxx Xxxxx, M.D.
Xxxxxx Xxxxx, M.D.
Xxxxxx Xxxxx, M.D.
Xxxxxxx Hamburg, M.D.
Xxxx Xxxxxx, M.D.
Xxx Xxxxxxxxxx, M.D.
Xxxxx Xxxxxx, M.D.
Xxxxx Xxxxxx, M.D.
Xxx Xxxxxxxxx, M.D.
Xxxxxxx Xxxxxxxxx, M.D.
Xxxx Xxxxxxx, M.D.
Xxxxx Xxxxxx, M.D.
Xxxxx Xxxxxxxxx, M.D.
Xxxxxxx Xxxxxxxxx, M.D.
Xxxxxx Xxxx, M.D.
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APPENDIX A
DEFINITIONS SECTION
----------- -------
Confidential Information 4.6(e)
Credit Facility Lender 5.2(b)
Effective Date Preamble
Extended Term 6.1
FFE 3.3
GAAP 1.2
Indemnified Person 8.4
Key Man 8.5
Laws 3.12
Manager Preamble
Medical Offices 3.1
Net Practice Revenues 1.3
Parent Preamble
Parties Background
Physician Employment Agreements 3.13
Physician Expenses 4.1
Physician Partners 1.4
Practice Preamble
Practice IP 4.6(d)
Practice Employees 1.5
Practice Expenses 1.6
PSC Background
State 1.7
Threshold Date 6.5
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EXHIBIT 3.1
Medical Offices
[to be provided]
47
EXHIBIT 3.6(B)
BILLING AGREEMENT
FOR
GOVERNMENTAL RECEIVABLES
THIS BILLING AGREEMENT ("AGREEMENT") IS ENTERED INTO THIS _____ DAY OF
__________, 1998, BY AND BETWEEN PSC MANAGEMENT CORP., A DELAWARE CORPORATION
("MANAGER"), AND (NAME OF PRACTICE) AND THE PHYSICIAN PARTNERS WHO ARE
SIGNATORIES HERETO (COLLECTIVELY REFERRED TO AS "PRACTICE").
WITNESSETH:
WHEREAS, THE PARTIES ENTERED INTO A MANAGEMENT SERVICES AGREEMENT DATED
____________, 19___ (THE "SERVICE AGREEMENT"), UNDER WHICH MANAGER PROVIDES
CERTAIN MANAGEMENT SERVICES TO PRACTICE, INCLUDING BILLING AND COLLECTION
SERVICES FOR MEDICARE, MEDICAID AND CHAMPUS RECEIVABLES; AND,
WHEREAS, THE PARTIES WISH TO SET FORTH IN DETAIL THE MECHANISMS UNDER
WHICH MANAGER PROVIDES AND IS COMPENSATED FOR SUCH BILLING SERVICES.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND AGREEMENTS
HEREIN CONTAINED, THE PARTIES AGREE AS FOLLOWS:
1. APPOINTMENT AND AUTHORITY. MANAGER SHALL, ON BEHALF OF PRACTICE,
XXXX AND COLLECT FROM MEDICARE, MEDICAID AND CHAMPUS THE PROFESSIONAL FEES FOR
MEDICAL SERVICES RENDERED BY PRACTICE TO MEDICARE, MEDICAID AND CHAMPUS
PATIENTS. PRACTICE HEREBY APPOINTS MANAGER FOR THE TERM HEREOF TO BE PRACTICE'S
TRUE AND LAWFUL ATTORNEY-IN-FACT FOR THE FOLLOWING PURPOSES:
A. TO XXXX MEDICARE, MEDICAID AND CHAMPUS IN THE NAME
AND ON BEHALF OF PRACTICE;
B. TO COLLECT ALL ACCOUNTS RECEIVABLE RESULTING FROM
SUCH XXXXXXXX IN THE NAME AND ON BEHALF OF PRACTICE;
C. TO TAKE POSSESSION OF AND ENDORSE IN THE NAME AND ON
BEHALF OF PRACTICE (AND/OR IN THE NAME OF AN
INDIVIDUAL PHYSICIAN WHO HAS PROPERLY REASSIGNED
BENEFITS TO PRACTICE) ANY NOTES, CHECKS, MONEY
ORDERS, ELECTRONIC PAYMENTS, AND OTHER FORMS OF
PAYMENT OF SUCH ACCOUNTS RECEIVABLE;
D. TO DEPOSIT ALL SUCH AMOUNTS COLLECTED, INCLUDING
ELECTRONIC PAYMENTS, INTO AN ACCOUNT OWNED BY
PRACTICE (THE "PHYSICIAN DEPOSIT ACCOUNT") WITH A
BANK WHOSE DEPOSITS ARE INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, WHICH ACCOUNT SHALL AT
ALL TIMES BE MAINTAINED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 2 BELOW; AND,
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E. TO WITHDRAW FUNDS FROM THE PHYSICIAN DEPOSIT ACCOUNT
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 2 BELOW
ON BEHALF AND IN THE NAME OF PRACTICE FOR THE PAYMENT
OF PRACTICE EXPENSES, AND REMITTANCE OF FUNDS TO
PRACTICE AS PROVIDED IN SECTION 5.1 OF THE SERVICE
AGREEMENT.
2. PHYSICIAN DEPOSIT ACCOUNT.
A. MANAGER SHALL HAVE ACCESS TO THE PHYSICIAN DEPOSIT
ACCOUNT SOLELY FOR THE PURPOSE OF PAYING PRACTICE
EXPENSES INCURRED BY OR ON BEHALF OF PRACTICE,
INCLUDING THE PAYMENT OF MANAGER'S FEE, IN ACCORDANCE
WITH THE TERMS OF THE SERVICE AGREEMENT. PRACTICE
AGREES TO EXECUTE AND DELIVER TO THE BANK ANY AND ALL
DOCUMENTS NECESSARY TO EVIDENCE OR EFFECT THE SPECIAL
POWER OF ATTORNEY GRANTED TO MANAGER IN ACCORDANCE
WITH SECTION 1 ABOVE.
B. MEDICARE AND MEDICAID PAYMENTS SHALL BE DEPOSITED
DIRECTLY TO THE PHYSICIAN DEPOSIT ACCOUNT. PRACTICE
AND MANAGER HEREBY AGREE THAT IF ANY MEDICARE AND
MEDICAID PAYMENTS ARE RECEIVED BY MANAGER ON BEHALF
OF PRACTICE, SUCH AMOUNTS SHALL BE FORWARDED TO THE
PHYSICIAN DEPOSIT ACCOUNT FOR DEPOSIT. FUNDS FROM THE
PHYSICIAN DEPOSIT ACCOUNT WILL ONLY BE DRAWN IN THE
NAME OF PRACTICE. PRACTICE HEREBY AGREES THAT THIS
PAYMENT ARRANGEMENT WILL CONTINUE IN EFFECT ONLY SO
LONG AS PRACTICE HAS SOLE CONTROL OF THE PHYSICIAN
DEPOSIT ACCOUNT, AND THE BANK IS SUBJECT ONLY TO
PRACTICE'S INSTRUCTIONS REGARDING THE PHYSICIAN
DEPOSIT ACCOUNT.
C. IN THE EVENT THAT PRACTICE REVOKES MANAGER'S RIGHT TO
WITHDRAW FUNDS FROM THE PHYSICIAN DEPOSIT ACCOUNT, OR
IF PRACTICE WITHDRAWS FUNDS FROM THE PHYSICIAN
DEPOSIT ACCOUNT OR TAKES ANY OTHER ACTIONS WITH
RESPECT TO THE PHYSICIAN DEPOSIT ACCOUNT (UNLESS SUCH
ACTIONS ARE REQUIRED BY APPLICABLE LAW) WITHOUT FIRST
OBTAINING THE APPROVAL OF THE ADVISORY BOARD IN
ACCORDANCE WITH THE SERVICE AGREEMENT (IT BEING
UNDERSTOOD THAT ALL PROCEEDS ARE INTENDED TO BE PAID
OVER TO MANAGER TO PAY PRACTICE EXPENSES AND REPAY
ANY ADVANCES MADE BY MANAGER IN ACCORDANCE WITH THE
SERVICE AGREEMENT), AND IF ANY SUCH ACTIONS REMAIN
UNCURED AFTER NOTICE AND 15 DAYS OPPORTUNITY TO CURE,
SUCH ACTIONS SHALL CONSTITUTE GROUNDS FOR IMMEDIATE
TERMINATION OF THIS AGREEMENT AND THE SERVICE
AGREEMENT AS A "PRACTICE EVENT OF DEFAULT"
THEREUNDER, AND PRACTICE SHALL IMMEDIATELY REIMBURSE
AND INDEMNIFY MANAGER FOR ALL COSTS AND DAMAGES
SUSTAINED AS A RESULT OF SUCH BREACH BY PRACTICE.
PRACTICE HEREBY ACKNOWLEDGES THAT PRACTICE HAS
GRANTED TO MANAGER A SECURITY INTEREST IN PRACTICE'S
CASH PROCEEDS FROM ALL COLLECTIONS COVERED BY THIS
AGREEMENT IN ACCORDANCE WITH SECTION 5.2 OF THE
SERVICE AGREEMENT. PRACTICE FURTHER AGREES IN THE
EVENT PRACTICE REVOKES MANAGER'S RIGHT TO WITHDRAW
FUNDS FROM THE ACCOUNT THAT PRACTICE SHALL BE DEEMED
TO HAVE RECEIVED ANY AND ALL AMOUNTS RETAINED IN THE
PHYSICIAN DEPOSIT ACCOUNT WHEN DETERMINING THE AMOUNT
TO BE REMITTED BY MANAGER TO PRACTICE UNDER SECTION
5.1 OF THE SERVICE AGREEMENT.
42
49
3. COMPENSATION. AS REIMBURSEMENT FOR SERVICES PROVIDED UNDER THE
SERVICE AGREEMENT AND THIS AGREEMENT, MANAGER SHALL RECEIVE THE FEES SET FORTH
IN SECTION 5.3 OF THE SERVICE AGREEMENT. THE PARTIES HAVE AGREED TO SUCH FEES AT
ARMS' LENGTH AND HAVE DETERMINED THAT SUCH FEES REPRESENT FAIR MARKET VALUE FOR
THE SERVICES PROVIDED HEREUNDER AND UNDER THE SERVICE AGREEMENT.
4. CONSTRUCTION OF TERMS. THE TERMS OF THE SERVICE AGREEMENT SHALL, TO
THE FULLEST EXTENT REASONABLY POSSIBLE, BE CONSTRUED SO AS TO BE CONSISTENT WITH
THE TERMS OF THIS AGREEMENT, AND ALL CAPITALIZED TERMS HEREIN SHALL, EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED HEREIN, HAVE THE SAME DEFINITIONS AS SET FORTH IN
THE SERVICE AGREEMENT. IN THE EVENT OF ANY AMBIGUITY OR INCONSISTENCY BETWEEN
THE TERMS AND CONDITIONS OF THIS AGREEMENT AND THE SERVICE AGREEMENT, THE TERMS
AND CONDITIONS OF THIS AGREEMENT SHALL GOVERN.
5. CHANGES IN REIMBURSEMENT LAWS AND REGULATIONS. IN THE EVENT OF
CHANGES IN LAWS AND REGULATIONS THAT WOULD CAUSE ANY PORTION OF THIS AGREEMENT
TO BE ILLEGAL OR UNENFORCEABLE, THE PARTIES SHALL PROMPTLY AMEND THIS AGREEMENT
AS NECESSARY TO COMPLY WITH SUCH LAWS AND REGULATIONS.
6. BINDING ON SUCCESSORS. THIS AGREEMENT SHALL BE BINDING UPON THE
PARTIES HERETO, AND THEIR SUCCESSORS, ASSIGNS, HEIRS AND BENEFICIARIES.
7. GOVERNING LAW. THE VALIDITY, INTERPRETATION, AND PERFORMANCE OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS DESIGNATED TO GOVERN THE TERMS OF
THE SERVICE AGREEMENT.
8. SEVERABILITY. THE PROVISIONS OF THIS AGREEMENT SHALL BE DEEMED
SEVERABLE AND IF ANY PORTION SHALL BE HELD INVALID, ILLEGAL OR UNENFORCEABLE FOR
ANY REASON, THE REMAINDER OF THIS AGREEMENT SHALL BE EFFECTIVE AND BINDING UPON
THE PARTIES.
9. AMENDMENTS. THIS AGREEMENT SHALL NOT BE MODIFIED OR AMENDED EXCEPT
BY A WRITTEN DOCUMENT EXECUTED BY BOTH PARTIES TO THIS AGREEMENT, AND ANY SUCH
WRITTEN MODIFICATIONS OR AMENDMENTS SHALL BE ATTACHED HERETO.
10. NOTICES. ANY COMMUNICATIONS REQUIRED OR DESIRED TO BE GIVEN
HEREUNDER SHALL BE DEEMED TO HAVE BEEN PROPERLY GIVEN IF SENT BY HAND DELIVERY,
OR BY FACSIMILE AND REPUTABLE OVERNIGHT COURIER, TO THE PARTIES HERETO AT THE
FOLLOWING ADDRESSES, OR AT SUCH OTHER ADDRESS AS EITHER PARTY MAY ADVISE THE
OTHER IN WRITING FROM TIME TO TIME:
IF TO MANAGER OR PARENT:
PHYSICIANS' SPECIALTY CORP.
0000 XXXX XXXXX XXXXX, XXXXX 000
XXXXXXX, XXXXXXX 00000
ATTENTION: CHIEF EXECUTIVE OFFICER
FACSIMILE: (000) 000-0000
TELEPHONE: (000) 000-0000
50
WITH A COPY OF EACH NOTICE DIRECTED TO MANAGER OR PARENT TO:
XXXXXXX X. XXXXX
XXXXXXXX XXXXXXX LLP
0000 XXXXXXXXXXX XXXXX
000 XXXXXXXXX XXXXXX, X.X.
XXXXXXX, XXXXXXX 00000-0000
FACSIMILE: (000) 000-0000
TELEPHONE: (000) 000-0000
IF TO THE PRACTICE OR ANY PHYSICIAN PARTNER:
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
WITH A COPY OF EACH NOTICE DIRECTED TO PRACTICE TO:
XXXX LEVER
XXXXXXX & XXXXXXXXX LLP
XXX XXXXX XXXXXXXX, 00XX XXXXX
XXXXX XXXXXX, XX 00000
FACSIMILE: (000) 000-0000
TELEPHONE: (000)000-0000
OR SUCH OTHER ADDRESS AS SHALL BE FURNISHED IN WRITING BY ANY PARTY TO THE OTHER
PARTY. ALL SUCH NOTICES SHALL BE CONSIDERED RECEIVED WHEN HAND DELIVERED OR ONE
BUSINESS DAY AFTER DELIVERY TO THE OVERNIGHT COURIER.
11. ADDITIONAL ACTS. EACH PARTY HEREBY AGREES TO PERFORM ANY FURTHER
ACTS AND TO EXECUTE AND DELIVER ANY DOCUMENTS WHICH MAY BE REASONABLY NECESSARY
TO CARRY OUT THE PROVISIONS OF THIS AGREEMENT.
12. CAPTIONS, ETC. THE CAPTIONS OR HEADINGS IN THIS AGREEMENT ARE MADE
FOR CONVENIENCE AND GENERAL REFERENCE ONLY AND SHALL NOT BE CONSTRUED TO
DESCRIBE, DEFINE OR LIMIT THE SCOPE OR INTENT OF THE PROVISIONS OF THIS
AGREEMENT. ALL ADDENDA AND EXHIBITS TO THIS AGREEMENT ARE HEREBY INCORPORATED
INTO THIS AGREEMENT BY THIS REFERENCE.
51
13. COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN SEVERAL
COUNTERPARTS, EACH OF WHICH, WHEN SO EXECUTED, SHALL BE DEEMED TO BE AN
ORIGINAL, AND SUCH COUNTERPARTS SHALL, TOGETHER, CONSTITUTE AND BE ONE AND THE
SAME INSTRUMENT.
52
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT AS OF THE
DATE FIRST WRITTEN ABOVE.
PRACTICE:
BY:
-----------------------------------
TITLE:
--------------------------------
MANAGER:
PSC MANAGEMENT CORP.
BY:
-----------------------------------
TITLE:
--------------------------------
PHYSICIAN PARTNERS:
--------------------------------------
Xxxxxx Xxxxx, M.D.
--------------------------------------
Xxxxxx Xxxxx, M.D.
--------------------------------------
Xxxxxx Xxxxx, M.D.
--------------------------------------
Xxxxxxx Hamburg, M.D.
--------------------------------------
Xxxx Xxxxxx, M.D.
--------------------------------------
Xxx Xxxxxxxxxx, M.D.
53
--------------------------------------
Xxxxx Xxxxxx, M.D.
--------------------------------------
Xxxxx Xxxxxx, M.D.
--------------------------------------
Xxx Xxxxxxxxx, M.D.
--------------------------------------
Xxxxxxx Xxxxxxxxx, M.D.
--------------------------------------
Xxxx Xxxxxxx, M.D.
--------------------------------------
Xxxxx Xxxxxx, M.D.
--------------------------------------
Xxxxx Xxxxxxxxx, M.D.
--------------------------------------
Xxxxxxx Xxxxxxxxx, M.D.
--------------------------------------
Xxxxxx Xxxx, M.D.
54
EXHIBIT 3.20
Restricted Areas
Westchester County, New York
Xxxxxx County, New York
Five Boroughs in New York City
Nassau County, New York
Suffolk County, New York
Xxxxxx County, New Jersey
Xxxxxx County, New Jersey
Passaic County, New Jersey
Newark, New Jersey
Elizabeth, New Jersey
55
EXHIBIT 12(b)
Physician Several Guarantees
Name of Physician Term of Obligations Guaranteed % Share of Liability
----------------- ------------------------------ --------------------
[to be provided]
