OPERATING AGREEMENT
XXXX X. XXXXXXX, D.P.M., P.C.
HEALTHDRIVE CORPORATION
OPERATING AGREEMENT
XXXX X. XXXXXXX, D.P.M., P.C.
HEALTHDRIVE CORPORATION
Table of Contents
Page No.
I. BACKGROUND................................................1
II. AGREEMENT.................................................1
1. Obligations of HDC................................1
(a) General......................................1
(b) Claim Processing and Collection of Fees......2
(c) License of Service Xxxx......................2
(d) Extensions of Credit to P.C..................3
(e) Bank Accounts................................3
(f) Records and Financial Data...................4
2. Obligations of P.C................................5
(a) Employment of Practitioners..................5
(b) Maintenance of Insurance.....................6
(c) Compliance with Regulations..................6
(d) Quality of Care..............................6
(e) Fees.........................................6
(f) Standardized Systems.........................6
(g) Control of Podiatry Practice by P.C..........7
(h) Authority to Contract........................7
(i) Exclusive Supplier...........................8
3. Prohibition on Referrals..........................8
4. Expenses of P.C...................................8
5. Compensation of HDC...............................8
6. Term of the Agreement.............................9
7. Termination of the Agreement......................9
8. Confidential and Proprietary Information.........10
9. Non-Competition and Non-Solicitation.............11
10. General..........................................11
(a) Independent Contractor......................11
(b) Exclusivity.................................12
(c) Indemnification.............................12
(d) Prior Agreements; Amendments................12
(e) Force Majeure...............................12
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(f) Assignment; Binding Effect..................12
(g) Construction of Agreement...................13
(h) Governing Law...............................13
(i) Additional Documents........................13
(j) Headings....................................13
(k) Notices.....................................13
(l) Counterparts................................14
(m) No Podiatry Practice By HDC.................14
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OPERATING AGREEMENT
OPERATING AGREEMENT, dated as of June 19, 1998, by and between Xxxx X.
Xxxxxxx, D.P.M., P.C., a professional corporation organized under Chapter
156A of the Massachusetts General Laws ("P.C."), and HealthDrive Corporation,
a Delaware corporation ("HDC").
I. BACKGROUND
WHEREAS, P.C. is a duly incorporated and validly existing professional
corporation organized for the practice of podiatry;
WHEREAS, HDC provides certain services and capital and licenses its
Service Xxxx (as hereinafter defined) to those engaged in the provision of
podiatry and/or ancillary health care services at long term care facilities
and other concentrated geriatric populations ("PODIATRY SERVICES"); and
WHEREAS, P.C. desires to engage HDC to provide certain services and
capital to P.C. and its podiatrists and ancillary health care personnel
("PRACTITIONERS") and to license HDC's Service Xxxx.
NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
II. AGREEMENT
1. OBLIGATIONS OF HDC.
(a) GENERAL. HDC shall be exclusively responsible to provide to P.C. the
following services required by P.C.:
(i) Order and purchase, as an accommodation to and on behalf of
P.C., all podiatry related and office inventory, laundry, linen, uniforms,
printing, stationary, forms, laboratory items and supplies as are ordinary
and necessary for operation of the P.C. HDC shall be solely responsible
for the payment of applicable sales or use tax with respect to such
purchases and shall make such property available for use by P.C. without
any additional charge therefor.
(ii) Operate and maintain P.C.'s bookkeeping and accounting systems;
(iii) Perform all payroll and payroll accounting functions for P.C.;
and
(iv) Administer all of PC's employee benefit plans.
(b) CLAIMS PROCESSING AND COLLECTION OF FEES. HDC shall, on behalf and in
the name of P.C., be exclusively responsible for processing all claims and
bills, and for collecting all moneys related thereto, for Podiatry Services
rendered by P.C. In this connection, P.C. appoints HDC for the term of this
Agreement its true and lawful agent, and shall assure that such appointment is
effective for P.C.'s Practitioners for the following purposes:
(i) To xxxx and collect on behalf of P.C., or any of its
Practitioners, amounts owing from patients for performance of Podiatry
Services, and P.C. hereby covenants to turn over, and require any of its
Practitioners to turn over, all such payments to HDC for deposit as
provided in Section 1(e) below;
(ii) To xxxx and collect on behalf of P.C., or any of its
Practitioners, amounts owing from Blue Shield plans, insurance companies,
Medicare, Medicaid, and any other third party payor for the performance of
Podiatry Services, and P.C. hereby covenants to turn over, and require any
of its Practitioners to turn over, all such payments to HDC for deposit as
provided in Section 1(e) below;
(iii) To take possession of and cause to be deposited any notes,
checks, money orders, insurance payments, and any other instruments
received in payment of accounts receivable and to deposit same as provided
in Section 1(e) below; and
(iv) To take such other actions relative to billing and collection
of fees, and related financial matters of the P.C. as are appropriate and
consistent with the purpose of this Agreement.
In connection with its obligations under this Section 1(b), HDC shall
maintain systems and procedures reasonably necessary to prevent unlawful
maximization of revenue; PROVIDED, HOWEVER, that HDC shall not be liable for
billing practices by P.C. or its Practitioners that unlawfully maximize revenue
to P.C. or its Practitioners.
(c) LICENSE OF SERVICE XXXX. HDC hereby grants to P.C. a non-exclusive,
revocable (in accordance with the provisions of this Agreement) and
non-assignable license for the term of this Agreement to use the names
"HealthDrive," "HealthDrive Corporation" or "HDC" and all designs, logos, and
marks incorporating the same (collectively, the "SERVICE XXXX") in connection
with advertising and promotion of P.C., but in each instance only in the form
and manner and in combination with such
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other designs, schemes, characteristics, words and the like as may from time to
time be approved in advance by HDC. Upon the expiration or termination of this
Agreement, P.C. will forthwith discontinue the use of the Service Xxxx and
thereafter shall not use or otherwise seek the benefits of the Service Xxxx or
any name, phrase, design, logo, xxxx or the like sufficiently related to or
identifiable with the Service Xxxx as to derogate from the full and complete
ownership and enjoyment of the same by and for the benefit of HDC. Recognizing
the special and unique value of the Service Xxxx to HDC, P.C. agrees that P.C.
shall take no action nor permit any action to be taken which shall in any way
derogate from the high level of quality and value associated with the Service
Xxxx and the ownership and enjoyment of the same by HDC. Furthermore, P.C.
agrees that, without limitation, a violation by P.C. of the provisions of this
Agreement relative to the Service Xxxx will cause irreparable harm to HDC and
the good will associated with the Service Xxxx and thus HDC shall be entitled to
immediate injunctive relief (whether by way of temporary or permanent or
mandatory or prohibitive injunction) for any such violation. Notwithstanding
anything in this paragraph to the contrary, P.C. shall not make use of the
Service Xxxx in any way which would cause a violation of the applicable
guidelines established by pertinent professional associations or the
Massachusetts Board of Registration in Podiatry, the Board of Registration in
Podiatry of any other jurisdiction in which Podiatry Services are provided or
other applicable laws or regulations.
(d) EXTENSIONS OF CREDIT TO P.C. HDC hereby agrees to extend credit to
P.C. to fund P.C.'s working capital requirements, including without
limitation amounts due to HDC pursuant to this Agreement, to the extent HDC
determines, in its sole discretion, that such Extensions of Credit are
commercially reasonable; PROVIDED, HOWEVER, that HDC shall not under any
circumstances be obligated to extend any credit to P.C. Such extensions of
credit shall be demand loans (each a "DEMAND LOAN") which shall be due and
payable, including the principal balance and all accrued interest, upon
thirty (30) days written notice from HDC to P.C. Interest on the unpaid
principal balance of each Demand Loan from time to time outstanding shall be
determined in good faith by HDC, but in no event shall exceed the annual rate
of interest announced from time to time by BankBoston, N.A. as its "base
rate" at its head office in Boston, Massachusetts plus five percent (5%), and
shall be added to outstanding principal balance on a monthly basis. The
outstanding principal amount of the Demand Loan, and any accrued interest,
shall be reflected from time to time on the books of HDC, and such entries
shall constitute definitive evidence of the amount of such principal amount
and accrued interest. P.C. hereby acknowledges the existence of an
outstanding principal balance and accrued interest in the amount of $______
(the "CURRENT BALANCE") due and payable to HDC and agrees to use its best
efforts to pay down the Current Balance and any additional amounts of
principal and accrued interest outstanding from time to time. During any
period that a principal balance or accrued interest remains outstanding under
a Demand Loan, P.C. shall not pay, declare or set apart a dividend or
distribution of any kind on any shares of the capital stock of P.C. or make
any other payment to any stockholder of P.C., other than in respect of
professional services provided to the P.C. by such stockholder.
(e) BANK ACCOUNTS. All funds collected by HDC pursuant to this Agreement
shall be deposited as follows:
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(i) All funds collected on behalf of P.C. as a result of xxxxxxxx to
agencies responsible for making Medicare or Medicaid payments shall be
deposited in one or more bank accounts established by HDC, as agent for
P.C., in the joint names of HDC and P.C.;
(ii) All funds collected on behalf of P.C. as a result of all
xxxxxxxx, other than those referenced in subparagraph (i) above, are
hereby assigned to HDC, and shall be deposited in one or more bank
accounts established by HDC, as agent for P.C., in the joint names of HDC
and P.C. or, in HDC's sole discretion, in the sole name of HDC;
(iii) P.C. does hereby grant a first and continuing security
interest to HDC in all P.C.'s accounts receivable to secure payment of
P.C.'s obligations hereunder, including without limitation payment of
the Compensation Amount and the Demand Loans, to the maximum extent
permitted by applicable law. In the event of any monetary default by
P.C., HDC may exercise all the remedies available to a secured creditor
under the Uniform Commercial Code and other applicable laws, including
seizure of the collateral, notification of account debtors and obtaining
a court order for reassignment of Medicare and Medicaid receivables to
the maximum extent permitted by applicable law. The P.C. shall execute
financing statements prepared by HDC. The provisions of this Section 1(e)
shall survive termination of this Agreement until all of HDC's fees and
expenses have been paid in full.
(f) RECORDS AND FINANCIAL DATA.
(i) METHOD OF ACCOUNTING; FINANCIAL STATEMENTS. HDC shall keep
complete and accurate books and records relating to the P.C. that reflect
all revenues that HDC receives as a result of xxxxxxxx in the name of P.C.
for Podiatry Services rendered by the P.C., and all expenses incurred by
P.C. or HDC in maintaining the P.C. and providing the Podiatry Services
rendered by the P.C. HDC shall allow an officer or employee designated by
P.C. to audit and inspect these books and records at appropriate and
reasonable times and at P.C.'s sole expense.
(ii) DATA FOR TAX RETURNS. HDC shall provide to P.C. the financial
data necessary to enable P.C. to prepare its annual corporate income tax
returns.
(iii) DISCLOSURE. If and to the extent required by applicable laws
and regulations, until the expiration of four (4) years after the
termination of this Agreement, HDC will make available upon a written
request from the United States Department of Health and Human Services
("HHS"), the United States Comptroller General, and their duly authorized
representatives, a copy of this Agreement and all books, records, and
documents as are necessary to certify
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the nature and extent of the costs incurred by P.C. pursuant to this
Agreement, and if HDC provides such services through a subcontract worth
$10,000 or more over a twelve-month period with a related organization,
the subcontract will also contain a clause permitting access by HHS, the
United States Comptroller General, and their representatives to books and
records of the related organization. HDC (and any such subcontractor) will
promptly notify P.C. as and when any such request is received, and will
provide P.C. (simultaneously with the providing of such materials to HHS)
with a copy of any materials so provided.
(iv) CONFIDENTIALITY. HDC shall preserve the confidentiality of
P.C.'s patient podiatry records and use information in such records only
for the limited purposes necessary to perform its responsibilities as set
forth in this Agreement.
2. OBLIGATIONS OF P.C.
(a) EMPLOYMENT OF PRACTITIONERS. HDC shall not provide any personnel to
P.C. P.C. shall be responsible for employing Practitioners to provide Podiatry
Services for P.C. P.C. acknowledges and agrees that in order to ensure the
quality of services provided by P.C. and the economic viability of P.C., it will
employ and contract with Practitioners subject to the following requirements:
(i) Every Practitioner shall be fully licensed to practice his/her
specialty under the laws of the Commonwealth of Massachusetts or such
other state in which such practitioner provides services;
(ii) As a condition to each Practitioner's employment, including
without limitation the holder of the capital stock of P.C. (the
"STOCKHOLDER"), such Practitioner shall be required by P.C. to execute a
non-competition and non-solicitation agreement in form and substance
acceptable to HDC prohibiting the Practitioner from competing with P.C. or
HDC for the term of his employment by P.C. and a period of 18 months
thereafter; and
(iii) P.C. shall fix compensation and fringe benefits for individual
Practitioners; provided, however, that compensation and benefits paid to
any such Practitioner, including without limitation the Stockholder (with
respect to compensation for services provided both to patients and P.C.),
shall not exceed the fair market value for such services. P.C. hereby
acknowledges and agrees that HDC has superior knowledge and experience
with respect to the fair market value of services provided by
Practitioners. If a dispute arises between P.C. and HDC with respect to
the fair market value of services provided by a Practitioner, P.C. hereby
agrees that HDC, in its sole discretion, shall determine fair market
value. HDC shall make such determination in
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good faith and based on its knowledge and experience and the amounts paid
to similarly qualified practitioners providing similar services for P.C.
or other professional corporations affiliated with HDC.
P.C. further acknowledges that fixed term agreements, including without
limitation employment agreements, between P.C. and Practitioners are not
necessarily in the best interests of patients and patient care and may
interfere with the quality of services provided by P.C., and, therefore, P.C.
hereby agrees that, without the express written consent of HDC, it shall not
enter into any such agreements with the Practitioners it employs, including
without limitation the Stockholder. HDC agrees that it shall make
any determinations with respect to fixed term arrangements in good faith and
based on its knowledge and experience in the industry.
(b) MAINTENANCE OF INSURANCE. P.C. covenants and agrees that until the
expiration or termination of this Agreement it will maintain, or will require
each of its Practitioners to maintain, comprehensive professional liability
insurance with limits of not less than $1,000,000 per claim and with aggregate
policy limits of not less than $3,000,000 per each Practitioner, with each of
P.C. and HDC having the right, upon request, to be added as additional insured.
P.C. shall be responsible for all such liabilities in excess of the limits of
such insurance policies. Premiums and deductibles with respect to such insurance
policies shall be an expense of P.C.
(c) COMPLIANCE WITH REGULATIONS. P.C. shall comply and shall cause each of
its Practitioners to comply with all applicable rules and regulations of
governmental bodies having jurisdiction over the P.C. or any of the
Practitioners.
(d) QUALITY OF CARE. P.C. shall at all times be solely responsible for the
quality of the Podiatry Services rendered by the Practitioners, it being agreed
that HDC shall have no responsibility or liability for such services or
programs.
(e) FEES. P.C. shall be solely responsible for setting its fees. P.C.
warrants that it will set its fees in accordance with law and that such fees
will be neither inadequate nor excessive in light of the services to be
performed and the need to insure the economic viability of P.C.; PROVIDED,
HOWEVER, that the foregoing shall not affect the control of the Podiatry
Practice by the P.C. pursuant to Section 2(g) of this Agreement.
(f) STANDARDIZED SYSTEMS. P.C. agrees to utilize HDC's standardized
business systems, procedures and forms (excluding clinical forms), at no charge
to P.C., which are intended to improve efficiency; PROVIDED that P.C. expressly
acknowledges and agrees that it shall have no property rights in the foregoing
systems, procedures and forms and such systems, procedures and forms shall be
deemed to constitute Confidential Information within the meaning of Section 7 of
this Agreement and subject to the restrictions on use, appropriation and
reproduction of such Confidential Information provided in Section 7 of this
Agreement; AND,
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PROVIDED FURTHER that the foregoing shall not affect the control of the Podiatry
Practice by the P.C. pursuant to Section 2(g) of this Agreement.
(g) CONTROL OF PODIATRY PRACTICE BY P.C. Notwithstanding anything to the
contrary contained in this Agreement, the delivery of Podiatry Services shall be
supervised, directed, and controlled, and all final determinations with respect
thereto shall be made, exclusively by P.C., including without limitation, the
following (collectively, "PODIATRY PRACTICE"):
(i) employment of all Practitioners, pursuant to Section 2(a) of
this Agreement;
(ii) supervision and direction of all Practitioners, including,
without limitation, assignment of patients to the Practitioners and
establishment and monitoring of peer review guidelines;
(iii) determination of the hospital supplying Practitioners to P.C.,
if applicable;
(iv) maintenance of patient records;
(v) establishment of policies and procedures with respect to patient
acceptance; and
(vi) establishment of the hours of operation of P.C., scope of
services provided and fees for such services.
In connection with its obligations under this Section 2(g), P.C. shall
maintain systems and procedures necessary in order to prevent overutilization of
services. HDC hereby expressly disclaims any control, direct or indirect, over
activities of P.C. constituting Podiatry Practice.
(h) AUTHORITY TO CONTRACT. P.C. shall have exclusive authority to
negotiate and enter into agreements related to Podiatry Practice; PROVIDED,
HOWEVER, that (i) P.C. shall give HDC thirty (30) days prior notice of P.C.'s
intent to execute any agreement obligating P.C. to engage in Podiatry Practice
or otherwise creating a binding legal obligation on P.C. related to Podiatry
Practice, and (ii) P.C. shall not enter into any agreement that does not relate
to Podiatry Practice without HDC's prior written consent. P.C. hereby approves,
confirms and ratifies all agreements negotiated and executed by HDC on P.C.'s
behalf prior to the date hereof.
(i) EXCLUSIVE SUPPLIER. P.C. hereby appoints HDC as the exclusive supplier
of the services set forth in Section 1 of this Agreement.
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3. PROHIBITION ON REFERRALS. In order to ensure compliance with federal and
state statutes, laws, rules and regulations, including without limitation the
provisions of the Social Security Act commonly referred to as the "Anti-kickback
Amendments" and the regulations promulgated pursuant to the Omnibus Budget
Reconciliation Act of 1993 and 1997 commonly referred to as "Xxxxx I" and "Xxxxx
II," HDC and P.C. hereby agree as follows:
(a) HDC and P.C. and its Practitioners shall have no obligation to refer
patients to each other or to long term care facilities under
contract with P.C., and P.C. and its Practitioners shall have no
obligation to refer patients to other professional corporations or
providers of medical, dental, optometry, podiatry, or ancillary
health care services affiliated with HDC or long term care
facilities under contract with professional corporations affiliated
with HDC; and
(b) P.C. shall not, and shall use its best efforts to cause the
Practitioners not to, (i) provide "designated health services," as
such term is defined under Xxxxx I and Xxxxx II, without providing
no less than 30 days prior written notice to HDC, and (ii) refer
patients to entities that provide "designated health services" and
in which P.C., or any of the Practitioners, have a financial
relationship, compensation arrangement, or an ownership or
investment interest.
4. EXPENSES OF P.C. All expenses incurred in connection with the conduct of
P.C.'s business and the services of HDC shall, unless otherwise specified in
this Agreement, be expenses of P.C. (and not HDC), including without limitation
those expenses described in Sections 2(a), 2(b) and 5 of this Agreement;
PROVIDED, HOWEVER, that HDC, as agent for P.C., shall, using funds billed and
collected pursuant to Section 1(e) above, pay all such expenses. P.C. agrees to
have an annual audit of its financial statements by independent auditors of
recognized standing reasonably acceptable to HDC and to deliver such audited
financial statements to HDC as promptly as practicable.
5. COMPENSATION OF HDC. As consideration for the license of the Service Xxxx,
the making of the Demand Loans and the services provided by HDC, P.C. shall
pay HDC a sum equal to the Compensation Amount (as defined below); PROVIDED,
THAT in no event shall the total compensation exceed the fair market value of
the services rendered by HDC. For purposes of this Section, "Compensation
Amount" shall mean the net of (i) all revenue minus (ii) all expenses
(excluding compensation due under this Section) of P.C. recorded on an
accrual basis using tax accounting principles. The amount of compensation due
HDC under this Section shall be determined on a monthly basis by HDC and
shall be due and payable to HDC on the last day of every month. Any amount
not paid when due shall accrue interest at a reasonable rate determined by
HDC. The fact that interest may accrue on any unpaid compensation due HDC
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shall in no way diminish HDC's right to be paid such compensation when due. HDC
may withdraw its fees directly from the bank accounts established hereunder.
In the event that P.C. makes a determination that it believes that the
Compensation Amount calculated by HDC in accordance with the formula set
forth above for any particular month exceeds the fair market value of the
services provided by HDC under this Agreement for such month P.C. shall
provide HDC with notice of such determination no later than thirty days after
the end of the month for which it believes the Compensation Amount exceeds
the fair market value of the services provided. In the event that P.C. does
not deliver such a notice within such thirty day period, P.C. shall for all
purposes under this Agreement be deemed to have agreed that the Compensation
Amount calculated by HDC for such month did not exceed the fair market value
of the services provided by HDC for that month. As soon as reasonably
practicable after the receipt of such notice, HDC and P.C. shall form a
committee (the "Fee Committee") to determine the fair market value of the
services provided by HDC during such month by majority vote. The Fee
Committee shall consist of one individual designated by HDC (the "HDC
Designee"), one individual designated by P.C. (the "P.C. Designee"), and a
third party designated by the HDC Designee and the P.C. Designee. In making
its determination, the Fee Committee shall consider the value of all of the
services provided by HDC to P.C. during such month taken as a whole, the
potential impact on P.C. of a discontinuation of the services provided by
HDC, and the fees charged by other similarly situated companies to similarly
situated medical or dental practices in HDC's industry, in addition to any
other factors that it deems relevant. Each of HDC and P.C. agree to be bound
by the good faith determination of the Fee Committee. In the event that the
Fee Committee determines that the Compensation Amount exceeds the fair market
value of the services provided during such month, HDC shall promptly refund
to P.C. the difference between the Compensation Amount and the fair market
value of the services provided, as determined by the Fee Committee.
6. TERM OF AGREEMENT. This Agreement shall be in effect from the date first
set forth above through June 19, 2038; PROVIDED, HOWEVER, that the term
hereof shall be automatically extended for additional periods of twelve (12)
months each, unless either party gives written notice as provided below to
the other at least ninety (90) days prior to the expiration of the initial
term or any extended term hereof. Upon termination of this Agreement, HDC
using funds billed and collected pursuant to Section 1(d) above shall: (i)
pay any expenses accrued by P.C. through the termination date; (ii) collect
all fees accrued to it through the termination date, including without
limitation the payment of the Compensation Amount specified in Section 4
hereof; and (iii) collect the amounts due under the Demand Loans specified in
Section 1(b) hereof. All other obligations of the parties shall cease as of
the termination date unless otherwise specifically provided in this
Agreement; PROVIDED, HOWEVER, that notwithstanding the foregoing, P.C. shall
be obligated to pay amounts due pursuant to items (ii) and (iii) above in the
event that funds billed and collected pursuant to Section 1(d) above are
insufficient to pay such amounts.
7. TERMINATION OF THE AGREEMENT.
(a) Notwithstanding any of the provisions of this Agreement, if a
receiver, liquidator, or trustee of either party shall be appointed by court
order or if a petition to reorganize shall be filed against either party under
any bankruptcy, reorganization or insolvency law and shall not be dismissed
within ninety (90) days, or if either party shall file a petition in voluntary
bankruptcy or make an assignment for the benefit of creditors, then either party
forthwith may terminate this Agreement upon written notice to the other party.
(b) If P.C. or HDC shall fail to perform obligations or observe provisions
which are material to this Agreement (in either case, a "Breach"), HDC, in the
case of a Breach by P.C., and P.C., in the case of a Breach by HDC, may
terminate this Agreement by giving thirty (30) days written notice to the
breaching party detailing the nature of the Breach, provided that the breaching
party shall not have cured the Breach within such thirty (30) day period, or,
with respect to Breaches which are not curable within such thirty (30) day
period, shall not have commenced to cure such Breach within such thirty (30) day
period and thereafter shall not have prosecuted to completion the cure of the
Breach with the exercise of due diligence.
(c) HDC may terminate this Agreement upon written notice to P.C. at such
time as P.C. does not qualify for any reason as a Professional Corporation or no
longer has the necessary authorization to render Podiatry Services in The
Commonwealth of Massachusetts or any other state in which Practitioners employed
or otherwise retained by P.C. provide such services.
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(d) HDC may terminate this Agreement upon written notice to P.C. if the
license to practice podiatry or any ancillary health care service of any
Practitioner is revoked or threatened to be revoked by the applicable Board of
Registration of the Commonwealth of Massachusetts or such other state in which
such Practitioner provides services, provided that P.C. has not forthwith
terminated such Practitioner from his or her employment or association with the
P.C.
8. CONFIDENTIAL AND PROPRIETARY INFORMATION.
(a) P.C. acknowledges and agrees that all business information and
materials provided to P.C. and its affiliates by HDC pursuant to this Agreement
constitute "Confidential Information." P.C. further agrees (i) not to disclose,
directly or indirectly, any Confidential Information to third parties without
HDC's prior written consent, (ii) not to use any Confidential Information in any
way, directly or indirectly, detrimental to HDC, and (iii) to keep such
Confidential Information confidential and ensure that P.C.'s officers,
directors, managers, employees and other agents and affiliates comply with the
foregoing obligations; PROVIDED THAT P.C. may disclose Confidential Information
to its officers, directors, managers, employees and other agents and affiliates
who need to know Confidential Information for the purposes of this Agreement, it
being understood and agreed to by P.C. that (i) such persons will be informed of
the confidential nature of the Confidential Information, and (ii) will be
required to execute instruments of adherence in form and substance acceptable to
HDC agreeing to be bound by this Section 7. P.C. agrees to be responsible for
any breach of this Section 7 by its officers, directors, managers, employees and
other agents and affiliates. P.C. acknowledges that the disclosure of
Confidential Information to it by HDC is done in reliance upon its
representations and covenants in this Agreement.
(b) Upon expiration or termination of this Agreement by either party for
any reason whatsoever, P.C. shall immediately return and shall cause its
officers, directors, managers, employees and other agents and affiliates to
immediately return to HDC all Confidential Information, and P.C. will not, and
will cause its officers, directors, managers, employees and other agents and
affiliates not to, thereafter use, appropriate or reproduce such Confidential
Information. P.C. further acknowledges and agrees that any such use,
appropriation, or reproduction of any Confidential Information by any of the
foregoing after the expiration or termination of this Agreement will result in
irreparable injury to HDC, that the remedy at law for the foregoing would be
inadequate, and that in the event of any such use, appropriation, or
reproduction of any such Confidential Information after the termination or
expiration of this Agreement, HDC, in addition to any other remedies or damages
available to it, shall be entitled to injunctive or other equitable relief.
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9. NON-COMPETITION AND NON-SOLICITATION. P.C. hereby acknowledges and agrees
that HDC will incur substantial costs in connection with its obligations
pursuant to this Agreement and that the non-competition covenants described
hereunder are necessary for the protection of HDC, and that HDC would not
have entered in to this Agreement without the following covenants.
(a) Except as specifically agreed to by HDC in writing, P.C. covenants and
agrees that during the term of this Agreement, and for a period of two (2) years
from the date this Agreement is terminated, other than termination by P.C. for
cause, or expires, P.C. shall not, directly or indirectly, own, manage, operate,
control, contract with, lend funds to, maintain an interest whatsoever in, or be
employed by, any enterprise providing capital or services to those engaged in
the provision of Podiatry Services or providing any other type of services or
products to third parties substantially similar to those offered by HDC located
anywhere in the United States.
(b) P.C. agrees that during the term of this Agreement, and for a period
of two (2) years from the date this Agreement is terminated, other than
termination by P.C. for cause, or expires, P.C. shall not, (i) solicit any
employee of HDC to leave HDC or become employed by P.C. or any entity, business,
corporation or partnership with which P.C. is directly or indirectly related, or
(ii) solicit any of HDC's, or any professional corporation affiliated with
HDC's, customers, clients, buyers, distributors, or manufacturers to cease doing
business with HDC or to do business with P.C. or any entity, business,
corporation or partnership with which P.C. is either directly or indirectly
related.
10. GENERAL.
(a) INDEPENDENT CONTRACTOR. It is expressly understood and agreed by the
parties that, in providing services under this Agreement, HDC shall at all times
act as an independent contractor, not as an employee of P.C., and none of P.C.
or the Practitioners shall be employees or servants of HDC. Further, it is
expressly understood and agreed by the parties that nothing contained in this
Agreement shall be construed to create a joint venture, partnership,
association, or other affiliation or like relationship between the parties, or a
relationship of landlord and tenant, it being specifically agreed that their
relationship is and shall remain that of independent parties to a contractual
relationship as set forth in this Agreement. In no event shall either party be
liable for the debts or obligations of the other of them except as otherwise
specifically provided in this Agreement. None of P.C., or any Practitioner,
whether such Practitioner be a member, partner, employee, subcontractor, or
otherwise, of P.C., shall have any claim under this Agreement or otherwise
against HDC for vacation pay, sick leave, retirement benefits, social security,
workers' compensation, disability or unemployment benefits, incentive
compensation or employee benefits of any kind.
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(b) EXCLUSIVITY. In recognition of the fact that HDC or any HDC
employees may perform services from time to time for others, including
services of the type HDC provides to P.C. under this Agreement, this
Agreement shall not prevent HDC from performing such services for others or
restrict HDC from using for such purposes any HDC employees who are
performing services under or with respect to this Agreement. The decision as
to which personnel are to be employed at what times shall be solely within
HDC's discretion.
(c) INDEMNIFICATION. (i) P.C. agrees to indemnify and hold harmless
HDC, its shareholders, directors, officers, employees, and other affiliates
and their respective successors and assigns, harmless from and against any
and all liabilities, demands, claims, actions, causes of action, losses,
fines, penalties, costs, damages and expenses, including reasonable
attorneys' and expert witness fees, alleged against, sustained or incurred by
any such persons arising out of or resulting from (i) any negligent or
intentional act or omission by P.C. or any Practitioner, (ii) any breach or
default on the part of P.C. in the performance of this Agreement. P.C., upon
notice from HDC, shall resist and defend, at the expense of P.C., any such
action or proceeding with counsel reasonably satisfactory to HDC.
(ii) HDC agrees to indemnify and hold harmless
P.C., its shareholders, directors, officers, employees and other affiliates
and their respective successors and assigns, harmless from and against any
and all liabilities, demands, claims, actions, causes of action, losses,
fines, penalties, costs, damages and expenses, including reasonable
attorneys' and expert witness fees, alleged against, sustained or incurred by
any such persons arising out of or resulting from any negligent or
intentional misconduct by HDC in connection with the services it has agreed
to provide pursuant to Section 1(b).
(d) PRIOR AGREEMENT; AMENDMENTS. This Agreement supersedes all prior
agreements and understandings between the parties hereto with respect to the
subject matter hereof, including but not limited to that Management
Agreement, dated as of May 22, 1992, and the Operating Agreement dated as of
May 26, 1998, between HDC and P.C., which are hereby terminated. This
Agreement may not be amended, altered, changed, or terminated orally. No
amendment, alteration, change, or attempted waiver of any of the provisions
hereof shall be binding without the written consent of both parties, and such
amendment, alteration, change, termination or waiver shall in no way affect
the other terms and conditions of this Agreement, which in all other respects
shall remain in full force.
(e) FORCE MAJEURE. HDC shall not be liable to P.C. for failure to perform
any of the services required under this Agreement in the event of strikes,
lockouts, calamities, acts of God, unavailability of supplies, or other events
over which HDC has no control, for so long as such event continues and for a
reasonable period of time thereafter, and in no event shall HDC be liable for
consequential, indirect or like damages.
(f) ASSIGNMENT; BINDING EFFECT. HDC shall have the right to assign or sell
its rights and obligations under this Agreement to any person, corporation,
partnership, or other legal entity. P.C. shall not assign this Agreement or its
rights and obligations under this Agreement without the written consent of HDC,
which consent may be withheld in HDC's sole discretion. Any attempted assignment
by the P.C. shall be void and of no force and effect. The provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties'
successors and assigns, respectively, but this provision shall not constitute a
consent by HDC to assignment by P.C. otherwise prohibited by the preceding
sentences.
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(g) CONSTRUCTION OF AGREEMENT. The failure to insist upon strict
compliance with any of the terms, covenants or conditions herein shall not be
deemed a waiver of such terms, covenants, or conditions, nor shall any waiver or
relinquishment of any right at any one or more times be deemed a waiver or
relinquishment of such right at any other time or times.
(h) GOVERNING LAW. This Agreement has been signed by the parties under
seal in Massachusetts, and the parties agree that it shall be governed and
construed in accordance with the laws of The Commonwealth of Massachusetts to
the fullest extent permitted by law, without regard to the application of
conflict of laws rules. If any portion of the provisions hereof shall to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such portion or provisions in circumstances other than those in
which it is held invalid or unenforceable, shall not be affected thereby, and
each portion or provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law.
(i) ADDITIONAL DOCUMENTS. The parties hereto shall execute such additional
documents as are reasonably required for the purpose of carrying out the intent
and purpose of this Agreement.
(j) HEADINGS. Section and paragraph headings are not part of this
Agreement and are included solely for convenience and are not intended to be
full or accurate descriptions of the contents thereof.
(k) NOTICES. Any notice hereunder shall have been deemed to have been
given only if in writing and either delivered in hand or sent by registered or
certified mail, return receipt requested, postage prepaid, or by United States
Express Mail or other commercial expedited delivery service,
(i) if intended for HDC such notice having been addressed to it at:
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, M.D.; and
(ii) if intended for P.C. such notice having been addressed to it at:
c/o HealthDrive Corporation
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, D.P.M.
Either party hereto by like notice to the other, may designate such other
address or addresses to which notice must be sent.
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(l) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all which together shall
constitute one instrument.
(m) NO PODIATRY PRACTICE BY HDC. It is acknowledged that HDC is not
authorized or qualified to engage in any activity which may be construed or
considered to constitute the practice of podiatry or any ancillary health care
service. To the extent any act or service of HDC under this Agreement is
construed or considered to constitute the practice of podiatry or any ancillary
health care service, the performance of such act or service by HDC shall be
deemed waived and excused. If notwithstanding any waiver or excuse of HDC's
performance of an act or service as contemplated in the immediately preceding
sentence, any of the provisions of this Agreement (1) may be construed or
considered to be in material violation of any rules, regulations or policies of
the Board of Registration in Podiatry (or such ancillary health care service) of
The Commonwealth of Massachusetts, the Board of Registration of any other
jurisdiction in which the P.C. provides Podiatry Services, or the statutes,
laws, rules or regulations of the United States or any state, governmental
agency, authority, or other body having jurisdiction over the P.C. or the
Company, or (2) may be construed or considered to impose a substantial threat to
the license to practice podiatry and/or any ancillary health care service of any
Practitioner, or to the authorization of P.C. to render Podiatry Services, then
the parties hereto agree to use their best efforts to negotiate in good faith an
amendment to this Agreement, the purpose and substance of which shall be
modification of only those provisions giving rise to the issues set forth in
clauses (1) and (2) of this sentence so that the Agreement as modified continues
to reflect, as nearly as possible, the intent of the parties as expressed
herein. If notwithstanding negotiation in good faith as contemplated in the
immediately preceding sentence, an amendment to this Agreement cannot be agreed
to that resolves the issues set forth in clauses (1) and (2) of the preceding
sentence and continues to reflect, as nearly as possible, the intent of the
parties expressed herein, this Agreement shall terminate thirty (30) days after
the date either party hereto provides notice to the other party hereto that such
circumstances exist.
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Executed as an instrument under seal as of the date first set forth above.
HEALTHDRIVE CORPORATION XXXX X. XXXXXXX, D.P.M., P.C.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx
---------------------------- -------------------------
Name: Xxxxxx X. Xxxxxxx, M.D. Name: Xxxx X. Xxxxxxx, D.P.M.
Office: Chief Executive Officer and President Office: President
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