EXHIBIT 10.5
FORM OF
MANAGEMENT SERVICES AGREEMENT
Dated as of the ____________ day of ___________, 1997
by and between
AMERICAN MEDICAL PROVIDERS, INC.
and
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TABLE OF CONTENTS
PAGE
ARTICLE 1 Definitions....................................................... 1
Section 1.1 Definitions............................................... 1
ARTICLE 2 Relationship of the Parties....................................... 8
ARTICLE 3 Services to be Provided by Administrator.......................... 9
Section 3.1 Overall Function.......................................... 9
Section 3.2 General Administrative Services........................... 9
Section 3.3 Facilities................................................ 11
(a) Premises..................................................... 11
(b) Personal Property............................................ 12
(c) Expenses..................................................... 12
(d) Disposition.................................................. 12
Section 3.4 Acquisition and Assistance................................ 12
Section 3.5 Financial Planning and Budgeting.......................... 12
Section 3.6 Inventory and Supplies.................................... 13
Section 3.7 Marketing, Advertising and Public Relations............... 13
Section 3.8 Personnel................................................. 13
Section 3.9 Provider and Payor Relationships.......................... 14
Section 3.10 Quality Assurance......................................... 14
Section 3.11 Other Consulting and Advisory Services.................... 14
Section 3.12 Events Excusing Performance............................... 14
ARTICLE 4 Obligations of the Group Practice................................. 15
Section 4.1 Employment of Physician Employees; Distributions to
Physicians Stockholders.................................. 15
Section 4.2 Professional Services..................................... 15
Section 4.3 Medical Practices......................................... 15
Section 4.4 Group Practice's Internal Matters......................... 16
Section 4.5 Group Practice Board Meetings............................. 16
Section 4.6 Name...................................................... 16
Section 4.7 Compliance with Laws...................................... 16
Section 4.8 Ancillary Operations...................................... 17
Section 4.9 Premises and Personal Property............................ 17
Section 4.10 Group Practice Employee Benefit Plans..................... 18
ARTICLE 5 Joint Planning Board.............................................. 19
(i)
ARTICLE 6 Restrictive Covenants and Liquidated Damages...................... 20
Section 6.1 Restrictive Covenants of the Group Practice............... 20
(a) Noncompetition............................................... 20
(b) Acknowledgment of Proprietary Interest....................... 21
(c) Covenant Not-to-Divulge Confidential and Proprietary
Information................................................. 21
(d) Return of Materials to Administrator......................... 21
(e) Return of Materials to the Group Practice.................... 21
Section 6.2 Restrictive Covenants and Liquidated Damages Provisions... 22
Section 6.3 Enforcement of Physician Agreements....................... 22
(a) Enforceability of Liquidated Damages Provisions.............. 22
(b) Enforcement of Restrictive Covenants and Other Provisions.... 23
Section 6.4 Remedies.................................................. 23
ARTICLE 7 Financial and Security Arrangements............................... 24
Section 7.1 Service Fees.............................................. 24
(a) Management of Professional Services.......................... 24
Section 7.2 Payments.................................................. 24
Section 7.3 Repayment................................................. 24
Section 7.4 Security Agreement........................................ 24
Section 7.5 Performance Incentive/Reduction........................... 25
ARTICLE 8 Records........................................................... 25
ARTICLE 9 Insurance and Indemnity........................................... 26
Section 9.1 Insurance to be Maintained by the Group Practice.......... 26
Section 9.2 Insurance to be Maintained by Administrator............... 26
Section 9.3 Continuing Liability Insurance Coverage................... 26
Section 9.4 Additional Insured........................................ 26
Section 9.5 Indemnification........................................... 26
Section 9.6 Guaranty.................................................. 27
ARTICLE 10 Term and Termination............................................. 27
Section 10.1 Term of Agreement......................................... 27
Section 10.2 Extended Term............................................. 27
Section 10.3 Termination by the Group Practice......................... 27
Section 10.4 Termination by Administrator.............................. 28
Section 10.5 Effective Date of Termination............................. 28
Section 10.6 Effect Upon Termination................................... 28
ARTICLE 11 General Provisions............................................... 29
Section 11.1 Assignment................................................ 29
Section 11.2 Amendments................................................ 29
Section 11.3 Waiver of Provisions...................................... 29
Section 11.4 Additional Documents...................................... 30
(ii)
Section 11.5 Attorneys' Fees........................................... 30
Section 11.6 Contract Modifications for Prospective Legal Events....... 30
Section 11.7 Parties In Interest; No Third Party Beneficiaries......... 30
Section 11.8 Entire Agreement.......................................... 30
Section 11.9 Severability.............................................. 30
Section 11.10 Governing Law............................................. 31
Section 11.11 No Waiver; Remedies Cumulative............................ 31
Section 11.12 Arbitration and Mediation................................. 31
(a) Mediation.................................................... 31
(b) Binding Arbitration.......................................... 32
Section 11.13 Communications............................................ 33
Section 11.14 Captions.................................................. 33
Section 11.15 Gender and Number......................................... 33
Section 11.16 Reference to Agreement.................................... 33
Section 11.17 Notice.................................................... 33
Section 11.18 Counterparts.............................................. 34
Section 11.19 Defined Terms............................................. 34
(iii)
FORM OF
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement (this "Agreement"), dated as of
_________________, 1997, is by and among American Medical Providers, Inc., a
Delaware corporation, ("AMP"), and its affiliates (collectively,
"Administrator") and ______________________ a [STATE] PROFESSIONAL LIMITED
LIABILITY COMPANY (the "Group Practice").
WITNESSETH:
WHEREAS, the Group Practice will conduct a podiatric medical practice in
the ____________________ area and will provide professional podiatric care and
products to the general public; and
WHEREAS, Administrator is in the business of owning certain assets of
medical practices and providing consulting, administrative, and other support
services to and furnishing medical practices with the necessary facilities,
equipment, non-physician personnel, supplies and non-physician support staff
services; and
WHEREAS, the Group Practice desires to obtain the services of
Administrator in performing functions so as to permit the Group Practice to
devote its efforts on a concentrated and continuous basis to the rendering of
medical services to its patients; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and on the terms and subject to the
conditions herein set forth, the parties hereto agree as follows:
ARTICLE 1
Definitions
SECTION 1.1 DEFINITIONS. For the purposes of this Agreement, the
following definitions shall apply:
(a) "ACCOUNTING CENTER" shall mean the separate accounting centers
within the Group Practice established for a subgroup of the Group Practice,
consisting of a single or multiple Physicians in accordance with the Physician
Engagement Agreements.
(b) "ACQUISITIONS" shall mean the acquisition transactions described in
the Acquisition Agreements.
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(c) "ACQUISITION AGREEMENTS" shall mean the Business Purchase Agreement,
the Physician Employment Agreement, and the Physician Engagement Agreement of
even date herewith by and between Administrator and (1) the Group Practice, (2)
the Physician Stockholders, (3) the Physician Employees and/or (4) the
predecessor employers of Physician Stockholders.
(d) "ACQUISITION CONSIDERATION" shall mean the AMP Common Stock and
other consideration furnished pursuant to the Acquisition Agreements by AMP in
connection with the Acquisition.
(e) "ACQUISITION EFFECTIVE DATE" shall mean the date the Acquisition is
effective pursuant to the terms of the Acquisition Agreements.
(f) "ADJUSTMENTS" shall mean any adjustments for uncollectible accounts,
discounts, Medicare and Medicaid disallowances, workers' compensation ,
employee/dependent health care benefit programs, professional courtesies and
other activities to the extent they do not generate a collectible fee or offset
a fee previously recorded.
(g) "ADMINISTRATOR EXPENSE" shall mean, pursuant to GAAP applied on a
consistent basis for each Accounting Center of the Group Practice:
(i) Any corporate overhead charges of Administrator and other
items incurred by Administrator that are not incurred specifically for
the purpose of providing services to the Group Practice or are not
directly attributable to the Group Practice as reasonably determined by
Administrator, including, without limitation, salaries and benefits of
executive officers of Administrator, except as otherwise provided for in
the definition of Group Practice Expenses;
(ii) Any amortization of any intangible asset resulting from the
Acquisition;
(iii) Any depreciation attributable to increases in the book
value of tangible depreciable assets resulting from the Acquisition;
(iv) Any legal and accounting expenses incurred by Administrator
in connection with the Acquisition;
(v) All taxes of Administrator, including but not limited to
state and federal income taxes and franchise taxes; but excluding state
and federal employee taxes related to employees who provide services for
the Group Practice, property taxes on assets used by the Group Practice
and other taxes specifically included in Group Practice Expenses.
(vi) Any expenses, whether for premiums or otherwise, related to
disability or life insurance for any Physician where the beneficiary
thereof is Administrator.
(vii) Any other expenses specifically included in "Administrator
Expenses" in this Agreement.
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(h) "AFFILIATE" with respect to any person shall mean a person that
directly or indirectly through one or more intermediaries controls, or is
controlled by or is under common control with, such person. Neither
Administrator nor the Group Practice is deemed to be an Affiliate of the other.
(i) "AMP COMMON STOCK" shall mean the common stock, par value $0.01 per
share, of AMP.
(j) "AMP GROUP" shall mean Administrator and its Affiliates and all
professional associations or corporations or other entities for which
Administrator, AMP, or their Affiliates provide management services.
(k) "ANCILLARY EMPLOYEES" shall mean those individuals who are employed
by or otherwise under contract or associated with Administrator to provide
services in the ancillary areas of the Group Practice's practice.
(l) "ANCILLARY EXPENSES" shall mean, pursuant to GAAP applied on a
consistent basis for each Accounting Center of the Group Practice, all operating
and non-operating expenses of Administrator incurred in the operation of
Ancillary Services on behalf of the Group Practice pursuant to this Agreement,
and all operating and non-operating expenses of the Group Practice incurred by
the Group Practice in the operation of Ancillary Services on behalf of the Group
Practice, including, without limitation, all expenses normally included within
the definition of Group Practice Expenses and specifically including all costs
associated with Ancillary Employees.
(m) "ANCILLARY REVENUE" for any month shall mean, all fees and income of
each Accounting Center of the Group Practice that, pursuant to GAAP applied on a
consistent basis, should be recorded each month (net of adjustments) by or on
behalf of the Group Practice from the provision of Ancillary Services to the
patients of the Group Practice.
(n) "ANCILLARY SERVICES" shall mean any and all services, products or
other fee generating activities provided to the patients of the Group Practice
and not resulting from direct professional medical services or incident to such
professional medical services by Physician Stockholders, Physician Employees or
Physician Extender Employees of the Group Practice.
(o) "ANNUAL CONTRIBUTION" shall mean for any given calendar year an
amount equal to the aggregate Group Practice Revenues for such calendar year
less the aggregate Group Practice Expenses for such year.
(p) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(q) "CONFIDENTIAL AND PROPRIETARY INFORMATION" shall have the meaning
set forth in Section 6.
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(r) "CURRENT PHYSICIAN RESTRICTIVE COVENANTS" shall have the meaning set
forth in Section 6.2.
(s) "DESIGNATED HEALTH SERVICES" shall have the meaning assigned to such
term in Xxxxx.
(t) "DISPUTE" shall have the meaning set forth in Section 11.12.
(u) "ERISA" shall have the meaning set forth in Section 4.10(c).
(v) "EXCLUDED GROUP PRACTICE EXPENSES" shall mean, pursuant to GAAP
applied on a consistent basis, for each Accounting Center of the Group Practice:
(i) any salaries or other distributions made to Physicians,
whether for professional fee income or otherwise, and any expenses
related thereto, including payroll and other taxes associated therewith;
(ii) any federal, state or other income taxes applicable to the
Group Practice;
(iii) any expenses, whether for premiums or otherwise, related
to disability or life insurance for any Physician where the beneficiary
thereof has been named by the Physician,
(iv) all costs, expenses and liabilities incurred by the Group
Practice or Administrator for professional liability insurance,
(v) any expenses described in any Physician Employment Agreement
for a Physician Employee,
(vi) any expenses described in any Physician Engagement
Agreement for a Physician Stockholder,
(vii) expenses related to professional meetings, seminars and
dues and professional licensing fees related to the business of the
Group Practice;
(viii) any contributions to any Group Practice Plan for the
benefit of any Physician, and
(ix) any other expenses specifically included in "Excluded Group
Practice Expenses" in this Agreement.
(w) "FUTURE PHYSICIAN RESTRICTIVE COVENANTS" shall have the meaning set
forth in Section 6.2.
(x) "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 and statements and
pronouncements of the Financial Accounting Standards Board and the Securities
and Exchange Commission or in such other statements by such other entity
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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 on
an accrual basis.
(y) "GROUP PRACTICE" shall include the Group Practice as defined in the
first paragraph of this Agreement and all Accounting Centers, satellite
locations and related businesses of such Group Practice.
(z) "GROUP PRACTICE EXPENSES" shall mean, pursuant to GAAP applied on a
consistent basis, for each Accounting Center of the Group Practice, all
operating and non-operating expenses of Administrator incurred specifically for
and directly attributable to the operation of the Group Practice pursuant to
this Agreement, and all operating and non-operating expenses of the Group
Practice incurred by the Group Practice in the operation of the Group Practice,
including, without limitation:
(i) Salaries, benefits and other direct costs of all employees
of Administrator who perform services for the Group Practice (other than
Group Practice Physician Employees), including, without limitation,
federal and state employee taxes and costs of workers' compensation.
(ii) Direct costs of all employees or consultants of
Administrator engaged to provide services at or in connection with the
Group Practice or who actually provide services at or in connection with
the Group Practice for improved performance, such as quality assurance,
materials management, purchasing, charge and coding analysis, physician
recruitment and business office consultant; provided, however, only the
portion of expenses related to such employee or consultant, without
xxxx-up, that is allocable to work performed at or for the benefit of
the Group Practice shall be included in Group Practice Expenses.
(iii) The obligations of Administrator, including capital costs,
depreciation and amortization, leases or subleases for assets which are
leased or utilized for the benefit of the Group Practice, including,
without limitation, any subleases between any Affiliates included in
Administrator, provided that the rent payable under such subleases shall
not exceed the rent payable by such Affiliate.
(iv) Personal and intangible property taxes assessed against
Administrator's or its Affiliate's assets which are leases or utilized
for the benefit of the Group Practice, commencing on the date of this
Agreement.
(v) Interest expense on indebtedness (1) assumed by
Administrator as a result of the Acquisition or (2) funds expended by
Administrator (a) to finance or refinance obligations assumed by
Administrator at the time of the Acquisition and/or (b) in connection
with making advances and capital available to the Group Practice and in
providing other services pursuant to this Agreement.
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(vi) Any provider tax assessed against the Group Practice by the
State and any sales and use taxes assessed against the Group Practice
related to Group Practice operations or assessed against Administrator
related to services provided hereunder.
(vii) All expenses specifically included in "Group Practice
Expenses" in this Agreement.
(viii) All expenses, whether for premiums or otherwise, related
to life insurance for any Group Practice Physician Stockholder where the
beneficiary thereof is the Group Practice.
(ix) Other expenses incurred by Administrator in providing
services for the direct benefit of the Group Practice and in carrying
out its obligations under this Agreement.
Provided, however, that, notwithstanding anything contained herein,
Administrator Expenses, Ancillary Expenses and Excluded Group Practice Expenses
shall not be included in Group Practice Expenses.
(aa) "GROUP PRACTICE FUNDS" shall indicate for the relevant period an
amount equal to Group Practice Revenues less than the sum of Group Practice
Expenses and the Service Fees, for each Accounting Center of the Group Practice.
(ab) "GROUP PRACTICE PLAN" shall have the meaning set forth in Section
4.10(a).
(ac) "GROUP PRACTICE REVENUES" for any month shall mean all fees and
income of each Accounting Center of the Group Practice that, pursuant to GAAP
applied on a consistent basis, should be recorded each month (net of
Adjustments) by or on behalf of the Group Practice, including, without
limitation, the fees generated as a result of professional medical services
furnished to patients by Physician Employees, including Physician Extender
Employees, and other fees or income generated in their capacity as
professionals, whether rendered in an inpatient or outpatient setting,
including, but not limited to, medical director fees or technical fees from
medical ancillary services and consulting fees, but shall not include (i) any
income or revenue received by any Group Practice Physician Employee individually
from the activities listed in Schedule A to the applicable Physician Employment
Agreement or Physician Engagement Agreement, (ii) liquidated damages received by
the Group Practice or the Administrator pursuant to Section 6.2 or 6.3, or (iii)
Ancillary Group Practice Revenues as defined herein.
(ad) "IRS" shall mean the Internal Revenue Service.
(ae) "JOINT PLANNING BOARD" shall mean a six (6) member joint board
established pursuant to Article 5.
(af) "LD CAUSES OF ACTION" shall have the meaning set forth in Section
6.3(a).
(ag) "LIQUIDATED DAMAGES" shall have the meaning set forth in Section
6.3(a).
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(ah) "LIQUIDATED DAMAGES PROVISIONS" shall have the meaning set forth in
Section 6.2.
(ai) "MANAGED CARE CONTRACTS" shall have the meaning set forth in
Section 3.9.
(aj) "MANAGED CARE PAYORS" shall have the meaning set forth in Section
3.9.
(ak) "MEDICAL WASTE" includes, but is not limited to, (i) pathological
waste, (ii) blood, (iii) sharps, (iv) wastes from surgery or autopsy, (v)
dialysis waste, including contaminated disposable equipment and supplies, (vi)
cultures and stocks of infectious agents and associated biological agents, (vii)
contaminated animals, (viii) isolation wastes, (ix) contaminated equipment, (x)
laboratory waste, (xi) any substance, pollutants material or contaminants listed
or regulated under any Medical Waste Law, and (xii) other biological Waste and
discarded materials contaminated with or exposed to blood, excretion, or
secretions from human beings or animals.
(al) "MEDICAL WASTE LAWS" shall mean the following, including
regulations promulgated and orders issued thereunder, all as may be amended from
time to time: (i) the MWTA, (ii) the U.S. Public Vessel Medical Waste
Anti-Dumping Act of 1988, 33 USCA xx.xx. 2501 ET SEQ., (iii) the Marine
Protection, Research, and Sanctuaries Act of 1972, 33 USCA ss.ss.1401 ET SEQ.,
(iv) The Occupational Safety and Health Act, 29 USCA ss.ss.651 ET M., (v) the
United States Department of Health and Human Services, National Institute for
Occupational Safety and Health, Infectious Waste Disposal Guidelines,
Publication No. 88-119, and (vi) any other federal, state, regional, county,
municipal or other local laws, regulations and ordinances insofar as they
purport to control Medical Waste, or impose requirements relating to Medical
Waste.
(am) "PAYMENT DATE" shall have the meaning set forth in Section 7.3.
(an) "PERSONAL PROPERTY" shall have the meaning set forth in Section
3.3(b).
(ao) "PHYSICIAN" shall mean all Physician Stockholders and Physician
Employees, as defined below.
(ap) "PHYSICIAN EMPLOYMENT AGREEMENT" shall mean the employment
agreement entered into between the Group Practice and Physician Employees,
whether on the date hereof or on any date hereafter during the term of this
Agreement and any extension thereof.
(aq) "PHYSICIAN EMPLOYEES" shall mean those individuals who are
physicians employed by the Group Practice under a Physician Employment
Agreement, or who are otherwise under contract or associated with the Group
Practice to provide professional medical services to patients of the Group
Practice except those individuals employed under a Physician Engagement
Agreement.
(ar) "PHYSICIAN ENGAGEMENT AGREEMENT" shall mean the engagement
agreement entered into between the Group Practice and Physician Stockholders,
whether on the date hereof or on any date hereafter during the term of this
Agreement and any extensions thereof.
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(as) "PHYSICIAN EXTENDER EMPLOYEES" shall mean those individuals who are
employed by or otherwise under contract or associated with Administrator as
nurse anesthetists, physicians assistants, nurse practitioners or similar
positions, or any position that generates a professional charge, but shall not
include Ancillary Employees.
(at) "PHYSICIAN STOCKHOLDER" shall mean those individuals engaged by the
Group Practice under a Physician Engagement Agreement.
(au) "PLANS" shall have the meaning set forth in Section 4.10(a).
(av) "PREMISES" shall mean the premises provided to the Group Practice
pursuant to Section 3.3.
(aw) "RESTRICTIVE COVENANTS" shall mean the Current Physician
Restrictive Covenants and the Future Physician Restrictive Covenants.
(ax) "SERVICE FEE" shall have the meaning set forth in Section 7. 1 (b).
(ay) "XXXXX" shall mean the anti-selfreferral provisions for certain
health services found in 42 U.S.C. ss. 1395nn and all rules and regulations
promulgated thereunder, as such may be amended or revised from time to time.
(az) "STATE" shall mean the State of ___________________.
(ba) "TAX RETURNS" shall include all federal, state, local, franchise,
property and other tax returns.
(bb) "TERMINATION DATE" shall have the meaning set forth in Section
10.5.
(bc) "TERMINATION NOTICE" shall have the meaning set forth in Section
10.5(a).
ARTICLE 2
Relationship of the Parties
The Group Practice and Administrator intend to act and perform as
independent contractors, and the provisions hereof are not intended to create
any partnership, joint venture, agency or employment relationship between the
parties. Administrator and the Group Practice agree that the Group Practice
shall retain the exclusive authority to direct the medical, professional, and
ethical aspects of its medical practice. Administrator shall neither exercise
control over nor interfere with the physician-patient relationships of the Group
Practice, which shall be maintained strictly between the physicians of the Group
Practice and their patients. The parties hereby agree that the benefits to the
Group Practice hereunder do not require, are not payment for and are not in any
way contingent upon the admission, referral or any other arrangement for the
provision of any item or service offered by Administrator or any of its
Affiliates to any of
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the Group Practice's patients in any ancillary service controlled, managed or
operated by Administrator.
ARTICLE 3
Services to be Provided by Administrator
SECTION 3.1 OVERALL FUNCTION. Administrator shall provide or arrange for
the services set forth in this Article 3 and the costs, fees, expenses and other
disbursements incurred by Administrator in connection therewith shall be
included in Group Practice Expenses, except to the extent such costs, fees or
expenses are Excluded Group Practice Expenses, Administrator Expenses or
Ancillary Expenses. Administrator is authorized to perform its services
hereunder as is necessary or appropriate for the efficient operation of the
Group Practice, including, without limitation, performance of some of the
business office functions at locations other than the Group Practice. The Group
Practice will not act in a manner which would prevent Administrator from
performing its duties hereunder and will provide such information and assistance
to Administrator as is reasonably required by Administrator to perform its
services hereunder. Administrator shall use its best efforts to cause its
employees, to comply with all applicable federal, state and local laws, rules
and regulations in its provision of services hereunder.
SECTION 3.2 GENERAL ADMINISTRATIVE SERVICES.
(a) The Group Practice hereby engages Administrator to serve as its
exclusive manager and administrator of non-physician services relating to the
operation of the Group Practice, subject to matters reserved for the Group
Practice or referred to the Joint Planning Board as herein contemplated, and
Administrator shall have all necessary authority to perform such services. The
Group Practice agrees that the purpose and intent of this Agreement is to
relieve the Physician Employees to the maximum extent possible of the
administrative, accounting, purchasing, non-physician personnel and other
business aspects of its practice. Administrator agrees that only the Group
Practice and Physician Employees, will perform the medical functions of its
practice. Administrator shall have no authority, directly or indirectly, to
perform or supervise, and shall not perform or supervise, any medical function.
Administrator may, however, advise the Group Practice as to the relationship
between its performance of medical functions and overall administrative and
business functions of its practice to the extent permitted by applicable law.
(b) Administrator shall, in the name of and on behalf of the Group
Practice, xxxx patients, insurance companies and other third-party payors and
collect the professional fees for medical services rendered by the Group
Practice in the Group Practice, for services performed outside the Group
Practice for its hospitalized patients, and for other professional and Group
Practice services and products. The Group Practice hereby appoints Administrator
for the term of this Agreement to be its true and lawful attorney-in-fact, for
the following purposes: (i) to xxxx patients, insurance companies and other
third-party payors in the Group Practice's name and on
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its behalf, (ii) to collect accounts receivable resulting from such billing in
the Group Practice's name and on its behalf, (iii) to receive payments on behalf
of the Group Practice from insurance companies, prepayments received from health
care plans, Medicare, Medicaid and all other third party payors; (iv) to take
possession of and endorse in the name of the Group Practice (and/or in the name
of an individual physician), such payments intended for the purpose of payment
of a physician's xxxx related to the Group Practice, and notes, checks, money
orders, insurance payments and other instruments received in payment of accounts
receivable; and (v) to initiate the institution of legal proceedings in the name
of the Group Practice or a Physician Employee to collect any accounts and monies
owed to the Group Practice or the Physician Employee, to enforce the rights of
the Group Practice or the Physician Employee as creditor under any contract or
in connection with the rendering of any service, and to contest adjustments and
denials by governmental agencies (or their fiscal intermediaries) as third-party
payors. All monies shall be accounted for by Administrator as being distinctly
attributable to the Group Practice. The Group Practice may perform the functions
or exercise the rights set forth in this Section 3.2(b) only with the consent of
Administrator. The Group Practice shall execute a Power of Attorney in form and
substance acceptable to the parties hereto in connection with the rights and
powers granted to Administrator pursuant to this Section 3.2(b). The Group
Practice shall cooperate with and at the request of Administrator shall provide
reasonable assistance to Administrator regarding the functions set forth herein.
In the performance of the services described in the Section 3.2(b),
Administrator shall use commercially reasonable efforts to collect such
professional fees and still comply with all applicable managed care contracts
and all applicable laws, rules and regulations.
(c) Administrator shall supply to the Group Practice the ordinary,
necessary or appropriate services for the efficient operation of the Group
Practice, including without limitation, necessary clerical, accounting,
purchasing, payroll, legal, bookkeeping and computer services, information
management, preparation of Tax Returns, printing, postage and duplication
services and medical transcribing services; provided, however, that the Group
Practice may elect to prepare its own Tax Returns, in which case, the cost of
preparing such Tax Returns in excess of $1,500 per annum shall be included in
Excluded Group Practice Expenses. Administrator shall prepare monthly unaudited
financial statements for the Group Practice containing a balance sheet, income
statement and cash flow statement, which shall be delivered to the Group
Practice as soon as practicable, but not later than thirty (30) days after the
end of each calendar month. The Group Practice may elect, no more than annually,
to have an audit conducted with respect to such financial statements, in which
case the cost of such audit shall be included in Excluded Group Practice
Expenses.
(d) Administrator shall maintain all files and records relating to the
operation of the Group Practice, including, but not limited to, accounting,
billing, collection and customary financial records and patient files. The
management of all files and records shall comply with all applicable federal,
state and local statutes and regulations, and all files and records shall be
located so that they are readily accessible for patient care, consistent with
ordinary records management practices. The Group Practice shall supervise the
preparation of, and direct the contents of, patient medical records, all of
which shall remain confidential. All original patient
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records contributed to the Group Practice by the Group Practice Physician
Stockholders shall be and remain the property of the Group Practice and all
original patient records created after the Acquisition Effective Date by the
Group Practice shall be and remain the property of the Group Practice. At such
time as this Agreement expires or terminates, (i) Administrator will provide the
Group Practice with the original patient records that it owns, if any (or true
and complete copies thereof, if Administrator shall be prevented by any
applicable laws, regulations or accreditation policies from providing the Group
Practice with the original records), of all continuing patients of the Group
Practice, but subject to applicable laws, regulations and accreditation
policies, Administrator shall be permitted to retain true and complete copies of
such records (and shall retain the original records if, for any of the foregoing
reasons, it is prevented from providing them to the Group Practice), and (ii)
subject to applicable laws, regulations and accreditation policies, the Group
Practice will, if requested by Administrator, provide Administrator with true
and complete copies of the original patient records that it owns. Administrator
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 management services, and, within the limits of its
responsibilities hereunder, to ensure that provision is made for appropriate
care for patients of the Group Practice.
(e) Administrator shall take such action in the name of and on behalf of
the Group Practice to collect fees and pay in a timely manner all Group Practice
Expenses, except as otherwise agreed among Administrator and the Group Practice.
(f) Administrator shall, upon the terms and at the times as mutually
agreed by Administrator and the Group Practice (but in no event less frequently
than monthly), distribute the Group Practice Funds to the Group Practice
Accounting Centers, with appropriate adjustments made to reflect any Group
Practice Expenses paid by the Administrator and not reimbursed by Group Practice
or Group Practice Revenues collected or received by the Group Practice and not
remitted to Administrator.
SECTION 3.3 FACILITIES.
(a) PREMISES. Administrator shall make available to the Group Practice
the Premises that are described in Schedule 3.3 attached hereto and such other
real property acquired (with the consent of the Group Practice) and improvements
made by Administrator for the use of the Group Practice hereunder; provided,
that in the event Administrator's rights to use any such Premises shall
terminate, Administrator shall use its best efforts to provide other suitable
Premises to be used by the Group Practice, which Premises shall be approved by
the Group Practice, such approval not to be unreasonably withheld. Administrator
shall obtain for the Group Practice all utilities reasonably required in
connection with the use of the Premises and shall provide for the proper
cleanliness of the Premises, including normal janitorial services and refuse
disposal. Administrator shall maintain the Premises and make all necessary
repairs thereto.
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(b) PERSONAL PROPERTY. Administrator shall provide the Group Practice
with the use of the equipment, furniture, fixtures, furnishings and other
personal property acquired by Administrator in the Acquisitions, together with
such other equipment, furniture, fixtures, furnishings and other personal
property acquired by Administrator for the use of Group Practice pursuant to the
terms hereof (collectively, the "Personal Property"). Administrator shall
maintain the Personal Property and make necessary repairs thereto.
(c) EXPENSES. All costs, fees, expenses and other disbursements incurred
by Administrator or the Group Practice in connection with the Premises and the
Personal Property, including, without limitation, all costs of repairs,
maintenance and improvements, utility expenses (i.e., telephone, electric, gas
and water), janitorial services, refuse disposal, real or personal property
lease cost payments and expenses, interest, principal and other debt service or
refinancing payments and expenses, depreciation, taxes and casualty, liability
and other insurance, shall be included in Group Practice Expenses, provided that
the lesser of depreciation or principal payments for the same assets shall not
both be included in Group Practice Expenses.
(d) DISPOSITION. Nothing herein shall be construed as precluding
Administrator from selling, leasing or otherwise disposing of all or any part of
its real property, improvements, Personal Property, tradenames, trademarks and
other intangible property; provided that any such disposition shall not
eliminate or diminish Administrator's obligations hereunder.
SECTION 3.4 ACQUISITION AND ASSISTANCE. In the event a decision is made
by the Group Practice to employ additional physicians or acquire physician
groups or practices and if requested by the Group Practice, Administrator may,
in its sole discretion, assist the Group Practice in the identification and
selection of physicians or physician groups or practices that may be beneficial
in providing the services and products of the Group Practice. In the event that
a decision is made by the Group Practice to pursue the employment of selected
physicians or the acquisition of a particular physician group or practice,
Administrator may, in its sole discretion, if requested by the Group Practice,
provide recruiting, consulting, negotiating and other services and may provide
for legal, accounting and other professional advisor services in connection with
such transaction. Nothing contained herein shall be construed to require
Administrator to provide any capital, funds or other assistance to the Group
Practice in connection with the employment of physicians or acquisition of
physician groups or practices by the Group Practice.
SECTION 3.5 FINANCIAL PLANNING AND BUDGETING.
(a) Subject to the terms contained herein, Administrator will make funds
available for capital expenditures and improvements by Administrator on behalf
of the Group Practice. Requests for expenditures and improvement projects shall
be prepared by the Joint Planning Board in consultation with the Group Practice
and Administrator. All requests for capital expenditures and improvements at the
Group Practice in excess of $5,000 individually and $20,000 in the aggregate for
any calendar year must be approved by the Board of Directors of Administrator.
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(b) Administrator shall consult with the Group Practice and the Joint
Planning Board, in the preparation of all annual capital and operating budgets.
Combined annual budgets for the Group Practice shall be subject to the review,
amendment and approval or disapproval of the Board of Directors of Administrator
(or a committee designated by such Board of Directors) and the Group Practice.
In the event Administrator and the Group Practice can not reach agreement on
such budgets, the next previously agreed to budgets shall remain in effect with
an adjustment to all items not to exceed three percent (3%).
SECTION 3.6 INVENTORY AND SUPPLIES. Administrator shall order and
purchase inventory and supplies, and such other ordinary, necessary or
appropriate materials which are requested by the Group Practice and which the
Group Practice shall reasonably determine to be necessary in the operation of
the Group Practice. Supplies and inventory to be used directly in patient care
and providing medical services shall be of the type and quality specified by the
Group Practice. Such inventory, supplies and other materials shall be included
in Group Practice Expenses at their cost to Administrator, as the case may be.
SECTION 3.7 MARKETING, ADVERTISING AND PUBLIC RELATIONS. In consultation
with the Joint Planning Board and the Group Practice, Administrator shall
implement (and design where requested) any appropriate local marketing, public
relations or advertising program on behalf of the Group Practice, with
appropriate emphasis on public awareness of the availability of services at the
Group Practice. Prior to publication or distribution of marketing or public
relations material or information, Administrator shall submit such material to
the Group Practice for its review and approval, which approval shall not be
unreasonably withheld. However, if Administrator does not receive a response
from Group Practice regarding a submission of material within ten (10) days of
such submission, Administrator may continue as if it had received approval from
Group Practice. Administrator shall also design and implement all national or
other non-local public relations or advertising programs on behalf of the Group
Practice, the cost of which shall be included in Administrator Expenses, except
to the extent such national programs are reasonably designed to replace or
supplement the marketing benefits derived from local marketing, public relations
or advertising programs, in which case, such costs will be included in Group
Practice Expenses. The parties hereto agree that all public relations and
advertising programs shall be conducted in compliance with applicable standards
of medical ethics, laws and regulations.
SECTION 3.8 PERSONNEL. Except as specifically provided in Section 5(b)
of this Agreement, Administrator shall employ or otherwise retain and shall be
responsible for selecting, hiring, training, supervising, and terminating, all
management, administrative, clerical, secretarial, bookkeeping, accounting,
payroll, billing and collection and other personnel as Administrator deems
reasonably necessary and appropriate for Administrator's performance of its
duties and obligations under this Agreement. Consistent with reasonably prudent
personnel management policies, Administrator shall seek and consider the advice,
input, and requests of the Group Practice in regard to personnel matters.
Administrator shall have sole responsibility for determining the salaries and
providing such fringe benefits, and for withholding, as required by law, any
sums for income tax, unemployment insurance, social security, or any other
13
withholding required by applicable law or governmental requirement.
Notwithstanding the foregoing, it is clearly understood that Physicians shall
exercise control over all actions taken by personnel with regard to the
rendering of medical services to the same extent Physicians would exercise such
control if such personnel were directly employed by Physician.
SECTION 3.9 PROVIDER AND PAYOR RELATIONSHIPS. Administrator shall
provide financial and business assistance to the Group Practice in the
negotiation, establishment, supervision and maintenance of contracts and
relationships (collectively, the "Managed Care Contracts") with all managed
care, institutional health care providers and payors, health maintenance
organizations, preferred provider organizations, exclusive provider
organizations, Medicare, Medicaid and other similar persons (collectively,
"Managed Care Payors"). Approval, disapproval, termination or amendment of any
contract or relationship with such Managed Care Payors and the Group Practice
shall be the responsibility of the Group Practice and the Joint Planning Board;
provided, however, that should a contract or relationship between any Managed
Care Payor and the Group Practice involve or affect a contract or relationship
between a Managed Care Payor and Administrator or a person or entity serviced or
managed by Administrator and a consensus among such affected Affiliates and
serviced entities cannot be reached regarding the contract or relationship, then
the ultimate decision as to the approval, disapproval, termination or amendment
of the contract or the relationship between such Affiliates and other affected
or involved serviced clinics and such Managed Care Payor, and such decision
involving the Group Practice and such Managed Care Payor, shall be made by the
Board of Directors of AMP.
SECTION 3.10 QUALITY ASSURANCE. Subject to Article 2, Administrator
shall assist the Group Practice in fulfilling its obligations to its patients to
maintain a high quality of medical and professional services. Any expenses that
are related to the overall maintenance of Administrator's quality assurance
program shall be included in Administrator Expenses; provided, however, that any
expenses related to such program that are incurred for services provided for the
direct benefit of the Group Practice shall be included in Group Practice
Expenses.
SECTION 3.11 OTHER CONSULTING AND ADVISORY SERVICES. Administrator will
provide such consulting and other advisory services as requested by the Group
Practice in all areas of the Group Practice's business functions, including,
without limitation, financial planning, acquisition and expansion strategies,
development of long-term business objectives and other related matters.
SECTION 3.12 EVENTS EXCUSING PERFORMANCE. In the event of strikes,
lock-outs, calamities, acts of God, unavailability of supplies or other events
over which Administrator has no control, Administrator shall not be liable to
the Group Practice for failure to perform any of the material services required
hereunder and the Group Practice shall not have the right to terminate this
Agreement pursuant to Section 10.3(b), for so long as such events continue and
for a reasonable period of time thereafter; provided, however, that if such
events continue and Administrator is not able to perform any of the services
required hereunder for a period of 180 consecutive days
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or more, either Administrator or Group Practice may terminate this Agreement by
written notice to the other.
ARTICLE 4
Obligations of the Group Practice
SECTION 4.1 EMPLOYMENT OF PHYSICIAN EMPLOYEES; DISTRIBUTIONS TO
PHYSICIANS STOCKHOLDERS. The Group Practice shall have complete control of and
responsibility for the hiring, compensation, supervision, training, evaluation
and termination of its Physician Employees, although Administrator and/or the
Joint Planning Board shall consult with the Group Practice with respect to such
matters. The Group Practice shall conduct an appropriate and reasonable due
diligence review in connection with the hiring of any physician or the
acquisition of any physician group or practice and shall compensate such
Physician Employees in amounts not to exceed amounts which are reasonable and
customary for physicians of comparable skills and experience in the community
where the Group Practice is located. Although Administrator may provide payroll
and other related services to the Group Practice, the Group Practice shall be
solely responsible for the payment of Physician Employees' salaries and wages,
payroll taxes and all other taxes now or hereafter applicable to their
employment. Physician Stockholders shall receive distributions in accordance
with their Physician Engagement Agreement. Neither the Group Practice nor its
Physicians shall have any claim under this Agreement or otherwise against
Administrator for workers' compensation, unemployment compensation or Social
Security benefits, all of which shall be the sole responsibility of the Group
Practice. The Group Practice shall only employ or contract with licensed
physicians or other persons meeting applicable credentialing guidelines
established by the Group Practice and approved by the Joint Planning Board. The
Group Practice shall cooperate in the obtaining and retaining of professional
liability insurance by ensuring that all its Physicians and its employees who
may have malpractice exposure or liability, are insurable and by participating
in an ongoing risk management program.
SECTION 4.2 PROFESSIONAL SERVICES. The Group Practice shall provide
professional services to patients in compliance at all times with ethical
standards, laws, rules and regulations applicable to the operations of the Group
Practice and the Physicians. The Group Practice shall ensure that each Physician
has all required licenses, credentials, approvals or other certifications to
perform his or her duties and services for the Group Practice. In the event that
any disciplinary actions or medical malpractice actions are initiated against
any Physician, the Group Practice shall inform Administrator within 24 hours of
such action and the underlying facts and circumstances. The Group Practice shall
carry out a program to monitor the quality of medical care practiced at the
Group Practice. The Group Practice shall employ such Physicians as is necessary
to provide efficient medical care to patients of the Group Practice.
SECTION 4.3 MEDICAL PRACTICES. The Group Practice shall use and occupy
the Premises exclusively for the practice of medicine and for providing other
related services and products. Unless otherwise approved in writing by
Administrator, which approval shall not be
15
unreasonably withheld, it is expressly acknowledged by the parties hereto that
the medical practice or practices conducted by the Group Practice shall be
conducted solely by Physicians associated with the Group Practice, and, except
as set forth on Schedule 4.3, no other physician or medical practitioners shall
be permitted to use or occupy the Group Practice. The Group Practice shall be
solely and exclusively in control of all aspects of the practice of medicine and
the delivery of medical services at the Group Practice's Premises and at such
outpatient surgery center, acute care hospitals and other facilities as the
Group Practice may deem appropriate from time to time. The rendition of all
medical professional services, including, but not limited to, diagnosis,
treatment, surgery, therapy, the prescription of medicine and drugs, and the
supervision and preparation of medical reports shall be the sole responsibility
of the Group Practice. Administrator shall have no authority whatsoever with
respect to the establishment of fees or charges for the rendition of such
services. From time to time, the Group Practice in its discretion will adopt and
implement fee schedules for non-prepaid patients which shall be reasonable in
relation to fees generally being obtained in the same or similar market areas
and for all re-xxxxxxxx and recovery items on prepaid Managed Care Contracts
which are authorized and permitted by such contracts, a copy of which and each
amendment thereto shall be provided to Administrator for review no later than
thirty (30) days prior to the proposed effective date thereof.
SECTION 4.4 GROUP PRACTICE'S INTERNAL MATTERS. The Group Practice shall
be responsible for matters involving its corporate governance, employees and
similar internal matters, including, but not limited to, preparation and the
contents of such reports to regulatory authorities governing the Group Practice
as the Group Practice is required by law to provide, distribution of
professional fee income among the Group Practice Physician Stockholders, which
will be included in Excluded Group Practice Expenses; PROVIDED, HOWEVER, that
such compensation shall be consistent with the Physician Engagement Agreements
and Physician Employment Agreements for each Physician. The costs incurred in
connection with the foregoing matters shall be Group Practice Expenses.
SECTION 4.5 GROUP PRACTICE BOARD MEETINGS. Administrator shall have the
right to have a non-voting attendee at all meetings of the Members and the Board
of Managers of the Group Practice, and shall be entitled to reasonable notice of
every such meeting as afforded Members and the Board of Managers.
SECTION 4.6 NAME. Administrator agrees that the Group Practice shall be
entitled to use on a non-exclusive and nontransferable basis at no cost for the
term of this Agreement such of the tradenames, service marks and trade marks of
Administrator at no cost as may be necessary or appropriate in the performance
of the Group Practice's services and obligations hereunder; provided, however,
that the Group Practice enter into such Tradename, Service Xxxx and Trade Xxxx
Agreements as Administrator may require.
SECTION 4.7 COMPLIANCE WITH LAWS. The Group Practice shall, and shall
use its best efforts to cause the Physicians to comply with all applicable
federal, state and local laws, rules, regulations and restrictions in the
conduct of the Group Practice's business. Without limiting
16
the generality of the foregoing, the Group Practice shall comply, and shall use
its best efforts to cause each Physician Employee to comply with all Medical
Waste Laws applicable to the operation of the Group Practice in the generation,
transportation, treatment, storage, disposal or other handling of Medical Waste
(to the extent that the Group Practice or the Physician Employees engage in such
activities), and the Group Practice shall not, and shall use its best efforts to
forbid any Physician to:
(a) enter into any contract, lease, agreement or arrangement, including,
but not limited to, any joint venture or consulting agreement, to provide
services, lease space, lease equipment or engage in any other venture or
activity with any physician, hospital, pharmacy, home health agency or other
person or entity which is in a position to make or influence referrals to, or
otherwise generate business for the Group Practice, if such transaction is in
violation of any applicable law, rule or regulation;
(b) knowingly and wilfully make or cause to be made a false statement or
representation of a material fact in any application for any benefit or payment;
(c) fail to disclose knowledge by a claimant of the occurrence of any
event affecting the initial or continued right to any benefit or payment on its
behalf or on behalf of another, with intent to fraudulently secure such benefit
or payment;
(d) knowingly and willfully pay, solicit or receive any remuneration
(including any kickback, bribe or rebate), directly or indirectly, overtly or
covertly, in cash or in kind or offer to pay or receive such remuneration (i) in
return for referring an individual to a person for the furnishing or arranging
for the furnishing of any item or service for which payment may be made in whole
or in part by Medicare or Medicaid, or (ii) in return for purchasing, leasing,
or ordering, or arranging for or recommending purchasing, leasing, or ordering
any good, facility, service, or item for which payment may be made in whole or
in part by Medicare or Medicaid; and
(e) refer a patient for Designated Health Services to, or provide
Designated Health Services to a patient upon a referral from, an entity or
person with which the physician or an immediate family member has a financial
relationship, other than as permitted by exceptions set forth in Xxxxx.
SECTION 4.8 ANCILLARY OPERATIONS. The Group Practice shall not acquire,
establish or commence the operation of any satellite location, medical office,
ambulatory surgery center, health maintenance organization, preferred provider
organization, exclusive provider organization or similar entity or organization
established or operated by the Group Practice after the date hereof without the
prior written consent of Administrator.
SECTION 4.9 PREMISES AND PERSONAL PROPERTY. The Group Practice shall use
its best efforts to prevent damage, excessive wear and tear, and malfunction or
other breakdown of the Premises and Personal Property or any part thereof by the
Physician Employees. The Group Practice shall promptly inform Administrator in
writing of any and all necessary replacements,
17
repairs or maintenance to any of the Premises or Personal Property and any
failures of equipment of which it becomes aware. The Group Practice shall comply
with all of the covenants and provisions set forth in any leases or subleases
for the Premises entered into or assumed by Administrator.
SECTION 4.10 GROUP PRACTICE EMPLOYEE BENEFIT PLANS
(a) Effective on the Acquisition Effective Date, the Group Practice
shall amend the tax-qualified retirement plan(s) described on Schedule 4.10(c)
(the "Group Practice Plan") to provide that employees of the Administrator who
are classified as "leased employees" (as defined in Code Section 414(n)) of the
Group Practice shall be treated as Group Practice employees for purposes of
eligibility and participation in the Group Practice Plan. Not less often than
annually, the Group Practice and the Administrator shall agree upon and identify
in writing those individuals to be classified as leased employees of the Group
Practice (the "designated leased employees"). The Group Practice and the
Administrator shall establish mutually agreeable procedures with respect to the
participation of designated leased employees in the Group Practice Plan. Such
procedures shall be designed to avoid the tax disqualifications of the Group
Practice Plan, similar plans of clinics similarly situated, and any similar plan
sponsored or maintained by the Administrator from time to time (collectively,
the "Plans").
(b) If the Joint Planning Board determines that the relationship between
the Administrator and the Group Practice (and other clinics similarly situated)
constitutes an "affiliated service group" (as defined in Code Section 414(m)),
the Administrator and the Group Practice shall take such actions as may be
necessary to avoid the tax disqualification of the Plans. Such actions may
include the amendment, freeze, termination or merger of the Group Practice Plan.
(c) The Plans described on Schedule 4.10(c) attached hereto are approved
by Administrator. The Group Practice shall not enter into any new "employee
benefit plan" as defined in Section 3(3) of the Employee Retirement Security Act
("ERISA") without the express written consent of Administrator. The Group
Practice shall not offer any retirement benefits or make any material retirement
payments other than under the Group Practice Plan to any Group Practice
Physician Employee without the express written consent of Administrator. Except
as otherwise required by law, the Group Practice shall not materially amend,
freeze, terminate or merge the Group Practice Plan without the express written
consent of Administrator. In the event of either of the foregoing, the
Administrator's consent shall not be withheld if such action would not
jeopardize the qualification of any of the Plans. The Group Practice agrees to
make such changes to the Group Practice Plan, including the freezing,
termination, or merger of the Group Practice Plan, as may be approved by the
Joint Planning Board and the Administrator, but only if such changes are
necessary to prevent the disqualification of any of the Plans.
(d) Expenses incurred in connection with the Group Practice Plan or
other Group Practice employee benefit plans, including without limitation the
compensation of counsel, accountants, corporate trustees, and other agents shall
be allocated amongst covered employees and treated as Group Practice Expense,
Ancillary Expense or Excluded Clinic Expense, as applicable.
18
(e) The employee benefit plan contribution and administration expenses
for the Physician Employees shall be included in the Group Practice's operating
budget. The Group Practice and the Administrator shall not make employee benefit
plan contributions or payments to the Group Practice for their respective
employees in excess of such budgeted amounts unless required by law or the terms
of the Group Practice Plan. The Administrator shall make contributions or
payments with respect to the Group Practice Plan or other Group Practice
employee benefit plans; (1) as a Group Practice Expense, on behalf of designated
leased employees, and other eligible Group Practice employees; (2) as an
Excluded Group Practice Expense on behalf of Physician Employees; and (3) as an
Ancillary Expense on behalf of all employees designated as performing Ancillary
Services. In the event the Group Practice Plan or other Group Practice employee
benefit is terminated, the Administrator shall be responsible, as a Group
Practice Expense, for any funding liabilities related to designated leased
employees, or other eligible Group Practice employees, excluding any liability
for Physician Stockholder or Physician Employee.
(f) The Administrator shall have the sole and exclusive authority to
adopt, amend, or terminate any employee benefit plan for the benefit of its
employees, regardless of whether such employees are designated leased employees,
unless such actions would require the amendment, freeze or termination of the
Group Practice Plan to avoid disqualification of the Group Practice Plan, in
which case any such action would be subject to the express prior written consent
of the Joint Planning Board. The Administrator shall have the sole and exclusive
authority to appoint the trustee, custodian and administrator of any such plan.
(g) From and after the Acquisition Effective Date, the Group Practice's
employees and designated leased employees shall receive credit for prior service
with the Group Practice's predecessor for vesting and eligibility purposes under
the Group Practice Plan, but only to the extent such service was actually
recognized under the Group Practice Plan immediately prior to the Acquisition
Effective Date.
(h) In the event that any "employee welfare benefit plan" ( as defined
in ERISA Section 3(l)) maintained or sponsored by the Group Practice must be
amended, terminated, modified, or changed as a result of the Group Practice and
Administrator being deemed to be a part of an affiliated service group, the
Joint Planning Board will replace such plan or plans with a plan or plans that
provides those benefits approved by the Joint Planning Board. It shall be the
goal of the Joint Planning Board in such event to provide substantially similar
or comparable benefits if the same can be provided at a substantially similar
cost to the replaced plan.
ARTICLE 5
Joint Planning Board
(a) The parties hereto shall establish a Joint Planning Board which
shall be responsible for developing long-term strategic planning objectives and
management policies for the overall
19
operation of the Group Practice and shall facilitate communication and
interaction between Administrator and the Group Practice. The Joint Planning
Board shall consist of six (6) members. Administrator shall designate, in its
sole discretion, three (3) members of the Joint Planning Board. The Group
Practice shall designate, in its sole discretion, three (3) members of the Joint
Planning Board. Actions of the Joint Planning Board must be approved by 2/3rds
of Administrator-designated members AND 2/3rds of Group Practice-designated
members.
(b) The Joint Planning Board shall, in addition to the responsibilities
set forth elsewhere in this Agreement, have the authority to (i) develop and
assist the Group Practice in implementing both long-term strategic objectives
and short-term operating plans, (ii) prepare proposals and make recommendations
to the Board of Directors of AMP regarding significant capital expenditures,
contractual arrangements, capital improvement and expansion projects on behalf
of the Group Practice, (iii) with assistance of Administrator, prepare the
annual capital and operating budgets of the Group Practice, (iv) consider and
make recommendations regarding grievances pertaining to matters not specifically
addressed in this Agreement if such matters are referred to it by the Group
Practice or Administrator, (v) make recommendations to the Group Practice
regarding the performance, number and type of physicians required for the
efficient operation of the Group Practice, and (vi) make decisions and
recommendations regarding the Group Practice Plan. Subject to Sections 3.4 and
4.1, decisions regarding the hiring or firing of physicians shall be made solely
by the Group Practice.
ARTICLE 6
Restrictive Covenants and Liquidated Damages
The parties recognize that the services provided by Administrator
hereunder shall be feasible only if the Group Practice operates an active
medical practice to which the physicians associated with the Group Practice
devote their full business time and attention. Accordingly, the parties hereto
agree as follows:
SECTION 6.1 RESTRICTIVE COVENANTS OF THE GROUP PRACTICE
(a) NONCOMPETITION. During the term of this Agreement and for a period
of one year thereafter, the Group Practice shall not, without the prior written
consent of Administrator, (i) establish, operate or provide physician services
at any medical office, clinic or other health care facility providing services
similar to those provided by the Group Practice, or (ii) engage or participate
in any business which engages in competition with the business conducted by AMP
Group, in either case, anywhere within twenty (20) miles of any location at
which any Physician of the Group Practice has practiced medicine in the last
year. This provision shall not apply to any Physician who leaves the Group
Practice because of death, disability, full-time retirement, termination without
cause or by law. This provision shall not apply to the Group Practice in the
event this Agreement is terminated under Section 10.3, below.
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(b) ACKNOWLEDGMENT OF PROPRIETARY INTEREST. The Group Practice
recognizes the proprietary interest of Administrator in any Confidential and
Proprietary Information (as hereinafter defined). The Group Practice
acknowledges and agrees that any and all Confidential and Proprietary
Information communications, learned of, developed or otherwise acquired by the
Group Practice during the term of this Agreement shall be the property of
Administrator. The Group Practice further acknowledges and understands that its
disclosure of any Confidential and Proprietary Information will result in
irreparable injury and damage to Administrator. As used herein, "Confidential
and Proprietary Information" means all trade secrets and other confidential
and/or proprietary information of Administrator, including information derived
from reports, investigations, research, work in progress, codes, marketing and
sales programs, financial projections, cost summaries, pricing formula,
contracts analyses, financial information, projections, confidential filings
with any state or federal agency, and all other confidential concepts, methods
of doing business, ideas materials or information (other than the Group
Practice's original patient records) prepared or performed for, by or on behalf
of Administrator by its employees, officers, directors, agents, representatives,
or consultants.
(c) COVENANT NOT-TO-DIVULGE CONFIDENTIAL AND PROPRIETARY INFORMATION.
The Group Practice acknowledges and agrees that Administrator is entitled to
prevent the disclosure of Confidential and Proprietary Information. The Group
Practice agrees that at all times during the term of this Agreement and forever
thereafter to hold in strictest confidence and not to disclose to any person,
firm or corporation, other than to Physicians and persons engaged by
Administrator to further the business of the Group Practice, and not to use
except in the pursuit of the business of Administrator, Confidential and
Proprietary Information, without the prior written consent of Administrator,
unless (i) such information becomes known or available to the public generally
through no wrongful act of the Group Practice or its employees, (ii) disclosure
is required by law or the rule, regulation or order of any governmental
authority under color of law, provided, that prior to disclosing any
Confidential and Proprietary Information pursuant to this clause (ii), the Group
Practice shall, if possible, give prior written notice thereof to the
Administrator and provide Administrator with the opportunity to contest such
disclosure, or (iii) the Group Practice reasonably believes that such disclosure
is required in connection with a lawsuit to which the Group Practice is a party.
(d) RETURN OF MATERIALS TO ADMINISTRATOR. In the event of any
termination of this Agreement for any reason whatsoever, or at any time upon the
request of Administrator, the Group Practice will promptly deliver to
Administrator all documents, data and other information in the Group Practice's
possession that contains any Confidential and Proprietary Information. The Group
Practice shall not take or retain any documents or other information, or any
reproduction or excerpt thereof, containing any Confidential and Proprietary
Information, unless otherwise authorized in writing by Administrator.
(e) RETURN OF MATERIALS TO THE GROUP PRACTICE. In the event of any
termination of this Agreement for any reason whatsoever, or at any time upon the
request of the Group Practice, the Administrator will promptly deliver to the
Group Practice all documents, data and other information pertaining to trade
secrets or other confidential and/or proprietary information of
21
the Group Practice, unless such documents, data or information is necessary for
Administrator to perform its services hereunder, in which case Administrator
shall be able to retain such data or information and shall furnish copies of
such documents.
SECTION 6.2 RESTRICTIVE COVENANTS AND LIQUIDATED DAMAGES PROVISIONS.
Each Physician Engagement Agreement and each Physician Employment Agreement
contain certain restrictive covenants pertaining to covenants not to compete
with and not to divulge the confidential and proprietary information of
Administrator and the Group Practice ( the "Current Physician Restrictive
Covenants"). Each Physician Engagement Agreement and each Physician Employment
Agreement contain certain provisions pertaining to the payment of liquidated
damages to the Group Practice in certain cases of early termination of such
Physician Engagement Agreement or such Physician Employment Agreement (the
"Liquidated Damages Provisions"). During the term of this Agreement, the Group
Practice shall not amend, alter or otherwise change any term or provision of any
Physician Engagement Agreement or Physician Employment Agreement without the
prior written consent of Administrator. Following termination of this Agreement,
the Group Practice shall not amend, alter or otherwise change any term or
provision of the Restrictive Covenants or Liquidated Damages Provisions ("Future
Physician Restrictive Covenants"), unless such provisions are no longer in force
and effect pursuant to the terms of the applicable Physician Engagement
Agreement or Physician Employment Agreement at the time of termination of this
Agreement.
SECTION 6.3 ENFORCEMENT OF PHYSICIAN AGREEMENTS.
(a) ENFORCEABILITY OF LIQUIDATED DAMAGES PROVISIONS. The Group Practice
hereby acknowledges that the Acquisition Consideration and the terms and
conditions of this Agreement were determined based upon numerous factors,
including the continuity of each Physician's practice and the agreement of
Physicians to remain with the Group Practice pursuant to the terms of the
Physician Engagement Agreement or the Physician Employment Agreements and to
utilize the assets and business overhead required to be provided by
Administrator for a period of five (5) years. Accordingly, in the event that the
Group Practice shall be entitled to any liquidated damages (the "Liquidated
Damages") pursuant to the terms of the Liquidated Damages Provisions, (i) the
Group Practice shall pay to Administrator an amount equal to such Liquidated
Damages on the date such Liquidated Damages are received by the Group Practice
or as otherwise provided in this Section 6.3(a), (ii) at the request of
Administrator, the Group Practice shall assign to Administrator such causes of
action and/or other rights it has in connection with events and actions giving
rise to the Liquidated Damages (the "LD Causes of Action") and shall cooperate
with and provide reasonable assistance to Administrator with respect to the
pursuit of the LD Causes of Action by Administrator, and (iii) at the request of
Administrator, the Group Practice shall seek any and all remedies at law or in
equity that it may have available to it in connection with the LD Causes of
Action. Administrator shall be entitled to receive all Liquidated Damages and/or
other damages or amounts recovered in connection with the LD Causes of Action,
which shall not be included in Group Practice Revenues. The costs and expenses
incurred by the Group Practice or Administrator in connection with pursuing the
LD Causes of Action shall be borne by Administrator and included in
Administrator Expenses. In
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the event that the Group Practice has not initiated proceedings to recover any
Liquidated Damages due and owing to the Group Practice within twenty (20) days
after a request by Administrator, the Group Practice shall, within five (5) days
of a request by Administrator, pay to Administrator an amount equal to such
Liquidated Damages. In no event shall the payment by the Group Practice to
Administrator of Liquidated Damages relieve the Group Practice of its obligation
to assign the LD Causes of Action to Administrator, provided, however, in the
event that the Group Practice pays Liquidated Damages to Administrator pursuant
to the immediately preceding sentence and the Group Practice has assigned the
related LD Causes of Action to Administrator, Administrator shall prosecute such
LD Causes of Action and if Administrator recovers such Liquidated Damages,
Administrator shall reimburse the Group Practice up to the amount paid to
Administrator by the Group Practice out of any Liquidated Damages so recovered.
(b) ENFORCEMENT OF RESTRICTIVE COVENANTS AND OTHER PROVISIONS. The Group
Practice shall enforce the Physician Engagement Agreements and Physician
Employment Agreements, including, without limitation, the Restrictive Covenants.
Subject to Section 6.3(a) and the following sentence, the costs and expenses of
such enforcement shall be included in Group Practice Expenses and all damages
and other amounts recovered thereby shall be included in Group Practice
Revenues. In the event that, after a request by Administrator, the Group
Practice does not pursue any remedy that may be available to it by reason of a
breach or default of the Restrictive Covenants or any other provision of the
Physician Employment Agreements, upon the request of Administrator, the Group
Practice shall assign to Administrator, such causes of action and/or other
rights it has with respect thereto; in which case, all costs and expenses
incurred in connection therewith shall be borne by Administrator and shall be
included in Administrator Expenses, and Administrator shall be entitled to all
damages and other amounts recovered thereby.
SECTION 6.4 REMEDIES. Administrator and the Group Practice acknowledge
and agree that a remedy at law for any breach of the provisions of this Article
6 shall be inadequate, and therefore, either party shall be entitled to specific
performance and injunctive or other equitable relief in the event of any such
breach or attempted breach, in addition to any other rights or remedies
available to either party at law or in equity. Each party hereto waives any
requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief. If any provision of
the Restrictive Covenants or this Article 6 relating to the restrictive period,
scope of activity restricted and/or the territory described therein shall be
declared by a court of competent jurisdiction to exceed the maximum time period,
scope of activity restricted or geographical area such court deems reasonable
and enforceable under applicable law, the time period, scope of activity
restricted and/or area of restriction held reasonable and enforceable by the
court shall thereafter be the restrictive period, scope of activity restricted
and/or the territory applicable to such provision of the Restrictive Covenants
or this Article 6. The invalidity or non-enforceability of any provision of the
Restrictive Covenants or this Article 6 in any respect shall not affect the
validity or enforceability of the remainder of the Restrictive Covenants or this
Article 6 or of any other provisions of this Agreement.
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ARTICLE 7
Financial and Security Arrangements
SECTION 7.1 SERVICE FEES. The Group Practice and Administrator agree
that the compensation set forth in this Article 7 is being paid to Administrator
in consideration of the services provided and the substantial commitment and
effort made by Administrator hereunder and any such fees have been negotiated at
arms' length and are fair, reasonable and consistent with fair market value.
Administrator shall be paid the following service fees:
(a) Management of Professional Services: Administrator shall be
reimbursed for the amount of all Group Practice Expenses and Ancillary Expenses
recorded by Administrator pursuant to the terms of this Agreement;
(b) Administrator shall receive as compensation an amount equal to
percent (__%) of Group Practice Revenues, subject to any adjustments
provided for herein (the "Service Fee"); and
(c) Management of Ancillary Services: Administrator shall receive as
additional compensation an amount equal to Ancillary Revenues of the Group
Practice minus Ancillary Expenses of the Group Practice multiplied by
percent (__%).
SECTION 7.2 PAYMENTS. The amounts to be paid to Administrator under this
Article 7 shall be calculated by Administrator applying the accrual basis of
accounting and shall be payable monthly. Payments due for each calendar month
shall be paid on the 15th day following the end of such month (or the first
preceding day that is a business day if the 15th day is not a business day) (a
"Payment Date"). Such amounts paid shall be estimates based upon available
information for such month, adjustments to the estimated payments shall be made
to reconcile final amounts due under Section 7.1 on the next Payment Date.
SECTION 7.3 REPAYMENT. Unless otherwise agreed to by Administrator and
the Group Practice, the Group Practice shall repay Administrator for any amounts
advanced to the Group Practice to fund obligations of the Group Practice as
requested by the Group Practice on the first Payment Date following such
advance. The Group Practice shall repay all indebtedness to Administrator in
connection with funding for capital expenditures or otherwise as agreed between
the Group Practice and Administrator. Any amounts owed to the Administrator by
the Group Practice and/or Physicians shall be subject to offset by Administrator
against amounts otherwise owed to Group Practice and/or Physicians in the event
repayment is not made as agreed.
SECTION 7.4 SECURITY AGREEMENT. In order to enforce its rights granted
hereunder, the Group Practice shall execute a Security Agreement in
substantially the form attached hereto as Exhibit 7.4 (the "Security
Agreement"). In addition, Group Practice shall cooperate with Administrator and
execute all other necessary security documents in connection with the granting
and perfection of such security interest (the "Additional Security Documents")
to Administrator
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or at Administrator's option, its lenders. Specifically, the Security Agreement
and the Additional Security Documents shall grant perfected first lien security
interests in all accounts receivable including Medicare/Medicaid and other
governmental receivables to the fullest extent permitted by law, in a form and
manner satisfactory to Administrator's legal counsel. All collections in respect
of such accounts receivable shall be deposited in a bank account or accounts at
a bank designated by Administrator. To the extent that the Group Practice comes
into possession of any payments in respect of such accounts receivable, the
Group Practice shall promptly remit such payments to Administrator for deposit
in Administrator's bank accounts.
SECTION 7.5 PERFORMANCE INCENTIVE/REDUCTION. It is the intent of the
parties to cause the Service Fee to continue to reflect the fair value of
management services rendered as and if the revenues and profitability of the
Accounting Centers of the Group Practice increase or decrease in relation to the
agreement of the parties. Therefore, if the amount of the Service Fee for any
quarterly period exceeds the amount by which Group Practice Revenues exceed the
sum of Group Practice Expenses and the Compensation of Physician Shareholders of
the Accounting Centers in the Group Practice (as further defined in the
appropriate Physician Engagement Agreements) (the "Adjusted Service Fee") by
more than five percent (5%), then the Service Fee shall be decreased by an
appropriate percentage so that such Service Fee equals the Adjusted Service Fee
and applied on a prospective basis unless further adjusted after the passage of
any successive quarterly period. If the amount of the Service Fee for any
quarterly period is less than the amount of the Adjusted Service Fee by more
than five percent (5%), then the Service Fee shall be increased by an
appropriate percentage so that such Service Fee equals the Adjusted Service Fee
and applied on a prospective basis unless further adjusted after the passage of
any successive quarterly period. Recognizing that certain costs and expenses can
vary to a considerable degree and that reducing such costs and expenses to the
extent practicable is one of the obligations of Administrator herein, the
adjustment should serve to maintain the parties negotiated agreement as to the
reasonable fair market value of the items and services furnished by
Administrator pursuant to this Agreement, considering the nature and volume of
the services required and the risks assumed by Administrator.
ARTICLE 8
Records
All records relating in any way to the operation of the Group Practice
(other than original patient medical records contributed to the Group Practice
by the Group Practice Physician Stockholders and all original patients records
created by the Group Practice after the Acquisition Effective Date) shall,
subject to the obligations of the Group Practice to maintain patient medical
records pursuant to Section 3.2(d), at all times be the property of
Administrator as set forth in Section 3.2(d). During the term of this Agreement,
and for a reasonable time thereafter, the Group Practice or its agents shall
have reasonable access during normal business hours to the Group Practice's and
Administrator's personal and financial records relating to the Group Practice,
including, but not limited to, records of collections, expenses with
disbursements as kept by Administrator in performing Administrator's obligations
under this Agreement, and the Group Practice may copy any or all such records.
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ARTICLE 9
Insurance and Indemnity
SECTION 9.1 INSURANCE TO BE MAINTAINED BY THE GROUP PRACTICE. During the
term of this Agreement, the Group Practice shall maintain comprehensive
professional liability insurance with such carrier as determined jointly by
Administrator and the Group Practice, with limits per claim and per physician to
be agreed upon by Administrator and the Group Practice and a separate limit of
the Group Practice with such deductible as is mutually agreeable by
Administrator and the Group Practice. All malpractice premiums and deductibles
related thereto shall be included in Excluded Group Practice Expenses. All
costs, expenses and liabilities incurred by the Group Practice or Administrator
in excess of the limits of such policies shall also be included in Excluded
Group Practice Expenses.
SECTION 9.2 INSURANCE TO BE MAINTAINED BY ADMINISTRATOR. During the term
of this Agreement, Administrator will use commercially reasonable efforts to
provide and maintain, as a Group Practice Expense, comprehensive professional
liability insurance for all professional employees of Administrator, and
comprehensive general liability and property insurance covering the Group
Practice premises and operations with such limits or coverages as may reasonably
be determined to be appropriate by Administrator; provided that Administrator
must obtain the Group Practice's approval in the event any such limits or
coverages are below the limits and coverages maintained as of the date of this
Agreement.
SECTION 9.3 CONTINUING LIABILITY INSURANCE COVERAGE. The Group Practice
shall obtain or require each of its Physicians to obtain comprehensive liability
insurance coverage under either a "tail policy" or a "prior acts policy" with
the same limits and deductibles as the insurance coverage provided pursuant to
Section 9.1, upon the termination of such physician's relationship with the
Group Practice for any reason. In the event that neither the Group Practice nor
the Physician obtains such comprehensive liability insurance coverage,
Administrator may do so. The cost of such comprehensive liability Insurance
coverage shall be included in Group Practice Expenses unless such cost is borne
by the Physician.
SECTION 9.4 ADDITIONAL INSURED. The Group Practice and Administrator
agree to use their reasonable efforts to have each other named as an additional
insured on the other's respective professional liability insurance programs. The
additional cost, if any, associated therewith shall be a Group Practice Expense.
SECTION 9.5 INDEMNIFICATION. The Group Practice shall indemnify, defend
and hold Administrator, AMP and their respective officers, directors,
shareholders, employees, agents and consultants (other than such persons who are
also officers, directors, shareholders, employees, agents or consultants of the
Group Practice) harmless, from and against any and all liabilities, losses,
damages, claims, causes of action and expenses (including reasonable attorneys'
fees), not covered by insurance (including self-insured insurance and reserves),
whenever arising or incurred, that are caused or asserted to have been caused,
directly or indirectly, by or as a result
26
of the performance of medical services or the performance of any intentional
acts, negligent acts or omissions by the Group Practice and/or its shareholders,
employees and/or subcontractors (other than Administrator or its employees)
during the term of this Agreement. Administrator shall indemnify, defend and
hold the Group Practice and its officers, shareholders, directors, employees,
agents and consultants harmless from and against any and all liabilities,
losses, damages, claims, causes of action and expenses (including reasonable
attorneys' fees), not covered by insurance (including self-insured insurance and
reserves), whenever arising or incurred, that are caused or asserted to have
been caused, directly or indirectly, by or as a result of the performance of way
intentional acts, negligent acts or omissions by Administrator and/or its
shareholders, employees and/or subcontractors (other than the Group Practice or
its employees) during the term of this Agreement.
SECTION 9.6 GUARANTY. Administrator hereby guarantees, absolutely and
unconditionally, the prompt performance by Administrator and any of its
Affiliates of all of its obligations due to the Group Practice under this
Agreement.
ARTICLE 10
Term and Termination
SECTION 10.1 TERM OF AGREEMENT. This Agreement shall commence on the
date hereof and shall expire on the 40th anniversary hereof unless earlier
terminated pursuant to the terms of either Section 10.3 or Section 10.4 or
automatically extended pursuant to the terms of Section 10.2
SECTION 10.2 EXTENDED TERM. Unless earlier terminated as provided for in
either Section 10.3 or Section 10.4, the term of this Agreement shall be
automatically extended for additional terms of ten (10) years each, unless
either party delivers to the other party, not less than twelve (12) months nor
earlier than fifteen (15) months prior to the expiration of the preceding term,
written notice of such party's intention not to extend the term of this
Agreement.
SECTION 10.3 TERMINATION BY THE GROUP PRACTICE. The Group Practice may
terminate this Agreement by giving written notice thereof to Administrator
(after the giving of any required notices and the expiration of any applicable
waiting periods set forth below) upon the occurrence of any of the following
events:
(a) Administrator shall admit in writing its inability to generally pay
its debts when due, apply for or consent to the appointment of a receiver,
trustee or liquidator of all or substantially all of its assets, file a petition
in bankruptcy or make an assignment for the benefit of creditors, or upon other
action taken or suffered by Administrator, voluntarily or involuntary, under any
federal or state law for the benefit of creditors, except for the filing of a
petition in involuntary bankruptcy against Administrator which is dismissed
within ninety (90) days thereafter.
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(b) Administrator shall default in the performance of any material duty
or material obligation imposed upon it by this Agreement and such default shall
continue for a period of ninety (90) days after written notice thereof has been
given to Administrator by the Group Practice, provided that the Group Practice
may terminate this Agreement, if and only if, such termination shall have been
approved by the affirmative vote of the holders of eighty percent (80%) of the
interest of the equity holders of the Group Practice.
SECTION 10.4 TERMINATION BY ADMINISTRATOR. Administrator may terminate
this Agreement by giving written notice thereof to the Group Practice (after the
giving of and required notices and the expiration of any applicable waiting
periods set forth below) upon the occurrence of any of the following events:
(a) The Group Practice shall admit in writing its inability to generally
pay its debts when due, apply for or consent to the appointment of a receiver,
trustee or liquidator of all or substantially all of its assets, file a petition
in bankruptcy or make an assignment for the benefit of creditors, or upon other
action taken or suffered by the Group Practice, voluntarily or involuntarily,
under any federal or state law for the benefit of debtors, except for the filing
of a petition in involuntary bankruptcy against the Group Practice which is
dismissed within ninety (90) days thereafter.
(b) The Group Practice shall default in the performance of any material
duty or material obligation imposed upon it by this Agreement, and such default
shall continue for a period of ninety (90) days after written notice thereof has
been given to the Group Practice by Administrator.
(c) The Group Practice or any Physician (i) engages in any conduct or is
formally accused of conduct for which such Physician's license to practice
medicine reasonably would be expected to be subject to revocation or suspension,
whether or not actually revoked or suspended, or (ii) is otherwise disciplined
by any licensing, regulatory or professional entity or institution, the result
of any of which event described in clause (i) or (ii) does or reasonably would
be expected to materially adversely affect the Group Practice.
SECTION 10.5 EFFECTIVE DATE OF TERMINATION. Any termination of this
Agreement shall be effective (the "Termination Date") as follows:
(a) Immediately upon receipt of a termination notice pursuant to Section
10.3 or Section 10.4 (a "Termination Notice"); or
(b) Upon the expiration of this Agreement pursuant to Section 10.1. and
10.2.
SECTION 10.6 EFFECT UPON TERMINATION. Upon the Termination Date, this
Agreement shall terminate and shall be of no further force and effect; provided,
however:
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(a) Administrator shall use its efforts to cooperate with the Group
Practice for the appropriate transfer of management services. Administrator
shall not object to the employment by the Group Practice of Administrator's
employees performing services solely for the Group Practice and located at the
offices of the Group Practice.
(b) Each party hereto shall provide the other party with reasonable
access to books and records owned by it to permit such requesting party to
satisfy reporting and contractual obligations which may be required of it.
(c) On the Termination Date, the Group Practice shall (i) assign to
Administrator, to the extent permitted by law, all accounts receivable included
in Group Practice Revenues that have not been collected and (ii) pay to
Administrator an amount equal to such accounts receivable (net of any related
allowance for doubtful accounts recorded in accordance with GAAP) that are not
assigned to Administrator by the Group Practice. Any other amounts due and owing
but unpaid to either Administrator or the Group Practice as of the Termination
Date shall be paid promptly by the appropriate party.
(d) Any and all covenants and obligations of either party hereto which
their terms or by reasonable implications are to be performed, in whole or in
part, after the termination of this Agreement, shall survive such termination,
including, without limitation, the obligations of the parties pursuant to the
following Sections: 6.1(b), 6.1(c), 6.1(d), 6.2, 6.3, 9.5, Article 7 and the
applicable provisions of Article 11.
ARTICLE 11
General Provisions
SECTION 11.1 ASSIGNMENT. Administrator shall have the right to assign
its rights hereunder without the consent of the Group Practice to AMP or any
direct or indirect wholly-owned subsidiary of Administrator or AMP (that remains
a wholly-owned subsidiary of Administrator or AMP) so long as such assignment
does not create any material economic obligations hereunder. The Group Practice
hereby agrees that Administrator has the right to grant a security interest in
its right to receive payments hereunder to any lending institution from which
Administrator or AMP obtains financing.
SECTION 11.2 AMENDMENTS. This Agreement shall not be modified or amended
except by a written document executed by both parties to this Agreement, and
such written modification(s) or amendment(s) shall be attached hereto.
SECTION 11.3 WAIVER OF PROVISIONS. Any waiver of any terms and
conditions hereof must be in writing, and signed by the parties hereto. The
waiver of any of the terms and conditions of this Agreement shall not be
construed as a waiver of any other terms and conditions hereof.
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SECTION 11.4 ADDITIONAL DOCUMENTS. Each of the parties hereto agrees to
execute any document or documents that may be requested from time to time by the
other party to implement or complete such party's obligations pursuant to this
Agreement.
SECTION 11.5 ATTORNEYS' FEES. If legal action is commenced by either
party to enforce or defend its rights under this Agreement, the prevailing party
in such action shall be entitled to recover its costs and reasonable attorneys'
fees in addition to any other relief granted.
SECTION 11.6 CONTRACT MODIFICATIONS FOR PROSPECTIVE LEGAL EVENTS. In the
event any state or federal laws or regulations, now existing or enacted or
promulgated after the date hereof, are interpreted by judicial decisions, a
regulatory agency or legal counsel in such a manner as to indicate that this
Agreement or any provision hereof may be in violation of such laws or
regulations, the Group Practice and Administrator shall amend this Agreement as
necessary to preserve the underlying economic and financial arrangements between
the Group Practice and Administrator and without substantial economic detriment
to either party. To the extent any act or service required of Administrator in
this Agreement should be construed or deemed, by any governmental authority,
agency or court, to constitute the practice of medicine, the performance of said
act or service by Administrator shall be deemed waived and forever unenforceable
and the provisions of this Section 11.6 shall be applicable. Neither party shall
claim or assert illegality as a defense to the enforcement of this Agreement or
any provision hereof, instead, any such purported illegality shall be resolved
pursuant to the terms of this Section 11.6 and Section 11.9.
SECTION 11.7 PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES. Except
as otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and permitted assigns of the parties hereto. Neither
this Agreement nor any other agreement contemplated hereby shall be deemed to
confer upon any person not a party hereto or thereto any rights or remedies
hereunder or thereunder.
SECTION 11.8 ENTIRE AGREEMENT. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding the
subject matter hereof, and supersede all prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
SECTION 11.9 SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
effected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
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SECTION 11.10 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING
CONFLICTS OF LAWS) OF THE STATE OF __________________________.
SECTION 11.11 NO WAIVER; REMEDIES CUMULATIVE. No party hereto shall by
any act (except by written instrument pursuant to Section 11.3 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
thereunder or to have acquiesced in any default in or breach of any of the terms
and conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any party hereto, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. No remedy set forth in this
Agreement or otherwise conferred upon or reserved to any party shall be
considered exclusive of any other remedy available to any party, but the same
shall be distinct, separate and cumulative and may be exercised from time to
time as often as occasion may arise or as may be deemed expedient.
SECTION 11.12 ARBITRATION AND MEDIATION. The parties agree to utilize
the following procedure with regard to any contention or claim arising out of or
relating to this Agreement, or any breach thereof (a "Dispute"); provided,
however, that the provisions in this Section 11.12. shall not be applicable to
any LD Cause of Action or other cause of action assigned to Administrator
pursuant to Section 6.3 or any Dispute or cause of action related thereto. If
any Dispute cannot be settled through direct discussions, the parties hereto
agree to endeavor first to resolve the Dispute through mediation in accordance
with Section 11.12(a). If the Dispute cannot be resolved through such mediation,
the parties hereto agree to resolve such Dispute by binding arbitration in
accordance with Section 11.12(b).
(a) Mediation
(i) INITIATION OF PROCEDURE. The initiating party shall give
written notice to the other party, describing the nature of the Dispute
and its claim for relief and identifying one or more individuals with
authority to resolve the Dispute on such party's behalf. The other party
shall have five (5) days from receipt of such notice within which to
designate in writing one or more individuals with authority to resolve
the Dispute on such party's behalf.
(ii) SELECTION OF MEDIATOR. Within ten (10) days from the date
of designation by the noninitiating party, the parties shall make a good
faith effort to select a person to mediate the Dispute. If no mediator
has been selected under this procedure, the parties shall jointly
request the National Health Lawyers Association Alternative Dispute
Resolution Service to provide a list of qualified attorney-mediators.
Within five (5) days of receipt of the list, the parties shall rank the
proposed mediators in numerical order of preference, simultaneously
exchange such list, and select as the mediator the one who has the best
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combined ranking. If such mediator is not available to serve, they shall
proceed to contact the mediator who was next highest in ranking until
they select a mediator.
(iii) TIME AND PLACE FOR MEDITATION; PARTIES REPRESENTED. In
consultation with the mediator selected, the parties shall promptly
designate a mutually convenient time in Houston, Texas for the
mediation, such time to be no later than twenty (20) days after
selection of the mediator. In the mediation, each party shall be
represented by persons with authority and discretion to negotiate a
resolution of the Dispute, and may be represented by counsel.
(iv) CONDUCT OF MEDIATION. The mediator shall determine the
format for the meetings and the mediation sessions shall be private. The
mediator will keep confidential all information learned in private
causes with any party unless specifically authorized by such party to
make disclosure of the information to the other party. The parties agree
that the mediation shall be governed by the provisions of Chapter 154 of
the Tex. Civ. Prac. & Rem. Code and such other rules as the mediator
shall reasonably prescribe.
(v) FEES OF MEDIATOR; DISQUALIFICATION. The fees and expenses of
the mediator shall be shared equally by the parties. The mediator shall
be disqualified as a witness, consultant, expert or counsel for any
party with respect to the Dispute and any related matters.
(vi) CONFIDENTIALITY. Mediation is a compromise negotiation for
purposes of federal and state Rules of Evidence that constitutes
privileged communication under Texas law. The entire mediation process
is confidential, and such conduct, statements, promises, offers, views
and opinions shall not be discoverable or admissible in any proceeding
for any purpose.
(b) BINDING ARBITRATION
(i) Following the close of any unsuccessful mediation proceeding
with respect to a Dispute, such Dispute shall, at the written request of
either party, be finally determined and settled pursuant to arbitration
in Houston, Texas by three arbitrators, one to be appointed by
Administrator, one by the Group Practice, and a neutral arbitrator to be
appointed by such two party-appointed arbitrators, The neutral
arbitrator shall be an attorney and act as chairman. Should either party
fail to appoint an arbitrator as hereinabove contemplated within five
(5) days after the party not requesting arbitration has received such
written request, or the two arbitrators appointed by or on behalf of the
parties as contemplated in this Section 11.12(b) fail to appoint a
neutral arbitrator as hereinabove contemplated within five (5) days
after the date of the appointment of the last arbitrator appointed by or
on behalf of the parties, then the National Health Lawyers Alternative
Dispute Resolution Service, upon application of Administrator or of the
Group Practice, shall appoint an arbitrator to fill such position with
the same force and effect as though such arbitrator had been appointed
as hereinabove contemplated.
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(ii) The arbitration proceeding shall commence within thirty
(30) days of the initial written request for arbitration and be
conducted in accordance with The Alternative Dispute Resolution Rules of
the National Health Lawyers Association. A determination, award or other
action shall be considered the valid action of the arbitrators if
supported by the affirmative vote of two or three of the three
arbitrators. The costs of arbitration (exclusive of attending the
arbitration, and of the fees and expenses of legal counsel to such
party, all of which shall be borne by such party) shall be shared
equally by Administrator and the Group Practice. The arbitration award
shall be final and conclusive and shall receive full faith and credit
and judgment upon such award may be entered and enforced in any court of
competent jurisdiction.
SECTION 11.13 COMMUNICATIONS. The Group Practice and the Administrator
agree that good communication between the parties is essential to the successful
performance of this Agreement, and each pledges to communicate fully and clearly
with the other on matters relating to the successful operation of the Group
Practice.
SECTION 11.14 CAPTIONS. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms or provisions hereof.
SECTION 11.15 GENDER AND NUMBER. When the context requires, the gender
of all words used herein shall include the masculine, feminine and neuter and
the number of all words shall include the singular and plural.
SECTION 11.16 REFERENCE TO AGREEMENT. Use of the words "herein",
"hereof', "hereto" and the like in this Agreement shall be construed as
references to this Agreement as a whole and not to any particular Article,
Section or provision of this Agreement, unless otherwise noted.
SECTION 11.17 NOTICE. Whenever this Agreement requires or permits any
notice, request, or demand from one party to another, the notice, request, or
demand must be in writing to be effective and shall be deemed to be delivered
and received (i) if personally delivered or if delivered by telex, telegram,
facsimile or courier service, when actually received by the party to whom notice
is sent or (ii) if delivered by mail (whether actually received or not), at the
close of business on the third business day next following the day when placed
in the mail, postage prepaid, certified or registered, addressed to the
appropriate party of parties, at the address of such party set forth below (or
at such other address as such party may designate by written notice to all other
parties in accordance herewith):
If to Administrator: American Medical Providers, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxx X. XxXxxxx
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With a copy to: Xxxxx & Xxxxxxxxx, LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxx, Esq.
If to the Group Practice: _______________________________
_______________________________
_______________________________
with a copy to: _______________________________
_______________________________
_______________________________
SECTION 11.18 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
SECTION 11.19 DEFINED TERMS. Terms used in the Exhibits attached hereto
with their initial letter capitalized and not otherwise defined therein shall
have the meanings assigned to such terms in this Agreement.
34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GROUP PRACTICE:
________________________________
By: ____________________________
Name: __________________________
Title: _________________________
ADMINISTRATOR:
AMERICAN MEDICAL PROVIDERS, INC.
By: ____________________________
Name: __________________________
Title: _________________________
35
