MANAGEMENT AND MEDICAL SERVICES AGREEMENT
EXHIBIT
10.1
THIS
MANAGEMENT AND MEDICAL SERVICES AGREEMENT, (the “Agreement”) is made and entered
into on this 4th day of
May, 2005 to take effect on the 1st day of
September, 2005, by and between Northwest Arkansas Primary Care
Physicians, P.A., an Arkansas professional association (the “Practice”)
and WellQuest Medical &
Wellness Centers of Northwest Arkansas, Inc. d/b/a WellQuest, an Arkansas
corporation (“WellQuest”).
BACKGROUND:
WellQuest
intends to operate centers (the “WellQuest Centers”) throughout northwestern
Arkansas that provide one-stop primary healthcare and wellness
services. WellQuest plans to establish the initial WellQuest Center
in Bentonville, Arkansas. Each WellQuest Center will consist of a medical spa, a
retail health and wellness shop, and related health and wellness services as
WellQuest determines are necessary or desirable.
Each
WellQuest Center will be located in the same building as and adjacent to a
physician practice, so that a patient visiting a WellQuest Center will have a
full range of primary care healthcare and preventative and wellness services
available to him or her.
WellQuest
desires to engage Practice to serve as the practice to provide medical direction
to the WellQuest Center(s), and Practice wishes to engage WellQuest to provide
certain management services to it, upon the terms and conditions as
follows.
NOW, THEREFORE, in
consideration of the mutual covenants herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENTS:
ARTICLE
I
ENGAGEMENT
OF WELLQUEST BY PRACTICE; AND ENGAGEMENT OF PRACTICE BY WELLQUEST
1.1. Engagement. Practice
hereby engages WellQuest to manage Practice, and WellQuest hereby agrees to
serve as manager of Practice. WellQuest hereby engages Practice, and Practice
agrees to be so engaged, to provide medical and supervisory services to
WellQuest Centers in Northwest Arkansas designated by WellQuest. Such
engagements of WellQuest and Practice are as set forth herein and subject to the
terms and conditions hereof.
1.2. Relationship of the
Parties. WellQuest and Practice 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. Notwithstanding the management authority granted to WellQuest herein,
WellQuest and Practice agree that Practice shall retain the authority to direct
the medical, professional, and ethical aspects of its medical practice. Each
party shall be solely responsible for and shall comply with all state and
federal laws pertaining to employment taxes, income withholding, unemployment
compensation contributions and other employment related statutes applicable to
that party.
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ARTICLE
II
DEFINITIONS
2.1. Definitions. For the
purposes of this Agreement, the following definitions shall apply:
2.1.1. “Adjustments”
shall mean any projected adjustments to Practice Revenues for insurance
contractual allowances, uncollectible accounts, discounts, Medicare and Medicaid
disallowances, worker’s compensation, employee/dependent healthcare benefit
programs, professional courtesies and other activities that do not generate a
collectible fee. These Adjustments shall also include a
reconciliation on a month-to-month basis to reflect the actual on-going
collections.
2.1.2. “Allied
Health Professionals” shall mean physician assistants, nurse practitioners, and
other such non-physician medical personnel providing services to
Practice.
2.1.3. “Capitation
Revenues” shall mean all payments from managed care organizations, where payment
is made periodically on a per member basis for the partial or total medical care
needs of a patient, co-payments and all HMO incentive bonuses.
2.1.4. “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 or in such other statements by such other
entity or other practices and procedures as may be approved by a significant
segment of the accounting profession, which are applicable to the circumstances
as of the date of determination. For purposes of this Agreement, GAAP shall be
applied in a manner consistent with the historic practices used by
WellQuest.
2.1.5. “Net
Revenues” shall mean the Practice Revenues of the Practice, less
Adjustments.
2.1.6. “Parent”
shall mean HQHealthQuest Medical & Wellness Centers, Ltd., an Oklahoma
corporation, which is the sole shareholder of WellQuest.
2.1.7. “Physician
Shareholder” shall mean C. Xxxx Xxx, M.D., who is currently, and who shall
remain for the term of this Agreement, the sole Shareholder of the
Practice.
2.1.8
“Practice” shall mean Northwest Arkansas Primary Care
Physicians, P.A.
2.1.9
“Practice Account” shall refer
to the account set up in Practice’s name pursuant to Section 5.2 hereof, into
which WellQuest shall pay on the tenth day of each month an amount equal to the
previous month’s expected accounts receivable of the Practice, and out of which
WellQuest shall make all disbursements, including disbursements to fund the
Practice Payroll Account.
2.1.10. “Practice
Employees” shall mean (i) those individuals who are employees of Practice or are
otherwise under contract with Practice to provide professional services to
Practice patients and are duly licensed to provide professional medical services
in the State of Arkansas, including physicians and Allied Health
Professionals.
2.1.11. “Practice
Lockbox Account” shall refer to the account set up in Practice’s name and under
Practice’s control, but subject to a lockbox daily “sweep” order pursuant to
Section 5.1 hereof, into which all Practice Revenue collected for the Practice
by WellQuest from patients and third party payors shall be
deposited.
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2.1.12. “Practice
Operating Expenses” shall mean all operating and non-operating expenses incurred
in the operation of the Practice, including, without limitation:
(a) Salaries,
benefits, and other direct costs of materials, services and employees of
WellQuest at the Practice including depreciation and interest expenses and other
indirect costs; and
(b) Regional
Costs, which shall be defined as material costs and direct costs of all
employees or consultants of Parent who provide services at or in connection with
the Practice required for improved Practice performance, such as work
management, materials management, purchasing, marketing, advertising, and
business office consultation; provided, however, only that portion of such
material costs or employee’s or consultant’s costs that is allocable to work
performed at or for the benefit of the Practice will be a Practice Operating
Expense.
2.1.13. “Practice
Operating Profit” shall mean for the applicable period Net Revenues, less
Practice Payroll Account payments, management fees payable to WellQuest, and
Practice Operating Expenses.
2.1.14. “Practice
Payroll Account” shall mean the account established by WellQuest in Practice’s
name, and under Practice’s control, into which WellQuest shall deposit $30,000
by the fifteenth day of each month following the month of services (such amount
subject to revision by the mutual written consent of the
parties). The primary source of the $30,000 monthly that WellQuest
shall deposit into the Payroll Account shall be funds transferred from the
Practice Account. However, if the Practice Account funds are not
sufficient to fund the $30,000 deposit into the Practice Payroll Account, then
WellQuest shall advance sufficient funds to fully fund the Practice Payroll
Account.
2.1.15. “Practice
Payroll Expenses” shall mean salaries, employee benefits, Practice payroll
taxes, education, CME, professional workshops, and other professional expenses
of Practice’s Employees.
2.1.16. “Practice
Revenues” shall mean (a) all fees and charges actually recorded or booked each
month by or on behalf of Practice as a result of professional
medical services personally furnished to patients by Physician Shareholder and
Practice Employees and other fees or income generated in their capacity as
professionals, whether rendered in an inpatient or outpatient setting plus (b)
Capitation Revenues.
ARTICLE
III
OBLIGATIONS
OF PRACTICE
3.1. Professional Services and
Supervision. Practice shall provide professional services to patients at
the Practice in compliance at all times with ethical standards, laws and
regulations applying to the medical profession. Practice shall ensure that each
physician associated with Practice to provide medical care to patients of
Practice is licensed by the State of Arkansas. Practice shall provide
supervision to the WellQuest Center(s) as requested or directed by WellQuest,
including, but not limited to medical supervision of the WellQuest Center
medical spa and any ancillary services provided in the WellQuest
Centers. Practice shall have a physician on site at the Practice
location or such other site as may be designated by WellQuest, and available to
provide the above services during the WellQuest Center’s hours of operation,
currently scheduled from 8 a.m. to 8 p.m. Monday through Saturday and noon to 6
p.m. on Sunday. The WellQuest Center’s hours of operation may be
changed by agreement of both parties. In addition to providing a
physician for supervisory services during the WellQuest Center’s hours of
operation, Practice shall provide physician coverage for “on-call” telephone
services when the WellQuest Center is not open. Such on-call services
shall be provided on a 24-hour/7-day a week, 365 day per year basis during all
hours the WellQuest Center is not open for business.
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3.2. Medical Practice.
Practice shall use and occupy the Practice exclusively for the practice of
family and occupational medicine, and shall comply with all applicable local
rules, ordinances and all standards of medical care. Practice shall ensure that
Physician Shareholder is personally actively involved and regularly present at
the Practice location to provide medical services. It is expressly acknowledged
by the parties that the medical practice or practices conducted at the Practice
shall be conducted solely by physicians associated with Practice, and no other
physician or medical practitioner shall be permitted to use or occupy the
Practice without the prior written consent of WellQuest. Practice
shall conform its hours of operation to the same hours of operation of the
WellQuest Center (currently 8 a.m. – 8 p.m., Monday through Saturday, and noon –
6 p.m. on Sundays). Practice will ensure that a qualified physician
is available at all times on site in the Practice for delivery of medical care
and for follow-up medical records and billing submission duties during the
Practice’s hours of operation.
3.3. Employment of Physician
Employees. Practice shall have complete control of and responsibility for
the hiring, compensation, supervision, evaluation and termination of its
Physician employees, although at the request of Practice, WellQuest shall
consult with Practice respecting such matters. Practice shall be responsible for
the payment of such Physician employees’ salaries and wages, payroll taxes,
benefits and all other taxes and charges now or hereafter applicable to them.
With respect to physicians, Practice shall only employ and contract with
licensed physicians meeting applicable credentialing guidelines established by
Practice.
3.4. Professional Insurance
Eligibility. Practice shall cooperate in the obtaining and retaining of
professional liability insurance by assuring that its Physician employees are
insurable, and participating in an on-going risk management
program.
3.5. Clinical
Standards. Practice shall cause its physician and Allied
Health Professional employees to perform clinical duties consistent
with recognized clinical guidelines, protocols, and procedures, including, but
not limited to, daily recording of services into electronic medical records and
daily submission of all billing information. Furthermore, Practice
will ensure that all of its employees perform within the quality, business,
services, and conduct standards and policies set forth by WellQuest and its
medical director from time to time, and that neither Practice, Physician
Shareholder or Physician Employees take any actions which could reflect
adversely on the reputation of WellQuest Center(s). A violation of
this Section 3.5 shall be considered a material breach of the
Agreement.
3.6. Education. As
requested or offered by WellQuest, Practice and its employees shall participate
in providing education and training on electronic medical record systems and
other practice functions.
ARTICLE
IV
RESPONSIBILITIES
OF WELLQUEST
4.1. General. In
addition to the specific duties outlined below in this Article IV, WellQuest
shall generally be responsible for all management services related to the
ordinary and usual business affairs of the Practice in accordance with this
Agreement and shall provide such services as are necessary to operate and
maintain the business affairs of the Practice in an efficient
manner. WellQuest shall have the power and authority to do any and
all actions reasonably necessary, advisable, or proper to conduct the business
affairs of the Practice. WellQuest shall have the right to delegate
any of its duties or obligations, or subcontract any of its services, or any
portion thereof.
4.2. Location, Establishment and
Lease of Practice Facilities. WellQuest shall sublease the practice
location to the Practice pursuant to the sublease (the “Sublease”) attached
hereto as Exhibit
A.
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4.3. Management and
Operation. In carrying out its obligations under this
Agreement with respect to the management of Practice’s practice, WellQuest’s
services shall include the duties set forth in this Section 4.3:
(a) Equipment and Business
Services. WellQuest shall obtain, at its expense, all
equipment which, in the discretion of WellQuest, is needed to equip the
Practice; shall advise the Practice as to governmental compliance; shall
establish, in cooperation and consultation with the Practice, policies and
procedures for the efficient and economical operation of the Practice; shall
provide consulting advice about trends in health care and effective alternatives
for positioning and marketing the Practice’s services to patients, employers,
third-party payors and other providers; shall design, recommend and administer
compensation and benefit packages for the Practice and staff at the Practice;
and shall, in consultation with the Practice, assist in maintaining an inventory
of all necessary drugs and medical and non-medical supplies for the
Practice.
(b) Marketing
Services. WellQuest, in consultation with the Practice, shall
design and implement an advertising and marketing program designed to promote
the Practice’s business at the Practice in a manner that both parties deem
appropriate. The marketing program shall be conducted in compliance
with applicable laws and regulations governing advertising by the medical
profession.
(c) Personnel Services.
WellQuest shall employ the personnel WellQuest determines necessary or
appropriate to operate the Practice, other than the physicians and other medical
staff who must be employed by Practice pursuant to requirements of
law. All such employees will be employed by WellQuest and entitled to
such fringe benefits as WellQuest customarily provides for such
personnel. All non-physician personnel required to support and
service Practice shall be employed by WellQuest and provided to Practice under
the employee lease agreement attached hereto as Exhibit
B.
(d) Financial
Services. WellQuest (i) shall be responsible for billing and
collecting payments for all medical services rendered by the Practice to its
patients (including negotiations with and collections from insurance companies,
HMOs, PPOs, CHAMPUS and other third-party payors), with all such billing and
collecting to be done in the name of the Practice; (ii) shall manage and, at the
Practice’s request, has agreed to finance its accounts receivable through the
purchase thereof with recourse on terms acceptable to both parties; (iii) shall
administer the Practice’s payroll; (iv) shall be responsible for and have
control of the Practice’s financial records and bank accounts; (v) shall prepare
and submit to the Practice monthly financial reports with respect to the
operation of the Practice; and (vi) shall, from the Practice’s funds, pay all
Practice Operating Expenses, with the exception of Practice Payroll Expenses,
which Practice shall pay out of the Practice Payroll Account pursuant to
Section5.2 hereof.
(e) Preparation of
Budgets. WellQuest shall prepare annual capital and operating
budgets for the Practice. WellQuest shall disclose to Practice all
Practice Expenses and Regional Costs expensed to Practice, and where WellQuest
deems appropriate, WellQuest may consult with Practice regarding budgets and
Regional Costs.
(f) Accountant Services; Audits
and Statements. WellQuest shall prepare annual financial
statements for the operations of the Practice and shall cause the financial
statements to be audited by a certified public accountant selected by WellQuest
in connection with the audit of the financial statements of
Parent. WellQuest shall prepare monthly unaudited financial
statements containing a balance sheet and statements of income from Practice
operations, which shall be delivered to Practice within thirty (30) days after
the close of each calendar month. In the event WellQuest’s
independent accountants are engaged to prepare the tax return of Practice and
the information to be provided by Practice to the Shareholder and to the
Practice Employees, such as the firm K-1 and W-2 forms, the cost of preparing
such information shall be paid by Practice, and Practice shall be solely
responsible for its state and federal income taxes.
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(g) Records. WellQuest
shall supervise and maintain custody of all files and records relating to the
operation of the Practice, including but not limited to accounting, billing,
patient medical records, collection records, client lists and addresses. Patient
medical records shall be located at the WellQuest Centers so that
they are readily accessible for patient care. The management of all files and
records shall comply with applicable state and federal statutes. WellQuest shall
use its best efforts to preserve the confidentiality of patient medical records,
shall use information contained in such records only for the limited purpose
necessary to perform the services set forth herein, and shall be responsible for
damages resulting from a breach of the foregoing due to its negligence;
provided, however, in no event shall a breach of said confidentiality be deemed
a default under this Agreement. WellQuest shall execute a business
associate agreement, attached to this Agreement as Exhibit C, in
compliance with the requirements of the Health Insurance Portability
and Accountability Act of 1996 (“HIPAA”). In order to ensure continuity of care,
Practice agrees, that in the event of the termination or expiration of this
Agreement, to transfer ownership and custody of the medical records to a
successor physician practicing in the same location.
(h) Computer and Clerical
Services. WellQuest shall supply to Practice necessary
clerical, accounting, bookkeeping and computer services, printing, postage and
duplication services, medical transcribing services and any other ordinary,
necessary or appropriate service for the operation of the Practice.
(i)
Physician
Recruitment. WellQuest shall assist Practice in recruiting additional
physicians, carrying out such administrative functions as may be appropriate
such as advertising for and identifying potential candidates, checking
credentials, and arranging interviews; provided, however, Practice shall
interview and make the ultimate decision as to the suitability of any physician
to become associated with the Practice. All physicians recruited by WellQuest
and accepted by Practice shall be the sole employees of Practice, to the extent
such physicians are hired as employees.
(j)
CME. WellQuest
shall make payment for the cost of professional licensure fees and board
certification fees of physicians associated with Practice and continuing medical
education up to an annual amount of $8,000.00. Any expenses above
$8,000 annually shall be the financial responsibility of the
Practice.
4.4. Professional Malpractice
Liability Insurance. At all times throughout the term of this Agreement,
WellQuest will seek to obtain and maintain for Practice, Practice’s Professional
Staff, and Practice’s leased employees, professional liability insurance issued
in Practice’s name in an amount of no less than $1,000,000 per occurrence and
$3,000,000 in the annual aggregate. WellQuest may amend such policies
to add WellQuest and its parent company as additional named
insureds.
4.5. Recruiting of Other
Practices. WellQuest agrees that as long as this Agreement is
in effect that WellQuest will not undertake in Northwest Arkansas to: (1)
recruit another physician to practice except as requested by Practice; (2)
manage another physician practice; or (3) engage another physician practice to
provide the medical and supervisory services to its WellQuest
Center(s).
4.6. Contracting
Authority. Practice hereby agrees to permit WellQuest to bind
Practice to agreements with third party payors under which Practice will provide
medical services to plan enrollees of such third party payors, in a manner
consistent with this Agreement. Practice hereby appoints WellQuest as
Practice’s agent and attorney-in-fact to execute agreements with payors binding
Practice to provide Practice services, on terms and conditions typically
contained in provider agreements with managed care organizations.
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4.7. Compliance with Applicable
Laws. WellQuest shall comply with all applicable federal, state and local
laws, regulations and restrictions in the conduct of its obligations under this
Agreement.
4.8. Quality Assurance.
WellQuest shall assist Practice in fulfilling its obligations to its patients to
maintain a high quality of medical and professional services.
ARTICLE
V
FINANCIAL
ARRANGEMENTS AND DISBURSEMENTS
5.1. Accounts Receivable.
WellQuest shall purchase the accounts receivable of Practice on a monthly
basis. The consideration for the purchase shall be the actual
collections from the accounts receivable, but WellQuest shall make a monthly
deposit toward the purchase of the accounts receivable by depositing, by the
10th
day of each month, an amount equal to the expected Practice Revenues for the
previous month’s services into the Practice Account. All collections
in respect of such accounts receivable shall be deposited in the Practice’s
Lockbox Account, which will be subject to a lockbox agreement, in form and
substance as that required by the Medicare reassignment rules, instructing that
the accounts be swept daily into WellQuest’s bank account with a qualified bank
in Arkansas. To the extent Practice comes into possession of any payments in
respect of such accounts receivable, Practice shall direct such payments to
WellQuest for deposit in WellQuest’s bank account.
5.2. Flow of
Funds.
(a) There
shall be three (3) bank accounts set up for the Practice: the Practice Account,
the Practice Payroll Account, and the Practice Lockbox Account.
(b) In
order to ensure a sufficient flow of revenue into the Practice and to minimize
the lag time between the Practice’s provision of medical services and its
payment for those services, WellQuest agrees to purchase the Practice’s accounts
receivable on a monthly basis, as set forth above in Section
5.1. WellQuest’s purchase price deposit for the previous month’s
accounts receivable shall be made into the Practice Account. Since
WellQuest will have already made the purchase price deposit into the Practice
Account, any monies collected for the Practice from patients and third party
payors shall be deposited into the Practice Lockbox Account, which shall be
subject to a “sweep” order instructing that all funds be swept daily into
WellQuest’s bank account. Actual collections shall be reconciled
against WellQuest’s purchase price deposit on an on-going monthly
basis.
(c) The Practice Account, which shall be
funded by the purchase by WellQuest of the Practice’s accounts receivable, shall
be in the Practice’s name, but WellQuest shall have signatory authority and
shall make all disbursements therefrom. WellQuest shall account for
all monies so disbursed from the Practice Account. From the funds in
the Practice Account, WellQuest shall pay the following:
(i) $30,000 by the 15th day of each month following the month
of services into the Practice Payroll Account; and
(ii) the
Practice Expenses.
(d) In the event that WellQuest shall
determine that the balance in the Practice Account will, at any time, be
insufficient to fund the $30,000 monthly deposit into the Practice Payroll
Account or to cover current Practice Expenses, then in such
event:
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(i)
WellQuest shall fund the shortfall for the $30,000 Practice Payroll Account
monthly deposit and/or shall pay such Practice Expenses (the “Physician
Advances”). Physician Advances shall accrue interest until repaid at the rate of
one percent (1%) in excess of the “U.S. Prime Rate” published in the “Money
Rates” section of the Wall Street Journal as determined on the first business
day of each calendar month during the time of the indebtedness; and
(ii) WellQuest’s management fee,
bonuses, and expenses paid by WellQuest shall accrue, and Practice shall pay
such accrued but unpaid management fees, bonuses and expenses as the Practice’s
cash flow improves.
(e) Physician Advances, any interest
thereon, and accrued management fees and Practice Operating Expenses paid by
WellQuest shall be repaid in succeeding months by an amount equal to eighty
percent (80%) of Practice Operating Profit for each such month until repaid in
full. Notwithstanding the foregoing, Practice remains obligated to
repay all such Physician Advances and to reimburse all amounts owed to WellQuest
regardless of whether there is a Practice Operating Profit.
5.3. Management
Fees: WellQuest shall be compensated for its services as
follows:
(a) a base management fee equal to 7.5% of
the Practice Net Revenues; and
(b) a performance bonus for efficient
management to be calculated as follows:
(i) a
performance ratio (the “Performance Ratio”) will be calculated by dividing the
Practice Operating Profit by the remainder of the Practice Net Revenue less
Physician Advances and base management fee.
(ii)
Practice shall receive all proceeds of the Practice Operating Profit up to a
Performance Ratio of 1%.
(iii)
WellQuest shall receive a performance bonus equal to $15,000 for each 1%
increase in the Performance Ratio above the initial 1%, prorated for any partial
percentage increases.
(iv)
Practice shall receive the remaining amounts in the Practice Operating Profit
after payment of the performance bonus to WellQuest.
ARTICLE
VI
RESTRICTIVE
COVENANTS
The
parties recognize that the services to be provided by WellQuest shall be
feasible only if Practice operates an active medical practice to which the
physicians associated with Practice devote their full time and attention. To
that end:
6.1. Restrictive Covenants by
Practice. During the term of this Agreement and for a period up to twelve
(12) months thereafter, neither Practice nor Physician Shareholder shall
establish, operate or provide physician services at any medical office, practice
or other health care facility providing services substantially similar to those
provided by Practice pursuant to this Agreement anywhere within 25 miles of a
WellQuest Center in northwestern Arkansas at which Practice provided services
pursuant to the terms of this Agreement (wherever located at such
time). Practice and Physician Shareholder jointly and severally agree
that in the event of a breach of this Section 6.1, among any and all other
remedies that WellQuest may pursue as a result of such breach, Practice shall
pay WellQuest an amount equal to the sum of the prior twelve (12) months’
compensation and benefits paid to its employees, as compensation for the
investment of time and capital that WellQuest has made in connection with the
provision of exclusive management services to the Practice and in recognition of
the value of the trade secrets, confidential business information, and patient
contacts provided by WellQuest to Practice and Physician Shareholder pursuant to
the relationship created by this Agreement. Physician Shareholder
joins this Agreement for purpose of agreeing to this Section 6.1.
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6.2. Restrictive Covenants By
Current Physician Shareholder and Physician Employees. Practice shall
obtain and enforce formal agreements from its current Physician Shareholder and
any current or future physician employees, other than Allied Health
Professionals, pursuant to which the Physician Shareholder and physician
employees agree not to establish, operate or provide physician services at any
medical office, practice or outpatient and/or ambulatory treatment or diagnostic
facility providing services substantially similar to those provided by Practice
within 25 miles of the any WellQuest Center in northwestern Arkansas at which
Practice provided services pursuant to the terms of this Agreement (wherever
located at such time) during the term of their employment and for a period of 12
months after any termination of employment with Practice. In the
event of a breach of this Section 6.2, among any and all other remedies that
WellQuest may pursue as a result of such breach, the Physician Shareholder or
the breaching physician employee, as the case may be, shall pay to WellQuest an
amount equal to the prior twelve (12) months’ compensation and benefits paid to
such Physician Shareholder or physician employees, as applicable, as
compensation for the investment of time and capital that WellQuest has made in
connection with the provision of exclusive management services to the Practice,
and in recognition of the value of the trade secrets, confidential business
information, and patient contacts provided by WellQuest to Practice and the
Physician Employees pursuant to the relationship created by this
Agreement. WellQuest shall be a third party beneficiary of any
restrictive covenants contained in the employment contracts between Practice and
Physician Employees.
6.4. Enforcement.
WellQuest and Practice acknowledge and agree that since a remedy at law for any
breach or attempted breach of the provisions of this Article VI shall be
inadequate, either party shall be entitled to specific performance and
injunctive or other equitable relief in case of any such breach or attempted
breach, in addition to whatever other remedies may exist by law. All parties
hereto also waive 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 Article VI 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 the restrictive covenant provisions in this Article VI.
The invalidity or non-enforceability of this Article VI in any respect shall not
affect the validity or enforceability of the remainder of this Article VI or of
any other provisions of this Agreement.
ARTICLE
VII
INSURANCE
AND INDEMNITY
7.1. Insurance to be Maintained
by Practice. Throughout the term of this Agreement, subject to the
provisions of Article IV providing for malpractice premiums and deductibles to
be a Practice Operating Expense, Practice shall maintain comprehensive
professional liability insurance with limits of not less than $1,000,000 per
claim and with aggregate policy limits of not less than $3,000,000 per physician
and a separate limit for Practice. Practice shall be responsible for all such
liabilities in excess of the limits of such policies. WellQuest shall have the
option of providing such professional liability insurance through an alternative
program, provided such program meets the requirements of the Insurance
Commissioner of the State of Arkansas. WellQuest shall reimburse Practice for
any unearned professional liability insurance premiums paid by Practice to the
extent not reimbursed or reimbursable by Practice’s insurance carrier if
Practice’s existing professional liability insurance program is cancelled and
replaced by a comparable professional liability insurance program initiated by
WellQuest.
7.2. Insurance to be Maintained
by WellQuest. Throughout the term of this Agreement, WellQuest will use
reasonable efforts to provide and maintain, as a Practice Operating Expense, (a)
comprehensive professional liability insurance for all professional employees of
WellQuest with limits as determined reasonable by WellQuest in its national
program and (b) comprehensive general liability and property insurance covering
the Practice premises and operations.
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7.3. Tail Insurance
Coverage. Practice will cause each individual physician who associates
with Practice after the date hereof to enter into an agreement with Practice
that upon termination of such physician’s relationship with Practice, for any
reason, tail insurance coverage will be purchased by the individual physician.
Such provisions may be contained in employment agreements, restrictive covenant
agreements or other agreements entered into by Practice and the individual
physicians, and Practice hereby covenants with WellQuest to enforce such
provisions relating to the tail insurance coverage or to provide such coverage
at the expense of Practice. The cost of tail insurance coverage for physicians
who are currently associated with Practice shall be a Practice Operating
Expense; provided, that the cost of tail insurance coverage for any physician
who is an employee of Practice and is serving as a Medical Director under a
written contract with WellQuest at the time of termination of this Agreement
shall be shared equally by WellQuest and the physician if such termination was
pursuant to Section 8.3(c) of this Agreement.
7.4. Indemnification.
Practice shall indemnify, hold harmless and defend WellQuest, its officers,
directors, shareholders and employees, from and against any and all liability,
loss, damage, claim, causes of action, and expenses (including reasonable
attorneys’ fees), whether or not covered by insurance, caused or asserted to
have been caused, directly or indirectly, by or as a result of the performance
of medical services or any other acts or omissions by Practice and/or its
shareholders, agents, employees and/or subcontractors (other than WellQuest)
during the term hereof. WellQuest shall indemnify, hold harmless and defend
Practice, its officers, directors, shareholders and employees, from and against
any and all liability, loss, damage, claim, causes of action, and expenses
(including reasonable attorneys’ fees), caused or asserted to have been caused,
directly or indirectly, by or as a result of the performance of any intentional
acts, negligent acts or omissions by WellQuest and/or its shareholders, agents,
employees and/or subcontractors (other than Practice) during the term of this
Agreement.
ARTICLE
VIII
TERM
AND TERMINATION
8.1. Term of Agreement.
This Agreement shall commence on May 4, 2005, with the performance called for
hereunder to commence on September 1, 2005, and shall expire on August 31, 2008
unless earlier terminated pursuant to the terms hereof. Thereafter,
this Agreement shall automatically renew for successive two (2) year terms
unless either party gives written notice of its intent not to renew at least 90
days prior to the expiration of the then current term.
8.2. Termination by
Practice. Practice may terminate this Agreement as follows:
(a) In
the event of the filing of a petition in voluntary bankruptcy or an assignment
for the benefit of creditors by WellQuest, or upon other action taken or
suffered, voluntarily or involuntarily, under any federal or state law for the
benefit of debtors by WellQuest, except for the filing of a petition in
involuntary bankruptcy against WellQuest which is dismissed within thirty (30)
days thereafter, Practice may give notice of the immediate termination of this
Agreement.
(b) In
the event WellQuest shall materially default in the performance of any duty or
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
WellQuest by Practice; provided, that a material default by Well Quest in
respect to an obligation to make a payment to Practice (including, but not
limited to, WellQuest’s obligation to fund the Practice Payroll Account) shall
be grounds for termination of this Agreement if the default is not cured by Well
Quest after fifteen (15) days written notice thereof has been given to WellQuest
by Practice.
10
8.3. Termination by
WellQuest. WellQuest may terminate this Agreement as
follows:
(a) In
the event of the filing of a petition in voluntary bankruptcy or an assignment
for the benefit of creditors by Practice, or upon other action taken or
suffered, voluntarily or involuntarily, under any federal or state law for the
benefit of debtors by Practice, except for the filing of a petition in
involuntary bankruptcy against Practice which is dismissed within thirty (30)
days thereafter, WellQuest may give notice of the immediate termination of this
Agreement.
(b) In
the event Practice shall materially default in the performance of any duty or
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
Practice by WellQuest, WellQuest may terminate this Agreement.
(c) At
WellQuest’s option, WellQuest may terminate this Agreement immediately upon the
termination or expiration of the sublease agreement between WellQuest and the
Practice, the lease agreement between WellQuest and its lessor, or the Medical
Director Agreement between WellQuest and Physician Shareholder.
(d) At
WellQuest’s option, WellQuest may terminate this Agreement immediately in the
event the Physician Shareholder or the Practice are investigated, sanctioned or
excluded from participation in a federal or state healthcare program, or
convicted of a crime, or in the event Physician Shareholder’s license to
practice medicine is revoked or restricted.
(e) At
WellQuest’s option, WellQuest may terminate this Agreement immediately upon the
occurrence of any incident in which the Practice, the Physician Shareholder, or
any of the Physician Employees has engaged in conduct which would be deemed by a
reasonable person to be disruptive, intimidating, coercive, harassing or below
the acceptable standard of clinical behavior; or which jeopardizes the health or
safety of patients or other HealthQuest Center employees, and, if the conduct is
that of an individual Physician Employee other than Physician Shareholder, if
the Practice fails to immediately remove and replace such Physician Employee
with another Physician Employee acceptable to WellQuest;
(f) At
WellQuest’s option, WellQuest may terminate this Agreement upon thirty (30) days
notice to Practice in the event that, beginning on the 25th month
of the Agreement’s term, the Practice’s net revenue, on a trailing three month
basis, does not equal or exceed $500,000.
ARTICLE
IX
MISCELLANEOUS
9.1. Whole Agreement;
Modification. There are no other agreements or understandings, written or
oral, between the parties regarding this Agreement, the Exhibits and the
Schedules, other than as set forth herein. 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) shall be attached
hereto.
11
9.2. Notices. All notices
required or permitted by this Agreement shall be in writing and shall be
addressed as follows:
To WellQuest:
|
WellQuest
Medical & Wellness Centers of Arkansas, Inc.
|
0000
Xxx Xxxx Xxxxx,
|
Xxxxx,
Xxxxxxxx 00000-0000
|
|
Attn: Xxxxx
Xxxxx
|
With copies to:
|
Xxxxxx
X’Xxxxxx Xxxxxx & Xxxxxxx
|
Bank
of America Center
|
00
Xxxx Xxxxx Xxxxxx, Xxxxx 0000
|
|
Xxxxx,
Xxxxxxxx 00000-0000
|
Attn: Xxxx
X’Xxxxxx, Esq.
|
To
Practice:
|
Northwest
Arkansas Primary Care Physicians, P.A.
|
0000
Xxxx Xxxxxx Xxxxx
|
Xxxxxx,
Xxxxxxxx 00000
|
|
Attn: C.
Xxxx Xxx, M.D.
|
With copies
to:
|
|
Attn:
|
or to
such other address as either party shall notify the other.
9.3. Binding on
Successors. This Agreement shall be binding upon the parties hereto, and
their successors and assigns.
9.4. 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.
9.5. Governing Law and
Venue. The validity, interpretation and performance of this Agreement
shall be governed by and construed in accordance with the laws of the State of
Oklahoma. The parties acknowledge that WellQuest is not authorized or qualified
to engage in any activity which may be construed or deemed to constitute the
practice of medicine. To the extent any act or service required of WellQuest 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 WellQuest shall be deemed waived and forever
unenforceable. The exclusive venue for any action shall be Tulsa
County, Oklahoma.
9.6. Severability. The
provisions of this Agreement shall be deemed severable and if any portion shall
be held invalid, illegal or unenforceable for any reason, the remainder of this
Agreement shall be effective and binding upon the parties.
9.7
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.
12
9.8. 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.
9.10.
Confidentiality.
Except for disclosure to its bankers, underwriters or lenders, or as necessary
or desirable for conduct of business, including negotiations with other
acquisition candidates, neither party hereto shall disseminate or release to any
third party any information regarding any provision of this Agreement, or any
financial information regarding the other (past, present or future) that was
obtained by the other in the course of the negotiation of this Agreement or in
the course of the performance of this Agreement, without the other party’s
written approval; provided, however, the foregoing shall not apply to
information which (i) is generally available to the public other than as a
result of a breach of confidentiality provisions; (ii) becomes available on a
non-confidential basis from a source other than the other party or its
affiliates or agents, which source was not itself bound by a confidentiality
agreement, or (iii) which is required to be disclosed by law including
securities laws, or pursuant to court order.
9.11. Contract Modifications for
Prospective Legal Events. In the event any state or federal laws or
regulations, now existing or enacted or promulgated after the effective date of
this Agreement, are interpreted by judicial decision, a regulatory agency or
legal counsel in such a manner as to indicate that the structure of this
Agreement may be in violation of such laws or regulations, Practice and
WellQuest shall amend this Agreement as necessary. To the maximum extent
possible, any such amendment shall preserve the underlying economic and
financial arrangements between Practice and WellQuest.
9.12. Remedies Cumulative.
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.
9.13. Language
Construction. The language in all parts of this Agreement shall be
construed, in all cases, according to its fair meaning. The parties acknowledge
that each party and its counsel have reviewed and revised this
Agreement.
9.14. No Obligation to Third
Parties. None of the obligations and duties of WellQuest or Practice
under this Agreement shall in any way or in any manner be deemed to create any
obligation of WellQuest or of Practice to, or any rights in, any person or
entity not a party to this Agreement.
9.15. Communications.
Practice and WellQuest 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 Practice’s practice.
9.16. Survival. Any
provisions of this Agreement creating obligations extending beyond the term of
this Agreement will survive the expiration or termination of this Agreement,
regardless of the reason for such termination.
9.17 Arbitration.
(a) Any
dispute or controversy arising among the parties hereto regarding any term,
covenant or condition of this Agreement or the breach thereof (other than a
dispute arising from Practice’s failure to pay indebtedness owed to WellQuest)
shall, upon written demand of any party hereto, be submitted to and determined
by arbitration before the American Health Lawyers Association Alternative
Dispute Resolution Service or the American Arbitration Association, in Tulsa,
Oklahoma, by a single arbitrator qualified and experienced in healthcare law, in
accordance with the rules of the Association then in effect in respect to the
arbitration of commercial healthcare disputes; provided, that any party hereto
may seek injunctive relief from a court and the proceeding for such equitable
relief shall not be subject to dismissal or stay as a result of a request for
arbitration under this section. The arbitrator shall have the
authority to grand injunctive relief, but the seeking or obtaining of injunctive
relief from a court by any party shall not be deemed a waiver by that party of
the right to demand arbitration of any dispute arising hereunder.
13
(b) The
arbitrator may not amend, very or invalidate any provision of this
Agreement. Any award or decision rendered shall be made by means of a
written opinion explaining the arbitrator’s reasons for the award or decision,
and the award or decision shall be final and binding upon the parties
hereto. Judgment upon the award or decision rendered by the
arbitrator may be entered in any court of competent
jurisdiction. The
parties hereby waive the right to appeal the judgment, award or decision of the
arbitrator.
(c) In
any such proceeding, the arbitrator shall, after a separate hearing, grant, and
the prevailing party shall be entitled to recover, its costs of prosecuting or
defending (or both) the claims made, including its reasonable attorneys’ fees
and costs, as well as the costs and fees of the arbitrator, shall be borne
equally by WellQuest, on the one hand, and Practice, on the other hand, until
allocated by the arbitrator as set forth above.
(d)
THE PARTIES ACKNOWLEDGE THAT
THEY ARE WAIVING IMPORTANT RIGHTS, INCLUDING THE RIGHT OT TRIAL BY JURY AND THE
RIGHT TO THE RESOLUTION OF THEIR DISPUTES BY A COURT, BY ENTERING THIS
AGREEMENT.
[Signature
Page to Follow]
14
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.
Practice:
|
|||
NORTHWEST
ARKANSAS PRIMARY CARE PHYSICIANS, P.A., an Arkansas professional
association
|
|||
By:
|
/s/
|
||
Title: President
|
|||
WellQuest:
|
|||
WELLQUEST
MEDICAL & WELLNESS CENTERS OF NORTHWEST ARKANSAS, INC., an Arkansas
corporation
|
|||
By:
|
/s/
|
||
Title:
|
|||
Consented
to:
C. Xxxx
Xxx executes this Agreement
individually
for the sole purpose of
consenting
to the provisions of Section 6.1:
C. Xxxx
Xxx, M.D.,
In his
individual capacity
15
EXHIBIT
A
WELLQUEST
MEDICAL &
WELLNESS CENTERS OF NORTHWEST
ARKANSAS, INC.
SUBLEASE
FOR
VALUABLE CONSIDERATION, this SUBLEASE is entered on this ___ day
of _____, 2005, by Northwest
Arkansas Primary Care Physicians, P.A., an Arkansas professional
association (“Practice”), and WellQuest Medical & Wellness Centers of
Northwest Arkansas, Inc. (“WellQuest”), an Arkansas
corporation. Practice and WellQuest agree as
follows:
1. Sublease;
Subordination to Base Lease. WellQuest hereby
subleases the “Premises” to Practice, and Practice subleases the Premises from
WellQuest, on the terms of this Sublease. This Sublease is
further subject to the terms of the “Base Lease”, to the extent such terms do
not conflict with this Sublease. WellQuest represents that Owner has
consented to this Sublease.
2. Definitions. In this
Sublease:
a.
|
“Base
Lease” is the lease dated October 6, 2004,
entered by HQHealthQuest Medical & Wellness Centers, Ltd., an Oklahoma
corporation, (“HQ”) and Owner, as it may be amended
before the Commencement Date of this Sublease. A true and
correct copy of the Base Lease, as amended to date, is attached to the
Sublease as Exhibit “1”.
|
b.
|
“Building”
refers collectively to all of the structures located on the Land, now or
in the future.
|
c.
|
“Management and Medical
Services Agreement” is the Agreement between Practice and WellQuest for
the management and operation of Practice’s medical clinic on the Premises
and any additional clinics to be operated by
WellQuest.
|
d.
|
“Medical Director
Services Agreement” is the Agreement between C. Xxxx Xxx, M. D. (“Fox”)
and WellQuest for the rendition by Fox of services as the medical director
of WellQuests medical clinics in northwest
Arkansas.
|
e.
|
“Land”
is the real property, together with all improvements on such real
property, described on Exhibit “2” attached to
this Sublease.
|
f.
|
“Owner”
is Rainbow Retail Investments, LLC, c/o Dixie Development,
Inc., with offices at 0000 X. Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxxx, XX
00000, or its successor or
assignee.
|
g.
|
“Practice
Persons” means Practice and Practice’s employees and leased
employees.
|
h.
|
“Practice’s
Share” is 61%, which is the square feet of rentable area of the Premises,
divided by the total rentable area under WellQuest’s Base
Lease.
|
i.
|
“Premises”
shall consist of
approximately 4,225 square feet of space at the Bentonville Colonnade more
particularly shown on Exhibit “3” attached to this
Sublease.
|
16
j.
|
“Protected
Health Information” is defined in the federal HIPAA privacy
regulations.
|
k.
|
“WellQuest
Persons” means WellQuest and WellQuest’s shareholders, directors,
employees, agents, customers, contractors and
invitees.
|
3. Term. Unless earlier terminated in
accordance with this Sublease, the term (the “Term”) of this Sublease
shall: (a) commence on August 1, 2005, if the Premises are approved
for occupancy and the operation of Practice’s medical clinic by that date;
provided that, in the event the Premises do not meet this condition by August 1,
2005, the term of this Sublease shall commence when WellQuest notifies Practice
that the Premises are approved by the appropriate governmental authorities for
occupancy and the operation of Practice’s medical clinic; (b) shall remain in
effect for as long as the Management and Medical Services Agreement remains in
effect. The date when the Term
commences is referenced in this Sublease as the “Commencement
Date”.
4. Rent. Practice
shall pay WellQuest “Rent,” which includes Base Rent and Additional Rent, in the
amounts and by the times WellQuest is required to pay the same to
Owner:
a. Base
Rent. Practice agrees
to pay to WellQuest as Base Rent for the Premises: the aggregate sum
of $ [to be inserted when
Owner certifies the rent amount due from WellQuest], payable in monthly
installments of $[same
note] per month for 96 months beginning with the payment due on the
Commencement Date;
b. Additional
Rent.
For each year of the Term,
Practice agrees to pay to WellQuest as Additional Rent for the Premises an
amount equal to the sum of Owner’s charges to WellQuest for monthly Operating
Costs, as defined herein, utilities, common area maintenance and attendant
charges, the buildout of the Premises, signage, and all other charges made under
the Base Lease. Practice shall also pay, as Additional Rent, all
property taxes attributed to or measured by the value of the Sublease or the
Improvements, which is now or subsequently imposed on WellQuest by Owner or any
government or unit thereof, and Practice’s Share of the security deposit
required by Owner relative to the Premises.
c. Payment.
1. In
General. Practice shall pay Base Rent in advance on the
first day of each calendar month, in advance and without
demand. Practice shall pay Additional Rent within 10 days after
WellQuest invoices Practice for the Additional Rent. Should the term
of this Lease commence on a day other than the first day of the month, a pro
rata portion of the monthly rent shall be paid in advance.
2. Rent. All
checks for Rent shall be made payable to WellQuest, if payment thereof is not
automatically withdrawn from Practice’s bank account, and delivered to the
address stated in WellQuest’s notice to Practice until WellQuest advises
Practice in writing to use a different mailing address for
Rent. WellQuest may accept a partial payment of Rent without waiving
the rights (A) to collect other Rent that is payable or (B) to declare an Event
of Default for nonpayment of all Rent. No restrictive endorsement on
a check such as “Payment in Full,” “In Satisfaction of All Claims,” or any other
restrictive endorsement, will be binding on WellQuest or effective even if
WellQuest accepts, endorses or deposits such check.
d. Value. The
Parties have considered the fair market value of the Rent for this
Sublease. The Parties have engaged separate counsel to represent the
Parties. The Parties have considered the terms of other
leases. The Parties stipulate that:
1. The Rent represents the fair
market value rent for the Premises without regard to the use of the Premises as
medical clinic.
17
2. The
terms of this Lease represent arms-length terms, are commercially reasonable,
and are consistent with fair market value.
5. Operating
Costs. "Operating Costs"
are the sum of:
a. Base
Lease. All amounts
charged to or paid by WellQuest as rent for operating costs or operating
expenses under the Base Lease (excluding additions to the Buildings and Land);
plus
b. Other. To the extent
that any of the following are paid or payable by WellQuest under the Base Lease
and are, in the sole discretion of WellQuest, attributable to the Premises, all
costs or expenses paid or incurred by WellQuest for maintaining, operating or
repairing the Premises, Building, Land or personal property used in conjunction
therewith, including, but not limited to, all costs and expenses for (i)
electricity, water, gas, sewer and other utilities, (ii) refuse collection,
(iii) supplies, janitorial and cleaning services, (iv) window washing, (v)
insurance, (vi) legal fees, (vii) real estate, personal property, sales and
other taxes, (viii) general or special assessments, (ix) zoning and licenses,
(x) inspections, (xi) accounting, (xiii) bonds and other amounts to contest any
tax or governmental rule or requirement, (xiii) structural or other repairs of
equipment, fixtures or other features, (xiv) ADA modifications attributable to
the Premises, (xv) management fees that are not payable in connection with the
sublease of a specific part of the Building, and (xvi) all other expenses or
charges that, in accordance with generally accepted property management
principles may be considered an expense of maintaining, operating or repairing
the Premises, Building, Land and personal property used in conjunction
therewith.
6. Use;
Maintenance; Laws. Practice shall use the Premises only to
operate a family medical clinic and all purposes reasonably incidental thereto
and for no other purpose without WellQuest’s prior written
consent. Subject only to WellQuest’s duty to maintain the Premises
and provide janitorial and waste removal services thereto, Practice shall
maintain and use the Premises in a clean, healthful and safe condition and shall
cause all Practice Persons to comply with all present and future laws,
ordinances, orders, rules and regulations of all governmental agencies or bodies
having any jurisdiction over the use, condition or occupancy of the
Premises. Practice
shall specifically comply with the requirements of section 21 of the Base Lease,
regarding hazardous materials.
7. Performance
of Base Lease.
a. In
General. The Premises have
been leased to WellQuest by Owner according to the terms of the Base
Lease.
b. Obligations
under Base Lease. With respect to
the Premises, Practice hereby assumes the duty to perform, and shall perform,
all of the obligations of the tenant/lessee, WellQuest, under the Base Lease as
well as Practice’s obligations under this Sublease.
c. Notice of
Claims. Practice shall
give WellQuest immediate written notice of:
1. Any
notice received from Owner;
2. Any
notice that is made according to the terms of the Base Lease; or
3. Any
circumstance, claim or condition that may result in a breach by WellQuest or
Practice of the Base Lease or this Sublease.
d. Owner: No
Duties under this Sublease. Owner is not
responsible for any act, omission or breach of contract by
WellQuest. Owner is not a party to and is not responsible for this
Sublease.
18
8. Maintenance,
Repairs and Services. In addition to the obligations regarding
maintenance and repairs that are described in the Base Lease:
a. Practice’s
Maintenance and Repair. Practice shall
keep the Premises in good maintenance, order, condition and repair, ordinary
wear and tear excepted. Practice shall pay for the full cost
of:
1.
Repairing all damage to the Premises and
2. Replacing or repairing all glass,
fixtures and equipment located on the Premises and damaged or removed without
WellQuest's consent; unless such damage was caused by the negligent or
intentional acts or omissions of WellQuest or Owner. Repairs and
replacements performed by WellQuest at Practice's expense which will be charged
and paid as Additional Rent.
b. Insurance
Risks. Practice shall
not do, or permit to be done by any of the Practice Persons, any act in or about
the Premises or the Building that would invalidate or increase the cost of fire
or other insurance policies covering the Land, the Building, the Premises or the
equipment, fixtures, or contents therein or thereof.
c. Waste and
Nuisance; Nondisturbance. Practice shall
keep the Premises free from waste and nuisance of any kind and shall use,
maintain and occupy the Premises in such a manner as not to interfere with or
disturb the use of the Building by other tenants or WellQuest.
d. Alterations. Practice shall
not make any alterations, improvements, installations or additions in or to the
Premises without submitting plans and specifications to the WellQuest and
securing WellQuest's advance written consent. All such work shall be
done by employees or contractors employed or contracted by WellQuest or, with
WellQuest's prior written consent, by contractors engaged by
Practice. As Additional Rent, Practice shall pay WellQuest or
Practice's contractors, as the case may be, immediately upon commencement of
such work, the full cost of such work and materials. If Practice pays
a contractor directly, then upon completion of the work, Practice shall deliver
to WellQuest (i) evidence of the payment to such contractor and (ii) written
lien waivers from all contractors and subcontractors, in form and content
satisfactory to WellQuest. Practice shall hold WellQuest harmless
from all costs, damages, liens and expenses related to any portion of such
work. If any materialmen's or mechanic's lien is filed against the
Premises, the Building or the Land or against the leasehold improvements of the
Practice by reason of any work performed or directed to be performed by Practice
or Practice's contractor, Practice shall immediately, without notice or demand
therefor, discharge such lien of record in the manner provided by
law.
e. Title to
Alterations and Improvements. All alterations,
improvements, installations and additions in or to the Premises, whether
temporary or permanent, made by WellQuest or Practice, immediately shall become
the property of Owner or WellQuest, as provided in the Base Lease, free and
clear of any lien, claim, title or interest of Practice (regardless of payment
by Practice) and shall remain upon the Premises at the termination of this
Lease, all without offset, credit, reimbursement or payment of any nature to
Practice. The terms "alterations," "installations," "improvements,"
or "additions" shall not be construed to include Practice's movable office
furniture, or medical or office equipment installed by Practice at Practice’s
expense and with WellQuest's prior written stipulation that it will remain
Practice’s equipment. WellQuest may remove any alterations,
improvements, installations or additions made by Practice upon termination of
this Lease at Practice's expense unless otherwise agreed in WellQuest's prior
written consent thereto.
f. Government
Mandates.
1. Practice’s
Cost. If any applicable
federal, state or local law, rule, regulation, code or similar governmental
requirement (collectively called a “Mandate”) requires (i) improvements to the
Premises or (ii) in order to meet the unique and special needs of any of the
Practice Persons, improvements to the Building, Common Areas or Land, then
Practice shall pay, as Additional Rent, Practice’s Share of all costs incurred
by WellQuest or Owner making such improvements to the
Premises.
19
2. Pro Rata
Cost. If a Mandate requires improvements to the Building, Land
or Common Areas, except for improvements to meet the unique and special needs of
a tenant other than Practice, then Practice shall pay, as Additional Rent,
Practice’s Share of all costs incurred by WellQuest or Owner making such
improvements.
9. Services
to Be Furnished to Practice.
a.
Practice acknowledges that Owner, under the Base Lease, has agreed to furnish,
the following services and utilities to the Premises on and after the
Commencement Date, at WellQuest’s expense, and Practice shall pay WellQuest the
share of such expenses allocable to the Premises, as determined by WellQuest,
upon the request of WellQuest:
1. Air conditioning and heating to
provide a temperature and humidity condition required, in WellQuest's sole
judgment, for comfortable occupancy of the Premises; and
2. Electricity, water, sewer, gases,
medical waste receptacles and disposal, trash removal, custodial services, cable
television and telephone access (for Practice’s equipment.
WellQuest
may, at the option of WellQuest, furnish, at the expense of Practice, an
uninterruptable power supply, emergency generator and backup
services.
b.
WellQuest reserves the right to stop any or all of the services to be supplied
by WellQuest in case of accident or breakdown or for the purpose of making
alterations, repairs or improvements thereto. Neither WellQuest nor
Owner shall not be liable for damage by abatement of rent or otherwise for
failure to furnish or delay in furnishing any or all of such services, nor shall
failure or delay in the furnishing of the same be considered a constructive
eviction when such failure or delay is caused by or is the result of accident,
fire, flood, wind, forces of nature, vandalism, riot, terrorist activity, act of
war, act of God, strikes, labor disputes, material, fuel or labor shortages,
governmental or other lawful regulations or requirements, or the failure of any
corporation, firm or person with whom WellQuest or Owner may contract for such
services to furnish the same, or where such failure or delay is due to any other
cause other than WellQuest’s or Owner’s gross negligence. No failure
to furnish or delay in furnishing any of the aforesaid services will relieve
Practice from the timely performance of any of Practice's obligations and
covenants contained in this Sublease. Practice releases all claims
against WellQuest and Owner for damages for interruption or stoppages of any of
the aforesaid services agreed to be furnished by WellQuest, save and except for
WellQuest’s or Owner’s gross negligence or intentional act or
omission.
c. Except
as specifically provided by this Sublease, WellQuest shall only be responsible
for furnishing the services required of it in Subsection (a) or otherwise
under this Sublease from Monday through Friday (exclusive of
Holidays) between the hours of 7:00 a.m. and 7:00 p.m.
10. Improvements. WellQuest
contracted for Owner to build in the Premises to meet Practice’s
requirements. Practice will pay the cost Owner charges WellQuest to
build in the Premises in the same manner Owner charges WellQuest, whether as
part of Practice’s Rent or in a lump sum. When Practice occupies the
Premises, Practice will have acknowledged satisfactory completion of
construction of the Premises and shall be deemed to have accepted the Premises,
with the exception of defective conditions which are not open and obvious. WellQuest, not Practice,
may take all depreciation and tax credits relating to amounts WellQuest is
charged for the construction, improvements, or any later alterations to the
Premises.
11. Common
Areas. During the Term, the Practice Persons have the
non-exclusive right, in common with the WellQuest Persons and other Building
tenants, to use all Common Areas of the Building and all parking areas,
walkways, rights-of-way, driveways, and means of ingress and egress, designated
by WellQuest or Owner from time to time as Common Areas to serve the Building,
subject to Practice’s compliance with the Rules and Regulations and rights
reserved by WellQuest in Sections 14 and 18 of this Sublease. Said
common areas in the Building, common parking, walkways, driveways,
rights-of-way, and areas of ingress and egress servicing the Building, together
with all landscaped areas thereof, are collectively called the "Common
Areas." WellQuest may restrict parking for the Practice Persons to a
designated area on the Land or adjoining parking areas.
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12. Termination
of Sublease. This Sublease shall terminate
upon the mutual agreement of the parties, the termination of the Management and
Medical Services Agreement or the termination of the Base Lease, and may, at the
option of WellQuest, terminate upon the termination of the Medical Director
Services Agreement.
13. Quiet
Enjoyment. WellQuest agrees
that, if Practice timely performs all of the terms and conditions of this
Sublease, Practice may peaceably and quietly occupy the Premises on the terms
and conditions of this Sublease.
14. Rules and
Regulations. Practice shall obey all rules and regulations of
the Premises and Building as outlined from time to time by WellQuest or
Owner. WellQuest may add to or change such rules and regulations that
(a) relate to legal or insurance requirements or to the safety and operation of
the Land, Building or Premises, or (b) do not unreasonably affect Practice's use
of the Premises. WellQuest shall not be liable for failure of any
other tenants to obey such rules or regulations. WellQuest’s failure
to enforce any current or subsequent rule or regulation against any other tenant
shall not constitute a waiver thereof.
15. Inspection. WellQuest’s
agents and employees may enter upon the Premises at all reasonable hours for the
purpose of inspections, alterations or repairs to the Premises or the
Building. In the event of emergency, WellQuest’s agents or employees
may enter the Premises at any time and may perform any acts related to safety,
protection, preservation or improvement of the Building or the
Premises. Practice shall provide WellQuest a key, and access codes,
to all areas of the Premises. Practice shall not change any key or
access code without first notifying WellQuest and providing WellQuest a copy of
such new key or code, which WellQuest may provide to Owner. Except
for repair of casualty damage, Practice shall not be entitled to any damages, by
abatement or reduction of rent or otherwise, because of work performed within
the Building or Premises by WellQuest.
16. Assignment
and Subletting.
a. By
Practice. Practice shall not assign, mortgage this Lease,
sublet or mortgage all or any portion of the Premises. Any sale or
other transfer, individually or in the aggregate, within a 24-month period, of
25% or more of the voting, income or capital interests in Practice, shall
constitute an assignment for purposes of this Section.
b .By
WellQuest. WellQuest may assign its rights
and obligations under this Sublease, or sublet all or any portion of the
Premises, without Practice's prior written consent, to any entity that is
related or unrelated to WellQuest. Upon the assignee’s assumption of
WellQuest’s obligations that accrue after the date of such assignment, WellQuest
shall be relieved of all such obligations under this Sublease.
17. Subordination
and Attornment. This Sublease is and shall be subject and
subordinate to all mortgages and deeds of trust now or in the future placed on
the Building or the Land and to all renewals, modifications, consolidations,
replacements and extensions thereof. Within 10 days after a request
by WellQuest, its lender or any purchaser, Practice shall execute and deliver to
WellQuest any documents reasonably necessary to confirm such
subordination. Notwithstanding the foregoing, any lender shall have
the unilateral right to subordinate its mortgage or deed of trust to
Practice. As long as a lender or a purchaser of the Land agrees to
continue Practice in possession of the Premises under this Sublease, Practice
shall attorn fully to such lender or purchaser.
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18. Rights
Reserved by WellQuest. WellQuest, for
itself and for Owner, reserves the following rights, exercisable without notice
and without liability to Practice for damage or injury to property, persons or
business (all claims for damage
or injury being hereby released and waived) and without effecting an
eviction or disturbance of Practice's use or possession of the Premises or
giving rise to any claim for set-offs or abatement of Rent:
a. To
change the name or street address of the Building.
b. To
exercise exclusive control and management of all parking and Common Areas
serving the Building. At any time WellQuest may:
1. Change the areas, location and
arrangement of all parking and Common Areas, including rights-of-way and
driveways;
2. Restrict parking
by Practice, and its employees, patients, agents, and invitees to
designated areas within the existing parking areas and to any future
noncontiguous parking area; and
3. Perform such other acts in and to
the Premises and its related improvements and to the parking and Common Areas
and Improvements as, in the exercise of good business judgment, WellQuest
determines to be desirable.
c. To
install, maintain or remove any or all signs on the exterior or interior of the
Building or the Common Areas.
d. To designate and approve, prior to
installation, all types of window coverings, fans, ventilators or
equipment.
e. To
designate and control all sources furnishing sign painting and lettering, ice,
mineral or drinking water, towels, vending machines and toilet supplies used or
consumed on the Premises and within or about the Building, or like or other
services, and, in general, to reserve to WellQuest the exclusive right to
designate, limit, restrict and control any business and any service in or to the
Building and its tenants.
f. To
take all such reasonable measures as WellQuest may deem advisable for security
of the Premises or its occupants. Neither this nor any other
provision contained in this Lease shall be construed, expressly or impliedly, as
requiring the WellQuest to provide security or other protective services with
respect to the Premises, the Building, parking or other Common
Areas.
g. To
require the evacuation of the Premises for cause, or for drill
purposes.
h. To
deny access to the Building temporarily and to close the Building on a regular
schedule, or at other specified times, as WellQuest may determine, subject,
however, to Practice's right to admittance under such regulations as shall be
prescribed from time to time by WellQuest.
i. To
regulate and approve the weight, size, electric and heat load, and location of
all equipment and articles in the Premises, and to require all such items to be
moved into and out of the Building and Premises only at such times and in such
manner as WellQuest shall direct. Movement of Practice's property
into or out of the Premises and within the Premises is at Practice’s sole and
entire risk and responsibility. WellQuest reserves the right to
require permits before allowing any such property to be moved into or out of the
Building.
j. To do
or permit the exercise of any right regarding the Premises, the Building or the
Land as Owner may have under the Base Lease.
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k. To
prohibit the placing of vending or dispensing machines of any kind in or about
the Premises without WellQuest’s prior written permission.
l. To
decorate, remodel, repair, alter or otherwise prepare the Premises for
reoccupancy during the last 90 days of the Term before Practice vacates the
Premises, or at any time after Practice abandons the Premises. This
provision does not authorize Practice to vacate or abandon the
Premises.
m. At any
time to decorate and make repairs, alterations, additions and improvements,
structural and otherwise, in or to the Premises, the Building, the Land, or any
part thereof. During any such operations, without abatement of rent,
without causing an eviction of Practice and without affecting any of
Practice's obligations hereunder so long as the Premises are reasonably
accessible, WellQuest may:
1. Take into and through the Premises
or any part of the Building all materials and equipment related to such
operations.
2. Temporarily close doors, entryways,
public space and corridors in the Building.
3. Interrupt or temporarily suspend the
operation of Building services and facilities.
4. Change the arrangement and location
of entrances or passageways, doors, corridors, elevators, stairs, and Common
Areas.
19. Disclaimer
of Liability; Indemnification; Etc.
a. In
General. WellQuest and Owner shall not be liable to any
Practice Person for:
1. Any death, injury, disability or
damage to person or property caused by any action, omission or negligence of
WellQuest, Owner or Practice;
2. Any theft or disappearance of
property from the Premises;
3. Any casualty, fire, delay or failure
to provide goods or services; or
4. Any defect in the quality of the
Premises or in any good or service.
b. Limitation
of Liability. WellQuest shall
not be liable to any Practice Person for a breach of this
Sublease. Practice’s sole remedies for WellQuest’s breach of this
Sublease are (i) to recover in rem against
WellQuest’s equity, if any, in the lease of the Premises, (ii) to receive an
abatement of rent in the specific instances permitted by the terms of this
Sublease or (iii) in an appropriate case, to obtain injunctive
relief. WellQuest shall not be required to pay incidental,
consequential or punitive damages. Practice agrees that these
limitations of remedies are reasonable and have been considered in calculating
the Rent.
c. Indemnification. Practice
shall indemnify WellQuest and Owner from and pay for WellQuest’s (and Owner’s)
defense of all claims for any death, injury, disability or damage caused by any
Practice Person, occurring on the Land, Building or Premises or made on behalf
of any Practice Person or a patient of Practice; provided that Practice is not
required to indemnify a person for that person’s gross negligence or willful and
intentional misconduct. In addition, Practice shall indemnify and
defend the Owner and WellQuest for every condition, risk or claim described in
the indemnification clauses of the Base Lease.
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20. Privacy.
a. In
General. All information
in any form (written, computer, oral or other) regarding WellQuest’s business,
practice, employees, contracts, suppliers, finances, clients, customers and
other information held or regarding WellQuest is WellQuest’s confidential and
proprietary information (“Confidential Information”). Practice shall
not receive or possess any Confidential Information. If, in any
manner, Practice comes into possession of any Confidential Information, Practice
immediately shall
return such information to WellQuest and shall not use or disclose any of such
Confidential Information.
b. Medical
Information. This Sublease
does not give Practice, WellQuest or Owner any right to inspect, copy or use
another’s Protected Health Information. In exercising its inspection
rights, WellQuest and Owner shall give due regard to the legitimate privacy
rights of Practice patients who are on the Premises when the inspection
occurs.
21. Insurance.
a.
Through the entire Term, Practice shall maintain, at its sole cost and expense,
the following types of insurance in the amounts specified and in the form
hereinafter provided for:
1. General
Liability. Commercial
general liability insurance covering Practice and all physicians who use the
Premises, against claims for personal injury, death or property damage occurring
upon, in or about the Premises, Land or Building. Such insurance shall have
limits of not less than $1,000,000 per person and
$1,000,000 per occurrence for personal injury to or death of any number
of persons arising out of any one occurrence, and $1,000,000 (for physicians,
but $3,000,000 for Practice) for property damage arising out of any one
occurrence. Practice’s insurance coverage required under this
Subsection shall include coverage for liability hazards as defined in the policy
forms and endorsements for premises and operations liability, personal injury
liability, terrorism, products and completed operations liability, broad
property damage liability and contractual liability, which shall extend to any
liability of Practice arising out of the indemnities granted under this
Lease.
2. Casualty. Throughout the
entire Term, Practice shall maintain “All Risk” or “Fire and Extended Coverage”
property insurance covering Practice’s trade fixtures and personal property, and
the trade fixtures and personal property of all physicians that are located on
or about the Premises, and all leasehold improvements to the Premises which
Practice is required to maintain or repair. Such insurance shall be
carried at the replacement cost of the insured property, and shall provide
protection against perils that are covered under standard insurance industry
practices within the classification of “All Risk” or “Fire and Extended
Coverage” property insurance, including but not limited to, loss or damage from
fire, lightning, windstorm, hail, explosion, riot, civil commotion, aircraft,
vehicles, smoke, water damage, collapse, sprinkler leakage, vandalism, malicious
mischief, terrorism, earthquake and flood.
3. Worker
Compensation. If Practice has
employees or leased employees, worker compensation insurance.
b. All
such insurance policies shall be maintained on an “Occurrence,” not “Claims
Made,” basis with financially responsible insurance companies that are
acceptable to WellQuest and that are authorized to insure risks in the State of
Arkansas. Such
insurance shall be issued in the name of Practice or the applicable physician,
with WellQuest and Owner named as additional insureds on all such
policies. Practice shall promptly deliver to WellQuest a certificate
or certificates (i) listing the insurers and policy numbers, for all of the
insurance required to be maintained under this Sublease, (ii) warranting that
said insurance is in full force and effect and that such insurance and the
policies evidencing the same comply with the requirements of this Sublease; and
(iii) containing an endorsement that the insurer will not cancel, amend or fail
to renew the policy without notifying WellQuest and Practice by certified or
registered mail at least thirty (30) days in advance of such cancellation or
amendment. If Practice fails to procure any insurance required
hereunder, or fails to maintain the insurance in force continuously during the
term, WellQuest has the option, but not the obligation, to procure such
insurance for Practice, and Practice shall immediately reimburse WellQuest for
the cost of such insurance on written demand.
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22. Untenantability. If the Premises
or the Building are, in whole or in part, made untenantable by fire or other
casualty, WellQuest may elect:
a. To
terminate this Sublease as of the date of the fire or casualty by notice to
Practice within 60 days after the occurrence; or
b. To
commence repair or reconstruction of the Building or the Premises at WellQuest's
expense within 90 days after WellQuest is enabled to take possession of and to
commence such repairs or reconstruction of the damaged Building or Premises, in
which case the Lease shall not terminate but rent shall be abated on a per diem
basis while a substantial part of the Premises is untenantable. If,
however, Practice occupies part of the Premises during such repairs or
reconstruction, Practice shall pay rent for the part of the Premises that it
occupies. If WellQuest elects so to repair or reconstruct the
Building or the Premises and does not substantially complete the work within 180
days after such repairs or reconstruction is commenced, either party may
terminate this Sublease as of the date of the fire or casualty by notice to the
other party not later than 210 days after such repairs or reconstruction
begins.
In the
event of termination of the Sublease pursuant to this Section, Rent shall be
apportioned on a per diem basis and paid to the date of the fire or
casualty. In no event shall WellQuest be liable any damages to
any Practice Person resulting from any fire or casualty to the
Building or the Premises, or from any repair or reconstruction of the
Premises.
23. Eminent
Domain. If the whole or any substantial part of the Premises
is taken or condemned for any public use or purpose, the Term shall end when,
and not before, the possession of the part so taken is taken by the authority
that takes the property. Rent for the month in which the taking
occurs shall be apportioned as of the date of such termination. If
part but not all of the Premises is taken or condemned, so that Practice may
continue to occupy the Premises not taken, the Base Rent and Practice’s Share
shall be reduced pro rata based on the net rentable area of the Premises so
taken. The entire condemnation award shall be the property of
WellQuest without apportionment to Practice. Practice shall not claim
or have any right to compensation for the condemnation of Practice’s leasehold,
but may claim a right to compensation for the condemnation of Practice’s movable
tangible personal property.
24. Surrender
of Premises. At the end of the
Term, Practice immediately shall surrender peaceable possession of the Premises
and deliver the Premises to WellQuest in as good repair and condition as at the
commencement of Practice's occupancy, reasonable wear and tear and damage or
destruction by fire or other casualty (that is not caused by a Practice Person)
excepted. Practice shall deliver all keys and access cards to the
Premises to WellQuest. If possession is not immediately surrendered,
WellQuest may take possession of the Premises and expel or remove Practice and
any other person occupying all or a portion of the Premises by force if
necessary, without having civil or criminal liability.
25. Brokers. Neither
party was represented by a broker in connection with this
transaction. Each party shall indemnify and defend the other party
against all claims for a commission arising out of this Sublease.
26. Right to
Enforce. To the extent
that any of WellQuest’s obligations are required to be performed by Owner,
Practice shall rely on and look solely to Owner for the performance
thereof. WellQuest may, in its option and sole discretion (but shall
not have any liability for failing to do so):
a.
Perform any duty of Owner. In such event, WellQuest shall have the
full right to receive the performance of such duty, or payment therefor, either
from Owner or (if permitted by the Base Lease) Practice;
25
b.
Perform any duty of Practice under this Sublease or under the Base Lease and for
that purpose WellQuest or its contractors may enter the Premises at any
time. If WellQuest performs any Practice duty, Practice shall pay to
WellQuest as Additional Rent (i) the entire direct cost of such performance,
(ii) WellQuest’s reasonable attorney and management fees and (iii) interest on
the sum of (i and ii) at 15% per annum. Neither WellQuest nor Owner
shall be liable for any damage to the Premises or to any property, or for any
loss of use of Premises, relating to any action described in this Subsection
(b); or
c. Assign
any right described in this Sublease to Owner, and in such event WellQuest shall
have no liability for any action or inaction of Owner.
27. Default. Each
of the following events is an Event of Default under this Sublease:
a.
Practice fails to pay any installment of Rent exactly as and when
due.
b. Either
party fails to comply with any material non-payment term of this Sublease other
than the payment of Rent and does not cure such failure within 30 days after
written notice thereof to that party.
c. Either
party fails to comply with any material term of the Base Lease with respect to
the Premises, and does not cure such failure within any notice period described
in the Base Lease.
d.
Practice becomes insolvent, makes a transfer in fraud of creditors, ceases
paying its obligations generally or makes an assignment for the benefit of
creditors.
e.
Practice files a petition under any section or chapter of the Bankruptcy Code,
as amended.
f. An
order, judgment or decree is entered by any court of competent jurisdiction on
the application of a creditor adjudicating Practice bankrupt or insolvent, or
approving a petition seeking Practice’s reorganization or appointment of a
receiver, trustee or liquidator of Practice, or of substantially all of
Practice's assets, and such order, judgment or decree continues unstayed and in
effect for any period of thirty (30) consecutive days.
g. A
receiver or trustee is appointed for all or substantially all of Practice’s
assets.
h. A
levy, execution or attachment is made on Practice or any of Practice's property,
and is not vacated or removed by court order, bonding or otherwise within a
period of thirty (30) days after it is made.
i.
Practice abandons or vacates any substantial portion of the Premises for a
period of ten (10) days.
j.
Practice does or permits to be done anything which creates a lien upon the
Premises.
k.
Practice states, in writing, that any part of this Sublease is invalid, is
unenforceable or is not the Parties’ agreement.
l. An
Event of Default by Practice occurs under the Management and Medical
Services Agreement, the Medical Director Services Agreement or a material
default occurs under any other agreement between the Parties.
WellQuest
shall not be in default under this Sublease unless Practice gives WellQuest a
notice specifying WellQuest’s failure to perform this Sublease and, within 30
days thereafter, WellQuest does not take reasonable steps to cure the
breach.
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28. Remedies
upon Default. Upon the occurrence of any such Event of Default
by one party, the other party shall have the option to pursue any one or more of
the following remedies without any notice or demand whatsoever:
a.
Declare all future Rent for the remainder of the Term to be accelerated and to
be payable immediately.
b.
Terminate this Sublease, in which event Practice xxxXx immediately surrender the
Premises to WellQuest. If Practice fails to surrender the
Premises after the Sublease is terminated, WellQuest may enter upon and take
possession of the Premises and expel or remove Practice and any other person who
may be occupying any part of the Premises, without being liable for prosecution
or any claim for damages as a result of such actoin. Practice shall
pay to WellQuest on demand the full amount of all loss and damage which
WellQuest may suffer by reason of such termination and removal, whether through
inability to relet the Premises on satisfactory terms or otherwise.
c. After
entering upon and take possession of the Premises and expeling or
removing Practice and any other person who may be occupying any part of the
Premises, attempt to relet the Premises on such terms as WellQuest may deem
advisable and receive the rent therefor; and Practice agrees to pay to WellQuest
on demand any deficiency in Rent for the remainder of the Term that may arise by
reason of such reletting (after deducting all make-ready, alteration and
renovation costs, broker fees, interest and other amounts incurred by WellQuest
to cause the Premises to be relet).
d.
Exercise any right or remedy of the lessor under the Base Lease.
e.
WellQuest may xxx for and collect Rent, or damages from Practice’s breach,
without terminating the Sublease.
f. If, on
account of any breach or default by Practice in its obligations hereunder,
WellQuest employs an attorney to enforce or defend any of WellQuest’s rights or
remedies hereunder, Practice shall pay, as additional Rent, all reasonable
attorney fees and costs incurred by WellQuest in such connection.
g.
Practice shall pay to WellQuest, as Additional Rent, interest at the rate of 15%
per annum on all Rent due WellQuest that is not paid within five (5) days after
such Rent becomes due and payable, such interest to accrue from the date such
payment is due and payable. (Interest on interest is not, however,
payable to WellQuest by Practice.)
h.
WellQuest may recover from Practice, as Additional Rent, all damages owing to
Owner as a direct or indirect result of Practice’s breach.
i.
WellQuest may exercise any or all other rights or remedies which it may have for
possession, rent, arrearages in rent, damages, other remedies under this
Sublease or under the Base Lease, in law, by statute or at equity.
All
remedies are cumulative and may be taken in any order selected by
WellQuest. If WellQuest elects to re-enter or take possession of the
Premises, Practice waives notice of such re-entry or repossession and of
WellQuest’s intent to re-enter or retake possession. The pursuit of
any remedy shall not constitute a forfeiture or waiver of any Rent due to
WellQuest or of any damages accruing to WellQuest by reason of any breach of any
of this Sublease. WellQuest’s waiver of or forbearance to enforce one
or more of its remedies for an Event of Default shall not constitute a waiver of
such Event of Default or of a waiver or forbearance with respect to any other
remedy. The loss or damage which WellQuest may suffer by reason of
termination of this Sublease or the deficiency arising by reason of any
reletting by WellQuest shall include the expense of repossession and any repairs
or remodeling undertaken by WellQuest following repossession and until the end
of the Regular Term. No reentry of the Premises by WellQuest shall
constitute an election by WellQuest to terminate this Sublease unless WellQuest
specifically notifies Practice in writing that the Sublease has been
terminated. Practice, for the purposes of this Sublease, waives any
and all stay and homestead laws of the State of Arkansas.
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29. WellQuest’s
Security Interest.
x. Xxxxx. In addition to
the statutory Landlord’s lien, but subject to the lien of any source of purchase
money financing procured at any time by Practice for the acquisition of
equipment, fixtures, inventory or supplies, (which purchase money security
interest must be properly and timely perfected to be superior to WellQuest’s
lien), Practice grants to WellQuest a continuing security interest in all of
Practice’s Accounts, Inventory, Equipment, Supplies, Contract Rights, General
Intangibles, Contract Rights, Tenant Improvements, Fixtures, proceeds and
products of any such collateral, and all such collateral now existing or
hereafter acquired. All of such items of property (including, without
limitation, proceeds and products) are referenced as the
“Collateral.”
b. Secured
Indebtedness. The Collateral secures payment of all Rent and
secures payment of all damages or losses that WellQuest may suffer by reason of
any breach by Practice of this Sublease. None of the Collateral shall
be removed from the Premises without WellQuest’s consent until Practice has paid
all arrearages in Rent and has performed all the terms of this
Sublease.
c. Remedies. After
any Event of Default, in addition to any other remedies that either party has,
WellQuest may, at its option:
1. Have and exercise all of the rights
of a secured party under the Arkansas Uniform
Commercial Code;
2. Enter upon the Premises and take
possession of all Collateral without liability for trespass or conversion;
and
3. Sell the Collateral at one or more
commercially reasonable public sales, in one or several lots, with or without
having such property at the sale, after giving Practice reasonable notice of the
time and place of any public sale or of the time after which any private sale is
to be made. At any such sale, WellQuest or its assigns may purchase Collateral
unless otherwise prohibited by law. Unless otherwise required by law,
and without intending to exclude any other manner of giving Practice reasonable
notice, the requirement of reasonable notice shall be met if such notice is
given in the manner prescribed in this Sublease for other notices at least 10
days before the time of sale.
d. Proceeds
of Sale. The proceeds from any such sale, less all expenses
connected with the taking of possession of, holding and selling the Collateral
(including reasonable attorney fees and other expenses), shall be applied as a
credit against the secured indebtedness. Any surplus shall be paid to
Practice or as otherwise required by law. Practice shall pay all
deficiencies immediately as Additional Rent.
e. Financing
Statement. Upon request by WellQuest, Practice shall execute
and deliver to WellQuest financing statements in a form sufficient to perfect
WellQuest’s security interests under the provisions of the Arkansas Uniform
Commercial Code. A photocopy of this Sublease may be filed as a
financing statement.
f. Statutory
Lien. WellQuest's
statutory lien for rent is not waived. The security interest granted
in this Section is in addition to such statutory lien.
30. Estoppel
Certificate. Within ten (10)
days after WellQuest requests a statement described in this Section, Practice
shall execute and deliver to WellQuest a statement, in writing and in form and
substance satisfactory to WellQuest, certifying (a) that this Sublease is in
full force and effect, (b) the ending date of the Term, (c) that all Rent is
paid currently without any offset or defense, except as noted therein (d) the
amount of Rent, if any, paid in advance, (e) any amendments to this Sublease,
(f) that there are no uncured defaults by Owner or WellQuest or stating in
reasonable detail those defaults claimed by Practice, and (g) such other matters
as may be reasonably requested by WellQuest.
28
31. No
Required Referrals. This Lease is not
based on the value or volume of referrals, or the promise or anticipation of any
referrals, from one party to the other. Neither Party is required to
make any referral to the other party at any time.
32. Notices. All notices
required under this Sublease shall be in writing and shall be deemed to be
properly served if delivered personally or if sent by Certified Mail with Return
Receipt Requested to WellQuest at the address stated below in the signature
section of this Sublease with a simultaneous copy to the last address where rent
was paid, or to Practice at the address of the Premises, until such time as
either Party shall advise the other in writing as to a different mailing
address. The effective date of mailed notices shall be the date
stamped on the envelope by the United States Post Office
Department. The Parties shall not refuse to accept delivery of said
notices.
33. Holding
Over Does Not Extend Sublease.
a. Holding
Over. If Practice
remains in possession of any part of the Premises after the end of the Term
without the execution of a new Lease by WellQuest, Practice shall be deemed to
be occupying the Premises as a holdover tenant subject to all of the conditions,
provisions and obligations of this Sublease, EXCEPT that the amount of monthly
rental to be paid during each month or partial month of the holdover shall be
two times the amount of the monthly Rent installment payable for the last full
calendar month immediately preceding the expiration of the Term and Practice
hereby indemnifies WellQuest and HQ from any and all losses, liabilities, costs,
fees (including attorney’s fees), damages, judgments or expenses WellQuest or HQ
may incur as a consequence of the holdover. In no event shall this
Subsection be deemed to authorize any holding over by
Practice. WellQuest may require Practice to leave the Premises
immediately upon the end of the Term or at any time thereafter.
b. Money
Received After Termination. No receipt of money by WellQuest
from Practice after the termination of this Lease (however such termination may
occur), service of any notice, commencement of any suit or final judgment for
possession, shall reinstate, continue or extend the term of this Lease, affect
any such notice, demand, suit or judgment, or extend Practice's right of
possession to any part of the Premises.
34. Time of
Essence. Time is of the essence in the performance by the
parties of each term, covenant and condition of this Sublease.
35. Binding
Effect. This Sublease shall inure to the benefit of and shall
bind the successors and assigns of the parties. Practice shall,
however, not have any right to assign, mortgage or otherwise encumber the
Premises or this Sublease or to further sublease the Premises except as
expressly permitted in advance in writing by WellQuest.
36. Severability.
Should any clause or provision of this Sublease be held invalid or void for any
reason, such invalid or void clause or provision shall be enforced to maximum
extent allowed by law and the deletion of the invalid or void portion of this
Sublease shall not affect the remaining terms of this Sublease, but the balance
of the provisions of this Sublease shall remain in full force and
effect.
37. Interpretation. This
Sublease shall be governed by, and construed in accordance with, Arkansas law. Captions
are inserted for ease of reference and are not to be used to interpret the
text.
38. Entire
Agreement. This Sublease
states the entire agreement of the parties with respect to the all elements of
the sublease by Practice of the Premises. There are no “side deals,”
and there are no terms or conditions relative to the sublease which are not
stated in this document. All attached Exhibits are incorporated into
this Sublease by reference.
29
Wherefore, the parties have
executed this Sublease on the day and year first above written.
Northwest
Arkansas Primary Care Physicians, P.A., an Arkansas
professional association
|
|||
By:
|
/s/
|
||
Title:
|
|||
WellQuest:
|
|||
WELLQUEST
MEDICAL & WELLNESS CENTERS OF NORTHWEST ARKANSAS, INC.,an Arkansas
corporation
|
|||
By:
|
|||
Title:
|
30
EXHIBIT 1: BASE
LEASE
[Filed as
exhibit 10.6 to the Registration Statement on Form S-1/A, filed with the
Securities and Exchange Commission on July 8, 2008]
31
EXHIBIT
2: LAND
[Deleted
and not included in the original]
32
EXHIBIT
3: PREMISES
33
Exhibit
B
Employee
Lease Agreement
EMPLOYEE
LEASE
THIS
EMPLOYEE LEASE made as of the ____ day of __________, 2005, by and between Northwest Arkansas Primary Care
Physicians, P.A. , an Arkansas professional association (the “Practice”)
and WellQuest Medical &
Wellness Centers of Northwest Arkansas, Inc. d/b/a WellQuest, an Arkansas
corporation (“WellQuest”).
BACKGROUND:
WellQuest
intends to operate centers (the “WellQuest Centers”) throughout northwestern
Arkansas that provide one-stop primary healthcare and wellness
services. WellQuest plans to establish the initial WellQuest Center
in Bentonville, Arkansas. Each WellQuest Center will consist of a medical spa, a
retail health and wellness shop, and related health and wellness services as
WellQuest determines are necessary or desirable.
The
parties hereto have entered into that certain Management and Medical Services
Agreement as of the date hereof pursuant to which, among other matters, the
parties agreed to enter into this Agreement, because Practice desires to
contract with WellQuest, and WellQuest wishes to contract with Practice, for the
provision of employees and services incidental to employee payroll, benefits,
supervision and management;
NOW,
THEREFORE, in consideration of the mutual promises contained herein, the parties
agree as follows:
1. Provision of
Employees. WellQuest agrees to employ and provide all
non-physician medical personnel to Practice in order to allow Practice to have
sufficient personnel to carry on its medical activities at the WellQuest
Center. Practice agrees to outline the job requirements of the
positions to be filled and to keep WellQuest informed of subsequent personnel
needs or changes.
2. Fees. Practice
agrees to remit to WellQuest monthly an amount equal to the cost of employing
the personnel consisting of the following items:
(i)
|
Wages
and salary per the schedule submitted by WellQuest to the Practice from
time to time (if Practice does not object to such schedule within 48 hours
of receipt, such schedule shall be deemed accepted).
|
|
(ii) | Payroll taxes; and | |
(iii) |
Fringe
benefits, including all reasonable fringe benefits which are or may become
standard for personnel at the WellQuest Center (such as health insurance,
disability insurance, life insurance, retirement plans, seminar and
related travel expenses and professional
dues).
|
3. Supervision of
Personnel. WellQuest shall be responsible for hiring, firing,
supervising, payroll and all other administrative functions usually performed by
an employer; provided, however, Practice and WellQuest shall cooperate in making
personnel decisions to the extent feasible. WellQuest and Practice
shall agree on an established schedule for holidays, vacations and sick leave
policies for WellQuest’s employees employed to work with
Practice. WellQuest shall be responsible for maintaining written
records of hours worked by all salaried and hourly personnel, including regular
and overtime hours.
34
4. Payroll
Taxes. WellQuest acknowledges that it is responsible for
payment of all payroll taxes for its employees and agrees to furnish proof of
such payments to Practice upon written request.
5. Employee
Review. WellQuest shall periodically, but not less than
annually, review and evaluate the performance of all personnel leased to
Practice. Moreover, Practice shall provide to WellQuest its own review and
evaluation of the performance of all personnel.
6. Conduct of
Practice. Practice covenants and agrees to obey all federal,
state and local statutes regarding treatment of employees in a business
situation. While the parties hereto recognize and affirm that the
employees leased to Practice are the employees of WellQuest, Practice covenants
and agrees not to conduct itself in any manner such as to make WellQuest liable
for, or subject to any racial or sexual discrimination charges, wage and hour
violations or any such other offenses for which WellQuest may be liable for
damages or fines, or subject to criminal prosecution, without WellQuest’s
knowledge or consent.
7. Indemnification by
Practice. Practice agrees to indemnify and hold WellQuest
harmless for any and all expenses, including all reasonable attorney's fees and
the costs of defense of any actions brought against WellQuest by any party as a
result of any actions, whether intentional or negligent, or any failure to act
on the part of Practice, or for any actions, whether intentional or negligent,
or any failure to act on the part of any or all employees of WellQuest if such
actions or failures to act result in legal or regulatory action being brought
against WellQuest. Practice hereby agrees to indemnify and hold
WellQuest harmless for all of the above related expenses, and also for any
judgment or fine which might be levied or adjudged against WellQuest as a result
of Practice's actions or failures to act, or as a result of WellQuest’s
employees' actions or failures to act.
8. Term. This
Agreement shall terminate when the Management and Medical Services Agreement
terminates or expires.
9. Entire
Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof, and no
modification, amendment or waiver of this Agreement or any provision thereof
shall be binding upon either party unless confirmed by written instrument signed
by each party.
10. Governing
Law. The validity, construction and effect of this Agreement,
and all extensions and modifications thereof, shall be construed in accordance
with the laws of the State of Oklahoma.
11. Breach. In
the event that Practice fails to make any payments due to be paid to WellQuest
hereunder or fails to comply with any other terms of this Agreement, and it
becomes necessary for WellQuest to retain the services of any attorney to
enforce the terms of this Agreement, then Practice shall be liable to WellQuest
for all reasonable attorneys' fees incurred in enforcing the terms of this
Agreement together with all costs incident thereto.
12. Binding
Effect. This Agreement shall be binding upon and inure to the
benefit of the successors, heirs and assigns of the parties hereto.
13. Assignment. Neither
party may assign this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld; provided, however, that
WellQuest may assign this Agreement to any of its affiliates without the prior
written consent of Practice.
14. Notices. The notice
provisions in the Management and Medical Services Agreement are incorporated
herein by reference.
35
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.
Practice:
|
|||
Northwest
Arkansas Primary Care Physicians, P.A., an Arkansas professional
association
|
|||
By:
|
/s/
|
||
Title:
|
|||
WellQuest:
|
|||
WELLQUEST
MEDICAL & WELLNESS CENTERS OF NORTHWEST ARKANSAS, INC., An Arkansas
corporation
|
|||
By:
|
|||
Title:
|
36
Exhibit
C
Business Associate Agreement
Regarding HIPAA Compliance
This
Business Associate Contract (the “Contract”) is entered into by Northwest
Arkansas Primary Care Physicians, P.A., an Arkansas professional association
(“Covered Entity”), and WellQuest Medical and Wellness Centers of Northwest
Arkansas, Inc., an Arkansas corporation (“Business Associate”) in satisfaction
of the requirement of Covered Entity to obtain satisfactory assurances from
Business Associate that Business Associate will safeguard and protect all
Protected Health Information (“PHI”) it receives.
RECITALS
Covered
Entity and Business Associate desire to protect the privacy and provide for the
security of PHI disclosed to Business Associate in compliance with the Health
Insurance Portability and Accountability Act of 1996, (“HIPAA”) and regulations
promulgated thereunder by the U.S. Department of Health and Human Services (the
“HIPAA Regulations”) and other applicable laws and regulations.
The
purpose of this Agreement is to satisfy certain standards and requirements of
HIPAA and the HIPAA Privacy Regulations (“Privacy Rule”), including, but not
limited to, Title 45, Section 164.504(e) of the Code of Federal Regulations
(“CFR”), as the same may be amended from time to time.
Covered
Entity will disclose certain information to Business Associate, some of which
may constitute PHI.
Business
Associate is an individual or entity who provides services involving the use or
disclosure of PHI.
In
consideration of the mutual promises made below and the exchange of information
pursuant to this Agreement, the parties agree as follows:
Section
1. Definitions
a. “Business
Associate” means WellQuest Medical & Wellness Centers of Northwest Arkansas,
Inc., an Arkansas corporation.
b. “Covered
Entity” means Northwest Arkansas Primary Care Physicians, P.A., an Arkansas
professional association.
c. “Individual”
has the same meaning as the term “Individual” in 45 C.F.R. §164.501 and shall
include a person who qualifies as a personal representative in accordance with
45 C.F.R. §164.502(g).
d. “Protected
Health Information” or “PHI” means any information, whether oral or recorded in
any form or medium: (i) that relates to the past, present, or future physical or
mental condition of an individual; the provision of health care to an
individual; or the past, present or future payment for the provision of health
care to an individual, and (ii) that identifies the individual or with respect
to which there is a reasonable basis to believe the information can be used to
identify the individual, and shall have the meaning given to such term under
HIPAA and the HIPAA Regulations, including, but not limited to 45 CFR Section
164.501.
e. “Secretary”
means the Secretary of the Department of Health and Human Services or his or her
designee.
37
Section
2. Obligations and Activities
of Business Associate
a. Business
Associate agrees to not use or disclose PHI other than as permitted or required
by the Agreement or as Required By Law.
b. Business
Associate agrees to use appropriate safeguards to prevent use or disclosure of
the PHI other than as provided for by this Agreement.
c. Business
Associate agrees to mitigate, to the extent practicable, any harmful effect that
is known to Business Associate of a use or disclosure of PHI by Business
Associate in violation of the requirements of this Agreement.
d. Business
Associate agrees to report to Covered Entity any use or disclosure of the PHI
not provided for by this Agreement of which it becomes aware.
e. Business
Associate agrees to ensure that any agent, including a subcontractor, to whom it
provides PHI received from, or created or received by Business Associate on
behalf of Covered Entity agrees to the same restrictions and conditions that
apply through this Agreement to Business Associate with respect to such
information.
f. Business
Associate agrees to provide access to PHI in a Designated Record Set to Covered
Entity, within fifteen (15) days of the request of Covered Entity, or, as
directed by Covered Entity, to an Individual in order to meet the requirements
under 45 CFR § 164.524.
g. Business
Associate agrees to make any amendment(s) to PHI in a Designated Record Set that
the Covered Entity directs or agrees to pursuant to 45 CFR § 164.526 at the
request of Covered Entity or an Individual, within fifteen (15) days of such
request.
h. Business
Associate agrees to make internal practices, books, and records, including
policies and procedures and PHI, relating to the use and disclosure of PHI
received from, or created or received by Business Associate on behalf of,
Covered Entity available to the Covered Entity, or to the Secretary, within
fifteen (15) days of such request or as designated by the Secretary, for
purposes of the Secretary determining Covered Entity’s compliance with the
Privacy Rule.
i. Business
Associate agrees to document such disclosures of PHI and information related to
such disclosures as would be required for Covered Entity to respond to a request
by an Individual for an accounting of disclosures of PHI in accordance with 45
CFR § 164.528.
j. Business
Associate agrees to provide to Covered Entity or an Individual, within fifteen
(15) days of a request to Business Associate, information collected in
accordance with this Agreement, to permit Covered Entity to respond to a request
by an Individual for an accounting of disclosures of PHI in accordance with 45
CFR § 164.528.
Section
3. Permitted Uses and
Disclosures by Business Associate
a. Except
as otherwise limited in this Agreement, Business Associate may use or disclose
PHI on behalf of, or to provide services to, Covered Entity for the following
purposes, if such use or disclosure of PHI would not violate the Privacy Rule if
done by Covered Entity or the minimum necessary policies and procedures of the
Covered Entity:
38
Management
of the non-medical aspects of Covered Entity’s business as provided in the
Management and Medical Services Agreement between Covered Entity and Business
Associate, dated __________, 2005.
b. Business
Associate may use PHI to report violations of law to appropriate Federal and
State authorities, consistent with § 164.502(j)(1).
Section
4. Obligations of Covered
Entity
a. Covered
Entity shall notify Business Associate of any limitation(s) in its notice of
privacy practices of Covered Entity in accordance with 45 CFR § 164.520, to the
extent that such limitation may affect Business Associate’s use or disclosure of
PHI.
b. Covered
Entity shall notify Business Associate of any changes in, or revocation of,
permission by an Individual to use or disclose PHI, to the extent that such
changes may affect Business Associate’s use or disclosure of PHI.
c. Covered
Entity shall notify Business Associate of any restriction to the use or
disclosure of PHI that Covered Entity has agreed to in accordance with 45 CFR §
164.522, to the extent that such restriction may affect Business Associate’s use
or disclosure of PHI.
Section
5. Permissible Requests by
Covered Entity
Covered
Entity shall not request Business Associate to use or disclose PHI in any manner
that would not be permissible under the Privacy Rule if done by Covered
Entity.
Section
6. Term and
Termination
a. Term. The
Term of this Agreement shall be effective as of the date of the Management
Agreement and shall terminate when all of the PHI provided by Covered Entity to
Business Associate, or created or received by Business Associate on behalf of
Covered Entity, is destroyed or returned to Covered Entity, or, if it is
infeasible to return or destroy PHI, protections are extended to such
information, in accordance with the termination provisions in this
Section.
b. Termination for
Cause. Upon Covered Entity’s knowledge of a material breach by Business
Associate, Covered Entity shall either:
i. Provide
an opportunity for Business Associate to cure the breach or end the violation
and terminate this Agreement and the Management Agreement if Business Associate
does not cure the breach or end the violation within the time specified by
Covered Entity;
ii. Immediately
terminate this Agreement and the Management Agreement if Business Associate has
breached a material term of this Agreement and cure is not possible;
or
iii. If
neither termination nor cure is feasible, Covered Entity shall report the
violation to the Secretary.
c. Effect of
Termination.
i. Except
as provided in paragraph c.ii. of this section, upon termination of this
Agreement, for any reason, Business Associate shall return or destroy all PHI
received from Covered Entity, or created or received by Business Associate on
behalf of Covered Entity. This provision shall apply to PHI that is in the
possession of subcontractors or agents of Business
Associate. Business Associate shall retain no copies of the
PHI.
39
ii. In
the event that Business Associate determines that returning or destroying the
PHI is infeasible, Business Associate shall provide to Covered Entity
notification of the conditions that make return or destruction infeasible. Upon
that return or destruction of PHI is infeasible, Business Associate shall extend
the protections of this Agreement to such PHI and limit further uses and
disclosures of such PHI to those purposes that make the return or destruction
infeasible, for so long as Business Associate maintains such PHI.
DATED:
|
/s/
|
||||
Business
Associate
|
|||||
DATED:
|
|||||
Covered
Entity
|
40