REFRACTIVE LASER CENTER
MANAGEMENT AGREEMENT
THIS REFRACTIVE LASER CENTER MANAGEMENT AGREEMENT ("Management
Agreement") is made and entered into as of March 1, 2000 (the "Effective Date"),
by and between Prime MBC, L.L.C., a Delaware limited liability company (the
"Center Company") and Xxxx Berkeley Eye Center, P.A., a Texas professional
association ("MBEC"). The Center Company and MBEC are collectively referred to
herein as the "Parties".
Recitals
WHEREAS, Prime RVC, Inc., a Delaware corporation ("Prime"), acquired an
ownership interest in Center Company (the "Purchase") pursuant to that certain
Contribution Agreement dated as of March 1, 2000 (the "Contribution Agreement")
by and among Prime, the Center Company, MBEC, MBC Holding Company, L.L.C., a
Texas limited liability company ("Target Center"), Xxxx Xxxxxxx Xxxx, M.D.,
Xxxxx X. Berkeley, M.D., Xxxxxxx X. Xxxxxx, M.D. and Xxxx X. Xxxxxxxxxx; and
WHEREAS, pursuant to the Contribution Agreement the Center Company owns
and operates a refractive laser center in Austin, Texas (the "Center") which was
previously owned by Target Center and managed by MBEC; and
WHEREAS, in connection with, and pursuant to, the Purchase, MBEC has
agreed to continue to provide management and marketing services to, and bear the
same type of expenses and employ all employees on behalf of, Center Company,
consistent with MBEC's past practices in connection with Target Center (subject
to appropriate adjustment for any growth of Center Company or increase in
patient volume at the Center during the term of this Management Agreement);
WHEREAS, the Center Company desires to engage and delegate daily
administrative and operational responsibility for the Center to MBEC, pursuant
to specified terms, conditions, and controls; and
WHEREAS, MBEC desires to provide such management services pursuant to
the terms and conditions set forth herein;
NOW, THEREFORE, the Parties hereby mutually agree as follows:
AGREEMENT
1. Appointment. The Center Company hereby appoints MBEC as contract manager for
the Center ("Appointment") and MBEC hereby accepts such Appointment, upon the
provisions and conditions set forth in this Management Agreement. MBEC hereby
agrees and acknowledges that its execution and performance of this Management
Agreement is a material inducement to the execution and performance by Prime of
the Contribution Agreement. Accordingly, Prime is a third party beneficiary of
this Agreement.
2. Term and Renewal. The initial term of this Management Agreement shall
commence upon the Effective Date and shall continue thereafter for a period of
five (5) years (the "Initial Term"). Thereafter, the term of this Management
Agreement shall automatically renew for successive five (5) year terms, unless
terminated by either party by giving written notice of termination at least 180
days prior to the end of the Initial Term or any renewal term, or unless
terminated for cause as set forth in Section 3. The Initial Term and all
renewals thereof shall be referred to herein as the "Term."
3. Termination. During the Term, this Management Agreement may be terminated
only upon the occurrence of any of the following events ("Events of
Termination"), which shall be deemed a termination for cause:
(a) By MBEC upon the failure by Center Company to make payments due
hereunder (other than a payment being disputed by Center Company in
good faith), or the failure by Center Company to allow MBEC to collect
a Management Fee (as hereinafter defined) pursuant to a Fee Report (as
hereinafter defined) approved, or deemed approved, by Center Company,
which failure remains uncured for a period of ten (10) days after
written notice, or by a non-breaching Party in the event of a failure
by any other Party to perform a material obligation hereunder, which
failure remains uncured for a period of thirty (30) days following
written notice thereof by the non-breaching Party;
(b) By the Center Company upon a final judicial determination having been
made, not subject to further appeal, that MBEC was grossly negligent in
performance of its obligations hereunder or committed a fraud upon the
Center Company;
(c) By the Center Company in the event any officer or director of MBEC or
any affiliate thereof is convicted on a charge constituting a felony
involving moral turpitude under the laws of the State of Texas;
(d) By the Center Company in the event of the involuntary transfer or
assignment of a majority of the voting securities of MBEC to a person
or entity other than an affiliate of MBEC;
(e) By the Center Company in the event MBEC makes an assignment for the
benefit of creditors, files a voluntary petition in bankruptcy, is
adjudicated a bankrupt or insolvent, or has ordered against it an order
for any relief in any bankruptcy or insolvency proceeding;
(f) By the Center Company in the event MBEC files a petition or answer
seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any statute, law, or
regulation or fails to contest the material allegations of a petition
filed against it in a proceeding of such nature;
(g) By the Center Company in the event MBEC seeks, consents to, or acquiesces
in the appointment of a trustee, receiver, or liquidator of MBEC or all or
any substantial part of its properties;
(h) By the Center Company in the event of any proceeding against MBEC
seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any statute, law, or
regulation not having been dismissed within one hundred twenty (120)
days after the commencement thereof;
(i) By the Center Company in the event of the appointment of a trustee,
receiver, or liquidator for MBEC or all or any substantial part of its
properties without the consent or acquiescence of MBEC, and such
appointment not being vacated or stayed within 90 days after the
appointment, or, if stayed, the appointment not having been vacated
within 90 days after the expiration of any such stay; or
(j) By a non-breaching Party in the event of a default of a material
obligation by any other Party under any Transaction Document (as
defined in the Contribution Agreement), which default remains uncured
for a period of thirty (30) days after written notice of such default,
provided it is possible to cure such default within thirty (30) days.
Solely for the purposes of a termination for cause pursuant to this
Section, "material" shall mean an economic impact exceeding $5,000,
disregarding any amount calculated as related legal fees or legal
costs.
4. Center Governance and Control. The overall control, policy development, and
quality assurance of and for the Center is vested in the Center Company. In
performance of its duties hereunder, MBEC shall provide monthly written reports
to Center Company's Board of Managers (the "Board") on the Center's development,
operations, and financial performance ("Monthly Reports") and, as needed, shall
supplement such reports with additional data and/or meetings with Board members.
5. Duties of MBEC. All compensation for services provided by MBEC to Center
Company pursuant to this Management Agreement is included in the Management Fee,
and MBEC shall have no right to any other payment, reimbursement or offset,
other than the Management Fee, for services provided or costs incurred pursuant
to this Management Agreement. Accordingly, MBEC shall have no right to bind
Center Company or incur any obligations or expenses on Center Company's behalf.
MBEC shall bear all costs and expenses incurred in the business, operation and
management of Center Company and the Center, with the exception of the office
lease for the Center, certain equipment maintenance (as paid by Target Center
immediately prior to the Purchase), and real estate and franchise taxes, which
costs shall be borne by Center Company. MBEC acknowledges and agrees that Center
Company has no employees, and that all employees providing services for Center
Company shall be employed by, and all employee salaries and benefits (if
applicable) shall be the obligation of, MBEC.
MBEC shall, subject to the oversight of the Board, have the general
responsibility and authority to implement all facets of total management
services to and for the Center, in accordance with Board policies, including,
but not limited to, the following:
(a) Strategic Planning. MBEC shall assist the Board in identifying, assessing,
and reviewing annual and long-range strategies, goals, and objectives for
the Center and shall implement approved plans.
(b) Budgets, Forecasts, and Approved Expenditures. MBEC shall develop
annual forecasts and recommended annual capital and operating budgets
for the Center, inclusive of items of revenues and expense customarily
associated with operations of this type ("Budgets"), and shall present
these to the Board for review and approval. Thereafter, MBEC shall have
responsibility for implementing approved Budgets and for measuring and
assessing the Center's performance against same in the Monthly Reports.
(c) Policies and Procedures. MBEC shall assist the Board in developing
policies and procedures consistent with the Center's quality assurance
standards and with requirements, if any, of licensing and other
regulatory groups, third party payors, and accreditation bodies which
may have authority or influence on delivery of refractive laser patient
care. MBEC shall have responsibility for implementation and
administration of policies and procedures approved by the Board, in
accordance with all applicable regulation.
(d) Licenses and Permits. MBEC shall apply for, renew, and exercise best
efforts to obtain and maintain any and all licenses, certifications,
and permits as are required for the operation of the Center and payment
for services provided therein.
(e) Accreditation. MBEC shall exercise best efforts to assure that the
Center's policies, procedures, and practices meet standards of any
groups from which the Center may seek accreditation. MBEC shall
coordinate timely preparation of applications for and completion of
surveys related to any such accreditation.
(f) Insurance and Risk Management. MBEC shall evaluate and obtain insurance
policies pertinent to property, casualty, professional liability, and
such other risks as are encountered in operations of the Center's type.
MBEC shall pay for accepted policies when due, maintain such policies
in full force and effect, and shall coordinate steps to assure any
claims are processed and/or defended appropriately.
(g) Participation Agreements and Third Party Contracting. MBEC shall assure
all required forms, applications, and fees are conveyed timely by the
Center to continue its participation in any appropriate third party
payment programs approved by the Board. Additionally, MBEC shall
identify and negotiate appropriate managed care contracts on behalf of
the Center consistent with approved policies.
(h) Professional Staff. MBEC shall coordinate the process of assuring that
application and credentialing processes are completed for appropriately
licensed clinical professionals seeking staff membership at the Center.
MBEC further shall coordinate documentation of such individuals'
training and continuing education related to refractive laser
procedures.
(i) Employee Matters. MBEC shall provide its employees to Center Company in
accordance with Board instructions, current operational needs, and
applicable regulations.
(j) Billing and Collections. MBEC shall identify systems and procedures for
the timely billing and collection of patient charges and/or facility
fees, as applicable, associated with the Center's services. MBEC shall
cause Board-approved billing and collections systems to be implemented.
(k) Banking and Financial Records. MBEC shall assure segregated bank accounts
are maintained with a financial institution selected by Center Company and
Prime, whose authorized signatory shall be determined by the Board, for
deposit of Center Company funds. All cash flow and funds of Center Company
received by, or in the possession of, MBEC, shall be promptly deposited by
MBEC in such accounts. MBEC shall maintain books of records and accounts
for Center Company in conformance with generally accepted accounting
principles, consistently applied. MBEC shall submit monthly financial
statements to the Board by the 10th day of the following month and will be
responsible for the timely preparation of the annual reports by January 31
of the following year. Neither MBEC nor any of its officers, directors, or
employees shall have any signatory authority over any bank account or other
financial account of the Center or the Center Company, except to disburse
the Management Fee pursuant to an accepted (or deemed accepted) Fee Report.
MBEC shall have no right of offset with respect to any Center Company funds
or Center funds.
(l) Procurement. MBEC shall negotiate arrangements for the cost-effective
purchasing of equipment and supplies necessary to carry out the
Center's operations in conformance with its quality assurance standards
and those of applicable regulatory and accreditation bodies, and MBEC
shall provide all necessary equipment and supplies.
(m) Marketing. Upon request of the Board, MBEC shall recommend and/or
evaluate feasibility of potential promotional programs for Center
services and implement any such Board-approved programs. The foregoing
notwithstanding, MBEC shall continue to provide to Center Company, at a
minimum, the same amount and quality of marketing services, materials
and programs as MBEC provided to Target Center immediately prior to the
Purchase; provided this shall not require MBEC to increase its
marketing efforts to accommodate increases in the general population of
the Austin metropolitan area that occur after the Effective Date.
(n) Utilization Review and Outcomes Assessment. MBEC shall coordinate the
formation and activities of such clinical review groups as the Board
shall determine are required to help assure services provided at the
Center are medically appropriate and rendered in a fashion associated
with sound clinical practice and outcomes.
6. Standards of Performance. At all times when performing its duties hereunder,
MBEC shall act in good faith, promptly, with due diligence, professionally, and
in a manner which will ensure that the Center is operated to provide a high
standard of health care on a fiscally prudent basis. Such performance shall
conform to accepted business practice within the health care industry generally
in Texas and to standards prescribed by entities accrediting facilities
providing treatments such as those of the Center. MBEC shall provide the
services required under this Agreement in a manner consistent with the levels of
service and standards of quality provided to Target Center by MBEC for all
periods prior to the date of this Agreement (subject to appropriate adjustment
for any growth of Center Company or increase in patient volume at the Center
during the term of this Management Agreement). MBEC shall refrain from entering
into any arrangement on behalf of the Center with any party related to MBEC,
unless such arrangement is made with the prior knowledge and written approval of
the Board.
7. Management Fees.
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(a) Overall Fee. In consideration for its services hereunder, MBEC shall
receive a fee ("Management Fee"), payable on a calendar quarterly
basis, equal to five percent (5%) of net collections annually. As used
herein, "net collections" shall mean all facility fees actually
collected by or for Center Company for procedures performed at the
Center during the applicable calendar quarter, less all contractual
allowances and discounts.
(b) Fee Reports; Payment. On or before each January 15, April 15, July 15 and
October 15, during the term of this Agreement, MBEC shall deliver to the
Board a report (including reasonable details and supporting documentation)
(the "Fee Report") calculating net collections and the Management Fee due
for the immediately preceding calendar quarter. Center Company shall have
fifteen (15) days from receipt of the Fee Report to accept the Fee Report
or to object in writing to any item contained in the Fee Report. MBEC
agrees to cooperate fully and promptly with requests from the Board for
clarification or additional supporting documentation related to a Fee
Report or the contents thereof. MBEC acknowledges and agrees that it shall
require a majority of Prime's designees to the Board to accept or object in
writing to a Fee Report for purposes of this Agreement. If Center Company
neither accepts the Fee Report nor objects in writing to the Fee Report
within fifteen (15) days of its receipt, the Fee Report shall be deemed to
be accepted. Upon the acceptance (or deemed acceptance) of the Fee Report
by the Board, MBEC shall be authorized to transfer to itself the Management
Fee then due.
8. Audit by Center Company. Center Company and Prime shall have the right to
audit and inspect all of the records of Target Center and the records of MBEC as
it relates to MBEC's services and Management Fees hereunder and as it relates to
patient volumes and demographics for purposes of determining compliance with the
Contribution Agreement, and shall not extend to any other general financial
records of MBEC. MBEC shall cooperate and provide access, and shall cause Target
Center to cooperate and provide access, to its relevant books and records in
connection with the exercise of such right. In the event of an exercise of a
Party's audit rights under this Section in connection with an objection to the
Fee Report or the Management Fee, MBEC shall cause a report to be prepared by an
independent certified public accountant selected by Center Company and approved
by Prime, said report to be prepared for and addressed to the Center Company and
Prime, in a form reasonably acceptable to Center Company and Prime,
substantiating MBEC's calculation of net collections and the Management Fee. The
auditing party must give at least ten (10) days prior written notice to MBEC of
its intent to exercise its auditing rights. Unless otherwise agreed by the
Parties involved, such audit shall be conducted during normal business hours at
the offices of the Party being audited.
Any overpayments by Center Company shall be credited, together with
interest accrued thereon at the rate of eighteen percent (18%) per annum from
the date paid until the date actually due, toward subsequent payment obligations
of Center Company.
The auditing Party shall bear all costs and expenses of the audit
unless the audit reveals that any Management Fee due hereunder was overpaid by
more than five percent (5%), in which case the auditing Party will promptly be
reimbursed for all reasonable out-of-pocket costs and expenses incurred by it in
connection with such audit.
9. Access to Center; Facility Fees. Center Company agrees to provide MBEC with
access, on a non-exclusive basis, to the Center for use in the examination,
counseling and performance of Refractive Surgery (as defined in the Contribution
Agreement). MBEC shall be responsible for reserving such access with Center
Company at least five (5) business days in advance. Center Company may, at its
sole discretion, provide access to the Center to other physicians for the
performance of Refractive Surgery, subject to the approval by MBEC, in its
reasonable discretion, of the credentials of such physicians. MBEC agrees to pay
Center Company a facility fee of $720 per Refractive Surgery procedure, and an
exam and testing fee of $50 per Refractive Surgery procedure, both, payable
monthly, during the Term of this Agreement. In the event that global patient
charges for Refractive Surgery services are increased or reduced (provided the
global patient charges are not reduced below $1,200), the facility fee shall
automatically be adjusted so that the facility fee shall remain at 40% of the
global patient charge; provided that in no event shall the facility fee be
reduced below $600, without the written consent of at least 60% of the Board. In
the event that global patient charges for Refractive Surgery services are
reduced (in accordance with the immediately preceding sentence) below $1,200,
the facility fee shall automatically be adjusted so that the facility fee shall
be 50% of the global patient charge. The parties acknowledge and agree that as
of the Effective Date, the global patient charges charged by MBEC are $1,895 per
Refractive Surgery procedure.
10. Indemnifications; Materiality. Each Party hereby agrees to indemnify and
hold the other Party harmless against all claims, liabilities, expenses, and
losses of any kind, including reasonable attorney fees, asserted against the
other Party arising from performance of its obligations hereunder, except if due
to the willful or negligent acts of the other Party made in bad faith or in
express breach of any provision hereunder. In addition to, and in no way
limiting, the foregoing indemnity obligations, MBEC shall indemnify and hold
harmless Center Company and the Center against all claims, liabilities,
expenses, and losses of any kind, including reasonable attorney fees, asserted
by or on behalf of any employee, former employee, agent or independent
contractor of MBEC, or their estate. Notwithstanding the foregoing, this Section
10 shall not be construed to contradict the indemnification provisions of the
Contribution Agreement. Notwithstanding anything contained herein, the
indemnification provisions of this Section 10 shall be ineffectual and shall not
permit or require indemnification for all, or any, losses, costs, liabilities,
claims or expenses arising, directly or indirectly, from any action or omission
permitting or requiring indemnification under the Contribution Agreement; and in
no event may any indemnity be allowed under this Agreement for amounts paid or
payable pursuant to the indemnification provisions of the Contribution
Agreement. For purposes of this Agreement, whenever there are references to
"material" or "materially," such terms shall be deemed to mean an economic
impact exceeding $5,000 with respect to the fact or matter being described.
11. Notices. All notices required hereunder shall be deemed given properly when
made in writing and delivered by U.S. Postal Service or courier, or by
postage prepaid, as set forth below or as the Parties hereafter may
designate in accordance with this Paragraph.
(a) As to the Center Company:
Prime MBC, L.L.C.
0000 Xxxxxxx xx Xxxxx Xxx., Xxxxx X-000
Xxxxxx, Xxxxx 00000
Attention: Chairman
(b) As to MBEC:
Xxxx Berkeley Eye Center, P.A.
0000 Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
12. Assignment and Succession. This Management Agreement may not be assigned by
MBEC to any affiliate thereof or to any other entity without the prior
written consent of the Center Company.
13. Waiver. No express or implied consent or waiver by either Party to any
breach or default of the other Party with respect to this Management
Agreement shall be deemed a consent or waiver to or of any other breach or
default hereunder.
14. Severability. If any provision of this Management Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Management Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
15. Governing Laws. This Management Agreement and the obligations of the
Parties hereunder shall be interpreted, construed, and enforced in
accordance with the laws of the State of Texas.
16. Arbitration. Any controversy between the parties regarding this Agreement
and any claims arising out of this Agreement or its breach shall be submitted to
arbitration by either party. The arbitration proceedings shall be conducted by a
single arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. The arbitration shall be conducted in Dallas, Texas and
the arbitrator shall have the right to award actual damages and attorney fees
and costs, but shall not have the right to award punitive, exemplary or
consequential damages against either party.
17. Entire Agreement and Amendment. This Management Agreement contains the
entire agreement between the Parties. No variations, modifications, or
changes shall be binding upon either Party unless set forth in a document
duly executed by the Parties.
[Signature page follows]
S-1
SIGNATURE PAGE
TO
REFRACTIVE LASER CENTER
MANAGEMENT AGREEMENT
This Management Agreement accepted by signatures and as of the dates
set forth below.
PRIME MBC, L.L.C.
By: __________________________________
Printed Name: _________________________
Title _________________________________
XXXX BERKELEY EYE CENTER, P. A.
By: __________________________________
Printed Name: _________________________
Title _________________________________
