EXHIBIT 10.5
MANAGEMENT SERVICES AGREEMENT
This Agreement is entered into as of the 12th day of December, 2001, by
and between THE HEART HOSPITAL OF MILWAUKEE, LLC, a Delaware limited liability
company ("Owner") and MILWAUKEE HOSPITAL MANAGEMENT, INC., a North Carolina
corporation ("MHMI"), both parties hereinafter collectively referred to as the
"Parties."
RECITALS:
WHEREAS, Owner desires to obtain the Contract Management Services
(defined below) of MHMI to manage its general acute care hospital specializing
in the diagnosis and treatment of cardiovascular disease and cardiovascular and
vascular surgery to be located in the greater Milwaukee, Wisconsin area (the
"Hospital");
WHEREAS, affiliates of MHMI, including MHMI's sole shareholder MedCath
Incorporated ("MedCath"), have a substantial amount of experience and expertise
in developing and operating hospitals similar to the Hospital as a result of
their development and operation of heart hospitals throughout the United States;
WHEREAS, Owner and MHMI mutually desire that such Contract Management
Services be made available to Owner.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Parties agree as follows:
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DEFINITIONS
1.1 ACT.
The term "Act" shall mean the Delaware Limited Liability Company Act,
as in effect in Delaware and set forth at 6 Del. C.ss.18-101 through 18-1109 (or
any corresponding provisions of succeeding law).
1.2 AGREEMENT.
The term "Agreement" shall mean this Management Services Agreement and
any amendment thereto as may be from time to time adopted in writing as
hereinafter provided.
1.3 AT OWNER'S EXPENSE.
The term "At Owner's Expense" shall mean an expense incurred by MHMI on
behalf of Owner either pursuant to an approved budget or as otherwise authorized
herein.
1.4 BOARD OF DIRECTORS.
The term "Board of Directors" means and shall refer to the Board of
Directors designated pursuant to the Operating Agreement of Owner (the
"Operating Agreement").
1.5 CONTRACT MANAGEMENT SERVICES.
The term "Contract Management Services" shall mean the services which
are authorized to be furnished by MHMI under this Agreement. The term "Contract
Management Services" shall not mean or be construed to include physician
services. It is hereby acknowledged, however, that Contract Management Services
shall be provided to Owner hereunder by MHMI and its Affiliates (such terms and
other capitalized terms not defined herein shall have the same meaning as set
forth in the Operating Agreement).
1.6 EQUIPMENT.
The term "Equipment" shall mean the appropriate equipment and supplies
acquired in connection with the development and operation of the Hospital.
1.7 GAAP.
The term "GAAP" or "Generally Accepted Accounting Principles" shall
mean the accounting and financial reporting principles as promulgated from time
to time by the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board.
1.8 HOSPITAL POLICIES.
The term "Hospital Policies" shall mean and include the Operating
Agreement, the written policies of Owner and other reasonable policies and
procedures of the Hospital, all as are from time to time adopted, revised,
authorized or approved by the Board of Directors and communicated in writing by
Owner to MHMI.
1.9 MEDCATH.
The term "MedCath" shall mean MedCath Incorporated, the sole
shareholder of MHMI.
1.10 MEMBER.
The term "Member" shall mean any member of The Heart Hospital of
Milwaukee, LLC, a Delaware limited liability company.
1.11 OWNER.
The term "Owner" shall mean The Heart Hospital of Milwaukee, LLC, a
Delaware limited liability company.
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1.12 PERSONNEL.
The term "Personnel" shall mean all persons (including supervisors,
nurses, technicians, support personnel and other individuals) hired pursuant to
this Agreement by MHMI as employees of Owner to furnish services to Owner, each
of which persons must hold such currently valid licenses, certifications and/or
registrations as may be required by local, State or federal laws or authorities
(including the Medicare and Medicaid programs) for the operation of the
Hospital. Except as provided herein, all Personnel shall be on the payroll of
Hospital and Hospital shall bear all salary and employee benefits expenses for
such personnel. The term "Employee Benefits" shall include (as applicable) the
employer's contribution to F.I.C.A., unemployment compensation and other
employment taxes, all bonuses, pension or profit sharing plan contributions,
worker's compensation, group life, accident and health insurance premiums,
disability and other benefits when applicable.
1.13 STATE.
The term "State" shall mean the State of Wisconsin.
1.14 TERM.
The term "Term" shall mean the contract period provided for under this
Agreement.
II
APPOINTMENT AND AUTHORITY
2.1 APPOINTMENT OF MHMI.
Owner hereby retains MHMI and MHMI hereby accepts such retention to
provide Contract Management Services.
2.2 AUTHORITY OF MHMI.
The Board of Directors hereby delegates to MHMI the authority to manage
the Hospital as set forth below, subject, however, in all cases to: (i) the
authority and approval of the Board of Directors as set forth in the Operating
Agreement, which provides that the Board of Directors shall be responsible for
making all Material Decisions and approving all Material Agreements (as defined
in the Operating Agreement); (ii) such policies and procedures as may be adopted
by the Board of Directors from time to time; and (iii) such power and authority
expressly required to be retained by the Board of Directors or Owner pursuant to
applicable law, including, without limitation, requirements of licensure,
conditions of participation in third party payor programs, and certification and
accreditation standards.
Subject to the terms and conditions of this Agreement, MHMI shall have
the exclusive right and commensurate authority, express or implied, to provide
Contract Management Services to Owner, which shall also include, subject to the
terms and conditions of this Agreement and the Operating Agreement, all services
and actions which MHMI determines to be reasonably necessary or appropriate for
the development and operation of the Hospital.
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The Parties acknowledge and agree that individual physicians who treat patients
at the Hospital (the "Physicians"), shall have complete freedom and control over
the provision of all professional medical services and the charges for their
services, subject only to the Medical Staff Bylaws and Rules and Regulations of
the Hospital. The Parties expressly agree and acknowledge that: (i) performance
of this Agreement shall not require or permit MHMI to become engaged in the
practice of medicine, nursing or other medical services whatsoever; (ii) this
Agreement shall not interfere with or inhibit the private physician-patient
relationship between the Physicians and their patients; and (iii) this Agreement
shall not require nor permit any illegal or unethical division of Physicians'
fees.
Subject in all cases to the foregoing and to the other terms and
conditions of this Agreement, MHMI shall have the right and the power, if, as,
and when it, from time to time, deems necessary or appropriate on behalf of
Owner and the Hospital:
(a) To negotiate and execute on behalf of Owner all
documents, instruments and agreements reasonably necessary or
appropriate to lease or acquire for fair market value, as approved by
both Members, the real property on which the Hospital will be located,
and to borrow funds to finance such acquisition and/or construction (it
being acknowledged that the Hospital will consist of a newly
constructed building);
(b) To prepare a budget for the development of the
Hospital and thereafter, annual operating budgets;
(c) To acquire in the name of Owner the Equipment, as
approved by the Board of Directors or as further described at Section
3.4 below, and enter into loans or other financing arrangements
therefor;
(d) To handle the negotiation and execution of all such
other agreements regarding the purchase of goods or services for the
Hospital;
(e) To establish procedures for quality assurance, peer
review and granting privileges to physicians with other specialties at
the Hospital, subject to the terms of the Hospital and Medical Staff
Bylaws approved by the Board of Directors and adopted for the Hospital;
(f) To expend all or portions of Owner's capital and
income in furtherance of or relating to Owner's business and purposes
in accordance with the budget established for the Hospital and other
reasonable cash management guidelines reasonably established by the
Board of Directors in accordance with the terms of the Operating
Agreement, including, but not limited to, payment of all ongoing
operational expenses, payment of commissions, organization expenses,
professional fees, rental fees, and operating and licensing fees and
development fees, and to invest in short-term debt obligations
(including, but not limited to, obligations of federal and state
governments and their agencies, commercial paper, and certificates of
deposit of commercial banks, or savings banks or savings and loan
associations) such of Owner's funds as are temporarily not required for
the development or operation of the Hospital and the payment of Owner
obligations;
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(g) To employ or retain on such terms and for such
compensation as MHMI may reasonably determine, such persons, firms, or
corporations as MHMI may deem advisable, including without limitation
qualified medical and other employees necessary or appropriate to
operate the Hospital, attorneys, accountants, financial and technical
consultants, supervisory managing agents, insurance brokers, brokers
and loan brokers, appraisers, architects and engineers, who may also
provide such services to MHMI, provided that the selection of the
President of the Hospital shall be a Material Decision (as defined in
the Operating Agreement) to be made by the Board of Directors;
(h) To execute leases, deeds, contracts, rental
agreements, construction contracts, sales agreements, and management
contracts;
(i) To exercise all rights, powers, and privileges of
Owner as lessee with respect to the Hospital or rights held by Owner;
(j) To consent to the modification, renewal, or extension
of any obligations to Owner of any Person or of any agreement to which
Owner is a party or of which it is a beneficiary;
(k) To execute in furtherance of any or all of the
purposes of Owner, any deed, lease, deed of trust, security interest,
mortgage, promissory note, xxxx of sale, assignment, contract, or other
instrument or to encumber in whole or in part the Equipment or the
Hospital or other real or personal property of Owner for the purpose
and reasons approved by the Board of Directors;
(l) To prepay in whole or in part, refinance, recast,
increase, modify, or extend any security interest, deed of trust, or
mortgage affecting the Hospital and in connection therewith to execute
any extensions or renewals thereof on the Hospital and to grant
security interests in any of the Equipment or the Hospital;
(m) To adjust, compromise, settle, or refer to
arbitration any claim against or in favor of Owner, and to institute,
prosecute, and defend any actions or proceedings relating to Owner, its
business, and properties provided, however, that MHMI will consult with
the Board of Directors regarding such claims;
(n) To acquire and enter into any contract of insurance
which MHMI deems necessary or appropriate for the protection of Owner
and MHMI, for the conservation of Owner or its assets, or for any
purpose beneficial to Owner; however, neither MHMI nor its Affiliates
shall be compensated for providing insurance brokerage services
relating to obtaining such insurance;
(o) To prepare or cause to be prepared reports,
statements, and other relevant information for distribution to the
Members, including annual reports;
(p) To open accounts and deposit and maintain funds in
the name of Owner in banks or savings and loan associations; provided,
however, that Owner's funds shall not be commingled with the funds of
any other Person;
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(q) To cause Owner to make or revoke any of the elections
referred to in Section 754 of the Internal Revenue Code of 1986 as
amended or any similar provisions enacted in lieu thereof;
(r) To make all decisions related to generally accepted
principles of accounting to be applied on a consistent basis and
federal income tax elections;
(s) To possess and exercise, subject to the restrictions
contained in this Agreement, any and all of the rights, powers and
privileges of a manager under the Act;
(t) To modify or otherwise improve the Hospital, subject
to the restrictions contained in this Agreement or in the Operating
Agreement;
(u) To manage, direct, and guide the operation of the
Hospital, including all necessary acts relating thereto, other than
medical or clinical matters which shall be under the direction of the
Medical Director (as defined in the Operating Agreement) and other
agreed upon qualified medical personnel;
(v) To establish minimum insurance requirements for all
physicians practicing at the Hospital;
(w) To file and publish all certificates, statements, or
other instruments required by law for the formation and operation of
the Company as a limited liability company in all appropriate
jurisdictions;
(x) To cause Owner to obtain and keep in force during the
term hereof fire and extended coverage and public liability and
professional liability insurance with such issuers and in such amounts
as MHMI shall deem advisable, but in amounts not less (and deductible
amounts not greater) than those customarily maintained with respect to
the business equipment and property comparable to Owner's;
(y) To deliver to the Secretary of State of Delaware such
filings as required in accordance with the Act and make any similar
filings required under Wisconsin law;
(z) To cause tax returns (income tax, sales tax, etc.)
for Owner to be prepared, at Owner expense, and timely filed with the
appropriate authorities. As soon as is reasonably practicable, and in
any event on or before the expiration of 75 days following the end of
each Fiscal Year, each Member (as defined in the Operating Agreement)
shall be furnished with a statement to be used in the preparation of
the Member's tax returns, showing the amounts of any Profits or Losses
allocated to the Member, and the amount of any distributions made to
the Member, pursuant to this Agreement, along with a reconciliation of
the annual report with information furnished to Members for tax
purposes;
(aa) To open and maintain, on behalf of Owner, a bank
account or accounts in a federally insured bank or savings institution
as it shall determine in which all monies received by or on behalf of
Owner shall be deposited. All withdrawals from such accounts shall be
made upon the signature of such Person or Persons as MHMI may
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from time to time designate. Any funds of Owner which MHMI may
determine are not currently required for the conduct of Owner's
business may be deposited with a federally insured bank or savings
institution or invested in short-term debt obligations (including
obligations of federal or state governments and their agencies,
commercial paper, certificates of deposit of commercial banks, savings
banks or savings and loan associations) as shall be determined by MHMI
in its sole discretion;
(bb) To execute, acknowledge, and deliver any and all
documents or instruments in connection with any or all of the
foregoing.
2.3 RESERVED POWERS OF OWNER.
Subject to the terms of this Agreement, Owner reserves the right to
direct that MHMI operate the Hospital in accordance with: (i) the terms and
conditions of the Operating Agreement; (ii) such policies and procedures as may
be adopted by the Board of Directors from time to time; and (iii) such power and
authority required to be retained by the Board of Directors pursuant to
applicable law, including, without limitation, requirements of licenses,
condition of participation in third party payor programs, and certification and
accreditation standards. At any time during the term of this Agreement, Owner
may change its policies, subject to the terms of its Operating Agreement.
2.4 RELIANCE ON MHMI'S AUTHORITY.
Any party dealing with or entering into any agreement with Owner may
rely on MHMI's execution of any such agreement without further inquiry, and such
signature by MHMI shall be binding upon the Owner hereunder.
III
COVENANTS OF MHMI
MHMI makes the following covenants with respect to this Agreement, the
performance of which shall be subject to the authority and approval of the Board
of Directors as set forth in the Operating Agreement:
3.1 DEVELOPMENT OF HOSPITAL.
MHMI shall propose a plan for the development of the Hospital which
sets forth a timeline for the planning, construction, licensing, accreditation
and operation of the Hospital (the "Development Plan") for approval by the Board
of Directors. The Development Plan shall be consistent with the Development
Budget or other budget approved by the members or directors of the Owner
pursuant to the Operating Agreement. Once approved by the Board of Directors,
MHMI shall use commercially reasonable best efforts to cause the Hospital to be
constructed and become operational in accordance with the Development Plan,
subject to the obligation of the Hospital to approve reasonable amendments to
the Development Plan as plans for the Hospital are finalized and changes to such
plans are thereafter made by the Owner.
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3.2 PERFORMANCE OF CONTRACT MANAGEMENT SERVICES.
During the term of this Agreement, MHMI shall perform necessary
Contract Management Services for Hospital at all times and in all places as
required pursuant to this Agreement.
3.3 SELECTION, RETENTION, SUPERVISION, TRAINING AND SCHEDULING OF
PERSONNEL.
Except as otherwise provided herein and except for certain senior
management personnel of the Hospital who shall be hired by and be employees of
MedCath and be assigned to the Hospital by MedCath, MHMI or MedCath shall hire
for Owner all Personnel who may be required for the proper operation of the
Hospital and shall have responsibility for the selection, retention,
supervision, training and termination of such Personnel. MHMI shall cause
appropriate Personnel to be scheduled and available as required to meet the
reasonable business needs of Owner in carrying out the Hospital's business.
3.4 SELECTION, PROVISION AND MAINTENANCE OF FACILITIES AND EQUIPMENT.
MHMI shall recommend for lease or purchase by Owner such facilities and
Equipment as may be required to meet the reasonable business needs of Owner in
carrying out the Hospital's business, including appropriate maintenance
contracts. MHMI shall periodically inspect and evaluate, or arrange therefor,
all such facilities and Equipment so that they are being maintained in a safe
and efficient manner and shall assure that all facilities and Equipment are in
good repair, ordinary wear and tear excepted. MHMI shall also maintain a current
level of knowledge with respect to new and innovative technology in the field of
the diagnosis and treatment of cardiac disease and vascular and cardiovascular
surgery and shall make recommendations to Owner with respect thereto as
appropriate.
3.5 SUPPLIES AND SUPPORT SERVICES.
MHMI shall assure the availability of all supplies and support services
that may be reasonably required for the proper and efficient operation of the
Hospital. MHMI may purchase goods and services for the Owner from Members of the
Owner or their Affiliates as long as they are of substantially the same quality
and price as could be obtained from an unrelated third party. It is intended
that MHMI and its Affiliates shall have the first opportunity to provide
information and accounting services to be purchased by the Hospital.
3.6 QUALITY ASSURANCE.
MHMI shall use its commercially reasonable best efforts to assure that
the Hospital is operated in accordance with the standards established by the
Joint Commission on Accreditation of Healthcare Organizations ("JCAHO") and
shall make regular reports to the Board of Directors relative thereto. In order
to facilitate this covenant, MHMI shall prepare, update and maintain from time
to time a quality assurance plan in writing and shall submit it to Owner for
review and approval.
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3.7 BUSINESS MANAGEMENT POLICIES, PROCEDURES, RECORDS AND REPORTS.
MHMI shall arrange for the maintenance of such records and make or
arrange for the making of such reports as are reasonably necessary and
appropriate for the conduct of the Hospital. Such business records and reports
shall include those applicable to a system of transaction approvals, revenue and
statistical accounting (including revenue analysis by customer and customer
group) and accounts receivable, payrolls, purchasing and accounts payable, bank
accounts, lines of credit, cash receipts and disbursements, general ledger,
property records for plant and equipment, statistical records, budgeted expenses
by department, tax matters and other journals, ledgers and records generally
required to be kept in order to effectuate the financial record keeping and
reporting for a business of the size and complexity of the Hospital. MHMI shall
report to Owner monthly on the financial position and results of operations of
the Hospital, to include the amounts of costs and expenses paid to MHMI and its
Affiliates that are not included in the Development Fee paid to MHMI pursuant to
Section 5.2 or the Operating and Licensing Fee paid to MHMI pursuant to Section
5.3 of this Agreement. Such interim reports shall be on an accrual basis. MHMI
shall prepare or arrange for the preparation of all tax reports and other
filings and shall assure the timely and accurate filing thereof. MHMI shall
arrange for the timely completion of annual financial audits by an independent
certified public accountant. MHMI shall use the same audit firm as used by
MedCath. MHMI shall prepare and submit to the Board of Directors for
consideration and approval annual budgets and proposed capital expenditures
including proposed financing arrangements therefor in accordance with the terms
of the Operating Agreement. Subject to Section 3.7-1 below, in the event
exceptions to the approved budget are required, MHMI shall submit proposals
therefor to the Board of Directors.
3.7-1 EXPENDITURE APPROVAL.
Once a budget has been approved by the Board of Directors as set forth
in Section 3.7, MHMI shall have the authority to expend up to one hundred and
ten percent (110%) of any and all funds which are included in the budget and
sign all agreements related thereto, including reimbursement to MHMI and its
Affiliates for goods and services provided to the Owner. MHMI agrees to make
available for review by the Board of Directors on a monthly basis summaries of
Owner's financial information for the applicable month. MHMI shall have the
right to recast the budget by transferring all or part of the funds approved for
specific line items to another category or line item by an aggregate amount not
to exceed ten percent (10%) of the total budgeted funds. MHMI is further
authorized to make additional expenditures reasonably related to additional
revenues or increased patient or procedural volumes provided that in making such
additional expenditures the gross margin between Owner's net patient revenues
and operating expenses remains the same or greater than the gross margin between
net patient revenues and operating expenses in the most recent budget approved
by the Board of Directors. MHMI shall report to the Board of Directors from time
to time on variances between the Hospital's budget and actual operating results.
3.8 BOOKS AND RECORDS AVAILABLE.
MHMI shall perform the obligations as may be from time to time
specified for subcontractors in Social Security Act, Sec. 1861(v)(1)(I) and the
regulations promulgated in implementation thereof (initially codified at 42
C.F.R., Sec. 420.300, et seq.). MHMI further
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agrees that if this Agreement is determined to be an agreement with a provider
under which a physician or other entity assumes some or all of the costs of the
provider department pursuant to 42 C.F.R., Sec. 405.550(e), MHMI shall make its
books and records available to the provider and Medicare fiscal intermediary as
necessary to verify the nature and extent of the costs of the services furnished
by MHMI or its Affiliates pursuant to this Agreement.
In the event any request for MHMI's or a related subcontractor's books,
documents and records is made pursuant to Social Security Act, Sec.
1861(v)(1)(I), 42 C.F.R., Sec. 420.300, et seq., or 42 C.F.R., Sec. 405.550(e),
MHMI or any subcontractor related to MHMI shall promptly give notice of such
request to Owner and provide Owner with a copy of such request and, thereafter,
consult and cooperate with Owner concerning the proper response to such request.
Additionally, MHMI or any subcontractor related to MHMI shall provide Owner with
a copy of each book, document and record made available to one or more of the
persons and agencies above or shall identify each such book, document and record
to Owner and shall grant Owner access thereto for review and copying.
In addition, MHMI agrees to make available to Owner such information
and records as Owner may reasonably request to facilitate Owner's compliance
with the requirements of the Medicare Conditions of Participation and the
Medicaid State Plan and to facilitate Owner's substantiation of its reasonable
costs or other claim for reimbursement or payment in accordance with the
requirements applicable to Owner pursuant to the Medicare and Medicaid programs
including, without limitation, the requirements contained in 42 C.F.R., Subpart
D of Part 405; 42 C.F.R., Subpart C of Part 420 and 42 C.F.R., Subpart B of Part
455.
3.9 MEDICAL RECORDS AND REPORTS.
MHMI shall arrange for an appropriate system for the maintenance of
medical records, including form and content reasonably acceptable to Owner, and
shall ensure that necessary and appropriate medical reports arising from
Hospital services are promptly and accurately prepared, issued and filed in
accordance with Owner's reasonable requirements. MHMI shall not, however, be
held responsible for any physician's failure to perform his or her record
keeping duties.
MHMI shall make commercially reasonable efforts, subject to Owner's
cooperation and approval, to implement Hospital policies that are consistent
with the Standards for Privacy of Individually Identifiable Health Information
(the "Privacy Standards") implementing the privacy requirements of the
Administrative Simplification subtitle of the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) set forth at 45 CFR Parts 160 and 164 on or
before the date that such Privacy Standards become applicable to Owner.
3.10 PRESIDENT.
MHMI (or MedCath) shall hire as its employee and designate a specific
individual to serve as President of the Hospital and shall, in the temporary
absence of such individual, assure the availability of one or more appropriately
skilled individuals to assume the duties of President. The President shall be
the individual to whom Owner will look for specific performance of the Contract
Management Services provided pursuant to this Agreement. The selection,
compensation, appointment, retention and replacement of the President shall be
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subject to the approval of the Board of Directors, not to be unreasonably
withheld. The base salary and benefits of the President will be reimbursed to
MHMI in addition to the fees to be paid to MHMI under Article V of this
Agreement. MHMI and the Board of Directors shall confer regarding severance pay
and/or benefits to be paid to the President and Owner shall reimburse MHMI for
such severance pay and benefits as are agreed to by the Board of Directors.
3.11 STATUS AS MEDICARE-CERTIFIED HOSPITAL.
MHMI shall use its commercially reasonable best efforts to assist the
Hospital in achieving and maintaining the status of a Medicare-certified
hospital.
3.12 OTHER LICENSES AND PERMITS.
MHMI shall use its commercially reasonable best efforts to obtain and
maintain in force all licenses and permits required for conduct of the business.
3.13 MHMI ORGANIZATIONAL REQUIREMENTS.
MHMI shall at all times during the term of this Agreement be and remain
legally organized and operated to provide Contract Management Services to the
Hospital in a manner consistent with all applicable State and federal laws.
3.14 INSURANCE.
3.14-1 FOR OWNER.
MHMI shall, upon approval of Owner and At Owner's Expense, obtain and
continue worker's compensation coverage for all of Owner's employees; employment
practices liability (if reasonably available), comprehensive general liability,
automobile liability and professional liability insurance with such coverages
sufficient to insure against the risks attendant to the Hospital in an amount
sufficient to meet the reasonable needs of the Owner. MHMI shall, At Owner's
Expense, obtain and continue coverage appropriate to insure Owner's property
from fire, flood, theft or other risks; business interruption insurance
coverage; director's and officer's liability; and employee honesty.
3.14-2 FOR MHMI.
MHMI shall, at its own expense, obtain worker's compensation coverage
for its other employees and comprehensive general liability coverage equivalent
to that provided herein for Owner.
3.14-3 INSURANCE COMPANIES AND POLICIES.
All insurance coverage specified herein shall be placed with companies
acceptable to Owner. If the liability policies are of a claims made form, MHMI
shall either renew the policies with the same company or shall purchase an
equivalent reporting endorsement at each anniversary of the effective date of a
claims made policy relating to the policy year then ended. Such insurance may be
included in master insurance policies obtained by Affiliates of MHMI for
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its other hospitals as long as such policies comply with the terms of this
Agreement and are on terms and conditions which are substantially as favorable
as could otherwise be obtained by Owner. In connection with MHMI's position as
Manager of Owner, MHMI and its Affiliates shall be listed as additional insureds
on insurance policies obtained by and for Owner.
3.14-4 EVIDENCE OF INSURANCE.
MHMI shall furnish Owner with copies of each insurance policy specified
herein and all amendments, endorsements and renewals to each policy, so long as
this Agreement is in effect. In addition, MHMI shall cause to be issued annually
to Owner a Certificate or Certificates of Insurance reflecting such coverages
with the insurers agreeing to provide ten (10) days, notice to Owner of the
cancellation or modification of the policies.
3.15 BILLING AND COLLECTION OF ACCOUNTS.
MHMI shall, At Owner's Expense, provide or arrange for the provision of
a billing and collections service for the Hospital and shall diligently attempt
to collect all amounts due including the referral of overdue accounts to outside
collection agencies and/or attorneys as appropriate.
3.16 EQUAL EMPLOYMENT OPPORTUNITY.
Without limitation of any provision herein set forth, MHMI expressly
agrees to abide by applicable federal and/or State equal employment opportunity
statutes, rules and regulations.
3.17 PROFESSIONAL SERVICES.
MHMI shall, At Owner's Expense, retain and make appropriate use of
attorneys, accountants and other advisors and consultants on behalf of Owner.
3.18 ADMINISTRATIVE MANAGEMENT.
MHMI shall apply its administrative knowledge and experience to
management of Hospital in order to train nurses, technicians, monitor
operations, evaluate technical competence of staff, educate the public and
assist the marketing efforts of the Hospital by devoting time to outside
contacts with existing and potential clients and to preparation and presentation
of proposals.
3.19 MEDICAL STAFF AFFAIRS.
MHMI shall provide appropriate support and facilitate the organization
and functioning of a medical staff for the Hospital as contemplated to be
authorized in the Medical Staff Bylaws for the Hospital, including appropriate
administrative and record keeping support.
3.20 COMPLIANCE PROGRAM.
MHMI shall, At Owner's Expense, prepare and assist Owner with the
implementation of a compliance program (the "Compliance Program") for the
Hospital that is consistent with and
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similar to compliance programs adopted by other hospitals affiliated with
MedCath. MHMI shall submit the Compliance Program to the Board of Directors for
approval, which approval shall not be unreasonably withheld or delayed.
IV
COVENANTS OF OWNER
Owner makes the following covenants with respect to this Agreement:
4.1 PAYMENT OF AUTHORIZED EXPENDITURES.
Owner shall, At Owner's Expense, provide financial resources for the
payment of expenditures and reimbursements authorized pursuant to this
Agreement. Owner shall reimburse MHMI or its Affiliates for expenses or goods
and services reasonably incurred by MHMI or its Affiliates for the benefit of
Owner where such expenses have been approved in advance by the Board of
Directors either in a budget or otherwise.
4.2 PAYMENT OF FEES TO MHMI.
Owner shall, At Owner's Expense, pay all fees due to MHMI pursuant to
this Agreement.
4.3 OWNER COOPERATION.
Owner shall exercise reasonable efforts to insure its cooperation with
MHMI in the performance of MHMI's duties and obligations hereunder. Owner shall
make decisions requested by MHMI in a reasonably timely manner.
V
FINANCIAL ARRANGEMENTS
Owner shall compensate MHMI for Contract Management Services of its
Hospital as set forth herein.
5.1 GENERAL.
Owner shall compensate MHMI for Contract Management Services through:
(i) the payment of the Development Fee as set forth in Section 5.2 hereinafter;
(ii) the payment of an Operating and Licensing Fee as set forth in Section 5.3
hereinafter; and (iii) reimbursement for costs and expenses incurred by MHMI on
behalf of Owner as set forth in Section 5.4 hereinafter.
5.2 DEVELOPMENT FEE.
Owner shall pay MHMI a fee of [***] ($[***]) annually in equal monthly
installments of [***] ($[***]), with each such installment payable in advance,
with the first such installment payable on the date hereof, for MHMI's services
for development of the Hospital (the "Development Fee"). The obligation to
[***] These portions of this exhibit have been omitted and filed separately with
the Commission pursuant to a request for confidential treatment.
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pay the Development Fee (including any monthly installment thereof not then due)
shall end at such time as Owner becomes obligated to pay the Operating and
Licensing Fee set forth below and MHMI shall cease to be entitled to payment of
monthly installments of the Development Fee at such time. If Owner becomes
obligated to pay the Operating and Licensing Fee after payment of an installment
on the Development Fee, but prior to the end of the applicable month for which
such installment was paid in advance, Owner shall be entitled to a credit
against the Operating and Licensing Fee equal to (a) the number of days
remaining in the applicable month divided by thirty (30), multiplied by (b)
$[***].
5.3 OPERATING AND LICENSING FEE.
Commencing as of the opening of the Hospital, Owner shall pay MHMI an
annual operating and licensing fee (the "Operating and Licensing Fee"), to be
paid monthly, equal to:
(a) [***] percent ([***]%) of annual net patient revenues
of the Hospital up to [***] ($[***]);
(b) [***] percent ([***]%) of annual net patient revenues
of the Hospital greater than [***] ($[***]) up to [***] ($[***]); and
(c) [***] percent ([***]%) of annual net patient revenues
of the Hospital greater than [***] ($[***]).
For the period from the Commencement Date to the first anniversary of the
Commencement Date, the maximum annual Operating and Licensing Fee payable to
MHMI under this Agreement is [***] ($[***]) (the "Maximum Fee"). For the period
from the first anniversary of the Commencement Date to the second anniversary of
the Commencement Date and annually thereafter, the Maximum Fee shall be
increased by a percentage equal to the percentage increase, if any, in the
Consumer Price Index ("CPI") during the previous twelve (12) month period
beginning and ending on the anniversary of the Commencement Date (or the closest
date for which CPI data is available). The CPI shall refer to the CPI entitled
"All Urban Consumers (CPI-U) - (1982-84=100) - U.S. City Average - Medical
Care", as promulgated by the Bureau of Labor Statistics of the United States
Department of Labor.
The Operating and Licensing Fee shall be paid within fifteen (15) days
following the end of each month and shall be determined on an accrual basis in
accordance with GAAP.
For purposes of this Section 5.3, the term "net patient revenues" means
gross amounts earned from patients, third-party payors and all other sources for
services rendered by the Hospital and other revenues of a nature that have
historically been or in the future become earned by the Hospital, less estimated
adjustments under reimbursement and contractual agreements and arrangements
including, but not limited to the Medicare Capital Cost recovery adjustment,
discounts, and other allowances deducted in arriving at net realizable amounts,
as determined on an accrual basis in accordance with GAAP. Retroactive
adjustments shall be accrued on an estimated basis in the period that the
related services are rendered and adjusted in future periods as final
settlements are determined in accordance with GAAP.
[***] These portions of this exhibit have been omitted and filed separately with
the Commission pursuant to a request for confidential treatment.
14
5.4 EXPENSES.
5.4-1 ORGANIZATION EXPENSES.
The parties specifically recognize that MHMI and its Affiliates have
incurred legal fees, filing fees, and other out-of-pocket costs for the benefit
of Owner, including costs connected with the preparation of applicable
agreements, securities law and health care law compliance documentation and
filings, fees and expenses of lobbyists, real estate acquisition matters (if
any) and formation and registration of Owner (collectively, the "Organization
Expenses"), and agree that MHMI shall be reimbursed fully for these amounts.
Because MHMI and its Affiliates are receiving some benefits from the legal
services provided under this Section 5.4-1 in connection with the preparation of
this Agreement and the Operating Agreement, the Right of First Refusal Agreement
and the Hospital Professional Services Agreement executed by the parties (or
their Affiliates) substantially contemporaneously with this Agreement
(collectively, the "Definitive Documents"), in addition to those benefits
received by Owner, the parties agree that MHMI shall be reimbursed by Owner for
seventy-five percent (75%) of the legal fees incurred in the preparation of the
Definitive Documents, not to exceed $50,000.
5.4-2 REIMBURSEMENT OF MHMI AND AFFILIATES.
In general, Owner's expenses shall be billed directly to and paid by
Owner. Owner shall reimburse MHMI and its Affiliates for (i) the Organization
Expenses; (ii) the actual costs to MHMI or its Affiliates of goods, services,
and materials used for and by Owner; and (iii) all reasonable travel and other
out-of-pocket expenses incurred by MHMI in the development and management of
Owner and its business. The reimbursement for expenses provided for in this
Section 5.4 shall be made to MHMI and its Affiliates regardless of whether any
distributions are made to the Members under Article VI and Article VII of the
Operating Agreement.
Goods and services may be purchased from MHMI or its Affiliates as long
as they are of a substantially the same quality and price as could be obtained
from an unrelated third party. It is intended that MHMI and its Affiliates shall
have the first opportunity to provide information and accounting and human
resource services to be purchased by Owner. Any such purchase of goods and
services by Owner from MHMI is further subject to the following:
(a) Reimbursement shall include the expenses for each
full-time equivalent, or a portion thereof, performing work directly on
behalf of or for the benefit of the Hospital even though such person
may be employed outside of the greater Milwaukee, Wisconsin area;
(b) The actual costs of the information system (hardware
and software, including installation and maintenance) incurred by MHMI
and its Affiliates for the direct benefit of Owner shall be reimbursed
by Owner.
5.4-3 ITEMS COVERED BY OPERATING AND LICENSING FEE AND DEVELOPMENT
FEE.
Other than for reimbursement for out-of-pocket travel costs and
expenses (airfare, lodging and other similar expenses), which shall be paid in
accordance with Section 5.4-2
15
above, MHMI agrees that the following costs and expenses of MHMI and its
Affiliates are compensated by Owner through the Operating and Licensing Fee or
the Development Fee, as applicable:
(a) The time of senior management of MedCath, which
includes the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, Senior Vice President of Development, the Division
Presidents, and the Vice President of Disease Management of MedCath;
(b) To the extent provided by personnel of MedCath
corporate headquarters, general oversight of the development of the
physical plant of the Hospital from conception to acquiring necessary
licenses, permits and approvals required to initiate operations;
(c) To the extent provided by employed personnel of
MedCath corporate headquarters as a general support resource service
made available to hospitals managed by MedCath or its Affiliates, and
generally consistent with the levels of support provided to other
hospitals managed by MedCath or its Affiliates, general access to and
support of: (i) the MedCath Corporate managed care support resources;
(ii) the MedCath Decision Support Group; (iii) the MedCath Corporate
Finance Department; (iv) the MedCath Corporate Information Services
Department (but not including installation of hardware and software);
(v) the MedCath Corporate Compliance and Risk Management programs; (vi)
the MedCath Corporate Human Resources Department Benefits
Administration, and (vii) MedCath equipment and medical supply
procurement expertise. It is intended that these resources will be made
available on a sporadic basis. The services of any MedCath personnel
specifically designated to provide services to the Hospital, whether on
a full-time or part-time basis, shall be reimbursed in accordance with
Section 5.4-2.
5.5 ANNUAL AUDIT OF OPERATING AND LICENSING FEE.
Owner, or any Member, at Owner's or the applicable Member's sole
expense, may obtain a special audit report from an independent certified public
accountant who is reasonably acceptable to MHMI as to the final determination of
the Operating and Licensing Fee for each fiscal year of Owner's Hospital and
such determination shall be binding on the parties. Upon receipt of such audit
report, the parties shall make a final cash settlement within ten (10) days of
the time that MHMI receives from Owner a copy thereof.
5.6 INDEMNITY BY MHMI.
To the extent Owner is not otherwise covered by insurance, MHMI agrees
to indemnify, defend and hold Owner, its members, officers, employees and
agents, harmless from and against any and all loss, claim, demand, cause of
action, penalty, liability, damage or deficiency, lawsuits, or other proceedings
resulting or arising (a) from any gross negligence or willful misconduct or
violation of law or of this Agreement by MHMI or its officers, directors,
employees or agents unless MHMI or its employees or agents were acting upon the
express instructions or directions of the Board of Directors, or (b) from the
nonfulfillment of any covenants or
16
agreements on the part of MHMI contained in this Agreement, and (c) any loss or
damage, reasonable attorney fees or other costs or expenses incident to (a) or
(b).
5.7 INDEMNITY BY OWNER.
To the extent MHMI is not otherwise covered by insurance, Owner agrees
to indemnify, defend and hold MHMI, its directors, officers, employees and
agents, harmless from and against any and all loss, claim, cause of action,
demand, penalty, liability, action, damage or deficiency, lawsuit or other
proceeding, resulting or arising from (a) acts or omission of Owner, its
members, officers, employees (unless due to the gross negligence or willful
misconduct of MHMI), (b) any liability or obligation of Owner, except those
which MHMI created in violation of this Agreement; (c) any nonfulfillment of
Owner of any of its covenants or agreements hereunder; (d) any violation of law
by Owner; and (e) any loss or damage, reasonable attorney's fees and other costs
and expenses incident to any of (a) through (d).
5.8 SURVIVAL OF INDEMNITY COVENANTS.
The indemnity covenants set forth in Sections 5.6 and 5.7 shall survive
the termination of this Agreement for any reason.
VI
TERM AND TERMINATION OF AGREEMENT
6.1 INITIAL.
The term of this Agreement shall begin upon the filing of the
Certificate of Formation in the office of the Secretary of State of Delaware and
continue until December 31, 2061, unless sooner terminated as provided herein;
provided, however, that the termination date may be extended for up to an
additional forty (40) years in five (5) year increments upon the mutual election
of MHMI and Owner.
6.2 TERMINATION.
This Agreement may be sooner terminated only on the first to occur of
the following:
6.2-1 TERMINATION BY AGREEMENT.
In the event Owner and MHMI shall mutually agree in writing, this
Agreement may be terminated on the terms and date stipulated therein.
6.2-2 TERMINATION BY MHMI.
This Agreement may be terminated by MHMI, in the event that Owner fails
to pay any amount due to MHMI within fifteen (15) days after notice in writing
of the unpaid amount.
17
6.2-3 TERMINATION BY OWNER.
Due to the substantial and long-term commitment of resources and
financial investment by MHMI and its Affiliates in the Hospital, the parties
hereto acknowledge and agree that Owner may not terminate this Agreement as a
result of any failure or default by MHMI under the terms of this Agreement,
except as specifically provided in this Section 6.2-3.
(a) Subject to (b) below, in the event that Owner (acting
through its Board of Directors without the participation of the
Directors appointed by MHMI) reasonably determines in good faith that
Good Cause (as defined below) exists or has arisen for the termination
of this Agreement, the Board of Directors shall give written notice to
MHMI setting forth in reasonable detail the basis for its determination
that Good Cause exists. If MHMI fails to cure such breach or failure
within sixty (60) days of notice of Good Cause, or if said breach or
failure cannot reasonably be cured within sixty (60) days, fails to
commence said cure within sixty (60) days, then this Agreement may be
terminated by Owner (acting through its Board of Directors without the
participation of the Directors appointed by MHMI); provided, however,
that in the event that the parties disagree with respect to the right
at such time of Owner to terminate this Agreement, MHMI may refer the
matter to binding arbitration in the manner set forth in Section 7.16
for a determination as to whether the right to terminate this Agreement
then exists and the termination of this Agreement shall not occur until
a final, non-appealable decision of the arbitrators establishing the
right of Owner to terminate this Agreement based upon then existing
facts and circumstances has been issued. Any termination of this
Agreement will be without prejudice to the rights, if any, of MHMI
under any other agreement including the Operating Agreement and will
not affect MHMI's rights as a Member and will not constitute a
withdrawal of MHMI as a Member.
For purposes of this Section 6.2-3(a), "Good Cause" shall mean
the existence or occurrence of any of the following:
(i) If MHMI is convicted of a felony as a result
of its operation of the Hospital or arising out of its
management of the Hospital that results in MHMI's exclusion
from participation in a State or federal health care program;
or
(ii) If MedCath Corporation ("MC"), MedCath
Holdings Inc. ("MHI"), MedCath or MHMI (x) shall file a
voluntary petition or answer in bankruptcy or seeking any
reorganization, liquidation or similar relief under any
present or future statute or law relating to bankruptcy or
insolvency, (y) a court of competent jurisdiction shall enter
an order, judgment, or decree approving a petition filed
against MC, MHI, MedCath or MHMI seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future
statute or law relating to bankruptcy or insolvency, or (z)
shall seek, consent to, or acquiesce in the appointment of any
trustee, receiver, conservator, or liquidator of MC, MHI,
MedCath or MHMI, or of all or any substantial part of its
properties (the term "acquiesce" as used herein, being deemed
to include but not to be limited to the failure to file a
petition or motion to vacate or discharge any order, judgment,
or decree providing for such appointment within the time
specified by law).
18
(c) Notwithstanding anything herein to the contrary, the
termination of this Agreement for any reason including without
limitation under (a) above, with or without cause, shall not become
effective unless and until the liability of MHMI and its Affiliates as
guarantors for any indebtedness of Owner is reduced by each lender or
lessor so that MHMI's and its Affiliates' aggregate percentage
guarantee of all indebtedness of Owner as compared with the percentage
guaranteed by all of the Members of Owner in the aggregate is equal in
proportion to the percentage Membership Interest in Owner held by MHMI,
as compared with the combined percentage Membership Interests held by
all of the Members of the Owner, and until all amounts loaned by MHMI
or its Affiliates to Owner are paid in full.
6.2-4 LEGISLATIVE OR ADMINISTRATIVE CHANGES.
If, as a result of any new law, rule or regulation, or as a result of a
change in the interpretation or enforcement of any existing law, rule or
regulation (the "Applicable Law"), health care counsel, who has not separately
represented Owner or its Members prior to the date of being retained to provide
such opinion, selected by MHMI, and reasonably agreed to by Owner, determines in
writing that it is reasonably likely that, as a result of this Agreement or the
performance of MHMI's responsibilities hereunder, the reimbursement which Owner
receives for its medical services will be materially and adversely affected as a
result of the Applicable Law, then the parties agree to attempt to negotiate in
good faith to amend the Agreement to avoid the material and adverse affects of
the Applicable Law while, at the same time, preserving as fully as possible the
material benefits of this Agreement to each of the parties hereto.
6.3 EFFECTS OF TERMINATION.
Upon termination of this Agreement as hereinabove provided, neither
party shall have any further obligation hereunder except for (a) obligations
accruing prior to the date of termination and (b) obligations, promises or
covenants contained herein which are expressly made to extend beyond the term of
this Agreement.
VII
MISCELLANEOUS
7.1 STATUS OF MHMI.
It is expressly acknowledged by the parties hereto that with respect to
the subject matter of this Agreement, MHMI is an "independent contractor" and
nothing in this Agreement is intended nor shall be construed to create an
employer/employee relationship, a joint venture relationship or a lease or
landlord/tenant relationship or to allow Owner to exercise control or direction
over the manner or method by which MHMI perform the contract services which are
the subject matter of this Agreement; provided, always, that the services to be
provided hereunder by MHMI shall be provided in a manner consistent with the
standards governing such services and the provisions of this Agreement. MHMI
understands and agrees that (a) employees of MHMI will not be treated as
employees of Owner for federal tax purposes; (b) Owner will not withhold on
behalf of MHMI pursuant to this Agreement any sums for income tax,
19
unemployment insurance, social security or any other withholding pursuant to any
law or requirement of any governmental body relating to MHMI or MHMI's personnel
or make available to MHMI any of the benefits afforded to employees of Owner;
(c) all of such payments, withholdings and benefits, if any, are the
responsibility of MHMI; and (d) MHMI will indemnify and hold Owner harmless from
any and all loss or liability arising with respect to such payments,
withholdings and benefits, if any. In the event the Internal Revenue Service or
any other governmental agency should question or challenge the independent
contractor status of MHMI, the parties hereto mutually agree that both MHMI and
Owner shall have the right to participate in any discussion or negotiation
occurring with such agency or agencies, irrespective of whom or by whom such
discussion or negotiation is initiated.
7.2 REPRESENTATIVES.
7.2-1 OWNER REPRESENTATIVE.
Except as may be herein more specifically provided, Owner shall act
with respect to all matters hereunder through the Board of Directors.
7.2-2 MHMI REPRESENTATIVE.
Except as may be herein more specifically provided, MHMI shall act with
respect to all matters hereunder through the president of MHMI or an authorized
designee.
7.3 NOTICES.
Any notice, demand or communication required, permitted or desired to
be given hereunder shall be deemed effectively given when personally delivered,
sent by overnight courier or mailed by prepaid certified mail, return receipt
requested, addressed as follows:
MHMI: Milwaukee Hospital Management, Inc.
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: President
With a copy to: Xxxxx & Xxx Xxxxx, PLLC
000 X. Xxxxx Xxxxxx, Xxxxx 00
Xxxxxxxxx, XX 00000-0000
Attn: Xxx X. Xxxxxxxx, Esq.
Owner: The Heart Hospital of Milwaukee, LLC
------------------------------------
------------------------------------
Attn: President
With a copy to:
------------------------------------
------------------------------------
------------------------------------
Attn:
-------------------------------
20
or to such other address and to the attention of such other person or officer as
either party may designate by written notice.
7.4 GOVERNING LAW.
This Agreement has been executed and delivered in and shall be
interpreted, construed and enforced pursuant to and in accordance with the laws
of the State of Delaware without regard to the conflict of laws provisions.
7.5 ASSIGNMENT.
No assignment of this Agreement or the rights and obligations hereunder
shall be valid without the specific written consent of both parties hereto,
except that MHMI shall be allowed to assign this Agreement to MedCath or its
wholly-owned subsidiaries or it may assign the revenue from this Agreement to
their lenders.
7.6 WAIVER OF BREACH.
The waiver by either party of a breach or violation of any provision of
this Agreement shall not operate as or be construed to be a waiver of any
subsequent breach of the same or other provision hereof.
7.7 ENFORCEMENT.
In the event that either party resorts to legal action to enforce the
terms and provisions of this Agreement, the successful party shall be entitled
to recover the costs of such action so incurred including, without limitation,
reasonable attorney's, fees.
7.8 GENDER AND NUMBER.
Whenever the context hereof requires, the gender of all words shall
include the masculine, feminine and neuter and the number of all words shall
include the singular and plural.
7.9 ADDITIONAL ASSURANCES.
The provisions of this Agreement shall be self-operative and shall not
require further agreement by the parties except as may be herein specifically
provided to the contrary; provided, however, at the request of Owner, MHMI shall
execute such additional instruments and take such additional acts as Owner may
deem necessary to effectuate this Agreement.
7.10 FORCE MAJEURE.
Neither party shall be liable nor deemed to be in default for any delay
or failure in performance under this Agreement or other interruption of service
or employment deemed resulting directly or indirectly from Acts of God, civil or
military authority, acts of public enemy, war, accidents, fires, explosions,
earthquakes, floods, failure of transportation, strikes or other work
interruptions by either party's employees or any similar or dissimilar cause
beyond the
21
reasonable control of either party. Further, MHMI shall not be in default
hereunder if the default resulted from actions taken at the request or direction
of the Board of Directors or if the Board of Directors failed to take reasonable
action recommended by MHMI to enable it to meet its obligations hereunder.
7.11 SEVERABILITY.
In the event any provision of this Agreement is held to be
unenforceable for any reason, the unenforceability thereof shall not affect the
remainder of this Agreement, which shall remain in full force and effect and
enforceable in accordance with its terms, unless such would frustrate the
original purposes hereof.
7.12 ARTICLES AND OTHER HEADINGS.
The articles and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
7.13 AMENDMENTS AND AGREEMENT EXECUTION.
This Agreement and amendments thereto shall be in writing and executed
in multiple copies on behalf of Owner by any official of Owner specifically
authorized by the Board of Directors with respect to such execution and on
behalf of MHMI by any official authorized to act on behalf of MHMI. Each
multiple copy shall be deemed an original, but all multiple copies together
shall constitute one and the same instrument.
7.14 CONFIDENTIALITY.
The Parties recognize that it is to their mutual interest that the
terms of this Agreement be maintained as confidential. Therefore, MHMI and Owner
agree that without their mutual consent, not to be unreasonably withheld, they
will direct their respective directors, officers, employees or agents not to
disclose the terms of this Agreement to third parties, except to their
respective advisors and consultants and other parties who have a need to know
the terms of this Agreement in order to complete the transaction contemplated
herein, and as required by disclosure requirements applicable to any affiliate
of MHMI as a publicly traded company and as otherwise required by law.
7.15 ENTIRE AGREEMENT.
With respect to the subject matter hereof, this Agreement, together
with the Operating Agreement of Owner to the extent referenced herein,
constitutes the entire agreement between the parties. MHMI shall be entitled to
no benefits other than those specified herein. No oral statements or prior
written material not specifically incorporated herein shall be of any force and
effect and no change in or additions to this Agreement shall be recognized
unless incorporated herein by amendment as provided herein, such amendment to
become effective on the date stipulated in such amendment. The parties
specifically acknowledge that in entering into and executing this Agreement,
they rely solely upon the representations and agreements contained in this
Agreement and no others.
22
7.16 ARBITRATION.
Subject to the right of any party to seek an injunction or other
equitable relief from a court with applicable authority, in the event of a
dispute between the parties arising out of any provision of this Agreement, then
such dispute shall be resolved by binding arbitration to be held in Milwaukee,
Wisconsin in accordance with the Arbitration Rules of the American Health
Lawyers Association Alternative Dispute Resolution Service (the "Rules"). Such
arbitration shall be conducted in accordance with the Rules by a panel of three
(3) arbitrators none of which shall reside in or practice primarily in Wisconsin
nor have previously represented the MHMI, Owner or any Affiliates in any
capacity. The decision of the arbitrators shall be final and binding on the
parties and shall be enforceable in any court of applicable jurisdiction. The
arbitrators shall have the authority to award to the losing party all costs
associated with such arbitration, including expenses and fees of the
arbitrators.
[Signatures appear on following page(s)]
23
IN WITNESS WHEREOF, the parties have executed this Agreement in
multiple originals as of the date above first written.
THE HEART HOSPITAL OF MILWAUKEE, LLC
By: /s/ signature illegible
-----------------------------------------
Title: VP
--------------------------------------
By:
-----------------------------------------
Title:
--------------------------------------
MILWAUKEE HOSPITAL MANAGEMENT, INC.
By: /s/ signature illegible
-----------------------------------------
Title:
--------------------------------------
For the sole and exclusive purposes of (i) guaranteeing the full performance of
MHMI's obligations under Article III and Section 5.6 hereof; (ii) guaranteeing
the provision of services obtained by MHMI on behalf of the Hospital as
described in Section 5.4-3 hereof; and (iii) otherwise acknowledging the rights
and responsibilities of MHMI under this Agreement, MedCath Incorporated hereby
executes this Agreement.
MEDCATH INCORPORATED
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Title: Executive Vice President and Chief Operating Officer
------------------------------------------------------
24
