EXHIBIT 10.4
PRACTICE MANAGEMENT SERVICES AGREEMENT
BY AND BETWEEN
XXXXXXX X. ORDER, M.D., P.C.
AND
MOLECULAR RADIATION MANAGEMENT, INC.
DATED AS OF DECEMBER 1, 1997
PRACTICE MANAGEMENT SERVICES AGREEMENT
AGREEMENT, made as of December 1, 1997, between XXXXXXX X. ORDER, M.D.,
P.C., a professional corporation organized under the laws of the State of New
York (the `P.C.") and MOLECULAR RADIATION MANAGEMENT, INC., a New York
corporation, (the "Company")
RECITALS
WHEREAS, the Company wishes to provide comprehensive medical practice
management services, including the leasing or subleasing of space and equipment,
consulting, billing, collection and related services (collectively, the
"Practice Management Services") and financial services to the P.C.;
WHEREAS, the P.C. desires that the Company provide Practice Management
Services and financial services to the P.C.; and
WHEREAS, the P.C. and the Company wish to set forth, as of the date
hereof, their respective rights and obligations as they relate to the provision
of such Practice Management Services and financial services.
NOW, THEREFORE, in consideration of mutual covenants and other good and
valuable consideration contained herein, the parties agree as follows:
1. RECITALS
1.1 The Recitals set forth above are incorporated herein as though set
forth in their entirety.
2. COMPREHENSIVE PRACTICE MANAGEMENT SERVICES
During the term of this Agreement, the Company will provide to the P.C. a
comprehensive range of non-medical Practice Management Services, all as
described in this Agreement, which the parties agree are sufficient to enable
the P.C. to conduct its medical practice (hereinafter the "P.C.'s Practice") and
the P.C. shall retain the Company on an exclusive basis (exclusive as to the
P.C. itself as well as to any other person or entity) to provide such services.
For purposes of clarification, it is understood that all services, of any nature
whatsoever including, without limitation, the providing of clerical,
managerial,3
technological consulting and receivables processing services, that are to be
provided by the Company to the P.C., whether or not specifically described in
this Agreement, shall not include services which relate to the providing of
medical services.
2.1 Space
(a) The Company will obtain for use by the P.C., by May 1, 1997, a
research laboratory (the "Lab"), equipped as set forth in Paragraph 2.2, for the
continued development of the Technology (as defined herein)
(b) The Company will obtain for use by the P.C. space in a clinical
or hospital department and/or numerous sites or establish a site for the private
practice of medicine for the treatment of patients utilizing the Technology, or
other Technology any such space to be reasonably satisfactory to the PC (the
"Treatment Space")
(c) To the extent that the Lab or Treatment Space, and any space
which Company may provide to the P.C. in the future, is available to the Company
as owner, lessee, sublessee or assignee (all such space being hereinafter called
"Licensed Space"), the P.C. agrees that all of the obligations contained in
each such lease, sublease or assignment (an "Xxxxxxxxx") which are imposed upon
the Company will be assumed by the P.C. which hereby agrees to assume the same.
The P.C.
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covenants and agrees to fully and faithfully perform the terms and conditions of
the Xxxxxxxxx and this Agreement. The P.C. shall not do or cause to be done or
suffer or permit any act to be done which would or might cause any of the
Xxxxxxxxx or the rights of the Company, as lessee, sub-lessee or assignee, as
the case may be, under the xxxxxxxxx, to be endangered, canceled, terminated,
forfeited, amended, modified or surrendered, or which would or might cause the
Company to be in default thereunder or liable for any damage, claim or penalty.
The Company shall have no obligation to take any action to enforce or compel
performance by any of its landlords and/or lessors and/or assignors of any
provision of any Xxxxxxxxx or other agreement and the Company shall not be
liable to the P.C. in the event of its landlords' or lessors' or assignors'
default or failure to perform any obligations. The P.C. agrees that if there is
any conflict between any of the Xxxxxxxxx and the provisions of this Agreement
which would permit the P.C. to door cause to be done or suffer or permit any act
or thing to be done which is prohibited by any of the Xxxxxxxxx, then the
provisions of the respective Xxxxxxxxx shall prevail.
(e) Upon the termination of an Xxxxxxxxx, the Company will either
(i) advise the P.C. that it will not provide space to the P.C., in which event
that P.C. shall be free to enter into such leases for space as it, in its sole
discretion, shall determine or (ii) advise the P.C. that it will provide space
to the P.C. in which event the Company will either provide the P.C. with the
space now provided under an Xxxxxxxxx or select and provide to the P.C.
comparable Licensed Space at a comparable location.
(f) The Company's provision of Licensed Space to the P.C. shall
include:
(i) electricity and water;
(ii) heat or air conditions, during the appropriate seasons,
in conformity with any local, state or federal
regulations; and
(ii) janitorial services as is customary in the location of
each such Licensed Space.
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2.2 Furnishings and Equipment
(a) The Company will arrange for the furnishing of the Lab and Treatment
Space with furniture and fixtures which are customary for such spaces' intended
uses, as more fully described in a Furnishings Schedule annexed hereto as the
same may hereafter be amended from time to time (the "Furnishings")
(b) The Furnishings provided by the Company shall remain at all times the
property of the Company whether owned or leased by the Company and the P.C.
shall not pledge, lend, create a security interest in, assign, sublease or part
with possession of the Furnishings or any part thereof or attempt in any other
manner to altar, modify, depose of the Furnishings or remove the Furnishings or
any part thereof from the Lab or Treatment Space, without the Company's prior
written consent, or take any other action which would adversely affect the
Company's title to or interest in the Furnishings. The P.C. will promptly
discharge, at its own expense, any lien or encumbrance on the Furnishings which
shall arise, unless same shall have been created by the Company. The P.C. agrees
to sign a UCC Form 1 Financing Statement and any applicable future continuation
statements to reflect that the Furnishings are the property of the Company and
also authorizes the Company to file such statements without its signature.
(c) The Company will provide the P.C. at the Lab, Treatment Space or other
site with the use of equipment reasonably necessary for the use and continued
development of the Technology, as more fully described in an Equipment Schedule
annexed hereto as the same may hereafter be amended from time to time (the
"Equipment") . The Equipment Schedule indicates all equipment which is attached
to the real property where the Lab and Treatment Space is located.
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(d) The Equipment provided by the Company to the P.C. at the Lab,
Treatment Space or other site shall remain at all times the property of the
Company even if installed in or attached to real property and whether owned or
leased by the Company. The P.C. shall not pledge, lend, create a security
interest in, assign, sublease or part with possession of, the Equipment or any
part thereof or attempt in any other manner to alter, modify, dispose of or
remove the Equipment or any part thereof from the Lab, Treatment Space or any
other site, without the Company's prior written consent, or take any other
action which would adversely affect the Company's title to or interest in the
Equipment. The P.C. shall promptly discharge, at its own expense, any lien or
encumbrance on the Equipment which shall arise, unless the same shall have been
created by the Company. The P.C. agrees to sign a Form UCC-l Financing Statement
and any applicable future continuation statements to reflect that the Equipment
is the property of the Company.
(e) The P.C. shall cause the Equipment to be operated in accordance with
any applicable manufacturer's manual of instructions and only by competent and
qualified personnel.
(f) THE COMPANY HEREBY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES WITH
RESPECT TO THE EQUIPMENT, AND THE FURNISHINGS, EXPRESS, IMPLIED OR OTHERWISE,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
(g) The P.C. agrees to use the Furnishings and Equipment only for the
purposes described in this Agreement and in accordance with applicable laws and
regulations.
(h) The Company shall be responsible, at its expense, to repair and/or
maintain the Furnishings and Equipment except for repairs caused by the willful
misconduct, negligence or misuse of the Furnishings or Equipment by the P.C. or
its agents or subcontractors. All such repairs and maintenance shall be provided
by the Company, by its own employees, agents or subcontractors, upon the request
of the P.C.
2.3 Supplies
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The Company will provide the P.C. with such medical and office
supplies (hereinafter the "Supplies") that are reasonably necessary for the day-
to-day operation of the P.C. including, specifically, isotopes and aggregated
proteins used in connection with the Technology which are supplied by including
but not limited to Mallinckrodt Medical, Inc. of St. Louis or such other
supplies as may be reasonably acceptable to the P.C. (the "Isotopes")
2.4 Personnel Services
(a) The Company will provide the P.C. with such clerical personnel and
other non-medical personnel such as, for example, secretaries, receptionists,
file clerks, administrators, etc. ("Non-Medical personnel") as may be reasonably
required to perform necessary services for the P.C.
(b) Non-Medical Personnel will be selected and assigned to the P.C. on an
as-needed basis as reasonably agreed to by the parties.
(c) The Company will be responsible for the salary, withholding taxes,
compensation insurance, disability insurance, medical/health insurance and other
fringe benefits of the Non-Medical Personnel provided by the Company to the P.C.
(d) The P.C. acknowledges that the Non-Medical Personnel provided by the
Company under this Agreement may, from time to time, perform services for other
clients of the Company. Nothing in this Agreement, express or implied, shall
prevent the Company from providing the services of such personnel of its other
present or future clients or using them for its own purposes.
(e) The Company will not provide Non-Medical Personnel on the holidays
listed below and also reserves the right to modify or substitute the list of
holidays on which services will not be provide:
1. New Year's Day 6. Independence Day
2. Xxxxxx Xxxxxx Xxxx Day 7. Labor Day
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3. President's Day 8. Yom Kippur
4. Good Friday 9. Thanksgiving Day
5. Memorial Day 10. Christmas Day
Should the P.C. require Non-Medical Personnel on any of the 10 holidays
set forth above, it shall notify the Company in writing seven (7) business days
in advance of the P.C.'s clerical needs. In such event, the Company will use its
best efforts to supply holiday Non-Medical Personnel as requested by the P.C.
2.5 Managerial and Administrative Services.
Unless otherwise set forth in this Agreement, the Company will
provide all non-medical managerial and administrative services as may be
reasonably required by the P.C. such as, for example, office administrative
services, general administrative services and fiscal management services.
2.6 LICENSING OF NAME AND PATENTS
(a) The Company hereby licenses to the P.C. for its use in
connection with the Technology the trade name "Molecular Radiation" (the "Trade
Name")
(b) The Company hereby licenses to the P.C. the methods for treating
solid tumor cancer covered by U.S. Patent Nos. 5,535,726 and 5,424,288 dated
July 23, 1996 and June 3, 1995, respectively (the "Patents"), and related know
how, procedures and technology (collectively, the "Technology"), which
Technology has been assigned to the Company through a separate agreement by and
between Xxxxxxx X. Order, M.D. and the Company, dated the date hereof.
3. CONSULTING SERVICES
3.1 The Company may provide to the P.C. the following services
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("Consulting Services") as may be agreed to in the future by the parties:
(a) review and analysis of available health insurance plans with
special emphasis on managed care/self insurance plans (hereinafter "Managed
Care") which can utilize the services of the P.C.;
(b) personal contact with representatives of Managed Care payers to
advise them of the expertise and quality of the P.C.'s Practice;
(c) preparation of the P.C's applications to the Managed Care and
Indemnity payers;
(d) consultation with the P.C. regarding the fees the P.C. should
accept from managed Care, Indemnity and capitate payers; and, subject to the
P.C.'s approval, negotiation of such reimbursement rates;
(e) assistance to the P.C. in negotiation of Managed Care and
Indemnity Provider Agreements;
(f) sources of patents;
(g) assistance to the P.C. in evaluating and developing areas in
which the P.C. can expand the P.C.'s Practice;
(h) evaluation of new technologies, methods and equipment;
(i) assistance in developing Quality Assurance and Utilization
Review programs;
(j) business advice in connection with the expansion of the P.C.
into new and expanded service areas or new medical subspecialties;
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(k) development of programs, including, but not limits to, the
formulation and production of seminars and/or lectures, whereby the expertise of
the P.C.'s physicians and its quality practice can be made known to the medical
professions and the communities in which the P.C. practices;
(1) consultation with the P.C. concerning the
feasibility/profitability of establishing new facilities for the P.C. and
assistance in (i) identifying suitable locations; (ii) negotiating purchase
contracts or leases; (iii) supervising renovations/constructions; and (iv)
integrating new~ facilities into the P.C.' s operation;
(m) consultation with the P.C. regarding practice acquisition
targets including (i) identification of medical practices available for
purchase; (ii) due diligence reviews;. (iii) negotiation of the purchase
contract; and (iv) assistance in the integration of the acquired practice;
(n) production of a strategic business plan for the P.C. for the
following two, five and seven years; and
(o) assistance in the development of community service programs;
4. BILLING AND COLLECTION AND ARBITRATION SERVICES
4.1 The Company will provide the P.C. with billing and collection
services for all medical services rendered by the P.C.
(a) The P.C. agrees that during the term of this Agreement, it will
provide the Company with billing and collection information relevant to all
claims and/or xxxxxxxx for all medical services rendered by the P.C. (the
"Claims")
(b) The Company will be responsible for the complete and/or
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exclusive processing of all Claims in connection with the P.C. `s Practice.
Where appropriate, the Company shall establish internal procedures to be used by
the P.C. for the purpose of assuring the accurate and timely gathering of
billable information.
(c) The Company agrees, in a manner consistent with industry
practices, to render bills on behalf of the P.C. and thereafter seek to collect
said accounts, exercising due care, skill and ability. The Company will also
xxxx and use appropriate efforts to collect all patient deductibles and
copayment amounts.
(d) The Company shall maintain accurate records of all transactions
which will be available during normal business hours for inspection by the P.C.
or its duly authorized representative upon reasonable notice to the Company.
(e) The Company shall at all times conform with all applicable
federal, state and local laws, rules and regulations and shall modify its
service in the event of any change in such laws, rules and regulations.
(f) The Company agrees to keep all information obtained from the
P.C. concerning identifiable patients and their diagnosis/treatment/evaluation
confidential except for disclosures required for billing purposes or where
required by law or subpoena.
(g) All claims submitted by the Company will be in the name of the
P.C. The P.C. agrees that remittances and all other proceeds of accounts
receivable generated by the P.C. shall be remitted to a post office box
maintained by the Company on behalf of the P.C. or to such other address as the
parties may hereafter agree upon. All monies and instruments collected by the
Company on behalf of the P.C. will be deposited into the P.C.'s segregated
operating account (the "Segregated Account") ; and in connection therewith, the
P.C. hereby authorizes the Company to endorse all such checks with the P.C. name
for deposit to the Segregated Account. In
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the event any payment, proceed or instrument in payment of services or accounts
receivable related to the P.C.'s Practice is received directly by the P.C., the
same shall be immediately remitted to the Company for deposit into the
Segregated Account.
(h) The P.C. agrees that the Company may designate two individuals
who will have signature authority over the Segregated Account and the P.C.
further agrees that the Company may make payments on behalf of the P.C. from the
Segregated Account for obligations of the P.C., which obligations shall include
the fees to be paid to the Company pursuant to this agreement.
4.2 The Company shall, at the request of the P.C., submit claims of
the P.C. for payment of its services to arbitration, prepare all documents
necessary in connection therewith and interface on behalf of the P.C. with
counsel if same is retained in connection with any such arbitration.
5. WORKING CAPITAL ADVANCE
5.1 Upon written request of the P.C., the Company may, in its sole
discretion, advance monies to the P.C. for purposes of working capital (the
"Working Capital Advance")
5.2 Upon written request for the Working Capital Advance, the P.C.
will provide the Company with:
(a) a statement that the proceeds of the Working Capital Advance
will be used solely by the P.C. for its medical practice; and
(b) a statement as to the exact use of the Working Capital Advance.
5.3 Upon review of a request for a Working Capital Advance and the
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financial records and reports of the P.C., the Company will determine whether
and upon what terms it will approve such Working Capital Advance. The Company's
determination to make the Working Capital Advance requested will be based upon
such factors as it determines are reasonable and appropriate, including but not
limited to, the following: (i) the purpose of the request; (ii) the financial
condition of the P.C. at the time of the request; (iii) the prevailing economic
conditions; (iv) interest rates; (v) the availability of capital to the Company
on reasonable terms and (vi) a business plan and budget of the P.C. for the
following calendar year. If the request for the Working Capital Advance is
granted, the parties agree to negotiate in good faith mutually agreeable terms
for the repayment of the Working Capital Advance and the P.C. agrees to execute
such documents as are customary to document such transaction. If the request for
a Working Capital Advance is denied, such denial will not constitute a breach of
this Agreement. The repayment of a Working Capital Advance will be in addition
to any fees due the Company pursuant to Paragraph 6 of this Agreement.
6. COMPENSATION
6.1 For the services to be provided by the Company to the P.C.
pursuant to Paragraphs 2 and 4 of this Agreement the P.C. will pay to the
Company (a) on a weekly basis, in arrears, an amount equal to the actual cost to
the Company of providing all such services to the P.C., which costs shall
include, without limitation, the salaries and benefits of the non-medical
Personnel, the cost of Supplies, the rent payable for Licensed Space if any, etc
plus (b) on a monthly basis in advance $9,000 per month through December 31,
1998 (Such $9,000 hereinafter called the "Initial Fee").
6.2 The Parties agree that the Initial Fee has been determined based
upon the management services required by the current operations of the P.C. and,
therefore, the parties agree that the Initial Fee shall be subject to adjustment
prior to January 1 during the terms of this Agreement beginning on January 1,
1999.
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In contemplation thereof, the parties agree that at least thirty (30) days prior
to each march 31 during the term of this Agreement (beginning with march 31,
1998) the P.C. and the Company shall meet for the
This Agreement shall be effective for a term commencing the 1st day
of December. 1997 and ending on the 30th anniversary thereof, unless earlier
terminated in accordance with this Agreement.
8. TERMINATION BY THE COMPANY
8.1 Notwithstanding paragraph 7 above, the Company has the option to
terminate this Agreement upon or following the occurrence of any of the
following events:
(a) the failure of the P.C. to make timely payment of any Fee due
the Company as set forth in Paragraph 6;
(b) the failure of the P.C. to make timely repayment of the Working
Capital Advances as set forth in Paragraph 7.3;
(c) failure of the P.C. to maintain professional liability insurance
as provided in paragraphs 17.4, 17.5 and 17.6 of this Agreement;
(d) final action by the New York State Board of Regents resulting in
the revocation or suspension of the license to practice medicine in New York of
any of the shareholders of the P.C.;
(e) the surrender of license to practice medicine in New York by all
shareholders of the P.C.;
(f) the filing of criminal charges against any shareholder of the
P.C.
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(g) the death of all shareholders of the P.C.;
(h) the mental or physical disability or incapacity of all
shareholders of the P.C. which prevents the shareholders from rendering medical
services to the P.C. for a consecutive period of fifteen (15) days;
(i) the failure of the P.C. to practice medicine for a period of
five (5) consecutive days;
(j) the dissolution of the P.C.;
(k) the bankruptcy or insolvency of the P.C.;
(1) assignment other than as permitted by Paragraph 30.1;
(9) material breach of this Agreement by the P.C. with such breach
continuing for forty-five (45) days after written notice to the P.C. by or on
behalf of the Company stating the nature of the breach, provided however, that
if the breach is not capable of cure within said forty-five (45) day period,
then the P.C. shall have such time as is reasonably necessary to cure such
breach provided that the P.C. commences action to cure the breach within the
forty-five (45) day notice period and continues diligently to attempt to cure
such breach.
9. DAMAGES
If any act described in paragraph 8 above shall occur and if the
same shall result in the Company terminating this Agreement, the P.C. shall (a)
be liable to the Company in an amount equal to the sum of all amounts which
remain payable by the Company for any contractual obligations which the Company
incurred or for which it may remain liable in order to meet the Company's
performance obligations under this contract and (b) pay the Company liquidated
damages in the agreed upon amount
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of (i) $1,400,000 if the termination occurs prior to September 1, 1997, (ii)
$1,200,000 if the termination occurs on or after September 1, 1997 and prior to
September 1, 1998, (iii) $1,000,000 if the termination occurs on or after
September 1, 1998 and prior to September 1, 1999, (iv) $800,000 if the
termination occurs on or after September 1, 1999 and prior to September 1, 2000;
(v) $600,000 if the termination occurs on or after September 1, 2000 and prior
to September 1, 2001 and prior to September 1, 2002, and (vi) $200,000 if the
termination occurs on or after September 1, 2002 and prior to September 1, 2003.
The liquidated damages are predicated upon (i) the initial significant
investment may by the Company in staffing and providing the services described
in this Agreement; (ii) the loss of future profits; (iii) the loss of other
corporate opportunity; and (iv) shall in no event be deemed to be a penalty.
In no way will Dr. 0. be liable personally for any damages
10. RIGHTS UPON TERMINATION
10.1 Upon termination or non-renewal of this Agreement, the
P.C. shall:
(a) quit and peacefully vacate all Licensed Space and
surrender to the Company any and all Furnishings, Equipment, Supplies or other
items provided by the Company in good order and condition (reasonable wear and
tear resulting from their proper use alone excluded) . Upon or at any time after
any such termination or non-renewal, the Company may, without further notice,
enter upon and re-enter all Licensed Space and possess and repossess itself
thereof, by force, summary proceedings, ejectment or otherwise, and may
dispossess and remove the P.C., its property and its personnel and all other
persons and property from the Licensed Space. The P.C. hereby expressly waives,
so far as permitted by law, the service of any notice of intention to reenter
provided for in any statute, or of the institution of legal proceedings to that
end.
(b) cease and desist from all use of the Company's Trade Name
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and Confidential Information (as hereinafter defined) in any way, and deliver to
the Company, or its duly authorized representatives, all materials and papers
which may contain the Company's Trade Name or Constitute the Company's
Confidential Information.
(c) refrain from using, without the Company's prior written
consent, the Company Trade Name, or name or any word or xxxx which is likely to
be similar to or confusing with the Company's Trade Name.
(d) cease and desist from all use of the Company's Technology
in any way.
(e) refrain from using, without the Company's prior written
consent, the Technology.
10.2 The P.C. agrees that its continued use of the Trade Name, the
Technology or the Company's Confidential Information at the termination or
expiration of this Agreement will result in immediate and irreparable damage to
the Company. In this regard, the P.C. agrees that the Company shall be entitled
to equitable relief by way of injunction and such other relief any court with
jurisdiction may deem just and proper. Additionally, the P.C. agrees that
pending such a hearing and the decision on the application for such permanent
injunctive relief, the Company shall be entitled to a temporary restraining
order, without prejudice to any other remedy available to the Company.
Furthermore, all such remedies hereunder shall be at the expense of the P.C.
10.3 The parties agree that subsequent to the termination of this
Agreement and until all sums due to the Company from the P.C. have been paid in
full, the Company shall have the option to collect the P.C.'s outstanding
receivables up to the amount due and payable to the Company by the P.C. and to
apply the proceeds thereof to the payment of all sums due to the Company from
the P.C. Upon such payment in full, the Company shall terminate its security
interest in the
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remaining accounts receivable of the P.C.
10.4 The provisions of this Paragraph 10 shall survive termination
of this Agreement and shall in no event be construed to be an exclusive remedy
of the Company and such remedy shall be held and construed to be cumulate and
not exclusive of any rights or remedies, whether in law or in equity, otherwise
available under the terms of this Agreement or under federal, state and local
statutes, rules and regulations.
11. SECURITY INTEREST
11.1 As security for the full and timely payment of all amounts which may
at any time and from time to time be owed by the P.C. to the Company pursuant to
this Agreement or otherwise, the P.C. hereby grants to the Company (a) a first
senior continuing security interest in all of the P.C.'s past, present and
future accounts, accounts receivable, contract rights and reimbursement rights
(the "General Receivables and Rights") and (b) the proceeds thereof. The General
Receivables and Rights are collectively referred to herein as the "Collateral."
In order to implement the foregoing, the P.C. agrees to sign a UCC Form 1
Financing Statement and any future updates and/or continuation statements and
also authorizes the Company to file such instruments without its signature.
11.2 The P.C. shall at all times keep the Collateral free and clear
of all liens and encumbrances except liens created by the Company's security
interest in the General Receivables and Rights.
11.3 The P.C. agrees from time to time, at the sole expense of the
P.C., to promptly execute and deliver all further instruments and documents, and
take all further action that may be necessary, or that the Company may request,
in order to perfect any security interest grated by the P.C. herein or to
perfect the Company's right in and to the accounts receivable assigned
receivables. Without limiting the generality of the foregoing, the P.C. shall
execute and file such
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security agreements, financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Company may request, in order to perfect and preserve the
security interest granted herein by the P.C. to the Company to file any such
instruments without its signature.
11.4 The occurrence of any of the events set forth in Paragraph 8
which gives rise to the Company's right to terminate this Agreement, shall
constitute a default hereunder (a "Default") . So long as no Default has
occurred, the P.C. shall be entitled to receive all proceeds received in respect
to the Collateral. Upon the occurrence of a Default, all rights of the P.C. with
the respect to the Collateral shall cease and the Company shall have the
exclusive right and authority to receive all amounts paid in respect of the
Collateral. In connection therewith, the P.C. irrevocably authorizes the Company
to notify any or all of the P.C.'s obligers (including, but not limited to,
patients and third-party payers) to make payment directly to the Company.
11.5 Upon Default, in addition to all rights and remedies set forth
in this Agreement, the Company may exercise from time to time any rights and
remedies available to it by law or in equity, including the rights and remedies
set forth in the Uniform Commercial Code as in effect from time to time in New
York.
11.6 In the event of Default, the Company shall have the right, in
the name, place and stead of the P.C., to execute the necessary endorsements,
assignments or other instruments of conveyance or transfer with respect to all
or any of the Collateral and the proceeds thereof. The foregoing grant of
authority is irrevocable and coupled with an interest.
12. MEDICAL RECORDS
12.1 The P.C. will maintain medical records regarding all patients
of the P.C.'s Practice as required by the laws of the State of New York and by
the
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rules and regulations of third-party payers, commercial insurers, health care
plans or organizations and in accordance with good medical practice. All records
at Lab or Treatment Space relating to the P.C.'s practice and its patients shall
remain the sole property of the P.C. All records relating to the services of the
Company which are created and maintained by the Company, shall remain the sole
property of the Company. The parties shall permit each other access during
normal business hours to such books and records upon reasonable notice.
13. FISCAL MATTERS
13.1 The P.C. shall have no responsibility or liability for any
taxes or governmental obligations imposed upon the Company, which shall be the
sole obligation of the company.
13.2 The Company shall have no responsibility or liability for any
taxes or governmental obligations imposed upon the P.C., which shall be the sole
obligation of the P.C.
14. INDEPENDENT CONTRACTOR
14.1 The Company and the P.C. acknowledge that the relationship
between them is that of independent contracting parties whereby the P.C. is a
purchaser and the Company is an independent contractor engaged in the business
of selling non-medical, practice management and financial services. Nothing
contained herein shall be construed to create an employer-employee or
masterservant relationship.
14.2 The P.C. acknowledges that the Company has the right as an
independent contractor to affiliate or contract with any other person or entity
and nothing contained herein shall be construed as limiting that right.
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15. INTENT OF THE PARTIES: CHANGE IN LAW
15.1 Neither the Company nor any of its personnel shall undertake or
be deemed to undertake the practice of medicine or provide medical advice to the
P.C. or its patients in the performance of services and other obligations under
this Agreement. The Company is not authorized to engage in any activity which
may be construed or deemed under any existing or future law or regulation to
constitute the practice of medicine, the ownership or operation of a medical
practice, or the operation of a health care facility. To the extent that any
acts of the Company required by any provision of this Agreement shall be
construed or deemed to constitute the practice of medicine, the ownership or
operation of a medical practice, or the operation of a health care facility or
if any acts of the P.C. under any provision of this Agreement shall be construed
or deemed to involve an act or service which may only be performed by a clinic,
diagnostic and treatment center or other health facility, said provision shall
be void ab initio or from the date of adoption of such law or regulation, as the
case may be, and the performance of said act cc sec--ice shall be deemed waived.
15.2 The P.C. shall be solely responsible for: (a) all aspects of
the medical care delivered and research conducted by the P.C.; (b) the
selection, supervision, direction, contracting and employment, hiring and firing
of health care professionals, including all physicians, licensed or certified
technicians and providers of medical or nursing services (hereinafter,
collectively the "Health Professionals") ; (c) establishing general operating
policies and procedures of the P.C.; and (d) all professional and ethical
affairs of the P.C.'s medical practice. The P.C. shall be solely responsible for
the determination and payment of compensation and fringe benefits to health
Professionals who are its employees or independent contractors. The P.C. agrees
to hire or engage only duly licensed and qualified Health Professionals.
15.3 If in the opinion of counsel to the Company this Agreement, in
whole or in part, is deemed to be in violation of any future federal, state or
local
20
statute, rule or regulation, the Company may, without electing an exclusive
remedy, (i) terminate this Agreement upon written notice which sets forth
counsel's opinion as to the effect of any newly enacted statute, rule or
regulation upon this Agreement and that the Agreement, in whole or in part,
violates such statute, rule or regulation (ii) demand that the Agreement be
renegotiated in order to conform to any newly enacted statute, rule or
regulation.
16. CONFIDENTIALITY/NON-SOLICITATION/NONDISCLOSURE
16.1 The P.C. recognizes and acknowledges that the methods,
techniques, controls, programs, management and financial strategies utilized by
the Company constitutes proprietary information of the Company and is
hereinafter referred to as Confidential Information.
16.2 The P.C. agrees that without the prior written approval of the
Company, the P.C. will not at any time, whether during or after the termination
of this Agreement, disclose to any person or use for its own benefits indirectly
nor directly except in the course of duties as contemplated by this Agreement,
such Confidential Information or use or permit any person to examine, copy or
duplicate any Confidential Information furnished to the P.C. by the Company and
at the request of the Company and in any event upon the termination of this
Agreement, the P.C. will return to the Company all Confidential Information, as
well as any copies or information derived therefrom. This provision shall
survive the termination of this Agreement.
16.3 During the term of this Agreement and for one (1) year after
its termination for any reason, any person who has been a shareholder of the
P.C. at any time during such period shall not, directly or indirectly, induce,
attempt to induce, or aid others in inducing, any person in the employ of the
Company to leave the Company's employment. The P.C. also agrees not to employ or
affiliate or contract with, or enter into any business or financial agreement
with, any employee of the Company during the period which such person is
employed by the Company and
21
for a period of one (1) year following said employee's termination of employment
with the Company. This provision shall survive the termination of this
Agreement.
16.4 The Company agrees that it will not disclose the treatment
and/or diagnosis of any identifiable patient of the P.C. to any third person
except in the course of its duties or where required by law and the Company
agrees to similarly instruct its employees.
16.5 The parties acknowledge that disclosure of any Confidential
Information of breach of any part of this Paragraph will give rise to
irreparable injury which will be inadequately compensable in damages.
Accordingly, either party may seek and obtain injunctive relief against the
breach or threatened breach of this Paragraph in addition to any and all other
legal remedies that may be available. In addition to any other relief or damages
to which a party may be entitled, the successful party shall be entitled to
recoup the expenses of reasonable legal fees in any action brought to enforce
any provision of this Paragraph.
16.6 If any provision contained in this Paragraph or anywhere in
this Agreement shall be deemed by any court of competent jurisdiction to be
invalid, illegal or unenforceable, then such provision shall be modified so as
to make it valid, legal and enforceable to the fullest extent permitted by law,
and the parties agree that such paragraph or provision shall be enforceable such
extent.
17. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE P.C.
The P.C. represents, warrants and covenants to the Company that:
17.1 The P.C. is a professional corporation duly organized, validly
existing and in good standing under the laws of the State of New York and duly
authorized to practice medicine. The only shareholder of the P.C. is Xx. Xxxxxxx
X. Order, M.D. (The "P.C. Shareholder").
22
17.2 The execution and delivery of this Agreement by the P.C. and
the performance of his duties hereunder (a) have been duly authorized by all
necessary corporate action, and this Agreement constitutes the valid and binding
obligation of the P.C., enforceable against the P.C. in accordance with its
terms and (b) will not violate or conflict with the P.C.'s Certificate of
Incorporation of By-laws and will not result in a breach of or constitute a
default under any agreement or instrument to which the P.C. or any of its
officers, directors or shareholders may be a party or by which any of them may
be bound or affected.
17.3 The P.C., its employees and professional subcontractors, if
any, shall, at all times during the term of this Agreement, be duly licensed as
required by the State of New York and company with all applicable laws and
regulations relating to the operation of its medical practice.
17.4 The P.C. agrees and covenants to maintain, at its sole cost and
expense, medical malpractice insurance in the minimum amount of $1 million per
occurrence and $3 million in the aggregate during the term of this Agreement or
if such insurance is not readily available, the P.C. Shareholders shall name the
P.C. on their individual malpractice policies as an additional insured. The P.C.
shall provide the Company with a copy of such policy or policies. The policy
shall provide for at least thirty (30) days advance written notice from the
insurer to the Company of any alteration, cancellation of termination of the
foregoing coverage.
17.5 The P.C. covenants and agrees to require all physicians hired
or contracted by it and who perform services for the P.C., at their own cost and
expense cc at the cost and expense of the P.C., to maintain malpractice
insurance in the minimum amount of $1 million per occurrence and $3 million,
cancellation or termination of the foregoing coverage. In the event of receipt
of such notice, the P.C. in the aggregate. The P.C. shall require that the
malpractice policies maintained by its physicians provide for thirty (30) days
advance written notice to the P.C. from the insurer of any alteration shall
immediately advise the Company of
23
any such alteration, cancellation or termination of malpractice coverage.
17.6 The P.C. Covenants and agrees to require all health
Professionals, other than physicians hired by the P.C. to perform services for
the P.C. to maintain (at their own cost and expense or at the cost and expense
of the P.C.) professional liability insurance as is customary in the New York
City area. The P.C. shall require that the professional liability insurance
policies maintained by Health Professionals provide for thirty (30) days advance
written notice to the P.C. from the insurer of any alteration, cancellation or
termination of the foregoing coverage. In the event of receipt of such notice,
the P.C. shall immediately advise the Company of any such alteration,
cancellation or termination of malpractice coverage.
17.7 The P.C. covenants and agrees to maintain at its expense
general casualty and liability insurance in amounts for medical practices such
as the P.C. which shall cover all risks of physical loss or damage to licensed
Space, Furnishings and Equipment and all risks of liability for bodily injury
and property damage resulting from the operation of any Equipment at the Lab or
Treatment Space and of damages, destruction and loss of use of property damage
from any condition of the Licensed Space. The casualty and liability insurance
shall specify the Company as a named insured and provide for thirty (30) days
advance written notice to the Company from the insurer of any alteration,
cancellation or termination of the foregoing insurance company. In the event of
receipt of such notice, the P.C. shall immediately advise the Company of such
alteration, cancellation or termination.
17.8 The P.C. agrees and covenants to comply with all OSHA, New York
State Department of Health and other applicable governmental regulations as
pertain to a medical practice.
17.9 The P.C. agrees and covenants to have all patients assign the
right of collection from carriers and participating health care organizations,
where appropriate, to the P.C. or its agent.
18. REPRESENTATIONS. WARRANTIES AND COVENANTS OF THE COMPANY
24
The Company represents, warrants and covenants to the P.C. that:
18.1 The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York.
18.2 The execution and delivery of this Agreement by the Company and
the performance of its duties hereunder: (a) have been duly authorized by all
necessary corporate action, and this Agreement constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms and (b) will not violate or conflict with any provision of law or of
the Company' s Certificate of Incorporation or By-laws and will not result in a
breach of or constitute a default under any agreement or instrument to which the
Company or any of its officers, directors or shareholders may be a party or by
which any of them may be bound or affected.
18.3 The Company agrees to maintain or cause to be maintained in the
name of the Company at its expense insurance covering: (a) all risks of physical
loss or damage to the Furnishings and Equipment; (b) liability for bodily injury
and property damage resulting from the operating of any of the Equipment or the
Isotopes at the Lab, Treatment Space or other site where the Company makes
available Equipment for the P.C.'s use and for damage, destruction and loss of
use of property of third parties resulting therefrom; and (c) all risks of
liability for bodily injury and property damage from any condition of the
Licensed Space with such insurance companies and in such amounts as the Company
shall deem appropriate, naming the P.C. as additional insured and furnishing the
P.C. with a Certificate of Insurance upon the P.C.'s request.
18.4 The Company agrees to maintain the Licensed Space, Furnishings
and Equipment in good condition and repair, reasonable wear and tear from normal
use excepted. Whenever possible, the Company shall arrange for routine
maintenance, on seven (7) days advance notice to the P.C. and at a time and
manner that is not disruptive to the P.C.'s Practice, all repairs of Equipment
other than those necessitated by the P.C.'s willful misconduct or misuse of the
Equipment will be performed as soon as practicable. The Company shall arrange
for emergency repairs to be performed as promptly
25
as practicable.
19. INDENTIFICATION
19.1 The P.C. shall indemnify, protect and hold harmless the
Company, its shareholders, officers, directors, employees, agents, successors,
subsidiaries, affiliates and assigns from and against the defense and any and
all losses, including legal expenses, damages (direct and consequential) ,
injuries, claims, demands, costs and expenses, including legal expenses, of
whatsoever nature, arising out of or in connection with or incidental to: (a)
the conduct of this medical practice including research activities, (b) any
breach of this Agreement by the P.C. or any of its shareholders, and (c) the use
or operation by the P.C.'s employees, agents, patients or invites of any item of
Equipment or Supplies, including the Isotopes, and its use and occupancy of the
Licensed Space and Furnishings regardless of where, how and by whom used or
operated.
19.2 The Company will indemnify and hold the P.C. and its
shareholders harmless from and against any and all losses, including legal
expenses, damages, injures, claims, demands, costs and expenses of whatsoever
nature arising out of or in connection with (a) any breach of this Agreement by
the Company; and (b) any gross negligence or willful misconduct of the Company
in the performance of its obligations under this Agreement.
19.3 The provisions contained in this Paragraph shall survive the
termination of this Agreement.
19.4 In no way shall Dr. 0. ever be held liable personally.
26
20. NON-COMPETITION AND RESTRICTIVE COVENANT
20.1 Throughout the term of this Agreement including any renewal or
other extension thereof, and for an additional period of three (3) years
following termination of this Agreement for any reason except with the prior
written consent of the Company, neither the P.C. nor any of its shareholders
will directly or indirectly (i) own, manage, operate, join, control or
participate in the ownership, management operation or control of, or have an
interest in or a financial relationship with, or be connected in any manner with
any business which is directly or indirectly competitive with the business of
the Company or (ii) other than as a shareholder and/or an employee of the P.C.
own, operate, market or become employed, be an independent contractor for or be
affiliated or connected in any manner with any medical practice or health care
provider located in County or County in the State of New York.
20.2 The provisions of Paragraph 20.1 shall not apply if the Company
terminates this Agreement, other than as a result of a breach by the P.C.
20.3 In order to give the language in Paragraph 20.1 effect, the
P.C. agrees to place the restrictions contained in Paragraph 20.1 in all
contracts and agreements with the P.C. Shareholders, including, without
limitation, any employment agreements with such P.C. Shareholders.
20.4 The P.C. agrees that it will not issue any share s of its
capital stock to any person unless such person agrees, in writing, with the
Company, to be bound by those provisions of this Agreement which are binding
upon the P.C. Shareholders.
20.5 The parties agree that the provisions of this Paragraph 20 are
necessary and reasonable to protect the Company in the conduct of its business.
The P.C. agrees that any remedy at law for any breach of the foregoing covenants
maybe inadequate and that the Company will be entitled, at its election, to
injunctive
27
relief to enjoin any violation, threatened or actual, of this Paragraph 20.
20.6 The parties agree that if any restriction contained in this
Paragraph 20 shall be deemed to be invalid, illegal or unenforceable by reason
of the extent, duration, geographical scope, or other provisions hereof the
court shall reduce same only to the extent necessary in order for same to be
enforceable, and in its reduced form, such restriction shall then be enforceable
in the manner contemplated hereby.
20.7 The provisions contained in this Paragraph 20 shall survive
termination of this Agreement.
21. FORCE MAJEURE
Neither party shall be liable for or deemed to be in default for any
delay or failure to perform any act under this Agreement (other than the payment
of money) resulting, directly or indirectly, from Acts of God, civil or military
authority, acts of public enemy, war, accidents fires, explosions, earthquake,
flood, failure of transportation, strikes or other work stoppages by either
party's employees, or any other cause beyond the reasonable control of such
party.
22. REMEDIES OF THE P.C.
(a) All services provided by the Company pursuant to this Agreement
are furnished without warranty. The P.C.'s sole monetary remedy, and the
Company's sole monetary obligation, for any failure to render any service, or
any error or omission or any delay or interruption with respect thereto, is
-limited to an adjustment to the P.C. of the fee otherwise payable hereunder in
an amount equal to the fair market value of such services for the period during
which the failure, delay or interruption occurred. With the sole exception of
the remedy set forth in the immediately preceding sentence, the P.C. expressly
waives, and agrees not to make any claim for, any damages, direct or
consequential, arising out of any failure to furnish any such services, any
error or omission with respect thereto, or any delay or interruption of the
same. In no event
28
shall there be any adjustment to the fee payable hereunder if the P.C. is in
default under the Agreement at such time.
(b) The P.C. may only terminate this Agreement upon a substantial
material and continued breach by the Company of its obligations to the P.C.
hereunder (a "Material breach") . A Material Breach shall only be deemed to have
occurred under the following circumstances:
(i) The P.C. shall deliver to the Company a written notice which
notice shall provide in detail the alleged Material Breach.
(ii) The Company shall have a period of 120 days in which to cure
such alleged Material Breach. If after the expiration of such 120 day
period the P.C. believes that such alleged Material Breach has not been
cured, the P.C. shall send to the Company a further notice specifying in
detail why it believes that the alleged Material Breach has been cured.
(iii) The Company shall then have a period of an additional 60 days
in which to cure such alleged Material Breach.
(iv) If after the expiration of such additional period, the P.C.
shall continue to maintain such alleged Material Breach shall not have
been cured, it shall send the Company a notice that it has elected to
terminate the Agreement on account of such alleged Material Breach (a "PC
Termination Notice)
(v) If the Company shall dispute the PC Termination Notice then this
Agreement shall not terminate unless and until a final determination by a
court of competent jurisdiction has determined that such Material Breach
has, in fact, occurred.
Notwithstanding anything to the contrary that may be contained herein, if a
Material Breach shall have occurred with respect to a specific service to be
rendered to the Company by the P.C. hereunder, this Agreement shall only
terminate with respect to
29
such service in which event the Initial Fee or the New Fee, as the case may be,
then in effect shall be proportionately reduced.
23. ENTIRE AGREEMENT
This Agreement sets forth the entire understanding between the
parties hereto and supersedes all other prior agreements between the parties.
Each party to this Agreement acknowledges that no representations, inducements,
promises or agreements, orally or otherwise, have been made by any party, or
anyone acting on behalf of any party, that not embodied in this Agreement, and
that no other agreement, statement or promise not contained in this Agreement
shall be valid or binding as between the P.C. and the Company.
24. ARBITRATION
Any controversy or claim arising out of or relating to this
contract, or the breach thereof shall be settled by three arbitrators in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators may be
entered in any Court having jurisdiction thereof. Arbitration will be conducted
in New York County, New York. This paragraph shall not apply to relief sought
under Paragraphs 10, 20 or 22 of this Agreement nor shall it restrict the right
of either party to institute proceeding to enable such party to obtain
provisional injunctive relief during the pendency of an arbitration.
25. COMPANY'S OPTION TO PURCHASE
In the event that the State of New York in the future permits the
corporate practice of medicine without need to resort to a Certificate of Need,
or
30
if, in the opinion of counsel to the Company, it otherwise becomes lawful in New
York State for the Company to acquire and operate the medical practice of the
P.C., the Company shall have the right to purchase the medical practice of the
P.C. and the P.C. agrees to sell the medical practice of the P.C. to the
Company. The purchase price shall be $100. In order to make meaningful the
foregoing right, the P.C. agrees that any purchaser of the P.C. or transferee or
other recipient of share thereof and any successor P.C. and shareholders thereof
shall be bound by the provisions of this Paragraph and no sale of the P.C. or
transfer of shares thereof shall be effective unless the purchaser or transferee
acknowledges in writing his agreement to the provisions of this Paragraph.
26. MODIFICATION
This Agreement may not be orally changed or modified. All changes or
modifications to this Agreement shall be in writing signed by the party against
whom enforcement of any waiver, change, modification, extension or discharge is
sought.
27. WAIVER
No delay or failure to exercise a remedy or right occurring upon any
breach or default shall be construed as a waiver of such remedy or right, nor
shall it affect any subsequent default of a same or different nature.
28. ASSIGNMENT
28.1 The P.C. shall not assign this Agreement or any of its rights
or obligations under this Agreement without the prior written consent of the
Company. Any transfer of the profits, losses or cash flow of the P.C. shall also
constitute an assignment hereunder and constitute a material breach. The Company
shall have a right to assign this Agreement in connection with a transfer of all
or substantially all of the Company's business whether by sale, merger or
otherwise.
31
28.2 The P.C. specifically agrees that the Company shall have the
right to perform the services to be provided hereunder through any parent,
subsidiary, division or affiliate of the Company without written consent from
the P.C.
29. SUCCESSORS AND ASSIGNS
All of the provisions herein contained shall be binding upon an
inure to the benefit of the respective successors and permitted assigns of the
parties hereto to the same extent as if such successors and permitted assigns
were in each case named as a party to this Agreement.
30. EFFECT OF INVALIDITY
Should any part of this Agreement for any reason be declared
invalid, such decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if this Agreement
had been executed with the invalid parties thereof eliminated.
31. NOTICES
Any notice or communications required or permitted hereunder shall
be deemed to have been sufficiently given or served for all purposes if in
writing and delivered personally to the party or to an officer of the party, or
sent by registered or certified mail, postage and charges prepaid, return
receipt requested to the parties' addresses as set forth below:
To the P.C.: Xxxxxxx X. Order, M.D., P.C.
c/o
To the Company: Molecular Radiation Management, Inc.
or such other address as may subsequently be provided to the other party in
writing.
32
Unless otherwise expressly set forth in this Agreement, any such notice shall be
deemed to be given on the date on which the same was deposited in a regularly
maintained receptacle for the deposit of United States mail, addressed and sent
as above.
32. FURTHER ACTIONS
At any time and from time to time, each party agrees, without
further consideration, to take such actions and to execute and deliver such
documents as may be necessary to effectuate the purposes of this Agreement.
33. CAPTIONS
The paragraph captions contained in this Agreement are inserted only
as a matter of convenience and reference, and in no way define, limit or
describe the scope of this Agreement, nor the intent of any provision thereof.
34. NO PARTNERSHIP/JOINT VENTURE
Nothing contained in this Agreement shall be deemed or construed as
creating a partnership or joint venture between the Company and the P.C. or
between the Company and any other person, nor cause the Company or the P.C. to
be responsible in any way for debts or obligations of the other or any person
whomsoever.
35. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but which, taken together, shall constitute
one Agreement.
33
36. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and as executed in Kings County. Kings County
shall have sole jurisdiction for any and all dispute resolutions, and all
parties consent to same.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
XXXXXXX ORDER, M D., P.C.
By:_____________________________________
Xxxxxxx X. 0rder, M.D., President
MOLECULAR RADIATION MANAGEMENT, INC.
By:_____________________________________
Name:
Title:
34
