FIRST AMENDED
MANAGEMENT, SERVICES AND FACILITY AGREEMENT
Between
REPRODUCTIVE PARTNERS, INC.
And
REPRODUCTIVE PARTNERS MEDICAL GROUP, INC.
THIS FIRST AMENDED MANAGEMENT, SERVICES AND FACILITY AGREEMENT
("Agreement") is dated January 1, 2005 by and between Reproductive Partners,
Inc., a Delaware corporation, with its principal place of business at 000 Xxxxx
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 ("RPI") and
Reproductive Partners Medical Group, Inc., a California medical corporation,
with a place of business at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000 ("Reproductive Partners"). RPI and Reproductive Partners are
individually
referred to herein as a "Party" and jointly, as "Parties."
RECITALS:
Reproductive Partners specializes in gynecological services, treatment
of human infertility encompassing the provision of in vitro fertilization and
other assisted reproductive services ("Infertility Services"). As of the date of
this Agreement, Reproductive Partners provides Infertility Services through
Xxxxx Xxx, M.D., Xxxxxx X. Xxxxxxxxxx, M.D., V. Xxxxxxx Xxxxx, M.D., Xxxxx X.
Xxxxxxx, M.D., Xxxxxxx X. Xxxxx, M.D. and Xxxxxx X. Xxxxx, M.D., the
shareholders of Reproductive Partners. Drs. Yee, Cassidenti, Garzo, Meldrum,
Xxxxx and Wisot are collectively referred to as "Physicians." Reproductive
Partners also contemplates providing Infertility Services through other
physician employees. Physicians have entered or will enter into employment
agreements with Reproductive Partners on or about the date of execution of this
Agreement.
RPI is in the business of making available to medical providers such as
Reproductive Partners certain assets (principally, facilities and equipment) and
support services, primarily consisting of (i) financial management; (ii)
administrative systems; (iii) clinical and laboratory organization and function;
(iv) marketing and (v) operations management. Such support services and the
provision of certain fixed assets are collectively referred to as "Services."
Reproductive Partners believes the Services will benefit its medical
practice and desires RPI's assistance with various aspects of Reproductive
Partners' medical practice through the utilization of the Services as more
particularly set forth herein. Reproductive Partners acknowledges and agrees
that the Services being made available to Reproductive Partners require
Reproductive Partners' cooperation and collaboration, and that RPI, in making
the Services available, makes no warranty or representation that the Services
will achieve Reproductive Partners' desired goals and objectives except as
expressly provided in this Agreement.
In addition, Reproductive Partners desires access to capital for
funding its growth and development, and RPI desires to provide such capital or
access to capital as provided herein.
On or about Xxxxxx 0, 0000, XXX and Reproductive Partners entered into
an agreement (the "Former Agreement") titled Management, Services and Facility
Agreement whereby RPI agreed to provide the Services to Reproductive Partners.
The parties now desire to amend that agreement in its entirety on the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the above recitals which the parties
incorporate into this Agreement, the mutual covenants and agreements herein
contained and other good and valuable consideration, Reproductive Partners
hereby agrees to purchase from RPI the Services and RPI agrees to provide the
Services to Reproductive Partners on the terms and conditions provided herein.
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement, the
following definitions shall apply:
1.1.1 "Adjustments" shall mean adjustments for refunds,
discounts, contractual adjustments, professional courtesies, and other
activities that do not generate a collectible fee as reasonably
determined by RPI and Reproductive Partners. Adjustments shall not
include Bad Debt.
1.1.2 "Additional Service Fee" shall mean a monthly fee paid
by Reproductive Partners to RPI in an amount equal to a percentage of
Reproductive Partners' monthly PDE.
1.1.3 "Assets" shall mean those fixed assets utilized in
connection with the operation of Reproductive Partners' medical
practice, including, but not limited to, fixed assets and leasehold
improvements.
1.1.4 "Bad Debt" shall mean all or a portion of an account,
loan or note receivable considered to be uncollectible in accordance
with Generally Accepted Accounting Principles ("GAAP"),
1.1.5 "Base Service Fee" shall mean a monthly fee paid by
Reproductive Partners to RPI in an amount equal to a percentage of
Reproductive Partners' monthly Physician and Other Professional
Revenues.
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1.1.6 "Cost Center" shall mean Reproductive Partners' Cost
Centers as described in the Physician Employment Agreements.
1.1.7 "Cost of Services" shall have the meaning set forth
in Article 2.
1.1.8 "Facilities" shall mean the medical offices and clinical
spaces of Reproductive Partners, including any satellite locations,
related businesses and all medical group business operations of
Reproductive Partners, which are utilized by Reproductive Partners in
its medical practice.
1.1.9 "Fiscal Year" shall mean the 12-month period beginning
January 1 and ending December 31 of each year.
1.1.10 "Infertility Services" shall mean gynecological
services, treatment of human infertility encompassing the provision of
in vitro fertilization and other assisted reproductive services
provided by Reproductive Partners or any Physician Employee and Other
Professional Employee.
1.1.11 "RPI Overhead" shall mean salaries, bonuses, payroll
taxes and benefits for RPI corporate office employees, rent and
expenses related to the operation of the RPI corporate office, travel
and entertainment expenses for corporate employees.
1.1.12 "Other Professional Employee" shall mean a
non-physician individual who provides services, including nurse
anesthetists, physician assistants, nurse practitioners, psychologists,
and other such professional employees who generate professional
charges, but shall not include Technical Employees.
1.1.13 "Physician-Employee" shall mean an individual,
including Physicians and any other physician who is an employee of
Reproductive Partners or is under contract with Reproductive Partners,
including physicians employed by entities with whom Reproductive
Partners has contracted, to provide Infertility Services to
Reproductive Partners' patients and is duly licensed as a physician in
the State of California.
1.1.14 "Physician and Other Professional Revenues" shall mean
all fees, whether received or accrued, and actually recorded each month
(net of Adjustments) by or on behalf of Reproductive Partners as a
result of professional medical and laboratory services furnished to
patients by Physicians and Physician-Employees and Other Professional
Employees and, except as described in the next succeeding sentence,
other fees or income earned in their capacity as professionals, whether
rendered in an inpatient or outpatient setting, including but not
limited to, medical director fees or technical fees from medical
ancillary services, consulting fees, ultrasound fees from businesses
owned or operated by Physicians and, including, but not limited to,
contributions by pharmaceutical and other companies for marketing and
research activities). Physician and Other Professional Revenues shall
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not include (i) board attendance fees and other compensation in
connection with board memberships; provided, the compensation for board
related activities does not exceed $5,000 in the aggregate, annually,
per Physician and (ii) other services where Physician does not provide
professional medical services such as testimony and consultation for
litigation-related proceedings, lectures, passive investments,
fundraising, or writing ("Permitted Services"; the compensation from
Permitted Services may be retained by a Physician or Physician-Employee
without limit, subject to Section 4.7.5 hereof. Physician and Other
Professional Revenues are sometimes referred to herein as "Revenues."
1.1.15 "Pre-distribution Earnings" ("PDE") shall mean (i)
Physician and Other Professional Revenues, less (ii) Cost of Services
and the Base Service Fee.
1.1.16 "Receivables" shall mean and include all rights to
payment for services rendered or goods sold, including, without
limitation, accounts receivables, contract rights, chattel paper,
documents, instruments and other evidence of patient indebtedness to
Reproductive Partners, policies and certificates of insurance relating
to any of the foregoing, and all rights to payment, reimbursement or
settlement or insurance or other medical benefit payments assigned to
Reproductive Partners by patients or pursuant to any Preferred
Provider, HMO, capitated payment agreements or other agreements between
Reproductive Partners and a payer, recorded each month (net of
Adjustments).
1.1.17 "Services" shall mean RPI making available certain
personnel and assets (including, without limitation, all facilities and
equipment necessary to operate Reproductive Partners' medical practice
for the provision of Infertility Services) and support services,
primarily consisting of (i) financial management; (ii) administrative
systems; (iii) clinical and laboratory organization and function; (iv)
marketing and (v) operations management, all as more fully set forth in
Article 3.
1.1.18 "Technical Employees" shall mean embryologists and
other laboratory personnel, ultrasonographers, phlebotomists and
technicians who provide services to Reproductive Partners.
ARTICLE 2
COST OF SERVICES
2.1 "Cost of Services" shall mean all ordinary and necessary expenses
of Reproductive Partners and all direct ordinary and necessary operating
expenses, without xxxx-up, of RPI, exclusive of RPI Overhead, incurred in
connection with products and/or services that are specific to Reproductive
Partners or customized for Reproductive Partners or that are related to volume
based usage by Reproductive Partners, including, without limitation, the
following costs and expenses, whether incurred by RPI or Reproductive Partners:
2.1.1 Salaries and fringe benefits of all RPI and other
employees employed at Reproductive Partners Facilities, along with
payroll taxes or all other taxes and charges now or hereafter
applicable to such personnel, and services of independent contractors;
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2.1.2 Base salary and expenses incurred in the recruitment of
additional physicians for Reproductive Partners, including, but not
limited to employment agency fees, relocation and interviewing expenses
and any actual out-of-pocket expenses of RPI personnel in connection
with such recruitment effort in an amount, up to $250,000 annually for
a period of three (3) years for each new physician's employment;
provided, (i) "additional physician" shall mean a new physician whose
hiring is not to replace a physician who has left Reproductive Partners
within 12 months prior to the employment of the new physician, but
whose hiring increases Reproductive Partner's full-time equivalent
("FTE") physicians to a number greater than Reproductive Partner's FTE
physicians for the previous 12 months; and (ii) "additional physician"
shall not mean a physician providing Infertility Services to patients
in "Territory" during the 12 month period immediately preceding
employment by Reproductive Partners. No more than one new physician per
Fiscal Year shall qualify as an additional physician for this Cost of
Services treatment.
2.1.3 Marketing expenses incurred by or on behalf of
Reproductive Partners, such as costs of printing marketing materials,
media placements, and consumer seminars;
2.1.4 Any sales and use taxes assessed against Reproductive
Partners related to the operation of Reproductive Partners' medical
practice;
2.1.5 Lease payments, depreciation expense (determined
according to GAAP), taxes and interest directly relating to the
Facilities and equipment, and other expenses of the Facilities
described in Section 3.2 below;
2.1.6 Legal fees paid by RPI or Reproductive Partners to
outside counsel in connection with matters specific to the operation of
Reproductive Partners such as regulatory approvals required as a result
of the parties entering into this Agreement; provided, however, legal
fees incurred by the parties relative to the execution or performance
of this Agreement or as a result of a dispute between the parties under
this Agreement shall be borne by each party and shall not be considered
a Cost of Services; and provided, further any cost related to disputes
between or among Physicians shall not be considered Cost of Services
and are outside the scope of this Agreement.
2.1.7 Health benefits provided to Physicians and
Physician-Employees, including health and life insurance and long-term
disability;
2.1.8 All insurance necessary to operate Reproductive Partners
including fire, theft, general liability professional liability and
malpractice insurance for Physicians and Physician-Employees of
Reproductive Partners, and Other Professional and Technical Employees
provided by RPI;
2.1.9 Professional licensure fees and board certification fees
of Physician- Employees, and Other Professional Employees rendering
Infertility Services on behalf of Reproductive Partners;
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2.1.10 Membership in professional associations and continuing
professional education for Physicians and Physician-Employees and Other
Professional Employees;
2.1.11 Risk Management Program described in Section 3.8
herein;
2.1.12
Cost of filing fictitious name permits pursuant to
this Agreement;
2.1.13 Cost of supplies, medical and administrative, and all
direct general and administrative expenses, including but not limited
to travel and entertainment expenses, car allowances (including car
leases), dues and subscriptions, car and other business related
expenses, such as cellular telephone, relative to Reproductive
Partners; and
2.1.14 Such other costs and expenses directly incurred by RPI
related to Reproductive Partners' operations which are included in the
annual operation budget referred to in Section 5.2.1 or otherwise
approved by Reproductive Partners in writing.
2.1.15 Cost incurred by RPI with respect to specific requests
for services from Reproductive Partners that are outside those provided
for in this Agreement. For such requested services, RPI and
Reproductive Partners will mutually determine how such specific
requests will be carried out, as well as how charges and costs,
including, but not limited to travel, will be applied.
2.1.16 Reproductive Partners' Bad Debt.
2.1.17 Costs incurred by RPI with respect to Services related
to a specific activity requested by Reproductive Partners that are in
excess of those Services typically provided to other medical providers
for the same activity, including, but not limited to additional travel
and staffing.
2.2 Notwithstanding anything to the contrary contained herein,
Cost of Services shall not include costs of the following:
2.2.1 Any federal or state income taxes of Reproductive
Partners or RPI other than as provided above;
2.2.3 The Base Service Fee;
2.2.4 Any amount paid to or on behalf of any Physician or
Physician-Employee including salary, payroll taxes, fringe benefits,
draw or pension contributions (all of which come out of Reproductive
Partners' share of PDE);
2.2.5 RPI's cash outlay to acquire capital assets for which
depreciation expense is to be charged as a Cost of Service under
Section 2.1.5.
2.2.6 RPI Overhead;
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ARTICLE 3
DUTIES AND RESPONSIBILITIES OF RPI
3.1 SERVICES AND ADMINISTRATION.
3.1.1 Reproductive Partners hereby engages RPI to provide the
Services. RPI agrees that during the term of this Agreement, RPI, its
affiliates and any Authorized Subcontractors (collectively "RPI") will
not provide the Services to any person or entity within the Counties of
San Xxxx Obispo, Xxxx, Santa Xxxxxxx, San Bernardino, Ventura, Los
Angeles, Orange, Riverside, San Diego or Imperial, California, (the
"Territory"), and Reproductive Partners agrees to limit its use of the
Services to the Territory, without prior written consent from RPI. None
of the Services made available to Reproductive Partners include any
physician medical functions. RPI acknowledges that its timely
performance of its duties and responsibilities as delineated in this
Article 3 are material to this Agreement and to Reproductive Partners'
interest. It is agreed that Reproductive Partners currently has offices
in Los Angeles, Orange and San Diego Counties. With respect to San Xxxx
Obispo, Xxxx, Santa Xxxxxxx, San Bernardino, Ventura, Riverside and
Imperial Counties, in the event that after five (5) years from the date
of this Agreement, Reproductive Partners has not expanded into any of
such Counties, RPI may provide the Services to other medical practices
in any of such Counties after giving Reproductive Partners written
notice of Reproductive Partners' right of first refusal to establish an
office and practice within such Counties, provided the terms of the
relationship between RPI and the other medical practices are not more
favorable to the other medical practices than the terms set forth in
the written notice from RPI to Reproductive Partners.
3.1.2 RPI will, on behalf of Reproductive Partners and as
directed by Reproductive Partners, xxxx patients timely and collect
professional fees for Infertility Services rendered by Reproductive
Partners at the Facilities, outside the Facilities for Reproductive
Partners' hospitalized patients, and for all other Infertility Services
rendered by any Physician- Employee or Other Professional Employees.
Reproductive Partners hereby appoints RPI for the term hereof to be its
true and lawful attorney-in-fact, for the following purposes: (i) xxxx
patients in Reproductive Partners' name and on its behalf; (ii) collect
Receivables resulting from such xxxxxxxx in Reproductive Partners' name
and on its behalf (recognizing that successfully collecting Receivables
may be dependent on Reproductive Partners' participation and
cooperation, Reproductive Partners will reasonably cooperate with
respect to RPI's collection efforts, and policies and procedures
established by the Practice Management Board governing the collection
of Receivables); (iii) receive payments from insurance companies,
prepayments from health care plans, and all other third-party payers;
(iv) take possession of and endorse in the name of Reproductive
Partners (and/or in the name of any Physician Employee or Other
Professional Employee rendering Infertility Services to patients of
Reproductive Partners) any notes, checks, money orders, and other
instruments received in payment of Receivables; and (v) at Reproductive
Partners' request, initiate the institution of legal proceedings in the
name of Reproductive Partners, with Reproductive Partners' cooperation,
to collect any accounts and monies owed to Reproductive Partners, to
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enforce the rights of Reproductive Partners as creditor under any
contract or in connection with the rendering of any service by
Reproductive Partners, and to contest adjustments and denials by
governmental agencies (or its fiscal intermediaries) as third-party
payers.
3.1.3 RPI will provide the administrative services function of
supervising and maintaining (on behalf of Reproductive Partners) all
files and records relating to the operations of the Facilities,
including but not limited to accounting and billing records, including
for billing purposes, patient medical records, and collection records.
Patient medical records shall at all times be and remain the property
of Reproductive Partners and shall be located at the Facilities and be
readily accessible for patient care. RPI's management of all files and
records shall comply with all applicable state and federal laws and
regulations, including without limitation, those pertaining to
confidentiality of patient records. The medical records of each patient
shall be expressly deemed confidential and shall not be made available
to any third party except in compliance with all applicable laws, rules
and regulations. RPI shall have access to such records in order to
provide the Services hereunder, to perform billing functions, and to
prepare for the defense of any lawsuit in which those records may be
relevant. The obligation to maintain the confidentiality of such
records shall survive termination of this Agreement. Reproductive
Partners shall have unrestricted access to all of its records at all
times.
3.1.4 RPI will provide, as requested by Reproductive Partners,
all reasonably necessary clerical, accounting, bookkeeping and computer
services, printing, postage and duplication services, medical
transcribing services, and any other necessary or appropriate
administrative services reasonably necessary for the efficient
operation of Reproductive Partners' medical practice at the Facilities.
3.1.5 With Reproductive Partners' cooperation, and
participation RPI will design and assist with implementing an
appropriate marketing program for Reproductive Partners. Reproductive
Partners' participation is essential in developing such marketing
program and accordingly, will designate one or more physicians to work
with RPI in designing and implementing such marketing program.
3.1.6 RPI, upon request of Reproductive Partners, will assist
Reproductive Partners in recruiting additional physicians, including
RPI providing such administrative functions as advertising for and
identifying potential candidates, checking credentials, and arranging
interviews; provided, however, Reproductive Partners shall interview
and make the ultimate decision as to the suitability of any physician
to become associated with Reproductive Partners. All physicians
recruited by RPI and accepted by Reproductive Partners shall be
employees of or independent contractors to Reproductive Partners.
3.1.7 RPI will assist Reproductive Partners and the Cost
Centers in negotiating any managed care contracts to which Reproductive
Partners desires to become a party. RPI will provide administrative
assistance to Reproductive Partners in fulfilling its obligations under
any such contract.
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3.1.8 RPI will arrange, in consultation with Reproductive
Partners, for legal and accounting services as may otherwise be
reasonably required in the ordinary course of Reproductive Partners'
operation.
3.2 FACILITIES. Reproductive Partners shall determine the nature and
extent of the facilities reasonably needed for Reproductive Partners' medical
practice and RPI will assist Reproductive Partners in obtaining such Facilities,
including providing administrative support, effort and resources in obtaining
the Facilities, including all furniture, equipment and furnishings necessary for
the Facilities, all repairs, maintenance and improvements thereto, utility
(telephone, electric, gas, water) services, customary janitorial services,
refuse disposal and all other services reasonably necessary in conducting
Reproductive Partners' medical practice at the Facilities. RPI will arrange for
the cleaning of the Facilities, and timely maintenance and cleanliness of the
equipment, furniture and furnishings located therein. RPI will advise, counsel
and collaborate with Reproductive Partners regarding the condition, use and
needs for the Facilities, the improvements thereto, equipment and services.
3.3 EXECUTIVE DIRECTOR AND OTHER PERSONNEL.
3.3.1 EXECUTIVE DIRECTOR. RPI will employ an Executive
Director, approved by the Practice Management Board, as defined in
Section 5.1,to manage and administer all of the day-to-day business
functions of the Facilities. RPI and Reproductive Partners agree to use
good faith efforts to recruit and hire such Executive Director prior to
March 31, 2005. All costs and expenses associated with the recruitment
of the initial Executive Director shall be borne by RPI. The Executive
Director's compensation shall be approved by Reproductive Partners.
Reproductive Partners may require that the Executive Director be
terminated in Reproductive Partners' reasonable discretion and in such
event, all costs and expenses associated with such termination shall be
a Cost of Services.
3.3.2 PERSONNEL. RPI will provide, as requested by
Reproductive Partners, Other Professional Employees, Technical
Employees, support and administrative personnel, clerical, secretarial,
bookkeeping and collection personnel reasonably necessary for the
efficient operation of Reproductive Partners at the Facilities. Such
personnel must be approved by Reproductive Partners, but will be under
the direction and supervision of the Executive Director, except that
Technical Employees and Other Professional Employees subject to the
professional supervision of Reproductive Partners. The compensation of
such personnel shall be approved by Reproductive Partners and
Reproductive Partners may request that any of such personnel be
terminated in its reasonable discretion and in such event, all cost and
expenses associated with such termination shall be a Cost of Services.
3.4 FINANCIAL PLANNING AND GOALS. RPI, in collaboration with
Reproductive Partners, will prepare, for the approval of the Practice Management
Board , an annual capital and operating budget (the "Budget") reflecting the
anticipated Revenues and Cost of Services, sources and uses of capital for
growth of Reproductive Partners' practice and for the provision of Infertility
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Services at the Facilities. RPI will present the Budget to the Practice
Management Board for its approval at least thirty (30) days prior to the
commencement of the Fiscal Year. If the Practice Management Board can not agree
on the Budget for any Fiscal Year during the term of this Agreement, the Budget
for the preceding Fiscal Year will serve as the Budget until such time as a new
Budget is approved.
3.5 FINANCIAL STATEMENTS. RPI will deliver to Reproductive Partners
monthly financial statements ("Financial Statements") within thirty (30) days
after the end of each calendar month. Such Financial Statements will comprise,
on a monthly and year-to-date basis, a statement of Reproductive Partners'
Revenues and Cost of Services, and PDE, as hereinafter defined.
3.6 TAX PLANNING AND TAX RETURNS. RPI will not be responsible for any
tax planning or tax return preparation for Reproductive Partners, but will
provide support documentation in connection with the same. Such support
documentation will not be destroyed without Reproductive Partners' consent.
3.7 INVENTORY AND SUPPLIES. For the account of Reproductive Partners,
RPI shall order and purchase inventory and supplies, and such other materials
which are requested by Reproductive Partners to enable Reproductive Partners to
deliver Infertility Services in a cost-effective quality manner.
3.8 RISK MANAGEMENT. RPI shall assist Reproductive Partners in the
development of a Risk Management Program and in meeting the standards of such
Program.
3.9 PERSONNEL POLICIES AND PROCEDURES. RPI shall develop personnel
policies, procedures and guidelines, governing office behavior, protocol and
procedures, which, with Reproductive Partners' approval, will aid in compliance
with applicable laws and guidelines related to employment and human resources
management.
3.10 LICENSES AND PERMITS. RPI will coordinate and assist Reproductive
Partners in its application for and efforts to obtain and maintain all federal,
state and local licenses, certifications and regulatory permits required for or
in connection with the operations of Reproductive Partners and equipment located
at the Facilities, other than those relating to the practice of medicine or the
administration of drugs by Physicians and Physician-Employees.
3.11 SUBCONTRACTED SERVICES. Subject to prior approval of Reproductive
Partners, which approval shall be reasonably given, RPI is expressly authorized
to subcontract with other persons or entities for any of the services that RPI
is required to perform pursuant to this Agreement ("Authorized Subcontractors").
Provided, however, that RPI shall disclose any term of this Agreement to any
subcontractor or potential subcontractor of RPI who does or will perform
services to Reproductive Partners to the extent the subcontractor or potential
subcontractor will perform significant or continuing functions for Reproductive
Partners which are specific obligations of RPI hereunder and shall incorporate
such terms into such subcontract, including but not limited to the restrictive
provisions of Section 3.1.1 hereof. No such subcontract will limit the overall
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responsibility of RPI for compliance with the terms and provisions of this
Agreement unless Reproductive Partners specifically agrees in writing. Nothing
in this Section 3.11 shall apply to contracts entered into by RPI that relate to
services not required to be performed directly by RPI such as payroll services.
3.12 ACCESS TO PROTECTED HEALTH INFORMATION. In connection with the
Services provided by RPI pursuant to this Agreement, RPI and its employees,
representatives and agents will have access to protected health information
("PHI") maintained by Reproductive Partners. In connection with such PHI, RPI
contemporaneous with entering into this Agreement will enter into a Business
Associate Agreement with Reproductive Partners in accordance with the
regulations promulgated under the Health Insurance Portability & Accountability
Act of 1996.
ARTICLE 4
DUTIES AND RESPONSIBILITIES OF REPRODUCTIVE PARTNERS
4.1 TIMELY PERFORMANCE. Reproductive Partners, in engaging RPI to
provide the Services described in this Agreement, acknowledges that Reproductive
Partners' timely performance of its duties and responsibilities as delineated in
this Article 4 are material to this Agreement and to RPI's interest.
4.2 PROFESSIONAL SERVICES. Reproductive Partners shall use its best
efforts to cause its Physicians and Physician-Employees to provide Infertility
Services to Reproductive Partners' patients in compliance at all times with
ethical standards, laws and regulations applying to the practice of medicine in
the applicable jurisdiction which such Physician or Physician-Employee provides
Infertility Services on behalf of Reproductive Partners. Reproductive Partners
shall ensure that each Physician, Physician-Employee, any Other Professional
Employee employed by Reproductive Partners, and any other professional provider
associated with Reproductive Partners is duly licensed to provide the
Infertility Services being rendered within the scope of such provider's
practice. In addition, Reproductive Partners shall require each Physician and
Physician-Employee to maintain a DEA number and appropriate medical staff
privileges as determined by Reproductive Partners during the term of this
Agreement. In the event that any disciplinary actions or medical malpractice
actions are initiated against any Physician, Physician-Employee or other
professional provider, Reproductive Partners shall promptly inform the Executive
Director and provide the underlying facts and circumstances of such action, and
the proposed course of action to resolve the matter. Periodic updates, but not
less than monthly, shall be provided to RPI.
4.3 MEDICAL PRACTICE. Reproductive Partners shall use and occupy the
Facilities exclusively for the purpose of providing Gynecology, Infertility
Services, and related services and activities and shall use its best efforts to
comply with all applicable laws and regulations and all applicable standards of
medical care, including, but not limited to, those established by the American
Society of Reproductive Medicine. The medical practice conducted at the
Facilities shall be conducted solely by Physicians employed by Reproductive
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Partners and Physician-Employees employed by or serving as independent
contractors to Reproductive Partners, and Other Professional Employees employed
by Reproductive Partners. No other physician or medical practitioner shall be
permitted to use or occupy the Facilities without the prior written consent of
RPI, except in the case of a medical emergency, in which event, notification
shall be provided to RPI as soon after such use or occupancy as possible.
4.4 EMPLOYMENT OF PHYSICIAN AND OTHER PROFESSIONAL EMPLOYEES. In the
event Reproductive Partners shall determine that additional physicians are
necessary, Reproductive Partners shall undertake and use its best efforts to
select physicians who, in Reproductive Partners' judgment, possess the
credentials and expertise necessary to enable such physician candidates to
become affiliated with Reproductive Partners for the purpose of providing
Infertility Services. Reproductive Partners shall cause each Physician-Employee
to enter into an employment or service agreement with Reproductive Partners or
their respective professional association which is a partner of Reproductive
Partners ("Physician Employment Agreement") in such form as is mutually and
reasonably acceptable to Reproductive Partners and RPI. Upon Reproductive
Partners' request, RPI shall consult with and advise Reproductive Partners
respecting the hiring, compensation, supervision, evaluation and termination of
Physician-Employees.
4.5 CONTINUING MEDICAL EDUCATION Reproductive Partners shall require
its Physician-Employees to participate in such continuing medical education as
Reproductive Partners deems to be reasonably necessary for such physicians to
remain current in the provision of Infertility Services.
4.6 PROFESSIONAL INSURANCE. Reproductive Partners shall maintain
professional liability coverage at all times during the Term, in limits of not
less than $1 million per occurrence, $3 million in the aggregate. In the event
Reproductive Partners desires to be made an additional insured under RPI's
professional liability coverage as provided for in Section 11.2, Reproductive
Partners shall cooperate in the obtaining and retaining of professional
liability insurance by assuring that its Physicians and Physician-Employees and
Other Professional Employees, if applicable, are insurable and participating in
an on-going Risk Management Program in cooperation with RPI.
4.7 DIRECTION OF PRACTICE Reproductive Partners, as a continuing
condition of RPI's obligations under this Agreement, shall at all time during
the Term be and remain legally organized and operated to provide Infertility
Services in a manner consistent with state and federal laws. Reproductive
Partners, through its physicians, is expected to provide leadership in its
market area and reasonably cooperate with RPI in RPI's efforts to make the
Services available to Reproductive Partners. In furtherance of which:
4.7.1 Reproductive Partners shall operate and maintain at the
Facilities a full-time practice of medicine specializing in the
provision of Infertility Services and shall maintain and enforce the
Physician Employment Agreements or in such other form as is mutually
and reasonably agreed to by Reproductive Partners and RPI in writing.
Reproductive Partners covenants that it shall not employ any physician,
or have any physician as a shareholder, unless said physician shall
sign the Physician Employment Agreement prior to assuming the status as
employee and/or shareholder. Reproductive Partners covenants that
Page 12 of 35
should a physician become a shareholder of Reproductive Partners, that
a condition precedent to the issuance of the shares shall be the
ratification of this Service Agreement. The relationship between
Reproductive Partners and physicians who independently contract with
Reproductive Partners to provide services shall be in such other form
as is mutually and reasonably agreed to by Reproductive Partners and
RPI in writing. RPI hereby approves of the terms and conditions of
Reproductive Partners' agreements with the University of California at
San Diego and the United States Navy.
4.7.2 Reproductive Partners shall not terminate the Physician
Employment Agreement(s) of any Physician, except in accordance with the
Physician Employment Agreement(s). Reproductive Partners shall not
amend or modify the Physician Employment Agreements in any material
manner, nor waive any material rights of Reproductive Partners
thereunder without the prior written approval of RPI, which approval
will not be unreasonably withheld, and it shall be deemed unreasonable
for RPI to withhold consent of an amendment or modification mandated by
the necessity of compliance with applicable law. Reproductive Partners
covenants to enforce the terms of each Physician Employment Agreement,
including but not limited to any terms confirming a
Physician-Employee's commitment to practice medicine solely through
Reproductive Partners for a specified number of years.
4.7.3 Recognizing that RPI would not have entered into this
Agreement but for Reproductive Partners' covenant to maintain and
enforce the Physician Employment Agreements with any physician now
employed or physicians who may hereafter become employees of
Reproductive Partners, and in reliance upon such Physician-Employee's
observance and performance of all of the obligations under the
Physician Employment Agreements, any damages, liquidated damages,
compensation, payment or settlement received by Reproductive Partners
from a physician whose employment is terminated, shall be considered to
be Physician and Other Professional Revenues.
4.7.4 Reproductive Partners shall retain that number of
Physician-Employees as are reasonably necessary and appropriate for the
provision of Infertility Services. Each Physician-Employee shall hold
and maintain a valid and unrestricted license to practice medicine in
the applicable jurisdiction where such Physician-Employee provides
Infertility Services on behalf of Reproductive Partners, and all
full-time Physician-Employees shall be board eligible in the practice
of gynecology, with training in the subspecialty of infertility and
assisted reproductive medicine. Reproductive Partners shall be
responsible for paying the compensation and benefits, as applicable,
for all Physician-Employees, and for withholding, as required by law,
any sums for income tax, unemployment insurance, social security, or
any other withholding required by applicable law. RPI, at the request
of Reproductive Partners, will establish and administer the
compensation with respect to such Physician-Employees in accordance
with the written agreement between Reproductive Partners and each
Physician Employee. RPI shall neither control nor direct any Physician
in the performance of Infertility Services for patients, and RPI will
not unreasonably interfere with the employer-employee relationship
between Reproductive Partners and its Physician-Employees.
Page 13 of 35
4.7.5 Reproductive Partners and its Physician-Employees shall
provide patient care and clinical backup as required for the proper
provision of Infertility Services to patients of Reproductive Partners
at Reproductive Partners' Facilities. Reproductive Partners shall
require that its full-time Physician-Employees devote substantially all
of their professional time, effort and ability to Reproductive
Partners' practice, including the provision of Infertility Services and
the development of such practice, and that Permitted Services, of any
Physician-Employee do not interfere with such Physician-Employees full
time practice of Infertility Services at Reproductive Partners'
Facilities.
4.7.6 Reproductive Partners shall obtain and maintain
necessary licenses and operate clinical laboratory and tissue bank
services in accordance with all applicable laws and regulations.
Reproductive Partners agrees that the Medical Director or Tissue Bank
Director, if applicable, shall be Physician-Employees or Other
Professional Employees, if applicable, of Reproductive Partners who
meet the qualifications required by applicable State law or regulation,
and that should there be a vacancy in any such position, Reproductive
Partners will cause another Physician-Employee or Other Professional
Employee, if applicable, to fill such vacancy in accordance with
applicable State law.
4.7.7 Reproductive Partners acknowledges that it bears all
medical obligations to patients treated at the Facilities and covenants
that it is responsible for all tissue, specimens, embryos or biological
material ("Biological Materials") kept at the Facilities on behalf of
the patients (or former patients) of Reproductive Partners, except for
the negligence, willful or intentional misconduct of RPI's employees;
provided, however, this shall not apply to circumstances where an RPI
employee is acting under the direction or supervision of a
Physician-Employee. In the event of a termination or dissolution of
Reproductive Partners, or the termination of this Agreement for any
reason, Reproductive Partners and the Physicians will have the
obligation to account to patients and to arrange for the storage or
disposal of such Biological Materials in accordance with patient
consent and the ethical guidelines of the American Society of
Reproductive Medicine ("Relocation Program"). RPI, in such event, will,
at the request of Reproductive Partners, assist in the administrative
details of such a Relocation Program for so long as Reproductive
Partners shall request and an appropriate fee shall be paid during that
time. These obligations shall survive the termination of this
Agreement.
4.7.8 Reproductive Partners will designate certain physicians
to (i) work with RPI in designing and implementing marketing plans,
(ii) participate in marketing strategy sessions, and (iii) identify
targeted referral sources and managed care opportunities.
4.8 PRACTICE DEVELOPMENT, COLLECTION EFFORTS AND NETWORK
INVOLVEMENT. Reproductive Partners agrees that during the term of this
Agreement, Reproductive Partners covenants for itself and will use reasonable
efforts to cause its Physician-Employees to:
4.8.1 Execute such documents and take such steps reasonably
necessary to assist billing and collecting for patient services
rendered by Reproductive Partners and its Physician-Employees;
Page 14 of 35
4.8.2 Promote Reproductive Partners' medical practice and
participate in marketing efforts developed by RPI and approved by
Reproductive Partners;
4.8.3 Reasonably cooperate with respect to RPI's
collection efforts, and policies and procedures governing the
collection of Receivables; and
4.8.4 Comply with all applicable laws and regulations,
federal, state and local.
ARTICLE 5
JOINT DUTIES AND RESPONSIBILITIES
5.1 FORMATION AND OPERATION OF PRACTICE MANAGEMENT BOARD. RPI and
Reproductive Partners will establish a practice management board ("Practice
Management Board"), which will be responsible, to assist Reproductive Partners,
in developing management and administrative policies for the overall operation
of Reproductive Partners. The Practice Management Board will consist of
designated representatives from RPI as determined by RPI, designated
representatives of Reproductive Partners as determined by Reproductive Partners,
the Executive Director and the Medical Director of each Cost Center. It is the
intent and objective of RPI and Reproductive Partners that they agree on the
overall provision of the Services to Reproductive Partners. In the case of any
matter requiring a formal vote, Reproductive Partners shall have one (1) vote
and RPI shall have one (1) vote; provided, however, the determination with
respect to adding Shareholders, or hiring or firing of Physician-Employees shall
be determined solely by Reproductive Partners. The desire is that RPI and
Reproductive Partners agree on matters of operations and that, if they disagree,
they will have to work cooperatively to resolve any disagreement. The Practice
Management Board shall meet at least three (3) times per calendar year and will
maintain minutes of all meetings, which minutes shall, among other things,
reflect all decisions of the Practice Management Board.
5.2 DUTIES AND RESPONSIBILITIES OF THE PRACTICE MANAGEMENT Board. With
the assistance of RPI, the Practice Management Board shall have, among others,
the following duties and responsibilities:
5.2.1 ANNUAL BUDGETS AND PROFITABILITY. Review and approve
annual capital and operation budgets prepared by RPI. The parties
covenant and agree to use their respective best efforts to assist the
Practice Management Board in achieving the projected budgets.
Reproductive Partners and RPI agree that, recognizing changes in
circumstances, annual budgets and forecast are subject to revisions.
Accordingly, the Practice Management Board may, from time to time,
propose to modify the annual budgets, as needed, including without
limitation, staff reductions, so that Reproductive Partners operates in
a profitable mode which means that PDE is positive on a monthly basis.
Reproductive Partners' approval of such modifications shall not be
unreasonably withheld and shall become part of the Budget. Further,
Reproductive Partners agrees that in the event Reproductive Partners
Page 15 of 35
incurs operational losses at any point during the term of this
Agreement, nothing herein shall obligate RPI to incur losses under this
Agreement in order to sustain Reproductive Partners' operations. For
example, RPI may take appropriate steps to reduce its Cost of Services
in order to avoid negative PDE at any point.
5.2.2 CAPITAL IMPROVEMENTS AND EXPANSION.Except as otherwise
provided herein, any renovation and expansion plans, and capital
equipment expenditures with respect to Reproductive Partners shall be
reviewed and approved by the Practice Management Board and shall be
based upon the best interests of Reproductive Partners, and shall take
into account capital priorities, economic feasibility, physician
support, productivity and then current market and regulatory
conditions.
5.2.3 MARKETING BUDGET.Reproductive Partners shall assist in
the development of an annual marketing budget and plan prepared by RPI
for approval by the Practice Management Board. All annual advertising
and other marketing budgets prepared by RPI shall be subject to the
review, amendment, approval and disapproval of the Practice Management
Board.
5.2.4 STRATEGIC PLANNING. The Practice Management Board shall
develop long-term strategic plans.
5.2.5 PHYSICIAN HIRING.Make recommendations regarding the
number and type of physicians required for the efficient operation of
Reproductive Partners; provided, the final determination on physician
hiring shall be made by Reproductive Partners.
5.2.6 EXECUTIVE DIRECTOR. The Practice Management Board will
direct the day-to-day functions of the Executive Director in
implementing the policies agreed by the Practice Management Board. The
Executive Director shall meet with the Medical Director of each Cost
Center on a regular basis as reasonably requested by either party to
discuss issues pertaining to the particular Cost Center. Salary and
fringe benefits paid to the Executive Director shall be recommended by
the Practice Management Board and approved by Reproductive Partners.
The Practice Management Board will conduct an annual evaluation of such
individual's performance.
.
ARTICLE 6
FINANCIAL ARRANGEMENTS
6.1 COMPENSATION. The compensation set forth in this Article 6 is being
paid to RPI in consideration of the substantial commitment made, capital
provided and services to be rendered by RPI hereunder and is fair and
reasonable. RPI shall be paid the following amounts (collectively
"Compensation"):
6.1.1 an amount reflecting all Cost of Services (whether
incurred by RPI or Reproductive Partners) paid or accrued by RPI
pursuant to the terms of this Agreement.
Page 16 of 35
6.1.2 during each year of this Agreement commencing with the
Effective Date , a Base Service Fee, paid monthly but reconciled to
annual Revenues, of an amount equal to six percent (6%) of the first
$8.0 million of Reproductive Partners' Revenues; five percent (5%) of
Reproductive Partners' Revenues over $8.0 million, but less than $12
million; and four percent (4%) of Reproductive Partners' Revenues of
$12 million or more. Reproductive Partners shall not pay a Base Service
Fee on fees which Reproductive Partners collects only to distribute to
others provided the amount collected equals the amount remitted to
third parties. Such fees include fees collected for (i) anesthesia
services, (ii) donor compensation collected from patients and paid to
third-party agencies, (iii) reference laboratories fees in connection
with donor services, and (iv) pre-implantation genetic testing service
fees and (v) pharmaceutical company grants for educational meetings.
6.1.3 commencing with the Effective Date, an additional
service fee ("Additional Service Fee") paid monthly but reconciled to
Fiscal Year operating results of Reproductive Partners, as follows:
Applicable Fiscal Year Additional Service Fee
---------------------- ----------------------
2005 15% of PDE
2006 15% of PDE
2007 15% of PDE
2008 15% of PDE
2009 15% of PDE
2010 14% of PDE
2011 13% of PDE
2012 12% of PDE
2013 11% of PDE
2014 and thereafter 10% of PDE
Provided, however, beginning with Fiscal Year 2010, if PDE
does not increase sufficiently so that the decrease in percent covers
the amount of the Additional Service Fee paid in 2009, RPI's Additional
Service Fee shall be the lesser of 15% of PDE for the applicable year
or the dollar amount of the Additional Service Fee paid in 2009. Set
forth below, for ease of understanding this principle, are examples of
how this provision would apply:
Page 17 of 35
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Year Contract Example Outcomes Reproductive RPI Additional RPI Additional
Additional Partners' PDE Service Fee % Service Fee $
Service Fee % Earned Earned
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
2009 15% $4.0 Million 15% $600,000
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
2010 14% A $3.0 Million 15% $450,000
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
B $5.0 Million 14% $700,000
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
2011 13% A $3.0 Million 15% $450,000
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
B $5.0 Million 13% $650,000
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
2012 12% A $3.0 Million 15% $450,000
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
B $5.0 Million 12% $600,000
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
C $4.5 Million 13% $600,000
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
2015 10% A $3.0 Million 15% $450,000
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
B $5.0 Million 12% $600,000
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
C $7.0 Million 10% $700,000
--------------------- ------------------ ------------------- ------------------ ------------------- ------------------
1. In year 2010, in Example A, RPI is paid at the 15% level,
but makes less, because PDE decreased from $4 million in 2009 to $3
million entitling RPI to the lesser of 15% of $3.0 million or $600,000.
In Example B, RPI is paid 14% of PDE because PDE increased sufficiently
such that the Additional Service Fee earned is equal to or greater than
the amount earned in 2009.
2. In year 2011, in Example A, because PDE decreased from $4
million in 2009 to $3 million, RPI is paid at the 15% level entitling
RPI to the lesser of 15% of $3.0 million or $600,000. In Example B, RPI
is paid 13% of PDE because PDE increased sufficiently such that the
Additional Service Fee earned is equal to or greater than the amount
earned in 2009.
3. In year 2012, in example A, because PDE decreased from $4
million in 2009 to $3 million, RPI is paid at the 15% level entitling
RPI to the lesser of 15% of $3.0 million or $600,000. In Example B, RPI
is paid 12% of PDE because PDE increased sufficiently such that the
Additional Service Fee earned is equal to or greater than the amount
earned in 2009. In Example C, although PDE is greater than PDE recorded
in 2009, the increase was not sufficient to cause RPI to be paid at
least $600,000 in PDE at the 12% level, therefore RPI is paid the
lesser of 15% of $4.5 million or $600,000. ($600,000 is in actuality
approximately13% of $4.5 million.)
4. In year 2015, in Example A, because PDE decreased from $4
million in 2009 to $3 million, RPI is paid at the 15% level entitling
RPI to the lesser of 15% of $3.0 million or $600,000. In Example B,
although PDE is greater than PDE recorded in 2009, the increase was not
sufficient to cause RPI to be paid at least $600,000 in PDE at the 10%
level, therefore, RPI is paid the lesser of 15% of $5 million or
$600,000. ($600,000 is in actuality 12% of $5 million. In Example C,
RPI is paid 10% of PDE because PDE increased sufficiently such that the
Additional Service Fee earned is equal to or greater than the amount
earned in 2009.
Page 18 of 35
It is understood and agreed that the Additional Service Fee is
paid to RPI in the event Reproductive Partners achieves positive PDE.
Nothing herein shall be interpreted to mean that if PDE is negative,
RPI makes a contribution to Reproductive Partners to cover any such
operating losses.
6.2 ACCOUNTS RECEIVABLE.
6.2.1 On or before the 20th business day of each month,
commencing with the first month following the Effective Date, RPI shall
reconcile the Receivables of Reproductive Partners arising during the
previous calendar month. Subject to the terms and conditions of this
Agreement, Reproductive Partners hereby sells and assigns to RPI as
absolute owner, and RPI hereby purchases from Reproductive Partners all
Receivables hereafter owned by or arising in favor of Reproductive
Partners on or before the 20th business day of each month. RPI shall
transfer or pay such amount of funds to Reproductive Partners equal to
the Receivables less Compensation due RPI pursuant to Section 6.1.
Reproductive Partners shall cooperate with RPI and execute all
necessary documents in connection with the purchase and assignment of
such Receivables to RPI or at RPI's option, to its lenders. All
collections in respect of such Receivables shall be deposited in a bank
account at a bank designated by RPI. To the extent Reproductive
Partners comes into possession of any payments in respect of such
Receivables, Reproductive Partners shall direct such payments to RPI
for deposit in bank accounts designated by RPI.
6.2.2 Any Medicare or Medicaid Receivables due to Reproductive
Partners shall be excluded from the operation of Section 6.2.1 hereof.
Any such Receivables shall be subject to agreement of Reproductive
Partners and RPI with respect to the collection thereof.
6.2.3 Reproductive Partners will be charged monthly interest
at an annualized rate of prime plus 2% on Receivables with average days
sales outstanding ("DSO") greater than 60 days for a trailing
three-month period. For example, if prime is 6% and Reproductive
Partners' Revenues are $1,385,000 for a three-month period, the average
Revenues per day (assuming 90 days in such three-month period) equals
$15,389. If on the last day of that same three-month period
Reproductive Partners' Receivables are $1.5 million, then Reproductive
Partners' DSO equal 97 days ($1.5 million divided by $15,389),
resulting in interest being charged for the month on $569,393.00 of
Reproductive Partners' Receivables ($15,389 times 37 days) at a rate of
0.67% ( 6% prime plus 2% divided by 12), or a $3,814.93 interest
charge. Any application of this Section 6.2.3 shall exclude Bad Debt
from the determination of Receivables subject to an interest payment.
6.2.4 On or before the 20th business day of each month,
commencing with the month following the Effective Date, RPI shall remit
to Reproductive Partners the PDE generated for the previous calendar
month.
Page 19 of 35
6.3 ADVANCES. RPI may advance necessary funds for Reproductive
Partners to meet Cost of Services and, to meet Physician distributions (through
their respective professional associations), and Physician-Employee salaries;
provided, however, nothing herein shall obligate RPI to incur Cost of Services
and Physician salary Advances in excess of Revenues under this Agreement in
order to sustain Reproductive Partners' operations. As security for such
Advances, Reproductive Partners shall deliver to RPI with the execution of this
Agreement a Security Agreement in the form of Exhibit 6.3 hereto giving RPI a
collateral interest in all Receivables of Reproductive Partners and PDE payable
to Reproductive Partners Shareholders. RPI shall, in its sole discretion, be
entitled to take any and all necessary action to prevent financial losses, in
the form of Cost of Services on behalf of Reproductive Partners, to RPI in the
event Reproductive Partners' Cost of Services exceed Reproductive Partners'
Revenues at any point during the Term of this Agreement. Notwithstanding
anything herein to the contrary, no Advances will be made by RPI to satisfy
Physician-Employee draws, salaries or pension contributions, unless requested by
Reproductive Partners.
6.3.1 Any Advance hereunder shall be a debt owed to RPI by
Reproductive Partners and shall be repaid within in twelve equal
installments plus accrued interest on the first day of each month
following any Advance. To the extent PDE is available for distribution
to Physicians for a particular month; RPI is authorized to deduct any
outstanding Advance from the PDE prior to distribution to the
Physicians to pay any installment then due.
6.3.2 Interest expense will be charged on an Advance and will
be computed at the Prime Rate plus 2% used by RPI's primary bank.
6.4 BUILD OUT AND CAPITAL COMMITMENT.
RPI agrees to invest sufficient capital to build, equip and supply
appropriate office and laboratory space for Reproductive Partners to conduct its
medical practice at the Facilities. As an expression of RPI's commitment to the
growth of Reproductive Partners' practice, RPI agrees to maintain, during the
term of this Agreement, an on-going investment in the Facilities and equipment,
without an interest charge to Reproductive Partners, of an amount up to
$500,000.00 ("Capital Commitment"). Any amounts invested by RPI in Reproductive
Partners' medical practice in excess of the Capital Commitment provided for this
Section will be charged to Reproductive Partners as a capital cost at an
interest rate of prime plus two (2%) percent.
ARTICLE 7
TERM, SERVICE RIGHTS, PAYMENTS, AND OTHER COMMITMENTS
7.1 This Agreement shall begin on the date first above written
("Effective Date") and shall continue for twenty-five years, with automatic
successive twenty-five year terms, unless sooner terminated as herein provided.
Page 20 of 35
7.2 In consideration of the considerable investment of time and
resources in Reproductive Partners expected by RPI, Reproductive Partners grants
to RPI the exclusive right to provide the Services to Reproductive Partners.
ARTICLE 8
TERMINATION OF THE AGREEMENT
8.1 TERMINATION
This Agreement may be terminated by either party in the event
of the following:
8.1.1 INSOLVENCY. If a receiver, liquidator or trustee of any
party shall be appointed by court order, or a petition to reorganize shall be
filed against any party under any bankruptcy, reorganization or insolvency law,
and shall not be dismissed within 90 days, or any party shall file a voluntary
petition in bankruptcy or make assignment for the benefit of creditors, then
either of the other parties may terminate this Agreement upon 10 days prior
written notice to the other parties.
8.1.2 MATERIAL BREACH. If either party believes that the other
party has materially breached its obligations hereunder, then the non-breaching
party ("Accuser") shall give notice ("Breach Notice") to the breaching party
("Accused"), setting forth in detail the basis for the belief ("Accusation") and
indicating that the Accused must cure said breach within 30 days ("Cure
Period").
(a) If the Accused, in good faith denies the Accusation, then
the Accused shall give notice within the Cure Period to the Accuser demanding an
arbitration of whether there has been a material breach of this Agreement. Such
arbitration shall be conducted in accordance with Section 11.7 hereof and the
parties agree, in good faith, to commence the arbitration within 60 days of the
Breach Notice and participate in the arbitration in a "time is the essence of
the arbitration" basis.
(b) If the Accused agrees with the Breach Notice and cures the
Material Breach within the Cure Period, no further action will be required by
either party.
(c) If the Accused agrees with the Breach Notice, but the
breach is not curable within the Cure Period and the Accused is making diligent
efforts to cure the breach during the Cure Period ("Good Faith Cure Efforts"),
the parties shall continue to operate under the terms and conditions of this
Agreement. If after the exercise of such Good Faith Cure Efforts, the Accused
shall be unable to cure the breach within 60 days from the Breach Notice, the
Accuser shall, in good faith, extend the time in which to cure the breach, upon
request of the Accused. In the event the Accuser does not extend the time in
which to cure the breach, the Accused shall be entitled to arbitrate pursuant to
Section 11.7 whether the Accused is entitled to an extension in order to cure
the breach.
Page 21 of 35
(d) It is the intent of the parties that in the event of a
material breach hereunder, the Accused shall the have the opportunity to a full
determination of whether there was a material breach, before this Agreement
terminates. If as a result of arbitration, there is a finding ("Finding") of a
material breach, the Accuser shall be entitled to terminate this Agreement and
the applicable section of Article 9 shall govern.
8.1.3 CHANGES IN LAW. (a) Notwithstanding any other provision
of this Agreement, if the governmental agencies that administer the Medicare,
Medicaid or other federally funded programs (or their representatives or agents)
or any other federal, state or local governmental or non-governmental agency or
any court or administrative tribunal passes, issues or promulgates any law,
rule, regulation, standard, interpretation, order, decision or judgment,
including but not limited to those relating to any regulations pursuant to state
or federal anti-kickback or self-referral statutes (collectively or
individually, "Legal Event") which in the good faith judgment of one party (the
"Noticing Party") materially and adversely affects either party's licensure,
accreditation, certification or ability to refer, to accept any referral, to
xxxx, to claim, to present a xxxx or claim or to receive payment or
reimbursement from any federal, state, or local governmental or non-governmental
payor or which subjects the Noticing Party to a risk of prosecution or civil
monetary penalty or which, in the good faith judgment of the Noticing Party,
indicates a rule or regulation with which the Noticing Party desires further
compliance,, then the Noticing Party may give the other party notice of intent
to amend or terminate this Agreement in accordance with the next subsection.
(b) The Noticing Party shall give notice to the other party
together with an opinion of counsel setting forth the following information:
(i) The Legal Event(s) giving rise to the notice;
(ii) The consequences of the Legal Event(s) as to the
Noticing Party;
(iii) The Noticing Party's intention to either:
(1) Terminate this Agreement due to
unacceptable risk of prosecution or civil monetary penalty; or
(2) Amend this Agreement, together with a
statement that the purpose thereof is one or more of the following:
(A) to further comply with any
anti-kickback or statutory provisions or rules or regulations created or
affected by the Legal Event(s); and/or
(B) to satisfy any licensure,
accreditation or certification requirements created or affected by the Legal
Event(s); and/or
(C) to eliminate or minimize the
risk of prosecution or civil monetary penalty;
Page 22 of 35
(iv) The Noticing Party's proposed amendment(s); and
(v) The Noticing Party's request for commencement
of the Renegotiation Period (as defined below).
(c) In the event of notice under either (a) or (b) above, the
parties shall have 90 days from the giving of such notice ("Renegotiation
Period") within which to attempt to amend this Agreement in accordance with the
Noticing Party's proposal (if any) or otherwise as the parties may agree. If the
parties cannot agree upon whether a Legal Event requires amendment of this
Agreement, the dispute shall be resolved by arbitration as provided in Section
11.7 of this Agreement. Such arbitration shall be commenced and completed within
the Renegotiation Period or this Agreement will terminate, unless otherwise
agreed to in writing by the parties. If the parties or the arbitrator agree that
a Legal Event requires amendment of this Agreement and this Agreement is not so
amended within the Renegotiation Period, this Agreement shall terminate as of
midnight (Pacific Time) on the last day of the Renegotiation Period, unless
otherwise agreed to in writing by the parties. Except as otherwise required by
applicable law, any amounts owing to either party hereunder shall be paid, on a
pro rata basis, up to the date of termination, if the arbitration decision
involves a termination of this Agreement, and any obligation hereunder that is
to continue beyond expiration or termination shall so continue pursuant to its
terms. All opinions of counsel presented by the Noticing Party hereunder and any
corresponding opinions given by the other party in response shall be deemed
confidential and given solely for purposes of renegotiation and settlement of a
potential dispute and shall not be deemed disclosed so as to waive any
privileges otherwise applicable to said opinions.
(d) The parties agree that if the Legal Event involves the
Base Service and/or Additional Service Fees, the Substituted Fee provided for in
Section 8.1.3(e) shall apply to the extent that the arbitration determines that
the Substituted Fee does not violate any law, rule, regulation, standard,
interpretation, order, decision or judgment, including but not limited to those
relating to any regulations pursuant to state or federal anti-kickback or
self-referral statutes.
(e) During the Renegotiation Period, if applicable, RPI and
Reproductive Partners agree that RPI's Base Service Fee and Additional Service
Fee shall in no event be less than $83,917 per month, reasonably adjusted for
the level of Services provided by RPI to Reproductive Partners at that time as
compared to the Services provided during the twelve months following the date of
this Agreement ("Substituted Fee").
8.2 TERMINATION BY RPI FOR PROFESSIONAL DISCIPLINARY ACTIONS.
Reproductive Partners shall be obligated to suspend a physician whose
authorization to practice medicine is suspended, revoked or not renewed. RPI may
terminate this Agreement upon 10 days prior written notice to Reproductive
Partners if a Physician's authorization to practice medicine is suspended,
revoked or not renewed and Reproductive Partners has failed to suspend such
physician; provided, however, such action may not be taken until Reproductive
Partners has been given 30 days to resolve such physician's authorization to
practice medicine. Reproductive Partners shall notify RPI within five (5) days
of a notice that a physician's authorization to practice medicine is suspended,
Page 23 of 35
revoked or not renewed or that formal disciplinary action has been taken against
a physician which could reasonably lead to a suspension, revocation or
non-renewal of a physician's license.
8.3 TERMINATION BY REPRODUCTIVE PARTNERS AFTER FIVE (5) YEARS.
Reproductive Partners shall have the right at any time after this Agreement has
been in effect for five (5) years, to terminate this Agreement without cause by
giving RPI twelve (12) months' prior written notice (the "Termination Notice")
of Reproductive Partners' intent to terminate.
ARTICLE 9
PURCHASE OF ASSETS - OBLIGATIONS AND OPTIONS
9.1 TERMINATION BY RPI. If RPI terminates this Agreement due to the
insolvency of Reproductive Partners (Section 8.1.1), or for a Finding of
material breach by Reproductive Partners (Section 8.1.2), or Reproductive
Partners fails to suspend a physician whose license is suspended, revoked or not
renewed (Section 8.2), the following shall apply:
9.1.1 On the closing date (the "Closing Date") for purposes of
consummating the termination, Reproductive Partners shall:
(a) Pay to RPI in immediately available funds, an amount equal
to the net book value (in accordance with GAAP) of all RPI Assets at
all Facilities made available to Reproductive Partners by RPI;
(b) Pay to RPI in immediately available funds, an amount equal
to the uncollected accounts receivable purchased from Reproductive
Partners immediately prior to the Closing Date which have not been
charged to Reproductive Services as a Bad Debt under Cost of Services;
(c) If PDE for the 12-month period prior to the month in which
termination notice is delivered ("PDE Period") is greater than $3.0
million, pay to RPI in immediately available funds an amount equal to
$3.25 million plus 50% of Reproductive Partners' aggregate PDE in
excess of $3.0 million for the PDE Period or, if PDE for the PDE Period
is less than $3.0 million, pay to RPI in immediately available funds an
amount equal to 108% of PDE for the PDE Period.
(d) A Consent to Assignment from each landlord of real estate
leased by RPI for the benefit of Reproductive Partners to the extent
each landlord is willing to provide such consent. The parties shall
endeavor to obtain a consent that include a release of RPI from any
further obligations or liability under the leases as of the Closing
Date, except for liabilities accruing prior to the Closing Date, and
shall satisfy any requirements provided for in the assignment
provisions of the applicable leases;
(e) Hire all RPI employees working at the Facilities or make
provision for their termination, without liability to RPI after the
Closing Date.
Page 24 of 35
(f) Pay to RPI in immediately available funds any outstanding
liabilities under this Agreement, including any and all loans or
Advances
(g) Execute such documents and perform such acts as
may be reasonably necessary to
accomplish the transactions required to effect the termination.
For purposes of Sections 9.1, 9.2 9.3 and 9.4 the Closing Date shall
mean 90 days following termination of this Agreement.
9.2 TERMINATION BY REPRODUCTIVE PARTNERS In the event this
Agreement is terminated by Reproductive Partners as a result of the insolvency
of RPI (8.1.1) or a Finding of a material breach by RPI (8.1.2), the following
shall apply:
9.2.1 On the Closing Date for purposes of consummating the
termination, Reproductive Partners shall:
(a) Pay to RPI in immediately available funds, an amount equal
to the net book value (in accordance with GAAP) of all RPI Assets at
all Facilities made available to Reproductive Partners by RPI, in the
event Reproductive Partners opts to acquire the Assets;
(b) Pay to RPI in immediately available funds, an amount equal
to the uncollected accounts receivable purchased from Reproductive
Partners immediately prior to the Closing Date which have not been
charged to Reproductive Services as a Bad Debt under Cost of Services;
(c) If the termination is because of RPI's involvency and if
PDE for the PDE Period is greater than $3.0 million, pay to RPI in
immediately available funds an amount equal to $3.25 million plus 50%
of Reproductive Partners' aggregate PDE in excess of $3.0 million for
the PDE Period or, if PDE for the PDE Period is less than $3.0 million,
pay to RPI in immediately available funds an amount equal to 108% of
PDE for the PDE Period; or, if the termination is because of a Finding
of material breach by RPI, then Reproductive Partners shall pay RPI an
amount equal to 50% of the unamortized portion of the $3.25 million
which amount shall be amortized over 25 years from the date first above
written.
(d) Have the option of assuming leases for office and
equipment used directly for the operation of Reproductive Partners'
business. In such event, a Consent to Assignment from each landlord of
real estate leased by RPI for the benefit of Reproductive Partners to
the extent each landlord is willing to provide such consent shall be
obtained. Reproductive Partners shall endeavor to obtain a consent that
include a release of RPI from any further obligations or liability
under the leases as of the Closing Date, except for liabilities
accruing prior to the Closing Date and shall satisfy any requirements
provided for in the assignment provisions of the applicable leases ;
Page 25 of 35
(e) Hire all RPI employees working at the Facilities or make
provision for their termination, without liability to RPI after the
Closing Date.
(f) Pay to RPI in immediately available funds any outstanding
liabilities under this Agreement, including any and all loans or
Advances
(g) Execute such documents and perform such acts as may be
reasonably necessary to accomplish the transactions required to effect
the termination.
9.3 TERMINATION UNDER SECTION 8.3 BY REPRODUCTIVE PARTNERS. In
the event Reproductive Partners elects to terminate this Agreement pursuant to
Section 8.3 hereof, the following shall apply:
9.3.1 On the Closing Date for purposes of consummating the
termination, Reproductive Partners shall:
(a) Pay to RPI in immediately available funds, an amount equal
to the net book value (in accordance with GAAP) of all RPI Assets at
all Facilities made available to Reproductive Partners by RPI;
(b) Pay to RPI in immediately available funds, an amount equal
to the uncollected accounts receivable purchased from Reproductive
Partners immediately prior to the Closing Date which have not been
charged to Reproductive Services as a Bad Debt under Cost of Services;
(c) If PDE for the PDE Period is greater than $3.0 million,
pay to RPI in immediately available funds an amount equal to $3.25
million plus 50% of Reproductive Partners' aggregate PDE in excess of
$3.0 million for the PDE Period or, if PDE for the PDE Period is less
than $3.0 million, pay to RPI in immediately available funds an amount
equal to 108% of PDE for the PDE Period.
(d) A Consent to Assignment from each landlord of real estate
leased by RPI for the benefit of Reproductive Partners to the extent
each landlord is willing to provide such consent. Reproductive Partners
shall endeavor to obtain a consent that include a release of RPI from
any further obligations or liability under the leases as of the Closing
Date, except for liabilities accruing prior to the Closing Date and
shall satisfy any requirements provided for in the assignment
provisions of the applicable leases ;
(e) Hire all RPI employees working at the Facilities or make
provision for their termination, without liability to RPI after the
Closing Date.
(f) Pay to RPI in immediately available funds any outstanding
liabilities under this Agreement, including any and all loans or
Advances
(g) Execute such documents and perform such acts as
may be reasonably necessary to
accomplish the transactions required to effect the termination.
Page 26 of 35
9.4 TERMINATION BY EITHER PARTY UNDER SECTION 8.1.3. If
either party terminates this Agreement pursuant to Section 8.1.3, the following
shall apply:
9.4.1 On the Closing Date for purposes of consummating the
termination, Reproductive Partners shall:
(a) Pay to RPI in immediately available funds, an amount equal
to the net book value (in accordance with GAAP) of all RPI Assets at
all Facilities made available to Reproductive Partners by RPI;
(b) Pay to RPI in immediately available funds, an amount equal
to the uncollected accounts receivable purchased from Reproductive
Partners immediately prior to the Closing Date which have not been
charged to Reproductive Services as a Bad Debt under Cost of Services;
(c) Pay to RPI in immediately available funds, an amount equal
to the unamortized portion of $3.25 million which amount will be
amortized over 25 years from the date first above written.
(d) A Consent to Assignment from each landlord of real estate
leased by RPI for the benefit of Reproductive Partners to the extent
each landlord is willing to provide such consent. Reproductive Partners
shall endeavor to obtain a consent that include a release of RPI from
any further obligations or liability under the leases as of the Closing
Date, except for liabilities accruing prior to the Closing Date and
shall satisfy any requirements provided for in the assignment
provisions of the applicable leases ;
(e) Hire all RPI employees working at the Facilities or make
provision for their termination, without liability to RPI after the
Closing Date.
(f) Pay to RPI in immediately available funds any outstanding
liabilities under this Agreement, including any and all loans or
Advances
(g) Execute such documents and perform such acts as may be
reasonably necessary to accomplish the transactions required to effect
the termination.
9.5 TRANSFER OF OWNERSHIP
Upon receipt of payments due under this Article 9 and other payments
due, RPI shall transfer ownership and possession of the Assets, and assign all
right, title and interest in and to and obligations under the Lease(s) to
Reproductive Partners and return to Reproductive Partners all security deposits.
Reproductive Partners shall have the option of receiving full credit on the
payments due under this Article 9 for all liens, encumbrances or security
interest, or of having RPI transfer ownership of the Assets free and clear of
all liens, encumbrances or security interests thereon.
Page 27 of 35
ARTICLE 10
INSURANCE
10.1 Reproductive Partners shall carry professional liability
insurance, covering itself and its employees providing Infertility Services
under this Agreement in the minimum amount of $1 million per incident, $3
million in the aggregate, at its own expense. If possible under the terms of the
insurance coverage, Reproductive Partners shall use its best efforts to cause
RPI to be named an additional insured on such policies to the extent reasonably
available at no additional cost or expense. Evidence of such policies shall be
presented to RPI upon execution of this Agreement.
10.2 RPI shall carry professional liability insurance, covering itself
and its employees providing patient care under this Agreement in the minimum
amount of $1 million per incident, $3 million in the aggregate, at its own
expense. RPI shall use its best efforts to cause Reproductive Partners to be
made an additional insured under RPI's professional liability coverage;
provided, however, conditions for being made an additional insured shall be (i)
Reproductive Partners utilizing patient informed consent forms supplied by RPI,
provided such forms are consistent with law and any guidelines issued by the
American Society of Reproductive Medicine and (ii) Reproductive Partners
complying with requirements of RPI's insurance company. RPI shall also carry a
policy of public liability and property damage insurance with respect to the
Facilities under which the insurer agrees to indemnify RPI and Reproductive
Partners against all cost, expense and/or liability arising out of or based upon
any and all claims, accidents, injuries and damages customarily included within
the coverage of such policies of insurance available for RPI. The minimum limits
of liability of such insurance shall be $1 million combined single limit
covering bodily injury and property damage. RPI shall obtain and maintain in
full force and effect during the term of this Agreement, appropriate workers'
compensation insurance coverage on all employees of RPI, to the extent required
by law. Certificates of Insurance evidencing such policies and additional
insured status shall be presented to Reproductive Partners within thirty (30)
days after such coverage is in effect.
10.3 Reproductive Partners and RPI shall provide written notice to the
other at least thirty (30) days in advance of the effective date of any
reduction, cancellation or termination of the insurance required to be carried
by each hereunder.
ARTICLE 11
MISCELLANEOUS
11.1 INDEPENDENT CONTRACTOR. RPI and Reproductive Partners are
independent contracting parties. In this regard, the parties agree that:
11.1.1 The relationship between RPI and Reproductive Partners
is that of an independent supplier of non-medical services and a
medical practice, respectively, and, unless otherwise provided herein,
Page 28 of 35
nothing in this Agreement shall be construed to create a
principal-agent, employer-employee, or master-servant relationship
between RPI and Reproductive Partners;
11.1.2 Notwithstanding the authority granted to RPI herein,
RPI and Reproductive Partners agree that Reproductive Partners shall
retain the full authority to direct all of the medical, professional,
and ethical aspects of its medical practices;
11.1.3 Any powers of Reproductive Partners not specifically
vested in RPI by the terms of this Agreement shall remain with
Reproductive Partners;
11.1.4 Reproductive Partners shall, at all times, be the sole
employer of the Physician-Employees, other than the Physicians, the
Other Professional Employees required by law to be employees of
Reproductive Partners and all other professional personnel engaged by
Reproductive Partners in connection with the operation of its medical
practice at the Facilities, and shall be solely responsible for the
payment of all applicable federal, state or local withholding or
similar taxes and provision of workers' compensation and disability
insurance for such professional personnel that are employees of
Reproductive Partners;
11.1.5 No party shall have the right to participate in any
benefits, employment programs or plans sponsored by the other party on
behalf of the other party's employees, including, but not limited to,
workers' compensation, unemployment insurance, tax withholding, health
insurance, life insurance, pension plans or any profit sharing
arrangement;
11.1.6 In no event shall any party be liable for the debts or
obligations of any other party except as otherwise specifically
provided in this Agreement; and
11.1.7 Matters involving the internal agreements and finances
of Reproductive Partners, including but not limited to the distribution
of professional fee income among Physician Employees and, if
applicable, Other Professional Employees who are providing professional
services to patients of Reproductive Partners, and other employees of
Reproductive Partners, disposition of Reproductive Partners property
and stock, accounting, tax preparation, tax planning, and pension and
investment planning, hiring and firing of physicians, decisions and
contents of reports to regulatory authorities governing Reproductive
Partners and licensing, shall remain the sole responsibility of
Reproductive Partners and the individual Physicians.
11.2 FORCE MAJEURE. No party shall be liable to the other parties for
failure to perform any of the services required under this Agreement in the
event of a strike, lockout, calamity, act of God, unavailability of supplies, or
other event over which such party has no control, for so long as such event
continues and for a reasonable period of time thereafter, and in no event shall
such party be liable for consequential, indirect, incidental or like damages
caused thereby.
Page 29 of 35
11.3 EQUITABLE RELIEF. Without limiting other possible remedies
available to a non-breaching party for the breach of the covenants contained
herein, including the right of RPI to cause Reproductive Partners to enforce any
and all provisions of the Physician Employment Agreements described in Section
4.3 hereof, injunctive or other equitable relief shall be available to enforce
those covenants, such relief to be without the necessity of posting bond, cash
or otherwise. If any restriction contained in said covenants is held by any
court to be unenforceable or unreasonable, a lesser restriction shall be
enforced in its place and remaining restrictions therein shall be enforced
independently of each other.
11.4 PRIOR AGREEMENTS; AMENDMENTS. This Agreement supersedes all prior
agreements and understandings between the parties as to the subject matter
covered hereunder including the Former Agreement, and this Agreement may not be
amended, altered, changed or terminated orally. No amendment, alteration, change
or attempted waiver of any of the provisions hereof shall be binding without the
written consent of all parties, and such amendment, alteration, change,
termination or waiver shall in no way affect the other terms and conditions of
this Agreement, which in all other respects shall remain in full force.
11.5 ASSIGNMENT; BINDING EFFECT. This Agreement and the rights and
obligations hereunder may not be assigned without the prior written consent of
all of the parties, and any attempted assignment without such consent shall be
void and of no force and effect, except that RPI may assign this Agreement to
any affiliate, which for purposes of this Agreement, shall include any parent or
subsidiary of RPI, without the consent of Reproductive Partners, provided RPI
shall remain liable for its obligations hereunder. The provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties'
respective heirs, legal representatives, successors and permitted assigns.
11.6 WAIVER OF BREACH. The failure to insist upon strict compliance
with any of the terms, covenants or conditions herein shall not be deemed a
waiver of such terms, covenants or conditions, nor shall any waiver or
relinquishment of any right at any one or more times be deemed a waiver or
relinquishment of such right at any other time or times.
11.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California irrespective of the
principal place of business of the parties hereto. Any and all claims, disputes,
or controversies arising under, out of, or in connection with this Agreement or
any beach thereof, except for equitable relief sought pursuant to Section 11.3
hereof, shall be determined by binding arbitration in the State of California,
City of Los Angeles (hereinafter "Arbitration"). The party seeking determination
shall subject any such dispute, claim or controversy to the American Arbitration
Association, and the rules of commercial arbitration thereof shall govern. The
Arbitration shall be conducted and decided by a single arbitrator, unless the
parties mutually agree, in writing at the time of the Arbitration, to three
arbitrators. In reaching a decision, the arbitrator(s) shall have no authority
to change or modify any provision of this Agreement, including any liquidated
damages provision. Each party shall bear its own expenses and one-half the
expenses and costs of the arbitrator(s). Any application to compel Arbitration,
confirm or vacate an arbitral award or otherwise enforce this Section 11.7 shall
Page 30 of 35
be brought in the Courts of the State of California or the United States
District Court for the Central District of California, to whose jurisdiction for
such purposes Reproductive Partners and RPI hereby irrevocably consent and
submit.
11.8 SEPARABILITY. If any portion of the provisions hereof shall to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such portion or provisions in circumstances other than those in
which it is held invalid or unenforceable, shall not be affected thereby, and
each portion or provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law, but only to the extent the same continues to
reflect fairly the intent and understanding of the parties expressed by this
Agreement taken as a whole.
11.9 HEADINGS. Section and paragraph headings are not part of this
Agreement and are included solely for convenience and are not intended to be
full or accurate descriptions of the contents thereof.
11.10 NOTICES. Any notice or other communication required by or which
may be given pursuant to this Agreement shall be in writing and mailed,
certified or registered mail, postage prepaid, return receipt requested, or
overnight delivery service, such as FedEx or DHL Express, prepaid, and shall be
deemed given when received. Any such notice or communication shall be sent to
the address set forth below:
11.10.1 If for RPI:
Xxxxx Xxx, M.D., President
Reproductive Partners, Inc.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
11.10.2 If for Reproductive Partners:
Xxxxx Xxx, M.D., President
Reproductive Partners Medical Group, Inc.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
With a copy to:
Xxxxxx X. Xxxxx, Esq.
Madden, Jones, Xxxx & Xxxxxxx
0000 X. Xxxxx Xxxx., Xxxxx 0000
Xxxx Xxxxx, XX 00000
Any party hereto, by like notice to the other parties, may designate
such other address or addresses to which notice must be sent.
Page 31 of 35
11.11 ENTIRE AGREEMENT. This Agreement and all attachments hereto
represent the entire understanding of the parties hereto with respect to the
subject matter hereof and thereof, and cancel and supersede all prior agreements
and understandings among the parties hereto, including the Former Agreement,
whether oral or written, with respect to such subject matter.
11.12 NO MEDICAL PRACTICE BY RPI. RPI will not engage in any activity
that constitutes the practice of medicine, and nothing contained in this
Agreement is intended to authorize RPI to engage in the practice of medicine or
any other licensed profession.
11.13 CONFIDENTIAL INFORMATION.
11.13.1 During the initial term and any renewal term(s) of
this Agreement, the parties may have access to or become acquainted
with each other's trade secrets and other confidential or proprietary
knowledge or information concerning the conduct and details of each
party's business ("Confidential Information"). At all times during and
after the termination of this Agreement, no party shall directly or
indirectly, communicate, disclose, divulge, publish or otherwise
express to any individual or governmental or non-governmental entity or
authority (individually and collectively referred to as "Person") or
use for its own benefit, except in connection with the performance or
enforcement of this Agreement, or the benefit of any Person any
Confidential Information, no matter how or when acquired, of another
party. Each party shall cause each of its employees to be advised of
the confidential nature of such Confidential Information and to agree
to abide by the confidentiality terms of this Agreement. No party shall
photocopy or otherwise duplicate any Confidential Information of
another party without the prior express written consent of the such
other party except as is required to perform services under this
Agreement. All such Confidential Information shall remain the exclusive
property of the proprietor and shall be returned to the proprietor
immediately upon any termination of this Agreement.
11.13.2 Confidential Information shall not include information
which (i) is or becomes known through no fault of a party hereto; (ii)
is learned by a party from a third-party legally entitled to disclose
such information; or (iii) was already known to a party at the time of
disclosure by the disclosing party.
11.13.3 In order to minimize any misunderstanding regarding
what information is considered to be Confidential Information, RPI or
Reproductive Partners will designate at each others request the
specific information which RPI or Reproductive Partners considers to be
Confidential Information.
11.14 INDEMNIFICATION.
11.14.1 RPI agrees to indemnify and hold harmless Reproductive
Partners, its directors, officers, employees and servants from any
suits, claims, actions, losses, liabilities or expenses (including
reasonable attorney's fees) arising out of or in connection with any
act or failure to act by RPI related to the performance of its duties
Page 32 of 35
and responsibilities under this Agreement. The obligations contained in
this Section 11.14.1 shall survive termination of this Agreement. This
indemnification provision shall apply to both third-party claims and
second-party claims, including, but not limited to, claims, actions,
damages, losses, expenses, or costs (including, but not limited to,
reasonable attorneys' fees and court costs) incurred by one party to
this Agreement as a result of an act, or omission to act, on the part
of the other party, its agents, or employees pursuant to this Agreement
11.14.2 Reproductive Partners agrees to indemnify and hold
harmless RPI, its shareholders, directors, officers, employees and
servants from any suits, claims, actions, losses, liabilities or
expenses (including reasonable attorney's fees) arising out of or in
connection with any act or failure to act by Reproductive Partners
related to the performance of its duties and responsibilities under
this Agreement. The obligations contained in this Section 11.14.2 shall
survive termination of this Agreement. This indemnification provision
shall apply to both third-party claims and second-party claims,
including, but not limited to, claims, actions, damages, losses,
expenses, or costs (including, but not limited to, reasonable
attorneys' fees and court costs) incurred by one party to this
Agreement as a result of an act, or omission to act, on the part of the
other party, its agents, or employees pursuant to this Agreement
11.14.3 In the event of any claims or suits in which RPI
and/or Reproductive Partners and/or their directors, officers,
employees and servants are named, each of RPI and Reproductive Partners
for their respective directors, officers, employees agree to cooperate
in the defense of such suit or claim; such cooperation shall include,
by way of example but not limitation, meeting with defense counsel (to
be selected by the respective party hereto), the production of any
documents in his/her possession for review, response to subpoenas and
the coordination of any individual defense with counsel for the
respective parties hereto. The respective party shall, as soon as
practicable, deliver to the other copies of any summonses, complaints,
suit letters, subpoenas or legal papers of any kind, served upon such
party, for which such party seeks indemnification hereunder. This
obligation to cooperate in the defense of any such claims or suits
shall survive the termination, for whatever reason, of this Agreement.
[Remainder of Page Left Intentionally Blank]
Page 33 of 35
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.
REPRODUCTIVE PARTNERS, INC.
By: /s/ Xxxxx Xxx
-------------------------------
Xxxxx Xxx, M.D., President
REPRODUCTIVE PARTNERS MEDICAL GROUP, INC.
By: /s/ Billyh Xxx
------------------------------
BillyYee, M.D., President
Page 34 of 35
Exhibit 6.3
Security Agreement
[Attached]
Page 35 of 35
