AMENDED AND RESTATED SERVICE AGREEMENT
THIS AMENDED AND RESTATED SERVICE AGREEMENT dated as of ______________,
199__, by and between COASTAL PHYSICIANS SERVICES OF THE SOUTHEAST, INC., a
North Carolina corporation ("Management Company"), and HALIFAX EMERGENCY
PHYSICIAN ASSOCIATES, P.C., a Virginia professional corporation ("Professional
Corporation").
RECITALS:
WHEREAS, Professional Corporation and Management Company have entered into
a Service Agreement, as amended from time to time, pursuant to which Management
Company is performing certain management functions to permit Professional
Corporation to be exclusively responsible for the professional and medical
aspects of providing medical services to patients (the "Service Agreement"); and
WHEREAS, Professional Corporation and Management Company acknowledge and
desire that this Agreement shall amend, restate and replace the Service
Agreement and shall constitute the exclusive contractual arrangement between the
parties regarding the matters hereinafter set forth; and
WHEREAS, Professional Corporation and Management Company mutually desire to
continue their contractual relationship under and subject to the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree as follows:
ARTICLE I
RELATIONSHIP OF THE PARTIES
---------------------------
1.1 Independent Relationship. Professional Corporation and Management
Company shall in all respects hereunder carry out their respective duties and
obligations and perform as independent contractors. The provisions of this
Agreement shall not create a partnership, joint venture, agency or employment
relationship between the parties. Management Company shall have no authority to
direct or control any medical, professional, or ethical aspects of the practice
of medicine by Professional Corporation or any physicians associated or
affiliated with Professional Corporation.
1.2 Patient Referrals. The parties agree that the benefits to Professional
Corporation hereunder do not require, are not payment for, and are not in any
way contingent upon the admission, referral or any other arrangement for the
provision of any item or service offered by Management Company to any patient.
1.3 Term of Agreement. This Agreement shall commence on the date executed
(the "Effective Date"), shall continue for a period of ten (10) years following
the Effective Date, and shall automatically renew indefinitely for successive
one (1) year terms thereafter unless terminated in accordance with the
provisions set forth below.
ARTICLE II
SERVICES TO BE PROVIDED BY MANAGEMENT COMPANY
---------------------------------------------
2.1 Performance of Management Functions. Management Company shall provide
or arrange for the services set forth in this Article and shall be compensated
for such services as set forth in this Agreement. Management Company is hereby
expressly authorized to perform its services hereunder in whatever manner it
deems reasonably appropriate to meet the business needs of Professional
Corporation, including, without limitation, performance of some or all of the
functions and duties hereunder at locations other than the principal place of
business or office of Professional Corporation. Professional Corporation shall
assist Management Company in efficiently managing the day-to-day operations of
the Professional Corporation in a businesslike manner.
2.2 Audits and Statements. Management Company shall prepare annual
financial statements for the operations of the Professional Corporation and, if
appropriate, shall cause the financial statements to be audited by a certified
public accountant of good standing selected by Management Company. If
Professional Corporation desires an audit of the financial statements provided
by Management Company hereunder, Professional Corporation may obtain such an
audit at its own expense. Management Company shall prepare monthly unaudited
financial statements containing a balance sheet and statements of income and
cash flow from Professional Corporation's operations, which shall be prepared
and made available to Professional Corporation within thirty (30) days after the
close of each calendar month.
2.3 Management Services and Administration.
2.3.1 Professional Corporation hereby appoints Management Company as
its sole and exclusive manager and administrator of all day-to-day business
functions. Professional Corporation agrees that the purpose and intent of
this Amended and Restated Service Agreement is to relieve the Professional
Corporation to the maximum extent possible of the administrative,
accounting, personnel and business aspects of the practice of medicine,
with Management Company assuming responsibility and being given all
necessary authority to perform these functions. Management Company agrees
that Professional Corporation will be responsible for all medical functions
relating to clinical services provided. Management Company will have no
authority, directly or indirectly, to perform, and will not perform, any
medical function.
2.3.2 Upon Professional Corporation's request, Management Company
shall, on behalf of Professional Corporation, xxxx patients and collect the
professional fees for medical services rendered by Professional Corporation
or its physicians. Such billing and collection shall be governed by the
following provisions:
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(a) If Management Company is to do the billing and collection of
professional fees, Management Company may contract with separate billing or
collection companies for the performance of this function, including
companies that may be related to or affiliated with Management Company.
Professional Corporation hereby appoints Management Company, or its
designee, for the term hereof to be its true and lawful attorney-in-fact,
for the following purposes: (i) to xxxx patients in Professional
Corporation's name and on its behalf for all professional and other
services rendered by Professional Corporation or any of its employees or
physicians; (ii) to collect accounts receivable resulting from such billing
in Professional Corporation's name and on its behalf; (iii) to receive
payments from patients, hospitals, insurance companies, health care plans,
Medicare, Medicaid and all other third party payors; (iv) to take
possession of and endorse in the name of Professional Corporation (and/or
in the name of physician, such payment intended as payment of a physician's
xxxx) any notes, checks, money orders, insurance payments and other
instruments received in payment of accounts receivable; (v) to initiate the
institution of legal proceedings in the name of Professional Corporation,
with its approval, to collect any accounts and monies owed to the
Professional Corporation; and (vi) to enforce the rights of Professional
Corporation as creditors under any contract or in connection with the
rendering of any service, and to contest adjustments and denials by
governmental agencies (or its fiscal intermediaries) as third-party payors.
(b) If Professional Corporation arranges for the billing and
collection of professional fees, it shall require the billing company
selected by it to perform all functions set forth in (i) through (vi) of
paragraph (a) above, and to remit the full amounts of such collections,
minus billing company's fees, to Management Company so that Management
Company can perform the other services set forth herein.
(c) All costs of billing and collection shall be an expense of
Professional Corporation.
2.3.3 Management Company shall design, supervise and maintain custody
of all business-related and financial files and records relating to the
operation of the Professional Corporation, including, but not limited to,
accounting, billing, patient records, and collection records. Patient
medical records and charts, to the extent such are not under the control of
a hospital or similar institutional health care provider, or which are
legally the responsibility of the Professional Corporation under state law
or regulations, shall at all times be and remain the property of
Professional Corporation, the hospital or the patient, as required under
applicable state law, and shall be maintained so that such records are
readily accessible for patient care. The management of all files and
records shall comply with applicable state and federal statutes. Management
Company shall preserve the confidentiality of patient medical records and
use information contained in such records only for the limited purpose
necessary to perform the services set forth herein; provided, however, in
no event shall a breach of said confidentiality be deemed a default under
this Agreement.
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2.3.4 Management Company shall provide the data necessary for
Professional Corporation to prepare its annual income tax returns and
financial statements, and shall arrange for the preparation of same.
Management Company shall make timely payment on behalf of Professional
Corporation of any federal, state or local income, franchise, social
security, unemployment or withholding taxes owed by the Professional
Corporation.
2.3.5 Management Company shall negotiate and administer all managed
care contracts on behalf of Professional Corporation.
2.3.6 Management Company shall, upon Professional Corporation's
request, arrange for legal and accounting services related to Professional
Corporation's operations traditionally used or required in the ordinary
course of business, including services required to enforce any physician
contract or other contract containing restrictive covenants. Professional
Corporation shall be solely responsible for the payments for such services.
2.3.7 Management Company shall provide advice and assistance to
Professional Corporation in connection with Professional Corporation's
procurement, management and administration of professional liability
insurance for Professional Corporation. Such services shall include,
without limitation, assisting with and arranging for the collection of
premiums for such insurance, assisting Professional Corporation with, and
monitoring the performance of, and making recommendations concerning, its
actuarial consultants, claims management functions, specialized legal
services and other insurance management services as deemed appropriate in
connection with such professional liability insurance programs; provided,
however, Management Company shall not be responsible for any claims, losses
or judgments against Professional Corporation or its physicians, agents or
employees, whether or not covered by insurance.
2.3.8 In the event Professional Corporation shall employ any
personnel, Management Company shall assist Professional Corporation with
its personnel administration and shall provide consulting services to
Professional Corporation in connection with personnel selection and all
other aspects of personnel administration, as requested. Management Company
shall provide for the administration of fringe benefit programs, if any,
which Professional Corporation may, from time to time, determine to provide
to its employees to the extent such programs may exist or may be applicable
to any employees of Professional Corporation. Such benefit programs may
include life insurance, health insurance, education leave, professional
dues, vacation allowances, disability insurance, pension or profit sharing
plans, and other fringe benefits. It is understood that consulting services
in the area of personnel shall apply only to employees of Professional
Corporation.
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2.3.9 Management Company shall provide consulting services and assist
with the financial administration and data processing functions of
Professional Corporation. The following financial accounting and data
processing services shall be provided:
(a) Billing, collecting and auditing of fees and accounts as set forth
in Section 2.3.2 herein;
(b) Data processing services in connection with financial planning,
management and administration;
(c) Preparing and, where required, filing of all financial and
statistical reports, reports required by governmental authorities and tax
returns; and
(d) Monitoring, and making recommendations concerning outside
accounting and legal services which may be required by and provided to
Professional Corporation.
2.3.10 Management Company shall monitor and consult with and advise
Professional Corporation on its communications systems, including
telephonic, courier or delivery services, and all other aspects of
comprehensive communications systems between and among the Professional
Corporation, its clients and other third parties;
2.3.11 Management Company shall provide advice and assistance to
Professional Corporation and related entities with respect to recruiting
independent contractor physicians and related medical or other personnel
(hereinafter referred to as "Support Personnel"). Such services shall
include, without limitation, performance of the following services on
behalf of Professional Corporation:
(a) Preparing and sending mass mailing recruitment literature and
materials;
(b) Accepting and reviewing applications of prospective independent
contractor physicians and Support Personnel;
(c) Reviewing and verifying references and D.E.A. numbers of
prospective physicians and/or Support Personnel;
(d) Reviewing, verifying and assisting, as appropriate, Professional
Corporation in obtaining licenses or certificates and generally complying
with all licensing statutes and requirements with respect to prospective
physicians and/or Support Personnel;
(e) Preparing and reviewing all necessary tax forms and related
information applicable to prospective physicians and/or Support Personnel;
(f) Interviewing prospective physicians and/or Support Personnel;
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(g) Assisting in scheduling meetings between hospitals and/or medical
facilities and prospective physicians and/or Support Personnel as may be
necessary or required by such hospitals and/or medical facilities;
(h) Negotiating and preparing documents as may be necessary to
establish appropriate contractual relationships between (i) physicians
and/or Support Personnel and/or (ii) Professional Corporation and/or any
entities related thereto; and
(i) Performing any and all other services relating to and arising out
of the recruitment of physicians and/or Support Personnel.
2.3.12 Management Company shall provide advice and assistance to
Professional Corporation with respect to establishing the credentials of
physicians and/or Support Personnel provided to hospitals and/or medical
facilities by Professional Corporation. Such services shall include,
without limitation, performance of the following services on behalf of
Professional Corporation;
(a) Preparing and submitting all necessary documents relating to or
required by such hospitals and/or medical facilities with respect to
establishing such credentials and for securing hospital privileges; and
(b) Performing any and all other services related to and arising out
of establishing the credentials of such physicians and/or Support
Personnel, as may reasonably be requested by Professional Corporation.
(c) Assisting Professional Corporation in recruiting and hiring
administrative support personnel and recruiting employees of Professional
Corporation.
2.4 Director. Management Company may designate one or more of its employees
who shall be the principal business contact for Professional Corporation and who
shall have principal responsibility for the obligations of Management Company
with respect to the management and administration of all of the day-to-day
business functions of Professional Corporation.
2.5 Compliance with Applicable Laws. Management Company shall comply with
all applicable federal, state and local laws, regulations and restrictions in
the conduct of its obligations under this Agreement.
ARTICLE III
OBLIGATIONS OF PROFESSIONAL CORPORATION
---------------------------------------
3.1 Professional Services. Professional Corporation and any physician
affiliated with it shall provide professional services to patients in compliance
at all times with ethical standards, laws and regulations applying to the
medical profession. Professional Corporation shall be responsible for ensuring
that each physician contracted by or associated with it to provide
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medical care to patients is duly licensed and has met all other regulatory and
legal requirements and qualifications to enable such physician to practice
medicine in the state in which the services are rendered. In the event that any
disciplinary actions or medical malpractice actions are initiated against
Professional Corporation, it shall immediately inform the Management Company and
the appropriate malpractice insurance carrier.
3.2 Medical Practice. Only Professional Corporation shall be engaged in the
practice of medicine and Management Company shall not be considered to be
responsible for any medical practice responsibilities or duties. Professional
Corporation shall comply with all applicable local rules, ordinances and all
standards of medical care applicable to it. It is expressly acknowledged by the
parties that the medical practice or practices conducted by the Professional
Corporation shall be conducted solely by physicians contracted or associated
with Professional Corporation.
3.3 Physicians. Professional Corporation shall be responsible for
contracting with physicians to provide services to meet the contractual
obligations of Professional Corporation to hospitals and other healthcare
organizations or providers with whom it has contracted. Professional
Corporation, and not Management Company, shall have responsibility for any
clinical evaluation of the professional services rendered by the physicians.
Professional Corporation shall be responsible for the payment of such
Physicians' contract fees, and Management Company is expressly authorized to
make such payments in the name of and on behalf of Professional Corporation.
3.4 Professional Dues and Education Expenses. All physicians associated
with Professional Corporation shall be responsible for the payment of all
licensure fees, membership dues in professional organizations, and all costs
associated with continuing professional education. Neither Management Company
nor Professional Corporation shall be responsible for any licensure fees, any
dues or membership fees for membership in professional associations (other than
its own), or for the cost or expenses associated with any continuing
professional education for such physicians.
3.5 Professional Insurance Eligibility. Professional Corporation shall
cooperate in the obtaining and maintaining of professional liability insurance
for itself and any physicians associated with it. Neither Management Company nor
Professional Corporation shall be responsible for the cost of any premiums for
such coverage for any physician.
3.6 Quality Assurance. Professional Corporation shall have sole
responsibility for all Quality Assurance compliance matters imposed on it by any
state law or regulatory authority.
ARTICLE IV
RESTRICTIVE COVENANTS AND LIQUIDATED DAMAGES
--------------------------------------------
4.1 Restrictive Covenants by Professional Corporation. For a period of time
equal to the duration of this Agreement, but in any event not less than one (1)
year, following termination of this Agreement, Professional Corporation shall
not establish, operate or provide or contract to
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provide, directly or indirectly, professional medical services at any hospital,
medical office, clinic or other medical services at any hospital, medical
office, clinic or other health care facility which services are substantially
similar to those provided by Professional Corporation during the term of this
Agreement within the States in which Professional Corporation has operated
during the term hereof.
4.2 Enforcement. Professional Corporation acknowledges and agrees that
since a remedy at law for any breach or attempted breach of the provisions of
this Article shall be inadequate, either party shall be entitled to specific
performance and injunctive or other equitable relief in case of any such breach
or attempted breach, in addition to whatever other remedies may exist by law.
All parties hereto also waive any requirement for the securing or posting of any
bond in connection with the obtaining of any such injunctive or other equitable
relief. If any provision of this Article relating to the restrictive period,
scope of activity restricted and/or the territory described therein shall be
declared by a court of competent jurisdiction to exceed the maximum time period,
scope of activity restricted or geographical area such court deems reasonable
and enforceable under applicable law, the time period, scope of activity
restricted and/or area of restriction held reasonable and enforceable by the
court shall thereafter be the restrictive period, scope of activity restricted
and/or the territory applicable to the restrictive covenant provisions in this
Article. The invalidity or non-enforceability of this Article in any respect
shall not affect the validity or enforceability of the remainder of this Article
or of any other provisions of this Agreement.
4.3 Consideration and Liquidated Damages. Professional Corporation
acknowledges that the covenants set forth in this Article are supported by the
covenants to be performed by Management Company herein. Therefore, in the event
of any breach of the provisions of this Article by Professional Corporation, it
shall pay to Management Company liquidated damages in an amount equal to five
(5) times the annual management fees paid during the previous full calendar
year, or five (5) times the annualized management fees for the current calendar
year, whichever is greater.
ARTICLE V
FINANCIAL ARRANGEMENTS
----------------------
5.1 Definitions. The following terms used herein shall have the meanings
specified below.
(a) "Accounts" shall mean all rights of Professional Corporation to
payment for patient services rendered in the ordinary course of business at
the Hospitals by Professional Corporation or its employees or contractors,
and for goods sold in connection with such patient services, including, but
not limited to, (i) Medicare patient receivables, (ii) Champus/Champva
patient receivables, (iii) Medicaid or other governmental patient
receivables, (iv) Blue Cross/Blue Shield patient receivables, (v)
non-contract patient receivables due from commercial insurance companies,
(vi) contract patient receivables due from health maintenance
organizations, employers prepaid plans, exclusive provider organizations,
preferred provider organizations and other managed
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care programs, and (vii) private patient receivables representing balances
due from patients for deductibles, coinsurance or co-payments.
(b) "Government Accounts" shall mean any Account which constitutes:
(i) a Medicare patient receivable; (ii) a Champus/Champva patient
receivable, (iii) a Medicaid patient receivable, or (iv) any other
governmental patient receivable, except that with respect to subclauses
(i), (ii) and (iii) above, deductibles and co-payments owed by program
beneficiaries shall not be deemed to be a "government account."
(c) "Hospital Accounts" shall mean any Accounts payable to
Professional Corporation by a Hospital or other healthcare facility whose
agreement with Professional Corporation is within the scope of this
Agreement and shall include, without limitation, any payments denominated
as a subsidy or availability fee.
5.2 Assignment of Revenues. Management Company shall be compensated for its
services to be provided pursuant to the terms of this Agreement as follows:
(a) In consideration of the services to be provided hereunder, and the
assumption of the specific liabilities of Professional Corporation as set
forth below, Professional Corporation does hereby transfer, assign, sell
and convey to Management Company on the date hereof, and on each day
thereafter during the term of this Agreement, all of its existing Accounts
(other than Government Accounts) and any other accounts receivable, and any
and all proceeds thereof, and all other rights to payments from any source
and any and all other revenues (hereinafter collectively "Revenues") to be
paid and delivered to Management Company as and when such Revenues are
collected in accordance with the procedures set forth herein and further
hereby constitutes and appoints Management Company as its agent and
attorney in fact for the purpose of collecting and receiving any and all
Revenues payable to Professional Corporation from any source whatsoever,
including, but not limited to, all payments from managed care
organizations, health maintenance organizations, or other capitation based
revenues, fees from patients, hospitals, worker's compensation, or any
other fees payable to or collectible by Professional Corporation as a
result of professional medical services rendered by physicians under
contract with Professional Corporation, and all other fees and revenues
payable to Professional Corporation.
(b) Power of Attorney. Except as otherwise provided by law with
respect to Government Accounts, Professional Corporation does hereby
irrevocably make, constitute and appoint Management Company and any of its
officers or designees its true and lawful attorney-in-fact, with full power
and authority to do any and all acts necessary or proper to carry out the
intent to this Agreement, including, without limitation, the right, power
and authority (i) to enforce all rights of Professional Corporation under
and pursuant to any agreements constituting, giving rise to or with respect
to the Accounts, all for the sole benefit of Management Company; (ii) to
enter into and perform such arrangements as may be reasonably necessary in
order to carry out the terms, covenants and conditions of this Agreement
that are required to be observed or performed by
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Professional Corporation; (iii) to endorse the name of Professional
Corporation on any and all instruments, notes, drafts, checks or other
negotiable instruments or commercial paper which may be payable to or to
the order of Professional Corporation or endorsed over to Professional
Corporation and to endorse the same to be made payable to the order of
Management Company in furtherance of the assignment provided herein; and
(iv) to execute such other and further documents as may be reasonably
necessary or desirable as determined by Management Company in order to
effectuate the assignment of the Accounts and the Revenues, and
Professional Corporation hereby ratifies and confirms all actions taken by
Management Company as such attorney-in-fact or its substitutes by virtue of
this power of attorney, which power is coupled with an interest and is
irrevocable until the termination of this Agreement and the payment in full
of all amounts provided hereunder.
(c) Collection of Accounts. Professional Corporation hereby covenants
and agrees to cooperate fully with Management Company to instruct all
Account Debtors to remit all payments in respect of Accounts (other than
Government Accounts) directly to the appropriate addresses designated by
Management Company. Any such payments will be endorsed by Management
Company pursuant to the power of attorney granted in subsection (b) above
and deposited into Management Company's account. Professional Corporation
agrees to deliver to Management Company all payments on such Accounts that
Professional Corporation may receive directly, duly endorsed in favor of
Management Company, not later than the business day immediately following
the receipt thereof.
(d) Government Accounts. All checks, cash and other instruments
representing payments or proceeds of Government Accounts shall be mailed to
the Professional Corporation at an address specified by Management Company.
Professional Corporation hereby covenants and agrees, from and after the
date hereof, to either (i) deliver to the Management Company all such
checks, cash and other instruments representing payments or proceeds of
Government Accounts, or (ii) place such proceeds into a depository account
and, immediately upon collection of funds in respect of such checks, cash
and other instruments, to cause such funds to be transferred to the
Management Company or deposited in a bank account specified by Management
Company not later than the Business Day immediately following the date of
receipt of such funds. Professional Corporation hereby authorizes
Management Company, and shall instruct the applicable banks, to sweep any
account used by Professional Corporation as a depository of such funds no
more frequently than once every Business Day and to transfer such funds as
directed by Management Company.
5.3 Assumption and Payment of Liabilities of Professional Corporation by
Management Company. In consideration of the assignment of Revenues set forth
above, Management Company hereby agrees to assume and pay as and when same
becomes due, in a commercially reasonable manner, all operating and
non-operating expenses incurred in the operation and conduct of business by the
Professional Corporation from and after the date hereof, including, without
limitation, direct costs of Medical Directors employed by Professional
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Corporation, contractual payments to physicians, all billing and collection
costs, and all other expenses necessary to the operation of Professional
Corporation; provided, however, the obligations assumed under this Agreement
specifically exclude, and Management Company shall have no obligation whatsoever
for the payment of, any of the following liabilities or obligations: (1) any
liability or obligation arising out of or resulting from any claim, suit, action
at law, judgment, settlement or liability relating to, caused by, or resulting
from any act or omission of any physician or the Professional Corporation
related to the delivery or performance of any professional medical services, or
the defense thereof, whether or not covered by any policy of professional
liability or other insurance; (2) any liability or obligation arising out of or
resulting from any claim, suit, action at law, judgment, settlement or liability
resulting from any act or omission by the Professional Corporation, its
employees, officers, directors, representatives or agents, or any act, event,
incident, occurrence, omission, state of facts or circumstances, audit,
arrangement or other matter occurring or in existence prior to the date hereof,
even if such liability does not accrue or is not known by the parties until
after the date hereof; (3) any indemnification obligation of Professional
Corporation to Management Company under Article VIII; or (4) any liability
incurred prior to the date hereof for the payment of any local, state or federal
income or other tax or fees, any social security, unemployment or withholding
taxes, any penalties, assessments, interest, or any ad valorem or similar
property taxes or any intangibles taxes, or any other liability related to the
payment or non-payment of any taxes.
5.4 Payments to Management Company. In consideration for the services to be
performed by Management Company hereunder, Management Company shall be entitled
to retain for its own benefit all monies, if any, which exceed the expenses to
be paid on behalf of Professional Corporation under Section 5.3 above. In the
event such expenses exceed the amounts collected by Management Company under
Section 5.2 above, Management Company shall be solely responsible for any such
deficiency.
5.5 Termination of Agreement. In the event that this Agreement is
terminated by either party, Management Company shall continue to perform its
obligations hereunder until the date of termination, and shall within a
reasonable time following the date of termination deliver to Professional
Corporation any and all records and other matters belonging to Professional
Corporation, and following the date of termination shall have no further
obligation to xxxx for any services rendered by or on behalf of Professional
Corporation, but shall continue, during the next one hundred eighty (180) days,
to collect and receive any and all Revenues paid on account of services rendered
prior to the termination date.
ARTICLE VI
RECORDS
-------
6.1 Patient Records. Upon termination of this Agreement, Professional
Corporation shall retain all patient medical records maintained by Professional
Corporation or Management Company in the name of Professional Corporation.
Professional Corporation shall, at its option, be entitled to retain copies of
financial and accounting records relating to all services performed by
Professional Corporation.
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6.2 Records Owned by Management Company. All records relating in any way to
the operation of Professional Corporation which are not the property of
Professional Corporation under the provisions of this Agreement, shall at all
times be the property of Management Company.
6.3 Access to Records. During the terms of this Agreement, and thereafter,
Professional Corporation or its designee shall have reasonable access during
normal business hours to its financial records in the custody or under the
control of Management Company, including, but not limited to, records of
collections, expenses and disbursements as kept by Management Company in
performing its obligations under this Agreement.
ARTICLE VII
INSURANCE AND INDEMNITY
-----------------------
7.1 Insurance to be Maintained by Professional Corporation. Throughout the
term of this Agreement, Professional Corporation shall maintain comprehensive
professional liability insurance with limits of not less than $1,000,000 per
claim and with aggregate policy limits of not less than $3,000,000 per annum.
Such insurance policy and limits shall be in addition to any liability insurance
applicable to any physician associated with Professional Corporation.
Professional Corporation shall be responsible for all liabilities in excess of
the limits of such policies. The Professional Corporation agrees to participate
in any state sponsored joint underwriting association or excess liability risk
pool to the extent that such may reduce the ultimate liability exposure of the
Professional Corporation or any physicians, or as may otherwise be agreed
between the parties.
7.2 Insurance to be Maintained by Management Company. Throughout the term
of this Agreement, Management Company shall maintain a policy of professional
liability insurance with limits of not less than $1,000,000 per claimant with
aggregate policy limits of not less than $3,000,000 per annum covering it in the
event that it should be named in a civil action arising out of any professional
services provided by Professional Corporation or by any physician associated
with Professional Corporation.
7.3 Indemnification.
(a) Professional Corporation shall indemnify, hold harmless and defend
Management Company, its officers, directors and employees, from and against
any and all liability, loss, damage, claim, causes of action, and expenses
(including reasonable attorneys' fees), whether or not covered by
insurance, caused or asserted to have been caused, directly or indirectly,
by or as a result of the performance of medical services or any other acts
or omissions by Professional Corporation and its shareholders, agents,
employees and subcontractors (other than Management Company) during the
term hereof.
(b) Management Company shall indemnify, hold harmless and defend
Professional Corporation, its officers, directors and employees, from and
against any and
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all liability, loss, damage, claim, causes of action, and expenses
(including reasonable attorneys' fees), caused or asserted to have been
caused, directly or indirectly, by or as a result of the performance of
services hereunder or any other acts or omissions by Management Company and
its shareholders, agents, employees and contractors (other than
Professional Corporation) during the term of this Agreement.
ARTICLE VIII
TERM AND TERMINATION
--------------------
8.1 Termination by Professional Corporation. Professional Corporation may
terminate this Agreement as follows:
(a) In the event of a filing of a petition in voluntary bankruptcy or
an assignment for the benefit of creditors by Management Company, or upon
other action taken or suffered, voluntarily or involuntarily, under any
federal or state law for the benefit of debtors by Management Company,
except for the filing of a petition in involuntary bankruptcy against
Management Company or Parent which is dismissed within sixty (60) days
thereafter, Professional Corporation may give notice of the immediate
termination of this Agreement.
(b) In the event (i) Management Company shall materially default in
the performance of any duty or obligation imposed upon it by this Agreement
and such default shall continue for a period of sixty (60) days after
written notice thereof has been given to Management Company by Professional
Corporation (or if not reasonably curable within such 60 day period and if
Management Company is proceeding reasonably diligently and in good faith
and such default is curable, up to 90 days); or (ii) Management Company
shall fail to remit expenses of Professional Corporation due as provided
hereunder and such failure to remit shall continue for fifteen (15) days
after written notice thereof, Professional Corporation may terminate this
Agreement.
8.2 Termination by Management Company. Management Company may terminate
this Agreement as follows:
(a) In the event of a filing of a petition in voluntary bankruptcy or
an assignment for the benefit of creditors by Professional Corporation, or
upon other action taken or suffered, voluntarily or involuntarily, under
any federal or state law for the benefit of debtors by Professional
Corporation, except for the filing of a petition in involuntary bankruptcy
against Professional Corporation which is dismissed within sixty (60) days
thereafter, Management Company may give notice of the immediate termination
of this Agreement.
(b) In the event Professional Corporation shall materially default in
the performance of any duty or obligation imposed upon it by this
Agreement, and such default shall continue for a period of sixty (60) days
after written notice thereof has been given to Professional Corporation by
Management Company (or if not reasonably curable
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within such sixty (60) day period and if Professional Corporation is
proceeding diligently and in good faith and such default is curable, up to
90 days), Management Company may terminate this Agreement.
(c) Management Company may cancel this Agreement without cause upon
sixty (60) days written notice to Professional Corporation and Shareholder.
ARTICLE IX
GENERAL PROVISIONS
------------------
9.1 Assignment. Management Company shall have the right to assign its
rights hereunder to any person, firm or corporation. Professional Corporation
shall have the right to assign its rights and obligations hereunder only with
the written consent of Management Company. In addition, Professional Corporation
agrees that it will not undertake or initiate any other action that would be
substantially equivalent to an assignment, including, but not limited to,
entering into any agreement, contract, plan or transaction, or series of
transactions to sell a significant portion of its assets, to enter into any plan
of reorganization pursuant to which the ownership of Professional Corporation
would be materially changed or altered, or to issue any new shares of stock to
any individual or other entity legally qualified to hold such stock, without the
prior express written consent of Management Company.
9.2 Whole Agreement; Modification. There are no other agreements or
understandings, written or oral, between the parties regarding this Agreement,
other than as set forth herein. This Agreement shall not be modified or amended
except b a written document executed by both parties to this Agreement.
9.3 Notices. All notices required or permitted by this Agreement shall be
in writing and shall be addressed as follows:
To Management Company: COASTAL PHYSICIANS SERVICES OF THE
SOUTHEAST, INC.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
Attn: President
To Professional Corporation: HALIFAX EMERGENCY PHYSICIAN
ASSOCIATES, P.C.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
Attn: President
or to such other address as either party shall notify the other.
9.4 Binding on Successors. This Agreement shall be binding upon the parties
hereto, and their successors, assigns, heirs and beneficiaries.
14
9.5 Waiver of Provisions. Any waiver of any terms and conditions hereof
must be in writing, and signed by the parties hereto. The waiver of any of the
terms and conditions of this Agreement shall not be construed as a waiver of any
other terms and conditions hereof.
9.6 Governing Law. The validity, interpretation and performance of this
Agreement shall be governed by and construed in accordance with the laws of the
state in which Professional Corporation is incorporated and doing business. The
parties acknowledge that Management Company is not authorized or qualified to
engage in any activity which may be construed or deemed to constitute the
practice of medicine.
9.7 Severability. The provisions of this Agreement shall be deemed
severable and if any portion shall be held invalid, illegal or unenforceable for
any reason, the remainder of this Agreement shall be effective and binding upon
the parties.
9.8 Additional Documents. Each of the parties hereto agrees to execute any
document or documents that may be requested from time to time by the other party
to implement or complete such party's obligations pursuant to this Agreement.
9.9 Attorneys' Fees. If legal action is commenced by either party to
enforce or defend its rights under this Agreement, the prevailing party in such
action shall be entitled to recover its costs and reasonable attorneys' fees in
addition to any other relief granted.
9.10 Time is of the Essence. Time is hereby expressly declared to be of the
essence in this Agreement.
9.11 Contract Modifications for Prospective Legal Events. In the event any
state or federal laws or regulations, now existing or enacted or promulgated
after the effective date of this Agreement, are interpreted by judicial
decision, a regulatory agency or legal counsel in such a manner as to indicate
that the structure of this Agreement may be in violation of such laws or
regulations, Professional Corporation and Management Company shall amend this
Agreement as necessary. To the maximum extent possible, any such amendment shall
preserve the underlying economic and financial arrangements between Professional
Corporation and Management Company.
9.12 Remedies Cumulative. No remedy set forth in this Agreement or
otherwise conferred upon or reserved to any party shall be considered exclusive
of any other remedy available to any party, but the same shall be distinct,
separate and cumulative and may be exercised from time to time as often as
occasion may arise or as may be deemed expedient.
9.13 No Obligation to Third Parties. None of the obligations and duties of
Management Company or Professional Corporation under this Agreement shall in any
way or in any manner be deemed to create any obligation of Management Company or
of Professional Corporation to, or any rights in, any person or entity not a
party to this Agreement.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
PROFESSIONAL CORPORATION:
HALIFAX EMERGENCY PHYSICIAN
ASSOCIATES, P.C.,
By: ___________________________________
Xxxxxx X. Xxxxx, M.D., President
ATTEST:
By: _________________________
_______________ Secretary
[CORPORATE SEAL]
MANAGEMENT COMPANY
COASTAL PHYSICIANS SERVICES OF THE
SOUTHEAST, INC.
By: ___________________________________
______ President
ATTEST:
By: _________________________
_______________ Secretary
[CORPORATE SEAL]
16
STOCK TRANSFER RESTRICTION AGREEMENT
AMONG
HALIFAX EMERGENCY PHYSICIAN ASSOCIATES, P.C.,
AND
XXXXXX X. XXXXX, M.D.
__________ ____, 199_
TABLE OF CONTENTS
Page
----
1. Restrictions On Shares......................................................2
2. Automatic Transfer of Shares in Certain Events..............................3
3. Other Matters...............................................................5
4. Restrictions on Certificates................................................5
5. Notices.....................................................................5
6. Successors..................................................................6
7. Additional Stockholders.....................................................6
8. Third Party Beneficiary.....................................................6
9. Governing Law...............................................................7
10. Complete Agreement.........................................................7
11. Captions...................................................................7
12. Modification...............................................................7
13. Arbitration................................................................7
14. Confidentiality............................................................7
15. Counterparts...............................................................7
i
STOCK TRANSFER RESTRICTION AGREEMENT
------------------------------------
THIS AGREEMENT made as of the ____ day of ____________ 199_, by and among
HALIFAX EMERGENCY PHYSICIAN ASSOCIATES, P.C., a Virginia professional
corporation (the "Corporation"), COASTAL PHYSICIANS SERVICES OF THE SOUTHEAST,
INC., a North Carolina corporation (the "Management Company"), and XXXXXX X.
XXXXX, M.D. (the "Stockholder").
W I T N E S S E T H:
--------------------
WHEREAS, the Stockholder is the owner and record holder of all of the
issued and outstanding shares of $____ par value common stock of the
Corporation; and
WHEREAS, the Corporation and the Stockholder believe that it is in their
best interest and the best interests of the Corporation to restrict the
transferability of the stock in the Corporation; and
WHEREAS, Corporation is a party to a Amended and Restated Service Agreement
with Management Company of even date herewith (the "Service Agreement") pursuant
to which Management Company has an interest in assuring continuity in the
management of Corporation;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties covenant and agree as follows:
1. Restrictions On Shares. Except as otherwise provided herein, the
Stockholder shall not sell, assign, transfer, gift, pledge, hypothecate,
encumber or otherwise dispose of, whether voluntarily, involuntarily, by
operation of law or otherwise, any shares of the stock of the Corporation which
the Stockholder now owns or may hereafter acquire (the "Stock"). In addition,
the Stockholder shall not cause the Corporation to authorize, approve or declare
any dividend or other distribution with respect to the Stock.
2. Automatic Transfer of Shares in Certain Events.
(a) By execution of this Agreement, the Stockholder hereby agrees that
all of the shares of Stock of the Corporation held by the Stockholder (or any
heir, executor, administrator, personal representative, estate, testamentary
beneficiary, donee, trustee in bankruptcy, successor or assignee of the
Stockholder) shall be transferred, or deemed transferred, to the Designated
Transferee (defined below) without further action by the Stockholder upon the
occurrence of any of the following events (each a "Transfer Event"):
(i) the date of death of the Stockholder;
(ii) the date the Stockholder is determined by a court of
competent jurisdiction to be incompetent, or permanently disabled so
as to be unable to render any professional services on behalf of the
Corporation;
(iii) the date the Stockholder becomes disqualified under
applicable law to be a shareholder of the Corporation;
(iv) the date upon which any of the shares of Stock held by the
Stockholder are transferred or attempted to be transferred
voluntarily, involuntarily by operation of law or otherwise to any
person;
(v) the date of filing any petition for or other document causing
or intended to cause a judicial, administrative, voluntary or
involuntary dissolution of the Corporation; or
(vi) the date of receipt by the Corporation of written transfer
instructions by Management Company.
(b) Transfer of Stock. Upon the occurrence of a Transfer Event with
respect to the Stockholder, subject to the terms set forth below, all of the
Stock of the Corporation held by the Stockholder or his successors and assigns
shall be immediately transferred, or deemed transferred, to the Designated
Transferee without further action by the Stockholder:
(i) The purchase price for the Stock transferred to the
Designated Transferee pursuant to this Section 2 shall be the greater
of one dollar ($1.00) or the stated par value of the Stock
(ii) Payment of the purchase price for the Stock shall be made to
the Stockholder in cash or by certified or cashiers check. The time
for payment of
2
the purchase price for the Stock hereunder shall be at 10:00 a.m. on
the first business day following receipt by the Designated Transferee
of notice of such Transfer Event (provided, however, that in the
absence of such notice, the Designated Transferee shall, upon becoming
aware of any such Transfer Event, promptly notify the Stockholder, the
Corporation and Management Company of such Transfer Event and tender
to the Stockholder the purchase price for the Stock). The Designated
Transferee shall tender the purchase price at the principal office of
the Corporation.
(iii) Notwithstanding anything to the contrary herein, upon the
occurrence of a Transfer Event, the Stock will be immediately
transferred, or deemed transferred, to the Designated Transferee
effective upon the date of such Transfer Event irrespective of the
date of payment for such Stock.
(c) Definition. For purposes of this Agreement, "Designated
Transferee" shall mean that individual who is designated by Management Company.
(d) Deposit and Custody of Stock. Management Company hereby
acknowledges receipt of stock certificate no. 01 (the "Certificate") of the
Corporation, said Certificate evidencing 1,000.00 shares of the Stock of the
Corporation respectively, deposited by the Stockholder upon execution hereof
duly endorsed in blank. Management Company agrees to hold said Certificate for
the benefit of the Designated Transferee. Upon the occurrence of a Transfer
Event, Management Company shall endorse the Certificate to the Clerk of the
Corporation for cancellation by the Clerk, registration of the shares
represented thereby in the name of the Designated Transferee on the books of the
Corporation, and issuance of a new certificate in the name of the Designated
Transferee.
(e) Deliveries by Designated Transferee. Notwithstanding anything
herein to the contrary, release by Management Company of a Certificate to the
Clerk of the Corporation shall be contingent on Management Company's prior or
concurrent receipt of:
(i) a stock transfer power executed by the Stockholder covering
the Stock transferred to the Designated Transferee;
(ii) issuance by the Corporation of a new stock certificate
evidencing the Designated Transferee's ownership of the Stock in the
Corporation; and
3
(iii) a copy of this Agreement duly executed by the Designated
Transferee substituting the Designated Transferee for the Stockholder
hereunder.
3. Other Matters.
(a) Upon the occurrence of a Transfer Event, the Stockholder shall be
disqualified as a stockholder of the Corporation, and shall immediately resign,
as President and as any other officer of the Corporation.
(b) After occurrence of a Transfer Event, the Stockholder, and any
person who acquires the Stock, other than the Designated Transferee, shall
neither have nor exercise any right or privilege as a stockholder of the
Corporation, including any right to receive any unallocated or undistributed
dividend.
4. Restrictions on Certificates. Upon the execution of this Agreement, the
Stockholders shall surrender their certificates representing shares of the Stock
subject to this Agreement to the Corporation for the purpose of placing notice
of the restrictions on transfer occasioned by this Agreement substantially as
follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
STOCK TRANSFER RESTRICTION AGREEMENT (A COPY OF WHICH IS ON FILE WITH THE
CORPORATION AND AVAILABLE WITHOUT CHARGE), AND NO TRANSFER OF THE SHARES
REPRESENTED HEREBY OR OF SHARES ISSUED IN EXCHANGE THEREFOR SHALL BE VALID
OR EFFECTIVE UNTIL THE TERMS AND CONDITIONS OF SUCH AGREEMENT SHALL HAVE
BEEN FULFILLED.
After such notice has been placed on such certificate, it shall be returned
to the Stockholder. All Stock which is subject to this Agreement and which is
issued to the Stockholder after the date of this Agreement shall bear the same
notice.
5. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) telexed,
telecopied or made by facsimile transmission, (iii) sent by overnight courier,
or (iv) sent by certified or registered mail, return receipt requested, postage
prepaid.
4
If to Corporation: HALIFAX EMERGENCY PHYSICIAN ASSOCIATES, P.C.,
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
If to Stockholder Xxxxxx X. Xxxxx, M.D.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
If to Management Company: COASTAL PHYSICIANS SERVICES OF THE
SOUTHEAST, INC.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if telexed, telecopied or made by facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next day following the day such
mailing is made (or in the case that such mailing is made on Saturday, on the
immediately following Monday), or (iv) if sent by certified or registered mail,
on the 3rd day following the time of such mailing thereof to such address (or in
the case that such 3rd day is a Sunday, on the immediately following Monday).
6. Successors. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, and their authorized successors or assigns. The
rights of any party hereunder may not be assigned without the consent of the
remaining parties hereto.
7. Additional Stockholders. Each holder of any of the capital stock of the
Corporation or any rights to acquire capital stock of the Corporation, including
any holder of any warrant, option or other security convertible into or
exchangeable for capital stock of the Corporation, shall execute a counterpart
of this Agreement acknowledging that the restrictions contained herein shall
apply to such stock or rights to acquire stock in the Corporation.
8. Third Party Beneficiary. The parties hereto acknowledge that the
Designated Transferee, if and when he or she becomes a Designated Transferee,
shall have standing to enforce the provisions of this Agreement.
5
9. Governing Law. This Agreement, the rights and obligations hereunder, and
any claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the state in which Corporation is incorporated and
doing business.
10. Complete Agreement. All understandings and agreements heretofore had
between the parties hereto with respect to the transactions contemplated hereby
are merged into this Agreement, and this Agreement reflects all the
understandings of the parties with respect to such transactions.
11. Captions. The section titles or captions in this Agreement are for
convenience of reference only. They shall not be considered to be a part of this
Agreement, and they in no way define, limit, extend or describe the scope or
intent of any provision hereof.
12. Modification. This Agreement cannot be modified, extended or amended
except by written agreement signed by all of the parties hereto.
13. Arbitration. Any dispute regarding the meaning and interpretation of
this Agreement shall be submitted to arbitration. The parties hereto agree that
all disputes arising under this Agreement shall be settled by arbitration in
accordance with the rules of the American Arbitration Association in the state
in which Corporation is incorporated and doing business (the "Association") then
in effect, before a single arbitrator chosen by mutual agreement of the parties
or, if the parties are unable to agree on an arbitrator, by the Association. A
determination of the dispute by the arbitrator shall be final and binding on the
parties to the extent provided by law. The cost of the arbitration, other than
attorney's fees and consultancy fees, shall be borne equally by the parties.
14. Confidentiality. The existence and the terms and conditions of this
Agreement are confidential and shall not be disclosed to any third party by any
party to this Agreement without the prior written consent of all other parties
to this Agreement.
15. Counterparts. This Agreement may be executed in two or more
counterparts and each counterpart, when so executed and delivered shall
constitute a complete and original instrument, and it shall not be necessary
when making proof of this Agreement or any counterpart thereto to produce or
account for any other counterparts.
6
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument on the date first written above.
CORPORATION:
HALIFAX EMERGENCY PHYSICIAN
ASSOCIATES, P.C.,
By: ___________________________________
Xxxxxx X. Xxxxx, M.D., President
MANAGEMENT COMPANY:
COASTAL PHYSICIANS SERVICES OF THE
SOUTHEAST, INC.
By: ___________________________________
, ______ President
STOCKHOLDER:
By: ___________________________________
Xxxxxx X. Xxxxx, M.D.,
Individually
