EXHIBIT 10.23
Management Services
Agreement
This Management Services Agreement ("Agreement") is entered into effective
the 1/st/ day of January, 2000 ("Effective Date") by and between Physicians
Resource Group, Inc., a Delaware corporation ("PRG") and AmSurg Corp., a
Tennessee corporation ("AmSurg").
WHEREAS, PRG, through its subsidiaries and affiliates, owns and operates
ophthalmology surgery centers throughout the United States; and
WHEREAS, PRG and AmSurg have executed a letter of intent describing a
proposed transaction by which AmSurg would purchase an undivided majority
interest in the assets or the equity interest of the centers; and
WHEREAS, the parties have been in negotiations since April 1, 1999 over the
terms of a definitive Acquisition Agreement (the "Acquisition Agreement"); and
WHEREAS, AmSurg is in the business of providing certain management services
to ambulatory surgery centers; and
WHEREAS, the parties desire to preserve the continued operations and
profitability of the Managed Centers during the period between the Effective
Date and the closing of the transactions contemplated by the Acquisition
Agreement; and
WHEREAS, PRG desires AmSurg to oversee operations of the Managed Centers,
and AmSurg desires to provide such services to PRG pursuant to this Agreement.
NOW THEREFORE, in consideration of the premises and the mutual promises and
covenants contained herein, PRG and AmSurg do hereby agree as follows:
1. Engagement
On behalf of all of the entities affiliated with PRG that own an interest
in the Managed Centers described in Section 2 hereof, PRG engages AmSurg and
AmSurg agrees to provide the management services set forth in Section 3 of this
Agreement upon the terms and conditions hereinafter set forth.
2. Nature of Relationship
2.1 AmSurg shall perform all services described in Section 3 hereof for the
account of and as agent of PRG, with respect to the centers listed on Schedule 1
----------
attached hereto, as it may be amended from time to time to add or delete a
center (the "Managed Centers"). Except as otherwise specifically provided in
Xxxxxxx 0, XxXxxx shall bear the costs and expenses of all services provided by
AmSurg pursuant to this Agreement.
2.2 Notwithstanding any provision to the contrary, the direction, coordination
and management of all medical aspects of Managed Centers programs and
operations, and the supervision of persons providing medical services, shall be
under the direction and control of the Medical Director of each Managed Center.
3. Management Services
AmSurg shall have the responsibility to supervise, consult in and oversee
the business operations of the Managed Centers. Subject to the terms of this
Agreement and the general direction and control of the governing body of each
entity that owns a Managed Center, AmSurg shall have the responsibility to, and
PRG shall take all actions necessary to grant AmSurg access to all accounts so
that AmSurg may, coordinate all business and administrative activities
pertaining to each Managed Center, including, but not in any way limited to, the
following:
3.1 Assist the Managed Center in operating in an efficient and business like
manner;
3.2 Coordinate the purchase or lease of inventory, supplies and pharmaceuticals
necessary for the operation of the Managed Center which will be purchased or
leased at a level consistent with historical practice;
3.3 Coordinate all reasonable and necessary actions to maintain all licenses,
permits and certificates required for the operation of the Managed Center, and
to ensure that all appropriate certification and accreditation available to the
Managed Center's operations are obtained;
3.4 Coordinate, together with the Medical Director, ongoing programs to
increase community and payor awareness of the Managed Center;
3.5 Negotiate contracts for the provision of services by the Managed Center
with appropriate third party payors, both public and private;
3.6 Provide input and make recommendations to the governing body on the overall
charge structure of the Managed Center, and arrange for payment of such charges
by others, when appropriate;
3.7 Oversee and direct the personnel performing accounting and bookkeeping
services for the Managed Center, including but not limited to, all actions
necessary to (1) maintain the books of account, including all journals and
ledgers, check register and payroll records, (2) post all
Management Services Agreement/Page 1
patient and other charges, including necessary analyses and corrections, (3)
establish adequate receivable, credit and collection policies and procedures,
(4) assist the billing and collections personnel in performing billing and
collections services in a manner consistent with historical practice, (5)process
vendors' invoices and other accounts payable on a current basis, (6) prepare
payroll checks from time sheet summaries prepared under AmSurg's supervision,
(7) prepare monthly bank reconciliations, and (8) establish patient direct pay
and insurance billing procedures;
3.8 Develop and revise, subject to approval by the governing body of each
Managed Center, all necessary policies and operating procedures pertaining to
each aspect of the Managed Center's operations;
3.9 In conjunction with the Medical Director, hire, supervise, discipline and
discharge all personnel working in the Managed Center and providing direct
patient care, as needed;
3.10 Arrange for the purchase of necessary insurance coverage for the Managed
Center;
3.11 Establish and administer accounting procedures and controls and systems for
the development, preparation, and keeping of records and books of accounting
relating to the business and financial affairs of the Managed Center;
3.12 Subject to the prior written approval of PRG, distribute to the partners or
members of each Managed Center, on a pro rata basis according to ownership
interests, and on a frequency consistent with the applicable provisions of the
operating agreement or partnership agreement of each Managed Center, but in no
event less frequently than quarterly, the available cash flow of the appropriate
Managed Center, which equals the cash funds of the Managed Center, less
provisions for payment of all outstanding and unpaid current cash obligations as
well as reasonably anticipated cash expenses and obligations;
3.13 Prepare unaudited annual financial statements for the operations of the
Managed Center and deliver a copy thereof to PRG and the governing body of the
Managed Center; furnish PRG and the governing body of the Managed Center in a
timely fashion with monthly operating reports and other reports reasonably
requested by PRG or any member of the governing body of a Managed Center;
3.14 Prepare capital and operating budgets for approval by the governing body of
each Managed Center;
3.15 Make capital expenditures as approved or directed by the governing body of
each Managed Center;
3.16 Provide PRG and each Managed Center with the information necessary in order
to prepare the state and federal tax returns of PRG and each Managed Center; and
3.17 Perform all duties herein required of it in good faith and with reasonable
diligence so as to assure that the Managed Centers efficiently provide
appropriate quality health care to patients.
Notwithstanding the foregoing, the parties acknowledge and agree that the
process of initiating the provision of management services to each of the
Managed Centers will involve a transition period, and the management of certain
Managed Centers may not become the responsibility of AmSurg immediately on the
Effective Date. In such event, the parties agree to cooperate in the exchange of
pertinent information concerning the operation of such Managed Center, and
further agree to use commercially reasonable efforts to complete the transition
of management responsibility to AmSurg as soon as reasonably practicable. In no
event will the failure of AmSurg to provide services specified in Section 3
hereof with respect to a Managed Center for which AmSurg has not been able to
assume complete management responsibility to on or after the Effective Date be
deemed a breach by AmSurg of any of the provisions of this Agreement. The
parties acknowledge and agree that PRG does not have control over the physicians
using the facilities of the Managed Centers and although PRG will use
commercially reasonable efforts, it cannot unilaterally cause those physicians
to cooperate with AmSurg's management activities.
4. Compensation for Services Rendered By AmSurg
4.1 For all services rendered by AmSurg under this Agreement, PRG shall pay
AmSurg a fee (the "Management Fee") equal to 2% of net collections of each
Managed Center, to be paid monthly in advance on or before the 10th day of each
month, based on the parties' reasonable estimate as to what the net collections
of the Managed Centers will be during the month; provided, however, that upon
the execution of this Agreement, and subject to Sections 4.2 and 4.3 hereof, PRG
shall prepay $308,620, which is the first six (6) months of the Management Fee
payable hereunder, based on the parties' reasonable estimate as to what the net
revenues of the Managed Centers will be during the next six (6) months.
The parties will determine the actual net collections of each Managed
Center on a monthly basis, and at the end of the first six (6) months of this
Agreement and each month thereafter, the Management Fee for such period will be
determined and AmSurg or PRG, as appropriate, will pay to the other party within
ten (10) days after such determination, the amount of any overpayment or
underpayment.
4.2 In the event that the closing of the transactions contemplated by the
Acquisition Agreement occurs prior to the expiration of six (6) months from the
Effective Date, the parties agree to calculate the Management Fee that would
have been payable during the term and AmSurg or PRG, as appropriate, will pay to
the other party within ten (10) days after such determination, the amount of any
overpayment or
Management Services Agreement/Page 2
underpayment. In addition, in the event that this Agreement terminates with
respect to a Managed Center, either because PRG no longer owns an interest
therein or AmSurg determines that it will not acquire the assets or equity
interest thereof, then the parties will calculate the Management Fee that would
have been payable until such date, and AmSurg or PRG, as appropriate, will pay
to the other party within ten (10) days after such determination, the amount of
any overpayment or underpayment with respect to that particular Managed Center.
4.3 In the event that this Agreement terminates for any reason other than (i)
the closing of the transactions contemplated by the Acquisition Agreement, or
(ii) as the result of a breach by AmSurg prior to the closing of the
transactions contemplated by the Acquisition Agreement, the parties agree that
AmSurg shall be entitled to retain, as liquidated damages and not as a penalty,
all of the Management Fees paid hereunder for the costs incurred by AmSurg in
order to be able to perform its services hereunder.
4.4 In the event that this Agreement terminates as the result of a breach
hereof by AmSurg prior to the closing of the transactions contemplated by the
Acquisition Agreement, the parties agree that AmSurg will return to PRG that
portion of the Management Fee that has not been earned as of the termination
date. Such payment will be made within ten (10) days after the parties have
determined the Management Fee that was earned during the term.
5. Term
The initial term of this Agreement shall commence on the Effective Date and
shall terminate on the closing of the transactions contemplated by the
Acquisition Agreement.
Notwithstanding the foregoing, this Agreement shall terminate immediately
in the event that PRG no longer owns an interest, direct or indirect, in any of
the Managed Centers; and further, provided that this Agreement shall terminate
with respect to a particular Managed Center if and when AmSurg determines that
it will not acquire the assets or equity interest of such Managed Center.
6. Events Excusing Performance
AmSurg shall not be liable to PRG or any entity that owns a Managed Center
for failure to perform any of the services required hereunder in the event of
strike, lockouts, calamities, acts of God, unavailability of supplies or other
events over which AmSurg has no control for so long as such events continue, and
for a reasonable period of time thereafter.
7. Medical and Financial Records
7.1 Upon termination of this Agreement, the Managed Centers shall retain
all patient medical records maintained by the Managed Centers or AmSurg in the
name of the Managed Center. At all times during the term of this Agreement,
access to patient records shall be governed by applicable state and federal laws
governing confidentiality of patient records.
7.2 During the term of this Agreement and thereafter, the Managed Centers or
their respective designees shall have reasonable access during normal business
hours to the Managed Center and the records created and maintained by AmSurg
which shall be the property of the Managed Centers, including but not limited
to, records of collection, expenses and disbursements as kept by AmSurg in
performing AmSurg's obligations under this Agreement, and the Managed Centers
may copy any or all such records. During the term of this Agreement and
thereafter, AmSurg or its designee shall have reasonable access during normal
business hours to the Managed Center's records as they apply to the Managed
Center and AmSurg may copy at its expense any or all of such records. To the
extent practicable, records will be maintained on the premises of the Managed
Centers.
8. Default and Termination
Either party shall be in default of this Agreement if it fails to perform
any material term hereof or any amendments hereto, and such failure is not cured
within thirty (30) days after receipt of written notification of such failure
from the party not in default. In the event of such default, the non-defaulting
party shall have the right to terminate this Agreement immediately by written
notice to the other party.
Additionally, PRG shall have the right to terminate this Agreement by
delivery of written notice to AmSurg in the event there occurs a material
adverse change in the financial condition or business operations of AmSurg that
PRG in good faith determines materially adversely affects or is reasonably
likely to materially adversely affect the ability of AmSurg to perform its
obligations under this Agreement.
In the event of termination of this Agreement for any reasons other than
the closing of the transactions contemplated by the Acquisition Agreement or in
the event that this Agreement is terminated with respect to a specific Managed
Center pursuant to Section 4.2 hereof, on termination AmSurg will provide to PRG
copies of all books and records generated by AmSurg in connection with AmSurg's
provision of management services under this Agreement generally or with respect
to the terminated Managed Center, as the case may be.
9. Assignment
AmSurg may assign its rights and duties under this Agreement to a direct or
indirect wholly owned subsidiary of AmSurg; provided that no additional fees and
expenses other than the fees and expenses described herein will be paid by PRG
as a result of such assignment without the prior approval of PRG and that AmSurg
will remain
Management Services Agreement/Page 3
primarily liable for the performance of its obligations hereunder. Upon any such
assignment, all references to AmSurg in this Agreement shall be deemed to
include such assignee. Except as provided above, this Agreement may not be
assigned by either party without the prior written consent of the other party.
10. Rights Cumulative; No Waiver
Any rights or remedies of either party in the event of default are intended
to be cumulative rather than exclusive. Moreover, if either party chooses not
to insist upon strict performance of any provision of this Agreement, such
choice shall not impair its rights to insist on strict performance in the event
of subsequent acts of default and the waiver by a party of any breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach by that party.
11. Access to Books and Records of Managed Centers by Governmental Officials
Upon written request of the Secretary of Health and Human Services or the
Comptroller General or any other duly authorized representatives thereof, AmSurg
or any other related organization providing services with a value or cost of Ten
Thousand Dollars ($10,000) or more over a twelve (12) month period, shall make
available to the Secretary those contracts, books, documents and records
necessary to verify the nature and extent of the cost of providing its services.
Such inspection shall be available up to four (4) years after such services are
rendered.
12. Notice
Any notice required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been properly made and delivered when
mail first class, postage prepaid, certified or registered mail, or overnight
courier service as follows:
if to AmSurg:
AmSurg Corp.
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx
Bass, Xxxxx & Xxxx PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
if to PRG:
Physicians Resource Group, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxx X. Xxxx
Xxxxxxx Xxxxxx LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Fax: (000) 000-0000
or to such other address as either party may from time to time specify by
written notice to the other party. Any such notice shall be deemed to be given
as of the date so delivered, if delivered personally, as of the date on which
the same was deposited in the United States mail, postage prepaid, addressed and
sent as aforesaid, or on the date received if sent by electronic facsimile.
13. Miscellaneous
13.1 Authorization for Agreement. The execution, delivery and performance of
this Agreement has been duly and validly authorized, executed and delivered by
PRG and AmSurg, and this Agreement constitutes the valid and enforceable
obligation of the parties in accordance with its terms. PRG has the power and
authority to enter into this Agreement on behalf of each entity that owns a
Managed Center.
13.2 Complete Agreement; Severability. This instrument contains the entire
agreement between the parties with respect to the subject matter hereof. All
prior negotiations and understandings are merged herein. This Agreement may not
be modified unless agreed to in a writing signed by both parties hereto.
Should any part of this Agreement be declared invalid by a court or
regulatory body of competent jurisdiction, such decision shall not affect the
validity of the remaining parts, and they shall remain in full force and effect.
13.3 Applicable Law. This Agreement shall be construed and enforced according to
the laws of the State of Tennessee.
13.4 No Presumption Created. The parties acknowledge that they have
independently negotiated the provisions of this Agreement, that they have relied
upon their own counsel as to matters of law and application and that neither
party has relied on the other party with regard to such matters. The parties
expressly agree that there shall be no presumption created as a result of either
party having prepared in whole or in part any provisions of this Agreement.
Management Services Agreement/Page 4
13.5 Governing Bodies. AmSurg shall make no change to the composition of the
governing bodies of the Managed Centers as in existence on the Effective Date.
13. Jurisdiction. PRG AND AMSURG AGREE THAT IN THE EVENT THAT PRG FILES A
------------
BANKRUPTCY PETITION UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE,
AMSURG AND PRG HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
UNITED STATES BANKRUPTCY COURT IN WHICH THE PETITION IS FILED FOR THE PURPOSE OF
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AMSURG
AND PRG HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT TO SUCH ACTION OR
PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH COURT. AMSURG AND PRG AGREE
THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAYBE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.
AMSURG CORP.
By: /s/ Xxx X. XxXxxxxx
---------------------------------------------
Title: PRESIDENT & CEO
------------------------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ Xxxxxxx Xxxxx
---------------------------------------------
Title: PRESIDENT
------------------------------------------
Management Services Agreement/Page 5
SCHEDULE 1
----------
MANAGED CENTERS
1. Alexandria Laser and Surgery Center 9. Ambulatory Eye Surgery
0000 Xxxxxxxxxx Xxxxx 0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
2. American Surgery Centers of Alabama, Ltd. 10. Center for Advanced Eye Surgery
0000 Xxxx Xxxxx Xxxxxx XX 0000 Xxx Xxxxx Xxxx, Xxxx. X, Xxxxx X
Xxxxxx, XX 00000 Xxxxxxxx, XX 00000
3. American Surgery Centers of South Florida, Ltd. 11. Shepherd Eye Surgicenter, Ltd.
(d/b/a a Foundation for Advanced Eye Care) 3575 Pecos XxXxxx
0000 Xxxx Xxxxxx Xxxx Xxx Xxxxx, XX 00000
Xxxxxxx, XX 00000
4. American Surgery Center of Glendale, Ltd. 12. Laser and Eye Surgery Center of the South, Inc.
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000 0000 Xxxxxxx Xxxxxx, Xxxxx X-0
Xxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
5. PRG Tennessee I, Inc. 13. Central Texas Day Surgery Center, LP
d/b/a Physicians Surgery Center 0000 Xxxxxxxxx Xxxxxx Xxxx
000 Xxxxxxxxxxx Xxxxxx, XX 00000
Xxxxxxx, XX 00000
6. The Xxxx Eye Clinic Medical Group, Inc. 14. Xxxxxxxx Surgery Center, Inc.
00000 Xxxxxxxx Xxxxxx, Xxxxx X 000 Xxxxxxxxx Xxxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000 Xxxxxx, XX 00000
7. Inland Eye Institute 15. Ridge Lake Ambulatory Surgery Center
0000 Xxxx Xxxxxxxxxx Xxxxxx 000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxx, XX 00000 Xxxxxxx, XX 00000
8. Key Xxxxxxx Surgery Center 16. XxxXxxx Ambulatory Surgery Center
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000 1024 Xxxxxx Drive
Dallas, TX 75204 Xxxxx, XX 00000
Management Services Agreement/Page 6
