MANAGEMENT AGREEMENT
THIS AGREEMENT is made this 1st day of January, 1998, by and between
MEDI-CEN MANAGEMENT, Inc., a Maryland corporation, having its principal place of
business at 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Chevy Chase, Maryland (the
"Management Company"), and XXXXX MEDICAL GROUP, P.C., a District of Columbia
professional corporation, having its principal place of business at 0000
Xxxxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. (the "P.C.").
WHEREAS, the P.C. has been formed under the District of Columbia
Professional Corporation Act to render medical and related services to patients
of the P.C.;
WHEREAS, the P.C. desires to operate a medical practice at 0000
Xxxxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X., and/or at other locations (the
"Practice") and to obtain certain management and consulting services for the
Practice from the Management Company; and
WHEREAS, the Management Company is ready, willing, and able to provide
such management and consulting services to the P.C. in connection with the
Practice.
NOW THEREFORE, in consideration of the mutual premises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Representations and Warranties.
1.1 Representations and Warranties of the Management Company. The
Management Company hereby represents and warrants to the P.C. that at all times
during the term of this Agreement, the Management Company is a corporation duly
organized, validly existing and in good standing under the laws of the District
of Columbia.
1.2 Representations and Warranties of the P.C. The P.C. hereby
represents and warrants to the Management Company that at all times during the
term of this Agreement:
(a) The P.C. is a professional corporation organized, validly existing
and in good standing under the laws of the District of Columbia and is duly
licensed and qualified under all applicable laws and regulations to engage
in the practice of medicine and related services in the District of
Columbia.
(b) Each of the professionals employed or engaged by the P.C. to
render services at the Practice is duly licensed, certified, or registered,
as applicable, to render the services for which he or she has been employed
or engaged by the P.C.
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(c) The P.C. will establish and enforce procedures to ensure that
proper and complete medical records are maintained regarding all patients
of the practice as required by applicable law and by the rules and
regulations of any third party payors with which the P.C. may contract or
affiliate. To the extent permitted by law, the P.C. shall provide access to
the Management Company to such books and records of the P.C. as may be
necessary to carry out the terms, conditions, and purposes of this
Agreement. 2. General Responsibilities of the Management Company. The
Management Company shall have responsibility for those certain management
and consulting services described below, exclusive of any medical,
professional and ethical aspects of the Practice. The Management Company
shall be the exclusive provider to the P.C. of such management and
consulting services. The P.C. agrees that it shall not obtain any
management or consulting services from any source other than the Management
Company, except with the prior written consent of the Management Company.
2.1 Management Services. The Management Company shall provide, or
arrange for the provision of, management and administrative services for the
Practice, including but not limited to the following:
(i) business planning, including recommending capital, operating and
cash flow budgets;
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(ii) financial management, including causing annual financial
statements to be prepared for the P.C. and providing to the P.C. the data
necessary for the P.C. to prepare and file its tax returns and make any other
necessary governmental filings;
(iii) bookkeeping, accounting, data processing and other computer based
information services;
(iv) maintenance of medical records;
(v) administering or causing to be administered, on behalf and in the
name of the P.C., any welfare, benefit or insurance plan or arrangement of the
P.C.;
(vi) human resources management, including recruitment of all
personnel, training of all nonphysician personnel, and the management of all
non-clinical staff;
(vii) billing and collection, accounts receivable and accounts payable
processing, on behalf and in the name of the P.C., in addition to billing and
collection services set forth under the Billing Agent Agreement attached hereto
as Exhibit A;
(viii) utilization, cost and quality management systems;
(ix) managed care contracting services, including:
(a) evaluating, negotiating and administering, on behalf and in the
name of the P.C., agreements with employers, multi-employer welfare trusts,
third party administrators and other third parties, including third party
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payors, managed care entities, institutional health care providers and
vendors;
(b) developing and marketing bundled health services;
(c) developing fee schedules and setting charges for risk-sharing
payor contracts;
(d) developing risk-sharing arrangements for payor contracts;
(e) developing clinical protocols and pathways;
(f) credentialing support services consisting of application
processing and information verification;
(g) receiving and allocating payments from payors in accordance with
payor contracts and the rules, regulations and policies approved by the
Management Company;
(h) administering risk pools, withhold funds and incentive/bonus
arrangements;
(i) data analysis, including tracking and reporting to the P.C. on a
regular basis the performance of the P.C. and its physician employees under
payor contracts;
(j) risk assumption modeling;
(k) processing prior approval requirements and verifying member
eligibility;
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(l) implementing utilization management and quality assurance
procedures, and procedures for determining medical necessity and compliance
with applicable clinical guidelines; and
(m) implementing patient grievance procedures.
Such managed care contracting services shall be performed by Manager
with respect to payor contracts to the extent applicable to such contracts. The
parties recognize that the Management Company's ability to perform any of the
foregoing functions may be limited by the nature and quality of information
provided by, and the systems of, payors. In such cases, the Management Company
will use its best efforts to perform such functions within such limitations.
(x) using best efforts, on behalf and in the name of the P.C., to
obtain malpractice and other agreed upon insurance coverages;
(xi) advertising, marketing and promotional activities;
(xii) arranging for necessary legal services except with respect to
any legal dispute between the P.C. and the Management Company;
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(xiii) performing credentialing support services such as application
processing and information verification; and
(xiv) centralized group purchasing, including, at the request of the
P.C., negotiating and arranging for the P.C. to purchase medical and
non-medical inventory and supplies and other goods and services, on behalf
and in the name of the P.C., which the Management Company deems to be
necessary for the efficient operation of the Practice.
2.2 Staff. Subject to the requirements of applicable federal and state
law, the Management Company shall, on the terms and conditions specified in this
Agreement, employ or engage and make available to the Practice, on a
non-exclusive basis, sufficient non-Physician professional and administrative
staff (hereinafter referred to collectively as "Staff"; Staff members who are
licensed, registered or certified by the state to perform professional services
are hereinafter referred to collectively as "Professional Staff") as may be
reasonably necessary to operate the Practice in an efficient manner and meet the
patient care needs of the Practice in a timely manner, during the hours of
operation of the Practice by the P.C. All Staff assigned by the Management
Company to the Practice shall be subject to the P.C.'s clinical supervision and
approval, which approval shall not be unreasonably withheld. The hiring, firing,
disciplining, and determination of compensation and benefits of such Staff in
connection with services provided to or on behalf of the Practice shall be
within the sole discretion of the Management Company; provided, however, that
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the Management Company shall, at the P.C.'s written request, remove from the
Practice any Staff member who does not perform to the reasonable satisfaction of
the P.C.
2.3 Consulting Services. The Management Company shall:
(i) Identify and investigate potential sites for the establishment of
medical malls by the P.C.;
(ii) Identify individual physicians for employment by the P.C.;
(iii) Identify physician practices for acquisition by the P.C.;
(iv) Where possible, manage practices identified for acquisition by
the P.C. prior to their acquisition;
(v) Prepare financial projections for new locations and acquisition
targets;
(vi) Perform financial analyses on proposed new locations and the
business of acquisition targets;
(vii) Assist in the determination of the mix of specialties to be
available at each medical mall;
(viii) Perform market analyses and needs assessments to assist in the
determination of appropriate mall locations and services to be offered
therein; and
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(ix)Provide consulting services on an as needed basis with respect to
each medical mall established or acquired by the P.C. for a period of up to
nine (9) months following establishment or acquisition.
2.4 Deposit of Net Practice Revenues. To the extent permitted by law,
and subject to paragraph 2.4.1 herein, during the term of this Agreement, all
Net Practice Revenues, as defined herein, shall be deposited directly into a
bank account at a bank mutually agreed upon by the parties (the "Bank"), from
which the Management Company shall have the sole right to make withdrawals (the
"Account"). The Management Company shall maintain its accounting records in such
a way as to clearly segregate Net Practice Revenues from other funds of the
Management Company. The P.C. hereby appoints the Management Company as its true
and lawful attorney-in-fact to deposit in the Account all Net Practice Revenues
collected and to make withdrawals from the Account. The P.C. and the Management
Company hereby agree to execute from time to time such documents and
instructions as shall be required by the Bank and mutually agreed upon to
effectuate the foregoing provisions and to extend or amend such documents and
instructions with respect to payment for the Management Services during any
extended term of this Agreement.
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For purposes of this Agreement, "Net Practice Revenues" shall mean all
revenue, calculated on a cash basis (after taking into account adjustments for
refunds and set-offs), collected by or on behalf of the Practice, the P.C. or
their respective employees as a result of professional medical services
personally furnished to patients and other fees or income generated by such
persons in their capacity as members of the Professional Staff (but excluding
any revenues, fees or income generated by or on behalf of any Professional Staff
Members as a result of or in connection with activities of such Professional
Staff member in which Partnership or the other Professional Staff members, as a
group, would have no financial interest under the terms of their Physician
Employment Agreements with the P.C., as amended from time to time, and that are
not billed, collected or otherwise administered through the P.C. or the
Practice), whether rendered in an inpatient or outpatient setting and whether
rendered to health maintenance organization, preferred provider organization,
Medicare, Medicaid or other patients, including, but not limited to, payments
received under any capitation arrangement. The term "Net Practice Revenues"
shall include any ancillary services revenues provided at the Practice offices.
2.4.1 With respect to Medicare and Medicaid services provided by the
P.C. and its Professional Staff and with respect to other services for which
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payments cannot be assigned to the Management Company under applicable law or
payor contracts, the Management Company shall xxxx or collect for such services
as agent for the P.C. pursuant to the Billing Agent Agreement attached hereto as
Exhibit A (the "Billing Agent Agreement"). With respect to funds deposited in
the Practice Account, as defined in the Billing Agent Agreement, the P.C. shall,
effective as of the date hereof, direct Account Bank, as defined in the Billing
Agent Agreement, in writing to transfer all amounts in the Practice Account at
the end of each business day of the Account Bank to an account designated by the
Management Company (the "Manager's Account"). The P.C. agrees that it will not
take any action that interferes with the transfer of funds from the Practice
Account to the Manager's Account as provided in the Billing Agent Agreement nor
will the P.C. or its agents remove, withdraw or authorize the removal or
withdrawal of any funds from the Practice Account for any purpose except to
accomplish the transfer of funds provided pursuant to the Billing Agent
Agreement.
2.4.2 The P.C. shall, and shall cause its Professional Staff to,
promptly endorse and deliver to Manager all payments, notes, checks, money
orders, insurance proceeds, remittances and other evidences of indebtedness or
payment received by the P.C. or its Professional Staff, with respect to all
accounts, contract rights, instruments, documents, or other rights to payment
from time to time arising from the rendering of medical services by the P.C. and
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its Professional Staff otherwise relating to the business of the P.C., together
with any guarantees thereof or securities therefor which are generated during
the term of this Agreement.
2.4.3 The P.C. and its Professional Staff hereby authorize the
Management Company to initiate legal proceedings in the name of the P.C. to
collect any accounts and monies owed to the P.C. and its Professional Staff as
creditors under any contract or in connection with the rendering of any service
hereunder, and to contest adjustments and denials by governmental agencies (or
their fiscal intermediaries) as third-party payors. All adjustments made for
uncollectible or doubtful accounts, charity care, professional courtesies and
other activities that do not generate a collectible fee shall be determined by
the Management Company in its reasonable judgment for purposes of financial
reporting.
2.5 Non-Operational Expenses. The Management Company shall be solely
responsible for the payment of all Management Company Expenses, defined as those
expenses that are not expressly specified as Operational or Practice Expenses,
as those terms are defined herein. The Management Company shall pay all
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Management Company Expenses as they fall due; provided, however, that the
Management Company may contest in good faith any claimed Management Company
Expenses as to which there is any dispute regarding the nature, existence or
validity of such claimed Management Company Expenses.
2.6 Further Obligations of the Management Company. The Management
Company shall cause all work required to be performed pursuant to the terms of
this Agreement to be done in a good and professional manner.
3. Responsibilities of the P.C.
3.1 Professional Services. During the term of this Agreement, the P.C.
shall be solely responsible for all aspects of the medical, diagnostic,
therapeutic and related professional services delivered by the Practice and for
the selection, training, professional direction, supervision and employment or
engagement of all physicians. The hiring, firing, credentialing, disciplining,
and determination of compensation and benefits of such physicians shall be
within the sole discretion of the P.C.
3.2 Time Commitment. The P.C. shall conduct the Practice fifty-two (52)
weeks per year, according to a schedule mutually determined by the Management
Company and the P.C. The P.C. shall provide physicians in adequate numbers to
meet all of the needs, including emergency needs, of patients of the Practice in
a timely and responsive manner.
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3.3 Quality of Service. The P.C. shall establish and enforce procedures
to assure the appropriateness, necessity, consistency, quality, cost
effectiveness and efficacy of all professional services provided to patients of
the Practice. The P.C. shall require each of its physicians, and the Management
Company shall require each member of its Professional Staff, to participate in
and cooperate with any utilization management, quality assurance, risk
management, patient care assessment, continuous quality improvement,
accreditation or other similar program or study to review the performance of the
physicians and such Professional Staff as may be required by the P.C.,
governmental agencies, professional review organizations, accrediting bodies, or
third party payors or health care entities with which the P.C. may contract or
affiliate.
3.4 Billing and Collection.
(a) The P.C., or the P.C.'s authorized billing agent, shall xxxx to
and collect from patients, third party payors and others for all services
rendered by the P.C. or any physician or member of the Professional Staff
in connection with the Practice. The P.C. hereby appoints the Management
Company as its agent and attorney-in-fact for purposes of billing and
collecting, in the P.C.'s name and on the P.C.'s behalf, for all such
professional services rendered in connection with the Practice, in
accordance with this Agreement and with the Billing Agent Agreement
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attached hereto as Exhibit A. Subject to the Billing Agent Agreement, the
Management Company shall issue bills for all such services within thirty
(30) days after such services are rendered, and the Management Company
shall use its best, good faith and diligent efforts to collect for all such
services as promptly as may be reasonably practicable.
(b) The P.C. shall provide written notice to the Management Company at
least thirty (30) days in advance of any proposed change in its charges. If
the Management Company objects in writing to any such proposed revised
charge the P.C. shall consult with the Management Company regarding the
appropriate level of such charge before said charge shall go into effect.
3.5 Practice Expenses. The P.C. shall be solely responsible for the
payment of all Practice Expenses, as defined herein. The P.C. shall pay all
Practice Expenses as they fall due; provided, however, that the P.C. may contest
in good faith any claimed Practice Expenses as to which there is any dispute
regarding the nature, existence or validity of such claimed Practice Expenses.
As used in this Agreement, "Practice Expenses" shall mean (a) any
federal, state or local income taxes of the Practice; (b) any salaries,
benefits, or other direct costs with respect to the Professional Staff,
including without limitation, workers' compensation, retirement plan
contributions, health, disability and life insurance premiums, payroll taxes or
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compensation paid or payable to physician independent contractors (or other
independent contractors who provide medical services to patients); (c) physician
licensure fees, board certification fees, hospital staff privilege dues, and
costs of membership in professional associations for Professional Staff members;
(d) costs of continuing professional education for Professional Staff members;
(e) insurance premiums for policies of malpractice insurance for the Practice
and Professional Staff members; deductibles under such policies of malpractice
insurance; any and all costs and expenses incurred with respect to claims under
such policies of malpractice insurance; liability judgments assessed against the
Practice or Professional Staff members in excess of policy limits; and (f)
direct personal expenses of Professional Staff members of a kind that the
Practice has historically charged to its Professional Staff, e.g., cellular
phone expenses, paging system expenses.
3.6 Further Obligations of the P.C. In order for the Management Company
to perform its duties as described herein, the P.C. shall:
(i) Provide full information regarding its requirements for expansion
and acquisition;
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(ii) Designate a representative who shall be fully acquainted with the
P.C.'s plans and has authority to render decisions promptly and furnish
information expeditiously; and
(iii) In the event that the P.C. becomes aware of any problems in any
sites or with any acquisition targets, give prompt written notice thereof
to the Management Company.
4. Financial Terms.
(a) Payment of Operational Expenses. The Management Company shall pay,
on behalf and in the name of the P.C., all Operational Expenses, as defined
herein, as they fall due, out of Net Practice Revenues; provided, however, that
the Management Company may, in the name of and on behalf of the P.C., contest in
good faith any claimed Operational Expenses as to which there is any dispute
regarding the nature, existence or validity of such claimed Operational
Expenses.
For purposes of this Agreement, "Operational Expenses" shall mean the
operating and non-operating expenses incurred by the Management Company in
performing its duties hereunder, including, but not limited to: (a) salaries,
benefits, and other direct costs (including, without limitation, professional
liability insurance) of all Staff of the P.C. (but not including Professional
Staff); (b) obligations under leases or subleases for space and equipment used
by the Practice; (c) personal property and intangible taxes assessed against
assets used by the Clinic; (d) charitable contributions budgeted and approved by
the Management Company and the P.C.; (e) depreciation and amortization; (f)
interest expenses; (g) costs and expenses incurred in recruiting physicians and
other Practice personnel; (h) utility expenses relating to the medical office
space, and all other costs relating to the medical office space, including
without limitation, costs of repair, maintenance, telephone, electric, gas and
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water utility expenses, general liability insurance, security, worker's
compensation for Management Company employees, normal janitorial services,
refuse disposal, and medical and office supplies, including pharmaceuticals; (i)
actual costs incurred with respect to billing and collecting; (j) premiums for
malpractice and other agreed upon insurance coverage; and (k) obligations of the
P.C. under contracts, including without limitation, that certain contract by and
between the P.C. and Medi-Cen Corporation of Maryland, Inc., dated January 17,
1997, and any contracts by and between the P.C. and Health Quality Management,
Inc.
(b) Compensation to Management Company. As compensation for services
rendered under this Agreement, the P.C. shall pay to the Management Company
sixty percent (60%) of the Revenue Margin, as defined herein, per calendar year
(the "Management Fee"). The P.C. shall retain the remaining Revenue Margin.
Notwithstanding any other provision of this Agreement, the Management Fee shall
in no event be less than Five Hundred Thousand Dollars ($500,000) per annum (the
"Management Fee Floor"), nor exceed a per annum amount equal to the sum of (1)
the product of the number of new Medical Malls established during the then
current year of this Agreement and Five Hundred Thousand Dollars ($500,000) (the
"Management Fee Cap"), and (2) the product of the number of existing Medical
Malls maintained during the then current year of this Agreement and One Million
Dollars ($1,000,000). At such time that Net Practice Revenues reach $__________,
and upon each $____________ increase in Net Practice Revenues thereafter, the
parties shall have the right to renegotiate the Management Fee, the Management
Fee Floor, and the Management Fee Cap to appropriately reflect the fair market
value of management and consulting services provided by Manager. In the event
that the Management Cap is reached in any year of this Agreement, the Management
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Company shall remit to the P.C. any remaining Revenue Margin. In the event that
the Management Fee Floor is not reached in any year of this Agreement, the P.C.
shall pay to the Management Company the shortfall. For purposes of this
Agreement, "Revenue Margin" shall mean the amount equal to Net Practice Revenues
less all Operational Expenses.
(c) Draws. Following the end of each month, the Management Company
shall estimate such month's Net Clinic Revenues by multiplying a Historical
Collection Percentage, as defined herein, by such month's gross production. For
purposes of this Agreement, the "Historical Collection Percentage" shall be
determined by averaging the collection percentages for the immediately preceding
six (6) months. Operational Expenses for such month shall then be subtracted
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from such estimated Net Clinic Revenues for such month, resulting in an
estimated Revenue Margin, as defined herein. The Management Company shall remit
to the P.C. forty percent (40%) of such estimated Revenue Margin by the
fifteenth (15th) day of the following month and shall retain any remaining
amounts as a draw on its Management Fee.
(d) Reconciliation. Within ninety (90) days after the end of each
calendar quarter, the Management Company will reconcile the amounts retained by
the Management Company as draws under subsection (c) above with the actual Net
Clinic Revenues attributable to the gross production for such quarter, and shall
determine the actual Revenue Margin. In the event that the amounts retained by
the Management Company as draws under subsection (c) above are less than sixty
percent (60%) of the actual Revenue Margin for such quarter, the P.C. shall pay
to the Management Company the shortfall. In the event that the draws paid under
subsection (c) above are in excess of sixty percent (60%) of the actual Revenue
Margin for such quarter, the Management Company shall remit to the P.C. the
overdraft.
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(e) Fair Market Value of Services Rendered. The Management Fee has been
determined by the parties to equal the fair market value of the consulting,
administrative and management services furnished by the Management Company
hereunder, without taking into account the proximity of the Premises to any
source of referrals, or the volume or value of any referrals of business from
the Management Company (or its affiliates) to the P.C., or from the P.C. to the
Management Company (or its affiliates), that is reimbursed under any
governmental or private health care payment or insurance program.
(f) Arm's Length Transaction. The Management Fee paid by the P.C. to
the Management Company hereunder has been determined by the parties through
good-faith and arm's length bargaining, and consistent with industry practices.
No amount paid hereunder is intended to be, nor shall it be construed to be, an
inducement or payment for referral of, or recommending referral of, patients by
the P.C. to the Management Company (or its affiliates) or by the Management
Company (or its affiliates) to the P.C. In addition, the Management Fee charged
hereunder does not include any discount, rebate, kickback, or other reduction in
charge, and the Management Fee charged hereunder is not intended to be, nor
shall it be construed to be, an inducement or payment for referral, or
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recommendation of referral, of patients by the P.C. to the Management Company
(or its affiliates) or by the Management Company (or its affiliates) to the P.C.
5. Regulatory Matters.
(a) The P.C.'s physicians and the Professional Staff shall at all times
be free, in their sole discretion, to exercise their professional/medical
judgment on behalf of patients of the P.C. No provision of this Agreement is
intended, nor shall it be construed, to permit the Management Company to affect
or influence the professional/medical judgment of any member of the P.C.'s
Professional Staff. To the extent that any act or service required or permitted
of the Management Company by any provision of this Agreement may be construed or
deemed to constitute the practice of medicine, the ownership or control of a
medical practice, or the operation of a medical or health care facility, said
provision of this Agreement shall be void ab initio and the performance of said
act or service by the Management Company shall be deemed waived by the P.C.
(b) The parties agree to cooperate with one another in the fulfillment
of their respective obligations under this Agreement, and to comply with the
requirements of law and with all ordinances, statutes, regulations, directives,
orders, or other lawful enactments or pronouncements of any federal, state,
municipal, local or other lawful authority applicable to the Practice, and of
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any insurance company insuring the Premises or the parties against liability for
accident or injury in or upon the Premises. 6. Insurance.
6.1 General Comprehensive Liability Insurance. During the term of this
Agreement, the Management Company shall obtain and maintain at its own expense a
comprehensive general liability insurance policy and such other insurance as may
be required, in such amounts, with such coverages and with such companies as the
Management Company may reasonably determine.
6.2 Equipment Insurance. The Management Company shall cause to be
carried and maintained insurance against all risks of physical loss or damage to
the Equipment in an amount not less than the original purchase price or the
replacement cost with like kind and quality at the time of loss, with such
companies and as the Management Company shall reasonably determine.
6.3 Malpractice Insurance. During the term of this Agreement, the
Management Company shall use its best efforts to obtain and maintain, at the
P.C.'s expense, professional liability insurance covering the P.C., the
physicians and each Professional Staff member, with limits of $1 million per
occurrence and $3 million in the aggregate. In the event the P.C. has a "claims
made" form of insurance in effect at any time during the term of this Agreement,
the Management Company shall obtain full "tail" coverage to cover any event that
may have occurred during the term of this Agreement. The P.C. shall provide to
the Management Company any information with respect to the P.C. or the
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Physicians necessary for the Management Company to secure such professional
liability insurance.
7. Indemnification. Except to the extent paid from the proceeds of
available insurance, each party (and its affiliates) agrees to indemnify and
hold the other party (and its affiliates) harmless against any loss, cost, suit,
claim, action, cause of action, damage, obligation, contract, demand, liability,
judgment, verdict, settlement or expense (including reasonable attorney's and
other consultancy fees and court costs) arising out of any act or omission of
the indemnifying party, its employees, agents or affiliates that occurs in
connection with this Agreement.
8. Non-Solicitation. The P.C. agrees, and shall cause its employees to
agree, not to solicit the employment of, or to employ, any employee of the
Management Company or its affiliates, including but not limited to any member of
the Staff provided by the Management Company to the P.C. hereunder, during the
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term of this Agreement, and for a period of one (1) year from the date of
termination or expiration of this Agreement.
9. Non-Compete. During the term of this Agreement, the P.C. and each of
the physicians employed or engaged by the P.C. shall not, without the express
written consent of the Management Company, directly or indirectly, in whole or
in part, own, manage, operate, join, control, participate in the ownership,
management, operation or control of, contract with, be employed by, or be
connected with in any manner, any business engaged in the same or similar
activities engaged in by the Management Company or the P.C., or that directly or
indirectly competes with the Management Company or the P.C.
If any part of paragraph 8 or 9 of this Agreement should be determined
by a court of competent jurisdiction to be unreasonable in nature, duration,
geographic area, or scope, then this Agreement is intended to and shall extend
only for such period of time, in such area and with respect to such activity, as
is determined by said court to be reasonable.
10. Disclosure of Information. The P.C. recognizes and acknowledges
that all records, files, reports, protocols, policies, manuals, data bases,
processes, procedures, computer systems, materials and other documents used by
the Management Company (or its affiliates) in rendering services hereunder, or
relating to the operations of the Management Company (or its affiliates), belong
to and shall remain the property of the Management Company, and constitute
proprietary information and trade secrets that are valuable, special, and unique
assets of the Management Company's business. The P.C. shall not, and shall
assure that each of its physicians shall not, during or after the term of this
Agreement, disclose any proprietary information or trade secrets of the
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Management Company (or its affiliates) to any other firm, person, corporation,
association, or other entity for any reason or purpose whatsoever, without the
written consent of the Management Company or its respective affiliate.
11. Enforcement. The P.C. agrees that the covenants set forth in
paragraphs 8, 9 and 10 are reasonable in nature, duration and geographical
scope. The P.C. further acknowledges that any violation of those covenants will
cause the Management Company irreparable damage, which a monetary award would be
inadequate to remedy, and that a court or arbitrator of competent jurisdiction
may, in addition to monetary awards, enjoin any breach of and enforce such
covenants by temporary restraining order, and preliminary and permanent
injunctive relief. If a court or arbitrator of competent jurisdiction determines
that any of the covenants in paragraphs 8, 9 and 10 is unreasonable in nature,
duration or geographic scope, then the P.C. agrees that such court or arbitrator
shall reform such covenant so that such covenant is enforceable to the maximum
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extent permitted by law for a covenant of that nature, and such court shall
enforce the covenant to that extent.
12. P.C. Covenants. (a) The P.C. agrees that, at all times during the
term of this Agreement, the P.C. shall cause its stockholder and directors to
fix the number of directors of the P.C. at three (3) and to elect the Management
Company Nominee to fill at least one (1) position on the P.C.'s Board of
Directors. For purposes of this subparagraph, "Management Company Nominee" shall
mean a licensed physician designated in writing by the Management Company to the
P.C., from time to time.
13. Effective Date; Term and Termination.
(a) This Agreement shall be effective January 1, 1998, provided that
the Management Company has completed a successful Initial Public Offering (a
"Successful IPO"), as defined herein, by such date, or upon such later date that
the Management Company completes a Successful IPO (the "Effective Date"). For
purposes of this Agreement, a "Successful IPO" shall mean ________________. The
term of this Agreement shall be for thirty (30) years commencing on the date
first written above, unless sooner terminated as set forth herein, and shall
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automatically renew for successive five (5) years terms unless either party
gives the other at least ninety (90) days prior written notice of its intention
not to renew prior to the expiration of the then current term.
(b) Either party may terminate this Agreement immediately upon the
occurrence of any of the following events with regard to the other party: (i)
the making of a general assignment for the benefit of creditors; (ii) the filing
of a voluntary petition or the commencement of any proceeding by either party
for any relief under any bankruptcy or insolvency laws, or any laws relating to
the relief of debtors, readjustment of indebtedness, reorganization, composition
or extension; (iii) the filing of any involuntary petition or the commencement
of any proceeding by or against either party for any relief under any bankruptcy
or insolvency laws, or any laws relating to the relief of debtors, readjustment
of indebtedness, reorganization, composition or extension, which such petition
or proceeding is not dismissed within ninety (90) days of the date on which it
is filed or commenced; or (iv) suspension of the transaction of the usual
business of either party for a period in excess of thirty (30) days.
(c) The Management Company may terminate this Agreement immediately
upon written notice to the P.C. of any breach of the Stock Transfer Restriction
Agreement between the P.C. and the stockholders of the P.C.
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(d) The Management Company may terminate this Agreement immediately
upon written notice to the P.C. of any breach of paragraph 9 of this Agreement.
(e) The Management Company may terminate this Agreement at any time,
with or without cause, by giving the P.C. ninety (90) days' prior written
notice; provided, however, that if this Agreement is terminated pursuant to this
paragraph, the parties may not enter into a substantially similar management
agreement within __ days of such termination.
(f) The P.C. may terminate this Agreement upon one year's prior written
notice to the Management Company in the event of a material breach by the
Management Company of any material term or condition hereof, if such breach is
not cured to the reasonable satisfaction of the P.C. within one year after the
P.C. has given notice thereof to the Management Company.
(g) Upon termination or expiration of this Agreement by either party,
the P.C. shall pay the Management Company any amounts owed to the Management
Company under paragraph 4 hereof as of the date of termination or expiration.
(h) Upon termination or expiration of this Agreement, the P.C. shall
return to the Management Company any and all property of Management Company that
may be in the P.C.'s possession or under the P.C.'s control.
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14. Arbitration.
Any disputes arising under this Agreement or any breach of this
Agreement, shall be determined by arbitration in accordance with the rules of
the American Arbitration Association ("Association"), then in effect, by a
single arbitrator selected by mutual agreement of the parties or, if the parties
are unable to agree on an arbitrator, by the Association; provided that this
paragraph shall not restrict the right of either party to institute a legal
proceeding to enable such party to obtain temporary injunctive relief during the
pendency of any such arbitration. A determination of the dispute by the
arbitrator shall be final and binding on the parties to the extent permitted by
law. The cost of the arbitration, other than attorneys or other consultancy
fees, shall be borne equally by the parties.
15. Status of Parties. In the performance of the work, duties and
obligations under this Agreement, it is mutually understood and agreed that each
party is at all times acting and performing as an independent contractor with
respect to the other and that no relationship of partnership, joint venture or
employment is created by this Agreement.
16. Force Majeure. Neither party shall be deemed to be in default of
this Agreement if prevented from performing any obligation hereunder for any
reason beyond its control, including but not limited to, Acts of God, war, civil
commotion, fire, flood or casualty, labor difficulties, shortages of or
inability to obtain labor, materials or equipment, governmental regulations or
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restrictions, or unusually severe weather. In any such case, the parties agree
to negotiate in good faith with the goal of preserving this Agreement and the
respective rights and obligations of the parties hereunder, to the extent
reasonably practicable. It is agreed that financial inability shall not be a
matter beyond a party's reasonable control.
17. Notices. Any notices to be given hereunder by either party to the
other shall be deemed to be received by the intended recipient (a) when
delivered personally, (b) the day following delivery to a nationally recognized
overnight courier service with proof of delivery, or (c) three (3) days after
mailing by certified mail, postage prepaid with return receipt requested, in
each case addressed to the parties at the addresses set forth below or at any
other address designated by the parties in writing:
If to the Management Company:
Medi-Cen Management, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Chevy Chase, Maryland 20815
Attention: Xxxxxxxx Xxxx
If to the P.C.:
Xxxxx Medical Group, P.C.
0000 Xxxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: P. Xxxxxx Xxxxxx, M.D.
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18. Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the subject matter of this Agreement. This Agreement may not be changed
orally, and may only be amended by an agreement in writing signed by both
parties.
19. No Rights in Third Parties. This Agreement is not intended to, nor
shall it be construed to, create any rights in any third parties, including,
without limitation, in any Physicians employed or engaged by the P.C. in
connection with the Practice.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
21. Severability. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be contrary to law, that provision will be
enforced to the maximum extent permissible, and the remaining provisions of this
Agreement will remain in full force and effect, unless to do so would result in
either party not receiving the benefit of its bargain.
22. Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to that term or any other term of
this Agreement.
23. Rights Unaffected. No amendment, supplement or termination of this
Agreement shall affect or impair any rights or obligations that shall have
theretofore matured hereunder.
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24. Interpretation of Syntax. All references made and pronouns used
herein shall be construed in the singular or plural, and in such gender, as the
sense and circumstances require.
25. Successors. This Agreement shall be binding upon and shall inure to
the benefit of the parties, their respective heirs, executors, administrators
and assigns.
26. Further Actions. Each of the parties agrees that it shall hereafter
execute and deliver such further instruments and do such further acts and things
as may be required or useful to carry out the intent and purpose of this
Agreement and as are not inconsistent with the terms hereof.
27. Assignability. The P.C. may not assign this Agreement except with
the prior written approval of Management Company. Management Company may assign
this Agreement after written notice to the P.C.
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IN WITNESS WHEREOF, and intending to be legally bound, the parties
hereto affix their signatures below and execute this Agreement under seal. XXXXX
MEDICAL GROUP, P.C.
By: _____________________________ Date: __________________________
MEDI-CEN MANAGEMENT, INC.
By: _____________________________ Date: __________________________
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