SYSTEM DESIGN AND IMPLEMENTATION AGREEMENT
THIS SYSTEM DESIGN AND IMPLEMENTATION AGREEMENT dated as of the 15 day of
October, 1996, by and among HEALTH FITNESS PHYSICAL THERAPY, INC., a Minnesota
corporation ("HFPT"), PRACTICE MANAGEMENT CONSULTANTS, INC., a Minnesota
corporation ("PMC"), and XXXXXX XXXXXX, an individual residing in Texas, and
XXXX XXXXXXXXX, an individual residing in Minnesota (each individually a
"Shareholder"; collectively the "Shareholders").
WITNESSETH
WHEREAS, PMC is engaged in the business of consulting to physical therapy
clinics and designing and implementing management systems for physical therapy
clinics, as well as serving as broker in the purchase and sale of physical
therapy clinics;
WHEREAS, HFPT has determined to expand its physical therapy business such
that HFPT's Rehabilitation Division becomes a leader in the rehabilitation
therapy industry and the predominant part of HFPT's combined business; and
WHEREAS, to achieve its goals of expanding its Rehabilitation Division,
HFPT has determined that it needs to design and implement state-of-the-art
management information and control systems; and
WHEREAS, HFPT has completed the conceptual framework and project definition
for such management information and control systems as set forth in Exhibit A
hereto (the "System"); and
WHEREAS, HFPT desires to retain PMC to design and implement the System for
use in managing HFPT's physical therapy business.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and subject to the terms and conditions set
forth herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Specific Definitions. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:
"Affiliate" of a specified person (natural or juridical) means a person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified. "Control"
shall mean ownership of more than 50% of the shares of stock entitled to vote
for the election of directors in the case of a corporation, and more than 50% of
the voting power in the case of a business entity other than a corporation.
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"Confidential Information" means Technology and other proprietary or
nonpublic information which derives economic value from not being generally
known to the public. Confidential Information shall include, but shall not be
limited to, all information in writing which is labeled "Proprietary,"
"Confidential" or with words of similar import and all oral statements
accompanied by a statement indicating that the information is proprietary or
confidential.
"Design and Implementation Costs" means as defined in Section 2.2(a).
"Design and Implementation Efforts" means as defined in Section 2.1.
"HFPT's PT Business" means that portion of HFPT's business engaged in the
acquisition, development and operation of physical therapy clinics on an
out-patient basis (including on-site physical therapy).
"Intellectual Property Rights" means all right, title and interest in and
to: (i) all United States and foreign letters patent and applications for
letters patent, industrial models, designs, utility models, certificates of
inventions, and any other indicia of invention ownership or rights thereto, any
such rights granted under any reissue, division, continuation or
continuation-in-part applications now or hereafter filed; (ii) all trade secret
rights arising under any laws; (iii) all copyright rights and all other literary
property and author rights, whether or not copyrightable, and all copyrights and
copyrighted interests and renewals thereof; (iv) all know-how whether or not
protectable by patent, copyright, or trade secret right; (v) all United States
and foreign trademarks, trade names, service marks, logos, and any applications
therefor, together with all goodwill associated therewith; (vi) all licenses to
use any of the foregoing; and (vii) all amendments, modifications or
improvements to any of the foregoing.
"Technology" means any invention, discovery, know-how, trade secret, data,
information, technology, process or concept, whether or not patented or
patentable, and whether or not memorialized in writing.
1.2 Definitional Provisions.
(a) The words "hereof," "herein," and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provisions of this Agreement.
(b) Terms defined in the singular shall have a comparable meaning when used
in the plural, and vice-versa.
(c) References to an "Exhibit" or to a "Schedule" are, unless otherwise
specified, to one of the Exhibits or Schedules attached to or referenced in this
Agreement, and references to an "Article" or a "Section" are, unless otherwise
specified, to one of the Articles or Sections of this Agreement.
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(d) The term "person" includes any individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any department
or agency thereof.
ARTICLE 2
DESIGN AND IMPLEMENTATION PROJECT
2.1 Design and Implementation of System. PMC shall use its best efforts,
upon the terms and conditions set forth herein, to design and implement the
System. The deliverables for such design and implementation shall be actual
systems, as well as operating and training manuals, forms, handbooks, guidelines
and other materials necessary for the management and employees of the
Rehabilitation Division of HFPT to fully implement and operate the System (all
such efforts referred to as the "Design and Implementation Efforts"). The
parties acknowledge that such Design and Implementation Efforts commenced
approximately January 26, 1996.
2.2 Costs of Design and Implementation.
(a) HFPT shall pay or reimburse PMC for expenses set forth in the Forecasts
(as defined below) which are reasonably and necessarily incurred in connection
with PMC's Design and Implementation Efforts ("Design and Implementation
Costs"); provided that, unless specifically approved in writing by HFPT prior to
incurrence, HFPT shall not be obligated to pay or reimburse PMC for Design and
Implementation Costs not reflected in the Forecasts or in excess of the amounts
therein.
(b) At least 30 days prior to the beginning of each calendar month, PMC
shall deliver to HFPT a forecast of expenditures to be incurred by PMC (or to
which PMC will irrevocably commit) in such month in connection with PMC's Design
and Implementation Efforts, in such detail as required by HFPT's normal
expenditure approval procedures or as HFPT may reasonably request (a
"Forecast"). Each Forecast shall be consistent with the Budget attached hereto
as Exhibit B (the "Budget"). During such 30-day period, the parties will discuss
and use their good faith best efforts to resolve any concerns HFPT may have
regarding such Forecast and to modify the Forecast accordingly. Within five (5)
business days of the beginning of each calendar month, HFPT shall advance to
PMC, in a single lump sum, the amount reflected in the Forecast for such
upcoming month, minus any funds advanced in previous months which have not been
spent and documented as required in the next sentence. Within five (5) business
days following the end of each month, PMC shall submit to HFPT proper
substantiating documentation evidencing all expenses and the purposes for which
the same were incurred.
2.3 Issuance of Warrant. As consideration for PMC's Design and
Implementation Efforts and for HFPT's ownership of all Inventions and
Intellectual Property Rights resulting therefrom, within 30 days after the date
hereof, HFPT shall issue to PMC a warrant in the form of Exhibit C hereto. The
number of Warrant Shares purchasable upon exercise of this Warrant and the
Exercise Price thereof shall be determined by HFPT so that the product of (i)
$25.00 (adjusted for any stock splits, reverse stock splits or stock dividends
declared after the date hereof) minus the Exercise Price, multiplied by (ii) the
number of Warrant Shares, equals $1,479,051; provided that the per share
Exercise Price shall not be less than $4.00 nor more than $6.00 (adjusted for
any stock splits, reverse stock splits or stock dividends declared after the
date hereof).
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2.4 Subsequent Design and Implementation. The parties contemplate that they
will, within 30 days after the date hereof, enter into a binding letter of
intent with respect to three additional phases of expansion of HFPT's PT
Business, the terms of which shall be set forth in, and subject to execution of,
one or more definitive agreements with respect thereto.
2.5 Exclusivity. During the term of this Agreement and thereafter so long
as HFPT is pursuing with PMC the subsequent phases contemplated by Section 2.4
or as otherwise provided in Section 5.3(b), neither the Shareholders, PMC nor
any of PMC's employees or representatives will, except on behalf of HFPT,
conduct any discussions, solicitations, inquiries, or negotiations with, or
engage (either directly or indirectly through ownership, consulting relationship
or other means) in, any physical therapy businesses except as described in
Schedule 2.5.
ARTICLE 3
INTELLECTUAL PROPERTY
3.1 Confidentiality. PMC acknowledges that it will enjoy access to and use
of Confidential Information of HFPT during the term of this Agreement and
thereafter. PMC agrees that neither it nor any of its employees or
representatives will disclose or use any HFPT Confidential Information without
the prior written consent of HFPT. Upon termination of this Agreement, PMC, its
employees and the Shareholders shall (i) deliver to HFPT all records, files,
data and similar materials containing HFPT Confidential Information or any
summaries, analyses or compilations thereof, and (ii) not disclose or use,
without HFPT's written consent, any Confidential Information of HFPT.
3.2 Ownership of Technology. All components of the System acquired from
third parties shall be purchased or licensed in the name of HFPT, and PMC shall
not have any ownership rights therein. All Technology designed or implemented by
PMC, either solely or jointly with employees of HFPT, in connection with or as a
result of the Design and Implementation Efforts shall be owned by HFPT and
constitute Confidential Information of HFPT. PMC acknowledges that all
copyrightable works resulting from the Design and Implementation Efforts are
"works for hire" owned by HFPT. PMC hereby agrees to execute appropriate papers
or documents and otherwise provide proper assistance to enable the HFPT (i) to
perfect its full legal right, title and interest in and to such Technology and
(ii) to secure, maintain, enforce and defend its Intellectual Property Rights
available for such Technology in any and all countries.
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3.3 Protection of Technology. HFPT shall be entitled to protect the
Technology resulting from the Design and Implementation Efforts by obtaining and
maintaining appropriate patent, copyright, or other registrations. All patents
and copyright registrations shall be applied for in the names of the actual
inventors or authors and shall be assigned to HFPT; PMC shall execute and
deliver such forms of assignment, power of attorney and other documents which
are necessary to give effect to the provisions hereof.
3.4 PMC Employees and Consultants. PMC shall ensure that all employees,
consultants and third parties who perform any portion of PMC's Design and
Implementation Efforts under this Agreement have entered into written agreements
with PMC whereby such employee, consultant or third party (i) agrees to maintain
the confidentiality of HFPT Confidential Information, and (ii) either assigns to
PMC all ownership rights, or grants PMC an exclusive worldwide fully-paid
license (with the right to sublicense), in any inventions or discoveries made or
developed by such employee, consultant or third party in the course of such
Design and Implementation Efforts. PMC shall provide copies of such agreements
to HFPT upon HFPT's request.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations of PMC. PMC and the Shareholders, jointly and
severally, represent, warrant and covenant to HFPT that:
(a) PMC is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Minnesota and has full corporate power
to conduct the business in which it is presently engaged and to enter into and
perform its obligations under this Agreement.
(b) PMC has taken all necessary corporate action under the laws of the
state of its incorporation and its articles of incorporation and by-laws to
authorize the execution and consummation of this Agreement. This Agreement
constitutes the valid and legally binding agreement of PMC enforceable against
PMC in accordance with the terms hereof, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(c) Neither the execution and delivery of this Agreement nor the
performance of the Design and Implementation Efforts will violate any provision
of the certificate of incorporation or bylaws of PMC or any law, rule,
regulation, writ, judgment, injunction, decree, determination, award or other
order of any court or governmental agency or instrumentality, domestic or
foreign, or conflict with or result in any breach of any of the terms of or
constitute a default under or result in termination of or the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature pursuant to the terms of any contract
or agreement to which PMC or any Shareholder is a party or by which PMC, any
Shareholder or any of their assets is bound.
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(d) Neither PMC nor any Shareholder is restricted, by confidentiality or
noncompetition obligations or otherwise, from carrying out the Design and
Implementation Efforts except as described in Schedule 4.1(d). HFPT's use of the
System will not infringe, misappropriate, misuse or conflict with the rights of
third parties.
(e) Except as described in Schedule 4.1(d), there are no actions, suits,
claims, disputes or proceedings or governmental investigations pending or
threatened against PMC or any of its Affiliates, either at law or in equity,
before any court or administrative agency or before any governmental department,
commission, board, bureau, agency or instrumentality, or before any arbitration
board or panel whether located in the United States or a foreign country. To
PMC's knowledge, PMC has not failed to comply with any law, rule, regulation,
writ, judgment, injunction, decree, determination, award or other order of any
court or other-governmental agency or instrumentality, domestic or foreign,
which failure in any case would in any material respect impair any rights of
HFPT under this Agreement.
4.2 Representations of HFPT. HFPT represents, warrants and covenants to PMC
that:
(a) HFPT is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Minnesota and has full corporate power
to conduct the business in which it is presently engaged and to enter into and
perform its obligations under this Agreement.
(b) HFPT has taken all necessary corporate action under the laws of the
state of its incorporation and its articles of incorporation and bylaws to
authorize the execution and consummation of this Agreement. This Agreement
constitutes the valid and legally binding agreement of HFPT enforceable against
HFPT in accordance with the terms hereof, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(c) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein will violate any provision
of the articles and bylaws of HFPT or any law, rule, regulation, writ, judgment,
injunction, decree, determination, award or other order of any court or
governmental agency or instrumentality, domestic or foreign, or conflict with or
result in any breach of any of the terms of or constitute a default under or
result in termination of or the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance of any
nature pursuant to the terms of any contract or agreement to which HFPT is a
party or by which HFPT or any of its assets is bound.
(d) HFPT agrees to reimburse PMC and any Shareholder for fifty percent
(50%) of any costs incurred with respect to the matter described in Schedule
4.1(d) as a result of carrying out the Design and Implementation Efforts.
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ARTICLE 5
TERMINATION
5.1 Term. Subject to the parties rights under Section 5.2, this Agreement
shall remain in force and effect until completion of the Design and
Implementation Efforts.
5.2 Termination.
(a) HFPT may, by specific written notice to PMC, terminate this Agreement,
including the Design and Implementation Efforts, if HFPT reasonably determines
that a lack of adequate financial resources makes it impracticable for HFPT to
complete the Design and Implementation Efforts.
(b) If either party breaches any of the material terms, conditions or
agreements of this Agreement, then the other party may terminate this Agreement,
at its option and without prejudice to any of its other legal and equitable
rights and remedies, by giving the breaching party ninety (90) days notice in
writing, particularly specifying the breach. Such notice of termination shall
not be effective if the other party cures the specified breach within such
ninety (90) day period, or, in the case of breaches not reasonably curable
within such ninety (90) days, if such party commences the cure thereof within
such ninety (90) days and diligently thereafter prosecutes such cure.
(c) Either party may, by written notice to the other party (which notice
shall be effective upon dispatch), terminate this Agreement in the event that
such other party becomes insolvent, makes an assignment for the benefit of
creditors, goes into liquidation or receivership or otherwise loses legal
control of its business.
5.3 Effect of Termination.
(a) If HFPT terminates the Design and Implementation Efforts, (i) HFPT
shall be obligated to reimburse PMC only for Design and Implementation Costs
incurred by PMC prior to the effective date of such termination (including
expenses to which PMC irrevocably committed), in no event more than the approved
amount through such month of the Design and Implementation Efforts, and (ii) PMC
shall promptly reimburse HFPT for any amounts advanced which are in excess of
Design and Implementation Costs incurred by PMC prior to the effective date of
such termination (including expenses to which PMC irrevocably committed).
(b) The rights and obligations of the parties under Section 2.5 and Article
3 shall survive any termination of this Agreement. If this Agreement is
terminated by HFPT by reason of any willful and material misconduct by PMC or a
Shareholder, then for a period of two (2) years after such termination neither
the Shareholders, PMC nor any of PMC's employees or representatives will,
directly or indirectly, perform any services related to the design or
implementation of systems similar to or performing the same function as the
systems described on Exhibit A, or sell or license any product or system similar
to or performing the same function as the systems described on Exhibit A, to any
physical therapy business, except as described in Schedule 2.5.
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(c) Upon termination of this Agreement, each party will within thirty (30)
days return to the other all tangible Confidential Information of the other
party (except one copy which may be retained by legal counsel solely for
evidentiary purposes in the event of a dispute).
ARTICLE 6
MISCELLANEOUS
6.1 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and the successors or assigns of the parties
hereto; provided, that (i) the rights and obligations of PMC or the Shareholders
herein may not be assigned without the prior written consent of HFPT, and (ii)
the rights and obligations of HFPT herein may not be assigned except to any
person who succeeds to all or a substantial portion of HFPT's PT Business. Any
attempted assignment of this Agreement in violation of this Section 6.1 shall be
null and void.
6.2 Entire Agreement. This Agreement and the agreements contemplated herein
and therein constitute the entire agreements of the parties with respect to the
subject matter of such agreements and supersede all previous proposals or
agreements, oral or written, and all negotiations, conversations or discussions
heretofore had between the parties related to the subject matter of such
agreements.
6.3 Governing Law, Consent to Jurisdiction and Choice of Forum. The
construction and performance of this Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota (without regard
to the choice of law provisions thereof). By execution of this Agreement, HFPT
and PMC hereby consent to the jurisdiction of the courts and other tribunals of
the State of Minnesota for the limited purpose of the determination of any and
all disputes arising out of the construction, interpretation and performance of
this agreement, provided that the specific dispute resolution procedures set
forth in this Agreement shall govern the subject matter described therein.
6.4 Tax Consequences. Each party represents and warrants that it has made
an independent evaluation of the tax consequences resulting to such party as a
result of the terms and effect of this Agreement. No party shall have any
recourse against any other party to this Agreement nor shall this Agreement be
affected in any way by reason of the fact that the consummation of this
Agreement or the transactions contemplated hereby do not have the tax
consequences currently anticipated by such party.
6.5 Survival. All of the representations, warranties, and indemnifications
made in this Agreement, and all terms and provisions hereof intended to be
observed and performed by the parties after the termination hereof (to the
extent specified herein), shall survive such termination and continue thereafter
in full force and effect, subject to applicable statutes of limitations.
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6.6 Amendment, Waiver, Discharge, etc. This Agreement may not be amended,
released, discharged, abandoned, changed or modified in any manner, except by an
instrument in writing signed on behalf of each of the parties to this Agreement
by their duly authorized representatives. The failure of either party to enforce
at any time any of the provisions of this Agreement shall in no way be construed
to be a waiver of any such provision, nor in any way to affect the validity of
this Agreement or any part of it or the right of either party after any such
failure to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
6.7 Execution in Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become a binding agreement when one or more counterparts have been
signed by each party and delivered to the other party.
6.8 Titles and headings; Construction. The titles and headings to Sections
and Articles herein are inserted for the convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of this
Agreement. This Agreement shall be construed without regard to any presumption
or other rule requiring construction hereof against the party causing this
Agreement to be drafted.
6.9 Benefit. Nothing in this Agreement, expressed or implied, is intended
to confer on any person other than the parties to this Agreement or their
respective successors or permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
6.10 Notices. All notices or other communications to a party required or
permitted hereunder shall be in writing and shall be delivered personally or by
telecopy (receipt confirmed) to such party (or, in the case of an entity, to an
executive officer of such party) or shall be sent by a reputable express
delivery service or by certified mail, postage prepaid with return receipt
requested, addressed as follows:
if to HFPT to:
Health Fitness Physical Therapy, Inc.
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxx, President
FAX (000) 000-0000
and a copy (which will not constitute notice) to:
Xxxxxxxxxx & Xxxxx
1100 International Centre
000 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxx
FAX (000) 000-0000
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if to PMC to:
Practice Management Consultants, Inc.
Xxxxx 0, Xxx 000
Xxxxxxx, Xxxxx 00000
FAX (000) 000-0000
and a copy (which will not constitute notice) to:
Kovalchuk and Xxxxxxxx, P.A.
000 Xxxxx Xxxxx
000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
FAX (000) 000-0000
PMC or HFPT may change their respective above-specified recipient and/or mailing
address by notice to the other party given in the manner herein prescribed. All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the return
receipt (if delivered by express delivery service or by mail).
6.11 Severability. If any provision of this Agreement is held invalid by a
court of competent jurisdiction, such provision shall be enforced to the maximum
extent permissible and the remaining provisions shall nonetheless be enforceable
according to their terms.
6.12 Execution of Further Documents. Each party agrees to execute and
deliver without further consideration any further applications, licenses,
assignments or other documents, and to perform such other lawful acts as the
other party may reasonably request to fully secure and/or evidence the rights or
interests herein.
6.13 Relationship. The relationship of HFPT and PMC with respect to the
Design and Implementation Efforts will be that of independent contractors.
Except as otherwise provided in this Agreement, neither party has, and will not,
represent that it has any power, right or authority to bind or to incur any
charges or expenses on behalf of the other party or in the other party's name
without the written consent of the other party. Nothing stated in this Agreement
will be construed as constituting HFPT and PMC, or their affiliates, as partners
or as creating the relationships of employer/employee, franchisor/franchisee, or
principal/agent between them. Neither party nor its affiliates nor its or their
employees or agents are, or will act, as employees of the other party within the
meaning or application of any unemployment insurance laws, social security laws,
workers' compensation or industrial accident laws, social security laws,
workers' compensation or industrial accident laws, or under any other laws or
regulations which may impute any obligations or liability to the other by reason
of an employment relationship. The parties will indemnify and reimburse each
other for and hold the other harmless from any liabilities or obligations
imposed or attempted to be imposed upon a party by virtue of any such law in
performance by a party of this Agreement.
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6.14 Compliance with Laws. The parties, and any permitted sublicensees of
the parties, will comply with all applicable international, national, state,
regional and local laws and regulations in exercising their rights or performing
their duties under this Agreement.
6.15 Arbitration. Any dispute arising out of or relating to this Agreement
or any breach hereof shall be settled by binding arbitration in accordance with
commercial arbitration rules of the American Arbitration Association ("AAA").
The arbitrator shall be a retired state or federal judge, as mutually-agreed
upon by HFPT and PMC or, if the parties cannot agree, as selected by the AAA.
The results of such arbitration proceedings shall be binding upon the parties
hereto, and judgment may entered upon the arbitration award in any court having
jurisdiction thereof. Notwithstanding the foregoing, either party may seek
interim injunctive relief from any court of competent jurisdiction.
IN WITNESS WHEREOF, each of the parties has caused this System Design and
Implementation Agreement to be executed in the manner appropriate to each.
PRACTICE MANAGEMENT CONSULTANTS, INC.
By: /s/ Xxxxxx X. Xxxxxx
Its: President
/s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
/s/ Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxx
HEALTH FITNESS PHYSICAL THERAPY, INC.
By: /s/ Xxxxx Xxxxx
Its: CEO
Exhibits:
A - Description of Design and Implementation Efforts
B - Summary of Expenses
C - Form of Warrant
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EXHIBIT A
DESCRIPTION OF THE SYSTEM DESIGN AND IMPLEMENTATION EFFORTS
OF REHABILITATION DIVISION OF HEALTH FITNESS PHYSICAL THERAPY
The System will be one or more management information and control systems to
manage and operate the Company's Rehabilitation Division, as such division
currently exists and as it is greatly expanded to become a leader in the
rehabilitation therapy industry and the predominant part of HFPT's combined
business. The System will include software (including packages), operating
manuals, policies and procedures for the following areas of physical therapy
operations:
o Billing and collections
o Therapist staffing management
o Patient scheduling
o Outcomes measurement
o Record keeping
The System will include interfaces and modifications to existing systems,
primarily the general ledger system.
As a test of the implementation of the System, PMC will begin preliminary
application of the MIS portion of the System to HFPT's existing Rehabilitation
Business. PMC will have direct access to all HFPT administration and operational
System and staff for the purposes of System design and implementation. Xxx
Xxxxxx will be a liaison to HFPT's Chief Executive Officer.
The Design and Implementation Efforts regarding the System shall include but not
be limited to the following:
o Billing and Collections system
- Provide outline of policy and procedure manual by October
15, 1996.
- Provide draft of policy and procedure manual by December 31,
1996.
- Provide draft of forms, training manual and other necessary
materials by December 31, 1996.
- Provide final completed policy and procedure manual and
forms, training manual and other necessary materials by
February 28, 1997.
o Therapist Staffing Management system
- Provide outline of policy and procedure manual by October
31, 1996.
- Provide draft of policy and procedure manual by December 31,
1996.
- Provide draft of forms, training manual and other necessary
materials by February 28, 1997.
- Provide final completed policy and procedure manual and
forms, training manual and other necessary materials by
March 31, 1997.
A-1
o Patient Scheduling system
- Provide outline of policy and procedure manual by October
31, 1996.
- Provide draft policy and procedure manual by November 30,
1996.
- Provide draft forms, training manual and other necessary
materials by December 31, 1996.
- Programming to begin as soon as practicable after completion
of preceding step.
- Provide final completed policy and procedures manual, forms,
training manual and other necessary materials as soon as
practicable after completion of programming.
o Outcome Measurement system
- Provide outline of policy and procedure manual by October
31, 1996.
- Provide draft policy and procedure manual by November 30,
1996.
- Provide draft forms, training manual and other necessary
materials by December 31, 1996.
- Programming to begin as soon as practicable after completion
of preceding step.
- Provide final completed forms, training manual and other
necessary materials as soon as practicable after
completion of programming.
o Record Keeping system
- Provide outline of policy and procedure manual by October
31, 1996.
- Provide draft policy and procedure manual by November 30,
1996.
- Provide draft forms, training manual and other necessary
materials by December 31, 1996.
- Programming to begin as soon as practicable after completion
of preceding step.
- Provide final completed policy and procedures manual, forms,
training manual and other necessary materials by as soon as
practicable after completion of programming.
A-2
EXHIBIT B
Projected Cost of Rehabilitation Division Management Information Systems
Design & Implementation
($000's)
Jan-Jun Jul-Dec Jan-Jun Jul-Dec
1996 1996 1997 1997 Total
---------------- -------------- ---------------- --------------- -------------
Application Software
Design & Implementation
Billed Hourly Charges $200 $325 $325 $175 $1,025
Expenses
Travel, Phones, Other $75 $100 $100 $50 $325
---------------- -------------- ---------------- --------------- -------------
Total Application Software
Design & Implementation $275 $425 $425 $225 $1,350
Equipment/Operating Software
Headquarters $0 $75 $25 $25 $125
Existing Physical Therapy
Sites $10 $200 $125 $0 $335
---------------- -------------- ---------------- --------------- -------------
Total Equipment/Operating
Software $10 $275 $150 $25 $460
================ ============== ================ =============== =============
TOTAL PROJECT COST $285 $700 $575 $250 $1,810
Schedule 2.5
Exceptions to Exclusivity
Physical Therapy Rehabilitation Center, Inc & Xxx Xxxxxxxxxx
South Austin Therapy Group
Isernhagen Clinics, Inc.
Xxxxxxx Physical Therapy, Inc., The Body Firm & Xxxxx Xxxxxxx
Midlands Physical Therapy, Inc. Xxxxx Xxxxx & Xxx Xxxxxxxxxxx
Xxxxxxxxx-Xxxxx Physical Therapy
Schedule 4.1(d)
Xxx Xxxxxx, one of PMC's officers, is subject to certain noncompetition
obligations set forth in the following portions of the following agreements:
1) Agreement dated November 26, 1993 by and among RehabClinics, Inc.,
Xxxxxx Physical Therapy Associates, Inc., West Suburban Health Partners, Inc.
and Xxxxxx X. Xxxxxx.
2) Section XI of Agreement of Purchase and Sale dated October 1, 1991 by
and among Xxxxxx Physical Therapy Associates, Inc., Xxxxxx X. Xxxxxx, Xxxx X.
Xxxxxxxxx, and RehabClinics, Inc.
3) Section 8 of Employment Agreement dated November 8, 1991 between Xxxxxx
Physical Therapy Associates, Inc. and Xxxxxx X. Xxxxxx.
4) Section XI of Agreement of Purchase and Sale dated January 1, 1992 by
and among West Suburban Health Partners, Inc., certain shareholders thereof
(including Xxxxxx X. Xxxxxx), and RehabClinics, Inc.
