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EXHIBIT 2.3
MANAGEMENT SERVICES AGREEMENT
BY AND BETWEEN
CARDIOLOGY MANAGEMENT PARTNERSHIP,
A TEXAS GENERAL PARTNERSHIP
AND
SOUTHEAST TEXAS CARDIOLOGY ASSOCIATES II, P.A.
A TEXAS PROFESSIONAL ASSOCIATION
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS........................................................... 2
Section 1.1 Adjusted Gross Revenue............................................ 2
Section 1.2 Adjustments....................................................... 2
Section 1.3 Ancillary Revenue................................................. 2
Section 1.4 Base Management Fee............................................... 2
Section 1.5 Budget............................................................ 2
Section 1.6 Business Manager.................................................. 2
Section 1.7 Business Manager Consent.......................................... 2
Section 1.8 Business Manager Expense.......................................... 3
Section 1.9 Confidential Information.......................................... 3
Section 1.14 GAAP............................................................. 3
Section 1.15 Management Fee................................................... 3
Section 1.16 Management Services.............................................. 3
Section 1.13 Management Services Agreement.................................... 3
Section 1.14 Master Transaction Agreement..................................... 4
Section 1.15 Medical Group.................................................... 4
Section 1.16 Medical Group Account............................................ 4
Section 1.17 Medical Group Consent............................................ 4
Section 1.18 Medical Group Expense............................................ 4
Section 1.19 Medical Services................................................. 4
Section 1.20 Net Collections................................................ 4
Section 1.21 Office........................................................... 4
Section 1.22 Office Expense................................................... 5
Section 1.23 Original Physicians' Salaries.................................. 6
Section 1.24 Performance Fee.................................................. 6
Section 1.25 Physician........................................................ 6
Section 1.26 Policy Board..................................................... 6
Section 1.27 Practice Territory............................................... 6
Section 1.28 Professional Services Revenues................................... 7
Section 1.29 Representatives.................................................. 7
Section 1.30 State............................................................ 7
Section 1.31 Term............................................................. 7
ARTICLE II. APPOINTMENT AND AUTHORITY OF BUSINESS MANAGER....................... 7
Section 2.1 Appointment...................................................... 7
Section 2.2 Authority........................................................ 7
Section 2.3 Patient Referrals................................................ 7
Section 2.4 Practice of Medicine............................................. 8
ARTICLE III. RESPONSIBILITIES OF THE POLICY BOARD............................... 8
Section 3.1 Formation and Operation of the Policy Board...................... 8
Section 3.2 Duties and Responsibilities of the Policy Board.................. 8
Section 3.3 Medical Decisions................................................ 9
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ARTICLE IV. COVENANTS AND RESPONSIBILITIES OF BUSINESS MANAGER.................. 10
Section 4.1 Office and Equipment............................................. 10
Section 4.2 Medical Supplies................................................. 11
Section 4.3 Support Services................................................. 11
Section 4.4 Quality Assurance Risk Management and Utilization Review......... 11
Section 4.5 Licenses and Permits............................................. 11
Section 4.6 Personnel........................................................ 11
Section 4.7 Contract Negotiations............................................ 12
Section 4.8 Billing and Collection........................................... 12
Section 4.9 Medical Group Account............................................ 13
Section 4.10 Fiscal Matters.................................................. 14
Section 4.11 Reports and Records............................................. 16
Section 4.12 Recruitment of Medical Group Physicians......................... 16
Section 4.13 Acquisitions of or Mergers with other Medical Groups............ 16
Section 4.14 Business Manager's Insurance.................................... 16
Section 4.15 No Warranty..................................................... 17
ARTICLE V. COVENANTS AND RESPONSIBILITIES OF MEDICAL GROUP...................... 17
Section 5.1 Organization and Operation....................................... 17
Section 5.2 Medical Group Personnel.......................................... 17
Section 5.3 Professional Standards........................................... 20
Section 5.4 Medical Services................................................. 20
Section 5.5 Peer Review/Quality Assurance.................................... 21
Section 5.6 Medical Group's Insurance........................................ 21
Section 5.7 Confidential and Proprietary Information......................... 21
Section 5.8 Noncompetition................................................... 22
Section 5.9 Name, Trademark.................................................. 24
ARTICLE VI. FINANCIAL ARRANGEMENT............................................... 24
Section 6.1 Definitions...................................................... 24
Section 6.2 Compensation..................................................... 24
Section 6.3 Adjustments...................................................... 25
Section 6.4 Reasonable Value................................................. 25
Section 6.5 Payment of Management Fee........................................ 26
Section 6.6 Disputes Regarding Fees.......................................... 26
ARTICLE VII. TERM AND TERMINATION............................................... 26
Section 7.1 Initial and Renewal Term......................................... 26
Section 7.2 Termination...................................................... 27
Section 7.3 Legislative, Regulatory or Administrative Change................. 28
Section 7.4 Effects of Termination........................................... 29
Section 7.5 Repurchase Obligation............................................ 29
Section 7.6 Repurchase Option................................................ 30
Section 7.7 Closing of Repurchase............................................ 31
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ARTICLE VIII. MISCELLANEOUS..................................................... 31
Section 8.1 Administrative Services Only..................................... 31
Section 8.2 Status of Contractor............................................. 31
Section 8.3 Notices.......................................................... 31
Section 8.4 Governing Law.................................................... 32
Section 8.5 Assignment....................................................... 32
Section 8.6 Arbitration...................................................... 33
Section 8.7 Waiver of Breach................................................. 33
Section 8.8 Enforcement...................................................... 33
Section 8.9 Gender and Number................................................ 33
Section 8.10 Additional Assurances........................................... 33
Section 8.11 Consents, Approvals, and Exercise of Discretion................. 33
Section 8.12 Force Majeure................................................... 33
Section 8.13 Severability.................................................... 34
Section 8.14 Divisions and Headings.......................................... 34
Section 8.15 Amendments and Management Services Agreement Execution.......... 34
Section 8.16 Entire Management Services Agreement............................ 34
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MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT is made and entered into effective as of
September 18, 1996 (the "Effective Date"), by and between Cardiology Management
Partnership, a Texas general partnership (as defined more precisely in Article
I, "Business Manager"), and Southeast Texas Cardiology Associates II, P.A., a
Texas professional association ("Medical Group").
RECITALS
This Management Services Agreement is made with reference to the following
premises:
A. Medical Group is a validly existing Texas professional association,
formed for and engaged in the conduct of a cardiology medical practice and the
provision of cardiology medical services to the general public in and around the
Beaumont, Texas area through individual physicians who are licensed to practice
medicine in the State of Texas and who are employed or otherwise retained by
Medical Group.
B. Business Manager is a validly existing Texas general partnership
that has been duly formed to manage the business aspects of the cardiology
medical practice of Medical Group.
C. Medical Group desires to focus its energies, expertise and time on
the practice of medicine and on the delivery of medical services to patients,
and to accomplish this goal it desires to delegate the increasingly more complex
business functions of its medical practice to persons with business expertise.
D. Medical Group wishes to engage Business Manager to provide such
management, administrative and business services as are necessary and
appropriate for the day-to-day administration of the nonmedical aspects of
Medical Group's medical practice, and Business Manager desires to provide such
services, all upon the terms and conditions hereinafter set forth.
E. Medical Group and Business Manager have determined a fair market
value for the services to be rendered by Business Manager and have developed a
formula for compensation for Business Manager that will allow the parties to
establish a relationship permitting each party to devote its skills and
expertise to the appropriate responsibilities and functions.
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NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions herein above and hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
For the purposes of this Management Services Agreement, the following
terms shall have the meanings ascribed thereto:
Section 1.1 Adjusted Gross Revenue The term "Adjusted Gross Revenue"
shall mean the sum of Professional Services Revenue and Ancillary Revenue
determined in accordance with GAAP.
Section 1.2 Adjustments. The term "Adjustments" shall mean any
adjustments on an accrual basis for uncollectible accounts, Medicare, Medicaid
and other payor contractual adjustments, discounts, workers' compensation
adjustments, professional courtesies and other reductions in collectible revenue
that result from activities that do not result in collectible charges.
Section 1.3 Ancillary Revenue. The term "Ancillary Revenue" shall mean
all revenue actually recorded each month (net of Adjustments) that is not
Professional Services Revenues.
Section 1.4 Base Management Fee. The term "Base Management Fee" shall
mean the amount determined in accordance with Section 6.1.
Section 1.5 Budget. The term "Budget" shall mean an operating and
capital expenditure budget of Medical Group for each fiscal year.
Section 1.6 Business Manager. The term "Business Manager" shall mean
Cardiology Management Partnership, a Texas general partnership, and each entity
that succeeds to the interests of the Business Manager and to whom the
obligations of Business Manager are assigned and transferred.
Section 1.7 Business Manager Consent. The term "Business Manager
Consent" shall mean the consent granted by Business Manager's representatives to
the Policy Board created pursuant to Article III herein. When any provision of
this Management Services Agreement requires Business Manager Consent, Business
Manager Consent shall not be unreasonably withheld and shall be binding on
Business Manager.
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Section 1.8 Business Manager Expense. The term "Business Manager
Expense" shall mean an expense or cost incurred by the Business Manager and for
which the Business Manager, and not Medical Group, is financially liable.
Section 1.9 Confidential Information. The term "Confidential
Information" shall mean any information of Business Manager or Medical Group, as
appropriate (whether written or oral), including all notes, studies, patient
lists, information, forms, business or management methods, marketing data, fee
schedules, or trade secrets of the Business Manager or of Medical Group, as
applicable, whether or not such Confidential Information is disclosed or
otherwise made available to one party by the other party pursuant to this
Management Services Agreement. Confidential Information shall also include the
terms and provisions of this Management Services Agreement and the Budget.
Confidential Information does not include, however, any information that (i) is
or becomes generally available to and known by the public (other than as a
result of an unpermitted disclosure directly or indirectly by the receiving
party or its affiliates, advisors or Representatives); or (ii) has already been
or is hereafter independently acquired or developed by the receiving party
without violating any confidentiality agreement with or other obligation of
secrecy to the furnishing party.
Section 1.10 GAAP. The term "GAAP" shall mean generally accepted
accounting principles, consistently applied, as set forth in the opinions and
pronouncements of the Accounting by such other entity or other practices and
procedures as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of the
determination. For purposes of this Management Services Agreement, GAAP shall be
applied on an accrual basis in a manner consistent with the historic practices
of the person to which the term applies.
Section 1.11 Management Fee. The term "Management Fee" shall mean
Business Manager's compensation determined in accordance with in Article VI
hereof.
Section 1.12 Management Services. The term "Management Services" shall
mean the business, administrative, management and supervisory services to be
provided to Medical Group, including without limitation the provision of
equipment, supplies, support services, marketing and advertising, certain
nonmedical personnel, office space, management, administration, billing and
collection services, financial recordkeeping and reporting and other business
office services, business functions and business affairs.
Section 1.13 Management Services Agreement. The term "Management
Services Agreement" shall mean this Management Services Agreement by and between
Medical Group and Business Manager and any amendments hereto as may be adopted
as provided in this Management Services Agreement.
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Section 1.14 Master Transaction Agreement. The term "Master Transaction
Agreement" shall mean the agreement effective as of August 21, 1996, by and
between Raytel Medical Corporation, Raytel Texas Physician Services, Inc.,
Raytel Southeast Management, L.P., Southeast Texas Cardiology Associates II,
P.A., Southeast Texas Cardiology Associates, P.A., Xxxxxxx X. Xxxxxxxxx, M.D.,
Xxxxx X. Xxxxxxxx, M.D., Xxxxxxx X. Xxxxx, M.D., and Xxxxxx Xxxxxxxxxxx, M.D.
Section 1.15 Medical Group . The term "Medical Group" shall mean
Southeast Texas Cardiology Associates II, P.A., a Texas professional
association.
Section 1.16 Medical Group Account. The term "Medical Group Account"
shall mean the bank account of Medical Group established as described in
Sections 4.8 and 4.9.
Section 1.17 Medical Group Consent. The term "Medical Group Consent"
shall mean the consent granted by Medical Group's representatives to the Policy
Board created pursuant to Article III herein. When any provision of this
Management Services Agreement requires Medical Group Consent, Medical Group
Consent shall not be unreasonably withheld and shall be binding on Medical
Group.
Section 1.18 Medical Group Expense. The term "Medical Group Expense"
shall mean an expense incurred by the Business Manager or Medical Group and for
which Medical Group, and not the Business Manager, is financially liable. Except
as modified in Section 5.2, herein below, Medical Group Expense shall include
such items as salaries for Physicians and physician assistants, benefits and
other related costs (including professional dues, subscriptions, continuing
medical education expenses and travel costs for continuing medical education or
other business travel). In the event Medical Group incurs consulting, accounting
or legal fees without coordinating such engagement through Business Manager, all
fees and expenses so incurred shall also be Medical Group Expenses.
Section 1.19 Medical Services. The term "Medical Services" shall mean
medical care and services, including but not limited to the practice of
cardiology and all related health care services provided by Medical Group
through the Physicians and other health care providers that are professionally
affiliated with Medical Group.
Section 1.20 Net Collections. The term "Net Collections" shall mean the
sum of all professional fees actually recorded each month on a cash basis as a
result of professional medical services and related health care services
rendered by the Physicians whether rendered in an outpatient or inpatient
setting.
Section 1.21 Office. The term "Office" shall mean any office space,
clinic, facility that Business Manager shall own or lease or otherwise procure
for the use of Medical Group.
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Section 1.22 Office Expense. The term "Office Expense" shall mean all
operating and non-operating expenses incurred by the Business Manager or Medical
Group in the provision of services to Medical Group. Office Expense shall not
include any state or federal income tax or any other expense that is a Medical
Group Expense or a Business Manager Expense. Without limitation, Office Expense
shall include:
(a) the salaries, benefits, and other direct costs of all
employees of Business Manager at the Office and the salaries, benefits,
and other direct costs of the nonphysician employees of Medical Group,
but not the salaries, or other direct costs of the Physicians or
physician assistants (which shall be Medical Group Expenses);
(b) the direct cost of any employee or consultant that
provides services at or in connection with the office for improved
clinic performance, such as management, billing and collections,
business office consultation, accounting and legal services, but only
when such services are coordinated by Business Manager;
(c) reasonable recruitment costs and out-of-pocket expenses of
Business Manager or Medical Group associated with the recruitment of
additional physician employees of Medical Group;
(d) malpractice insurance expenses for Physicians, Business
Manager employees, and nonphysician employees; comprehensive and
general liability and vicarious liability insurance covering the Office
and employees of Medical Group and Business Manager at the Office;
(e) the expense of using, leasing, purchasing or otherwise
procuring the Office and related equipment, including depreciation;
(f) the cost of capital (whether as actual interest on
indebtedness incurred on behalf of Medical Group or as reasonable
imputed interest on capital advanced by Business Manager) to finance or
refinance obligations of Medical Group, purchase medical or nonmedical
equipment, or finance new ventures of Medical Group;
(g) the Base Management Fee;
(h) direct costs related to obtaining and maintaining
capitation or other managed care contracts for professional medical
services or health care service contracts with medical or health care
providers;
(i) the reasonable travel expenses associated with attending
meetings,
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conferences, or seminars to benefit Medical Group;
(j) the cost of medical supplies (including but not limited to
drugs, pharmaceuticals, products, substances, items, or medical
devices), office supplies, inventory and utilities (excluding, however,
those medical supplies or medical inventory owned by Medical Group on
the date of this Management Services Agreement);
(k) any state sales tax on those certain enumerated services
in Article IV that have been determined to be taxable services by the
state;
(l) any interest expense on promissory notes, contractual
obligations, or the Transaction Documents arising as part of the
consideration paid to the Physicians pursuant to the Master Transaction
Agreement and the other Transaction Documents; and
(m) all amortization and depreciation expense related to or
arising as part of the consideration paid to the Physicians pursuant to
the Master Transaction Agreement and the other Transaction Documents.
Section 1.23 Original Physicians' Salaries. The term "Original
Physicians' Salaries" shall mean the sum of the salaries paid to the Physicians
as agreed upon at the Effective Date of this Agreement as set forth in Exhibit
5.1A.
Section 1.24 Performance Fee. The term "Performance Fee" shall mean the
amount payable to the Business Manager, if any, determined under Article VI, as
a Management Fee based upon the Business Manager assisting Medical Group to
achieve certain pre-determined performance criteria.
Section 1.25 Physician. The term "Physician" shall mean each
individually licensed professional who is employed or otherwise retained by or
associated with Medical Group, each of whom shall meet at all times the
qualifications described in Article V.
Section 1.26 Policy Board. The term "Policy Board" shall refer to the
body responsible for developing and implementing management and administrative
policies for the overall operation of Medical Group.
Section 1.27 Practice Territory. The term "Practice Territory" shall
mean the geographic area within the six counties consisting of Jefferson,
Orange, Xxxxxx, Xxxxxx, Xxxxxxxx and Liberty Counties and within a radius of
thirty (30) miles of any current or future facility from which Medical Group
provides Medical Services in Texas, representing the
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geographic boundaries of the medical practice conducted by Medical Group.
Section 1.28 Professional Services Revenues. The term "Professional
Services Revenues" shall mean the sum of all professional fees actually recorded
each month on an accrual basis under GAAP (net of Adjustments) as a result of
professional medical services and related health care services rendered by the
Physicians whether rendered in an outpatient or inpatient setting.
Section 1.29 Representatives. The term "Representatives" shall mean a
party's officers, directors, employees, or other agents or representatives.
Section 1.30 State. The term "State" shall mean the State of Texas.
Section 1.31 Term. The term "Term" shall mean the initial and any
renewal periods of duration of this Management Services Agreement as described
in Section 7.1.
ARTICLE II.
APPOINTMENT AND AUTHORITY OF BUSINESS MANAGER
Section 2.1 Appointment. Medical Group hereby appoints Business Manager
as its sole and exclusive agent for the provision of Management Services to the
Medical Group, and Business Manager hereby accepts such appointment, subject at
all times to the provisions of this Management Services Agreement.
Section 2.2 Authority. Consistent with the provisions of this
Management Services Agreement, Business Manager shall have the responsibility
and commensurate authority to provide Management Services to Medical Group.
Subject to the terms and conditions of this Management Services Agreement,
Business Manager is hereby expressly authorized to provide the Management
Services in any reasonable manner Business Manager deems appropriate to meet the
day-to-day requirements of the business functions of Medical Group. Business
Manager is also expressly authorized to negotiate and execute on behalf of
Medical Group all contracts, including payor, managed care or provider
agreements. The parties acknowledge and agree that Medical Group, through its
Physicians, shall be responsible for and shall have complete authority,
responsibility, supervision and control over the provision of all Medical
Services and other professional health care services performed for patients, and
that all diagnoses, treatments, procedures and other professional health care
services shall be provided and performed exclusively by or under the supervision
of Physicians as such Physicians, in their sole discretion, deem appropriate.
Business Manager shall have no control or supervision over the provision of
Medical Services.
Section 2.3 Patient Referrals. Business Manager and Medical Group agree
that the
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benefits hereunder do not require, are not payment for, and are not in any way
contingent upon the referral, admission, or any other arrangement for the
provision of any item or service offered by Business Manager to patients of
Medical Group in any facility, laboratory, catheterization laboratory, or health
care operation controlled, managed, or operated by Business Manager.
Section 2.4 Practice of Medicine. The parties acknowledge that Business
Manager is not authorized or qualified to engage in any activity that may be
construed or deemed to constitute the practice of medicine. To the extent any
act or service herein required by Business Manager should be construed by a
court of competent jurisdiction or by the Texas State Board of Medical Examiners
constitute the practice of medicine, the requirement to perform that act or
service by Business Manager shall be deemed waived and unenforceable.
ARTICLE III.
RESPONSIBILITIES OF THE POLICY BOARD
Section 3.1 Formation and Operation of the Policy Board. The parties
hereby establish a Policy Board that shall be responsible for developing and
implementing management and administrative policies for the overall operation
and management of Medical Group. The Policy Board shall consist of five (5)
members. Business Manager shall designate, in its sole discretion, three (3)
members of the Policy Board, and Medical Group shall designate, in its sole
discretion, two (2) members of the Policy Board. Each party's representatives to
the Policy Board shall have the authority to make decisions on behalf of the
respective party. Except as may otherwise be provided, the act of a majority of
the members of the Policy Board shall be the act of the Policy Board. The
Medical Group shall designate the Executive Director as a member of the Policy
Board.
Section 3.2 Duties and Responsibilities of the Policy Board. The Policy
Board shall have the following duties, obligations, and authority:
(a) Capital Improvements and Expansion. Any renovation and
expansion plans and capital equipment expenditures with respect to
Medical Group's facilities shall be reviewed and approved by the Policy
Board and shall be based upon economic feasibility, physician support,
productivity and then current market conditions.
(b) Patient Fees; Collection Policies. As a part of the annual
operating budget, the Policy Board shall review and approve the fee
schedule and collection policies for all physician and ancillary
services rendered by Medical Group.
(c) Ancillary Services. The Policy Board shall approve Medical
Group-provided ancillary services based upon the pricing, access to and
quality of such
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services.
(d) Provider and Payor Relationships. Decisions regarding the
establishment or maintenance of relationships with institutional health
care providers and third party payors shall be approved by the Policy
Board. The Policy Board shall review and approve discounted fee
schedules, including capitated fee arrangements.
(e) Strategic Planning. The Policy Board shall approve the
long-term strategic planing objectives.
(f) Physician Hiring. The Policy Board shall approve the
number and type of physicians required for the efficient operation of
Medical Group's facilities. The Policy Board shall review and approve
any variations to the restrictive covenants in any physician employment
contract.
(g) Grievance Referrals. The Policy Board shall consider and
make recommendations to Medical Group regarding grievances pertaining
to matters not specifically addressed in this Management Services
Agreement as referred to it by Medical Group's Board of Directors.
(h) Policy Board Meetings. The Policy Board meetings shall be
held as mutually agreed, but at least quarterly, in Jefferson County,
Texas.
(i) Relationship to Business Manager. The Policy Board does
not have the authority to remove, replace, or supersede the Business
Manager.
(j) Annual Budget. The Policy Board shall approve the Budget
prepared in accordance with Section 4.10, herein, and once approved
will remain the Budget until a new Budget is adopted by the Policy
Board. It shall require the four-fifths (4/5ths) vote of the Policy
Board to change the Performance Fee and Monthly Fee contained in the
schedules attached to the Budget.
Section 3.3 Medical Decisions. Despite the above listing of activities
and areas of interest, all medical decisions will be made solely by physicians,
but nonphysician members of the Policy Board may participate in the discussion
process. The physician members of the Policy Board shall review and resolve
issues relating to:
(a) Types and levels of Medical Services to be provided;
(b) Recruitment of physicians to Medical Group, including the
specific qualifications and specialties of recruited physicians;
(c) Fee schedules; and
(d) Any other function or decision that the parties agree is
medical related.
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ARTICLE IV.
COVENANTS AND RESPONSIBILITIES OF BUSINESS MANAGER
During the Term, Business Manager shall serve generally in a
supervisory capacity in order to best oversee all aspects of the Management
Services provided hereunder, specifically by arranging and coordinating such
Management Services as Business Manager, in its supervisory capacity, deems
necessary and appropriate to facilitate the day-to-day administration of the
business aspects of Medical Group's operations, including without limitation
those set forth in this Article IV in accordance with all law, rules,
regulations and guidelines applicable to the provision of Management Services.
Section 4.1 Office and Equipment
(a) As necessary and appropriate, taking into consideration
the professional concerns of Medical Group, Business Manager shall
lease, acquire or otherwise procure an Office in a location or
locations reasonably acceptable to Medical Group and shall permit
Medical Group to use the Office. Any Office procured by Business
Manager for the use by Medical Group shall be procured at commercially
reasonable rates. Any move from Medical Group's present practice
location(s) shall be done only after Business Manager has received
Medical Group's Consent.
(b) Business Manager shall provide all nonmedical equipment,
fixtures, office supplies, furniture and furnishings deemed reasonably
necessary by Business Manager for the operation of the Office and
reasonably necessary for the provision of Medical Services.
(c) Business Manager shall provide, finance, or cause to be
provided or financed medical related equipment as requested by Medical
Group. Subject to economic feasibility, Medical Group shall have final
authority in all medical equipment selections. All medical and
nonmedical equipment acquired for the use of Medical Group shall be
owned by Business Manager.
(d) Business Manager shall be responsible for the care,
custody, and control, including repair and maintenance of the Office,
consistent with Business Manager's responsibilities under the terms of
any lease or other use arrangement, and for the repair, maintenance,
and replacement of all equipment other than such repairs, maintenance
and replacement necessitated by the negligence or willful misconduct of
Medical Group, its Physicians or other personnel employed by Medical
Group, the repair or replacement of which shall be a Medical Group
Expense and not an Office Expense.
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Section 4.2 Medical Supplies. Business Manager shall order, procure,
purchase and provide on behalf of and as agent for Medical Group all reasonable
medical supplies unless otherwise prohibited by federal and/or State law.
Furthermore, Business Manager shall ensure that the Office is at all times
adequately stocked with the medical supplies appropriate for the operation of
Medical Group and required for the provision of Medical Services. The ultimate
oversight, supervision and ownership, to the extent necessary, for all medical
supplies is and shall remain the sole responsibility of Medical Group. As used
in this provision the term "medical supplies" shall mean all drugs,
pharmaceuticals, products, substances, items or devices whose purchase,
possession, maintenance, administration, prescription or security requires the
authorization or order of a licensed health care provider or requires a permit,
registration, certification or other governmental authorization held by a
licensed health care provider as specified under any federal and/or State law.
Section 4.3 Support Services. Business Manager shall coordinate,
supervise, or otherwise arrange for all printing, stationery, forms, postage,
duplication or photocopying services, and other support services as are
reasonably necessary and appropriate for the operation of the Office and the
provision of Medical Services therein.
Section 4.4 Quality Assurance Risk Management and Utilization Review.
Business Manager shall assist Medical Group in Medical Group's establishment and
implementation of procedures to ensure the consistency, quality,
appropriateness, and medical necessity of Medical Services provided by Medical
Group, and shall arrange for administrative support for Medical Group's overall
quality assurance, risk management and utilization review programs.
Section 4.5 Licenses and Permits. Business Manager shall, on behalf of
and in the name of Medical Group, coordinate all development and planning
processes, and apply for and use reasonable efforts to obtain and maintain all
federal, State, and local licenses and regulatory permits required for or in
connection with the operation of Medical Group and equipment (existing and
future) located at the Office, other than those relating to the practice of
medicine or the administration of drugs by Physicians retained by or associated
with Medical Group.
Section 4.6 Personnel. Business Manager shall coordinate and supervise
the retention of and shall oversee the selection, hiring, training, supervision
and termination of all management, administrative, clerical, secretarial,
bookkeeping, accounting, payroll, billing and collection and other nonphysician
personnel of Medical Group to enable Business Manager to perform its duties and
obligations under this Management Services Agreement. Business Manager shall
have sole responsibility for determining the salaries and providing such fringe
benefits, and for withholding, as required by law, any sums for income tax,
unemployment insurance, social security, or any other withholding required by
applicable law or governmental requirement.
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Section 4.7 Contract Negotiations. Business Manager shall negotiate,
either directly or on Medical Group's behalf all contractual arrangements with
third parties as are reasonably necessary and appropriate for Medical Group's
provision of Medical Services, including, without limitation, negotiated price
agreements with third party payors, employers, employer groups, alternative
delivery systems, or other purchasers of group health care services.
Section 4.8 Billing and Collection. On behalf of and for the account of
Medical Group, Business Manager shall have the exclusive right to establish and
maintain, on behalf of Medical Group, all credit and billing and collection
policies and procedures, and shall coordinate and supervise Medical Group
personnel to ensure the timely billing and collection of all professional and
other fees for all billable Medical Services provided by Medical Group or
Physicians. Business Manager shall advise and consult with Medical Group
regarding the fees for Medical Services provided by Medical Group; it being
understood, however, that Business Manager shall establish the fees to be
charged for Medical Services. In connection with the billing and collection
services to be provided hereunder, and throughout the Term (and thereafter as
provided in Section 7.3), Medical Group hereby grants to Business Manager an
exclusive special power of attorney and appoints Business Manager as Medical
Group's exclusive true and lawful agent and attorney-in-fact, and Business
Manager hereby accepts such special power of attorney and appointment, for the
following purposes:
(a) To supervise and coordinate the billing of Medical Group's
patients, in the name of Medical Group's and on behalf of Medical Group
for all billable Medical Services provided by Medical Group to
patients.
(b) To supervise and coordinate the billing in Medical Group's
name and on Medical Group's behalf, as applicable, all claims for
reimbursement or indemnification from Blue Shield/Blue Cross, insurance
companies, Medicare, Medicaid, and all other third party payors or
fiscal intermediaries for all covered billable Medical Services
provided by Medical Group to patients.
(c) To ensure the collection and receipt in Medical Group's
name and on Medical Group's behalf, all accounts receivable generated
by such xxxxxxxx and claims for reimbursement that have not been
purchased by Business Manager, to administer such accounts including,
but not limited to, (i) extending the time of payment of any such
accounts for cash, credit or otherwise; (ii) discharging or releasing
the obligors of any such accounts; (iii) with the consent of the Policy
Board, suing, assigning or selling at a discount such accounts to
collection agencies; or (iv) with the of the Policy Board, taking other
measures to require the payment of an any such accounts.
(d) To deposit all amounts collected in Medical Group's name
and on behalf
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17
of Medical Group into Medical Group Account which shall be and at all
times in Medical Group's name. Medical Group covenants to transfer and
deliver to Business Manager for deposit into Medical Group Account or
itself to make such deposit of all funds received by Medical Group from
patients or third party payors for Medical Services. Upon receipt by
Business Manager of any funds from patients or third party payors or
from Medical Group pursuant hereto for Medical Services, Business
Manager shall immediately deposit same into the Medical Group Account.
Business Manager shall disburse such deposited funds to creditors and
other persons on behalf of Medical Group, maintaining records of such
receipt and disbursement of funds as directed by Medical Group.
(e) To take possession of, endorse in the name of Medical
Group, and deposit into the Medical Group Account any notes, checks,
money orders, insurance payments, and any other instruments received in
payment for Medical Services.
(f) To sign checks, drafts, bank notes or other instruments on
behalf of Medical Group, and to make withdrawals from the Medical Group
Account for payments specified in this Management Services Agreement
and as requested from time to time by Medical Group.
Upon request of Business Manager, Medical Group shall execute and deliver to the
financial institution wherein the Medical Group is maintained, such additional
documents or instruments as may be necessary to evidence or effect the special
and limited power of attorney granted to Business Manager by Medical Group
pursuant to this Section 4.8 or pursuant to Section 4.9 of this Management
Services Agreement. The special and limited power of attorney granted herein
shall be coupled with an interest and shall be irrevocable except with Business
Manager's written consent. The irrevocable power of attorney shall expire on the
later of when this Management Services Agreement has been terminated, when all
accounts receivable purchased by Business Manager have been collected, or when
all Management Fees due to Business Manager have been paid. If Business Manager
assigns this Management Services Agreement in accordance with its terms, then
Medical Group shall execute a power of attorney in favor of the assignee and in
the form of Exhibit 4.8 attached hereto.
Section 4.9 Medical Group Account.
(a) Power of Attorney. Business Manager shall have access to
the Medical Group Account solely for the purposes stated herein. In
connection herewith and throughout the Term (and thereafter as provided
in Section 7.3), Medical Group hereby grants to Business Manager an
exclusive special power of attorney for the purposes herein and
appoints Business Manager as Medical Group's exclusive true and lawful
agent and attorney-in-fact, and Business Manager hereby accepts such
power of
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18
attorney and appointment, to deposit into the Medical Group
Account all funds, fees, and revenues generated from the Medical
Group's provision of Medical Services and collected by Business
Manager, and to make withdrawals from Medical Group Account for
payments specified in this Management Services Agreement and as
requested from time-to-time by Medical Group.
(b) Priority of Payments. Each month, Business Manager shall
apply funds that are in the Medical Group Account in the following
order of priority:
(1) to Medical Group, all Original Physician Salaries
(all other expenses incurred by Medical Group for such
expenses as attorneys, accountants, and consultants, as well
as other expenses for continuing medical education,
professional society meetings, and other similar expense shall
be paid by Medical Group out of its portion of the balance
remaining after payment of the items set forth in
subparagraphs (2) through (4), herein below);
(2) to Business Manager, Office Expenses, except the
Base Management Fee;
(3) to Business Manager, the Base Management Fee;
(4) to Business Manager, any Performance Fee to which
Business Manager may be entitled; and
(5) the remaining balance shall remain with the
Medical Group.
Section 4.10 Fiscal Matters.
(a) Annual Budget.
(1) Process for Budgets. Annually and at least thirty
(30) days prior to the commencement of each fiscal year of
Medical Group, Business Manager shall prepare and deliver to
Medical Group a proposed Budget, setting forth an estimate of
Medical Group's revenues and expenses for the upcoming fiscal
year (including, without limitation, the Management Fee and
Performance Fee associated with the services provided by
Business Manager hereunder). Medical Group shall review the
proposed Budget and either approve the proposed Budget or
request any changes within fifteen (15) days after receiving
the proposed Budget. The Budget shall be deemed adopted by
Medical Group unless specific changes are reasonably requested
within the fifteen days of receiving the
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proposed budget. The Budget may be revised or modified only in
consultation with the Business Manager.
(2) Obligation of Business Manager. Business Manager
shall use commercially reasonable efforts to manage and
administer the operations of Medical Group as herein provided
so that the actual revenues, costs and expenses of the
operation and maintenance of Medical Group during any
applicable period of Medical Group's fiscal year shall be
consistent with the Budget.
(b) Accounting and Financial Records. Business Manager shall
establish and administer accounting procedures, controls, and systems
for the development, preparation, safekeeping of administrative or
financial records and books of account relating to the business and
financial affairs of Medical Group and the provision of Medical
Services, all of which shall be prepared and in accordance with GAAP,
as consistently applied, and applicable laws and regulations. Business
Manager shall prepare and deliver to Medical Group, within ninety (90)
days of the end of each calendar year, a balance sheet and a profit and
loss statement reflecting the financial status of Medical Group in
regard to the provision of Medical Services as of the end of such
calendar year, all of which shall be prepared in accordance with GAAP
consistently applied.
(c) Review of Expenditures. Either one of Medical Group's
representatives to the Policy Board shall review all expenditures
related to the operation of Medical Group, but neither shall have the
power to prohibit or invalidate any expenditure that is consistent with
the Budget.
(d) Tax Matters.
(1) In General. Business Manager shall prepare or
arrange for the preparation by an accountant approved in
advance by Medical Group (which approval shall not be
unreasonably withheld) of all appropriate tax returns and
reports required of Medical Group.
(2) Sales and Use Taxes. Business Manager and Medical
Group acknowledge and agree that although Business Manager
generally acts in a supervisory and consultative capacity
hereunder by coordinating, overseeing and otherwise
facilitating the provision of services, there are certain
services provided by Business Manager hereunder that the
parties recognize are subject to State sales taxes and for
which Business Manager may have a legal obligation to collect
such taxes and to remit same to the appropriate tax collection
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authorities. Medical Group agrees to the payment of such State
sales tax as an Office Expense.
Section 4.11 Reports and Records.
(a) Medical Records. Business Manager shall establish,
monitor, and maintain procedures and policies for the timely creation,
preparation, filing and retrieval of all medical records generated by
Medical Group in connection with Medical Group's provision of Medical
Services; and, subject to applicable law, shall ensure that medical
records are promptly available to Physicians and any other appropriate
persons. All such medical records shall be retained and maintained in
accordance with all applicable State and federal laws relating to the
confidentiality and retention thereof. All medical records shall be and
remain the property of Medical Group.
(b) Other Reports and Records. Business Manager shall timely
create, prepare, and file such additional reports and records as are
reasonably necessary and appropriate for Medical Group's provision of
Medical Services, and shall be prepared to analyze and interpret such
reports and records upon the request of Medical Group.
Section 4.12 Recruitment of Medical Group Physicians. Business Manager
shall coordinate, supervise or perform all administrative services reasonably
necessary and appropriate to recruit potential physician personnel to become
employees of Medical Group. Business Manager shall provide Medical Group with
agreements to document Medical Group's employment, retention or other service
arrangements with such individuals. It will be and remain the sole and complete
responsibility of Medical Group to interview, select, supervise, and control all
Physicians performing Medical Services or other professional services on behalf
of the Medical Group.
Section 4.13 Acquisitions of or Mergers with other Medical Groups.
Business Manager shall negotiate all acquisitions of or mergers with any other
medical practices in the Practice Territory. Business Manager agrees to
coordinate all such acquisitions or mergers with the Policy Board in order to
obtain the advice and consent (which shall not be unreasonably withheld) of the
Medical Group representatives regarding the professional qualifications of the
physician groups to be acquired or merged with the Medical Group.
Section 4.14 Business Manager's Insurance. Throughout the Term,
Business Manager shall, as an Office Expense, obtain and maintain with
commercial carriers, through self-insurance or some combination thereof,
appropriate workers' compensation coverage for Business Manager's employed
personnel provided pursuant to this Management Services Agreement, and
professional, casualty and comprehensive general and vicarious liability
covering Business Manager, Business Manager's personnel, and all of Business
Manager's
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21
equipment in such amounts, on such basis and upon such terms and
conditions as Business Manager deems appropriate. Upon the request of Medical
Group, Business Manager shall provide Medical Group with a certificate
evidencing such coverage. Business Manager may also carry, at its own expense,
key person life and disability insurance on any shareholder or Physician
employee of Medical Group in amounts determined reasonable and sufficient by
Business Manager. Business Manager shall be the owner and beneficiary of any
such insurance.
Section 4.15 No Warranty. Medical Group acknowledges that Business
Manager has not made and will not make any express or implied warranties or
representations that the services provided by Business Manager will result in
any particular amount or level of medical practice or income to Medical Group.
ARTICLE V.
COVENANTS AND RESPONSIBILITIES OF MEDICAL GROUP
Section 5.1 Organization and Operation. Medical Group, as a continuing
condition of Business Manager's obligations under this Management Services
Agreement, shall at all times during the Term be and remain legally organized
and operated to provide Medical Services in a manner consistent with all State
and federal laws. Medical Group shall operate and maintain within the Practice
Territory a full time practice of medicine specializing in the provision of
cardiology Medical Services, and for the first five (5) years of the Term of
this Management Services Agreement, Medical Group shall maintain and enforce
employment agreements in the form of Exhibit 5.1 with the Physicians specified
in Exhibit 5.1A. Medical Group shall not amend the employment agreements in any
material manner or waive any material rights of Medical Group thereunder without
the prior approval of Business Manager. Recognizing that Business Manager would
not have entered into this Management Services Agreement but for Medical Group's
covenant to maintain employment agreements with its original shareholders,
Medical Group agrees that any damages, compensation, payment, or settlement
received by Medical Group as liquidated damages from a Physician who terminates
the employment agreement without cause or whose employment agreement is
terminated by Medical Group for cause shall be treated as Ancillary Revenue
under this Agreement.
Section 5.2 Medical Group Personnel.
(a) Physician Personnel. Medical Group shall retain, as the
Medical Group Expense and not as an Office Expense, that number of
Physicians, as are reasonably and appropriate in the sole discretion of
Medical Group for the provision of Medical Services, subject to the
following conditions:
(1) During the first year of this Agreement, the
total Original
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Physician' Salaries (as defined above in Section 1.23
shall remain equal to an aggregate amount of [*] and
shall be paid in accordance with the amounts set
forth in Exhibit 5.1A attached hereto;
(2) During the subsequent four (4) years of this
Agreement, the total amount of the Original
Physicians' Salaries shall remain at [*] of Net
Collections, as that term is defined above in
Section 1.20.
(3) After the first [*] of this Agreement, Original
Physician Salaries shall become a Medical Group
Expense.
(4) Salaries for physicians hired during the term of
this Agreement shall be a Medical Group Expense.
(5) During the entire Term of this Agreement if the
Policy Board determines that it is necessary and
appropriate to hire additional physicians, and that
Business Manager is required to advance working
capital to the Medical Group [*]
(b) Revised Priority of Payments. Beginning with the sixth
year and continuing thereafter for the balance of the term of this
Agreement, the order of priority in which
Business Manager shall apply funds shall be as follows:
(1) to Medical Group, all Original Physician
Salaries;
(2) to Business Manager, Office Expenses, except the
Base Management Fee;
(3) to Business Manager, the Base Management Fee;
(4) to Medical Group, other expenses incurred by
Medical Group for such expenses as attorneys, accountants, and
consultants, as well as other expenses for continuing medical
education, professional society meetings, and other similar
expense;
[*CONFIDENTIAL TREATMENT REQUESTED -- OMITTED PORTIONS FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]
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(5) to Business Manager, any Performance Fee to which
Business Manager may be entitled; and
(6) the remaining balance shall remain with the
Medical Group.
(c) Each Physician shall hold and maintain a valid and
unrestricted license to practice medicine in the State of Texas, and
shall be competent in the practice of cardiology.
(d) Except as provided in subparagraph (a), above, Medical
Group shall be responsible for paying the compensation and benefits as
applicable, for all Physicians and any other physician personnel or
other contracted or affiliated physicians, and for withholding, as
required by law, any sums for income tax, unemployment insurance,
social security, or any other withholding required by applicable law.
Business Manager may, on behalf of Medical Group, establish and
administer the compensation program with respect to such individuals in
accordance with the written agreement between Medical Group and each
Physician. Business Manager shall neither control nor direct any
Physician in the performance of Medical Services for patients.
(e) Nonphysician Health Care Personnel. All nonphysician
health care personnel who provide care services in the diagnostic areas
shall be employed by or retained by the Business Manager as an Office
Expense and shall be under Medical Group's control, supervision and
direction while performing Medical Services for patients.
(f) Covenant of Medical Group to Maintain Adjusted Gross
Revenue Production. The Physicians hereby covenant and agree to
maintain Adjusted Gross Revenue at [*] during the initial [*] years of
this Agreement in order to maintain the salary amount specified in
Section 5.2(a) and provide the basis for the consideration paid
pursuant to Section 2.03 of the Master Transaction Agreement. In the
event the Threshold Revenue declines at least [*] during any three (3)
month period of time and remains at that level for more than six (6)
months, then the consideration specified in Section 2.03 of the Master
Transaction Agreement shall be reduced and each Physician shall refund
to Business Manager a proportionate amount of the consideration, as
follows:
(1) In the event the reduction in Adjusted Gross
Revenue is equal to [*] of Threshold Revenue, then the
Physicians shall refund [*]
[*CONFIDENTIAL TREATMENT REQUESTED -- OMITTED PORTIONS FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]
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percent of the consideration paid pursuant to Section 2.03 of
the Master Transaction Agreement; and
(2) In the event the reduction in Adjusted Gross
Revenue is more than [*] percent, then Physicians shall
refund the same percentage of the consideration as the
percentage decline in Threshold Revenue.
(3) Provided, however, that the refund amount shall
be adjusted on an annual basis so that only the unamortized
amount of the consideration shall be reduced. Thus, on each
anniversary of the Closing, which shall be deemed to be
September 18, 1996, for purposes of this Agreement, [*] of the
consideration shall have been vested and not subject to the
adjustment specified in this Section 5.2(f). For example, if
Threshold Revenue declined [*] during year [*] of this
Agreement, then the consideration would be reduced by [*] of
the [*] decline, or in other words there would be a refund of
[*] of the consideration paid to the Physicians, who would
then refund a proportionate share of their consideration. The
[*] shall be adjusted downwards by the same percentage that
the consideration is reduced.
Section 5.3 Professional Standards. As a continuing condition of
Business Manager's obligations hereunder, each Physician and any other physician
personnel retained by Medical Group to provide Medical Services must (i) comply
with, be controlled and governed by and otherwise provide Medical Services in
accordance with all applicable federal, State and municipal laws, rules,
regulations, ordinances and orders, and the ethics and of care of the medical
community wherein the principal office of each Physician is and (ii) obtain and
retain appropriate medical staff membership with appropriate clinical privileges
at any hospital or health care facility at which Medical Services are to be
provided. Procurement of temporary staff privileges pending the completion of
the medical staff approval process shall satisfy this provision, provided the
Physician actively pursues full appointment and actually receives full
appointment within a reasonable time.
Section 5.4 Medical Services. The Medical Group shall ensure that
Physicians and nonphysician health care personnel are available to provide
medical services to patients in accordance with the acceptable medical standards
established from time to time by the Business Manager after consultation with
the Medical Group. In the event that Physicians employed by, or shareholders of,
Medical Group are not available to provide Medical Services coverage, Medical
Group shall engage and retain locum tenens coverage. Physicians retained on a
locum tenens basis shall meet all of the requirements of Section 5.3, and the
cost of providing locum tenens coverage shall be a Medical Group Expense. With
the assistance of the Business Manager, Medical Group and the Physicians shall
be responsible for scheduling Physician and nonphysician health care personnel
coverage of all medical procedures. Medical Group shall cause all Physicians to
develop and promote Medical Group.
[*CONFIDENTIAL TREATMENT REQUESTED -- OMITTED PORTIONS FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]
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Section 5.5 Peer Review/Quality Assurance. The Medical Group shall
adopt a peer review/quality assurance program to monitor and evaluate the
quality and cost-effectiveness of Medical Services provided by physician
personnel of Medical Group in accordance with medical standards established from
time to time by the American College of Cardiologists, the American Medical
Association, the Texas Medical Association, and other similar professional
associations, which would be acceptable to Business Manager. Upon request of
Medical Group, Business Manager shall provide administrative assistance to
Medical Group in performing its peer review/quality assurance activities, but
only if such assistance can be provided consistent with maintaining the
confidentiality and nondiscoverability of the processes and actions of the peer
review/quality assurance process of Medical Group.
Section 5.6 Medical Group's Insurance. The Medical Group shall, as an
Office Expense, obtain and maintain with commercial carriers reasonably
acceptable to Business Manager appropriate worker's compensation coverage for
Medical Group's employed personnel, if any, and professional and comprehensive
general liability and vicarious liability insurance covering Medical Group and
each of the Physicians Medical Group retains or employs to provide Medical
Services. The comprehensive general liability and vicarious liability coverage
shall be in the minimum amount of One Million Dollars ($1,000,000.00); and
professional liability coverage shall be in the minimum amount of One Million
Dollars ($1,000,000.00) for each occurrence and Three Million Dollars
($3,000,000.00) annual aggregate. The insurance policy or policies shall provide
for at least thirty (30) days advance written notice to Medical Group from the
insurer as to any alteration of coverage, cancellation, or proposed cancellation
for any cause. Medical Group shall cause to be issued to Business Manager by
such insurer or insurers a certificate reflecting such coverage and shall
provide written notice to Business Manager promptly upon receipt of notice given
to Physician of the cancellation or proposed cancellation of such for any cause.
Upon the termination of this Management Services Agreement for any reason,
Medical Group shall obtain and maintain as a Medical Group Expense "tail"
professional liability coverage, in the amounts specified in this section for an
extended reporting period of 10 years, and Medical Group shall be responsible
for paying all premiums for "tail" insurance coverage; except for a termination
pursuant to Section 7.2(b), in which case Business Manager shall be responsible
for paying all premiums for "tail" insurance coverage. In no event shall the
professional liability insurance carrier be replaced or changed without Medical
Group Consent.
Section 5.7 Confidential and Proprietary Information. The Medical Group
will not disclose any Confidential Information of Business Manager without
Business Manager's express written authorization, such Confidential Information
will not be used in any way directly or indirectly detrimental to Business
Manager, and Medical Group will keep such Confidential Information confidential
and will ensure that its affiliates and advisors who have access to such
Confidential Information comply with these nondisclosure obligations;
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26
provided, however, that Medical Group may disclose Confidential Information to
those of its Representatives who need to know Confidential Information for the
purposes of this Management Services Agreement, it being understood and agreed
to by Medical Group that such Representatives will be informed of the
confidential nature of the Confidential Information, will agree to be bound by
this Section , and will be directed by Medical Group not to disclose to any
other person any Confidential Information. Medical Group agrees to be
responsible for any breach of this Section by its advisors, or Representatives.
If Medical Group is requested or required (by oral questions, interrogatories,
requests for information or documents, subpoenas, civil investigative demands,
or similar processes) to disclose or produce any Confidential Information
furnished in the course of its dealings with Business Manager or its advisors,
or Representatives, Medical Group will (i) provide Business Manager with prompt
notice thereof and copies, if possible, and, if not, a description, of the
Confidential Information requested or required to be produced so that Business
Manager may seek an appropriate protective order or waive compliance with the
provisions of this Section and (ii) consult with Business Manager as to the
advisability of Business Manager's taking of legally available steps to resist
or narrow such request. Medical Group further agrees that, if in the absence of
a protective order or the receipt of a waiver hereunder Medical Group is
nonetheless, in the written opinion of its legal counsel, compelled to disclose
or produce Confidential Information concerning Business Manager to any tribunal
legally authorized to request and entitled to receive such Confidential
Information or to stand liable for contempt or suffer other censure or penalty,
Medical Group may disclose or produce such Confidential Information to such
tribunal without liability hereunder, provided, however, that Medical Group
shall give Business Manager written notice of the Confidential Information to be
so disclosed or produced as far in advance of its disclosure or production as is
practicable and shall use its best efforts to obtain, to the greatest extent
practicable, an order or other reliable assurance that confidential treatment
will be accorded to such Confidential Information so required to be disclosed or
produced.
Section 5.8 Noncompetition. The Medical Group hereby recognizes and
acknowledges that Business Manager will incur substantial costs in providing the
equipment, support services, personnel, management, administration, and other
items and services that are the subject matter of Management Services Agreement
and that in the process of providing services under this Management Services
Agreement, Medical Group will be privy to financial and Confidential
Information, to which Medical Group would not otherwise be exposed. The parties
also recognize that the services to be provided by Business Manager will be
feasible only if Medical Group operates an active practice to which the
Physicians associated with Medical Group devote their full professional time and
attention. Medical Group agrees and acknowledges that the noncompetition
covenants described hereunder are necessary for the protection of Business
Manager, and that Business Manager would not have entered into this Management
Services Agreement without the following covenants.
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(a) During the Term of this Management Services Agreement and
except for its obligations pursuant to this Management Services
Agreement, Medical Group shall not establish, operate, or provide
Medical Services at a medical office, clinic or other health care
facility anywhere within the Practice Territory.
(b) Except as specifically agreed to by Business Manager in
writing and except as otherwise specifically provided herein, Medical
Group covenants and agrees that during the Term of this Management
Services Agreement and for a period of five (5) years from the date
this Management Services Agreement is terminated, Medical Group shall
not directly or indirectly (excluding ownership of less than five
percent (5%) of the of equity of any publicly traded entity), manage,
operate, control, or be otherwise associated with, lend funds to, lend
its name to, or maintain any interest whatsoever in any enterprise (i)
having to do with the provision, distribution, promotion, or
advertising of any type of management or services or products to third
parties in competition with Business Manager, in the Practice
Territory; and/or (ii) offering any type of service(s) or product(s)
to third parties similar to those offered by Business Manager to
Medical Group in the Practice Territory. Notwithstanding the above
restriction, nothing herein shall prohibit Medical Group or any of its
shareholders from providing management and administrative services to
its or their own medical practices after the termination of this
Management Services Agreement.
(c) The written employment agreements described in Section 5.1
shall contain covenants of the shareholder employees pursuant to which
the shareholders agree not to compete with Medical Group within the
Practice Territory for two (2) years after termination of their
respective employment agreement, except as otherwise specifically
provided herein.
(d) Medical Group understands and acknowledges that the
provisions in Section 5.7 and Section 5.8 are designed to preserve the
goodwill of Business Manager and the goodwill of the individual
Physicians of Medical Group. Accordingly, if Medical Group breaches any
obligation of Section 5.7 or Section 5.8, in addition to any other
remedies available under this Management Services Agreement, at law or
in equity, Business Manager shall be entitled to enforce this
Management Services Agreement by injunctive relief and by specific
performance of the Management Services Agreement, such relief to be
without the necessity of posting a bond, cash or otherwise.
Additionally, nothing in this paragraph shall limit Business Manager's
right to recover any other damages to which it is entitled as result of
Medical Group's breach. If any provision of the covenants is held by a
court of competent jurisdiction to be unenforceable due to an excessive
time period, geographic area, or restricted activity, the covenant
shall be reformed to comply with such time period, geographic area, or
restricted activity that would be held enforceable.
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Section 5.9 Name, Trademark. Medical Group represents and warrants that
Medical Group conducts its professional practice under the name of, and only
under the name of "Southeast Texas Cardiology Group, P.A." and that such name is
the name of Medical Group under State law, and that Medical Group is the sole
and absolute owner of the name. Medical Group covenants and promises that,
without the prior written consent of the Business Manager, Medical Group will
not:
(a) take any action or omit to take any action that is
reasonably likely to result in the change or loss of the name;
(b) license, sell, give, or otherwise transfer the name or the
right to use the name to any medical practice, physician, professional
corporation, professional association, or any other entity; or
(c) cease conducting the professional practice of Medical
Group under the name.
ARTICLE VI.
FINANCIAL ARRANGEMENT
Section 6.1 Definitions. For purposes of this Article VI, capitalized
terms used herein shall have the meanings ascribed as follows:
(a) Monthly Fee. The Monthly Fee shall be [*] per month for
the first year. As part of the budgeting process the Monthly Fee shall
be adjusted annually at the beginning of each fiscal year, in order
for Business Manager to provide proper staffing levels to support
Medical Group.
(b) Fee Amount. The Fee Amount shall be the Monthly Fee and
for each prior month in which the Base Management Fee is less than the
Monthly Fee, the sum of the amounts of any such shortfall not
previously paid.
(c) Base Management Fee. The Base Management Fee shall be the
lesser of the Fee Amount or the amount of cash available to be paid by
the Medical Group out of the Medical Group Account pursuant to
Sections 4.8 and 4.9 hereof.
Section 6.2 Compensation. Medical Group and Business Manager agree to
the compensation set forth herein as being paid to Business Manager in
consideration of a substantial commitment made by Business Manager hereunder and
that such fees are fair and reasonable. Each month, in the priority established
by Section 4.9(b), Business Manager shall be paid the following:
[*CONFIDENTIAL TREATMENT REQUESTED -- OMITTED PORTIONS FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]
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(i) the amount of all Office Expenses (other than the Base
Management Fee) paid on behalf of Medical Group.
(ii) the Base Management Fee.
(iii) the Performance Fee if the mutually agreed upon
pre-established criteria for payment of the Performance Fee set forth
in the Budget have been met.
Section 6.3 Adjustments. Adjustments to the Management Fee calculation
shall be made as follows:
(a) Upon termination of this Management Services Agreement
(except as provided in Section 7.2(b)(iv) herein below), a liability
for the Management Fee shall be established in an amount equal to the
difference, if any, between (i) the cumulative Base Management Fees
during the Term less (ii) the amounts already paid by Medical Group as
Base Management Fees, and the Base Management Fee and any cumulated but
unpaid Performance Fees shall become immediately due and payable.
(b) After the fifth anniversary of this Management Services
Agreement, the Monthly Fee shall increase each year by the lesser of
five per cent (5%) per year or the increase, if any, from the prior
year in the Consumer Price Index - Health/Medical Services, as
published by the United States Department of Labor ("DOL"), for the
Beaumont, Texas metropolitan area. If the DOL ceases publishing the
Consumer Price Index - Health/Medical Services, or ceases to publish
the Consumer Price Index - Health/Medical Services of Beaumont, Texas
metropolitan area, the parties shall use any other comparable index
selected by the Business Manager.
(c) If there are not sufficient funds to pay the Performance
Fee, unpaid amounts shall accumulate and carry over from month to month
until paid. No amounts carried over shall earn interest. Furthermore,
the amount of the Performance Fee paid will be monitored and reconciled
on an annual basis and any overpayment of the Performance Fee shall be
promptly refunded by the Business Manager.
Section 6.4 Reasonable Value. Payment of the Base Management Fee or
Performance Fee is not intended to be and shall not be interpreted or applied as
permitting Business Manager to share in Medical Group's fees for Medical
Services or any other services. Rather, such payment is acknowledged as the
parties' negotiated agreement as to the reasonable fair market value of the
management expertise, strategic planning, capital access, resource retention,
equipment, contract analysis and support, purchasing, office space, and other
management and administrative oversight services supervised, coordinated,
arranged for or otherwise facilitated by Business Manager pursuant to this
Management Services
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Agreement, as more specifically set forth in Article IV herein, as well as for
the personnel services Business Manager provides under Section 4.6 hereof,
considering the nature and extent of the services required and the risks assumed
by Business Manager.
Section 6.5 Payment of Management Fee. To facilitate the payment of the
Management Fee as provided in Section 6.2 hereof, Medical Group hereby expressly
authorizes Business Manager to make withdrawals of the Management Fee from the
Medical Group Account as such fee becomes due and payable during the Term and
thereafter as provided in Section 7.3.
Section 6.6 Disputes Regarding Fees.
(a) It is the parties' intent that any disputes regarding the
payment of the Management Fee shall be resolved to the extent possible
by good faith negotiation. Business Manager and Medical Group shall
negotiate the dispute in good faith, and if an agreement is reached,
the parties shall implement the resolution without further action.
(b) If the parties cannot reach a resolution within a
reasonable time, Medical Group shall, at its option, submit the dispute
to mediation. Mediation shall be conducted in Beaumont, Texas in
accordance with the rules of the National Health Lawyers Association
Alternative Dispute Resolution Service, and if the amount in dispute is
$25,000 or less, the mediation shall be binding.
(c) If the amount in dispute is greater than $25,000, or if
the mediation process fails to resolve the dispute, the dispute shall
be submitted by either party to binding arbitration pursuant to the
Master Transaction Agreement.
ARTICLE VII.
TERM AND TERMINATION
Section 7.1 Initial and Renewal Term. The Term of this Management
Services Agreement will be for an initial period of forty (40) years after the
effective date, and shall be automatically renewed for successive five (5) year
periods thereafter, provided that neither Business Manager nor Medical Group
shall have given notice of termination of this Management Services Agreement at
least one hundred twenty (120) days before the end of the initial term or any
renewal term, or unless otherwise terminated as provided in Section 7.2 of this
Management Services Agreement.
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Section 7.2 Termination.
(a) Termination By Business Manager. Business Manager may
terminate this Services Agreement upon the occurrence of any one of the
following events which shall be deemed to be "for cause":
(i) The revocation, suspension, cancellation or
restriction of any Medical Group shareholder Physician's
license to practice medicine in the State if, in the
reasonable discretion of the Business Manager, Medical Group
will not be financially viable after such revocation,
suspension, cancellation, or restriction;
(ii) Medical Group's loss or suspension of its
Medicare or Medicaid provider number, and/or Medical Group's
restriction from treating beneficiaries of the Medicare or
Medicaid programs, or such successor programs;
(iii) The dissolution of Medical Group or the filing
of a petition in voluntary bankruptcy, an assignment for the
benefit of creditors, or other action taken voluntarily or
involuntarily under any State or federal statute for the
protection of debtors;
(iv) Medical Group materially defaults in the
performance of any of its material duties or obligations
hereunder, and such default continues for sixty (60) days
after Medical Group receives notice of the default.
(b) Termination By Medical Group. Medical Group may terminate
this Management Services Agreement upon the following occurrence which
shall be deemed to be "for cause":
(i) If either Business Manager, Raytel Southeast
Management, L.P., Raytel Texas Physician Services, Inc., or
Raytel Medical Corporation (each a "Raytel Party") is
adjudicated a bankrupt and its affairs are ordered to be wound
up and then dissolved, or a Raytel Party makes an assignment
for the benefit of creditors, or other action is taken
voluntarily or involuntarily under any State or federal
statute for the protection of debtors;
(ii) Business Manager is convicted of a felony in
connection with the performance of its duties and obligations
under this Management Services Agreement;
(iii) Business Manager materially defaults in the
performance of any
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of its material duties or obligations hereunder, and such
default continues for sixty (60) days after Business Manager
receives notice of the default; or
(iv) in the event there is a change in control of the
Business Manager. For purposes of this Section 7.2(b)(iv), a
"Change in Control" shall mean the sale of substantially all
of the assets of the Business Manager or a sale of more than
two-thirds (2/3) of the ownership interests of the Business
Manager (other than the sale and assignment of the partnership
interests provided in Section 8.5 and as contemplated in the
Transaction Documents) to a party not approved by the Medical
Group. A sale of the ownership interests of Business Manager
shall include the Change in Control in Raytel Texas Physician
Services, Inc., the corporate General Partner of Raytel
Southeast Management, L.P. (except within the controlled group
of companies owned or controlled by Raytel Medical
Corporation), and shall also include the Change in Control of
Raytel Medical Corporation. A Change in Control shall have the
result of accelerating the vesting of all consideration paid
to the Physicians pursuant to the Master Transaction Agreement
and the other Transaction Documents, and shall cause the
noncompetition covenants or agreements which are part of the
Master Transaction Agreement and the Transaction Documents to
be rescinded.
Termination by Medical Group hereunder shall require the affirmative
vote of three-fourths of the outstanding voting shares of the common
shareholders of Medical Group entitled to vote.
(c) Termination by Agreement. In the event Medical Group and
Business Manager shall mutually agree in writing, this Management
Services Agreement may be terminated on the date specified in such
written agreement.
Section 7.3 Legislative, Regulatory or Administrative Change. In the
event there shall be a change in the Medicare or Medicaid statutes, federal or
State statutes, case laws, regulations or general instructions, the
interpretation of any of the foregoing, the adoption of new federal or State
legislation, or a change in any third party reimbursement system, any of which
are reasonably likely to materially and adversely affect the manner in which
either party may perform or be compensated for its services under this
Management Services Agreement or which shall make this Management Services
Agreement unlawful, the parties shall immediately enter into good faith
negotiations regarding a new service arrangement or basis for compensation for
the services furnished pursuant to this Management Services Agreement that
complies with the law, regulation, or policy and that approximates as closely as
possible the economic position of the parties prior to the change. If good faith
negotiations cannot resolve the matter, it shall be submitted to arbitration as
referenced in Section 8.6.
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Section 7.4 Effects of Termination. Upon termination of this Management
Services Agreement, as herein above provided, neither party shall have any
further obligations hereunder except for (i) obligations accruing prior to the
date of termination, including, without limitation, payment of the Management
Fees and Medical Group Expenses relating to services provided prior to the
termination of this Management Services Agreement, (ii) obligations, promises,
or covenants set forth herein that are expressly made to extend beyond the Term,
including, without limitation, indemnities and noncompetition provisions, which
provisions shall survive the expiration or termination of this Management
Services Agreement by Business Manager for cause, and (iii) the obligations of
Medical Group and Business Manager described in this Section 7.4; provided that
in case of any termination under Section 7.2(b), Medical Group and the
Physicians shall be released, relieved and discharged from any non-compete
agreements or covenants under the Master Transaction Agreement, the Partnership
Interest Purchase Agreement, the respective Employment Agreement for each of the
Physicians, and any Succession Agreement for the Medical Group. In effectuating
the provisions of this Section 7.3, Medical Group specifically acknowledges and
agrees that Business Manager shall continue to collect on behalf of Medical
Group all cash collections from accounts receivable in existence at the time
this Management Services Agreement is terminated (except in the case of
termination under Section 7.2(b) it being understood that such cash collections
will represent, in part, compensation to Business Manager for management
services already rendered, provided however, if this Agreement is terminated by
Medical Group with cause, Business Manager shall not have the right to collect
the accounts receivable. Upon the expiration or termination of this Management
Services Agreement for any reason or cause whatsoever, Business Manager shall
surrender to Medical Group all books and records pertaining to Medical Group's
medical practice.
Section 7.5 Repurchase Obligation. Upon termination of this Management
Services Agreement by Business Manager for cause, Medical Group shall:
(a) Purchase from Business Manager at book value the
intangible assets, deferred charges, and all other amounts on the books
of the Business Manager relating to and including the Management
Services Agreement as adjusted through the last day of the month most
recently ended prior to the date of such termination in accordance with
GAAP to reflect amortization or depreciation of the intangible assets,
deferred charges, or covenants;
(b) Purchase from Business Manager any real estate owned by
Business Manager and used as an Office at the greater of the appraised
fair market value thereof or the then book value thereof;
(c) Purchase at book value all improvements, additions, or
leasehold improvements that have been made by Business Manager at any
Office and that relate
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solely to the performance of Business Manager's obligations under this
Management Services Agreement;
(d) Assume all debt, and all contracts, payables, and leases
that are obligations of Business Manager and that relate principally to
the performance of Business Manager's obligations under this Management
Services Agreement or the properties leased or subleased hereunder by
Business Manager; and
(e) Purchase from Business Manager at book value all of the
equipment and all other assets, including inventory and supplies,
tangibles and intangibles, set forth on the books of the Business
Manager as adjusted through the last day of the month most recently
ended prior to the date of such termination in accordance with GAAP to
reflect operations of the Office, depreciation, amortization, and other
adjustments of assets shown on the books of the Business Manager.
Section 7.6 Repurchase Option. Upon termination of this Management
Services Agreement by Medical Group for cause, Medical Group shall have the
option but not the obligation to do all or none of the following:
(a) Purchase from Business Manager any real estate owned by
Business Manager and used as an Office at the greater of the appraised
fair market value thereof or the then book value thereof;
(b) Purchase at book value all improvements, additions, or
leasehold improvements that have been made by Business Manager at any
Office and that relate solely to the performance of Business Manager's
obligations under this Management Services Agreement;
(c) Assume all debt, and all contracts, payables, and leases
that are obligations of Business Manager and that relate principally to
the performance of Business Manager's obligations under this Management
Services Agreement or the properties leased or subleased by Business
Manager; and
(d) Purchase from Business Manager at book value all of the
equipment and all other tangible assets, including inventory and
supplies, set forth on the books of the Business Manager as adjusted
through the last day of the month most recently ended prior to the date
of such termination in accordance with GAAP to reflect operations of
the Office, depreciation, amortization, and other adjustments of assets
shown on the books of the Business Manager.
Section 7.7 Closing of Repurchase. Medical Group shall pay cash for the
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repurchased assets. The amount of the purchase price shall be reduced by the
amount of debt and liabilities of Business Manager, if any, assumed by Medical
Group. Medical Group and any Physician associated with Medical Group shall
execute such documents as may be required to assume the liabilities set forth in
Section 7.4(d) or Section 7.5(c) and to remove Business Manager from any
liability with respect to such purchased asset and with to any property leased
or subleased by Business Manager. The closing date for the repurchase shall be
determined by Business Manager but shall in no event occur sooner than sixty
(60) days or later than one hundred eighty (180) days from the date of the
notice of termination.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1 Administrative Services Only. Nothing in this Management
Services Agreement is intended or shall be construed to allow Business Manager
to exercise control or direction over the manner or method by which Medical
Group and its Physicians perform Medical Services or other professional health
care services. The provision of all Medical Services, including, but not limited
to, the prescription or administration of medicine and drugs, shall be the sole
responsibility of Medical Group and its Physicians, and Business Manager shall
not interfere in any manner or to any extent therewith. Nothing contained in
this Management Agreement shall be construed to permit Business Manager to
engage in the practice of medicine, it being the sole intention of the parties
hereto that the services to be rendered to Medical Group by Business Manager are
solely for the purpose of providing nonmedical and management and administrative
services to Medical Group so as to enable Medical Group to devote its full time
and energies to the professional conduct of its medical practice and provision
of Medical Services to its patients and not to administration or practice
management.
Section 8.2 Status of Contractor. It is expressly acknowledged that the
parties hereto are independent contractors, and nothing in this Management
Services Agreement is intended and nothing shall be construed to create an
employer/employee, partnership or joint venture relationship.
Section 8.3 Notices. Any notice, demand, or communication required,
permitted, or desired to be given hereunder shall be in writing and shall be
delivered to the parties at the following respective addresses:
Medical Group: Southeast Texas Cardiology Associates, P.A.
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx, M.D.
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with a copy to: Xxxxxx, Xxxx & Xxxxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxxx, Esq.
Xxxxx Xxx, Esq.
Business Manager: Raytel Southeast Management, L.P.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, Esq.
or to such other address, or to the attention of such other person or officer,
as any party may by written notice designate. Any notice, demand, or
communication required, permitted, or desired to be given hereunder shall be
sent either (a) by hand delivery, in which case notice shall be deemed received
when actually delivered, (b) by prepaid certified or registered mail, return
receipt requested, in which case notice shall be deemed five calendar days after
deposit, postage prepaid in the United States mail, or (c) by a nationally
recognized overnight courier, in which case notice shall be deemed received one
business day after deposit with such courier.
Section 8.4 Governing Law This Management Services Agreement shall be
governed by the laws of the State of Texas applicable to agreements to be
performed wholly within the State. The federal and State courts of Jefferson
County, Texas shall be the exclusive venue for any litigation, special
proceeding, or other proceeding between the parties that may arise out of, or be
brought in connection with or by reason of, this Management Services Agreement.
Section 8.5 Assignment. Except as may be herein provided to the
contrary, this Management Services Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective legal representatives,
successors, and assigns; provided, however, that Medical Group may not assign
this Management Services Agreement without the prior written consent of Business
Manager, which consent may be withheld in Business Manager's sole and absolute
discretion. The sale, transfer, pledge, or assignment of any of the common
shares held by any shareholder of Medical Group or the issuance by Medical Group
of common or other voting shares to any other person, or any combination of such
transactions within a period of one (1) year, such that the existing
shareholders in Medical Group fail to maintain a majority of the voting in
Medical Group shall be deemed an attempted assignment by Medical Group, and
shall be null and void unless consented to in writing by Business Manager prior
to any such transfer or issuance. The parties agree that Raytel Southeast
Management L.P. ("Raytel Southeast") shall succeed to all of the rights and
obligations of Cardiology Management Partnership under this Management Services
Agreement, and Raytel
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Medical Corporation guarantee the performance of Raytel Southeast, under this
Management Services Agreement, or any appointed successor. Business Manager
shall have the right to (i) assign its rights and obligations hereunder to any
third party and (ii) collaterally assign its interest in this Management
Services Agreement and its right to collect Management Fees hereunder to any
financial institution or other third party.
Section 8.6 Arbitration. The parties shall use good faith negotiation
to resolve any controversy, dispute or disagreement arising out of or relating
to this Management Services Agreement or the breach of this Management Services
Agreement. Any matter not resolved by negotiations shall be submitted to binding
arbitration and such arbitration shall be governed by the terms of the Master
Transaction Agreement, which, as it applies to the parties hereto, is
incorporated herein by reference in its entirety.
Section 8.7 Waiver of Breach. The waiver by either party of a breach or
violation of any provision of this Management Services Agreement shall not
operate as, or be construed to constitute, a waiver of any subsequent breach of
the same or another provision hereof.
Section 8.8 Enforcement. In the event either party resorts to legal
action to enforce or interpret any provision of this Management Services
Agreement, the prevailing party shall be entitled to recover the costs and
expenses of such action so incurred, including, without limitation, reasonable
attorneys' fees.
Section 8.9 Gender and Number. Whenever the context of this Management
Services Agreement requires, the gender of all words herein shall include the
masculine, feminine, and neuter, and the number of all words herein shall
include the singular and plural.
Section 8.10 Additional Assurances. Except as may be herein
specifically provided to the contrary, the provisions of this Management
Services Agreement shall be self-operative and shall not require further
agreement by the parties; provided, however, at the request of either party, the
other party shall execute such additional instruments and take such additional
acts as are reasonable and as the requesting party may deem necessary to
effectuate this Management Services Agreement.
Section 8.11 Consents, Approvals, and Exercise of Discretion. Whenever
this Management Services Agreement requires any consent or approval to be given
by either party, or either party must or may exercise discretion, and except
where specifically set forth to the contrary, the parties agree that such
consent or approval shall not be unreasonably withheld or delayed, and that such
discretion shall be reasonably exercised.
Section 8.12 Force Majeure. Neither party shall be liable or deemed to
be in default for any delay or failure in performance under this Management
Services Agreement or other
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interruption resulting from, directly or indirectly, acts of God, civil or
military authority, acts of public enemy, war, accidents, fires, explosions,
earthquakes, floods, failure of transportation, strikes or other work
interruptions by either party's employees, or any other similar cause beyond the
reasonable control of either party unless such delay or failure in performance
is expressly addressed elsewhere in this Management Services Agreement.
Section 8.13 Severability. The parties hereto have negotiated and
prepared the terms of this Management Services Agreement with the intent that
each and every one of the terms, covenants and conditions herein be binding upon
and inure to the benefit of the respective parties. Accordingly, if any one or
more of the terms, provisions, promises, covenants or conditions of this
Management Services Agreement or the application thereof to any person or
circumstance shall be adjudged to any extent invalid, unenforceable, void or
voidable for any reason whatsoever by a court of competent jurisdiction or an
arbitration tribunal, such provision shall be as narrowly construed as possible,
and each and all of the remaining terms, provisions, promises, covenants and
conditions of this Management Services Agreement or their application to other
persons or circumstances shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by applicable law.
Section 8.14 Divisions and Headings. The divisions of this Management
Services Agreement into articles, sections, and subsections and the use of
captions and headings in connection therewith is solely for convenience and
shall not affect in any way the meaning or interpretation of this Management
Services Agreement.
Section 8.15 Amendments and Management Services Agreement Execution.
This Management Services Agreement and amendments hereto shall be in writing and
may be executed in multiple copies. Each multiple copy shall be deemed an
original, but all multiple copies together shall constitute one and the same
instrument.
Section 8.16 Entire Management Services Agreement. With respect to the
subject matter of this Management Services Agreement, this Management Services
Agreement supersedes all previous contracts and constitutes the entire agreement
between the parties. Neither party shall be entitled to benefits other than
those specified herein. No prior oral statements or contemporaneous negotiations
or understandings or prior written material not specifically incorporated herein
shall be of any force and effect, and no changes in or additions to this
Management Services Agreement shall be recognized unless incorporated herein by
amendment as provided herein, such amendments to become effective on the date
stipulated in such amendments. The parties specifically acknowledge that, in
entering into and executing this Management Services Agreement, the parties rely
solely upon the representations and agreements contained in this Management
Services Agreement and no others.
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IN WITNESS WHEREOF, Medical Group and Business Manager have caused this
Management Services Agreement to be executed by their duly authorized
representatives, all as of the day and year first above written.
MEDICAL GROUP: BUSINESS MANAGER:
SOUTHEAST TEXAS CARDIOLOGY CARDIOLOGY MANAGEMENT
ASSOCIATES II, P.A., PARTNERSHIP
a Texas professional association a Texas general partnership
By: /s/ Xxxxxxx Xxxxxxxxx By:/s/ Xxxxx Xxxxxxxx
------------------------- ----------------------------
Xxxxxxx Xxxxxxxxx, M.D. Xxxxx Xxxxxxxx, M.D.
Title: President Title: Administrative Partner
GUARANTY
This Management Services Agreement shall be assigned to Raytel Southeast
Management, L.P., pursuant to Section 8.5, herein above, as part of the series
of transactions set forth in the Master Transaction Agreement, and Raytel
Medical Corporation, a party to the Master Transaction Agreement hereby
guarantees the performance of Raytel Southeast Management, L.P. as the Business
Manager of each and every duty, responsibility, obligation, and covenant set
forth herein.
RAYTEL MEDICAL CORPORATION
By: /s/ E. Xxxxxx Xxxxx, Xx.
-------------------------------
E. Xxxxxx Xxxxx, Xx.
Its: Senior Vice President and
Chief Financial Officer.
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