EXHIBIT 10.9
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AMENDED AND RESTATED
SERVICE AGREEMENT
DATED AS OF THE 1ST DAY OF OCTOBER, 2002
BY AND AMONG
RADIOLOGIX, INC.,
MID-ROCKLAND IMAGING PARTNERS, INC.
AND
XXXXXX VALLEY RADIOLOGY ASSOCIATES, P.L.L.C.
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AMENDED AND RESTATED
SERVICE AGREEMENT
This Amended and Restated Service Agreement (this "Agreement"), dated
effective as of October 1, 2002, is entered into by and among Radiologix, Inc.,
a Delaware corporation (formerly known as American Physician Partners, Inc.)
("Parent"), Mid-Rockland Imaging Partners, Inc., a Delaware corporation
("Administrator"), and Xxxxxx Valley Radiology Associates, P.L.L.C., a New York
professional limited liability company (the "Group").
RECITALS
A. The Group, Parent and Administrator entered into that certain
service agreement dated November 7, 1997, as amended (the "Original Agreement").
This Agreement reflects a modification of the financial structure contained in
the Original Agreement.
B. The Group owns and operates a radiology medical practice in the
Dutchess, Orange, Rockland, Ulster and Westchester areas in New York State, and
in the Bergen County area in New Jersey, including providing services at two (2)
hospitals, and provides professional and technical radiology services to the
general public through individual physicians who are licensed to practice
medicine in the State of New York and New Jersey and who are employed or
otherwise retained by the Group.
C. Administrator is in the business of owning certain assets of medical
practices and providing management, administrative, and other non-medical
radiological support services to radiological and radiation oncology medical
practices including, without limitation, furnishing necessary facilities,
equipment, non-physician personnel, supplies and non-physician support staff
services.
D. The Group desires to obtain the services of Administrator in
performing such non-medical business functions so as to permit the Group to
devote its full professional time and attention to the rendering of professional
and technical radiology and related services to its patients.
E. The Group and Administrator have determined a fair market value for
the services to be rendered by Administrator, and based on this fair market
value, have developed a procedure for compensation of Administrator, all as more
particularly set forth in this Agreement.
F. Administrator is willing to commit significant management and
capital resources to the Group to allow for the Group's further growth and
competitiveness, all as provided in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and on the terms and subject to the
conditions herein set forth, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For the purposes of this Agreement, the
following definitions shall apply:
"Acquisition" shall mean the acquisition described in the Acquisition
Agreement.
"Acquisition Agreement" shall mean the Agreement and Plan of
Reorganization and Merger, dated June 27, 1997, as amended by and between Parent
and Rockland Radiological Group, P.C.
"Acquisition Consideration" shall mean the Parent Common Stock and
other consideration furnished pursuant to the Acquisition Agreement by Parent in
connection with the Acquisition.
"Acquisition Effective Date" shall mean the date the Acquisition is
effective pursuant to the terms of the Acquisition Agreement.
"Adjustments" shall mean any adjustments on an accrual basis for
uncollectible accounts receivable or discounts and allowances, including but not
limited to, Medicare and Medicaid disallowances or other third-party contractual
allowances, workers' compensation, employee/dependent health care benefit
programs, professional courtesies, and other activities to the extent they do
not generate a collectible fee or offset a fee previously recorded.
"Administrator" shall have the meaning as set forth in the first
paragraph hereof.
"Administrator Account" shall have the meaning set forth in Section
3.2(b)(ii).
"Administrator Expenses" shall mean, as determined pursuant to GAAP
applied on a consistent basis, all expenses contemplated by this Agreement other
than Professional Expenses. Administrator Expenses shall be the sole
responsibility of Administrator.
"Affiliate" with respect to any person shall mean a person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such person. Neither
Administrator nor the Group is deemed to be an Affiliate of the other.
"CMS" shall mean The Centers for Medicare and Medicaid Services or any
successor or its predecessor, the Health Care Financing Administration.
"Confidential and Proprietary Information" shall have the meaning set
forth in Section 6.1(d).
"Deposit Account" shall mean the bank account established for the Group
to deposit any and all payments received in connection with global fees,
professional fees and technical fees collected on behalf of the Group other than
payments received pursuant to Section 3.2(b)(i) below.
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"ERISA" shall have the meaning set forth in Section 4.9.
"Facility Charges" shall have the meaning set forth in Section
3.2(b)(i).
"Fair Market Value" shall mean as to any asset, the fair market value
of such asset as mutually determined by an Independent Financial Expert selected
by Administrator and an Independent Financial Expert selected by the Group,
provided further that in the event that the Independent Financial Experts
selected by Administrator and the Group cannot agree on the Fair Market Value
within ninety (90) days prior to the Purchase Closing then the two (2)
Independent Financial Experts shall mutually select a third Independent
Financial Expert to determine the Fair Market Value which determination shall be
binding on the parties hereto. Each such Independent Financial Expert may use
any customary and generally accepted method of determining fair market values,
and shall take into account the effect of any liabilities, liens, claims or
encumbrances that may reasonably be expected to have an effect on the Fair
Market Value. The cost of any Independent Financial Experts retained by any
person hereunder shall be paid one-half by Administrator and one-half by the
Group.
"Full-time Physician Employee" shall mean any Physician Employee who
would be eligible to participate in any qualified employee benefit plan of the
Group.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board and Securities and
Exchange Commission or their respective successors.
"Group Account" shall mean the bank account established by the Group
solely for the benefit of the Group and into which Administrator shall deposit
the amounts to which the Group is entitled in accordance with the priority of
payments set forth in Section 7.6 below.
"Group Physician Members" shall mean those Physician Employees and
Physician Extender Employees who own an interest, directly or indirectly, in the
equity capital of the Group.
"IDTF" shall mean an independent diagnostic testing facility as defined
by CMS and the regulations promulgated thereunder, which has also obtained all
licenses and permits required under New York law, rules and regulations.
"Independent Financial Expert" shall mean any nationally-recognized
accounting or investment banking firm regularly engaged in the business of
evaluating assets of medical practices and associated businesses which (i) does
not (and whose directors, officers, employees, Affiliates or stockholders do
not) have a material direct or indirect financial interest in Administrator,
Parent or any of their Affiliates or in the Group or any of its Affiliates, (ii)
has not been, and at the time it is called upon to give independent financial
advice to the parties hereto is not (and none of whose directors, officers,
employees, Affiliates or stockholders is) a promoter, director or officer of
Administrator, Parent or any of their Affiliates or of the Group or any of its
Affiliates, and (iii) has not been retained to render advice, service or an
opinion to Administrator, Parent or the Group or
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any of their Affiliates within the past five-year period except as an
Independent Financial Expert for purposes of this Agreement. Notwithstanding the
preceding, prior retention of any accounting or investment banking firm by
Administrator, Parent or the Group or any of their Affiliates shall not
disqualify such firm from serving as an Independent Financial Expert pursuant to
this Agreement; provided, that (i) such firm was retained solely to evaluate the
fair market value of assets of other medical practices and (ii) the individuals
providing services to Independent Financial Expert are not the same as those
previously rendering services and such firm establishes appropriate procedures
to prevent disclosure of any confidential information. Any individual performing
services on behalf of an Independent Financial Expert shall have at least five
(5) years of experience in evaluating the fair market value of assets of medical
practices and associated businesses.
"Joint Planning Board" shall mean the joint board described in, and
established pursuant to, Section 5.1.
"Managed Care Contracts" shall have the meaning set forth in Section
3.7.
"Managed Care Payors" shall have the meaning set forth in Section 3.7.
"Member Employment Agreements" shall mean the employment agreements
entered into between the Group and each Group Physician Member.
"Parent" shall have the meaning set forth in the first paragraph
hereof.
"Parent Common Stock" shall mean the common stock, $.0001 par value per
share, of Parent.
"Payment Date" shall have the meaning set forth in Section 7.2.
"Personal Property" shall have the meaning set forth in Section 3.3(b).
"Physician Employee Employment Agreements" shall mean the employment
agreements entered into between the Group and each Physician Employee.
"Physician Employees" shall mean those individuals who are physicians
employed by the Group, or by shareholders, members or partners of the Group,
including the Physician Group Members, or who are otherwise under contract or
associated with the Group from time to time.
"Physician Extender Employees" shall mean those individuals who are
employed by or otherwise under contract or associated with the Group from time
to time such as advanced practice nurses (APNs), physician assistants (PAs), or
any other position that generates a professional charge.
"Practice Related Liabilities" shall have the meaning set forth in
Section 10.6(b).
"Practice Site(s)" shall mean any facilities, including satellite
locations at which the Group provides care, including radiology medical
services, to patients.
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"Premises" shall mean the premises provided to the Group pursuant to
Section 3.3(a).
"Professional Expenses" shall mean all operating and non-operating
expenses incurred in connection with the Professional Operations, including,
without limitation: (i) any salaries, benefits, payroll taxes or other
distributions made to the Group Physician Members, Physician Employees,
Physician Extender Employees and other employees of the Group or other
physicians employed, retained or hired by the Group, and providing professional
supervision and interpretation services at the Premises; (ii) any federal, state
or local income or other franchise, property or other taxes applicable to the
Group; (iii) the costs associated with the preparation of any federal, state or
local income or other tax returns on behalf of the Group (excluding the costs
associated with the preparation of payroll tax returns); (iv) all professional
related expenses of the Group Physician Members, Physician Employees, Physician
Extender Employees and other employees of the Group, including but not limited
to, professional meetings, seminars, dues and subscriptions other than such
seminars or meetings that Administrator or Parent requires that any of the Group
Physician Members, Physician Employees, Physician Extender Employees and other
employees of the Group attend; (v) all costs and expenses associated with the
performance of professional services to or for the benefit of the Group by
legal, accounting, investment, financial or other advisors specifically retained
by the Group including, without limitation, all such costs and expenses incurred
by the Group in connection with the Acquisition; (vi) interest on indebtedness
incurred by Administrator in connection with making advances and capital
available to the Group; (vii) any provider tax assessed against the Professional
Operations and any sales and use tax related solely to the Professional
Operations; (viii) direct expenses of requisite and obligatory professional
licensing and insurance costs (including, without limitation, professional
liability, general liability, workers compensation, property and casualty)
solely related to the Professional Operations; (ix) any depreciation of assets
to the extent used solely in connection with the Professional Operations,
provided such amount has been approved in advance by the Joint Planning Board;
and (x) such other expenses as may be specified in this Agreement. Professional
Expenses shall be the sole responsibility of the Group.
"Professional Operations" shall mean all business and operations
conducted by the Group including, without limitation, the provision of
professional medical services to patients by Physician Employees and Physician
Extender Employees at any Practice Site, but specifically excluding Technical
Operations.
"Professional Revenues" for any month shall mean all fees and income of
the Group, as determined pursuant to GAAP applied on a consistent basis,
recorded each month (net of Adjustments) by or on behalf of the Group, generated
by the Professional Operations including, but not limited to, any fees generated
by Physician Employees and Physician Extender Employees in their professional
capacity such as medical director fees, consulting fees, and fees for expert
testimony, but excluding any income derived by any such Physician Employee from
any outside medical activity or related source not required to be assigned to
the Group (or Administrator) as described in Section 6.2 hereof. Global-fee
revenues shall be allocated between Professional Revenues and Technical Revenues
based upon the RVUs. To the extent RVUs or similar measures are no longer
established by CMS, global-fee revenues shall be allocated between Professional
Revenues and Technical Revenues based upon the last available RVU allocation
percentages on a
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modality-by-modality basis. To the extent RVUs have not been established for any
modality or procedure, then the allocation between Professional Revenues and
Technical Revenues shall be determined by the Joint Planning Board.
"Purchase Assets" shall have the meaning set forth in Section 10.6(a).
"Purchase Closing" shall have the meaning set forth in Section 10.7.
"Purchase Price" shall have the meaning set forth in Section 10.6(c).
"Restrictive Covenants" shall have the meaning set forth in Section
6.2.
"RGX Group" shall mean Administrator, Parent and their Affiliates and
all professional associations or corporations or other entities to which
Administrator, Parent or their Affiliates provide administrative, management or
technical services.
"RVUs" shall mean the relative value units in effect from time to time
as established by CMS.
"Security Agreement" shall have the meaning set forth in Section 7.4.
"Technical Operations" shall mean outpatient imaging centers and/or
radiation oncology centers, hospital radiology departments, mobile imaging
services or any other operations utilizing facilities or equipment owned or
managed by Administrator, Parent or any of their Affiliates, or in which
Administrator, Parent or any of their Affiliates hold or own an ownership or
equity interest in, and which generate Technical Revenues.
"Technical Revenues" shall mean all fees and income of the Group or
Administrator, as determined pursuant to GAAP applied on a consistent basis,
that are recorded each month (net of Adjustments) by or on behalf of the Group
or Administrator, for the use of Administrator's facilities and equipment, and
net of any Professional Revenues. Global-fee revenues shall be allocated between
Professional Revenues and Technical Revenues based upon RVUs. To the extent RVUs
or similar measures are no longer established by CMS, global-fee revenues shall
be allocated between Professional Revenues and Technical Revenues based upon the
last available RVU allocation percentages on a modality-by-modality basis. To
the extent RVUs have not been established for any modality or procedure, then
the allocation between Professional Revenues and Technical Revenues shall be
determined by the Joint Planning Board.
"Termination Date" shall have the meaning set forth in Section 10.5.
"Termination Notice" shall have the meaning set forth in Section
10.5(a).
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ARTICLE II
RELATIONSHIP OF THE PARTIES
Section 2.1 Independent Contractors. The Group and Administrator intend
to act and perform as independent contractors, and the provisions hereof are not
intended to create any partnership, joint venture, agency or employment
relationship between the parties. Administrator and the Group agree that the
Group shall retain the exclusive authority to direct the medical, professional,
and ethical aspects of its medical practice. Administrator shall neither
exercise control or direction over the medical methods, procedures or decisions
nor interfere with the physician-patient relationships of the Group, which shall
be maintained strictly between the physicians of the Group, Physician Employees
and/or Physician Extender Employees and their patients.
Section 2.2 Practice of Medicine. The parties hereto acknowledge that
neither Administrator nor Parent is authorized or qualified to engage in any
activity which may be construed or deemed to constitute the practice of medicine
and that nothing herein shall be construed as the practice of medicine by
Administrator or Parent. To the extent any act or service required of
Administrator is construed or deemed to constitute the practice of medicine,
Administrator is released from any obligation to provide, and the Group shall be
deemed not to have requested Administrator to provide, such act or service
without otherwise affecting the other terms of this Agreement.
Section 2.3 No Payment or Other Compensation for Referrals. The parties
hereby agree that the benefits to the Group hereunder do not require, are not
payment or compensation in cash or in kind for, and are not in any way
contingent upon the admission, referral or any other arrangement for the
provision of any item or service offered by Administrator or any of its
Affiliates to any of the Group's patients in any facility controlled, managed or
operated by Administrator.
Section 2.4 Group's Internal Matters. The Group shall be solely
responsible for matters involving its company governance, employees and similar
internal matters, including, but not limited to, preparation and contents of
such reports to regulatory authorities governing the Professional Operations
that the Group is required by law to provide, and distribution of salaries and
professional fee income among the Group Physician Members, Physician Employees
and Physician Extender Employees. Administrator shall assist the Group, where
necessary and appropriate, by providing the information and data in a timely
manner to be included in such reports.
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ARTICLE III
SERVICES TO BE PROVIDED BY ADMINISTRATOR
Section 3.1 General.
(a) Scope of Services Provided. Administrator shall provide or
arrange for the services set forth in this Article III, and the costs, fees,
expenses and other disbursements incurred by Administrator or Parent in
connection therewith shall be included in Administrator Expenses, except to the
extent such costs, fees or expenses are a Professional Expense as determined
under this Agreement. Administrator is authorized to perform its services
hereunder as is necessary or appropriate for the efficient operation of the
Professional Operations and the Technical Operations, including, without
limitation, performance of some of the business office functions at locations
other than the Practice Sites. Except to the extent necessary to comply with
applicable laws, regulations or professional ethical standards, the Group will
not act in a manner which would prevent Administrator from performing its duties
hereunder and will provide such information and assistance to Administrator as
is reasonably required by Administrator to perform its services hereunder.
Administrator shall cause its employees, to comply with all applicable federal,
state and local laws, rules and regulations in Administrator's provision of
services hereunder.
(b) Alternative Management Arrangements.
(i) If Administrator fails to perform, provide or arrange
for the services set forth in this Article III in a manner reasonably consistent
with commercially available services offered by third party providers of
physician practice management services of the type and scope offered by
Administrator, then the Group shall provide written notice of such event to
Administrator, Parent or their Affiliates, including reasonable evidence of such
commercially available services. Administrator shall deliver to the Group within
thirty (30) days after receipt by Administrator of such written notice a written
plan detailing the methods and procedures Administrator, Parent or their
Affiliates shall utilize to restore the level of service contemplated by this
Agreement. In the event Administrator fails to restore the level of service
contemplated by this Agreement in accordance with such plan submitted or in any
event within ninety (90) days after Administrator's submission of such written
plan, the Group shall be entitled to reimbursement by Administrator for the
reasonable costs and expenses of obtaining such service on a temporary basis
until such time Administrator demonstrates its ability to perform such service
at the level contemplated by this Agreement. Nothing contained in this
subsection (b)(i) shall be construed to limit the Group's ability to provide
notice of a Material Administrator Default pursuant to Section 10.3(b) of this
Agreement.
(ii) If Administrator is unable to perform or is released
from performing any service which is required of Administrator because such
service is construed or deemed to constitute the practice of medicine,
Administrator shall deliver to the Group notice of such an event. The Group
shall be entitled to reimbursement by Administrator for the reasonable costs and
expenses of obtaining such services until such time Administrator is able to
perform or provide such service in accordance with applicable law.
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Section 3.2 General Administrative Services.
(a) Exclusive Management Services; Scope of Services. Except
as provided in EXHIBIT 3.2(a), the Group hereby engages Administrator to serve
as its exclusive manager and administrator of non-medical business services
relating to the operation of the Group, subject to matters reserved for the
Group or referred to the Joint Planning Board as herein contemplated, and
Administrator shall have all necessary authority and hereby agrees to perform
such services. The Group agrees that the purpose and intent of this Agreement is
to relieve the Group to the maximum extent possible of the administrative,
accounting, purchasing, non-physician personnel and other non-medical business
aspects of the Group. Administrator agrees that the Group, Physician Employees
and Physician Extender Employees, and only the Group, Physician Employees and
Physician Extender Employees, will perform the professional medical functions of
the Group. Administrator shall have no authority, directly or indirectly, to
perform, and shall not perform, any professional medical function. Administrator
may, however, advise the Group as to the relationship between the Group's
performance of professional medical functions and the overall administrative and
business functions of the Group to the extent permitted by applicable law.
(b) Billing and Collection.
(i) To the extent permitted by law and at Administrator's
sole discretion, Administrator shall directly xxxx and collect from patients,
insurance companies, Managed Care Payors and other third-party payors for
professional supervision and interpretation fee charges and technical fee
charges incurred in connection with services rendered at the Premises (the
"Facility Charges") both prior to and during the term of this Agreement.
Administrator will deposit all collections from Facility Charges directly into
the Administrator Account.
(ii) To the extent required by law or if Administrator
does not directly xxxx and collect Facility Charges pursuant to Section
3.2(b)(i) above, Administrator shall, in the name of and on behalf of the Group,
xxxx patients, insurance companies, Managed Care Payors, and other third-party
payors and collect fees in connection with the services performed at the
Premises or any Practice Site(s) (including fees generated by both the Technical
Operations and the Professional Operations), whether rendered prior to or during
the term of this Agreement, except for the Facility Charges to the extent
Administrator bills and collects such Facility Charges pursuant to subsection
(b)(i) above. Administrator will deposit all collections from this subsection
(b)(ii) directly into the Deposit Account. The Group hereby appoints
Administrator for the term of this Agreement to be its true and lawful
attorney-in-fact, for the following purposes:
(A) to xxxx patients, insurance companies, Managed
Care Payors, and other third-party payors in the Group's name and on its behalf;
(B) to collect accounts receivable resulting from
such billing not otherwise purchased by Administrator (as provided for in
Section 3.2(e) hereof) in the Group's name and on its behalf;
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(C) to receive payments on behalf of the Group from
insurance companies, prepayments received from health care plans, Medicare,
Medicaid, Managed Care Payors and all other third-party payors;
(D) to ensure the collection and receipt in
Administrator's name and for Administrator's account of all accounts receivable
of the Group purchased by Administrator, and to deposit such collections into
the Deposit Account;
(E) to take possession of and endorse in the name of
the Group and deposit into the Deposit Account (and/or in the name of an
individual physician, such payment intended for purpose of payment of
professional fees related to the Group) any notes, checks, money orders,
insurance payments and other instruments received in payment of accounts
receivable not otherwise purchased by Administrator; and
(F) upon the prior consent of the Group, which
consent shall not be unreasonably withheld or delayed, to initiate the
institution of legal proceedings in the name of the Group or a Physician
Employee to collect any accounts and monies owed to the Group or the Physician
Employee, to enforce the rights of the Group or the Physician Employee, as the
case may be, as creditor under any contract or in connection with the rendering
of any service, and to contest adjustments and denials by governmental agencies
(or their fiscal intermediaries) as third-party payors.
(iii) The Group hereby appoints Administrator as its true
and lawful attorney-in-fact to deposit into the Deposit Account all Professional
Revenues and Technical Revenues collected by Administrator as provided for in
Section 3.2(b)(ii). The Group covenants, and shall cause all Physician Employees
and Physician Extender Employees to covenant, to forward any payments received
with respect to any Professional Revenues or Technical Revenues generated for
services provided by the Group or any of its Physician Employees and Physician
Extender Employees to Administrator for deposit. All owners of the Deposit
Account shall execute a revocable standing transfer order (the "Transfer Order")
under which the bank maintaining the Deposit Account shall transfer the entire
balance of the Deposit Account to a separate bank account owned solely by
Administrator (the "Administrator Account") on a daily basis. The Group and
Administrator hereby agree to execute from time to time such documents and
instructions as shall be required by the bank maintaining the Deposit Account
and mutually agreed upon to effectuate the foregoing provisions and to extend or
amend such documents and instructions. Any action by the Group that materially
interferes with the operation of this Section, including but not limited to, any
failure to deposit or to have Administrator deposit any Professional Revenues
and/or Technical Revenues (other than the collections related to the Facility
Charges) into the Deposit Account, any withdrawal of any funds from the Deposit
Account not authorized by the express terms of this Agreement or any other
written agreement executed by each of the parties, or any revocation of or
attempt to revoke the Transfer Order (otherwise than upon expiration or
termination of this Agreement), will constitute a breach of this Agreement and
will entitle Administrator, in addition to any other remedies it may have at law
or in equity, to seek a court ordered assignment of the rights provided to
Administrator pursuant to subparagraph (i) above.
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(iv) All monies collected pursuant to Section 3.2(b)(ii)
above shall be accounted for by Administrator as being distinctly attributable
to the Group.
(v) The Group may perform the functions or exercise the
rights set forth in Section 3.2(b)(ii) only with the prior written consent of
Administrator. The Group shall execute such documents in form and substance as
approved by Administrator and its legal counsel to permit Administrator to
exercise the rights and powers granted to Administrator pursuant to this Section
3.2(b). The Group shall cooperate with, and at the request of Administrator
shall provide reasonable assistance to, Administrator with the functions set
forth herein. In the performance of the services described in this Section
3.2(b), Administrator shall use commercially reasonable efforts to collect the
payments billed on behalf of the Group pursuant to subsection (b)(ii) and shall
comply with all applicable Managed Care Contracts and all applicable laws, rules
and regulations.
(c) Accounting. Administrator shall administer and maintain
the operation of an appropriate accounting system with respect to the operation
of the Group and the Technical Operations, and Administrator shall perform all
bookkeeping and accounting services necessary or appropriate for the efficient
operation of the Group and the Technical Operations, including the maintenance,
custody and supervision of business records, ledgers and reports; the
establishment, administration and implementation of accounting procedures,
controls and systems; and implementation and management of computer-based
management information systems. The Group and its authorized representatives
shall have the right to review all financial books and records maintained by
Administrator relating to the operation of the Group and the Technical
Operations and to the cash management transfer and uses contemplated by Section
3.2(d) hereof. Such information shall be provided by Administrator to the Group
in any media reasonably requested upon reimbursement of Administrator's actual
cost.
(d) Cash Management. Administrator shall manage the cash and
cash equivalents of the Group and Administrator shall be entitled (and is hereby
authorized) to transfer such cash to the account of Administrator and to use
such cash for purposes as Administrator deems appropriate, subject to and
consistent with the terms and provisions of this Agreement. Nothing in this
Section 3.2(d) shall be construed to limit or otherwise modify the requirement
that Administrator disburse funds in fulfillment of the obligations of the Group
and Administrator under this Agreement.
(e) Purchase of Accounts Receivable and Right of Offset.
Effective each business day of the month and subject to applicable law,
Administrator shall purchase all accounts receivable of the Group arising during
the day or days just ended and shall make payment to Group therefor or offset,
without further notice or authorization, sums owed Administrator by Group as the
parties have agreed herein. The purchase price shall be an amount equal to the
aggregate face amount of the accounts receivable being sold less contractual
adjustments and estimated allowances for bad debt as determined from time to
time based on recent historical collection experience of one year or less.
Administrator shall make appropriate adjustments for bad debt and contractual
allowances following the close of each calendar month of the Administrator.
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(f) Obligations of Administrator. Administrator shall supply
to the Group all ordinary, necessary or appropriate services for the efficient
operation of the Group and the Technical Operations, including without
limitation, clerical, accounting, purchasing, payroll, legal, bookkeeping and
computer services, information management, printing, postage and duplication
services and medical transcribing services. Administrator shall prepare monthly
unaudited cash-basis financial statements for the Group containing a balance
sheet, income statement and monthly operational reports which detail payments,
charges and accounts receivable statistics, monthly reconciliation reports on
cash management and any other financial reports reasonably requested by a member
of the Joint Planning Board designated by the Group, which shall be delivered to
the Group as soon as practicable, but no later than thirty (30) days after the
end of each calendar month. The Group may elect to have an audit conducted with
respect to such financial statements by an accounting firm selected by Group in
its sole discretion, in which case the cost of such audit shall be considered a
Professional Expense, unless such audit discloses a material discrepancy, equal
to or greater than ten percent (10%) of the amount to which the Group is
entitled in accordance with the priority of payment set forth in Section 7.6
below, in which case the cost shall be an Administrator Expense.
(g) Records and Files.
(i) Administrator's Business and Financial Records. At all
times during and after the term of this Agreement, including any extensions or
renewals hereof, all business records, including but not limited to, business
agreements, books of account, personnel records, general administrative records
and all information generated under or contained in the management information
system pertaining to Administrator's obligations hereunder, and other business
information of Administrator of any kind or nature, except for patient medical
records and the Group's Records (as defined in subparagraph (ii) below), shall
be and remain the sole property of Administrator; provided that during and after
termination of this Agreement, the Group shall be entitled to reasonable access
to such records and information, including the right to obtain copies thereof in
any media reasonably requested by the Group, for any purpose related to patient
care or the defense of any claim relating to patient care or the business of
Administrator or the Group or to the relationships of the parties hereto, and
the Administrator agrees to safeguard such records for such period as may be
required by applicable federal or state law following termination of this
Agreement, but in no event less than six (6) years. Administrator hereby agrees
to preserve the confidentiality of such patient medical records and to use the
information in such records only for the limited purposes necessary to perform
management services and, within the limits of its responsibilities hereunder, to
ensure that provision is made for appropriate care for patients.
(ii) Business and Financial Records. At all times during
and after the term of this Agreement, the business agreements, financial,
operational, corporate and personnel records and information relating
exclusively to the business and activities of the Group and patient medical
records and charts (hereinafter referred to as the "Group's Records") shall be
and remain the sole property of the Group; provided, however, that the patient
medical records and charts located at any Practice Site that has obtained IDTF
status shall be deemed to be the sole property of Administrator and shall be
subject to Section 3.2(g)(i) above.
12
(iii) Access to Records. At all times during and after the
term of this Agreement, each party and its authorized agents shall be entitled,
upon request and with reasonable advance notice, to obtain access (within not
more than 30 days following receipt of such notice by the other party or
parties) to all records of the other party directly related to the performance
of such party's obligations pursuant to this Agreement; provided, however, that
such right shall not allow, without obtaining appropriate consent, which consent
will not be unreasonably withheld, for access to patient, medical and other
records that must be kept confidential as required by law. Either party, at its
expense, shall have the right to make copies in any media of any records to
which it has access pursuant to this subparagraph (iii).
(iv) Compliance with Law. The management of all files and
records by Administrator and the Group shall comply with all applicable federal,
state and local statutes and regulations.
(h) Collections. Subject to the consent requirement contained
in Section 3.2(b)(ii)(F), Administrator shall take such action as is reasonably
or lawfully necessary in the name of and on behalf of the Group to collect the
fees described in subsection (b)(ii) on behalf of Group, except as otherwise
agreed between Administrator and the Group.
Section 3.3 Facilities.
(a) Premises. Administrator shall make available to the Group
the Premises that are described in EXHIBIT 3.3(a) attached hereto and such other
improvements made by Administrator or Parent for the use of the Group hereunder.
The Premises shall be subject to such expansion or reduction as reviewed and
approved by the Joint Planning Board. Administrator shall obtain for the Group
all utilities reasonably required in connection with the use of the Premises and
shall provide for the proper cleanliness of the Premises, including normal
janitorial and maintenance services and refuse disposal, including but not
limited to medical waste. Administrator shall maintain the Premises in good
condition and use commercially reasonable efforts to make or cause to be made
all necessary repairs thereto in a timely manner.
(b) Personal Property. Administrator shall provide the Group
with the use of the equipment, furniture, fixtures, furnishings and other
personal property acquired in the Acquisition or any replacements thereto,
together with such other equipment, furniture, fixtures, furnishings and other
personal property necessary or appropriate for the efficient operation of the
Technical Operations acquired by Administrator or Parent or the Professional
Operations associated with the Premises (subject to review and approval of the
Joint Planning Board) for the use of the Group pursuant to the terms hereof
(collectively, the "Personal Property"). Administrator shall maintain the
Personal Property in good condition and use commercially reasonable efforts to
make or cause to be made all necessary repairs thereto in a timely manner.
(c) Expenses. All costs, fees, expenses and other
disbursements incurred by Administrator, Parent or their Affiliates in
connection with the Premises and the Personal Property, including, without
limitation, all reasonably necessary costs of repairs, maintenance and
improvements, utility expenses (i.e., telephone, electric, gas and water),
janitorial services, refuse disposal, real or personal property lease cost
payments and expenses, interest, refinancing expenses,
13
depreciation, loss on disposition of assets, taxes and casualty, liability and
other insurance, shall be included in Administrator Expenses. To the extent the
Premises or Personal Property are used in connection with the Professional
Operations, the costs and expenses associated with such usage shall be allocated
between Professional Expenses and Administrator Expenses as approved by the
Joint Planning Board.
(d) Disposition. Subject to this Agreement and the provisions
contained in existing agreements to which Administrator or Parent is or becomes
a party and, where necessary and appropriate for the efficient operation of the
Professional Operations and the Technical Operations, nothing herein shall be
construed as precluding Administrator or Parent from selling, leasing or
otherwise disposing of all or any part of the Premises, Personal Property, real
property, improvements, trade names, trademarks and other intangible property;
provided, however, any such sale, lease or disposition shall be subject to the
prior review and approval of the Joint Planning Board and shall not eliminate or
diminish Administrator's obligations hereunder.
(e) No Warranties or Representations. Except as otherwise
provided in this Agreement, the Group acknowledges that Administrator makes no
warranties or representations, express or implied, as to the fitness,
suitability or adequacy of the Premises or the Personal Property, or any other
property furnished under this Agreement, for the conduct of a medical practice
or for any other particular purpose.
Section 3.4 Acquisition and Assistance.
(a) Employment of Physicians. Subject to consultation with the
Joint Planning Board, in the event a decision is made by the Group to employ
additional physicians, if requested by the Group, Administrator will assist the
Group in the identification and selection of physicians or physician groups or
practices that may be beneficial in the operation of the Group. Subject to
consultation with the Joint Planning Board, in the event that a decision is made
by the Group to pursue the employment of selected physicians, if requested by
the Group, Administrator will provide recruiting, consulting, negotiating and
other advisory services in connection with such transaction, but any
out-of-pocket costs associated with any of the foregoing shall be considered a
Professional Expense. Notwithstanding the preceding, as set forth in and subject
to the provisions of Section 4.1 hereof, the Group shall have complete control
of and responsibility for the hiring of all Physician Employees and Physician
Extender Employees.
(b) Acquisitions. In the event that the Group contemplates
acquiring or affiliating with a physician group, practice or other entity, and
such acquisition or affiliation involves the use or expenditure of
Administrator's and/or Parent's cash or other resources including the assumption
of any expenses or liabilities incurred or reasonably expected to be incurred as
a result of such an acquisition or affiliation including, without limitation,
capital and personnel (collectively, the "Resources"), then the Group shall
first consult with the Joint Planning Board and Administrator, and any decision
to make such affiliation or acquisition shall be subject to prior approval of
Administrator, which decision of the Administrator shall be provided to the
Group in a reasonable and timely manner following satisfactory review of the
physician group, practice or other entity to be acquired or affiliated with and
the terms and provisions of the proposed affiliation or acquisition and in any
event within 30 days following notification of the proposed transaction
14
and receipt of all necessary information related thereto. If such contemplated
acquisition or affiliation does not involve the use or expenditure of any of
Administrator's and/or Parent's Resources, then such decision shall be in the
sole discretion of the Group. Notwithstanding any provision contained herein to
the contrary, any person or entity with which the Group affiliates or acquires
shall be subject to the terms and conditions of this Agreement.
Section 3.5 Financial Planning and Budgeting.
(a) Budgeting. Administrator shall collaborate with the Group
and the Joint Planning Board in the preparation of all annual capital and
operating budgets. These annual budgets shall be subject to the review,
amendment and approval or disapproval of the Board of Directors of Parent or a
committee designated by such Board of Directors. For purposes of developing the
initial annual operating budget, the Joint Planning Board shall take into
account the categories of expenses determined by Administrator and Joint
Planning Board. The projected annual operating budget for each subsequent year
shall be subject to the approval of the Joint Planning Board and shall reflect
the anticipated revenues and expenses of Administrator and the Group. For
purposes of developing the annual capital budget, the Joint Planning Board will
include budgeted amounts for any anticipated expansion of existing facilities,
acquisition of new facilities, acquisition or upgrades of equipment, any
practice asset acquisitions, and any other anticipated capital expenses of
Administrator on behalf of the Group.
(b) Capital Expenditures. Subject to the terms contained
herein, Administrator will make funds available for capital expenditures and
improvements by Administrator as follows:
(i) Budgeted Expenditures. All budgeted capital
expenditures and improvement projects shall be subject to final review and
approval by the Joint Planning Board prior to the making of any actual
expenditure. Such review and approval shall be based on confirming that the
assumption, facts and circumstances on which the decision to budget for such
expenditure was based still support and justify the actual expenditures.
(ii) Non-Budgeted Expenditures. Requests for non-budgeted
capital expenditures and improvement projects shall be evaluated and prepared by
the Joint Planning Board in consultation with the Group and Administrator. All
requests for non-budgeted capital expenditures and improvements in excess of
either $75,000 individually or an aggregate amount equivalent to $2,500
multiplied by the number of Full-time Physician Employees employed at the time
the capital budget for such Group for the applicable year is determined
(provided, however, that such aggregate amount shall not exceed $250,000 for any
calendar year) must be approved by the Board of Directors of Parent or by any
committee specifically designated by the Board of Directors of Parent for such
purposes.
(c) Capital Improvements and Expansion. Subject to Section
3.5(b), any site or Premises renovation, expansion or reduction plans and/or
capital equipment expenditures shall be reviewed and approved by the Joint
Planning Board and shall be based upon economic feasibility, productivity and
then current market conditions in light of both the particular project and the
Group as a whole.
15
Section 3.6 Personnel. Administrator shall provide non-physician
professional support (other than Physician Extender Employees) including,
without limitation, nurses, technologists, physicists and administrative,
clerical, secretarial, bookkeeping and collection personnel as is reasonably
necessary for the efficient conduct of the Professional Operations and the
Technical Operations. All such personnel shall be duly qualified by education or
experience for their respective positions and shall possess all licenses which
may be required by law. Such personnel shall be employees of Administrator, and
Administrator shall determine and cause to be paid the salaries and benefits of
all such personnel. If the Group is dissatisfied with the services of any such
personnel who provide services primarily for the Group at the Premises, the
Group shall consult with Administrator, and Administrator shall in good faith
determine whether the performance of that employee could be brought to
acceptable levels through counsel and assistance, or whether such employee
should be considered for termination. Such Personnel shall be supervised by and
comply with the directions and orders of Administrator, except as otherwise
required by applicable law. If Administrator determines to retain such employee
and the Group is still dissatisfied with the services provided by such employee
after a reasonable period of time, Administrator shall either relocate such
employee or otherwise cease to utilize such employee in providing services to
the Group hereunder. Administrator shall maintain established working
relationships wherever possible and Administrator shall make every effort
consistent with sound business practices to honor the specific requests of the
Group with regard to the assignment of Administrator's employees.
Section 3.7 Provider and Payor Relationships. Administrator shall
provide financial and business assistance to the Group in the negotiation,
establishment, supervision and maintenance of contracts and relationships
(collectively, the "Managed Care Contracts") with all managed care,
institutional health care providers and payors, health maintenance
organizations, preferred provider organizations, exclusive provider
organizations, Medicare, Medicaid, insurance companies and other similar persons
or entities (collectively, "Managed Care Payors") related to the Professional
Operations and the Technical Operations. Group shall maintain all existing
Managed Care Contracts with Managed Care Payors, and any approval, disapproval,
termination or amendment of any Managed Care Contract with any Managed Care
Payor shall, after consultation with the Joint Planning Board, be the
responsibility and obligation of Group, and Group shall act in a manner that is
in the best business interests of the Professional Operations and the Technical
Operations. Administrator shall have the right and authority to submit an
application to obtain IDTF status for any or all of the Premises, and the Group
shall reasonably assist and cooperate with Administrator in the preparation and
filing of any such applications as may be requested by Administrator from time
to time. Notwithstanding the preceding language, if a contract or relationship
between any Managed Care Payor and the Group involves or affects a contract or
relationship with any other physician group or practice serviced or managed by
Administrator, Parent or any of their Affiliates (the "Other Practices") and a
consensus among the Group and the Other Practices cannot be reached regarding
the contract or relationship, then the ultimate decision as to the approval,
disapproval, termination or amendment of such contract or relationship involving
the Group, the Other Practices and such Managed Care Payor shall be determined
by the affirmative vote of the Physician Board Members (as defined below) who
hold a majority of the Group Voting Power (as defined below). For purposes of
this Section 3.7, (i) the term "Physician Board Members" shall mean (a) those
members appointed by the Group who serve on the Joint Planning Board and (b)
those persons
16
appointed by the Other Practices who serve on the Other Practices' joint boards
(in a similar capacity to the Joint Planning Board) as part of their contractual
relationship with Parent, Administrator or any of their Affiliates, and (ii) the
term "Group Voting Power" shall mean the total voting percentage which may be
cast by the Physician Board Members on a collective basis, with the percentage
of votes able to be cast by any Group or Other Practice, as applicable, shall be
equal to the quotient determined by dividing (x) the total estimated annual
professional revenues to be generated by the Group from such Managed Care
Contract as determined by Administrator, Parent or their Affiliates, as
appropriate, in its sole discretion, by (y) the total estimated annual
professional revenues to be generated by the Group and all Other Practices from
such Managed Care Contract as determined by the Administrator, Parent or their
Affiliates, as appropriate, in its sole discretion.
Section 3.8 Inventory and Supplies. Administrator shall order, purchase
and provide to the Group on a timely basis inventory and supplies, and such
other ordinary, necessary or appropriate materials which are requested by the
Group and which the Group shall reasonably determine to be necessary in the
Professional Operations on the same terms commercially available to
Administrator. To the extent that such inventory, supplies and other materials
are not related to the provision of professional or technical services at the
Premises, Administrator's cost for such inventory, supplies and other materials
shall be considered a Professional Expense.
Section 3.9 Advertising and Public Relations. In consultation with the
Joint Planning Board, Administrator shall implement (and design where requested)
an appropriate local public relations or advertising program, with appropriate
emphasis on public awareness of the availability of services at the Practice
Sites. Prior to publication or distribution of such marketing or public
relations material or information, Administrator shall submit such material to
the Group for its review and approval, which shall not be unreasonably withheld.
Administrator or Parent shall also design and implement all national or other
non-local public relations or advertising programs. To the extent such national
programs are reasonably designed to replace or supplement the marketing benefits
derived from local public relations or advertising programs, a pro rata share of
such costs will be considered an Administrator Expense. The parties hereto agree
that all public relations and advertising programs shall be conducted in
compliance with applicable standards of medical ethics, laws and regulations.
Section 3.10 Quality Assurance. Subject to Article II, Administrator
shall assist the Group in fulfilling its obligations to its patients to maintain
a high quality of medical and professional services. Any expenses that are
related to the overall maintenance of Administrator's quality assurance program
shall be included in Administrator Expenses; provided, however, that any
expenses related to such program that are incurred for services provided solely
for the direct benefit of the Group shall be considered a Professional Expense.
Section 3.11 Other Consulting and Advisory Services. Administrator will
provide such consulting and other advisory services as reasonably requested by
the Group in all areas of the Group's business functions, including, without
limitation, financial planning, acquisition and expansion strategies,
development of long-term business objectives and other related matters.
Section 3.12 Events Excusing Performance. In the event of strikes,
lock-outs, calamities, acts of God, unavailability of supplies or other events
over which Administrator has no
17
control, Administrator shall not be liable to the Group for failure to perform
any of the services required hereunder and the Group shall not have the right to
terminate this Agreement pursuant to Section 10.3(b), for so long as such events
continue and for a reasonable period of time thereafter; provided however that
if such events continue and Administrator is not able to perform any material
portion of the services required hereunder for a period of 120 consecutive days
or more, either Administrator or Group may terminate this Agreement by written
notice to the other.
ARTICLE IV
OBLIGATIONS OF THE GROUP
Section 4.1 Employment of Physician Employees and Physician Extender
Employees. Except as set forth in Article V, the Group shall have complete
control of and responsibility for the hiring, compensation, supervision,
training, evaluation and termination of its Physician Employees and Physician
Extender Employees. Upon the reasonable prior written request of Administrator,
the Group shall deliver to Administrator copies of all executed employment
agreements with its Physician Employees and Physician Extender Employees or
subcontractor agreements covering other physicians, as well as provide to
Administrator copies of all renewals, extensions, modifications and replacements
to such employment agreements. The Group hereby acknowledges and agrees that
each such employment agreement shall at all times be in compliance with all
applicable terms and conditions contained in this Agreement. The Group shall
conduct an appropriate and reasonable due diligence review in connection with
the hiring of any physician or the acquisition of any physician group or
practice. Although Administrator may provide payroll and other related services
to the Group, the Group shall be solely responsible for the payment of such
Physician Employees' and Physician Extender Employees' salaries and wages,
payroll taxes and all other taxes now or hereafter applicable to their
employment. The Group and its Physician Employees and Physician Extender
Employees shall not have any claim under this Agreement or otherwise against
Administrator or Parent for workers' compensation, unemployment compensation or
Social Security benefits, all of which shall be the sole responsibility of the
Group. The Group shall only employ or contract with licensed physicians or other
persons meeting applicable credentialing guidelines established by the Group
after consultation with the Joint Planning Board. The Group shall obtain and
retain professional liability insurance and ensure that its Physician Employees
and Physician Extender Employees, and other employees who may have malpractice
exposure or liability, are insured and participate in an ongoing risk management
program.
Section 4.2 Professional Supervision and Interpretation Services. The
Group shall provide professional medical supervision and interpretation services
to its patients in compliance at all times with ethical standards, laws, rules
and regulations applicable to the operations of the Professional Operations, the
Physician Employees and Physician Extender Employees. The Group shall ensure
that each Physician Employee and each Physician Extender Employee has all
required licenses, credentials, approvals or other certifications to perform his
or her duties and services for the Group and, in the event that the Group
becomes aware of any disciplinary actions or medical malpractice actions
initiated against any Physician Employee or Physician Extender Employee, the
Group shall promptly inform Administrator of such action and the underlying
facts and circumstances. If required by applicable law, any state or federal
regulatory agency or any
18
contractual obligations, the Group shall carry out a program to monitor the
quality of medical care practiced by the Group; provided, however, that the
preceding language shall not limit the Group's obligation to participate in or
comply with any programs established by Administrator or Parent for purposes of
ensuring that the Group complies with applicable law. The Group shall be
responsible and obligated to employ and to provide at the Practice Sites, a
sufficient number of Physician Employees and Physician Extender Employees to
render all professional medical supervision and interpretation services required
at and on behalf of the Practice Sites in accordance with customary medical
standards and all applicable laws, including all laws relating to the billing
and collection of such professional supervision and interpretation services.
Section 4.3 Medical Practice. The Group shall use and occupy the
Premises exclusively for the practice of medicine and for providing other
related services and products. Unless otherwise approved in writing in advance
by Administrator, which approval shall not be unreasonably withheld or delayed,
it is expressly acknowledged by the parties hereto that the professional medical
practice or practices conducted at the Premises shall be conducted solely by
Physician Employees and the Physician Extender Employees, and, no other
physician or medical practitioner shall be permitted to use or occupy the
Premises; provided, however, if any test or procedure is required to be
performed jointly with another physician who is not a Physician Employee or
Physician Extender Employee, then such physician may use and occupy the Premises
for purposes of performing such procedure or test so long as the Group receives
usual and customary fees in connection with such procedure or test. The Group
shall be solely and exclusively in control of all aspects of the practice of
medicine and the delivery of medical services at the Group's facilities and at
such outpatient surgery centers, acute care hospitals and other facilities as
the Group may deem appropriate from time to time. The rendition of all
professional medical services, including, but not limited to, diagnosis,
treatment, therapy, the prescription of medicine and drugs, and the supervision
and preparation of medical reports shall be the sole responsibility of the
Group. From time to time the Group, after consultation with the Joint Planning
Board, will adopt and implement fee schedules for (i) non-prepaid patients which
shall be reasonable in relation to fees generally being charged in the same or
similar market areas and (ii) for all rebillings and recovery items on prepaid
Managed Care Contracts which are authorized and permitted by such contracts. A
copy of such agreements and any amendment thereto shall be provided to
Administrator for review no later than thirty (30) days prior to the proposed
effective date thereof.
Section 4.4 Group's Internal Matters. The Group shall be responsible
for matters involving its company governance, employees and similar internal
matters, including, but not limited to, preparation and contents of such reports
to regulatory authorities governing the Group that the Group is required by law
to provide, distribution of professional fee income among the Group Physician
Members, disposition of the Group's property and ownership units (subject to any
restrictions contained herein), hiring and firing of its employees, licensing
and implementing all compliance plans and procedures as described in Section
4.6. The costs incurred in connection with the foregoing matters, except as
otherwise provided under this Agreement, shall be considered a Professional
Expense.
Section 4.5 Name. Administrator agrees that the Group shall be entitled
to use on a non-exclusive and non-transferable basis for the term of this
Agreement the names set forth on
19
EXHIBIT 4.5 as may be necessary or appropriate in the performance of the Group's
services and obligations hereunder.
Section 4.6 Compliance with Laws. The Group shall, and shall use its
best efforts to cause the Physician Employees, Physician Extender Employees and
other employees of the Group to, comply with all applicable federal, state and
local laws, rules, regulations and restrictions in the conduct of the
Professional Operations and the Technical Operations. Without limiting the
generality of the foregoing, the Group shall comply and shall cause each
Physician Employee, Physician Extender Employee and other employee of the Group
to comply, with all laws applicable to the operation of the Technical Operations
in the generation, transportation, treatment, storage, disposal or other
handling of radioactive, medical, biological or hazardous materials or waste,
and the Group shall not, and shall use its best efforts to prohibit any
Physician Employee, Physician Extender Employee and any employee of the Group
from:
(a) entering into any contract, lease, agreement or
arrangement, including, but not limited to, any joint venture or consulting
agreement, to provide services, lease space, lease equipment or engage in any
other venture or activity with any physician, hospital, pharmacy, home health
agency or other person or entity which is in a position to make or influence
referrals to, or otherwise generate business for, the Professional Operations or
the Technical Operations, if such transaction is in violation of any applicable
law, rule or regulation;
(b) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any application for any
benefit or payment from a Managed Care Payor or any other Payor;
(c) knowingly and willfully making or causing to be made a
false statement or representation of a material fact for use in determining
rights to any benefit or payment from a Managed Care Payor or any other Payor;
(d) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another, with intent to
fraudulently secure such benefit or payment;
(e) knowingly and willfully paying, soliciting or receiving
any remuneration (including any kickback, bribe, or rebate), directly or
indirectly, overtly or covertly, in cash or in kind or offering to pay or
receive such remuneration (i) in return for referring an individual to a person
for the furnishing or arranging for the furnishing of any item or service for
which payment may be made in whole or in part by Medicare or Medicaid, or (ii)
in return for purchasing, leasing, or ordering, or arranging for or recommending
purchasing, leasing, or ordering any good, facility, service, or item for which
payment may be made in whole or in part by Medicare or Medicaid;
(f) referring a patient for health services or products to or
providing health services to a patient upon a referral from an entity or person
with which the physician or an immediate family member has a financial
relationship, other than as permitted by exceptions set forth in federal or
state anti-referral laws or regulations; and
20
(g) undertaking any action that is not in accord with the
regulatory compliance plans, policies and manuals developed by or in conjunction
with Administrator.
Section 4.7 Ancillary Services. Except as set forth in Section 3.4(b),
the Group shall not acquire, establish or commence the operation of any
satellite location, medical office, imaging center, health maintenance
organization, preferred provider organization, exclusive provider organization
or similar entity or organization established or operated by the Group after the
effective date of the Original Agreement without the prior written consent of
Administrator.
Section 4.8 Premises and Personal Property. The Group shall use its
best efforts to prevent damage, excessive wear and tear, and malfunction or
other breakdown of the Premises and Personal Property or any part thereof by the
Physician Employees and Physician Extender Employees or other employees of the
Group. The Group shall promptly inform Administrator both orally and in writing
of any and all necessary replacements, repairs or maintenance to any of the
Premises or Personal Property and any failures of equipment of which it becomes
aware. The Group shall comply with all covenants and provisions set forth in any
leases or subleases for the Premises entered into or assumed by Administrator
and Administrator agrees to make available to the Group copies of all such
leases to the Group.
Section 4.9 Group Employee Benefit Plans. The Group shall not enter
into or offer to any Physician Employee or other employee of the Group or
Administrator any "employee benefit plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) without
the express written consent of Administrator, which consent shall not be
unreasonably withheld.
Section 4.10 Events Excusing Performance. In the event of strikes,
lock-outs, calamities, acts of God, unavailability of supplies or other events
over which the Group has no control, the Group shall not be liable to
Administrator, Parent or their Affiliates for failure to perform any of its
obligations required hereunder as may be materially restricted by any such event
and Administrator shall not have the right to terminate this Agreement pursuant
to Section 10.4(a), for so long as such events continue and for a reasonable
period of time thereafter; provided however that if such events continue and the
Group is not able to perform any material portion of its obligations required
hereunder for a period of 120 consecutive days or more, either the Group or
Administrator may terminate this Agreement by written notice to the other.
ARTICLE V
JOINT PLANNING BOARD
Section 5.1 Formation and Operation of the Joint Planning Board.
(a) The parties hereto shall establish the Joint Planning
Board which shall be responsible for developing long-term strategic planning
objectives and management policies for the overall operation of the Technical
Operations and shall facilitate communication and interaction between
Administrator and the Group. The Joint Planning Board shall consist of no less
than three
21
(3) or more than six (6) members. Administrator shall designate, in its sole
discretion, two (2) members of the Joint Planning Board, who shall serve at the
pleasure of Administrator and who may be removed or replaced by Administrator at
any time. The Group shall designate, in its sole discretion, no less than one
(1) or more than four (4) members of the Joint Planning Board, who shall serve
at the pleasure of the Group and who may be removed and replaced by the Group at
any time. Each member appointed by Administrator shall be entitled to one (1)
vote per member, and each member appointed by the Group shall be entitled to
that number of votes equal to the quotient determined by dividing (x) two (2)
votes by (y) the number of members designated by the Group to the Joint Planning
Board. The act of the members holding a majority of the voting power of the
Joint Planning Board shall be the act of the Joint Planning Board.
(b) Each member of the Joint Planning Board shall have the
right to vote on every matter either in person, by telephone, by written consent
or by one or more agents, who are also members of the Joint Planning Board,
authorized by a written proxy signed by the member and filed with the Joint
Planning Board. A proxy shall state that it either shall be voted for or against
a specific matter or matters identified in the proxy or shall be voted
identically to the vote of the agent specified in the proxy on any and all
matters that may come before and be voted on by the Joint Planning Board. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the member executing it,
before the vote pursuant to that proxy, by a writing delivered to the Joint
Planning Board stating that the proxy is revoked, or by a subsequent proxy
executed by, or attendance at the meeting and voting in person by, the member
executing the proxy; or (ii) written notice of the death or incapacity of the
maker of that proxy is received by the Joint Planning Board before the vote
pursuant to that proxy is counted; provided, however, that no proxy shall be
valid after the expiration of eleven (11) months from the date of the proxy,
unless otherwise provided in the proxy.
Section 5.2 Duties and Responsibilities of the Joint Planning Board.
The Joint Planning Board shall advise the Group on the following matters:
(a) Capital Improvements and Expansion. Subject to Section
3.5(b), any site or Premises renovation, expansion or reduction plans and/or
capital equipment expenditures with respect to the Technical Operations shall be
reviewed and approved by the Joint Planning Board and shall be based upon
economic feasibility, productivity and then current market conditions in light
of both the particular project and the Group as a whole.
(b) Annual Budgets. The Joint Planning Board shall collaborate
with Administrator on all annual capital and operating budgets prepared by
Administrator, as set forth in Section 3.5(b) and after the annual capital and
operating budgets have been approved as provided in Section 3.5(b), no
substantial changes may be made in such budgets without the approval of the
Joint Planning Board. For purposes of this Section 5.2, substantial means any
change individually or in the aggregate which would result in a change in excess
of five percent (5%) to the annual capital or operating budgets.
(c) Advertising. The Joint Planning Board shall consult with
Administrator on all local advertising and other marketing of the services
performed by or for the Group.
22
(d) Patient Fees. As a part of the annual operating budget, in
consultation with and upon recommendation of the Joint Planning Board, the Group
shall review and adopt the fee schedule for all professional services rendered
by the Group.
(e) Ancillary Services and Fees. The Joint Planning Board
shall approve non-medical ancillary services (including, without limitation,
fees for technical services which do not generate Professional Revenues) based
upon the pricing, access to, and quality of such services and shall review and
adopt the fee schedule for all ancillary services.
(f) Provider and Payor Relationships. Subject to Section 3.7,
decisions regarding the establishment or maintenance of relationships with
institutional health care providers and payors shall be approved by the Group
after consultation with the Joint Planning Board.
(g) Strategic Planning. The Joint Planning Board shall develop
a plan which depicts the strategic direction of the Professional Operations and
the Technical Operations, as updated from time to time. Such plan will, among
other things, identify opportunities, objectives, and the resources required to
effect such plan.
(h) Capital Expenditures. The Joint Planning Board shall
determine the priority of capital expenditures in accordance with Section 3.5(b)
hereof.
(i) Provider Hiring. The Joint Planning Board shall consult
with the Group to recommend the number and type of Physician Employees and
Physician Extender Employees required for the efficient operation of the Group.
(j) Non-Physician Personnel. The Joint Planning Board shall
consult with Administrator to recommend the number and type of non-physician
employees required for the efficient operation of the Professional Operations
and the Technical Operations.
Section 5.3 Acts of the Joint Planning Board. Except as otherwise
specifically provided herein, the act of the members holding a majority of the
voting power of the Joint Planning Board shall be the act of the Joint Planning
Board. The Group agrees that, unless the following are approved in advance by
the Joint Planning Board and such act of the Joint Planning Board includes the
approval by both of the members designated by Administrator, it shall take no
action or implement any decision that would (i) require Administrator to expend
funds or incur obligations beyond those set forth under Sections 3.5 or 5.2 of
this Agreement; (ii) have a material adverse effect on the amount of
Administrator's management fee under Article VII; or (iii) otherwise have a
material adverse effect on Administrator's financial interests under this
Agreement. Except as provided in the prior sentence, the Group and Administrator
hereby agree to be bound by the act of the Joint Planning Board if such act was
approved by the members holding at least a majority of the voting power of the
Joint Planning Board. No action of the Joint Planning Board shall be effective
unless authorized by the members holding a majority of the voting power of the
Joint Planning Board present or represented by proxy at the applicable meeting.
In the event that a matter cannot be resolved by the Joint Planning Board due to
a tie vote, and no compromise can be reached, then either (x) the Board of
Directors of Parent or (y) a committee designated by the Board of Directors of
Parent containing at least one (1) physician member will make a final
23
determination on the matter in dispute provided that both the Group and
Administrator shall have had an opportunity to make a presentation to the Board
of Directors of Parent or a committee thereof, as applicable. A quorum of the
Joint Planning Board shall consist of the members holding a majority of the
voting power of the Joint Planning Board, present in person, by telephone, or by
proxy and the quorum must remain for the duration of the meeting.
Section 5.4 Joint Planning Board Meetings. Meetings of the Joint
Planning Board may be held by telephone or similar communication equipment so
long as all members participating in a meeting can hear and speak to each other.
The Joint Planning Board shall prepare and maintain written minutes of all
meetings and shall provide a copy of the minutes to the members within fifteen
(15) business days following each meeting.
(a) Regular Meetings. The Joint Planning Board shall hold not
less than four (4) regular meetings each year, at such specific times and places
as the members may determine.
(b) Special Meetings. A special meeting of the Joint Planning
Board may be called by fifty percent (50%) of the voting power of the Joint
Planning Board.
(c) Notice Requirement. A member calling a special meeting
must provide all other members with ten (10) days' advance written or telephonic
notice. Notice must be given or sent to the member's address or telephone number
as shown on the records of the Joint Planning Board. Notice may be delivered
directly to each member or to a person at the member's principal place of
business who would reasonably be expected to communicate that notice promptly to
the member.
(d) Waiver of Notice Requirement.
(i) Written Waiver, Consent or Approval. Notice of a
special meeting need not be given to any member who, either before or after the
meeting, signs a waiver of notice or a written consent to the holding of the
special meeting, or an approval of the minutes of the special meeting. Such
waiver, consent or approval need not specify the purpose of the special meeting.
All such waivers, consents, and approvals shall be filed with the Joint Planning
Board records or made a part of the minutes of the special meetings.
(ii) Failure to Object. Notice of special meeting need not
be given to any member who attends the special meeting and does not protest
before or at the commencement of the special meeting such lack of notice.
(iii) Quorum. The smallest number of members that hold
votes that exceed fifty percent (50%) of all voting power shall constitute a
quorum of the Joint Planning Board; provided, however, that if two (2)
consecutive special meetings are called and a quorum is not present at either
special meeting, the quorum requirements for the third special meeting shall be
limited to those members who attend such third special meeting, and any action
(subject to the economic limitations set forth in Section 5.3 above) may be
transacted at such meeting upon the approval of a majority of the voting power
of the Joint Planning Board present and voting at such meeting; provided,
further, that the parties shall act in good faith in attempting to schedule all
such
24
meetings, including, without limitation, compliance with the notice requirements
set forth in Section 5.4(c).
(iv) Proxies. The Joint Planning Board shall provide for
the use of proxies, telephonic conference calls, written consents or other
appropriate methods by which the full participation of the Group members and
Administrator members can be assured.
ARTICLE VI
RESTRICTIVE COVENANTS
The parties recognize that the services to be provided by Administrator
hereunder shall be feasible only if the Group operates active Professional
Operations and, in conjunction with Administrator, Technical Operations to which
the physicians associated with the Group devote their full medical time and
attention. Accordingly, the parties hereto agree as follows:
Section 6.1 Restrictive Covenants of the Group.
(a) Noncompetition. During the term of this Agreement, the
Group shall not, without the prior written consent of Administrator, (i)
establish, operate or provide professional radiology, radiation oncology or
diagnostic services at any medical office, practice or other health care
facility (other than a Practice Site) providing services similar to those
provided by the Group or Administrator or enter into an agreement with any third
party payor to provide such services, (ii) enter into any other management or
administrative services agreement or other arrangement with any other person or
entity (other than with Administrator) for purposes of obtaining management,
administrative or other support services, or (iii) engage or participate in any
business which engages in competition with the business conducted by the RGX
Group anywhere within 15 miles of any location at which any member of the RGX
Group conducts business.
(b) Covenant Not to Solicit. During the term of this Agreement
and for twenty-four (24) months following the termination of this Agreement, the
Group shall not, without the prior written consent of Administrator: (i) unless
the Group acquires the Purchase Assets pursuant to Article X, directly or
indirectly recruit or hire, or induce any party to recruit or hire any person
who is an employee of, or who has entered into an independent contractor
arrangement with, any member of the RGX Group; (ii) directly or indirectly,
whether for itself or for any other person or entity, call upon, solicit, divert
or take away, or attempt to solicit, call upon, divert or take away any
customers, business, or clients of any member of the RGX Group; (iii) directly
or indirectly solicit, or induce any party to solicit, any contractors of any
member of the RGX Group, to enter into the same or a similar type of contract
with any other party; or (iv) disrupt, damage, impair or interfere with the
business of any member of the RGX Group.
(c) Engagement of Administrator. If (i) this Agreement is
terminated pursuant to Section 10.4(a) or (c), and (ii) the Group does not
acquire the Purchase Assets as provided in Article X, then if the Group
establishes, operates or provides professional services at any office, practice,
diagnostic imaging center, hospital or other health care facility providing
25
services substantially similar to those provided by the Group or Administrator
pursuant to this Agreement anywhere within 15 miles of any location of any
Practice Site(s), the Group or any successor thereto shall engage Administrator
as the sole and exclusive manager and administrator of the nonprofessional
functions and services of such other office, practice, hospital or health care
facility on the same terms and conditions as contained herein.
(d) Administration's Obligations Regarding Proprietary
Interest.
(i) Acknowledgement of Proprietary Interest.
Administrator, Parent or their Affiliates hereto recognize the proprietary
interest of the Group in any Confidential and Proprietary Information (as
hereinafter defined). Administrator, Parent and their Affiliates acknowledge and
agree that any and all Confidential and Proprietary Information of the Group
("Group's Confidential and Proprietary Information") communicated to, learned
of, developed or otherwise acquired by Administrator, Parent and their
Affiliates during the term of this Agreement shall be the property of the Group.
Administrator, Parent and their Affiliates further acknowledge and understand
that disclosure of any of Group's Confidential and Proprietary Information will
result in irreparable injury and damage to the Group. As used herein, "Group's
Confidential and Proprietary Information" means all trade secrets and other
confidential and/or proprietary information of the Group, including information
derived from reports, investigations, research, work in progress, codes,
marketing and sales programs, financial projections, cost summaries, pricing
formula, contract analyses, financial information, projections, confidential
filings with any state or federal agency, and all other confidential concepts,
methods of doing business, ideas, materials or information prepared or performed
for, by or on behalf of the parties hereto by its employees, officers,
directors, agents, representatives, or consultants. Group's Confidential and
Proprietary Information shall not include any information which: (i) was known
to Administrator, Parent or their Affiliates prior to its disclosure by the
Group; (ii) is or becomes publicly known through no wrongful act of
Administrator, Parent or their Affiliates or any of their employees, directors,
independent agents, contractors or advisors; (iii) is disclosed pursuant to a
statute, regulation or the order of a court of competent jurisdiction, provided
that the Administrator, Parent or their Affiliates provide prior notice to the
Group.
(ii) Covenant Not-to-Divulge Confidential and Proprietary
Information. Administrator, Parent and their Affiliates acknowledge and agree
that the Group is entitled to prevent the disclosure of Group's Confidential and
Proprietary Information. Administrator, Parent and their Affiliates agree at all
times during the term of this Agreement and thereafter to hold in strictest
confidence and not to disclose to any person, firm or corporation, except as may
be necessary for the discharge of its obligations under this Agreement, and not
to use, except in the pursuit of the business of the Group or Administrator,
Group's Confidential and Proprietary Information, without the prior written
consent of the Group; unless (i) such information becomes known or available to
the public generally through no wrongful act of Administrator, Parent or their
Affiliates or their employees, directors, independent agents, contractors or
advisors, or (ii) disclosure is required by law or the rule, regulation or order
of any governmental authority under color of law; provided, that prior to
disclosing any Group's Confidential and Proprietary Information pursuant to this
clause (ii), Administrator, Parent or their Affiliates shall, if possible, give
prior written notice thereof to the Group and provide the Group with the
opportunity to contest such disclosure. Administrator, Parent and their
Affiliates shall take all necessary and proper
26
precautions against disclosure of any of Group's Confidential and Proprietary
Information to unauthorized persons by any of its officers, directors, employees
or agents. All officers, directors, employees, and agents of Administrator,
Parent and their Affiliates who will have access to all or any part of the
Group's Confidential and Proprietary Information will be required to execute an
agreement upon request, valid under the law of the jurisdiction in which such
agreement is executed, and in a form acceptable to Administrator, Parent or
their Affiliates and their counsel, committing themselves to maintain the
Group's Confidential and Proprietary Information in strict confidence and not to
disclose it to any unauthorized person or entity. Upon termination of this
Agreement for any reason, the Administrator, Parent and their Affiliates and
their employees, directors, agents or advisors shall cease all use of any of the
Group's Confidential and Proprietary Information and shall execute such
documents as may be reasonably necessary to evidence their abandonment of any
claim thereto.
(iii) Return of Materials. In the event of any termination
of this Agreement for any reason whatsoever, or at any time upon the request of
the Group, the Administrator, Parent and their Affiliates will promptly deliver
or cause to be delivered to the Group all documents, data and other information
in their possession that contain any Group's Confidential and Proprietary
Information. The Administrator, Parent and their Affiliates shall not take or
retain any documents or other information, or any reproduction or excerpt
thereof, containing any Group's Confidential and Proprietary Information, unless
otherwise authorized in writing by the Group. In the event of termination of
this Agreement, Administrator, Parent and their Affiliates will deliver to the
Group all documents and data pertaining to Group's Confidential and Proprietary
Information not otherwise purchased as part of the Acquisition.
(e) Group's Obligations Regarding Proprietary Interest.
(i) Acknowledgement of Proprietary Interest. The Group
recognizes the proprietary interest of the Administrator, Parent and their
Affiliates in any Confidential and Proprietary Information (as hereinafter
defined). The Group acknowledges and agrees that any and all Confidential and
Proprietary Information of Administrator, Parent or their Affiliates
("Administrators' Confidential and Proprietary Information") communicated to,
learned of, developed or otherwise acquired by the Group during the term of this
Agreement shall be the property of Administrator, Parent or their Affiliates.
The Group further acknowledges and understands that its disclosure of
Administrator's Confidential and Proprietary Information will result in
irreparable injury and damage to Administrator, Parent or their Affiliates. As
used herein, "Confidential and Proprietary Information" means all trade secrets
and other confidential and/or proprietary information of the Administrator,
Parent or their Affiliates, including information derived from reports,
investigations, research, work in progress, codes, marketing and sales programs,
financial projections, cost summaries, pricing formula, contract analyses,
financial information, projections, confidential filings with any state or
federal agency, and all other confidential concepts, methods of doing business,
ideas, materials or information (other than the Group's patient records)
prepared or performed for, by or on behalf of the parties hereto by its
employees, officers, directors, agents, representatives, or consultants.
Confidential and Proprietary Information shall not include any information
which: (i) was known to the parties hereto prior to its disclosure by the
Administrator, Parent or their Affiliate; (ii) is or becomes publicly known
through no wrongful act of the Group or any of its employees; (iii) is disclosed
pursuant to a statute,
27
regulation or the order of a court of competent jurisdiction, provided that the
Group provides prior notice to Administrator, Parent or its Affiliates.
(ii) Covenant Not-to-Divulge Confidential and Proprietary
Information. The Group acknowledges and agrees that Administrator, Parent or
their Affiliates are entitled to prevent the disclosure of Confidential and
Proprietary Information. The Group agrees at all times during the term of this
Agreement and thereafter to hold in strictest confidence and not to disclose to
any person, firm or corporation, except as may be necessary for the discharge of
its obligations under this Agreement, and not to use, except in the pursuit of
the business of the Group or Administrator, Administrator's Confidential and
Proprietary Information, without the prior written consent of Administrator,
Parent and their Affiliates; unless (i) such information becomes known or
available to the public generally through no wrongful act of the Group or its
employees or (ii) disclosure is required by law or the rule, regulation or order
of any governmental authority under color of law; provided, that prior to
disclosing any Administrator's Confidential and Proprietary Information pursuant
to this clause (ii), the Group shall, if possible, give prior written notice
thereof to Administrator, Parent and their Affiliates and provide such parties
with the opportunity to contest such disclosure. The Group shall take all
necessary and proper precautions against disclosure of any Administrator's
Confidential and Proprietary Information to unauthorized persons by any of its
officers, directors, employees or agents. All officers, directors, employees,
and agents of the Group who will have access to all or any part of the
Administrator's Confidential and Proprietary Information will be required to
execute an agreement upon request, valid under the law of the jurisdiction in
which such agreement is executed, and in a form acceptable to Administrator,
Parent and their Affiliates and its counsel, committing themselves to maintain
the Administrator's Confidential and Proprietary Information in strict
confidence and not to disclose it to any unauthorized person or entity. Upon
termination of this Agreement for any reason, the Group and their employees
shall cease all use of any of the Administrator's Confidential and Proprietary
Information and shall execute such documents as may be reasonably necessary to
evidence their abandonment of any claim thereto.
(iii) Return of Materials. In the event of any termination
of this Agreement for any reason whatsoever, or at any time upon the request of
Administrator, Parent or their Affiliates, the Group will promptly deliver or
cause to be delivered to Administrator, Parent and their Affiliates all
documents, data and other information in their possession that contains any
Administrator's Confidential and Proprietary Information regarding
Administrator, Parent and their Affiliates. The Group shall not take or retain
any documents or other information, or any reproduction or excerpt thereof,
containing any Administrator's Confidential and Proprietary Information, unless
otherwise authorized in writing by the party possessing such Administrator's
Confidential and Proprietary Information. In the event of termination of this
Agreement, the Group will deliver to Administrator, Parent and their Affiliates
all documents and data pertaining to Administrator's Confidential and
Proprietary Information of the other parties not otherwise purchased as part of
the Purchased Assets.
(f) Third Party Beneficiaries. The members of the RGX Group
not party to this Agreement are hereby specifically made third party
beneficiaries of this Section 6.1, with the power to enforce the provisions
hereof.
28
Section 6.2 Restrictive Covenants. The Group shall obtain and enforce
formal agreements with each Physician Employee who is either (i) a Group
Physician Member or (ii), to the extent permitted under applicable law, a
Full-time Physician Employee which each contain certain restrictive covenants
thereof pertaining to covenants not to compete and/or solicit with and not to
divulge the Confidential and Proprietary Information of any member of the RGX
Group or the Group (the "Restrictive Covenants"). Except as otherwise approved
by the Joint Planning Board, each Group Physician Member or Full-time Physician
Employee shall agree, during the term of his/her employment or contractor
agreement with the Group and for a period of twenty-four (24) months after any
termination of such agreement: (i) not to establish, operate or provide
professional radiology services at any office, practice, hospital or health care
facility providing services substantially similar to those provided by the Group
or Administrator pursuant to this Agreement within 15 miles of any location of
any Practice Site(s) and (ii) to be bound by non-solicitation, noncompetition
and nondisclosure of confidential/proprietary information and engagement of
Administrator covenants similar to those applicable to the Group as contained in
Section 6.1 hereof. Except as otherwise approved by the Joint Planning Board,
each Group Physician Member or Full-time Physician Employee shall agree that
during the term of his/her employment or contractor agreement with the Group (w)
not to practice radiological medicine other than at the Premises or such other
location or Practice Site(s) as approved by the Joint Planning Board; (x) to
devote substantially all of his or her professional time, effort and ability to
the Group; (y) to request in writing and receive in writing prior approval from
the Group to engage in any outside medical activities; and (z) to turn over to
the Group, to be included in Professional Revenues attributed to the Group, any
income derived by such Group Physician Member or Full-time Physician Employee
from any outside medical activity or related source from the following
medically-related activities: teaching, consulting, medical research, inventions
developed utilizing the Group's or the Administrator's time and material,
testimony for litigation, and insurance examinations. The Group shall not
materially amend, alter or otherwise change any term or provision of any Member
Employment Agreement or Physician Employee Employment Agreement relating to the
foregoing covenants in this Section 6.2 without the prior written consent of
Administrator; notwithstanding the foregoing, any such amendment, alteration or
change shall not be inconsistent with the terms or provisions of this Agreement.
Following termination of this Agreement, the Group shall not amend, alter or
otherwise change any term or provision of the Restrictive Covenants, unless such
provisions are no longer in force and effect pursuant to the terms of the
applicable Member Employment Agreement or Physician Employee Employment
Agreement at the time of termination of this Agreement. In the event the
Purchase Assets are acquired by the Group pursuant to Article X, the obligation
of the Group to enforce Restrictive Covenants shall be limited to enforcement of
non-solicitation and nondisclosure of confidential/proprietary information
covenants.
Section 6.3 Enforcement of Restrictive Covenants and Other Provisions.
The Group shall enforce the Member Employment Agreements and, to the extent
permitted under applicable law, the Physician Employee Employment Agreements,
including, without limitation, the Restrictive Covenants. The costs and expenses
of such enforcement shall be included in Professional Expenses and all damages
and other amounts recovered thereby shall be included in Professional Revenues.
In the event that, after a request by Administrator, the Group does not pursue
any remedy that may be available to it by reason of a breach or default of the
Restrictive Covenants or any other provision of the Member Employment Agreements
and, to the extent
29
permitted under applicable law, the Physician Employee Employment Agreements,
upon the request of Administrator, the Group shall assign to Administrator such
causes of action and/or other rights it has related to such breach or default
and shall cooperate with and provide reasonable assistance to Administrator with
respect thereto; in which case, all costs and expenses incurred in connection
therewith shall be borne by Administrator and shall be included in Administrator
Expenses, and Administrator shall be entitled to all damages and other amounts
recovered thereby. In the event the Purchase Assets are acquired by the Group
pursuant to Article X, the obligation of the Group to enforce Restrictive
Covenants shall be limited to enforcement of non-solicitation and nondisclosure
of confidential/proprietary information covenants.
Section 6.4 Remedies. Administrator and the Group acknowledge and agree
that a remedy at law for any breach or attempted breach of the provisions of
this Article VI shall be inadequate, and therefore, either party shall be
entitled to specific performance and injunctive or other equitable relief in the
event of any such breach or attempted breach, in addition to any other rights or
remedies available to either party at law or in equity. Each party hereto waives
any requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief. If any provision of
the Restrictive Covenants or this Article VI relating to the restrictive period,
scope of activity restricted and/or the territory described therein shall be
declared by a court of competent jurisdiction to exceed the maximum time period,
scope of activity restricted or geographical area such court deems reasonable
and enforceable under applicable law, the time period, scope of activity
restricted and/or area of restriction held reasonable and enforceable by the
court shall thereafter be the restrictive period, scope of activity restricted
and/or the geographical area applicable to such provision of the Restrictive
Covenants or this Article VI. The invalidity or non-enforceability of any
provision of the Restrictive Covenants or this Article VI in any respect shall
not affect the validity or enforceability of the remainder of the Restrictive
Covenants or this Article VI or of any other provisions of this Agreement.
Section 6.5 Condition Precedent to Release of Obligations. In the event
a Group Physician Member or Full-time Physician Employee terminates his/her
employment agreement with the Group, the Group shall be entitled to release
(with the consent of Administrator in its sole and absolute discretion) such
Group Physician Member or Full-time Physician Employee from the restrictive
covenants contained in Section 6.2, above. In the event the Group elects to
release such Group Physician Member or Full-time Physician Employee, the Group
hereby covenants that it shall obtain a formal agreement between each Group
Physician Member or Full-time Physician Employee, as the case may be, and
Administrator which provides that, for a period of two (2) years following
termination of any employment agreement with the Group, such Group Physician
Member or Full-time Physician Employee agrees to (a) engage Administrator as the
sole and exclusive manager and administrator of the non-medical functions and
services of said Group Physician Member's or Full-time Physician Employee's
medical practice and (b) pay to Administrator the identical amount of revenues
paid by the Group to the Administrator attributable to such Group Physician
Member or Full-time Physician Employee derived from such Group Physician
Member's or Full-time Physician Employee's performance of professional medical
services within 15 miles of any Practice Site.
Section 6.6 Service Area Rights and Obligations.
30
(a) Primary Service Area. During the term of this Agreement
and within any Primary Service Area, Parent, Administrator or their Affiliates
shall not, without the prior written consent of the Group, (i) acquire or lease
the non-medical assets (through an asset acquisition, merger or other
consolidation or otherwise) of any Radiologist, group of Radiologists or
professional corporation or association (or other professional entity) whose
owners are Radiologists, (ii) acquire any imaging center where, within a
reasonable time period following such acquisition, the Group will not be
entitled to provide professional Radiology services for such imaging center, or
(iii) contract to provide management and administrative services similar to
those provided under this Agreement to any Radiologist, group of Radiologists or
professional corporation or association (or other professional entity) whose
owners are Radiologists. Following a request for written consent by
Administrator, Parent or their Affiliates hereunder, the Group shall respond
upon the earlier of (i) within thirty (30) days from receipt of such request and
all other necessary information related thereto or (ii) one-half of the time
during which Administrator, Parent or their Affiliates must respond. In the
event the Group, Parent, Administrator or their Affiliates acquire a
Professional Service Opportunity, the Group shall accept such Professional
Service Opportunity and shall perform any and all professional Radiology
services that are reasonably required at such location(s) in accordance with the
terms and provisions of this Agreement; provided (x) that the professional
reimbursement for such services is reasonable in relation to the overall market
environment and work effort required and (y) the Group shall not be required to
employ any Radiologist previously associated with such Professional Service
Opportunity.
(b) Secondary Service Area. During the term of this Agreement
and within any Secondary Service Area, Parent, Administrator or their Affiliates
shall first offer to the Group any New Professional Service Opportunity;
provided, however, that this provision shall not be applicable to any merger of
a Radiologist, group of Radiologists or professional corporation or association
(or other professional entity) whose owners are Radiologists with the Group.
Administrator shall give written notice (the "Administrator Notice") to the
Group describing the New Professional Service Opportunity. Within the earlier of
(i) thirty (30) days or (ii) one-half of the time during which the
Administrator, Parent or their Affiliates must respond to an offer described in
the Administrator's Notice, the Group shall deliver to Administrator a written
notice stating whether or not the Group elects to accept or reject the New
Professional Service Opportunity which election shall be binding on the Group.
If the Group does not elect to exercise the right or fails to provide the notice
to Administrator within the time frame herein provided, Administrator shall be
released from the right of first offer with respect to that particular New
Professional Service Opportunity. Prior to consummating any asset acquisition,
merger or other consolidation of any Radiologist, group of Radiologists, or
professional corporation or association (or other professional entity) whose
owners are Radiologists within any Secondary Service Area, Administrator shall
first consult with the Joint Planning Board.
(c) Determination of Primary and Secondary Service Area. The
existence and location of each of the Group's Primary Service Areas and
Secondary Service Areas shall be determined each time the Group, Parent,
Administrator or their Affiliates propose an acquisition, management
relationship, Professional Service Opportunity or New Professional Service
Opportunity as contemplated in subsections (a) and (b) above.
31
(d) Dispute Resolution. Any disputes regarding the
interpretation of the provisions of this Section 6.6 shall be referred to and
decided by the Joint Planning Board as provided in Section 5.3 of this
Agreement.
(e) Definitions. The definitions utilized in connection with
this Section 6.6 shall have the following meanings:
"New Professional Service Opportunity" shall mean a
Professional Service Opportunity pursuant to which the Group or any other member
of a RGX Group managed by Parent, Administrator or their Affiliates is not
currently providing professional Radiology services.
"Primary Service Area" shall mean that area within a five (5)
mile radius from any imaging center owned, operated or managed by Administrator,
Parent or their Affiliates for which the Group provides professional Radiology
services or any hospital at which on-site professional Radiology services are
then provided by Physician Employee(s) or Physician Extender Employee(s) of the
Group.
"Professional Service Opportunity" shall mean any opportunity
to perform professional Radiology services for any hospital, hospital system or
imaging center under a formal agreement with such entity.
"Radiologist" shall mean and include both radiologists and
radiation oncologists.
"Radiology" shall mean and include diagnostic imaging,
interventional radiology and radiation oncology services.
"Secondary Service Area" shall mean that area which extends
five (5) miles beyond the boundary of any Primary Service Area.
Section 6.7 Survival of Certain Covenants. If this Agreement is
terminated pursuant to Section 10.4(a), (b) or (c), the provisions of Section
6.2 and Section 6.3 shall survive such termination if the actions or events
giving rise to a breach of the Restrictive Covenants or other provisions
occurred prior to such termination. If the Agreement is terminated pursuant to
the preceding sentence, all of the provisions of Section 6.1 shall survive.
However, regardless of the reason for termination, or upon expiration of this
Agreement, the provisions of Section 6.1(d), (e), (f) and (g) shall survive such
termination or expiration indefinitely unless otherwise expressly limited as to
a period of time.
Section 6.8 Definition. The term "Full-time Physician Employee" as used
in Sections 6.2 and 6.5 of this Article VI only, shall mean a Full-time
Physician Employee who shall have been employed by the Group for two (2) years;
provided, that such Full-time Physician Employee shall enter into a written
agreement at the commencement of the later of (i) his/her employment or (ii) the
Acquisition, which includes the provisions set forth in Sections 6.2 and 6.5
above, and acknowledges his/her understanding that such provisions will be
enforceable against such Full-time Physician Employee following such two (2)
year period. Notwithstanding the foregoing, the Group shall be entitled to apply
to the Joint Planning Board for the purpose of requesting that a particular
32
Full-time Physician Employee not be required to execute an employment agreement
that contains the provisions contained in Sections 6.2 and 6.5, which such
release by Administrator shall not be unreasonably withheld or delayed.
ARTICLE VII
FINANCIAL AND SECURITY ARRANGEMENTS
Section 7.1 Service Fee. The Group and Administrator agree that the
compensation set forth in this Article VII is being paid to Administrator in
consideration of the services provided and the substantial commitment and effort
made by Administrator hereunder and that such fees have been negotiated at arms'
length and are fair, reasonable and consistent with fair market value.
Administrator shall be paid the service fee (the "Service Fee") as set forth on
EXHIBIT 7.1 hereto. Payment of the Service Fee is not intended to and shall not
be interpreted or implied as permitting Administrator to share in the Group's
fees for medical services but is acknowledged as the negotiated fair market
value compensation to Administrator considering the scope of services and the
business risks assumed by Administrator.
Section 7.2 Payments. Except as otherwise set forth on EXHIBIT 7.1
hereto, the amounts to be paid to Administrator under this Article VII shall be
calculated by Administrator on the accrual basis of accounting and shall be
payable monthly. Payments due for any Service Fee shall be made by the Group
each calendar month as provided herein and shall be paid on the 15th day
following the end of such month (or the first preceding day that is a business
day if the 15th day is not a business day) (a "Payment Date"). Except as
otherwise set forth on EXHIBIT 7.1, such amounts paid shall be estimates based
upon available information for such month, and adjustments to the estimated
payments shall be made to reconcile final amounts due under Section 7.1 on the
next Payment Date.
Section 7.3 Advances. If Administrator, in its sole discretion, elects
to advance any sums to the Group, any such amounts advanced to the Group
pursuant to this Section 7.3 shall be repaid by the Group in such priority as
set forth in Section 7.6 below and shall bear interest at Parent's then
available, borrowing rate offered by Administrator's or Parent's senior lender
(which rate shall be charged consistently to each physician group who enters
into a Service Agreement with Administrator) until all such amounts of principal
and interest are repaid to Administrator as provided herein.
Section 7.4 Security Agreement. In order to enforce its rights granted
hereunder and subject to applicable law, the Group shall execute a Security
Agreement in substantially the form attached hereto as EXHIBIT 7.4 (the
"Security Agreement"), which Security Agreement grants a security interest in
all of the Group's accounts receivable (as more fully described in the Security
Agreement) to Administrator. In addition, the Group shall cooperate with
Administrator and execute all necessary documents in connection with the pledge
of such accounts receivable to Administrator or at Administrator's option, its
lenders.
33
Section 7.5 Adjustment of Fees. In addition to the adjustments provided
for in Section 7.2, Service Fees payable by Group pursuant to this Article VII
shall be adjusted as appropriate upon agreement of the parties upon the
divestiture or acquisition by the Group of, or affiliation with, a radiology or
diagnostic practice group. Whether or not Parent capital stock or funds are
utilized to fund the acquisition or affiliation, the Service Fee and other
related provisions of this Agreement shall be adjusted as agreed upon by the
parties on a case by case basis. Under either acquisition or affiliation model,
the precise adjustment to the Service Fee and to other related provisions of
this Agreement shall be a joint decision of the parties, shall be memorialized
in a written amendment to this Agreement, and shall be based upon the
methodology used to generally determine Services Fees hereunder.
Section 7.6 Priority of Payments. Administrator shall administer and
make disbursements from amounts deposited into the Deposit Account or
transferred from the Deposit Account to make the payments in accordance with
this Section 7.6, as the same become due and payable, in the following order of
priority:
(a) Payment of the outstanding balance of all amounts advanced
to the Group through the end of the prior month, and applicable interest thereon
(as provided for in Section 7.3);
(b) Disbursements to the Group of amounts due for professional
supervision and interpretation services shall be determined in accordance with
Exhibit 7.6(b) hereto and disbursed into the Group Account on the fifteenth
(15th) day following the end of each calendar month (or the first preceding day
if the fifteenth (15th) day is not a business day);
(c) Payment of all accrued Administrator Expenses for the
prior month; provided, however, that if Administrator Expenses exceed Technical
Revenues, then the amount by which Administrator Expenses exceed Technical
Revenues shall be excluded for purposes of the priority of payments set forth
below and the Group shall not be responsible for such amount; and
(d) Payment of the accrued Service Fee; and
(e) The remaining balance, if any, shall be deposited into the
Group Account on the fifteenth (15th) day following the end of each calendar
month.
ARTICLE VIII
RECORDS
Section 8.1 Records. All records relating in any way to the operation
of the Professional Operations and the Technical Operations (other than Group
Records) shall, subject to the obligations of the Group and Administrator to
maintain patient medical records pursuant to Section 3.2(g), at all times be the
property of Administrator as set forth in Section 3.2(g). During the term of
this Agreement, and for a reasonable time thereafter, the Group or its agents
shall have reasonable access during normal business hours to the Group's and
Administrator's personnel and financial records relating to the Professional
Operations and the Technical Operations, including, but not limited to, records
of collections, expenses and disbursements as kept by Administrator in
34
performing Administrator's obligations under this Agreement, and the Group may
copy any or all such records.
ARTICLE IX
INSURANCE AND INDEMNIFICATION
Section 9.1 Insurance to be Maintained by the Group.
(a) During the term of this Agreement, the Group shall
maintain comprehensive professional medical/malpractice liability insurance with
such carrier as determined jointly by Administrator and the Group with minimum
legal limits or such higher limits as shall be required under the Group's
contracts with hospitals or other third parties. Such insurance shall be on a
per claim and per physician basis and a separate limit for the Group to the
extent available and permitted by law with such deductible as is mutually
agreeable by Administrator and the Group. All comprehensive professional
medical/malpractice liability insurance premiums and deductibles shall be
considered a Professional Expense. All costs, expenses and liabilities incurred
by the Group in excess of the limits of such policies identified in the
preceding sentence shall be considered a Professional Expense. Administrator,
Parent or their Affiliates may attempt to secure excess liability for the types
of coverages contemplated by this Section 9.1(a). If successful, the Group shall
have the opportunity to purchase at Administrator's cost, without xxxx-up, as a
Professional Expense, such coverage to the extent permitted by the
then-applicable restrictions set forth in such policy.
(b) The Group, Administrator and Parent each waives any right
one may have against the other, to the extent allowed by the waiving party's
insurance coverage, on account of any loss or damage occasioned to any party by
another party, their respective real and personal property, the Premises or its
contents, arising from any risk generally covered by fire and extended coverage
insurance or from vandalism or malicious mischief; and the parties, on behalf of
their respective insurance companies, waive any right to subrogation, except
when such loss or damage is due to the gross negligence or willful misconduct of
the other party.
Section 9.2 Insurance to be Maintained by Administrator. During the
term of this Agreement, Administrator will provide and maintain (i)
comprehensive professional medical/ malpractice liability insurance for all
applicable employees of Administrator and (ii) comprehensive general liability
and property insurance covering the Premises, personal property and operations
with such limits and coverages as a reasonable business person under similar
circumstances would maintain. All costs, expenses and liabilities incurred by
Administrator for the policies identified in subsections (i) and (ii) hereof
shall be included in Administrator Expenses.
Section 9.3 Continuing Liability Insurance Coverage. The Group shall
obtain or require each of its Physician Employees and Physician Extender
Employees to obtain continuing liability insurance coverage under either a "tail
policy" or a "prior acts policy," with the same limits and deductibles as the
insurance coverage provided pursuant to Section 9.1 upon the termination of such
physician's relationship with the Group for any reason, unless such physician
was covered with
35
an occurrence-based policy while employed or retained by the Group. In the event
that the Group, any Physician Employee or Physician Extender Employees fails to
obtain such continuing liability insurance coverage, Administrator may do so.
The cost of such continuing liability insurance coverage shall be considered a
Professional Expense.
Section 9.4 Additional Insureds. The Group and Administrator agree to
use their reasonable efforts to have each other named as an additional insured
on the other's respective professional liability insurance programs. The
additional cost, if any, associated therewith shall be considered a Professional
Expense.
Section 9.5 Indemnification.
(a) By the Group. The Group shall indemnify, defend and hold
Administrator, Parent, their Affiliates and their respective officers,
directors, members, employees, agents, attorneys and consultants (other than
such persons who are also officers, directors, shareholders, employees, agents
or consultants of the Group) harmless, from and against any and all liabilities,
losses, damages, claims, causes of action and expenses (including reasonable
attorneys' fees), not covered by insurance (including self-insured insurance and
reserves), whenever arising or incurred, that are caused or asserted to have
been caused, directly or indirectly, by or as a result of the performance of
medical services or the performance of any intentional acts, negligent acts or
omissions by the Group and/or its shareholders, employees and/or subcontractors
(other than Administrator, Parent, Affiliates or their employees, officers,
directors, agents, attorneys and consultants) during the term of this Agreement.
Provided, however, that in the event an indemnification obligation under the
preceding sentence arises as of the result of any act or omission of a person
who is an officer, shareholder or other equity holder, director, employee,
agent, attorney or consultant of Administrator, Parent or any of its Affiliates
(other than in connection with the activities of the Joint Planning Board), such
person shall not be entitled to indemnification in connection therewith and any
other adjustment as is equitable shall be made to the Group's indemnification
obligation arising thereby.
(b) By the Administrator. Administrator and Parent, jointly
and severally, shall indemnify, defend and hold the Group and its officers,
members, managers, employees, agents, attorneys and consultants, harmless from
and against any and all liabilities, losses, damages, claims, causes of action
and expenses (including reasonable attorneys' fees), not covered by insurance
(including self-insured insurance and reserves), whenever arising or incurred,
that are caused or asserted to have been caused, directly or indirectly, by or
as a result of the performance of any intentional acts, negligent acts or
omissions by Administrator, Parent or Affiliates and/or any of their respective
shareholders, employees and/or subcontractors (other than the Group or its
employees) during the term of this Agreement. Provided, however that in the
event an indemnification obligation under the preceding sentence arises as a
result of any act or omission of a person who is an officer, member or other
equity holder, manager, employee, agent, attorney or consultant of the Group
(other than in connection with the activities of the Joint Planning Board), such
person shall not be entitled to indemnification in connection therewith and any
other adjustment as is equitable shall be made to Administrator's or Parent's
indemnification obligation arising thereby.
36
ARTICLE X
TERM AND TERMINATION
Section 10.1 Term of Agreement. This Agreement shall commence on the
date hereof and shall expire on November 26, 2037, unless earlier terminated
pursuant to the terms of either Section 10.3 or Section 10.4 or automatically
extended pursuant to the terms of Section 10.2.
Section 10.2 Extended Term. Unless earlier terminated as provided for
in either Section 10.3 or Section 10.4, the term of this Agreement shall be
automatically extended for additional terms of five (5) years each, unless
either party delivers to the other party, not less than twelve (12) months nor
earlier than fifteen (15) months prior to the expiration of the preceding term,
written notice of such party's intention not to extend the term of this
Agreement.
Section 10.3 Termination by the Group. The Group may, in its sole
discretion, terminate this Agreement by giving written notice thereof to
Administrator (after the giving of any required notices and the expiration of
any applicable waiting periods set forth below) upon the occurrence of any the
following events:
(a) Administrator or Parent shall admit in writing its
inability to generally pay its debts when due, apply for or consent to the
appointment of a receiver, trustee or liquidator of all or substantially all of
its assets, file a petition in bankruptcy or make an assignment for the benefit
of creditors, or upon other action taken or suffered by Administrator or Parent,
voluntarily or involuntarily, under any federal or state law for the benefit of
creditors, except for the filing of a petition in involuntary bankruptcy against
Administrator or Parent which is dismissed within ninety (90) days thereafter.
(b) Administrator or Parent shall default in the performance
of any material duty or material obligation imposed upon it by this Agreement (a
"Material Administrator Default") and such default shall continue for a period
of sixty (60) days after written notice thereof has been given to Administrator
by the Group with a copy to the financial institution contemplated in Section
12.1(a) at the address provided by Administrator, provided that the Group may
terminate this Agreement, if and only if, such termination shall have been
approved by the affirmative vote of the holders of two-thirds of the interests
of the equity holders of the Group. The Group agrees that the financial
institution contemplated in Section 12.1(a) shall have the right, but not the
obligation, to cure any Material Administrator Default. Notwithstanding anything
to the contrary in this Agreement, following receipt by Administrator of the
notice of a Material Administrator Default and until such Material Administrator
Default shall be cured, the Group may take such action as may be reasonably
required to cover such Material Administrator Default so as to maintain for the
Group the same level of service as before the Material Administrator Default,
without prejudicing in any way the Group's other rights and remedies, and may
offset all of its costs from the amounts which may otherwise be due to
Administrator under this Agreement.
(c) An independent law firm with nationally recognized
expertise in health care law and acceptable to the parties hereto renders an
opinion to the parties hereto that (i) a
37
material provision of this Agreement is in violation of applicable law or any
court or regulatory agency enters an order finding a material provision of this
Agreement is in violation of applicable law and (ii) this Agreement can not be
amended pursuant to Section 11.6 hereof to cure such violation.
Section 10.4 Termination by Administrator. Administrator may, in its
sole discretion, terminate this Agreement by giving written notice thereof to
the Group (after the giving of any required notices and the expiration of any
applicable waiting periods set forth below) upon the occurrence of any of the
following events:
(a) The Group shall default in the performance of any material
duty or material obligation imposed upon it by this Agreement (a "Material Group
Default") and (i) the Group fails to deliver to Administrator within thirty (30)
days after written notice of such Material Group Default has been given to Group
a written plan (reasonably acceptable to Administrator) detailing the methods
and procedures that the Group shall utilize to cure such Material Group Default,
(ii) the Group has delivered a plan but has failed to utilize its best efforts
to cure such Material Group Default within sixty (60) days after written notice
thereof has been given to the Group by Administrator or (iii) the Group has
delivered the plan but, after utilizing its best efforts, is unable to cure such
Material Group Default within ninety (90) days after written notice thereof has
been given to the Group by Administrator. The term "Material Group Default" for
purposes of this Section 10.4 shall include, but not be limited to, (A) the
Group's admission in writing of its inability to generally pay its debts when
due, application for or consent to the appointment of a receiver, trustee or
liquidator of all or substantially all of its assets, filing of a petition in
bankruptcy or making an assignment for the benefit of creditors, or upon other
action taken or suffered by the Group, voluntarily or involuntarily, under any
federal or state law for the benefit of debtors, except for the filing of a
petition in involuntary bankruptcy against the Group which is dismissed within
ninety (90) days thereafter or (B) the Group or any Physician Employee (1) fails
to adhere to any compliance plan, policy, or manual as described in Section 4.6
hereof that has been approved by the Group and made applicable to all
shareholders and employees of the Group, or (2) engages in any conduct or is
formally accused of conduct for which the Group's ability or license, or a
Physician Employee's license to practice medicine reasonably would be expected
to be subject to revocation or suspension, whether or not actually revoked or
suspended, or (3) is notified in writing of any adverse action by any state or
federal department or agency that has the effect of either excluding that
individual from participating in or from receiving reimbursement under any
program funded by the federal government or by any state government,
notwithstanding any available post-sanction remedies, or (4) is otherwise
disciplined by any licensing, regulatory or professional entity or institution,
the result of any of which event does or is reasonably expected to materially
adversely affect the Professional Operations or the Technical Operations, the
result of any of which event described in subparagraphs (1) through (4) above,
in the absence of termination of a Physician Employee or a Physician Extender
Employee or other action of the Group to monitor and cure such act or conduct by
such employee, does or reasonably would be expected to materially and adversely
affect the Professional Operations or the Technical Operations. Notwithstanding
anything to the contrary in this Agreement, following receipt by the Group of
the notice of a Material Group Default, and until such Material Group Default
shall be cured, the Administrator may take such action as may be reasonably
required to cover such Material Group Default so as to maintain for the
Administrator the same level of service at the Premises as before the Material
Group Default,
38
without prejudicing in any way Administrator other rights and remedies, and may
offset all of its costs of cover from amounts which may otherwise due to the
Group under this Agreement.
(b) An independent law firm with nationally recognized
expertise in health care law and acceptable to the parties hereto renders an
opinion to the parties hereto that (i) a material provision of this Agreement is
in violation of applicable law or any court or regulatory agency enters an order
finding a material provision of this Agreement is in violation of applicable law
and (ii) this Agreement can not be amended pursuant to Section 11.6 hereof to
cure such violation.
(c) At any time during the five-year period following the
Acquisition Effective Date if more than thirty-three and one-third percent
(33 1/3%) of the total number of Group Physician Members and Full-time Physician
Employees retained or employed by the Group at the time of the Acquisition
Effective Date are no longer employed or retained by the Group for reasons other
than (i) death, (ii) permanent disability, (iii) loss of a hospital contract or
privileges for reasons other than voluntary resignation by the Group or a
failure to renew or a failure to respond to a reasonable proposal to extend the
term of such contract or (iv) voluntary closing of facilities by Administrator.
For purposes of this Section 10.4(c), if Parent and/or Administrator are
notified in writing by the Group at or prior to the Acquisition Effective Date
of any Physician Employee or Physician Extender Employee that intends to retire
prior to expiration of such five-year period, then such Physician Employee or
Physician Extender Employee shall not be counted for purposes of determining the
above percentage.
Section 10.5 Effective Date of Termination. Any termination of this
Agreement shall be effective (the "Termination Date") as follows:
(a) Immediately upon receipt of a termination notice pursuant
to Section 10.3 or Section 10.4 (a "Termination Notice") and expiration of
applicable cure periods; or
(b) Upon the expiration of this Agreement pursuant to Sections
10.1 or 10.2.
Section 10.6 Purchase of Assets. Upon the termination of this
Agreement, subject to the provisions of subparagraphs (a) through (e) set forth
below, if Administrator is the defaulting party, the Group shall have the option
to require Administrator and/or Parent to sell to the Group, and if the Group is
the defaulting party, Administrator and/or Parent shall have the option to
require the Group to purchase from Administrator and/or Parent, the Purchase
Assets and assume the Practice Related Liabilities below:
(a) Purchase Assets. The Group shall purchase, free and clear
of all liens and encumbrances other than those arising from Practice Related
Liabilities (as defined below), from Administrator and/or Parent or their
Affiliates, as the case may be, pursuant to subparagraph (c) below, all assets,
tangible or intangible, real or personal, of Administrator, Parent or their
Affiliates that relate primarily to the Professional Operations or the Technical
Operations other than Administrator's, Parent's or their Affiliates' accounting
and financial records (the "Purchase Assets"), including, but not limited to,
without duplication, (i) all equipment, furniture, fixtures, furnishings,
inventory, supplies, improvements, additions and leasehold improvements utilized
by
39
the Professional Operations or the Technical Operations, (ii) any real estate
owned by Administrator, Parent or Affiliates that is occupied by or used
primarily for the benefit of the Professional Operations or the Technical
Operations, (iii) all unamortized intangible assets (including, without
limitation, goodwill) set forth on the financial statements of Administrator,
Parent or their Affiliates used solely in connection with the Professional
Operations or the Technical Operations, or otherwise resulting from the
Acquisition; provided, however, that no amortization with respect to the
goodwill associated with the Acquisition shall be set forth on such financial
statements, (iv) all Confidential and Proprietary Information that relates
solely to the Professional Operations or the Technical Operations, and (v) all
other assets that would be set forth on a balance sheet of Administrator, Parent
or their Affiliates prepared as of the date of the Purchase Closing relating
primarily to the Professional Operations or the Technical Operations.
(b) Practice Related Liabilities. The Group shall assume all
of Administrator's and its Affiliates' liabilities, debt, payables and other
obligations (including lease and other contractual obligations), or portions
thereof, which relate directly or are directly attributable to the Professional
Operations, Technical Operations or the Purchase Assets (the "Practice Related
Liabilities").
(c) Purchase Price. The Purchase Price shall be the lesser of
(i) Fair Market Value of the Purchase Assets subject to the assumption of the
Practice Related Liabilities or (ii) the value of the Actual Consideration
(defined below)(alternatively, the "Purchase Price"); provided, however, the
Purchase Price shall not be less than the net book value of the Purchase Assets
at the Termination Date. The Purchase Price shall be paid pursuant to Section
10.7. For purposes of this subparagraph (c), the term "Actual Consideration"
shall mean (i) cash consideration paid to the Group pursuant to the Acquisition
Agreement and (ii) an amount equal to the number of shares of Parent Common
Stock (as adjusted for stock splits, stock dividends, recapitalizations,
reorganizations, or any similar transaction whereby the Parent Common Stock is
increased or decreased or exchanged for a different number or kind of
securities) issued pursuant to the Acquisition Agreement multiplied by the fair
market value of Parent Common Stock immediately prior to the time that a
Termination Notice is provided pursuant to Section 10.7. The Purchase Price
shall be appropriately adjusted to offset and account for any monetary
obligations of the Group or Administrator owing to the other as provided herein.
(d) Exercise of Option.
(i) The Group. Upon a termination of this Agreement, the
Group shall be entitled to exercise its option to require Administrator, Parent
or their Affiliates to sell the Purchase Assets and shall assume the Practice
Related Liabilities pursuant to this Section 10.6 at any time (unless this
Agreement is terminated pursuant to Section 10.4(a) or 10.4(c)).
(ii) Administrator. Upon termination of this Agreement,
Administrator shall be entitled to exercise its option to require the Group to
purchase the Purchase Assets and assume the Practice Related Liabilities
pursuant to this Section 10.6 (i) during the five-year period following the
Acquisition Effective Date if this Agreement is terminated pursuant to Sections
10.3(c), 10.4(b) or 10.4(c) and (ii) at any time in the event of a termination
pursuant to Section 10.4(a).
40
(e) Notice. Each party shall exercise its option under this
Section 10.6 by giving written notice thereof in the Termination Notice, if
applicable, or prior to ninety (90) days before the Termination Date if this
Agreement expires pursuant to Sections 10.1 or 10.2.
Section 10.7 Terms of Purchase. The closing of the transactions
contemplated by Section 10.6 (the "Purchase Closing") shall occur (a) on the
Termination Date if this Agreement expires pursuant to the terms of Sections
10.1 and 10.2, or (b) on a date mutually acceptable to the parties hereto that
shall be within 180 days after receipt of a Termination Notice. The parties
shall enter into an asset purchase agreement containing representations,
warranties and conditions customary to a transaction of this size involving the
purchase and sale of similar businesses. Subject to the conditions set forth
below, at the Purchase Closing, Administrator and/or their Affiliates, as the
case may be, shall transfer and assign the Purchase Assets to the Group, and in
consideration therefor, the Group shall (a) pay to Administrator, Parent and/or
their Affiliates an amount in cash or, at the option of the Group (subject to
the conditions set forth below), Parent Common Stock (valued pursuant to Section
10.6(c) hereof), or some combination of cash and Parent Common Stock equal to
the Purchase Price and (b) assume the Practice Related Liabilities. The
structure of the transaction set forth in this Section 10.7 shall, if possible,
be structured as a tax-free transaction under applicable law. Each party shall
execute such documents or instruments as are reasonably necessary, in the
opinion of each party and its counsel, to effect the foregoing transaction. The
Group shall, and shall use its best efforts to cause each shareholder of the
Group to, execute such documents or instruments as may be necessary to cause the
Group to assume the Practice Related Liabilities and to release Administrator,
Parent and/or their Affiliates, as the case may be, from any liability or
obligation with respect thereto. In the event the Group desires to pay all or a
portion of the Purchase Price in shares of Parent Common Stock, such transaction
shall be subject to the satisfaction of each of the following conditions:
(a) The holders of such shares of Parent Common Stock shall
transfer to Administrator, Parent and/or their Affiliates good, valid and
marketable title to the shares of Parent Common Stock, free and clear of all
adverse claims, security interests, liens, claims, proxies, options,
stockholders' agreements and encumbrances (not including any applicable
securities restrictions and lock-up arrangements with the Parent or any
underwriter); and
(b) The holders of such shares of Parent Common Stock shall
make such representations and warranties as to title to the stock, absences of
security interests, liens, claims, proxies, options, stockholders' agreements
and other encumbrances and other matters as reasonably requested by
Administrator, Parent and/or their Affiliates.
In the event (i) the Fair Market Value of the Purchase Assets exceeds
net book value of the Purchase Assets, (ii) the Group has utilized commercially
reasonable efforts to obtain financing for such acquisition but is unable to
obtain such financing and (iii) there is either a Material Administrator Default
pursuant to Section 10.3(a) or (c) or a Material Group Default pursuant to
Section 10.4(b) triggering a sale of the Purchase Assets, the Group shall be
entitled to obtain financing from Administrator, Parent and/or their Affiliates
but only for the difference between the Fair Market Value of the Purchase Assets
and the net book value of the Purchase Assets. The terms of such financing shall
be for a five (5) year period at an interest rate equal to the prime rate (as
41
published in the Wall Street Journal) plus four percent (4%) or such lesser rate
as is required to be in conformance with all applicable state and federal law.
In the event the Group is entitled to obtain financing from Administrator,
Parent and/or their Affiliates the Group shall execute and deliver to
Administrator, Parent and/or their Affiliates all such documentation necessary
and appropriate to effectuate the financing transaction including, without
limitation, a secured promissory note, security agreement and financing
statements and such documentation shall contain such representations, warranties
and conditions customary to a secured transaction of this size.
Section 10.8 Exception to Purchase. Notwithstanding anything contained
herein to the contrary, Administrator, Parent and/or their Affiliates shall not
be obligated to sell the Purchase Assets to the Group as provided in Section
10.6(d)(i) above if the Group is not able to pay the Purchase Price pursuant to
the terms set forth above and assume the Practice Related Liabilities at the
Purchase Closing. In such event, the Group shall surrender the Purchase Assets
to Administrator, Parent and/or their Affiliates as of the Purchase Closing. If
the Group fails to so surrender the Purchase Assets, Administrator, Parent
and/or their Affiliates may, if permitted by applicable law, without prejudice
to any other remedy which it may have hereunder or otherwise, enter the Premises
and take possession of the Purchase Assets and expel or remove the Group and any
other person who may be occupying the Premises or any part thereof, by force if
necessary, without being liable for prosecution or any claim for damages
therefor.
Section 10.9 Effect Upon Termination. Upon the Termination Date, except
as provided below, this Agreement shall terminate and shall be of no further
force and effect and all further obligations of Administrator, Parent and/or
their Affiliates and the Group under this Agreement shall terminate without
further liability of the Administrator, Parent and/or their Affiliates to the
Group or the Group to the Administrator, Parent and/or their Affiliates
(including, without limitation, any liability for loss of anticipated profits
over the remaining term of this Agreement or from a sale of the Purchase Assets
pursuant to this Article X at less than Fair Market Value), except with respect
to the obligations set forth below. The foregoing to the contrary
notwithstanding:
(a) Administrator, Parent and/or their Affiliates shall use
their best efforts to cooperate with the Group for the appropriate transfer of
management services.
(b) Each party hereto shall provide the other party with
reasonable access to books and records owned by it to permit such requesting
party to satisfy reporting and contractual obligations which may be required of
it.
(c) Any other amounts due and owing but unpaid to either
Administrator, Parent and/or their Affiliates or the Group as of the Termination
Date shall be paid promptly by the appropriate party.
(d) Any and all covenants and obligations of either party
hereto which by their terms or by reasonable implication are to be performed, in
whole or in part, after the termination of this Agreement, shall survive such
termination, including, without limitation, the obligations of the parties
pursuant to the following Sections: 6.1(b), 6.1(c), 6.1(d), 6.1(e), 6.1(f), 6.2,
6.3, 9.5, Article VIII and the applicable provisions of Article X and XI.
42
ARTICLE XI
DISPUTE RESOLUTION
Section 11.1 Informal Dispute Resolution. In the event of any claim,
controversy, dispute or disagreement between or among the parties hereto which
is not subject to the dispute resolution methodology set forth in Article V
hereof, the parties hereto agree that such other claims, controversies, disputes
or disagreements shall be presented to the Joint Planning Board for hearing and
resolution. In the event the Joint Planning Board is unable to resolve such
matter within a reasonable period following presentation to the Joint Planning
Board, such matter shall be presented to either (a) the Board of Directors of
Parent or (b) a committee designated by the Board of Directors of Parent which
contains at least one (1) physician member. The Board of Directors of Parent or
such committee shall meet within thirty (30) days to attempt to resolve such
claim, controversy, dispute or disagreement.
Section 11.2 Arbitration. If a claim, controversy, dispute or
disagreement arising out of or relating to this Agreement, which is not subject
to the alternative dispute resolution methodology contained in Article V hereof,
cannot be resolved by the informal means set forth in Section 11.1, the parties
hereto agree that any such claim, controversy, dispute or disagreement between
or among any of the parties shall be governed exclusively by the terms and
provisions of this Article XI; provided, however, that within ten (10) days from
the date which any claim, controversy, dispute or disagreement cannot be
resolved by the informal means set forth in Section 11.1 and prior to commencing
an arbitration procedure pursuant to this Article XI, the parties shall meet to
discuss and consider other alternative dispute resolution procedures other than
arbitration, provided, however that if the parties hereto agree to an
alternative to arbitration they may agree to an alternative set of rules,
including rules of evidence and procedure. If at any time prior to the rendering
of the decision by the arbitrator (or pursuant to such other alternative dispute
resolution procedure) as contemplated in this Article XI to the extent a party
makes a written offer to the other party proposing a settlement of the matter(s)
at issue and such offer is rejected, then the party rejecting such offer shall
be obligated to pay the costs and expenses (excluding the amount of the award
granted under the decision) of the party that offered the settlement from the
date such offer was received by such other party if the decision is for a dollar
amount that is less than the amount of such offer to settle. Notwithstanding the
foregoing, the terms and provisions of this Article XI shall not preclude any
party hereto from seeking, or a court of competent jurisdiction from granting, a
temporary restraining order, temporary injunction or other equitable relief for
any breach of (i) any noncompetition or confidentiality covenant or (ii) any
duty, obligation, covenant, representation or warranty, the breach of which may
cause irreparable harm or damage.
Section 11.3 Arbitrators. In the event there is a claim, controversy,
dispute or disagreement among Administrator and the Group arising out of or
relating to this Agreement (including any claim based on or arising from an
alleged tort) and the parties hereto have not reached agreement regarding an
alternative to arbitration, the parties agree to select within 30 days of notice
by a party to the other of its desire to seek arbitration under this Article XI
one arbitrator mutually acceptable to Administrator and the Group to hear and
decide all such claims under this Article XI. If such matter or action involves
health-care issues, then the arbitrator shall have such
43
qualifications as would satisfy the requirements of the National Health Lawyers
Association Alternative Dispute Resolution Service. Each of the arbitrators
proposed shall be impartial and independent of all parties. If the parties
cannot agree on the selection of an arbitrator within said 30-day period, then
any party may in writing request the judge of the United States District Court
for the Southern District of New York (White Plains) senior in term of service
to appoint the arbitrator and, subject to this Article XI, such arbitrator shall
hear all arbitration matters arising under this Article XI.
Section 11.4 Applicable Rules.
(a) Each arbitration hearing shall be held at a place in
Rockland County, New York acceptable to the arbitrator. The arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association to the extent such rules do not conflict with the terms
hereof. The decision of the arbitrator shall be reduced to writing and shall be
binding on the parties and such decision shall contain a concise statement of
the reasons in support of such decision. Judgment upon the award(s) rendered by
the arbitrator may be entered and execution had in any court of competent
jurisdiction or application may be made to such court for a judicial acceptance
of the award and an order of enforcement. The charges and expenses of the
arbitrator shall be shared equally by the parties to the hearing.
(b) The arbitration shall commence within ten (10) days after
the arbitrator is selected in accordance with the provisions of this Article XI.
In fulfilling his duties with respect to determining the amount of any loss, the
arbitrator may consider such matters as, in the opinion of the arbitrator, are
necessary or helpful to make a proper valuation. The arbitrator may consult with
and engage disinterested third parties to advise the arbitrator. The arbitrator
shall not add any interest factor reflecting the time value of money to the
amount of any loss and shall not award any punitive damages.
(c) If the arbitrator selected hereunder should die, resign or
be unable to perform his or her duties hereunder, the parties, or such senior
judge (or such judge's successor) in the event the parties cannot agree, shall
select a replacement arbitrator. The procedure set forth in this Article XI for
selecting the arbitrator shall be followed from time to time as necessary.
(d) As to any determination of the amount of any loss, or as
to the resolution of any other claim, controversy, dispute or disagreement, that
under the terms hereof is made subject to arbitration, no lawsuit based on such
claimed loss or such resolution shall be instituted by Administrator, or the
Group, other than to compel arbitration proceedings or enforce the award of the
arbitrator, except as otherwise provided in Section 11.2.
(e) All privileges under New York and federal law, including
attorney-client and work-product privileges, shall be preserved and protected to
the same extent that such privileges would be protected in a federal court
proceeding applying New York law.
44
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Assignment.
(a) Administrator shall have the right to assign its rights
hereunder to Parent or any direct or indirect wholly-owned subsidiary of
Administrator or Parent (that remains a wholly-owned subsidiary of Administrator
or Parent) or to a financial institution as collateral security for the
indebtedness of Parent, Administrator or their Affiliates without the consent of
the Group. No assignment under subsection (a) shall relieve Administrator or
Parent of their obligations hereunder without the consent of the Group.
(b) Administrator, Parent and their Affiliates shall provide
notice to the Group of Administrator's intent (i) to assign this Agreement
(other than as permitted in Section 12.1(a) herein), (ii) sell all or
substantially all of the assets of Administrator or (iii) effectuate a
consolidation, merger or sale of a majority of the capital stock of
Administrator as soon as practicable following a decision by the Parent's and
Administrator's respective boards of directors to seek such assignment or sale.
The assignment of this Agreement (other than as permitted in Section 12.1(a)),
the sale of all or substantially all of the assets of Administrator by Parent or
a consolidation, merger or sale of a majority of the capital stock of
Administrator shall not be permitted unless Administrator shall give written
notice to the Group stating the party who made the offer and specifying the
purchase price offered (the "Notice"). The Group shall have the option to
repurchase the Purchase Assets on the same terms and conditions set forth in the
Notice. In the event the Group fails to provide written notice to Administrator
of its intent to exercise its option to repurchase the Purchase Assets pursuant
to this Section 12.1 within the earlier of (i) thirty (30) days or (ii) one-half
of the time during which Administrator, Parent or their Affiliates must respond
to an offer following the Group's receipt of the Notice, the option contained in
this Section 12.1 shall be deemed null and void and of no further force and
effect, and Administrator shall be free to assign the Agreement, sell all or
substantially all of the assets of Administrator or sell or transfer all of the
capital stock Administrator without the consent of the Group. No assignment
under this subsection (b) shall relieve Administrator or Parent of their
obligations hereunder without the consent of the Group.
Section 12.2 Amendments. This Agreement shall not be modified or
amended except by a written document executed by all parties to this Agreement,
and such written modification(s) or amendment(s) shall be attached hereto.
Section 12.3 Waiver of Provisions. Any waiver of any terms and
conditions hereof must be in writing, and signed by the parties hereto. The
waiver of any of the terms and conditions of this Agreement shall not be
construed as a waiver of any other terms and conditions hereof.
Section 12.4 Additional Documents. Each of the parties hereto agrees to
execute any document or documents that may be reasonably requested from time to
time by the other party to implement or complete such party's obligations
pursuant to this Agreement.
45
Section 12.5 Attorneys' Fees. If legal action is commenced by either
party to enforce or defend its rights under this Agreement, the prevailing party
in such action shall be entitled to recover all reasonable attorneys' fees,
costs and expenses including, but not limited to, attorney's fees, costs and
expenses for trial, appellate proceedings and negotiations, in addition to any
other relief granted.
Section 12.6 Contract Modifications for Prospective Legal Events. In
the event any state or federal laws or regulations, now existing or enacted or
promulgated after the date hereof, are interpreted by judicial decision, a
regulatory agency or independent legal counsel in such a manner as to indicate
that this Agreement or any provision hereof may be in violation of such laws or
regulations, the Group and Administrator shall amend this Agreement as necessary
to preserve the underlying economic and financial arrangements between the Group
and Administrator and without substantial economic detriment to either party. If
this Agreement cannot be so amended, the terms of Section 10.3(c) and 10.4(b)
shall apply. To the extent any act or service required of Administrator in this
Agreement should be construed or deemed, by any governmental authority, agency
or court to constitute the practice of medicine, the performance of said act or
service by Administrator shall be deemed waived and forever unenforceable and
the provisions of this Section 12.6 shall be applicable. Neither party shall
claim or assert illegality as a defense to the enforcement of this Agreement or
any provision hereof; instead, any such purported illegality shall be resolved
pursuant to the terms of this Section 12.6 and Section 12.9.
Section 12.7 Parties In Interest; No Third Party Beneficiaries. Except
as otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and permitted assigns of the parties hereto. Except
as provided in Section 6.1(f), neither this Agreement nor any other agreement
contemplated hereby shall be deemed to confer upon any person not a party hereto
or thereto any rights or remedies hereunder or thereunder.
Section 12.8 Entire Agreement. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding the
subject matter hereof, and supersede all prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
Section 12.9 Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
Section 12.10 Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be governed by and construed and
enforced in accordance with the substantive laws (but not the rule governing
conflicts of laws) of the State of New York.
46
Section 12.11 No Waiver; Remedies Cumulative. No party hereto shall by
any act (except by written instrument pursuant to Section 12.3 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default in or breach of any of the terms
and conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any party hereto, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. No remedy set forth in this
Agreement or otherwise conferred upon or reserved to any party shall be
considered exclusive of any other remedy available to any party, but the same
shall be distinct, separate and cumulative and may be exercised from time to
time as often as occasion may arise or as may be deemed expedient.
Section 12.12 Communications. The Group and Administrator, Parent and
their Affiliates agree that good communication between the parties is essential
to the successful performance of this Agreement, and each pledges to communicate
fully and clearly with the other on matters relating to the successful operation
of the Professional Operations and the Technical Operations.
Section 12.13 Captions. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms or provisions hereof.
Section 12.14 Gender and Number. When the context requires, the gender
of all words used herein shall include the masculine, feminine and neuter and
the number of all words shall include the singular and plural.
Section 12.15 Reference to Agreement. Use of the words "herein",
"hereof', "hereto" and the like in this Agreement shall be construed as
references to this Agreement as a whole and not to any particular Article,
Section or provision of this Agreement, unless otherwise noted.
Section 12.16 Notice. Whenever this Agreement requires or permits any
notice, request, or demand from one party to another, the notice, request, or
demand must be in writing to be effective and shall be deemed to be delivered
and received (i) if personally delivered or if delivered by telex, telegram,
facsimile or courier service, when actually received by the party to whom notice
is sent or (ii) if delivered by mail (whether actually received or not), at the
close of business on the third business day next following the day when placed
in the mail, postage prepaid, certified or registered, addressed to the
appropriate party or parties, at the address of such party set forth below (or
at such other address as such party may designate by written notice to all other
parties in accordance herewith):
47
If to Administrator or Parent: Radiologix, Inc.
3600 X.X. Xxxxxx Xxxxx Tower
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx
with a copy to: Radiologix, Inc.
3600 X.X. Xxxxxx Chase Tower
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
If to Group: Xxxxxx Valley Radiology Associates, P.L.L.C.
00 Xxxxxxxx Xxxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx, M.D.
with a copy to: Drake, Sommers, Loeb, Xxxxxxx & Xxxxxxx, PLLC
Xxx Xxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Section 12.17 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
Section 12.18 Defined Terms. Terms used in the Exhibits attached hereto
with their initial letter capitalized and not otherwise defined therein shall
have the meanings assigned to such terms in this Agreement.
Section 12.19 Parent Obligations. All of the duties and obligations of
Administrator to the Group under this Agreement shall be deemed to be the joint
and several obligations of Administrator and Parent.
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IN WITNESS WHEREOF, the parties hereto have executed this Service
Agreement as of the date first written above.
GROUP:
XXXXXX VALLEY RADIOLOGY ASSOCIATES, P.L.L.C.
By:
-------------------------------------------
Title:
----------------------------------------
ADMINISTRATOR:
MID-ROCKLAND IMAGING PARTNERS, INC.
By:
-------------------------------------------
Title:
----------------------------------------
PARENT:
RADIOLOGIX, INC.
By:
-------------------------------------------
Title:
----------------------------------------
49
