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EXHIBIT 10.8
FULL SERVICE FACILITY
AND
MANAGEMENT AGREEMENT
HOUSTON PHYSICAL MEDICINE ASSOCIATES, M.D., P.A.
JULY 1, 1996
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FULL SERVICE FACILITY AND MANAGEMENT AGREEMENT
THIS FULL SERVICE FACILITY AND MANAGEMENT AGREEMENT, entered into
effective as of July 1, 1996, is by and between HOUSTON PHYSICAL MEDICINE
ASSOCIATES, M.D., P.A., d/b/a TEXAS MEDICAL REHABILITATION & PAIN CENTER, P.A.,
a Texas professional association ("DOCTOR")and DOCTORS PRACTICE MANAGEMENT,
INC., a Texas corporation ("COMPANY").
WITNESSETH:
WHEREAS, DOCTOR is a duly incorporated and validly existing Texas
professional association that is engaged in the business of providing
professional services, specifically including physician services, in Texas
("Professional Services"); and
WHEREAS, COMPANY is a duly incorporated and validly existing Texas
corporation, qualified to do business in Texas, that is experienced in providing
management and related items and services including, without limitation,
capital, personnel, facilities and equipment to licensed health care personnel,
professional associations, and other professional health care entities and
individuals; and
WHEREAS, DOCTOR's physician employees practice medicine in Texas and
desire and intend to continue to operate a professional health care practice to
provide Professional Services and related health care services in facilities
designed and equipped for such services,
WHEREAS, DOCTOR further desires and intends to provide Professional
Services and related health care services at various locations in the Houston,
Texas Standard Metropolitan Statistical Area, as defined by the U.S. Department
of Commerce, Bureau of the Census, including, without limitation, the provision
of such services at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (Used Premises");
WHEREAS, DOCTOR prefers to devote substantially all of its time to the
practice of medicine and the delivery of medical services to its patients and,
therefore, desires and intends to obtain such management, administrative, and
business services as are reasonably necessary and appropriate for DOCTOR to
efficiently provide Professional Services at the Leased Premises and other
locations and Company desires to provide and is fully capable of providing all
such management, administrative and business services; and
WHEREAS, COMPANY desires to and is capable of making Leased Premises
available to DOCTOR and COMPANY desires to and is capable of providing the
management, administrative, and business services necessary and appropriate for
DOCTOR'S provision of Professional Services at the Leased Premises and other
locations; and
WHEREAS, DOCTOR and COMPANY mutually desire an arrangement that:
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(a) facilitates consistency of service, both in the medical care provided
by DOCTOR and in the administrative and business services provided by COMPANY;
(b) facilitates effective utilization of DOCTOR'S resources;
(c) facilitates appropriate staffing and scheduling of personnel for and by
DOCTOR, as the case may be;
(d) facilitates the management and administration of the day-to-day
business operations of DOCTOR;
(e) ensures that each party will receive the total revenue attributable to
such party's services, capital investment, and business risks, and no portion of
the revenue attributable to the services, capital investment, and business risks
of the other party; and
(f) ensures that (1) DOCTOR and licensed health care personnel employed by
DOCTOR shall (a) owe their first duty to their patients; and (b) preserve the
confidential nature of the doctor-patient relationship; (2) DOCTOR controls
patient care in the medical and administrative procedures to be followed; and
(3) that COMPANY does not commit any act constituting the practice of medicine
or use any licensed health care practitioner's license to practice medicine all
for the benefit of those seeking services as patients.
NOW, THEREFORE, for and in consideration of the agreements contained
herein and other good and valuable consideration, the receipt and adequacy all
of which are forever acknowledged and confessed, the parties hereto agree as
follows:
Article I DEFINITIONS.
For the purposes of this Agreement, the following terms shall have the
following meanings ascribed thereto, unless otherwise clearly required by the
context in which such term is used.
1.1 Agreement. The term "Agreement" shall mean this FULL SERVICE
FACILITY AND MANAGEMENT AGREEMENT between DOCTOR and COMPANY and any amendments
hereto, as may from time to time be adopted, as hereinafter provided.
1.2 Professional Services. The term "Professional Services" shall
mean the professional services, specifically including physician services, and
related health care services provided by DOCTOR.
1.3 DOCTOR. The term "DOCTOR" shall mean Houston Physical Medicine
Associates, M.D., P.A., d/b/a Texas Medical Rehabilitation & Pain Center, P.A.,
a Texas professional association.
1.4 DOCTOR'S Account. The term "DOCTOR'S Account" shall mean the
bank account of COMPANY established as described in Section 3.12 hereof.
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1.5 Facility. The term "Facility" shall mean the medical offices
owned or leased by COMPANY where Professional Services are provided by DOCTOR.
1.6 COMPANY. The term "COMPANY" shall mean Doctors Practice
Management, Inc. and Management Service Organization, Inc. Texas corporations.
1.7 Management Fee. The term "Management Fee" shall mean COMPANY's
compensation as described in Article V hereof.
1.8 State. The term "State" shall mean the State of Texas.
1.9 Term. The term "Term" shall mean the initial and any renewal
periods of duration of this Agreement as described in Section 6.1 hereof.
1.10 Location. The term "Location" shall mean the Facility(s) in
the Houston, Texas, Standard Metropolitan Statistical area and such Facility(s)
as may exist in the future.
ARTICLE II APPOINTMENT AND AUTHORITY.
2.1 Appointment. DOCTOR hereby appoints COMPANY as its sole and
exclusive agent for the management and administration of the business functions
and services related to DOCTOR'S provision of Professional Services, and COMPANY
hereby accepts such appointment, subject at all times to the provisions of this
Agreement.
2.2 Authority of COMPANY. Consistent with the provisions of this
Agreement, COMPANY shall have the responsibility and commensurate authority to
provide full service management services for DOCTOR, including, without
limitation, equipment, supplies, support services, personnel (but specifically
excluding licensed medical personnel), marketing, billing and collection
services, management, administration, financial record keeping and reporting,
and other business office services as provided herein. COMPANY, subject to the
ultimate control and direction of DOCTOR, is hereby expressly authorized to
provide all such services in any reasonable manner COMPANY deems appropriate to
meet the day-to-day requirements of the business functions of DOCTOR. To the
extent practicable, COMPANY, at its discretion, shall perform some or all of the
services specified hereunder for DOCTOR.
2.3 Authority of DOCTOR. DOCTOR, through licensed health care
personnel, shall be solely responsible for and have sole and complete authority,
supervision and control over the provision of Professional Services and other
related health care services performed for patients of DOCTOR, and all
diagnoses, treatments, procedures, and other professional health care services
shall be provided and performed exclusively by or under the supervision of
licensed health care personnel retained by DOCTOR, as DOCTOR, in its sole
discretion, deems appropriate and in accordance with all laws. DOCTOR will have
the ultimate authority in the hiring and termination of all clinic staff, both
licensed and unlicensed. DOCTOR also has the right to request COMPANY to replace
any COMPANY personnel assigned to the clinic. This Agreement shall in no way be
construed to mean or suggest that COMPANY is engaged in the practice of
medicine.
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2.4 Management Committee The management committee will be
comprised of representative's of DOCTOR, DPM and MSO. The decisions of the
management committee shall be based on a 2/3 majority. The scope of the
committee will be (a) Budgets( Income, Expense, Capital (b) Contract
Negotiations with 3rd parties which may have a material effect on operations.
(c) Capital expenditures in excess of five thousand dollars ($ 5,000.00) (d)
Lines of Credit (c) Expansion funding. COMPANY must approve all fiscal matters
related to expense budget overrun's and capital expenditure.
ARTICLE III COVENANTS OF COMPANY.
3.1 Leased Premises and Equipment. COMPANY shall, at COMPANY's
expense, provide to DOCTOR the Locations and all equipment that is deemed by the
parties hereto to be reasonably necessary and appropriate for the provision of
Professional Services at the Locations.
3.1.1 Retention of Title. DOCTOR shall have access to and use of the
Locations and all equipment located therein throughout the Term, provided,
however, that title to the Locations and all equipment other than items placed
in the Locations by DOCTOR shall, at all times, be and remain in COMPANY, or if
applicable, the entity from which COMPANY leases the Locations and/or equipment.
3.1.2 Repair and Maintenance. COMPANY shall be responsible for the
repair and maintenance of the Locations, and for the repair, maintenance, and
replacement of all equipment located at the Locations, as well as other
obligations under the Lease Agreement regarding the Locations comparable to the
effective date hereof.
3.1.3 Additional Equipment. Should DOCTOR, from time to time during
the Term request COMPANY to provide additional patient care equipment, office,
or other equipment for use at the Locations or to replace used or obsolete
equipment, COMPANY and DOCTOR shall consult with each other on the matter.
Should COMPANY be unwilling or unable to provide such requested equipment,
DOCTOR may acquire and maintain such equipment and title to same shall be and
remain in DOCTOR; provided, however, that COMPANY agrees to provide and maintain
all equipment which is usual and customary in a facility similar to the
Locations, throughout the Term hereof.
3.1.4 Disclaimer of Warranty. COMPANY MAKES NO WARRANTY, EITHER
EXPRESSED OR IMPLIED, WITH RESPECT TO THE LOCATIONS, PREMISES OR ANY EQUIPMENT
PROVIDED BY COMPANY PURSUANT TO THIS AGREEMENT, AND ALL WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY EXPRESSLY
DISCLAIMED.
3.2 Utilities and Related Services. COMPANY shall, at COMPANY's
expense arrange for and shall timely pay when due all charges relating to the
provision of necessary electricity, gas, water, telephone, sewage, cleaning and
decorating (interior and exterior), pest extermination, heating
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and air-conditioning maintenance, and similar services reasonably necessary and
appropriate for the provision of Professional Services at the Locations.
3.3 Supplies. COMPANY shall obtain and provide, in its name and
for its own account, all reasonable patient care, office, and other supplies,
and shall ensure that the Leased Premises are at all times adequately stocked
with such supplies as are reasonably necessary and appropriate for the provision
of Professional Services at the Leased Premises. Patient care supplies shall be
provided in accordance with the specifications of DOCTOR with respect to brand
names, dosages, quantities and other specifications.
3.4 Waste Disposal. COMPANY shall, at COMPANY's expense, arrange
for the proper disposal of all medical and non-medical wastes generated by
DOCTOR. Such waste disposal shall include disposal of any bio-hazardous waste
and any other medical waste that requires special disposal, provided that all
Physicians and non-physician personnel employed by DOCTOR comply with all
guidelines established by COMPANY for waste disposal. DOCTOR shall at all times
comply with guidelines set forth by COMPANY for all waste disposal, including
the disposal of sharps, bio-hazardous waste and any other waste products. DOCTOR
shall also comply with any guidelines set forth by COMPANY with respect to the
operation and maintenance of any equipment or other item that has environmental
law implications.
3.5 Support Services. COMPANY, at COMPANY's expense, shall arrange
for the provision of all laundry, linen, printing, stationery, forms, postage,
duplication or photocopying services, patient record transcribing services, and
other similar support services as are reasonably necessary and appropriate for
the provision of Professional Services.
3.6 Licenses and Permits. COMPANY shall, at COMPANY's expense and
on behalf of and in the name of DOCTOR, coordinate all development and planning
processes, and apply for and use COMPANY's best efforts to obtain and maintain
all federal, State and local licenses and regulatory permits required for or in
connection with the operation of the Facility and the equipment (existing and
future) located therein, other than those relating to the practice of medicine.
3.7 PERSONNEL.
3.7.1 Provision of Company Personnel. COMPANY shall employ or
otherwise retain, at COMPANY's expense, and shall be responsible for selecting,
training, supervising, and terminating all management, administrative, clerical,
secretarial, bookkeeping, accounting, payroll, billing and collection, and other
non-professional personnel as COMPANY deems reasonably necessary and appropriate
for COMPANY's performance of its duties and obligations under this Agreement.
COMPANY shall have the sole responsibility for determining the salaries and
fringe benefits of personnel retained by COMPANY, for paying such salaries and
providing such fringe benefits, or for withholding, as required by law, any sums
of income tax, unemployment insurance, social security, or any other withholding
pursuant to any applicable law or governmental requirement.
3.7.2 Non-Exclusivity. In recognition of the fact that the personnel
retained by COMPANY to provide services pursuant to this Agreement may from time
to time perform services for others,
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this Agreement shall not prevent COMPANY from performing such services for
others or restrict COMPANY from using its personnel to provide services to
others, provided such activity does not cause any material detriment to DOCTOR.
In recognition of the professional obligations of DOCTOR, DOCTOR shall have the
right and obligation to retain, at DOCTOR's expense, any additional
professional or other personnel as DOCTOR deems necessary or appropriate for the
provision of health care services.
3.7.3 Equal Employment Opportunity. COMPANY shall abide and provide
assistance to DOCTOR, and abide by any and all applicable federal and/or State
equal employment opportunity statutes, rules, and regulations, including,
without limitation, Title VII of the Civil Rights Act of 1964, the Equal
Employment Opportunity Act of 1972, the Age Discrimination in Employment Act of
1967, the Equal Pay Act of 1963, the National Labor Relations Act, the Fair
Labor Standards Act, the Rehabilitation Act of 1973, and the Occupational Safety
and Health Act of 1970, all as may from time to time be modified or amended.
3.7.4 Labor Reports. COMPANY shall appropriately prepare, maintain,
and file all requisite reports and statements regarding income tax withholdings,
unemployment insurance, social security, workers' compensation, equal employment
opportunity, or other reports and statements required with respect to personnel
provided by COMPANY or DOCTOR pursuant to this Agreement.
3.8 Consultants. COMPANY shall render such business and financial
management, consultation, and advice as may from time-to-time be requested by
DOCTOR in connection with the business operations of DOCTOR and DOCTOR's
provision of Professional Services. In addition, COMPANY shall make available to
DOCTOR, for consultation and advice, to the extent available and as reasonably
necessary, COMPANY's specialists in such areas as accounting, auditing,
budgeting, medical practice management, finance, law, government programs,
housekeeping, insurance, management development, patient records, nursing,
recruitment, quality assurance, systems and procedures, and third party
reimbursement.
3.9 Contract Negotiations. Upon the request of DOCTOR, COMPANY
shall advise with respect to and negotiate on DOCTOR's behalf, all contractual
arrangements with third parties as are reasonably necessary and appropriate for
DOCTOR's provision of Professional Services, including, without limitation,
negotiated price agreements with third party payors, managed care providers, or
the purchasers of group health care services.
3.10 Marketing. In accordance with applicable law and ethical
standards and restrictions, COMPANY shall establish and implement a marketing
and public relations program promoting DOCTOR'S provision of Professional
Services to the general public and to other health care professionals and
suppliers. In connection with such marketing program and in accordance with
applicable law and ethical standards and restrictions, COMPANY shall establish
signs on or about the Facility identifying the operations of the Facility and
the provision of Professional Services therein. COMPANY shall implement all
marketing programs at the direction of DOCTOR.
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3.11 License to Use Trade names and Trademarks of COMPANY. COMPANY,
at some time in the future may grant to DOCTOR, but only subject to the terms
and conditions of this Agreement, a license to use certain names in connection
with the provision of Professional Services in combination with such color
schemes, patterns, appearances, characteristics and words as are specifically
approved by COMPANY. DOCTOR'S use of any trademarks, trade names, service marks,
insignia, slogans, emblems, symbols, designs or other identifying
characteristics owned by or associated with COMPANY or any of its subsidiaries
or affiliates (collectively, "COMPANY MARKS") shall be subject to the prior
written approval of COMPANY. DOCTOR acknowledges that such names and COMPANY
Marks have acquired a secondary meaning in connection with COMPANY's operations.
DOCTOR may also apply to COMPANY for permission to use any other COMPANY Marks
which permission may or may not be granted in the absolute discretion of
COMPANY. The use of any COMPANY Marks in any signs, advertising or any
promotional material shall be subject to the prior approval of COMPANY.
The restrictions imposed hereunder shall extend to all other COMPANY
Marks licensed to DOCTOR by COMPANY. Except as specifically authorized by this
Agreement, DOCTOR will not use COMPANY Marks nor use, imitate or infringe upon
any of the foregoing in whole or in part. On the termination of this Agreement
for whatever cause, including COMPANY's breach, DOCTOR shall forthwith, at its
expense, make whatever changes may be necessary in any signs, advertising and
promotional material in order to comply with the provisions of this Section and
cease using the name and any COMPANY Marks. DOCTOR's covenants under this
Section are unconditional and in no way dependent upon the performance of
COMPANY of any of its agreements hereunder.
DOCTOR will always acknowledge and recognize both before and after the
expiration of this Agreement the exclusive right of COMPANY to use or to grant
to others the right or license to use, whether separately or as a part of or in
connection with other words, any COMPANY ▇▇▇▇. If DOCTOR utilizes any COMPANY
▇▇▇▇, DOCTOR shall take all actions which are necessary to maintain COMPANY's
good will and reputation or cease utilizing, at COMPANY's demand, the name and
any and all COMPANY Marks.
3.12 Billing and Collection. On behalf of DOCTOR and for the
purpose depositing all receipts arising from DOCTOR's patient activities,
COMPANY shall maintain the DOCTOR'S current lockbox account at Southwest Bank of
Texas. Such account will require two (2) signatures, one (1) COMPANY and one (1)
DOCTOR for all disbursements in excess of two thousand dollars ($ 2,000) . Such
DOCTOR'S account will be under the COMPANY FEIN . COMPANY shall establish and
maintain credit and billing and collection policies and procedures, and shall
use COMPANY's best efforts to timely ▇▇▇▇ and collect all professional and other
fees for all billable Professional Services provided by DOCTOR; it being
understood, however that DOCTOR, in his sole discretion, shall establish the
fees for all billable Professional Services provided by DOCTOR. DOCTOR shall
timely advise COMPANY of any changes in DOCTOR'S fee schedule to permit COMPANY
to implement such changes. In connection with this Section 3.12 and throughout
the Term, DOCTOR hereby grants a special power of attorney to and appoints
COMPANY as DOCTOR's true and lawful agent and attorney-in-fact, and COMPANY
hereby accepts such special power of attorney and appointment, for the following
purposes:
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3.12.1 To ▇▇▇▇ DOCTOR'S patients, in DOCTOR'S name and on DOCTOR'S
behalf, for billable Professional Services provided by DOCTOR.
3.12.2 To ▇▇▇▇, in DOCTOR'S name and on DOCTOR'S behalf, all claims
for reimbursement or indemnification from Blue Shield/Blue Cross, Medicare,
Medicaid and all other third party payors for covered billable Professional
Services provided by DOCTOR.
3.12.3 To collect and receive, in DOCTOR'S name and on DOCTOR'S
behalf, all accounts receivable generated by such ▇▇▇▇▇▇▇▇ and claims for
reimbursement or indemnification, and to deposit all amounts collected in the
DOCTOR'S Account, which account shall be and remain in COMPANY'S name. In
connection herewith, DOCTOR covenants to transfer and deliver to COMPANY all
funds received by DOCTOR from patients or third party payors for Professional
Services. Upon receipt by COMPANY of any funds from patients or third party
payors or from DOCTOR pursuant hereto for Professional Services, COMPANY shall
deposit same into the DOCTOR'S Account.
3.12.4 To take custody of, endorse in the name of DOCTOR, and deposit
into the DOCTOR'S Account any notes, checks, money orders, insurance payments,
and any other instruments received in payment of the accounts receivable for
Professional Services.
Upon request of COMPANY, DOCTOR shall execute and deliver to COMPANY or
the financial institution wherein the DOCTOR'S Account is maintained, such
additional documents or instruments as may be reasonably necessary to evidence
or effect the special power of attorney granted to COMPANY by DOCTOR and the
conditions pursuant to this Section 3. 11 or pursuant to Section 3.12 hereof.
3.13 DOCTOR'S Account. COMPANY shall operate the DOCTOR'S Account
for the purpose's stated herein. In connection herewith and throughout the Term,
DOCTOR hereby appoints COMPANY as DOCTOR'S true and lawful agent and
attorney-in-fact, and grants COMPANY a special power of attorney and COMPANY
hereby accepts such special power of attorney and appointment, to deposit in the
DOCTOR'S Account all funds, fees, and revenues generated from the provision of
Professional Services and collected by COMPANY, and to make withdrawals and sign
checks for disbursements , in amounts of less than of Two Thousand Dollars
($2,000.00) with one (1) signature from the DOCTOR'S Account solely for the
purpose of withdrawing the Collected Revenues to be applied to the Management
Fee and DOCTOR's Expenses. DOCTOR shall execute any and all additional documents
required by the bank where the DOCTOR'S Account is held to effectuate the power
of attorney and conditions of the account granted herein. Notwithstanding the
limited power of attorney granted to COMPANY hereunder. COMPANY shall furnish to
DOCTOR, on a monthly basis, its normal Cash Receipts and Disbursements Report.
3.13.1 Cash Flow and Funding COMPANY will provide to DOCTOR a line of
Credit in the amount of One Hundred Thousand dollars ($100,000) at floating
prime interest rate plus 1 % to be made available upon execution of this
agreement and the execution of a signed note by the DOCTOR. Loan will be all due
and payable within the term of the FULL SERVICE FACILITY AND
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MANAGEMENT AGREEMENT or upon its termination. All interest payments to be made
monthly during such term. COMPANY will take a security interest in the Accounts
Receivable of DOCTOR as evidenced by a signed Security Interest by DOCTOR and
the filing of a signed UCC form.
COMPANY will provide the necessary cash flow of the DOCTOR to allow for
payment of all DOCTOR monthly expenses in addition to the monthly sum of Thirty
Thousand Dollars to DOCTOR as per section 3.14.1. All monies provided by
COMPANY for purposes of this Cash Flow guarantee are separate and apart from the
Line of Credit contained herein.
3.13.2 COLLECTION GUARANTEE. COMPANY GUARANTEES THAT IT WILL COLLECT
80% OF ALL ▇▇▇▇▇▇▇▇, INCLUDING ADJUSTMENTS AND EXCLUDING ANY WORKERS
COMPENSATION NON COMPENSABLE OR PERSONAL LIABILITY ACCOUNTS, WITHIN NINETY (90)
DAYS FROM INSURANCE CLAIM SUBMISSION DATE. COMPANY WILL FUND ANY EXCEPTION
OCCASIONED BY THEIR FAILURE TO PERFORM TO THIS GUARANTEE.
3.13.3 Stock Option DOCTOR will be granted an option to purchase
150,000 restricted shares of the COMPANY at a price of .70 cents at the time of
the execution of this agreement. Additionally DOCTOR will be given an option to
purchase 150,000 restricted shares of the company at a price equal to seventy
percent (70%), of the then market price), per one million dollars of annual
collected revenue upon each anniversary of this agreement.
In the event of any planned initial public offering of the COMPANY ,
DOCTOR will be given an accelerated annual option based on the then annualized
collection rate of the DOCTOR in advance of the anniversary date. COMPANY has
provided this option in recognition of the amendment to the termination
conditions in section 6.2 of this agreement.
3.13.4 First Right of Refusal-EXCLUSIVITY COMPANY WILL EXTEND TO
DOCTOR THE FIRST RIGHT OF REFUSAL FOR ALL PHYSICAL MEDICINE AND CHRONIC PAIN
EXPANSION OPPORTUNITIES THAT MAY ARISE DURING THE TERM OF THIS AGREEMENT AS IT
IS THE INTENTION OF COMPANY TO HAVE DOCTOR TO ACT AS THE EXCLUSIVE GATEKEEPER
FOR CHRONIC PAIN, PHYSICAL THERAPY AND HYDRO THERAPY RELATED PRACTICE
ACTIVITIES.
3.14 FISCAL MATTERS.
3.14.1 Annual Budget. Annually and at least thirty (30) days prior to
the commencement of each fiscal year of DOCTOR, and upon the execution of this
agreement COMPANY shall prepare and deliver to DOCTOR an operational budget for
such fiscal year ("Annual Budget"), setting forth an estimate of the operating
revenues and expenses associated with the provision of Professional Services at
the Leased Premises (including, without limitation, all costs associated with
the Leased Premises, equipment, supplies, services, and personnel provided by
COMPANY to DOCTOR pursuant to this Agreement, and all compensation costs
associated with DOCTOR and DOCTOR's personnel). Such budget shall separately
address two components: The DOCTOR's Expenses and the COMPANY's Expenses, which
are both defined as direct expenses in support of DOCTOR that are in line with
historical expenses of DOCTOR and which are reasonable and customary for DOCTOR.
Any non-budgeted expenses shall be reviewed and approved by both parties. Any
such non-budgeted expense undertaken by COMPANY or DOCTOR without mutual
agreement (except for emergency circumstances) shall be absorbed by that party
COMPANY shall use its best efforts to perform its
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duties and obligations under this Agreement such that the actual revenues,
costs, and expenses associated with the provision of Professional Services at
the Leased Premises during any applicable period of DOCTOR'S fiscal year shall
be consistent with the Annual Budget. COMPANY shall prepare and submit to DOCTOR
for its agreement, and shall thereafter adopt, an Annual Budget for the current
fiscal year as soon as practicable.
It is agreed that the operating expenses of DOCTOR for the first annual
period will represent Fifty Five percent (55%) of collected revenue excluding
DOCTOR'S monthly income guarantee of Thirty Thousand Dollars ($30,000). The
initial budget is made apart of this agreement attachment A
3.14.2 Accounting and Financial Records. COMPANY shall establish and
administer accounting procedures, controls, and systems for the development,
preparation, and safekeeping of records and books of account relating to the
provision of Professional Services at the Leased Premises, all of which shall be
prepared and maintained in accordance with generally accepted accounting
principles consistently applied on a cash basis. COMPANY shall prepare and
deliver to DOCTOR, within ninety (90) days of the end of each fiscal year of
DOCTOR, a balance sheet, a profit and loss statement, and a statement of changes
in cash flow reflecting the financial status of the provision of Professional
Services as of the end of such prior fiscal year, all of which shall be prepared
in accordance with generally accepted accounting principles. COMPANY shall also
prepare and deliver to DOCTOR unaudited-audited, monthly financial statements
for management purposes only. Additionally, COMPANY shall prepare and deliver to
DOCTOR such other financial statements or records as COMPANY may from time to
time deem appropriate or DOCTOR may reasonably from time-to-time request.
3.14.3 Access. DOCTOR shall have the right at all reasonable times
during normal business hours to audit, examine, and make copies of books of
account maintained by COMPANY pursuant to this Agreement. COMPANY shall maintain
such records for DOCTOR's access upon request for a period of four (4) years
following the Term hereof.
3.15 REPORTS AND RECORDS.
3.15.1 Patient Records. COMPANY shall establish, monitor, and
maintain procedures and policies for the timely filing and maintenance of all
patient records generated by DOCTOR in connection with DOCTOR'S provision of
Professional Services. All patient records shall be treated in accordance with
all applicable State and federal laws relating to the confidentiality of patient
records. All patient records shall be the property of, maintained by, and in the
custody of DOCTOR, but DOCTOR expressly agrees that COMPANY shall have access to
such patient records, at all reasonable times during normal business hours, to
the extent necessary for COMPANY to fulfill its obligations under this Agreement
and that COMPANY, to the extent lawfully permitted, shall have access to such
patient records, for the purpose of making necessary copies, in the event this
Agreement is terminated. COMPANY shall maintain the confidentiality of all
patient records in accordance with all applicable laws and shall establish
written policies and procedures for such which are to be approved by DOCTOR for
the protection of confidential information.
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3.15.2 Other Reports and Records. COMPANY shall timely create,
prepare, and file such additional reports and records as are reasonably
necessary and appropriate hereunder, and shall analyze and interpret such
reports and records upon DOCTOR's request.
3.16 Legal Actions. As requested by DOCTOR, COMPANY shall advise
and assist DOCTOR in instituting or defending, in the name of DOCTOR, all legal
actions or proceedings by or against third parties arising out of DOCTOR'S
provision of Patient Care Service, including, without limitation, those actions
to collect fees for billable Professional Services or other billable services
provided to patients by DOCTOR, and those actions necessary for the protection
and continued operation of DOCTOR.
3.17 Indemnification by COMPANY. DOCTOR, its officers, its
employees, and its agents will incur no liability in connection with the conduct
of COMPANY prior to the effective date of this Agreement. Accordingly, COMPANY
shall and hereby does indemnify, hold harmless, and agrees to defend DOCTOR and
its officers, employees, and agents from and against any claims, obligations,
demands, causes of action, losses, liabilities, damages, costs and expenses,
including reasonable attorney's fees (collectively "Claims") arising out of or
connected with the conduct of COMPANY prior to the effective date of this
Agreement.
DOCTOR shall not, by entering into this Agreement and performing
hereunder, assume or become liable for any of the existing or future Claims made
against COMPANY. COMPANY shall and hereby does indemnify, hold harmless, and
agrees to defend DOCTOR, its officers, employees, and agents, from and against
any Claims arising out of or connected with the negligence or fault of COMPANY,
its employees, agents, contractors or COMPANY's performance of its obligations
within its scope of responsibility hereunder.
If any Claim shall arise hereunder DOCTOR shall give prompt written
notice of such Claim to COMPANY; except that any delay or failure of notice
shall not relieve COMPANY of the obligations hereunder except to the extent such
delay has materially prejudiced COMPANY.
3.18 COMPANY's Expenses COMPANY shall be solely responsible and
obligated to pay all reasonable direct and indirect expenses of operating each
Location other than DOCTOR's Expenses as defined herein and contained in the
initial and annual budget.
ARTICLE IV COVENANTS OF DOCTOR.
4.1 Organization/Operation. DOCTOR, is a professional association
created under Texas law and shall at all times during the Term (i) be and remain
legally organized to provide Professional Services in a manner consistent with
all State and federal laws; (ii) be duly authorized to conduct business in the
State of Texas; and (iii) have and maintain a physician to provide Professional
Services in the Leased Premises and all other locations of Doctor who shall (a)
hold a valid and unlimited license to practice medicine in the State of Texas,
and (b) be engaged principally in the provision of Professional Services at each
such location.
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4.2 Professional Personnel of DOCTOR. DOCTOR shall employ, at
DOCTOR's expense, all licensed health care personnel, including physicians,
nurses, vocational nurses and physician assistants, as DOCTOR deems reasonably
necessary and appropriate for DOCTOR's operation of his practice and provision
of Professional Services each of whom shall be subject to the applicable
provisions of this Agreement (collectively, "Professional Personnel"). DOCTOR
shall have the sole responsibility for paying the salaries and fringe benefits
of all such personnel, and the sole responsibility to withhold, as required by
law, any sums for income tax, unemployment insurance, social security, or any
other withholding pursuant to any applicable law or governmental requirements
(collectively, "Professional Compensation"). COMPANY shall, in the name of and
on behalf of DOCTOR, establish and administer (out of funds available in the
DOCTOR'S Account) the compensation with respect to, such professional personnel
and, on behalf of DOCTOR and out of funds available in the DOCTOR'S Account,
ensure that proper tax withholdings from such compensation are made and timely
remitted to the appropriate governmental entities. Each physician retained by
DOCTOR shall at all times hold and maintain a valid and unlimited license to
practice in the State of Texas. DOCTOR shall enter into and maintain with each
such physician a written agreement which shall include, without Limitation, the
provisions of Section 4.3 hereof.
4.3 Special Consideration/Damages/Non-Competition. DOCTOR hereby
recognizes and acknowledges that COMPANY will incur substantial costs in
providing any Leased Premises, equipment, supplies, support services, personnel,
marketing, management, administration, and other items and services that are the
subject matter of this Agreement. Accordingly, DOCTOR covenants and agrees that
DOCTOR and all of its personnel shall devote their best efforts to the success
of DOCTOR's practice and the provision of Professional Services by DOCTOR.
During the term of this Agreement and any extension hereof, plus two
(2) years thereafter, neither DOCTOR nor any employee, agent, partner,
shareholder, director, officer, affiliate or any entity with any beneficial
interest or any control interest in DOCTOR, either directly or indirectly, for
himself or herself, or on behalf of or in conjunction with any other person,
persons, partnership, associations or corporations shall (a) divert or attempt
to divert any business of, or any patients of DOCTOR to or interest in any other
competitive establishment that is located within a TEN (10) mile radius of any
company Location, except where such referral is in the best interest of the
patient, or (b) solicit or employ any employee or independent contractor
physician of DOCTOR or COMPANY without prior written approval from the other
party hereto. IT IS HOWEVER AGREED THAT THIS PROVISION DOES NOT APPLY TO DOCTORS
CURRENT LOCATIONS AS STIPULATED HEREIN.
DOCTOR shall continuously and uninterruptedly, during the term hereof,
during all business hours and on such days as businesses of like nature in the
area are open for business, provide services in a manner calculated to produce
the maximum volume of revenue which is consistent with the professional
obligation of DOCTOR and in the best interest of DOCTOR's patients. DOCTOR shall
cause the work load, patient load and surgical criteria for each of its
14
Professional Personnel to remain substantially the same as their historical
practice during the immediate past three (3) years.
During the Term hereof and for a period of five (5) years thereafter,
except as may be required by law, DOCTOR and its employees, agents, directors,
officers, shareholders and partners shall not disclose, communicate or disclose
to, or use for the direct or indirect benefit of any other person or entity any
confidential information regarding COMPANY's business methods, business
policies, procedures, techniques, or trade secrets or other knowledge or
processes developed by COMPANY or any other confidential information relating to
or dealing with the business operations or activities of COMPANY, made known to
DOCTOR or learned or acquired by DOCTOR hereunder.
If any restriction contained in this Section 4.3 is held by any court
to be unenforceable or unreasonable, a lesser restriction shall be enforced in
its place and the remaining restrictions set forth herein shall be enforced
independently of each other.
4.4 DOCTOR'S Insurance. DOCTOR shall provide, obtain, and maintain
throughout the Term appropriate workers' compensation insurance coverage for
DOCTOR'S employed personnel and shall carry professional liability insurance
covering DOCTOR and all of DOCTOR'S physician Professional Personnel in the
minimum amount of One Million Dollars ($1,000,000) for each occurrence and Three
Million Dollars ($3,000,000) annual aggregate, and such amounts as may be
reasonable for all other Professional Personnel (collectively, "Professional
Insurance"). Such professional insurance policy or policies maintained by DOCTOR
shall include COMPANY as additional insured, if permitted by the insurer. DOCTOR
shall provide to COMPANY a certificate of insurance evidencing such coverage on
an annual basis. The insurance policy or policies shall provide for at least
thirty (30) days advance written notice to DOCTOR from the insurer as to any
alteration of coverage, cancellation, or proposed cancellation of coverage for
any cause. The certificate of insurance shall require such notice to also be
given to COMPANY. DOCTOR shall notify COMPANY of all legal actions or
proceedings instituted by or against DOCTOR arising out of or related to
DOCTOR'S operation of a medical practice.
4.5 Indemnification by DOCTOR. COMPANY, its officers, its
employees, and its agents will incur no liability in connection with the conduct
of DOCTOR prior to the effective date of this Agreement. Accordingly, DOCTOR
shall and hereby does indemnify, hold harmless, and agrees to defend COMPANY and
its officers, employees, and agents from and against any claims, obligations,
demands, causes of action, losses, liabilities, damages, costs and expenses,
including reasonable attorney's fees (collectively "CLAIMS") arising out of or
connected with the conduct of DOCTOR prior to the effective date of this
Agreement.
COMPANY shall not, by entering into this Agreement and performing
hereunder, assume or become liable for any of existing or future Claims made
against DOCTOR. DOCTOR shall and hereby does indemnify, hold harmless, and
agrees to defend COMPANY, its officers, employees, and agents, from and against
any Claims arising out of or connected with the negli-
15
gence or fault of DOCTOR, its employees, agents, contractors or DOCTOR's
performance of its obligations hereunder.
If any Claim shall arise hereunder COMPANY shall give prompt written
notice of such Claim to DOCTOR; except that any delay or failure of notice shall
not relieve DOCTOR of the obligations hereunder except to the extent such delay
has materially prejudiced DOCTOR.
4.6 DOCTOR's Expenses. DOCTOR shall be solely responsible and
obligated to pay only the reasonable Professional Compensation including the
compensation benefits and employer costs associated with all Physicians and
other licensed health care employees, and Professional Insurance expenses
associated with the Professional Personnel including malpractice and general
liability, retained by DOCTOR in addition to such other expenses as may be
mutually agreed to by the parties hereto (collectively, "DOCTOR's Expenses").
4.7 Equipment. DOCTOR hereby represents and warrants that
sufficient equipment currently exists at each Location as may be required to
provide Professional Services of the type and volume currently provided by
DOCTOR as of the effective date of this Agreement and will treat same with
appropriate care.
ARTICLE V MANAGEMENT FEE.
5.1 Amount of Management Fee. DOCTOR and COMPANY mutually
recognize and acknowledge that COMPANY will incur substantial costs in arranging
for DOCTOR's use of the Locations and in providing the equipment, support
services, personnel, marketing, office space, management, administration, and
other items and services that are subject matter of this Agreement. DOCTOR and
COMPANY further recognize that certain of such costs and expenses can vary to a
considerable degree, according to the extent of DOCTOR's business and services.
Furthermore, DOCTOR and COMPANY agree that it will be impracticable to ascertain
and segregate all of the exact costs and expenses that will be incurred by
COMPANY from time to time in performance of his obligations under this
Agreement. However, it is the intent of the parties that the fees paid to
COMPANY be reasonable and approximate its costs and expenses, plus a reasonable
return, considering the investment and risk taken by COMPANY and the value of
the services provided by COMPANY. DOCTOR agrees to pay a Management Fee to
COMPANY in an amount equal to the actual direct operating expenses of COMPANY
attributable to DOCTOR's business plus an amount equal to eighteen percent
(18.%) of annual collected revenue in excess one million and one dollars up to
Two million dollars ($2,000,000) and twenty percent (20 %) of annual collected
revenue in excess of two million one thousand dollars up to two million five
hundred thousand dollars and thereafter twenty two percent (22.0 %) all annual
collected revenue in excess of two million five hundred thousand dollars. Annual
revenue is hereinafter defined as the twelve month period commencing with the
effective date of this agreement. An amount equal to THREE THOUSAND AND 00/100
DOLLARS ($3,000) each year is specifically designated for the provision of data
processing and other taxable services.
16
For purposes hereof, "Revenues Collected" shall be defined as an amount
equal to the total of any monies received from patients, and/or third-party
payors and deposited in the DOCTOR's account, less any refunds, during any given
twelve month or agreement anniversary date.
Either party, not more than four times in any twelve month period, upon
giving notice to the other party hereto shall have the right to inspect the
records of DOCTOR to ascertain and audit Revenues Collected, DOCTOR's Expenses,
and COMPANY's Expenses, subject to patient confidentiality laws. If the audit or
examination discloses that the Management Fee was incorrectly computed or any
expense improperly classified, the parties shall within twenty (20) days of such
determination reconcile the difference by a cash payment to the applicable
party. In all events, a reconciliation of the preceding year shall occur
following the preparation of annual financial statements.
5.1.1 PERFORMANCE BONUS. DOCTOR WILL PAY A BONUS TO COMPANY FOR
FISCAL MANAGEMENT PERFORMANCE WHEREBY COMPANY IS ABLE TO MANAGE THE TOTAL
EXPENSES OF DOCTOR UNDER THE BUDGETED LEVEL. SUCH BONUS IS DISCRETIONARY IN
NATURE.
5.2 Payment of Management Fee. An advance on the Management Fee
shall be payable to COMPANY on a quarterly basis for each quarter during the
Term and computed on an estimated annual basis. Such advance will be limited to
seventy five percent (75 %) of the then estimated annual collected revenue and
imputed Management Fee. The balance of twenty five percent (25%) will be held in
reserve pending the final quarter calculation of annual collected revenue.
Payment of the Management Fee is not intended to be, and shall not be,
interpreted or applied as permitting COMPANY to share in DOCTOR's fees for
Professional Services or any other services, but is acknowledged as the parties'
negotiated agreement as to the reasonable, fair market value of the equipment,
support, services, personnel, marketing, office space, management,
administration, and other items and services furnished by COMPANY pursuant to
this Agreement, considering the nature and volume of the services required and
the risks assumed by COMPANY.
ARTICLE VI TERM AND TERMINATION.
6.1 Initial and Renewal Terms. This Agreement shall be effective
as of July 1, 1996 for a period of five (5) years therefrom.
6.2 Termination. This Agreement may be terminated upon the first
to occur of any of the following events:
6.2.1 Termination by Agreement. In the event DOCTOR and COMPANY
shall mutually agree in writing, this Agreement may be terminated on the date
specified in such written agreement.
17
6.2.2 Optional Termination. COMPANY or DOCTOR may, with or without
cause, provide thirty (30) days written notice during the first twenty four
months of this agreement.
In the event of any initial public offering by COMPANY this termination
provision will be by mutual consent amended to allow for termination without
cause, by either party during the remainder of the contract period, provided the
terminating party will pay to the non-terminating party, damages in an amount
equal to the collected revenues of DOCTOR during the one (1) year period
preceding the date of termination. Failure to amend this provision will result
in the termination of all agreements then in place between DOCTOR and COMPANY.
6.2.3 Damages or Condemnation of Premises. In the event the Leased
Premises are totally or substantially destroyed by fire, explosion, flood,
windstorm, hail, earthquake, or other casualty or act of God, and the owner
landlord of the Leased Premises decides not to repair or rebuild the Leased
Premises, or in the event all or a substantial portion of the Leased Premises
and the Facility are taken or are to be taken by condemnation or eminent domain
proceeding, then either party may by written notice (sent within thirty (30)
days of such event) to the other terminate this Agreement if suitable
alternative premises cannot be secured within sixty (60) days. In the event the
owner/landlord of the Leased Premises decides to repair or rebuild the Leased
Premises to their original size and condition, the Management Fee and the duties
and obligations of COMPANY and DOCTOR hereunder shall ▇▇▇▇▇ until such time as
the Leased Premises are suitable for COMPANY and DOCTOR to resume their
respective duties and obligations hereunder.
6.2.4 Bankruptcy. In the event that either party becomes insolvent,
or if any petition under federal or State law pertaining to bankruptcy or
insolvency or for a reorganization or arrangement or other relief from creditors
shall be filed by or against either party, or if any assignment, trust,
mortgage, or other transfer shall be made of all or a substantial part of the
property of either party, or if either party shall make or offer a composition
in its debts with its creditors, or if a receiver, trustee, or similar officer
or creditor's committee shall be appointed to take charge of any property of or
to operate or wind up the affairs of either party, then the other party may by
written notice immediately terminate this Agreement.
6.2.5 Specific DOCTOR Breaches. At COMPANY's option, in the event of
Dr. ▇▇▇▇▇▇ ▇▇▇▇ shall die or be involuntarily inducted into the active military
services of the United States, (ii) DOCTOR or any physician employed or retained
by DOCTOR shall fail by omission or commission in any substantial manner to
provide Professional Services in a competent manner, (iii) DOCTOR shall fail to
meet any of the qualifications set forth in Section 4.1 hereof, (iv) Dr. ▇▇▇▇▇▇
▇▇▇▇'▇ license to practice medicine is revoked, suspended, canceled or limited
in any manner, (v) Dr. ▇▇▇▇▇▇ ▇▇▇▇ convicted of a felony or any crime of moral
turpitude, or (vi) Dr. ▇▇▇▇▇▇ ▇▇▇▇ or shall fail to comply with the terms of his
Employment Contract of even date herewith, then COMPANY may by written notice to
DOCTOR immediately terminate this Agreement.
18
6.2.6 COMPANY Breaches. At DOCTOR's option, in the event COMPANY
fails to make timely payments of the obligations it has undertaken, (ii) fails
or refuses to account to DOCTOR for collection on amounts for services rendered,
or (iii) is in default of any material obligations having an impact upon DOCTOR,
then DOCTOR may by written notice to COMPANY terminate this Agreement if COMPANY
has failed to cure such default within thirty (30) days of DOCTOR's written
notice of such violation, provided if such breach cannot by its nature be
reasonably cured within thirty (30) days then COMPANY shall have such time as
may be reasonable to cure the breach.
6.2.7 Action by Board of Medical Examiners or Other Authority with
legal Jurisdiction. While both parties believe that this Agreement is in full
compliance with the Texas Medical Practice Act, the interpretation of the Act
may be subject to change. In the event the Board of Medical Examiners for the
State or other authority with legal jurisdiction shall, solely by virtue of this
Agreement, initiate an action to revoke the license of any physician retained by
DOCTOR to practice medicine in the State, DOCTOR may, by written notice to
COMPANY, immediately request that the Agreement be amended in a mutually
acceptable manner. Any amendment shall be made in the lawful manner which
results in the least changes to the parties' expectations hereunder. In the
event the offending-provisions of the Agreement cannot be cured as to the
legality of such provisions to the satisfaction of both parties, then either
party may terminate this Agreement upon ten (10) days written notice, and such
termination shall be conducted as set forth in Section 3 of the Master
Agreement. In the event the Board of Medical Examiners shall, on any other
grounds, including, without limitation, improper medical practice or improper
conduct by any physician retained by DOCTOR, restrict, suspend or revoke the
license of such physician to practice medicine in the State, the COMPANY may, by
written notice to DOCTOR, immediately terminate this Agreement.
6.2.8 Default. In the event either party shall give written notice
to the other that such other party has substantially defaulted in the
performance of any material duty or material obligation imposed upon it by this
Agreement, and such default shall not have been cured within thirty (30) days
following the giving of such written notice, the party giving such written
notice shall have the right to immediately terminate this Agreement unless the
defaulting party shall, within said thirty (30) day period, have made a good
faith effort to initiate corrective action and it is contemplated that such
corrective action will be completed within the following @ (30) day period.
6.3 Effects of Termination. Upon termination of this Agreement, as
herein above provided, neither party shall have any further obligations
hereunder except for (i) obligations accruing prior to the date of termination,
and (ii) obligations, promises, or covenants set forth herein or in those
collateral agreements of even date herewith that are expressly made to extend
beyond the Term, including, without limitation, indemnities, non-compete and
fees which provisions shall survive the expiration or termination of this
Agreement.
6.4 Continued Professional Services. Following any notice of
termination hereunder, whether given by COMPANY or DOCTOR, DOCTOR and COMPANY
will fully cooperate
19
with each other in all matters relating to the performance or discontinuance of
Professional Services, as appropriate, at the Locations by DOCTOR and the
orderly transition of patients.
ARTICLE VII MISCELLANEOUS.
7.1 Exhibits, Schedules and Other Instruments. As used herein, the
expression "this Agreement" means the body of this Agreement and all exhibits,
certificates, and schedules; and the expressions " herein, " " hereof, " and "
hereunder " and other words of similar import refer to this Agreement and such
exhibits, certificates, and schedules as a whole and not to a particular part or
subdivision thereof unless otherwise clearly indicated.
7.2 Independent Relationship. It is mutually understood and agreed
that DOCTOR and COMPANY, in performing their respective duties and obligations
under this Agreement, are at all times acting and performing as independent
contractors with respect to each other, and nothing in this Agreement is
intended nor shall be construed to create an employer/employee relationship or a
joint venture relationship, 6r to allow COMPANY to exercise control or direction
of any nature, kind, or description over the manner. or method by which DOCTOR
performs Professional Services.
7.3 Notices. Any notice, demand, or communication required,
permitted, or desired to be given shall be deemed effectively given (i) when
personally delivered, (ii) upon receipt when delivered by telephonic document
transfer, (iii) three (3) business days next following the day the notice is,
mailed by prepaid certified mail, return receipt requested, or (iv) the next
business day following deposit with a reputable overnight courier, addressed as
follows:
DOCTOR: Texas Rehabilitation & Pain Center, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
COMPANY: Doctors Practice Management, Inc.
% Management Services Organization, Inc.
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
or to such other address, and to the attention of such other person or officer
as any party may designate, with copies thereof to the respective counsel
thereof as notified by such party. Rejection or other refusal to accept or the
inability to deliver because of a changed address of which no notice was given
in accordance with the provisions hereof, shall be deemed to be receipt of the
notice sent.
20
7.4 Legal Fees and Costs. In the event either party brings any
action for relief against the other, declaratory or otherwise, arising out of
this Agreement (including actions to enforce and interpret this Agreement), the
losing party shall pay to the prevailing party, in addition to any other relief
to which such party shall be entitled, a reasonable sum for attorneys fees
incurred in bringing such suit and/or enforcing any judgment granted therein,
all of which shall be deemed to have accrued upon the commencement of such
action and shall be paid whether or not such action is prosecuted to judgment.
Any judgment or order entered in such action shall contain a specific provision
providing for the recovery of attorney fees and costs incurred in enforcing such
judgment, in addition to any other relief to which such party shall be entitled.
7.5 Choice of Law and Venue. THIS AGREEMENT HAS BEEN EXECUTED AND
DELIVERED IN AND SHALL BE INTERPRETED, CONSTRUED, ENFORCED AND GOVERNED BY AND
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AND THAT THE COURTS OF THAT
STATE IN THE COUNTY OF ▇▇▇▇▇▇, AND THE UNITED STATES DISTRICT COURT FOR SOUTHERN
DISTRICT OF TEXAS SHALL BE THE EXCLUSIVE COURTS OF JURISDICTION AND VENUE FOR
ANY LITIGATION, SPECIAL PROCEEDING OR OTHER PROCEEDING AS BETWEEN THE PARTIES
THAT MAY BE BROUGHT, OR ARISE OUT OF, IN CONNECTION WITH, OR BY REASON OF THIS
AGREEMENT. SELLER HEREBY CONSENTS TO THE JURISDICTION OF SUCH COURTS.
7.6 Assignment. It is specifically provided that Company has
entered into a sub contract agreement with Management Service Organization, Inc.
for the non cancelable term or for as long as this FULL SERVICE MANAGEMENT
AGREEMENT is in effect and as such is a stipulated Third Party to this
agreement. Except as provided above, this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective legal
representatives, successors, and assigns; provided, however, that DOCTOR shall
not assign, transfer or pledge his rights and obligations under this Agreement
or collaterally assign or hypothecate this agreement without the prior written
consent of COMPANY. COMPANY shall have the right to (i) assign its rights and
obligations hereunder to any affiliated third party and (ii) collaterally assign
its interest in this Agreement and its right to collect Management Fees
hereunder to any financial institution or other third party without the consent
of DOCTOR. COMPANY must provide ten days prior written notice to DOCTOR prior to
assigning this Agreement but in no event will it terminate the sub contract
agreement with Management Service Organization, Inc..
7.7 Waiver of Breach. The waiver by either party of a breach or
violation of any provision of this Agreement shall not operate as, or be
construed to constitute, a waiver of any subsequent breach of the same or
another provision hereof.
7.8 Enforcement. All claims and disputes relating to this
Agreement shall be subject to confidential arbitration in accordance with the
National Health Lawyers Association Alternative Dispute Resolution Rules of
Procedure for Arbitration then obtaining and with individuals knowledgeable of
the medical industry serving as arbitrators. Written notice of demand for
arbitration shall be filed with the other party to the Agreement and with the
National Health Lawyers Association in Washington, D.C., within a reasonable
time after the dispute has arisen. In the event
21
either party resorts to legal action to enforce the arbitration results or any
other provision of this Agreement, the prevailing party shall be entitled to
recover the costs of such action so incurred, including, without limitation,
reasonable attorneys' fees.
7.9 Gender and Number. Whenever the context of this Agreement
requires, the gender of all words herein shall include the masculine, feminine,
and neuter, and the number of all words herein shall include the singular and
plural. The term "person" when used herein shall mean an individual,
partnership, joint venture, corporation, trust, government entity, and
association.
7.10 Additional Assurances. Except as may be herein specifically
provided to the contrary, the provisions of this Agreement shall be
self-operative and shall not require further agreement by the parties; provided,
however, at the request of either party, the other party shall execute such
additional instruments and take such additional acts as are reasonable and as
the requesting party may deem necessary to effectuate this Agreement.
7.11 Consents, Approvals, and Exercise of Discretion. Except as may
be herein specifically provided to the contrary, whenever this
Agreement-requires any consent or approval to be given by either party, or
either party must or may exercise discretion, the parties agree that such
consent or approval shall not be unreasonably withheld or delayed, and such
discretion shall be reasonably exercised in good faith.
7.12 Force Majeure. Neither party shall be liable or deemed to be
in default for any delay or failure in performance under this Agreement or other
interruption of service deemed to result, directly or indirectly, from acts of
God, civil or military authority, acts of public enemy, war, accidents, fires,
explosions, earthquakes, floods, failure of transportation, strikes or other
work interruptions by either party's employees, or any other similar cause
beyond the reasonable control of either party.
7.13 Severability. In the event any provisions of this Agreement is
held to be invalid, illegal, or unenforceable for any reason and in any respect,
if the extent of such invalidity, illegality or unenforceability does not
destroy the basis of the bargain herein such invalidity, illegality, or
unenforceability shall in no event affect, prejudice, or disturb the validity of
the remainder of this Agreement, which shall be in full force and effect,
enforceable in accordance with its terms as if such provisions had not been
included, or had been modified as provided below, as the case may be. To carry
out the intent of the parties hereto as fully as possible, the invalid, illegal
or unenforceable provision(s), if possible, shall be deemed modified to the
extent necessary and possible to render such provision(s) valid and enforceable.
In the event this Agreement cannot be modified to the satisfaction of the
parties hereto, then either party may terminate this Agreement upon ten (10)
days written notice.
7.14 Divisions and Heading-s. The division of this Agreement into
articles, sections, and subsections and the use of captions and headings in
connection therewith are solely for convenience and shall not affect in any way
the meaning or interpretation of this Agreement.
22
7.15 Amendments and Agreement Execution. This Agreement and
amendments thereto shall be in writing and executed in multiple copies on behalf
of DOCTOR by its duly authorized representative and on behalf of COMPANY by its
duly authorized representative. Each multiple copy shall be deemed an original,
but all multiple copies together shall constitute one and the same instrument.
7.16 Time of Essence. Time shall be of the essence with respect to
this Agreement.
7.17 Entire Agreement/Amendment. This Agreement and collateral
agreements of even date herewith supersede all previous agreements (written or
oral), and constitutes the entire agreement of whatsoever kind or nature
existing between or among the parties respecting the within subject matter and
no party shall be entitled to benefits other than those specified herein. As
between or among the parties, no oral statements or prior written material not
specifically incorporated herein shall be of any force and effect; the parties
specifically acknowledge that in entering into and executing this Agreement, the
parties rely solely upon the representations and agreements contained in this
Agreement and no others. All prior representations or agreements, whether
written or verbal, not expressly incorporated herein are superseded. This
Agreement may not be amended, supplemented, canceled or discharged except by
written instrument executed by all parties hereto. This Agreement may be
executed in two or more counterparts, each and all of which shall be deemed an
original and all of which together shall constitute one instrument. It shall not
be necessary that the signatures of all of the parties appear on each
counterpart; it shall be sufficient that the signature of each party appear on
one or more counterparts.
7.18 Rules of Construction. The parties acknowledge that each party
and its counsel have reviewed and revised this Agreement, and the parties hereby
agree that the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments or exhibits, certificates and
schedules hereto. The term " include " or " including " shall mean without
limitation by reason of enumeration. All references in this Agreement to Dollars
or monetary payment shall be deemed to refer to U.S. Dollars.
7.19 Reproduced Copies of Documents. This Agreement and all
documents relating hereto other than promissory notes, including without
limitation, (a) consents, waivers, and modifications which may hereinafter be
executed, (b) documents received by any party at the Closing, (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any means or process including electronic or
mechanical means. Any reproduction shall be admissible into evidence as the
original itself in any Litigation without regard to whether the original is in
existence. If a party signs this Agreement and then transmits an electronic
facsimile of the signature page the recipient may rely upon the electronic
facsimile as a signed original of this Agreement without modification or change
unless same is noted thereon.
7.20 Third Parties. None of the provisions of this Agreement shall
be for the benefit of third parties or enforceable by any third party except as
otherwise contained herein. Any agreement to pay an amount and any assumption of
a liability herein contained, expressed or implied, shall
23
only be for the BENEFIT of the parties hereto and such agreement or assumption
shall not inure to the benefit of the any third party, including an obligee.
IN WITNESS WHEREOF, DOCTOR and COMPANY have executed this Agreement in multiple
originals as of the date written above.
DOCTOR:
HOUSTON PHYSICAL MEDICINE ASSOCIATES, M.D., P.A.
d/b/a TEXAS REHABILITATION & PAIN CENTER, P.A.
By: /s/ Dr. ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Dr. ▇▇▇▇▇▇ ▇▇▇▇, President
COMPANY:
DOCTORS PRACTICE MANAGEMENT, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
-------------------------------------
▇▇▇▇ ▇▇▇▇, President
MANAGEMENT SERVICE ORGANIZATION, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
24
AMENDMENT ONE TO THE FULL SERVICE FACILITY AND MANAGEMENT
AGREEMENT BY AND BETWEEN HOUSTON PHYSICAL MEDICINE ASSOCIATES
M.D., P.A. AND DOCTORS PRACTICE MANAGEMENT, INC.
This Amendment One to the Full Service Facility and Management Agreement dated
July 1, 1996 is agreed to by Houston Physical Medicine Associates, M.D., P.A.,
referred to herein as "Doctor") and Doctors Practice Management, Inc., referred
to herein as ("Company").
In consideration of the mutual promises between Doctor and Company, Item 3.13.3
included in the Full Service Facility and Management Agreement dated July 1,
1996 between Doctor and Company is hereby amended and replaced in its entirety
as follows:
3.13.3 Stock Option
Upon the successful completion of an initial public offering ("IPO") by
the Company, the Doctor will be granted an option to purchase 150,000 shares or
one-tenth of one percent (0.01%), whichever is smaller of the Company's then
outstanding common stock at the time of the IPO, at a price equal to seventy
percent of the then market price (70%). Additionally, Doctor will be given an
option to purchase 150,000 shares or one-tenth of one percent (0.01%) of the
Company's restricted shares at a price equal to seventy percent of the then
market price (70%), per one million dollars of annual collected revenues upon
each anniversary of this Agreement.
Such Amendment One to the Full Service Facility and Management Agreement shall
be effective as of July 1, 1996.
DOCTOR:
HOUSTON PHYSICAL MEDICINE ASSOCIATES, M.D. P.A.
D/B/A TEXAS REHABILITATION & PAIN CENTER, P.A.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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Dr. ▇▇▇▇▇▇ ▇▇▇▇, President
COMPANY
DOCTORS PRACTICE MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇, Vice President
MANAGEMENT SERVICE ORGANIZATION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
