EXHIBIT 10.25
AMENDED AND RESTATED
MANAGEMENT SERVICES AGREEMENT
BETWEEN
STAT HEALTHCARE, INC.
AND
STAT PHYSICIANS, P.A.
TABLE OF CONTENTS
PAGE
I. RESPONSIBILITIES OF PROFESSIONAL ASSOCIATION................... 2
1.1 Sole Responsibility for All Medical and Professional
Matters................................................ 2
1.2 Contracted Providers..................................... 2
1.3 Fees, Charges and Payor Agreements....................... 2
1.4 Compliance with Law...................................... 3
1.5 Practice Sites; Availability............................. 3
1.6 Quality Assurance........................................ 3
1.7 Patient Referrals........................................ 3
1.8 Professional Dues and Education Expenses................. 3
1.9 Professional Insurance Eligibility....................... 4
1.10 Fees for Professional Services........................... 4
II. RESPONSIBILITIES OF MANAGEMENT COMPANY......................... 4
2.1 General Responsibility................................... 4
2.2 Responsibilities with Regard to Selected Patient-Related
Matters................................................ 4
(a) Patient Relations.................................. 4
(b) Quality Assurance.................................. 4
2.3 Responsibilities with Regard to Selected Financial
Matters................................................ 5
(a) Billing............................................ 5
(b) Cash Management.................................... 6
(c) Accounting......................................... 6
(d) Reporting.......................................... 6
2.4 Responsibilities for Financial Planning and Goals........ 7
(a) Preparation of Budget.............................. 7
(b) Expansion of the Practice.......................... 8
(c) Development of New Services........................ 9
(d) Capital Investment and Support..................... 9
2.5 Data Processing.......................................... 9
2.6 Other Responsibilities................................... 10
(a) Marketing.......................................... 10
(b) Insurance.......................................... 10
(i) Professional Errors and Omissions Coverage... 10
(ii) Premium Amounts.............................. 10
(iii) Malpractice Insurance........................ 10
(iv) Copies of Insurance Policies................. 10
(c) Personnel.......................................... 10
(d) Managed Care Agreements............................ 11
III. FINANCIAL ARRANGEMENTS......................................... 11
3.1 Management Company's Compensation........................ 11
i.
PAGE
(a) Calculation........................................ 11
(b) Payment............................................ 13
3.2 Definitions.............................................. 13
3.3 Accounts Receivable...................................... 14
IV. COVENANTS...................................................... 15
4.1 Covenants and Warranties of Professional Association..... 15
4.2 Covenants and Warranties of Management Company........... 15
V. TERM AND TERMINATION........................................... 16
5.1 Term..................................................... 16
5.2 Events of Default........................................ 16
5.3 Termination.............................................. 17
5.4 Duties upon Termination or Expiration of This Agreement.. 17
VI. RESTRICTIVE COVENANTS.......................................... 17
6.1 Covenant Regarding Proprietary Information............... 17
6.2 Covenants Not to Compete During the Term................. 18
(a) Restrictive Covenants by Professional Association.. 18
(b) Restrictive Covenants by Contracted Physicians..... 19
6.3 Covenant Not to Compete Following Termination............ 19
6.4 Covenant Not to Solicit.................................. 19
VII. INFORMATION AND RECORDS........................................ 19
7.1 Ownership of Records..................................... 19
7.2 Professional Association's Business and Financial Records 20
7.3 Access to Records........................................ 20
7.4 Confidentiality of Records............................... 20
7.5 Limitations on Use of Management Information System...... 20
VIII. MISCELLANEOUS.................................................. 21
8.1 Independent Contractor Status of Parties................. 21
8.2 No Waiver................................................ 21
8.3 Notices.................................................. 21
8.4 Assignment............................................... 22
8.5 Successors and Assigns................................... 22
8.6 Severability............................................. 22
8.7 Third Parties............................................ 22
8.8 Headings................................................. 22
8.9 Time of the Essence...................................... 22
8.10 Governing Law............................................ 22
8.11 Confidentiality.......................................... 22
8.12 Contract Modifications for Prospective Legal Events...... 23
8.13 Language Construction.................................... 23
ii.
8.14 Communications........................................... 23
8.15 Indemnification.......................................... 23
8.16 Entire Agreement......................................... 24
8.17 Incorporation by Reference............................... 24
8.18 Amendments only in Writing............................... 24
8.19 Counterparts............................................. 24
8.20 Commercial Impracticability.............................. 24
8.21 Election of Remedies..................................... 24
8.22 Attorneys' Fees and Expenses............................. 24
8.23 Survival................................................. 24
Schedules
1.2 List of Contracted Providers and Physician Assistant Employees
1.3(a) Fee Schedule
1.3(b) Payor Schedule
1.5 Practice Sites
iii.
AMENDED AND RESTATED
MANAGEMENT SERVICES AGREEMENT
This Amended and Restated Management Services Agreement
("Agreement") is entered into as of February 1, 1996 ("Effective Date") by and
between STAT Healthcare, Inc., a Delaware corporation ("Management Company"),
and STAT Physicians, P.A., a Texas professional association ("Professional
Association").
RECITALS
A. Professional Association is a Texas professional association that
engages in the business of providing or arranging for the provision of emergency
department medical services ("Emergency Services").
B. Professional Association contracts with physicians to provide
professional medical care at the emergency department of various hospitals and
healthcare facilities pursuant to written agreements ("Practice Sites"). A
listing of the Practice Sites is set forth at SCHEDULE 1.5, attached hereto and
incorporated herein by reference.
C. Professional Association has entered into independent contractor
agreements with various physicians and other health care professionals licensed
to practice in the State of Texas ("Contracted Providers") to assist
Professional Association in providing or arranging for the provision of health
care services to patients of Professional Association ("Patients"), and may
enter into employment agreements with physician assistants licensed to practice
with the State of Texas to perform services for Patients ("Physician
Assistants").
D. Management Company engages in the business of providing certain
administrative and support services to emergency physician practices.
E. Professional Association desires to secure certain administrative
services from Management Company in connection with its operation of the
Practice.
F. Professional Association and Management Company desire to enter
into a written agreement for the provision by Management Company, on an
exclusive basis, of administrative services to Professional Association with
respect to the Practice, so as to permit Professional Association to devote its
efforts on a concentrated and continuous basis to the rendering of medical
services to its patients.
G. Professional Association and Management Company are parties to a
certain Management Services Agreement, dated as of February 1, 1996 (the
"Original Agreement"), and Professional Association and Management Company
desire to amend and restate the Original Agreement as provided herein.
1.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the parties agree as follows:
I. RESPONSIBILITIES OF PROFESSIONAL ASSOCIATION
1.1 SOLE RESPONSIBILITY FOR ALL MEDICAL AND PROFESSIONAL MATTERS. All
medical and professional matters relating to the operations of the Practice and
the performance of services for Patients of Professional Association shall be
the sole responsibility of Professional Association. Professional Association
expressly acknowledges that the emergency physician or practices conducted at
these facilities shall be conducted solely by physicians associated with
Professional Association as Contracted Providers.
1.2 CONTRACTED PROVIDERS. Professional Association shall have complete
control of and responsibility for the hiring, engagement, compensation,
supervision, evaluation, and termination of all Contracted Providers who will
provide patient care services, although at the request of Professional
Association, Management Company shall consult with Professional Association
respecting such matters. With respect to physicians, Professional Association
shall only contract with licensed physicians meeting applicable credentialling
guidelines established by Professional Association. Professional Association may
enter into employment agreements with Physician Assistants licensed to practice
in the State of Texas to perform services for Patients. Professional Association
shall be responsible for the payment of salaries and wages, compensation,
payroll taxes, employee benefits, and all other taxes and charges now or
hereafter applicable to Contracted Providers and Physician Assistant employees,
all of which shall be in conformity with the applicable Professional Association
Budget described in Section 2.4(a). A list of all Contracted Providers and
Physician Assistant employees is set forth at SCHEDULE 1.2, attached hereto and
incorporated herein by reference. Prior to making any changes to the list of
Contracted Providers, or licensed or health care professional employees set
forth at SCHEDULE 1.2, Professional Association shall consult with Management
Company. Professional Association shall also consult with Management Company
with regard to the terms of contracts entered into between Professional
Association and Contracted Providers, or licensed Physician Assistant employees,
and the terms and conditions of their employment or engagement as independent
contractors, as applicable.
1.3 FEES, CHARGES AND PAYOR AGREEMENTS. Professional Association
shall, after consultation with Management Company, determine the fees, charges,
premiums, or other amounts due in connection with its delivery of Emergency
Services to Patients. Such fees, charges, premiums, or other amounts -
regardless of whether determined on a fee-for-service, capitated, prepaid, or
other basis - shall be reasonable and consistent with the fees, charges,
premiums, and other amounts due to health care providers for similar services
within the community under the type of reimbursement program involved.
Professional Association shall deliver to Management Company a schedule of fees
for all of Professional Association's charges ("Fee Schedule") at the Effective
Date,
2.
a copy of which is set forth at SCHEDULE 1.3(A), attached hereto and
incorporated herein by reference, along with a schedule of all agreements
between Professional Association and Payors or their agents for the provision of
health care services ("Payor Schedule"), a copy of which is set forth at
SCHEDULE 1.3(B), attached hereto and incorporated herein by this reference.
Professional Association shall, after consultation with Management Company, give
Management Company at least thirty (30) days' prior written notice of any
changes in the Fee Schedule or Payor Schedule, or of any changes in the
agreements with Payors identified in the Payor Schedule. For the purposes of
this Agreement, the term "Payor" shall mean insurers, Health Maintenance
Organizations, and other third party payors.
1.4 COMPLIANCE WITH LAW. Professional Association shall require in its
contractual relationships with all of its Contracted Providers that they comply
with all laws, regulations, and ethical and professional standards applicable to
the practice of medicine. Physicians providing medical services shall at all
times be licensed to practice medicine in the State of Texas.
1.5 PRACTICE SITES; AVAILABILITY. Professional Association shall
conduct its practice from the emergency departments of contracted hospitals and
care centers ("Practice Sites") set forth in SCHEDULE 1.5 as may be amended from
time to time. Any additional or substitute Practice Site shall be deemed to be
part of the Practice for the purposes of this Agreement. Contracted Providers
shall be available at Practice Sites to provide Emergency Services twenty-four
(24) hours per day, seven (7) days per week. Contracted Providers shall provide
Emergency Services to Patients in a courteous and prompt fashion, be available
and accessible to Patients, provide Patients with full and meaningful
information, and render Emergency Services in a manner that assures continuity
of care.
1.6 QUALITY ASSURANCE. Professional Association shall monitor and
develop quality assurance programs and performance standards, shall monitor
utilization and quality of services provided by Contracted Providers, and shall
take all steps necessary to remedy any and all deficiencies in the efficiency or
the quality of medical care provided.
1.7 PATIENT REFERRALS. The parties agree that the benefits to
Professional Association hereunder do not require, are not payment for, and are
not in any way contingent upon the admission, referral or any other arrangements
for the provision of any item or service offered by Management Company or any
affiliate of Management Company to any of Professional Association's patients in
any facility or laboratory controlled, managed or operated by Management Company
or any affiliate of Management Company.
1.8 PROFESSIONAL DUES AND EDUCATION EXPENSES. Professional Association
and its Contracted Providers shall be solely responsible for the cost of
membership in professional associations and continuing professional education.
Professional Association shall ensure that each of its Contracted Providers
participates in such continuing medical
3.
education as is necessary for such provider to remain current with professional
licensure and community standards.
1.9 PROFESSIONAL INSURANCE ELIGIBILITY. Professional Association shall
cooperate in the obtaining and retaining of professional liability insurance by
assuring that either its Contracted Providers are insurable or instituting
proceedings to terminate any Contracted Provider who is not insurable or loses
his or her insurance eligibility. Termination shall be effective no more than
thirty (30) days from such determination. Professional Association shall require
all Contracted Providers to participate in an on-going risk management program.
1.10 FEES FOR PROFESSIONAL SERVICES. Professional Association shall be
solely responsible for legal, accounting and other professional services fees
incurred by Professional Association.
II. RESPONSIBILITIES OF MANAGEMENT COMPANY
2.1 GENERAL RESPONSIBILITY. Management Company shall have general
responsibility for providing fiscal services, management information services,
and other support services to Professional Association with respect to the
Practice, except as otherwise provided in this Agreement. Management Company
shall perform all required functions in accordance with sound management
techniques. Notwithstanding Management Company's general and specific rights and
responsibilities set forth in this Agreement, Professional Association shall
have full authority and control with respect to all medical, professional and
ethical determinations over the Practice to the extent required by federal,
state and city law and regulation. Management Company shall not engage in
activities which constitute the practice of medicine under applicable law.
Management Company shall neither exercise control over nor interfere with the
physician-patient relationship, which shall be maintained strictly between the
physicians of Professional Association and their Patients.
2.2 RESPONSIBILITIES WITH REGARD TO SELECTED PATIENT-RELATED MATTERS.
(a) PATIENT RELATIONS. Management Company shall assist
Professional Association in maintaining positive Patient relations by, among
other things: responding to Patient grievances and complaints in matters other
than medical evaluation, diagnosis, and treatment; and establishing and
maintaining Patient transfer arrangements to expedite referrals where medically
necessary, as determined and requested by the attending physician.
(b) QUALITY ASSURANCE. Management Company shall assist
Professional Association, in accordance with criteria established by
Professional Association, in the development and implementation of appropriate
quality assurance programs, including development of performance and utilization
standards, sampling techniques for case review, and preparation of appropriately
documented studies.
4.
Notwithstanding the foregoing, Management Company shall not perform any duties
that constitute the corporate practice of medicine.
2.3 RESPONSIBILITIES WITH REGARD TO SELECTED FINANCIAL MATTERS.
(a) BILLING. Management Company shall submit on a timely basis
all bills and necessary documentation required by Patients and Payors in order
to obtain payment in connection with Professional Association's delivery of
health care services at the Practice or its arrangement for the delivery of such
services. In seeking such payment, Management Company shall act as Professional
Association's agent in billing and collecting professional fees, charges,
premiums, or other amounts owed to Professional Association. In such billing,
Management Company shall indicate on its billhead that it is billing in the name
of Professional Association and shall only ▇▇▇▇ under Professional Association's
provider number. In this connection, Professional Association hereby appoints
Management Company, during the term of this Agreement, as Professional
Association's true and lawful attorney-in-fact, with power of substitution, for
the following purposes relating to the Practice:
(i) To ▇▇▇▇ Professional Association's Patients in
Professional Association's name and on Professional Association's behalf for all
billable medical services provided by Professional Association.
(ii) To ▇▇▇▇ in Professional Association's name and on
Professional Association's behalf, all claims for reimbursement or
indemnification from insurance companies, Medicare, Medicaid and all other
Payors or fiscal intermediaries for all covered billable medical services
provided by Professional Association to Patients.
(iii) To collect accounts receivable generated by such
▇▇▇▇▇▇▇▇ in Professional Association's name and on Professional Association's
behalf, including, where deemed appropriate by Management Company and approved
in advance by Professional Association, settling and compromising claims,
assigning such accounts receivable to a collection agency or the bringing of
legal action against a Patient or Payor on Professional Association's behalf.
(iv) To receive all payments in Professional Association's
name and on behalf of Professional Association from Patients and Payors. After
receipt of such payments, Management Company shall endorse in the name of
Professional Association and, in the name of Professional Association pursuant
to Section 3.4, deposit all such payments directly into a depository account
with a banking institution selected by Management Company and approved by
Professional Association, such approval not to be unreasonably withheld, and
shall apply such payments in accordance with the terms of this Agreement.
(v) To write checks against or otherwise withdraw funds
deposited in Professional Association's bank account for the purposes and only
for the purposes described in this Agreement. Except as otherwise provided
herein, in no event
5.
shall Management Company commingle funds of Professional Association with its
own funds or utilize Professional Association's funds or other assets for the
benefit of Management Company or any of its directors, officers, employees or
agents.
(b) CASH MANAGEMENT. In addition to the billing, collecting, and
payment services referenced in Section 2.3(a), Management Company shall manage
the cash and cash equivalents of Professional Association for the benefit of
Professional Association. Management Company shall be entitled (and is hereby
authorized) to transfer such cash to the accounts of Management Company or its
Affiliates to make such payments and disbursements as set forth in this
Agreement.
Management Company may subcontract with a third party for the performance of all
or a portion of the foregoing services.
(c) ACCOUNTING. Management Company shall direct and maintain the
operation of an appropriate accounting system with respect to Professional
Association's operation of the Practice which shall perform all bookkeeping and
accounting services required for the operation of the Practice, 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. Such accounting system shall allow Management
Company to prepare the reports specified in Section 2.3(c). Professional
Association and its authorized representatives shall have the right to review
the financial books and records maintained by Management Company relating to the
operation of the Practice, and Management Company shall, upon reasonable advance
written notice from Professional Association, allow Professional Association and
its authorized representatives access to all information and documents required
for such review.
(d) REPORTING. Management Company shall present to Professional
Association reports on the financial condition of Professional Association on
the basis set forth below in clauses (i) and (ii) and such other reports that
Professional Association may reasonably request, including daily activity
reports, weekly analyses, alternative delivery system reports, backlog reports
and the like. Management Company also shall provide such reports as may be
required by any regulatory agency having jurisdiction over the operations of
Professional Association.
The reports initially required to be delivered to
Professional Association under this Section 2.3(c) with respect to the Practice
are as follows:
(i) As soon as possible after the close of each month, a
balance sheet and a related statement of revenues and expenses showing the
results of Professional Association's operations for the preceding month of the
fiscal year and the year to date.
6.
(ii) As soon as possible after the close of each fiscal
year, a balance sheet and related statement of revenues and expenses showing the
results of Professional Association's operations during that fiscal year.
Professional Association, at its option and expense, may have such annual
financial statement reviewed by an independent certified public accounting firm
selected by Professional Association and acceptable to Management Company.
2.4 RESPONSIBILITIES FOR FINANCIAL PLANNING AND GOALS.
(a) PREPARATION OF BUDGET. Management Company shall prepare the
Professional Association Budget and the Management Company Budget for each
Budget Period in accordance with the provisions of this SECTION 2.4(A). The
Professional Association Budget and the Management Company Budget for the first
Budget Period, each dated as of the Effective Date, will be in form and
substance as mutually agreed by the parties hereto prior to the Effective Date.
For the purposes of this Agreement, "Budget Period" shall mean each fiscal year
of Professional Association which shall be a calendar year, and any partial
fiscal year of Professional Association that occurs either during 1996 or
immediately prior to the Termination Date.
With respect to each Budget Period following the initial
Budget Period, the Management Company shall prepare a preliminary draft
Professional Association Budget and the Management Company Budget, and shall
deliver a preliminary draft of each such budget to the Professional Association,
with a copy to Professional Association, at least 120 days prior to the
commencement of the Budget Period to which such budget relates. The Professional
Association shall provide any comments or required changes to such preliminary
drafts to the Management Company within 15 days after receipt thereof. The
Management Company shall then submit a revised Professional Association Budget
and Management Company Budget to the Professional Association, with a copy to
Professional Association, for approval by the Professional Association no later
than 15 days after the end of the 15-day period referred to in the immediately
preceding sentence. The foregoing time periods during which drafts of the
Professional Association Budget and Management Company Budget are to be
delivered and approved shall be subject to adjustment from time to time as
determined appropriate by the Professional Association.
If, prior to the commencement of any Budget Period, either
the Professional Association or the Professional Association board of directors
has not yet approved the Professional Association Budget, or the Professional
Association has not yet approved the Management Company Budget, then the
Management Company and Professional Association will work diligently in good
faith to obtain such approvals, and until such approvals are obtained, with
respect to the Professional Association Budget and the Management Company
Budget, (i) as to any disputed line items, the immediately preceding Budget
Period's budget shall be controlling until such time, if any, as agreement is
reached on the amounts to be allocated to such disputed line items, specifically
as follows: (A) non-recurring extraordinary items shall not be continued from
the budget for the immediately preceding Budget Period, (B) if the previous
budget
7.
was for a Budget Period of less than 12 months, it shall be annualized, (C) if
items such as rents or taxes are subject to an automatic increase, such
increases shall be effective at the increased rate, (D) for items such as
employee salaries, the total salary number shall be adjusted to take into
account changes in the number of employees, but individual salaries shall not
increase and (E) Provider compensation and purchased medical services,
collectively, shall be decreased to the extent that Professional Association's
gross revenues decline in the new Budget Period and shall be increased to the
extent that Professional Association's gross revenues increase in the new Budget
Period (in each case as compared to the immediately preceding Budget Period) so
that the sum of Provider compensation and purchased medical services as a
percentage of Professional Association's gross revenues remains constant between
the two Budget Periods; and (ii) as to any line items which are not in dispute,
the revised budgets submitted by the Management Company shall control.
(b) EXPANSION OF THE PRACTICE. Management Company shall assist
Professional Association in its efforts to expand the Practice by the addition
of new physicians through recruitment, or through the merger with or acquisition
of other physician groups, as may be economically justified and provided for in
the Professional Association Budget. The Professional Association Budget may be
adjusted as required to accurately reflect such mergers or acquisitions,
anticipated mergers or acquisitions, or other changes in the number of
Contracted Providers. Such services shall include, without limitation,
performance of the following services on behalf of Professional Association:
(i) Preparing and sending mass mailing recruitment
literature and materials;
(ii) Accepting and reviewing applications of prospective
independent contractor physicians and Support Personnel;
(iii) Reviewing and verifying references and D.E.A.
numbers of prospective independent contractor physicians and/or Support
Personnel;
(iv) Reviewing and verifying licensing status and
requirements with respect to prospective independent contractor physicians
and/or Support Personnel;
(v) Preparing and reviewing all necessary tax forms and
related information applicable to prospective independent contractor physicians
and/or other licensed or certified persons with whom Professional Association
contracts for the provision of ancillary services ("Support Personnel");
(vi) Interviewing prospective independent contractor
physicians and/or Support Personnel;
(vii) Assisting in scheduling meetings between hospitals
and/or medical facilities and prospective independent contractor physicians
and/or
8.
Support Personnel, as may be necessary or required by such hospitals and/or
medical facilities;
(viii) Negotiating and preparing documents as may be
necessary to establish appropriate contractual relationships between (a)
independent contractor physicians and/or Support Personnel and/or (b)
Professional Association and/or any entities related thereto; and
(ix) Performing any and all other services relating to and
arising out of the recruitment of independent contractor physicians and/or
Support Personnel.
(x) Soliciting proposals from the emergency departments of
hospitals and care centers and negotiating and entering into contracts with such
entities in the name of and on behalf of Professional Association and subject to
Professional Association's approval.
(c) DEVELOPMENT OF NEW SERVICES. Management Company will
exercise its good faith business judgment to add new services or to supplement
existing services, subject to Section 3.1(d) below, as may be economically
justified and provided for in the Professional Association Budget. The parties
agree that expansion of the Practice and development of new services will depend
on, among other things, physician composition, anticipated volume, type and
level of reimbursement available, the number and the specialty mix of physicians
in the Practice, the level of physician support, the overall performance of the
Practice, and the requirements of applicable leases and subleases.
(d) CAPITAL INVESTMENT AND SUPPORT. The parties acknowledge that
the addition of new services, the provision of working capital support, the
merger or acquisition of assets of other physician groups, building
improvements, the purchase of new or replacement equipment, and the provision of
space, facilities and equipment for new physicians (without limitation, "Capital
Investments") together may require substantial capital investment by Management
Company. Management Company will exercise its good faith business judgment to
provide the appropriate level of capital support and management services to
accomplish the financial goals of Professional Association.
2.5 DATA PROCESSING. Management Company shall provide, operate,
supervise and direct the development of appropriate and efficient electronic
data processing systems with respect to Professional Association's operation of
the Practice.
9.
2.6 OTHER RESPONSIBILITIES.
(a) MARKETING.
(i) Management Company shall provide all services
reasonably necessary for marketing Professional Association's health care
services and shall submit any marketing programs for prior review and revision,
if necessary, and approval by Professional Association, which approval shall not
be unreasonably withheld. Such marketing shall comply with applicable laws and
regulations governing the use of advertising by the medical profession and with
applicable standards of medical ethics.
(ii) Management Company may make recommendations and
assist in developing patient education materials and programs. Prior to
instituting any such programs, Management Company shall obtain the approval of
Professional Association, which approval shall not be unreasonably withheld.
(b) INSURANCE.
(i) PROFESSIONAL ERRORS AND OMISSIONS COVERAGE.
Management Company shall obtain and maintain during the term of this Agreement,
on behalf of itself and Professional Association, if available on commercially
reasonable terms as determined by Management Company, professional errors and
omissions insurance and general liability insurance, with coverage in amounts to
be agreed upon. To the extent obtainable without incurring additional material
expense, the policies providing coverage to Management Company shall name
Professional Association as an additional insured, and the policies providing
coverage to Professional Association shall name Management Company as an
additional insured.
(ii) PREMIUM AMOUNTS. The amount of the premiums for all
insurance provided under this Agreement for Professional Association shall be
included, either separately or as part of the line-item for leasehold expenses,
in Professional Association Budget as an expense to Professional Association.
(iii) MALPRACTICE INSURANCE. It is understood that
Professional Association and its Contracted Providers shall, at Professional
Association's cost, at all times be covered by malpractice insurance with
coverage in amounts to be agreed upon.
(iv) COPIES OF INSURANCE POLICIES. Management Company
shall, upon request, promptly provide Professional Association with copies of
all policies of insurance that it procures under this Agreement. Each such
policy shall provide that it cannot be modified or terminated except after
thirty (30) days written notice to Professional Association.
(c) PERSONNEL. To the extent such personnel are not
provided by the relevant hospital, Management Company shall furnish the services
of all personnel required for the operation of the Practice. Except as
specifically provided in this
10.
Section 2.6(c), Management Company has the power to recruit, hire, train,
promote, assign, set the compensation level for, and discharge all nonmedical
personnel. Physician Assistants who provide direct patient care shall provide
such services under the exclusive direction, supervision and control of
Professional Association, while all other services of Management Company
personnel shall be performed under the exclusive direction, supervision and
control of Management Company. Notwithstanding the foregoing, if the activities
of any of the nonprofessional personnel affects the delivery of medical care by
Professional Association, Professional Association shall direct and supervise
the provision of such activities to ensure that the best possible medical care
is provided to Professional Association's patients and such activities shall not
be subject to any direction or control by Management Company except as may be
specifically authorized by Professional Association. If Professional Association
is dissatisfied with the services of any such personnel, Professional
Association shall consult with Management Company. Management Company 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 terminated. All of Management Company's obligations regarding staff
shall be governed by the goal of supporting Professional Association in its
provision of high quality medical care. Employee assignments shall be made with
the intention of assuring consistent and continued rendering of high quality
medical support services and to ensure prompt availability and accessibility of
individual medical support personnel to physicians in order to develop constant,
familiar and routine working relationships between individual physicians and
individual members of the medical support personnel.
(d) MANAGED CARE AGREEMENTS. Management Company shall negotiate
and administer all Payor agreements in the name of and on behalf of Professional
Association and subject to Professional Association's approval and Management
Company shall consult with Professional Association on all professional and
clinical matters relating thereto.
III. FINANCIAL ARRANGEMENTS
3.1 MANAGEMENT COMPANY'S COMPENSATION. In consideration for the
services furnished by the Management Company to Professional Association
hereunder, Professional Association shall pay the Management Company a
management fee (the "Management Fee"), which shall be calculated and paid as
follows:
(a) CALCULATION.
(i) The Management Fee for any period shall be equal to
the sum of (x) the Base Fee for such period and (y) the Incentive Fee, if any,
for such period.
11.
(ii) For purposes of this Agreement:
(A) The term "Base Fee" shall mean, for any period,
all expenses of the Management Company of any kind whatsoever with
respect to any period in providing the services contemplated under
this Agreement (including any depreciation expense), other than
Excluded Expenses. For purposes of this Agreement, the term "Excluded
Expenses" shall mean (1) any interest expense on money which is
borrowed by the Management Company from a third party (not including
under this clause (1) interest expense on indebtedness incurred by
Management Company or its Affiliates to finance any of its obligations
hereunder or services provided hereunder, or interest which may accrue
on any accounts payable of the Management Company generated in
providing the services contemplated under this Agreement, which
interest shall be included in the Base Fee) and (2) any federal or
state income tax expenses of the Management Company. The Management
Company shall be entitled, at its option, to include as an expense of
the Management Company for purposes of the Base Fee a reasonable
hourly fee for any specialist or professional employed by Management
Company or one of its Affiliates (such as a management systems
specialist, an insurance consultant, a lawyer, etc.) who provides
services to the Management Company for specific projects in connection
with Management Company's obligations hereunder, provided that such
fees are not in excess of comparable fees that would be charged by
unaffiliated parties providing a comparable quality of service.
(B) The term "Incentive Fee" shall mean, for any period,
an amount, if any, equal to the lesser of (i) gross revenues of
Professional Association minus the sum of (x) the Professional
Association Operating Expenses, plus (y) the Base Fee, or (ii) the
Capital Return Amount.
(iii) The calculation of the "Capital Return Amount", for
purposes of Section 3.1(a)(ii)(B) for any period, shall be made by multiplying
the Managed Capital for such period by the Capital Return Percentage applicable
to such period. The Managed Capital and the Capital Return Percentage shall be
determined as follows:
(A) The Management Company's managed capital ("Managed
Capital") on the Effective Date shall be deemed to be $5,000,000.
From and after the Effective Date, such Managed Capital
shall be subject to adjustment and calculation as follows:
(1) Managed Capital shall be (a) increased dollar for dollar by
any additional cash and the fair market value of other property
contributed by the Management Company to or on behalf of Professional
Association from and after the Effective Date, and (b) decreased
dollar for dollar by any cash or the fair market value of other
property distributed to the Management
12.
Company or any Affiliate of the Management Company from and after the
Effective Date, other than in exchange for goods or services acquired
by the Management Company from such Affiliate or as otherwise provided
in this Agreement or in reduction of any liabilities of the Management
Company.
(2) Any funds which are provided by the Management Company or
its Affiliates to the Professional Association shall be deemed to be
additional cash contributions to, and not debt obligations of, the
Professional Association for purposes of this calculation, whether or
not such contributions are otherwise characterized by Management
Company or its Affiliates for other purposes as inter-company losses.
(3) Managed Capital for purposes of this Section 3.1 shall be
determined as of the end of each quarter during a Budget Period.
However, the cash balance of the Management Company included as of the
end of each quarter shall be the sum of the daily cash balance for the
Management Company for each day during such quarter, divided by the
number of days during such quarter.
(B) The "Capital Return Percentage" shall initially mean
33.1%.
The Capital Return Percentage was calculated by dividing
an agreed upon after-tax percentage of 20% by 0.605 (i.e., assuming
the Management Company was a separate legal entity and would be
subject to an approximately 35% rate for U.S. federal or state
franchise or income tax, as applicable, and a 4.5% rate (after giving
effect to the U.S. federal income tax benefit) for state income tax
purposes) and may be adjusted for increases in federal or state income
tax rates. However, commencing on the fifth anniversary of the
Effective Date, and for each year thereafter, the Management Fee shall
be subject to reasonable increase, at the discretion of the Management
Company, to reflect profitability, expansion and improvements in
operations of Professional Association.
(b) PAYMENT. The Management Fee for any Budget Period
shall be paid as follows:
(i) The Management Fee for such Budget Period shall be
paid as determined by the parties.
(ii) The Management Fee will be reconciled on a quarterly
basis with respect to three-month periods ending March 31, June 30, September 30
and December 31 of each year.
3.2 DEFINITIONS. For the purposes of this Article III, the
following definitions shall apply:
13.
(a) An "Affiliate" of an entity means (i) any person or entity
directly or indirectly controlled by such entity, (ii) any person or entity
directly or indirectly controlling such entity, (iii) any subsidiary of such
entity if the entity has a fifty percent (50%) or greater ownership interest in
the subsidiary, or (iv) such entity's parent entity if the parent has a fifty
percent (50%) or greater ownership interest in the entity. For purposes of this
Article III, Professional Association is not an Affiliate of Management Company.
(b) "Professional Association Operating Expenses" shall mean the
amount set forth in the applicable Professional Association Budget as
Professional Association Operating Expense, which shall include the budgeted
cost and expense for the following items:
(i) payments and compensation to be made by or on behalf
of Professional Association to Contracted Providers;
(ii) compensation, employment-related benefits and
applicable payroll and other deductions, withholdings or payments of Physician
Assistants, if any, in consideration for the provision of professional medical
or other health care services;
(iii) professional liability insurance, to the extent paid
by Professional Association;
(iv) arranging health care services for patients covered
by Payor Contracts where such health care services are not provided by
Professional Association; and
(v) such other items as the parties agree.
It is the intention of Professional Association and Management Company that, for
the administrative convenience of Professional Association, the Professional
Association Budget will generally consist of only the budgeted cost and expense
of any additional items which legally or practically cannot be supplied by
Management Company.
3.3 ACCOUNTS RECEIVABLE. On approximately the tenth of each month,
Management Company may purchase the accounts receivable (net of Medicare,
Medicaid and other government-funded healthcare programs subject to restrictions
on the providers' ability to transfer payments (together "Adjustments")) of
Professional Association, arising during the previous month, by transferring the
amount set forth below by wire transfer into an account of Professional
Association at such place and by such method as may be designated by
Professional Association. The consideration for such purchase would be an amount
equal to all fees recorded each month (net of Adjustments), less the Management
Fee. In the event Management Company exercises its right to purchase pursuant to
this Section 3.3, it is the intention of the parties that Management Company
would thereby become owner of the accounts receivable of
14.
Professional Association. However, in case such purchase shall be ineffective
for any reason, concurrently with any exercise by Management Company of its
right to purchase, the parties shall execute a Security Agreement, in a form
acceptable to Management Company, to grant a security interest in the accounts
receivable to Management Company. In addition, in the event Management Company
exercises its right to purchase, Professional Association shall cooperate with
Management Company to execute all necessary documents in connection with the
pledge of such accounts receivable to Management Company, or at Management
Company's option, its lenders. All collections in respect of such accounts
receivable shall be deposited in a bank account at a bank designated by
Management Company. To the extent Professional Association comes into possession
of any payments in respect of such accounts receivable, Professional Association
shall direct such payments to Management Company for deposit in bank accounts
designated by Management Company.
IV. COVENANTS
4.1 COVENANTS AND WARRANTIES OF PROFESSIONAL ASSOCIATION.
Professional Association covenants with and warrants to Management Company as
follows:
(a) Professional Association is and shall remain during the term
of this Agreement a professional association duly organized, validly existing
and in good standing under the laws of the State of Texas, actively engaged in
the practice of medicine, and possessing full power and authority to own its
properties and to conduct the business in which it engages.
(b) Professional Association has full power and authority to
execute and deliver this Agreement and to engage in the transactions and
obligations contemplated by this Agreement. Upon its execution, this Agreement
shall constitute a valid and binding obligation of Professional Association,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, moratorium, or other similar laws affecting generally
the rights of creditors and by principles of equity. The party executing this
Agreement on behalf of Professional Association is duly authorized to do so.
(c) The consummation of the transactions contemplated by this
Agreement will not: result in a breach of the terms, provisions, or conditions
of or constitute a default under the Articles of Association, Bylaws or other
enabling or governing instruments of Professional Association or any agreement
to which Professional Association is a party or by which it is bound; or, to the
best knowledge of Professional Association, constitute a violation of any
applicable law or regulation.
4.2 COVENANTS AND WARRANTIES OF MANAGEMENT COMPANY. Management
Company covenants with and warrants to Professional Association as follows:
15.
(a) Management Company is and shall remain during the term of
this Agreement a corporation which is duly organized, validly existing and in
good standing under the laws of the State of Texas, possessing full corporate
power and authority to own its properties and to conduct the business in which
it engages.
(b) Management Company has full corporate power and authority to
execute and deliver this Agreement and to engage in the transactions and
obligations contemplated by this Agreement. Upon its execution, this Agreement
shall constitute a valid and binding obligation of Management Company,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, moratorium, or other similar laws affecting generally
the rights of creditors and by principles of equity. The party executing this
Agreement on behalf of Management Company is duly authorized to do so.
(c) The consummation of the transactions contemplated by this
Agreement will not: result in any breach of the terms, provisions or conditions
of or constitute a default under the Articles of Incorporation, Bylaws or other
enabling or governing instruments of Management Company or any agreement to
which Management Company is a party or by which it is bound; or, to the best
knowledge of Management Company, constitute a violation of any applicable law or
regulation.
V. TERM AND TERMINATION
5.1 TERM. This Agreement shall commence on Effective Date and shall
continue in effect in perpetuity, unless sooner terminated pursuant to this
Article V.
5.2 EVENTS OF DEFAULT. Each of the following shall constitute an
"Event of Default" (the party causing such default is referred to as the
"Breaching Party"):
(a) The Breaching Party fails to make any payment required under
this Agreement.
(b) The Breaching Party admits in writing its inability to pay
its debts as they mature, makes any general assignment for the benefit of
creditors, or seeks to avail itself of any law for the release of insolvent
debtors.
(c) Insolvency, bankruptcy, dissolution, liquidation, or
receivership proceedings are commenced by or with the consent of the Breaching
Party, or are pending for more than sixty (60) days against the Breaching Party.
(d) The Breaching Party fails to observe or otherwise breaches
any material term, condition, covenant, or warranty of this Agreement.
16.
5.3 TERMINATION. Subject to the provisions of this Article V, the non-
Breaching Party may terminate this Agreement upon the occurrence of an Event of
Default in accordance with the following:
(a) In the event of the occurrence of an Event of Default
referred to in Section 5.2(a) above, upon the expiration of thirty (30) days
after written notice, which notice shall specify the nature and extent of such
Event of Default to the Breaching Party, unless the amount due is paid within
such thirty (30) days.
(b) In the event of the occurrence of any other Event of
Default, upon the expiration of ninety (90) days after written notice, which
notice shall specify the nature and extent of such Event of Default to the
Breaching Party. However, in the case of a remediable Event of Default, the
Breaching Party shall have the opportunity to remedy such Event of Default
within such ninety (90) days.
5.4 DUTIES UPON TERMINATION OR EXPIRATION OF THIS AGREEMENT. If
this Agreement is terminated upon expiration of its term, or earlier as provided
in Sections 5.3 or 8.12:
(a) Neither party shall be released or discharged from any
obligation, debt or liability which has previously accrued or been incurred and
remains to be performed upon the date of termination or expiration;
(b) Any sums of money owing by one party to the other shall be
paid immediately;
(c) Each party shall return to the other party all originals and
copies of the Proprietary Information of any of the Protected Parties (as those
terms are defined in Article VI) which are in the possession of such party or
any other person or entity to whom it has delivered such originals and copies;
and
(d) Damages and any other remedies available at law or in equity
may be sought and collected from the Breaching Party in the event of a
termination resulting from an Event of Default.
VI. RESTRICTIVE COVENANTS
6.1 COVENANT REGARDING PROPRIETARY INFORMATION. In the course of the
relationship created pursuant to this Agreement, Professional Association will
have access to certain methods, trade secrets, processes, ideas, systems,
procedures, inventions, discoveries, concepts, software in various stages of
development, designs, drawings, specifications, models, data, documents,
diagrams, flow charts, research, economic and financial analysis, developments,
procedures, know-how, policy manuals, form contracts, marketing and other
techniques, plans, materials, forms, copyrightable materials and trade
information (all of which is referred to in this Agreement as "Proprietary
17.
Information") regarding the operations of Management Company and/or of its
Affiliates (collectively, the "Protected Parties"). Professional Association
shall maintain all such Proprietary Information in strict secrecy and shall not
divulge such information to any third parties, except as may be necessary for
the discharge of their obligations under this Agreement. Professional
Association shall take all necessary and proper precautions against disclosure
of any Proprietary Information to unauthorized persons by any of its officers,
directors, employees or agents. All officers, directors, employees, and agents
of Professional Association who will have access to all or any part of the
Proprietary Information may be required to execute an agreement, at the
reasonable request of the other party, valid under the law of the jurisdiction
in which such agreement is executed, and in a form acceptable to Management
Company and its counsel, committing themselves to maintain the Proprietary
Information in strict confidence and not to disclose it to any unauthorized
person or entity. The Protected Parties 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. Upon termination of this Agreement for any
reason, Professional Association and each of its Contracted Providers shall
cease all use of any of the Proprietary Information and, at the request of
Management Company, shall execute such documents as may be necessary to evidence
Professional Association's abandonment of any claim thereto. The parties
recognize that a breach of this Section 6.1 cannot be adequately compensated in
money damages and therefore agree that injunctive relief shall be available to
the Protected Parties as their respective interests may appear.
The obligations of Professional Association under this Section 6.1
shall not apply to information: (i) which is a matter of public knowledge on or
becomes a matter of public knowledge after the Effective Date of this Agreement,
other than as a breach of the confidentiality terms of this Agreement or as a
breach of the confidentiality terms of any other agreement between Professional
Association and Management Company or its Affiliates; or (ii) was lawfully
obtained by Professional Association on a non- confidential basis other than in
the course of performance under this Agreement and from some entity other than
Management Company or its Affiliates or from some person other than one employed
or engaged by Management Company or its Affiliates, which entity or person has
no obligation of confidentiality to Management Company or its Affiliates.
6.2 COVENANTS NOT TO COMPETE DURING THE TERM. The parties recognize
that the services to be provided by Management Company shall be feasible only if
Professional Association operates an active emergency physician practice to
which Professional Association and Contracted Physicians devote full time and
attention. To that end:
(a) RESTRICTIVE COVENANTS BY PROFESSIONAL ASSOCIATION. During
the term of this Agreement, Professional Association shall not establish,
operate or provide physician or other health care services at any hospital,
medical office, clinic or other health care facility providing services
substantially similar to those provided by Professional Association pursuant to
this Agreement anywhere other than at the Practice
18.
Sites and as may be approved in writing by Management Company. Professional
Association shall also not enter into any management or administrative services
agreement or arrangement with any person or entity other than Management Company
without Management Company's prior written approval.
(b) RESTRICTIVE COVENANTS BY CONTRACTED PHYSICIANS. Professional
Association may obtain and enforce formal agreements with its Contracted
Physicians not to establish, operate or provide physician or other health care
services, during the term of this Agreement pursuant to such terms and language
as the parties agree.
6.3 COVENANT NOT TO COMPETE FOLLOWING TERMINATION. For three (3) years
following the termination of this Agreement by Management Company pursuant to
Section 5.3 or by either party pursuant to Section 8.12, Professional
Association shall not enter into any management or administrative services
agreement or any similar arrangement with any person or entity for the provision
of the same or similar services as Management Company provides to Professional
Association under this Agreement, or who otherwise competes with Management
Company within such area as the parties agree surrounding any location where
Management Company or any of its Affiliates is conducting the same or similar
business.
6.4 COVENANT NOT TO SOLICIT. For three (3) years following the
termination of this Agreement, Professional Association shall not:
(a) Directly or indirectly solicit, recruit or hire, or induct
any party to solicit, recruit or hire any person who is an employee of, or who
has entered into an independent contractor arrangement with, Management Company
or any Affiliate of Management Company;
(b) 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 Management Company's customers,
business, or clients; or
(c) Directly or indirectly solicit, or induce any party to
solicit, any of Management Company's contractors or the contractors of any
Affiliate of Management Company, to enter into the same or a similar type of
contract with any other party; or
(d) Disrupt, damage, impair or interfere with the business of
Management Company.
VII. INFORMATION AND RECORDS
7.1 OWNERSHIP OF 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,
general administrative records and all information generated under or contained
in the management information system
19.
pertaining to Management Company's obligations hereunder, and other business
information of any kind or nature, except for patient medical records and
Professional Association's Records (as defined in Section 7.2 below), shall be
and remain the sole property of Management Company; provided that after
termination of this Agreement Professional Association shall be entitled to
reasonable access to such records and information, including the right to obtain
copies thereof, for any purpose related to patient care or the defense of any
claim relating to patient care or the business of Management Company or
Professional Association.
7.2 PROFESSIONAL ASSOCIATION'S BUSINESS AND FINANCIAL RECORDS. At all
times during and after the term of this Agreement, the financial, corporate and
personnel records and information relating exclusively to the business and
activities of Professional Association, as distinguished from the business and
activity of Management Company, hereinafter referred to as "Professional
Association's Records," shall be and remain the sole property of Professional
Association.
7.3 ACCESS TO RECORDS. Each party shall be entitled, upon request and
with reasonable advance notice, to obtain access 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 for access
to records that must necessarily be kept confidential. Either party, at its
expense, shall have the right to make copies of any records to which it has
access pursuant to this Section.
7.4 CONFIDENTIALITY OF RECORDS. Management Company and Professional
Association shall adopt procedures for maintaining the confidentiality of the
records relating to the operations of Management Company and Professional
Association, including but not limited to all statistical, financial and
personnel data related to the operations of Management Company or Professional
Association, which information is not otherwise available to third parties
publicly or by law, and shall comply with all applicable federal and state
statutes and regulations relating to such records. Patient medical records and
other privileged patient information shall not be disclosed or utilized by
Professional Association or Management Company or their agents or employees
except as required or permitted by applicable laws and regulations.
7.5 LIMITATIONS ON USE OF MANAGEMENT INFORMATION SYSTEM. Professional
Association shall use all software and hardware provided or arranged for by
Management Company pursuant to this Agreement in accordance with and subject to
the terms and conditions of any license, sublicense, lease or other agreement
applicable thereto and shall not allow or permit any person to use the software
or hardware or any portion thereof in violation of any such license, sublicense,
lease or other agreement.
20.
VIII. MISCELLANEOUS
8.1 INDEPENDENT CONTRACTOR STATUS OF PARTIES. In the performance of
the work, duties and obligations under this Agreement, it is mutually understood
and agreed that each party is at all times acting and performing as an
independent contractor with respect to the other and that no relationship of
partnership, joint venture or employment is created by this Agreement. Neither
party, nor any other person performing services on behalf of such party pursuant
to this Agreement, shall have any right or claim against the other party for
Social Security benefits, workers' compensation benefits, disability benefits,
unemployment insurance benefits, health benefits, vacation pay, sick leave or
any other employee benefits of any kind.
8.2 NO WAIVER. The waiver by any party to this Agreement of any breach
of any term or condition of this Agreement shall not constitute a waiver of
subsequent breaches. No waiver by any party of any provision of this Agreement
shall be deemed to constitute a waiver of any other provision.
8.3 NOTICES. If, at any time after the execution of this Agreement, it
shall become necessary or convenient for one of the parties to serve any notice,
demand or communication upon the other party, such notice, demand, or
communication shall be in writing and shall be served personally, by facsimile
transmission, with voice confirmation and receipt confirmed, overnight courier
which provides confirmation of delivery, or by depositing the same in the United
States mail, registered or certified, return receipt requested, postage prepaid
and,
(a) If intended for Professional Association, then
the notice shall be addressed:
STAT Physicians, P.A.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
(b) If intended for Management Company, then the
notice shall be addressed:
STAT Healthcare, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇
or to such other address as either party may have furnished to the other party
in writing as the place for the service of notice. Any notice so mailed shall be
deemed to have been given three (3) days after the same has been deposited in
the United States mail; any notice given personally, by facsimile or overnight
courier shall be deemed to have been given upon receipt of the notice.
21.
8.4 ASSIGNMENT. Neither party may sell, transfer, assign, or otherwise
convey its rights or obligations under this Agreement without the prior written
consent of the other; which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, Management Company shall have the limited right
to delegate or subcontract for the performance of any and all duties required to
be performed by Management Company as set forth herein. In effecting any such
subcontract or delegation, Management Company must assure that the subcontractor
or delegee is qualified and will be compensated for the subcontracted or
delegated services in an amount no greater than the fair market value of such
services as paid for comparable services charged by other persons or entities in
the same geographic area.
8.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of this
Agreement respecting assignment, the terms, covenants and conditions contained
herein shall be binding upon and inure to the benefit of the successors and
permitted assigns of the parties hereto.
8.6 SEVERABILITY. If any provision of this Agreement other than
Article III is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
8.7 THIRD PARTIES. Except as provided in Article VII, nothing in this
Agreement shall be construed to create any duty to, any standard of care with
reference to or any liability to anyone not a party to this Agreement.
8.8 HEADINGS. The headings used in this Agreement are for convenience
of reference only and shall have no force or effect in the construction or
interpretation of the provisions of this Agreement.
8.9 TIME OF THE ESSENCE. Time is of the very essence of each and all
of the agreements, covenants and conditions of this Agreement.
8.10 GOVERNING LAW. This Agreement shall be interpreted in accordance
with and governed by the laws of the State of Texas, to the jurisdiction of
which each of the parties hereby submits.
8.11 CONFIDENTIALITY. Except for disclosure to its bankers,
underwriters or lenders, or as necessary or desirable for conduct of business,
including negotiations with other acquisition candidates, neither party hereto
shall disseminate or release to any third party any information regarding any
provision of this Agreement, or any financial information regarding the other
(past, present or future) that was obtained by the other in the course of the
negotiations of this Agreement or in the course of the performance of this
Agreement, without the other party's written approval; provided, however, the
foregoing shall not apply to information which (i) is generally available to the
public other than as a result of a breach of confidentiality provisions; (ii)
becomes available on a non-confidential basis from a source other than the other
party or its Affiliates or
22.
agents, which source was not itself bound by a confidentiality agreement, or
(iii) which is required to be disclosed by law including securities laws, or
pursuant to court order.
8.12 CONTRACT MODIFICATIONS FOR PROSPECTIVE LEGAL EVENTS. The parties
acknowledge that Management Company is not authorized or qualified to engage in
any activity which may be construed or deemed to constitute the practice of
medicine. Professional Association and Management Company shall amend this
Agreement if (i) any act or service required of Management Company in this
Agreement is interpreted by judicial decision, a regulatory agency or legal
counsel of both parties in such a manner as to indicate that such act or service
constitutes the practice of medicine; or (ii) the structure of this Agreement is
in violation of state or federal laws or regulations, now existing or enacted or
promulgated after the effective date of this Agreement. Such amendment shall, to
the maximum extent possible, preserve the underlying economic and financial
arrangements between Professional Association and Management Company. The
parties agree that such amendment may require reorganization of Professional
Association or Management Company, or both, and may require either or both
parties to obtain appropriate regulatory licenses and approvals. If an amendment
is not possible, either party shall have the right to terminate this Agreement.
8.13 LANGUAGE CONSTRUCTION. The language in all parts of this
Agreement shall be construed, in all cases, according to its fair meaning, and
not for or against either party hereto. The parties acknowledge that each party
and its counsel have reviewed and revised this Agreement and 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.
8.14 COMMUNICATIONS. Professional Association and Management Company
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 Professional
Association's practice.
8.15 INDEMNIFICATION. Professional Association shall indemnify, hold
harmless and defend Management Company, its officers, directors, shareholders,
employees, agents and independent contractors from and against any and all
liabilities, losses, damages, claims, causes of action, and expenses (including
reasonable attorneys' fees and disbursements), whether or not covered by
insurance, caused or asserted to have been caused, directly or indirectly, by or
as a result of the performance of medical services or any other acts or
omissions by Professional Association and/or its partners, agents, employees
and/or subcontractors (other than Management Company) during the term hereof.
Management Company shall indemnify, hold harmless and defend Professional
Association, its officers, directors, partners, employees, agents and
independent contractors from and against any and all liabilities, losses,
damages, claims, causes of action, and expenses (including reasonable attorneys'
fees and disbursements), whether or not covered by insurance, caused or asserted
to have been caused, directly or indirectly, by or as a result of the
performance of any acts or omissions by Management
23.
Company and/or its shareholders, agents, employees and/or subcontractors during
the terms of this Agreement.
8.16 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, negotiations and
discussion, whether written or oral, between the or among parties regarding the
subject matter of this Agreement including, without limitation, the Original
Agreement.
8.17 INCORPORATION BY REFERENCE. All exhibits and other attachments to
this Agreement are incorporated by reference into this Agreement by such
reference.
8.18 AMENDMENTS ONLY IN WRITING. This Agreement may not be amended or
modified in any respect whatsoever, except by an instrument in writing signed by
the parties hereto.
8.19 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be considered an original and all of which
shall constitute one and the same agreement. This Agreement shall not become
effective until it has been executed by all of the parties hereto.
8.20 COMMERCIAL IMPRACTICABILITY. No party to this Agreement shall be
liable for any failure to perform its obligations hereunder where such failure
results from any cause beyond that party's reasonable control, including, for
example, an act of God, labor disturbance such as a strike or walkout, war,
riot, fire, storm, accident, government regulation or interference, or
mechanical, electronic or communications failure.
8.21 ELECTION OF REMEDIES. The respective rights of the parties to
this Agreement shall be cumulative. Each party shall have all other rights and
remedies not inconsistent with this Agreement as law and equity may provide. No
exercise by any party of any one right or remedy shall be deemed to be an
exclusive election of rights or remedies.
8.22 ATTORNEYS' FEES AND EXPENSES. In the event of any arbitration or
action or proceeding at law or in equity between the parties to enforce any
provision of this Agreement or to protect or establish any right or remedy of
either party hereunder, the substantially unsuccessful party to such arbitration
or litigation shall be obligated to pay to the substantially prevailing party
all costs and expenses, including reasonable attorneys' fees, incurred therein
by such prevailing party, and if such prevailing party shall receive an award or
recover judgment in any such action or proceeding, such costs, expenses and
attorneys' fees shall be included in and as a part of such award or judgment.
8.23 SURVIVAL. The provisions of Articles III, IV, V, VI, VII and VIII
shall survive any termination of this Agreement.
24.
IN WITNESS WHEREOF, Management Company and Professional Association
have caused this Agreement to be executed by their duly authorized respective
officers as of the Effective Date.
STAT Healthcare, Inc.
By: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Cheif Financial Officer
STAT Physicians, P.A.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
Its: Chairman of the Board and
Vice President
25.
