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EXHIBIT 10.41
BUSINESS MANAGEMENT AGREEMENT
(PROFESSIONAL)
This Business Management Agreement is made and entered into effective
as of December 1, 1996, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C., an Arizona
professional corporation ("Business Manager"), and MILLENNIUM VISION, P.C., a
professional corporation, organized and existing under the laws of the State of
Arizona (the "Practice").
R E C I T A L S
A. The Practice is a professional corporation duly organized and
validly existing under the laws of the State of Arizona (the "State") which is
engaged in the provision of Professional Eye Care Services (as defined below) to
the general public in the State through individual Professionals (as defined
below) who are licensed to practice medicine or optometry in the State and who
are employed or otherwise retained by the Practice.
B. Business Manager is a professional corporation duly organized and
validly existing under the laws of the State.
C. The Practice desires to devote substantially all of its energies,
expertise and time on the delivery of Professional Eye Care Services to
patients.
D. The Practice desires to engage Business Manager to provide
facilities, equipment and such management, administrative and business services
as are necessary and appropriate for the day-to-day administration of the
non-medical and non-optometric aspects of the Practice's professional eye care
practice, and Business Manager desires to provide such, upon the terms and
conditions hereinafter set forth, for the purpose of enhancing the
cost-efficiency and quality of services rendered by the Practice to its
patients.
NOW, THEREFORE, for and in consideration of the mutual agreements,
terms, covenants and conditions contained herein and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:
1. DEFINITIONS. For the purposes of this Business Management
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. Account. The term "Account" shall mean the bank account described
in Sections 3.9 and 3.10(a) and (c).
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1.2. Acquisition Transaction. The term "Acquisition Transaction" shall
mean the completed Agreement and Plan of Reorganization entered into by and
between Business Manager and Vision 21, Inc.
1.3. Adjusted Gross Revenue. The term "Adjusted Gross Revenue" shall
mean all revenues, for Professional Eye Care Services and any other revenues,
calculated on an accrual basis under GAAP, generated by or on behalf of the
Practice and its Professionals and Capitation Revenues during the term of this
Business Management Agreement, including, without limitation, all technical fees
from ancillary services, all proceeds from key person life insurance policies
purchased by Business Manager in accordance with Section 3.15, all amounts paid
by third parties for contractual liabilities, including payments under
non-shareholder Professionals' non-competition agreements, and all medical
director, consultant, teaching and expert witness fees except for those fees set
forth in Exhibit 1.3 (unless the time and efforts of the individuals responsible
for such excluded revenues are materially greater than the historical time or
efforts expended in obtaining such revenues or if such excluded revenues
historically flowed through the Practice), minus any allowances for bad debts,
uncollectible accounts, Medicare, Medicaid and other payor contractual
adjustments, discounts, workers' compensation adjustments, reasonable
professional courtesies, and other reductions in collectible revenue that result
from activities that do not result in collectible charges.
1.4. Agreement or Business Management Agreement. The term "Agreement"
or "Business Management Agreement" shall mean this instrument as originally
executed and delivered, or, if amended or supplemented, as so amended or
supplemented.
1.5. Budget. The term "Budget" shall mean an operating budget and
capital expenditure budget for each fiscal year as prepared in accordance with
Section 3.11(a).
1.6. Business Manager. The term "Business Manager" shall have the
meaning set forth in the Recitals hereto.
1.7. Business Manager Consent. The term "Business Manager Consent"
shall mean the consent granted by Business Manager's representatives (or either
representative) to the Practice Advisory Council created pursuant to Article II
herein, which consent shall not be unreasonably withheld or delayed and shall be
binding on the Business Manager.
1.8. Business Manager Expense. The term "Business Manager Expense"
shall mean an expense or cost incurred by the Business Manager, for which the
Business Manager is financially liable and is not entitled to reimbursement from
the Practice. Business Manager Expense shall specifically include: (a) any
amortization of intangible assets resulting from the Acquisition Transaction,
(b) any income or franchise taxes of the Business Manager, (c) any expense or
cost relating to any underwritten initial public offering of Business Manager's
common stock pursuant to which a registration statement is filed under the
Securities Act of 1933 (except for underwriter's commissions, charges or
discounts related to the sale of stock by
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any Shareholder of the Practice which shall be borne individually by them), (d)
expenses and costs relating to the acquisition of any other health care
companies unless all or a specific portion of such expenses and costs are
approved as an Office Expense by the Practice Advisory Council, or unless the
Practice participates in the acquisition through the Practice's acquisition of
medical assets of the acquired health care company, and (e) any other expense or
cost that are not reasonable and customary reimbursements based upon a usual
national practice management company's arrangement with a practice. Business
Manager Expenses (as of the date hereof) are more specifically identified in
Exhibit 1.8. In the case of any inconsistency between specifics in Exhibit 1.8
and the general descriptions in (a) through (d) above, Exhibit 1.8 shall govern
(as of the date hereof).
1.9. Capitation Revenues. The term "Capitation Revenues" shall mean
all collections from managed care organizations or third-party payors where such
payment is made periodically on a per member basis for the partial or total
needs of a subscribing patient, less amounts that are payable to other providers
of health care items and services to capitation patients. Capitation Revenues
shall include any co-payments and incentive bonuses received as a result of a
capitation plan.
1.10. Clinical Personnel. The term "Clinical Personnel" shall mean
those individuals who are (to the extent permitted by law) employed by or
otherwise under contract or associated with Business Manager as nurse
anesthetists, physician assistants, technicians, nurse practitioners or similar
positions, or any position that generates a professional charge except for
Professionals. In the event that such individuals are not permitted by the laws
of the State to be employed by or otherwise under contract with Business
Manager, such individuals shall instead be employed by or under contract with
the Practice, and all expenses associated with the employment of or contracting
with such individuals shall be Practice Expenses.
1.11. Confidential Information. The term "Confidential Information"
shall mean any information of Business Manager or the Practice, as appropriate
(whether written or oral), including all business management or economic
studies, patient lists, proprietary forms, proprietary business or management
methods, marketing data, fee schedules, or trade secrets of the Business Manager
or of the Practice, as applicable, whether or not such Confidential Information
is disclosed or otherwise made available to one Party by the other Party
pursuant to this Business Management Agreement. Confidential Information shall
also include the terms and provisions of this Business Management Agreement and
any transaction or document executed by the Parties pursuant to this Business
Management Agreement. Confidential Information does not include any information
that the receiving party can establish (a) is or becomes generally available to
and known by the public or medical community (other than as a result of an
unpermitted disclosure directly or indirectly by the receiving party or its
affiliates, advisors, or Representatives); (b) is or becomes available to the
receiving party on a nonconfidential basis from a source other than the
furnishing party or its affiliates, advisors or Representatives, provided that
such source is not and was not bound by a confidentiality agreement with or
other obligation of secrecy to the furnishing party of which the receiving
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party has knowledge; or (c) has already been or is hereafter independently
acquired or developed by the receiving party without violating any
confidentiality agreement with or other obligation of secrecy to the furnishing
party.
1.12. GAAP. The term "GAAP" shall mean generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity or other practices and procedures as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of the determination. All
financial reporting which is required pursuant to this Agreement to be made in
conformity with GAAP shall also be prepared in a manner acceptable to the
Securities and Exchange Commission for reports made pursuant to the Securities
and Exchange Commission's rules and regulations.
1.13. Local Advisory Council. The term "Local Advisory Council" shall
have the meaning set forth in Section 2.10 of this Agreement.
1.14. Management Fee. The term "Management Fee" shall mean the Business
Manager's compensation established as described in Article V hereof.
1.15. Management Services. The term "Management Services" shall mean
the business, administrative, and management services to be provided for the
Practice, including, without limitation, the provision of equipment, inventory
and supplies (including the use of all assets owned by Business Manager which
are located at the Office on the effective date hereof), support services,
personnel (including Clinical Personnel but excluding Professionals), office
space, management, administration, financial record keeping and reporting, and
other business office services, all as reasonably necessary for the conduct of
the Practice's business.
1.16. National Appeals Council. The term "National Appeals Council"
shall have the meaning set forth in Section 2.11 hereto.
1.17. Office. The term "Office" shall mean any office space, clinic, or
facility, including satellite facilities, that Business Manager shall own or
lease or otherwise procure for the use of the Practice.
1.18. Office Expense. The term "Office Expense" shall mean all
operating and non-operating expenses incurred by the Business Manager in the
provision of Management Services to the Practice and shall include all operating
and non-operating expenses incurred by the Practice relating to the items set
forth in this Section. The Business Manager shall be reimbursed by the Practice
for any Office Expense incurred by the Business Manager in the provision of
services to the Practice, upon request by the Business Manager. Office Expense
shall not include any Business Manager Expense, Practice Expense or Shareholder
Expense or
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any state, local or federal income or franchise tax. Without limitation, Office
Expense shall include the following expenses, as such expenses are more
specifically described in Exhibit 1.18:
(a) the salaries, benefits, payroll taxes, and other direct
costs of all employees of Business Manager (including Clinical Personnel)
primarily working at the Office and the salaries, benefits, payroll taxes, and
other direct costs of the non-Professional and nonclinical employees of the
Practice, but not the salaries, benefits, payroll taxes or other direct costs of
the Professionals;
(b) the direct cost of any employee or consultant that
provides services at or in connection with the Office for improved clinic
performance, such as management, billing and collections, business office
consultation, and accounting and legal services, but only when such services are
coordinated by Business Manager and/or included in the Budget;
(c) reasonable recruitment costs and out-of-pocket expenses of
Business Manager or the Practice associated with the recruitment of additional
Professionals, other employees of the Practice and Business Manager's employees
primarily located at the Office;
(d) personal property and intangible property taxes assessed
against Business Manager's assets used in connection with the operation of the
Office;
(e) comprehensive and general liability insurance covering the
Office and employees of the Practice and Business Manager at the Office;
(f) the expense of using, leasing, purchasing or otherwise
procuring and maintaining the Office and related equipment, including
depreciation in the case of furniture, fixtures and equipment (not to exceed,
for any existing item, the amount of current depreciation for such existing
item) owned by Business Manager and used at the Office, except for those
equipment expenses described in Section 3.2(d), which shall be a Shareholder
Expense.
(g) the cost of capital (whether as actual interest on
indebtedness incurred on behalf of the Practice, as reasonable imputed interest
on capital advanced by Business Manager, which shall be equal to the average
cost of borrowing by Business Manager as reflected on its most recent published
financial statements, or in the absence of either of the foregoing, eight
percent (8%)), to finance or refinance obligations of the Practice, purchase
additional (new or used) medical or non-medical equipment to be used in
connection with the Office, or to finance new ventures of the Practice; in any
such case only as such cost of capital is set forth in the Budget or otherwise
approved in advance by the Practice Advisory Council;
(h) the reasonable travel expenses associated with attending
meetings, conferences, or seminars to benefit the Practice so long as such
expenses are related to individuals located at the Office and the Practice's pro
rata share for individuals who are consultants of or employed by Business
Manager who provide material services to the Practice;
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(i) the cost of non-medical office supplies, inventory and
utilities;
(j) billing and collection costs and expenses;
(k) the Practice's pro-rata share of reasonable corporate
overhead charges or other reasonable expenses (including computer and data
processing costs) which are incurred by Business Manager or any parent or
affiliate of Business Manager in connection with regional expenses or corporate
headquarters expenses which: (i) relate to the provisions of benefits or
services by Business Manager on behalf of the Practice as reflected in the
Budget, or (ii) are a substitute at the same or less cost as the existing level
of expenses historically incurred by the Practice or set forth in the Budget;
(l) all other expenses which are set forth in the Budget and
which directly or indirectly benefit the Practice incurred by Business Manager
in carrying out its obligations under this Business Management Agreement;
(m) reasonable costs and expenses (to the extent not covered
by insurance) of lawsuits or claims against the Business Manager, the Practice
or its Professional(s) related to their performance of duties at the Office or
their interest in the leasehold or other assets used in connection with the
Office, provided that if the Business Manager, the Practice or its
Professional(s) does not prevail in the lawsuit or claim or settles the matter
with a material payment by the party (the party at "fault"), such costs and
expenses shall be deemed a Business Manager Expense in the event of Business
Manager's fault, and a Shareholder Expense in the event of fault by the Practice
or Professional, whereupon the Practice and such Professional(s) shall be
jointly responsible for the immediate reimbursement of the sums advanced (which
may at the option of Business Manager be offset by Business Manager against sums
otherwise due the Practice under Section 3.10(b)); provided further that
Business Manager shall not advance such costs and expenses from the account if
the Practice Advisory Council concludes that (i) it is unlikely that the Account
will be reimbursed if the party involved will not prevail in the lawsuit or
claim, or (ii) it is reasonable to believe that obtaining a reimbursement of the
advanced sums will be difficult to achieve; and the Parties acknowledge that
nothing in this Section shall create any liability on the part of a Professional
who would otherwise be shielded from personal liability by the corporate or
limited liability structure of the Practice;
(n) key person life insurance premiums related to policies
which the Parties agree to acquire on the life of the Practice's Professionals,
whereupon any proceeds shall be paid to the Account as Adjusted Gross Revenues,
unless the Parties agree to a specific split of the proceeds. Should only the
Practice choose to obtain key person life insurance, the Practice shall pay all
premiums as a Shareholder Expense and shall receive all proceeds. Further, if
only the Business Manager chooses to obtain such insurance, Business Manager
shall pay all premiums as a Business Manager Expense and shall receive all
proceeds. The Practice shall cause its Professionals to submit to a medical
examination necessary to obtain such insurance.
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In the event that any of the above described individuals described in
Section 1.18(b) devote a substantial amount of time to serving one or more
health care practices other than the Practice, which is not prohibited
hereunder, or the above described equipment or Office are utilized to a
substantial degree by one or more health care practices other than the Practice,
the Office Expenses shall be allocated between the Practice and such other
health care practices to reflect each practice's pro-rata share of any expenses
or costs relating to such individuals, equipment or Office (including the
recruitment costs of such individuals and the comprehensive and general
liability insurance expenses with respect to such individuals). Expenses
contemplated in this paragraph which potentially and primarily relate to
Sections 1.18(b), (c), (d), (e), (f), (g), (h), (k) and (l) shall be in the
Budget or approved by the Practice Advisory Council, and where reasonably
determinable, are intended to be reasonable and customary based upon similar
relationships generally existing between national practice management companies
and practices they manage. The Practice's pro-rata portion of expenses related
to individuals who are consultants of or employed by Business Manager and who
provide services benefiting more than one practice shall be based upon the
actual time expended by the individuals in performing such services as compared
to the time spent by such individuals with other practices managed by the
Business Manager, or, if not reasonably calculable, as determined by Business
Manager, based upon the estimated proportionate revenue size of the Practice as
compared to the aggregate revenue size as estimated in all of the Budgets of all
other practices managed by the Business Manager which are benefiting from such
individual's services. Likewise, equipment and other benefits provided by the
Business Manager to several Practices shall be split pro-rata based upon the use
or benefit derived by each Practice, but if not calculable, shall be based upon
the estimated proportionate revenue size as set forth in the preceding sentence.
Notwithstanding anything to the contrary herein, unless an expense is expressly
designated as a Business Manager Expense, a Practice Expense or a Shareholder
Expense in this Business Management Agreement or any exhibit thereto, all
expenses incurred by Business Manager in providing services pursuant to this
Business Management Agreement shall be considered an Office Expense.
1.19. Ophthalmologist. The term "Ophthalmologist" shall mean each
individually licensed physician who is employed or otherwise retained by or
associated with the Practice, each of whom shall meet at all times the
qualifications described in Section 4.2 and Section 4.3, including, without
limitation, any Shareholder of the Practice who is a licensed physician.
1.20. Optometrist. The term "Optometrist" shall mean each individually
licensed Optometrist, if any, who is employed or otherwise retained by or
associated with the Practice, each of whom shall meet at all times the
qualifications described in Section 4.2 and Section 4.3.
1.21. Parties. The term "Parties" shall mean the Practice and Business
Manager.
1.22. Practice. The term "Practice" shall have the meaning set forth in
the Recitals.
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1.23. Practice Advisory Council. The term "Practice Advisory Council"
shall have the meaning set forth in Section 2.6 of this Agreement.
1.24. Practice Consent. The term "Practice Consent" shall mean the
consent granted by the Practice's representatives (or either representative) to
the Practice Advisory Council created pursuant to Article II herein, which
consent shall not be unreasonably withheld or delayed and shall be binding on
the Practice.
1.25. Practice Expenses. The term "Practice Expenses" shall mean (a)
all reasonable non-shareholder Professionals' salaries, benefits, payroll taxes
and other direct costs related to their services at the Office (including
reasonable and customary professional dues, subscriptions, continuing education
expenses, severance payments, (b) the cost of medical supplies (including, but
not limited to, optical supplies, drugs, pharmaceuticals, products, substances,
items or medical devices), (c) reasonable and customary professional liability
insurance expenses of Professionals, (d) travel costs for continuing education
and necessary business travel for non-shareholder Professionals, and (e) costs
of goods sold in any optical business of the Practice. Notwithstanding the
foregoing, the term Practice Expenses shall specifically exclude (i) business
travel requested by Business Manager, which shall be an Office Expense, (ii) any
and all compensation or expenses attributable to Shareholders, which shall be a
Shareholder Expense (except reasonable and customary expenses for malpractice
insurance which shall be a Practice Expense), (iii) "tail" insurance coverage
for Shareholders, which shall be a Shareholder Expense, or (iv) such other items
agreed to in advance in writing by the Parties hereto. During this Agreement,
for so long as a current Shareholder of the Practice is an employee of, or
contractor to, or Shareholder of the Practice, such Shareholder shall be deemed
to be a Shareholder for the purposes of this definition. Such expenses are to be
approved annually in the Budget. Practice Expenses are more specifically
described in attached Exhibit "1.18."
1.26. Practice Territory. The term "Practice Territory" shall mean the
geographic area described in Exhibit 1.26, representing the geographic
boundaries in which the Practice renders Professional Eye Care Services.
1.27. Professional. The term "Professional" shall mean any
Ophthalmologist or Optometrist.
1.28. Professional Eye Care Services. The term "Professional Eye Care
Services" shall mean professional health care items and services, including, but
not limited to, the practice of ophthalmology, and the practice of optometry,
and all related professional health care services provided by the Practice
through the Practice's Ophthalmologists, Optometrists, if any, and other
professional health care providers that are retained by or professionally
affiliated with the Practice. The term shall also include any and all business
whatsoever in connection with any current or future ambulatory surgery centers
or optical businesses owned or operated, or to be owned or operated in the
future, in whole or in part, by the Practice or any of its Professionals during
the terms of this Agreement.
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1.29. Representatives. The term "Representatives" shall mean a Party's
officers, directors, managers, employees, or other agents.
1.30. Shareholder. The term "Shareholder" shall mean any current or
future shareholder of the Practice.
1.31. Shareholder Expense. The term "Shareholder Expense" shall be
limited to the following expenses, as such expenses are more specifically
described in Exhibit 1.18: (a) Shareholders' salaries, benefits, payroll taxes,
and other direct costs (including professional dues, subscriptions, continuing
education expenses, severance payments, entertainment, and travel costs for
continuing education or other business travel but excluding business travel
requested by Business Manager, which shall be an Office Expense, and excluding
any other expense of a Shareholder approved as an Office Expense in advance by
the Parties); (b) those portions of leasehold obligations of the Business
Manager which are deemed in excess of fair market value as set forth in Exhibit
1.31; (c) to the extent not covered by insurance and subject to the advance
provisions contained herein, the defense costs of any litigation brought against
the Practice or the Professionals by any third party and any liability judgment
assessed against the Practice or the Professionals; (d) certain equipment
expenses described in Section 3.2(d); (e) interest on any funds advanced to the
Practice by Business Manager to the extent that Business Manager is a net lender
in accordance with the terms of this Agreement; (f) "tail" coverage malpractice
insurance expenses for the Shareholders and any malpractice insurance expenses
of any Professional which are in excess of those which are customary and
reasonable; (g) any income taxes or franchise tax of the Practice; and (h)
consulting, accounting, or legal fees which relate solely to the Shareholders.
The Practice shall reimburse the Business Manager for any Shareholder Expense
incurred by the Business Manager.Unless an expense is expressly designated as a
Business Expense, an Office Expense or a Practice Expense in this Business
Management Agreement or in any exhibit hereto, all expenses incurred by the
Practice shall be considered a Shareholder Expense. Notwithstanding the above,
the Practice may require certain Professionals to pay certain expenses incurred
for them specifically.
1.32. State. The term "State" shall have the meaning set forth in the
Recitals.
1.33. Term. The term "Term" shall mean the initial and any renewal
periods of duration of this Business Management Agreement as described in
Section 6.1.
2. APPOINTMENT OF BUSINESS MANAGER AND ESTABLISHMENT OF PRACTICE
ADVISORY COUNCIL, LOCAL ADVISORY COUNCIL AND NATIONAL APPEALS
COUNCIL.
2.1 Appointment. The Practice hereby appoints Business Manager as its
sole and exclusive agent for the management and administration of the business
functions and business
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affairs of the Practice and; Business Manager hereby accepts such appointment,
subject at all times to the provisions of this Business Management Agreement.
2.2 Authority. Consistent with the provisions of this Business
Management Agreement, Business Manager shall have the responsibility and
commensurate authority to provide Management Services for the Practice. The
Practice shall give Business Manager thirty (30) days' prior notice of the
Practice's intent to execute any agreement creating a binding legal obligation
on the Practice. The Parties acknowledge and agree that the Practice, through
its Professionals, shall be responsible for and shall have complete authority,
responsibility, supervision, and control over the provision of all Professional
Eye Care Services and other professional health care services performed for
patients, and that all diagnoses, treatments, procedures, and other professional
health care services shall be provided and performed exclusively by or under the
supervision of Professionals as such Professionals, in their sole discretion,
deem appropriate. Business Manager shall have and exercise absolutely no
control, influence, authority or supervision over the provision of Professional
Eye Care Services.
2.3 Patient Referrals. Business Manager and the Practice agree that the
benefits to the Practice hereunder do not require, are not payment for, and are
not in any way contingent upon the referral, admission, or any other arrangement
for the provision of any item or service offered by Business Manager to patients
of the Practice in any facility, laboratory, center, or health care operation
controlled, managed, or operated by Business Manager.
2.4 Internal Decisions of the Practice. Matters involving the
Practice's allocation of professional income among its Shareholders and the
Professional employees of the Practice, tax planning, and investment planning
shall remain the responsibility of the Practice and the Shareholders of the
Practice.
2.5 Practice of Ophthalmology and Optometry. The Parties acknowledge
that Business Manager is not authorized or qualified to engage in any activity
that may be construed or deemed to constitute the practice of ophthalmology or
optometry. To the extent any act or service herein required by Business Manager
should be construed by a court of competent jurisdiction or by the State Board
of Medicine or the State Board of Optometry to constitute the practice of
ophthalmology or optometry, the requirement to perform that act or service by
Business Manager shall be deemed waived and unenforceable.
2.6 Formation and Operation of the Practice Advisory Council. The
Parties hereby establish a Practice Advisory Council which shall be responsible
for advising Business Manager and the Practice with respect to developing and
implementing management and administrative policies for the overall operation of
the Practice's facilities and for providing dispute resolution on certain
matters. The Practice Advisory Council shall consist of four (4) members.
Business Manager shall designate, in its sole discretion, two (2) members of the
Practice Advisory Council or may have one (1) member with two (2) votes. The
Practice shall designate, in its sole discretion, two (2) members of the
Practice Advisory Council or may have one (1) member
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with two (2) votes. The Practice Advisory Council members selected by the
Practice shall be full-time Professional employees of the Practice. Each Party's
representatives to the Practice Advisory Council shall have the authority to
make decisions on behalf of the respective Party. Except as may otherwise be
provided, the act of a majority of the members of the Practice Advisory Council
shall be the act of the Practice Advisory Council. The decisions, resolutions,
actions, or recommendations of the Practice Advisory Council shall be
implemented by Business Manager or the Practice, as appropriate.
2.7 Duties and Responsibilities of the Practice Advisory Council. The
Practice Advisory Council shall review, evaluate, make recommendations, and
where specifically authorized herein and permitted by law, make decisions with
respect to the following matters:
(a) Facility Improvements and Expansion. Any renovation and
expansion plans and capital equipment expenditures with respect to the
Practice's facilities (including with respect to any ambulatory surgical center
or optical business) shall be reviewed by the Practice Advisory Council which
shall make recommendations to Business Manager with respect to proposed changes
therein. Such renovation and expansion plans and capital equipment expenditures
shall be based upon economic feasibility, ophthalmology and optometry support,
productivity and then current market conditions.
(b) Marketing and Public Relations. The Practice Advisory
Council shall review and make recommendations to the Practice with respect to
all marketing and public relations services and programs promoting the
Practice's Professional Eye Care Services.
(c) Patient Fees; Collection Policies. As a part of the annual
operating budget, the Practice Advisory Council shall review and make
recommendations to the Practice concerning the fee schedule and collection
policies for all Professional Eye Care Services and ancillary services rendered
by the Practice.
(d) Ancillary Services. The Practice Advisory Council must
approve any new non-professional ancillary services to be rendered by the
Practice including ambulatory surgical center and optical business, and
concerning the pricing, continuation of, access to, and quality of such
services.
(e) Provider and Payor Relationships. The Practice Advisory
Council shall review and make recommendations to Business Manager and the
Practice regarding the establishment or maintenance of relationships between the
Practice and institutional health care providers and third-party payors, and
shall review and approve all agreements with institutional health care providers
and third-party payors which contain terms which are materially different from
those terms set forth in guidelines established by the Local Advisory Council.
The Practice Advisory Council shall also make recommendations to Business
Manager and the Practice concerning discounted fee schedules, including
capitated fee arrangements of which the Practice shall be a party, and shall
review and approve all such capitated fee arrangements.
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(f) Strategic Planning. The Practice Advisory Council may make
recommendations to Business Manager concerning development of long-term
strategic planning objectives for the Practice.
(g) Capital Expenditures. The Practice Advisory Council shall
make recommendations to Business Manager and the Practice concerning the
priority of major capital expenditures and shall review and approve any
commitment to make any capital expenditures for non-medical equipment relating
to the Office involving amounts in excess of $15,000 individually, or $50,000 in
the aggregate, in any one fiscal year, which amounts may be increased from
time-to-time by the Local Advisory Council.
(h) Hiring of Professionals. The Practice Advisory Council
shall recommend to the Practice the number and type of Professionals required
for the efficient operation of the Practice's facilities.
(i) Fee Dispute Resolution. At the request of Business Manager
or the Practice, the Practice Advisory Council shall make recommendations to
Business Manager with respect to any dispute concerning a set-off or reduction
in Management Fees.
(j) Grievance Referrals. The Practice Advisory Council shall
consider and make recommendations to Business Manager and the Practice regarding
grievances pertaining to matters not specifically addressed in this Business
Management Agreement as referred to it by Business Manager or the Practice's
Board of Directors.
(k) Termination of Business Manager's Personnel. The Practice
Advisory Council shall review and approve any decision by the Business Manager
to terminate any of Business Manager's personnel primarily located at the Office
who occupy office manager or higher level positions.
(l) Approval of New Office. The Practice Advisory Council
shall approve any move of the current Office location or the expansion to an
additional Office location. Additionally, the Practice Advisory Council shall
approve the establishment of any ambulatory surgical center or optical business
of the Practice and the move or expansion of any such business.
(m) Approval of Budget. The Practice Advisory Council shall
have the power to adopt, approve and amend the Budget and to approve various
expenses as set forth herein, which shall be subject to change upon submission
of any dispute thereon to Ernst & Young LLP (or its successor or replacement)
and appeal to the National Appeals Council as provided in Section 3.11(a).
Except in those specific instances set forth above in which the Practice
Advisory Council has been granted the authority to make decisions binding upon
the Business Manager and the
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Practice, it is acknowledged and agreed that recommendations of the Practice
Advisory Council are intended for the advice and guidance of Business Manager
and the Practice and that the Practice Advisory Council does not have the power
to bind Business Manager or the Practice. Where discretion with respect to any
matter is vested in Business Manager or the Practice under the terms of this
Agreement, Business Manager or the Practice, as the case may be, shall have
ultimate responsibility for the exercise of such discretion, notwithstanding any
recommendations of the Practice Advisory Council. Business Manager and the
Practice shall, however, take such recommendations of the Practice Advisory
Council into account in good faith in the exercise of such discretion.
2.8 Professional Health Care Decisions. Despite the above listing of
activities and areas of interest, all decisions required by applicable law to be
made solely by health care professionals will be made solely by the appropriate
Professionals, but non-Professional members of the Practice Advisory Council may
participate in the discussion process. The Professional representatives of the
Practice on the Practice Advisory Council shall have exclusive authority to
review and resolve issues related to:
(a) Types and levels of Professional Eye Care Services to be
provided; (provided, however, that the Practice Advisory Council shall have the
authority set forth in Section 2.7(d) with respect to new ambulatory surgical
centers and new optical business);
(b) Recruitment of Professionals to the Practice, including
the specific qualifications and specialties of recruited Professionals;
(c) Any medical or optometric related functions;
(d) Fee schedules; and
(e) Any other decisions required by applicable law to be made
solely by Professionals and not by non-Professionals.
2.9 Meetings of the Practice Advisory Council. The Practice Advisory
Council shall meet on a regular basis as mutually agreed by the Parties. A
special meeting of the Practice Advisory Council may be called by either
Business Manager or the Practice upon two (2) weeks' notice, except in the event
of an emergency, in which case a special meeting may be called by either
Business Manager or the Practice upon three (3) business days' notice. Meetings
may be held telephonically or by any other means agreeable to the Parties.
2.10 Formation and Operation of Local Advisory Council. Business
Manager shall, within six (6) months of the effective date of this Business
Management Agreement establish a Local Advisory Council composed of delegates
from health care practices for which Business Manager is then providing
management services similar to those services contemplated in this Business
Management Agreement. All of such health care practices shall be located within
the
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market area described on Exhibit 2.10, as such market area may be expanded from
time-to-time by the Local Advisory Council. For six (6) years from the date
hereof, the Practice shall be entitled to appoint one delegate to the Local
Advisory Council, of which the initial delegate shall serve an initial two (2)
year term. Thereafter, for the two (2) subsequent two (2) year terms, the
Practice may appoint the same or a different delegate to the Local Advisory
Council. After the six (6) year period, the Practice shall have the right to
vote, along with other Practices managed in the market by the Business Manager,
for the delegates to the Local Advisory Council in accordance with the by-laws,
as modified time-to-time as described below. Business Manager shall be entitled
to appoint two delegates to the Local Advisory Council who may be replaced from
time-to-time at the Business Manager's discretion, and who together shall have a
voting power equal to the combined voting power of all delegates appointed by
the health care practices. If any market contains only one health care practice,
such practice shall appoint one (1) individual to the Local Advisory Council who
shall have two (2) votes. Any matter to be determined by the Local Advisory
Council must receive the affirmative vote of a majority of the votes cast of the
delegates appointed to the Local Advisory Council. The Local Advisory Council
shall make recommendations to Business Manager and such health care practices as
to regional policy and strategy issues within the market area and as to the
following:
(a) The establishment of private pay fee schedules where
permitted by law;
(b) The establishment of guidelines for agreements with
institutional health care providers and third-party payors; and
(c) Any agreement with an institutional health care provider
or third-party payor which materially differs from guidelines established by the
Local Advisory Council.
The Local Advisory Council may, from time-to-time, select commercial
carriers for professional, casualty and comprehensive general liability coverage
for health care practices in the market area and such selection shall be binding
upon such health care practices.
The Local Advisory Council shall consider and determine any issue upon
which the Practice Advisory Council is deadlocked (except for the determination
of the Budget). In determining such disputes, the Local Advisory Council shall
make findings of fact relating to evidence presented by the Parties to the
dispute. Decisions by the Local Advisory Council may be appealed by any party
adversely affected to the National Appeals Council, which shall have the option
of hearing the appeal. The Local Advisory Council's rules of operation and
procedure shall be governed by by-laws to be adopted by the delegates, and such
by-laws may be amended or restated from time-to-time. Such by-laws shall be
reasonable and in accord with the terms and spirit of this Agreement. The
Practice and Business Manager covenant and agree to abide by the Local Advisory
Council's by-laws, as such by-laws may be amended from time-to-time.
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2.11 Formation and Operation of the National Appeals Council. Business
Manager shall within six (6) months of the effective date of this Business
Management Agreement establish a National Appeals Council composed of one (1)
delegate appointed by each of the initial Local Advisory Councils to be
established by Business Manager, and two (2) delegates appointed by the Business
Manager. The initial delegates of the Local Advisory Councils shall serve an
initial two (2) year term, and thereafter, if the local advisory council
qualifies under the then current by-laws of the National Appeals Council with
respect to the eligibility of Local Advisory Councils to appoint delegates to
the National Appeals Council, the local advisory council may appoint the same or
a different delegate to the National Appeals Council. Business Manager's
delegates to the National Appeals Council shall together have a voting power
equal to the combined voting power of all delegates appointed by the Local
Advisory Councils. Any matter to be determined by the National Appeals Council
must receive the affirmative vote of a majority of the votes cast of the
delegates appointed to the National Appeals Council. The National Appeals
Council shall serve as a forum of appeal of any determinations of the Local
Advisory Councils over which it chooses to have jurisdiction. In resolving such
appeals it determines to hear, the National Appeals Council shall review
findings of fact made by the applicable local advisory council and shall only
reverse a decision of the local advisory council if the local advisory council's
decision was based upon manifest error. The National Appeals Council shall also
determine disputes which it chooses to have jurisdiction over and which cannot
be decided because of a deadlock among the delegates of any Local Advisory
Council. In the event of a deadlock among the delegates of the National Appeals
Council, the dispute may be submitted by either party to the dispute to
arbitration in accordance with Section 8.7 of this Agreement. In all other
instances, the determination of a dispute by the National Appeals Council shall
be final. The National Appeals Council's rules of operation and procedure shall
be governed by by-laws to be adopted by the Local Advisory Councils' and
Business Manager's delegates, and such by-laws may be amended or restated from
time-to-time. Such by-laws shall be reasonable and reflect the terms and spirit
of this Agreement. The National Appeals Council's decisions shall be binding
upon the parties. The Practice and Business Manager covenant and agree to abide
by the National Appeal Council's by-laws, as such by-laws may be amended from
time-to-time.
3. OBLIGATIONS AND RESPONSIBILITIES OF BUSINESS MANAGER.
3.1 Management Services. Business Manager shall provide all Management
Services as are necessary and appropriate for the day-to-day administration of
the business aspects of the Practice's operations, pursuant to the terms of this
Business Management Agreement. Business Manager shall operate in a reasonable
and customary manner with due consideration to the Practice's past business
practices and shall operate in accordance with all applicable laws, rules and
regulations which are necessary and material to the Business Manager's
performance of the Management Services. Business Manager will provide in good
faith and with due diligence its services consistent with management services
generally provided in operations of a medical practice similar in size, type and
operations in the State of the Practice. All costs and expenses
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related to Business Manager's duties contained in this Section 3 shall be Office
Expenses unless limited or excluded as an Office Expense pursuant to the terms
of this Agreement.
3.2 Office and Equipment.
(a) Business Manager shall lease, sublease, acquire or
otherwise procure one or more Offices that are deemed by the Parties to be
reasonably necessary and appropriate, and the expenses associated with such
lease, sublease, acquisition, or procurement shall be Office Expenses. Any
Office procured by Business Manager for the use by the Practice shall be
procured at commercially reasonable rates. Any relocation from the Practice's
present Office location or expansion of the Practice's Office into an additional
Office shall be done only after Business Manager has received Practice Consent,
which shall not be unreasonably withheld.
(b) In the event the Practice is the lessee of an Office under
a lease with an unrelated and nonaffiliated lessor, Business Manager may require
the Practice to assign such lease to Business Manager upon receipt of consent
from the lessor. The Practice shall use its best efforts to assist in obtaining
the lessor's consent to the assignment. Any expenses incurred in the assignment
shall be Office Expenses.
(c) Business Manager shall provide all non-health care
equipment, fixtures, office supplies, furniture and furnishings as are
reasonable and approved in the Budget for the operation of the Office and the
provision of Professional Eye Care Services. If the Practice wishes to choose
additional equipment, which the Business Manager determines not to acquire or
lease, the Practice may acquire or lease such equipment, and the expense related
thereto shall be deemed a Shareholder Expense.
(d) Business Manager shall provide, finance, or cause to be
provided or financed health care related equipment as reasonably required by the
Practice. The Practice shall have final authority in all health care equipment
selections; provided, however, that if the Practice chooses to acquire health
care equipment which is not in the Budget and which Business Manager reasonably
chooses not to acquire, expenses related thereto shall be treated as a
Shareholder Expense and such equipment shall be owned by the Practice; provided
further that following such acquisition or lease by the Practice, if the
Practice Advisory Council determines that after a period of six months of use
such equipment is reasonably certain to result in material profit to Business
Manager (taking into account the cost or expense and anticipated revenues
associated with such equipment), then Business Manager shall acquire such
equipment from the Practice by either (at Business Manager's option), paying
cash or by assuming the liability associated with such equipment, or if such
equipment is then being leased by the Practice, by assuming such lease. In the
event of such an acquisition by Business Manager, it shall reimburse the
Practice for previous expenses applied thereto.. Except for equipment which
Business Manager elects not to acquire or lease which are acquired or leased by
the Practice pursuant to Section 3.2(c) or (d), all health care and non-health
care equipment, other than Professional-owned automobiles, acquired for the use
of the Practice shall be owned by Business Manager
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and the depreciation and related capital charge shall be an Office Expense.
Business Manager may make recommendations to the Practice on the relationship
between its health care equipment decisions and the overall administrative and
financial operations of the practice.
(e) Business Manager shall be responsible for the repair and
maintenance of the Office, consistent with Business Manager's responsibilities
under the terms of any lease or other use arrangement, and for the prompt
repair, maintenance, and replacement of all equipment other than such repairs,
maintenance and replacement necessitated by the gross negligence or willful
misconduct of the Practice, its Professionals or other personnel employed by the
Practice, the repair or replacement of which shall be a Shareholder Expense and
not an Office Expense. Replacement equipment shall be acquired where Business
Manager in good faith determines that such replacement is necessary or where the
Budget has made allowances for such replacement.
(f) Any portion of the foregoing lease payments in excess of
fair market value (as set forth in Exhibit 1.31) relating to leases of equipment
or an Office shall be treated as a Shareholder Expense.
3.3 Health Care Supplies. Business Manager shall order, procure,
purchase and provide on behalf of and as agent for the Practice all reasonable
health care supplies unless otherwise prohibited by federal and/or state law.
Furthermore, Business Manager shall ensure that the Office is at all times
adequately stocked with the health care supplies that are necessary and
appropriate for the operation of the Practice and required for the provision of
Professional Eye Care Services. The ultimate oversight, supervision and
ownership for all health care supplies is and shall remain the sole
responsibility of the Practice and all costs and expenses relating to such
supplies shall be a Practice Expense. As used in this provision, the term
"health care supplies" shall mean all drugs, pharmaceuticals, optical supplies,
products, substances, items or devices the whose purchase, possession,
maintenance, administration, prescription or security of which requires the
authorization or order of a licensed health care provider or requires a permit,
registration, certification or other governmental authorization held by a
licensed health care provider as specified under any federal and/or state law.
3.4 Support Services. Business Manager shall provide or arrange for all
printing, stationery, forms, postage, duplication or photocopying services, and
other support services as are reasonably necessary and appropriate for the
operation of the Office and the provision of Professional Eye Care Services
therein.
3.5 Quality Assurance, Risk Management, and Utilization Review.
Business Manager shall assist the Practice in the Practice's establishment and
implementation of procedures to ensure the consistency, quality,
appropriateness, and medical necessity of Professional Eye Care Services
provided by the Practice, and shall provide administrative support for the
Practice's overall quality assurance, risk management, and utilization review
programs. Business Manager
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shall perform these tasks in a manner to ensure the confidentiality and
non-discoverability of these program actions to the fullest extent allowable
under state and federal law.
3.6 Licenses and Permits. Business Manager shall, on behalf of and in
the name of the Practice, coordinate all development and planning processes, and
apply for and use reasonable efforts to obtain and maintain all federal, state
and local licenses and regulatory permits required for or in connection with the
operation of the Practice and the equipment (existing and future) located at the
Office, other than those relating to the practice of ophthalmology or optometry
or the administration of drugs by Professionals retained by or associated with
the Practice. The expenses and costs associated with obtaining and maintaining
permits with respect to the Office and licenses for professional practice by the
non-shareholder Professionals shall be deemed an Office Expense.
3.7 Personnel. Except as specifically provided in Section 4.2 of this
Business Management Agreement, Business Manager shall employ or otherwise retain
and shall be responsible for selecting, hiring, training, supervising, and
terminating, all management, administrative, clerical, secretarial, bookkeeping,
accounting, payroll, billing and collection and other personnel (including
Clinical Personnel but excluding Professionals) as Business Manager deems
reasonably necessary and appropriate for Business Manager's performance of its
duties and obligations under this Business Management Agreement. Consistent with
reasonably prudent personnel management policies, Business Manager shall seek
and consider the advice, input, and requests of the Practice in regard to
personnel matters. Business Manager shall have sole responsibility for
determining the salaries and providing fringe benefits, and for withholding, as
required by law, any sums for income tax, unemployment insurance, social
security, or any other withholding required by applicable law or governmental
requirement. Business Manager does not currently intend to change the existing
composition or employment terms of any of Business Manager's personnel which
have employment arrangements with the Practice on the effective date of this
Agreement (unless there are unsettled issues regarding such arrangements as
described in Exhibit 3.7). Business Manager reserves the right, however, to
change the number, composition or employment terms of such personnel in the
future at Business Manager's discretion; provided, however, that the termination
of any of Business Manager's personnel who are Clinical Personnel or occupy
office manager or higher level positions, and are primarily located at the
Office must receive the approval of the Practice Advisory Council. Business
Manager and the Practice recognize and acknowledge that Business Manager and
personnel retained by Business Manager may from time-to-time perform services
for persons other than the Practice. This Business Management Agreement shall
not be construed to prevent or prohibit Business Manager from performing such
services for others or restrict Business Manager from using its personnel to
provide services to others. Business Manager hereby disclaims any liability
relating to the effect of its employees on the qualification of the Practice's
retirement plans under the Internal Revenue Code, and all liabilities for such
classification shall be solely the responsibility of the Practice.
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3.8 Contract Negotiations. Business Manager shall evaluate, assist in
negotiations and administer on behalf of the Practice contracts that do not
relate to the provision of Professional Eye Care Services as set forth in this
Agreement and/or as approved in the Budget. To the extent permitted by law,
Business Manager shall evaluate, assist in negotiations, administer and execute
on the Practice's behalf, all contractual arrangements with third parties as are
reasonably necessary and appropriate for the Practice's provision of
Professional Eye Care Services, including, without limitation, negotiated price
agreements with third-party payors, alternative delivery systems, or other
purchasers of group health care services. However, the Practice shall have the
final authority with regard to the entry into all of such contractual
arrangements relating to the provision of Professional Eye Care Services.
3.9 Billing and Collection. As an agent on behalf of and for the
account of the Practice, Business Manager shall establish and maintain credit
and billing and collection services, policies and procedures, and shall use
reasonable efforts to timely ▇▇▇▇ and collect all Professional and other fees
for all billable Professional Eye Care Services provided by the Practice, or
Professionals employed or otherwise retained by the Practice. The Practice
Advisory Council shall make recommendations to and consult with Business Manager
and the Practice regarding the fees for Professional Eye Care Services provided
by the Practice. In connection with the billing and collection services to be
provided hereunder, and throughout the Term (and thereafter as provided in
Section 6.3), the Practice hereby grants to Business Manager an exclusive
special power of attorney and appoints Business Manager as the Practice's
exclusive true and lawful agent and attorney-in-fact (which shall be deemed
revoked in the event of termination for cause by the Practice), and Business
Manager hereby accepts such special power of attorney and appointment, for the
following purposes:
(a) To ▇▇▇▇ the Practice's patients, in the Practice's name
using the Practice's tax identification number and on the Practice's behalf, for
all billable Professional Eye Care Services provided by the Practice to
patients.
(b) To ▇▇▇▇, in the Practice's name using the Practice's tax
identification number and on the Practice's behalf, all claims for reimbursement
or indemnification from health maintenance organizations, self-insured
employers, insurance companies, Medicare, Medicaid, and all other third-party
payors or fiscal intermediaries for all covered billable Professional Eye Care
Services provided by the Practice to patients.
(c) To collect and receive (to the extent permitted by law),
in the Practice's name and on the Practice's behalf, all accounts receivable
generated by such ▇▇▇▇▇▇▇▇ and claims for reimbursement, to administer such
accounts including, but not limited to, extending the time of payment of any
such accounts; suing, assigning or selling at a discount such accounts to
collection agencies; or taking other measures to require the payment of any such
accounts; provided, however, that the Practice shall review and approve (which
approval shall not be unreasonably withheld) any decision by Business Manager to
undertake extraordinary collection measures, such as filing lawsuits,
discharging or releasing obligors, or assigning or selling
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accounts at a discount to collection agencies. Business Manager shall act in a
professional manner and in compliance with all federal and State fair debt
collection practices laws in rendering billing and collection services.
(d) To deposit all amounts collected into the Account which
shall be a cash collateral account held in the name of Business Manager and
shall be opened at a financial institution chosen by Business Manager. All
amounts received or collected are hereby pledged to the Business Manager and
shall be held or deposited in the Account to secure the performance of the
Practice's obligations under this Agreement. The Account shall be held under
Business Manager's tax identification number. The Practice covenants to transfer
and deliver to the Account all funds received by the Practice from patients or
third-party payors for Professional Eye Care Services. Upon receipt by Business
Manager of any funds from patients or third-party payors or from the Practice
pursuant hereto for Professional Eye Care Services, Business Manager shall
immediately deposit the same into the Account. Business Manager shall
administer, be responsible for, and be obligated to pay for all Office Expenses;
provided, however, that Business Manager shall only be liable for Office
Expenses to the extent of funds in the Account plus any amounts borrowed by
Business Manager in accordance with Section 5.4. Business Manager shall disburse
such deposited funds to creditors and other persons on behalf of the Practice,
maintaining records of such receipt and disbursement of funds. Business Manager
may borrow amounts from the Account in excess of amounts due Business Manager
pursuant to this Agreement and to the full extent of funds in the Account. Such
borrowed amounts shall bear interest to the Account in the amount of six percent
(6%) per annum, and any of such borrowed amounts outstanding shall be repaid by
Business Manager to the Account when needed to cover all expenses and
obligations under this Agreement and shall be repaid within thirty (30) days of
the termination of this Agreement.
(e) To take possession of, endorse in the name of the
Practice, and deposit into the Account any notes, checks, money orders,
insurance payments, and any other instruments received in payment of accounts
receivable for Professional Eye Care Services.
(f) To sign checks on behalf of the Practice, and to make
withdrawals from the Account for payments specified in this Business Management
Agreement. Upon request of Business Manager, the Practice shall execute and
deliver to the financial institution wherein the Account is maintained, such
additional documents or instruments as may be necessary to evidence or effect
the special power of attorney granted to Business Manager by the Practice
pursuant to this Section 3.9. The special power of attorney granted herein shall
be coupled with an interest and shall be irrevocable except with Business
Manager's written consent. The irrevocable power of attorney shall expire when
this Business Management Agreement has been terminated, all accounts receivable
payable to Business Manager pursuant to this Business Management Agreement have
been collected and all Management Fees due to Business Manager have been paid.
If Business Manager assigns this Business Management Agreement in accordance
with its terms, the Practice shall execute a power of attorney in favor of the
assignee in a form acceptable to Business Manager.
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3.10 Maintenance of Account. During the term of this Business
Management Agreement, all Adjusted Gross Revenues collected resulting from the
rendering of Professional Eye Care Services by the Practice shall be deposited
directly into the Account in which Business Manager shall have the sole signing
capacity.
(a) Payments from the Account. Each month Business Manager
shall pay from funds that are in the Account all sums due and payable as an
Office Expense and Practice Expenses. Additionally, on or before the 15th day of
the following month, (i) Business Manager shall pay from funds that are in the
Account to the Practice Adjusted Gross Revenue less accrued Office Expense,
accrued Practice Expense (excluding optical supplies), accrued Management Fee,
and (at the discretion of Business Manager) all sums advanced by the Business
Manager, and (ii) the accrued Management Fee for the previous month shall be
paid.
(b) Payments to the Practice's Account. To the extent funds
are available, the Business Manager shall be responsible for remitting from the
Account to an account to be owned by and held in the Practice's name, separate
from the Account, the amounts which the Practice is entitled to receive under
Section 3.10(a). Within sixty (60) days of the end of each of the first three
(3) fiscal quarters in each fiscal year and within one hundred twenty (120) days
of the end of each fiscal year, a settlement process shall be undertaken
pursuant to which adjustments, if necessary, shall be made in the total payments
to the Practice based upon the financial statements prepared in accordance with
Section 3.11(b). Any additional payment due to the Practice will be made within
thirty (30) days of the completion of the settlement process. Any reduction in
payments to the Practice as the result of such settlement process shall be made
by reducing future payments to the Practice, commencing with the month following
completion of the settlement process, until such adjustments are made in full.
Business Manager and the Practice shall each have signing capacity to
withdraw funds from the Practice's account; provided however that Business
Manager shall only be entitled to withdraw funds relating to such account in
connection with the payment of Practice Expenses and Shareholders' salaries,
benefits and payroll taxes. Subject to the foregoing, the Practice hereby grants
to Business Manager a special power of attorney and appoints Business Manager as
the Practice's true and lawful agent and attorney-in-fact, and Business Manager
hereby accepts such special power of attorney and appointment, to sign checks on
behalf of the Practice for payments of the Practice Expenses and Shareholders'
salaries, benefits and payroll taxes in accordance with this Business Management
Agreement. Upon request of Business Manager, the Practice shall execute and
deliver to the financial institution wherein the Practice's account is
maintained, such additional documents or instruments as may be necessary to
evidence or effect the special power of attorney granted to Business Manager by
the Practice pursuant to this Section 3.10(b). The special power of attorney
granted herein shall be coupled with an interest and shall be irrevocable except
with Business Manager's written consent. The irrevocable power of attorney shall
expire when this Business Management Agreement has been terminated. If Business
Manager assigns this Business Management Agreement in accordance with its terms,
the Practice shall execute a power of attorney in favor of the assignee in a
form acceptable to
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Business Manager. Business Manager shall not make any withdrawal from the
Practice's account unless expressly authorized in this Agreement.
A Practice payroll account shall be established on behalf of the
practice for payroll to non-shareholder Professionals of the Practice. Funds for
this account shall be received as Practice Expenses. Business Manager and the
Practice shall each have signing capacity to access the account for payroll.
(c) Insufficient Funds in Account. During the Term of this
Agreement, Business Manager shall advance sufficient funds to cover all expenses
and obligations only if, and to the extent that, the amount of such advances,
plus accrued interest thereon, does not exceed the reasonably collectable value
of the Practice's accounts receivable as determined by Business Manager in its
reasonable discretion plus any amounts borrowed by Business Manager pursuant to
Section 5.4. Business Manager may, however, elect from time to time to advance
additional funds to the Practice at its discretion. Any of such advances shall
be deemed loans to the Practice to be repaid by the Practice along with interest
at six percent (6%) per annum. Any of such advanced amounts which have not been
paid to Business Manager pursuant to Section 3.10(a)(i) on the date of
termination of this Agreement shall become due and payable on the date of such
termination.
3.11 Fiscal Matters.
(a) Annual Budget. Annually and at least thirty (30) days
prior to the commencement of each fiscal year of the Practice, the Practice
Advisory Council shall prepare and deliver to the Practice a proposed budget,
setting forth an estimate of the Practice's revenues and expenses for the
upcoming fiscal year (including, without limitation, the Management Fee
associated with the Management Services provided by Business Manager hereunder
and the salaries and benefits of all non-shareholder Professionals employed by
the Practice). The Budget may be amended by the Practice Advisory Council from
time-to-time during any applicable fiscal year to reflect changing circumstances
affecting the Practice. Disputes concerning the Budget will, at the request of
either Party hereto, be submitted to the accounting firm of Ernst & Young LLP,
any successor thereof, or such other big six accounting firm agreed to by the
Parties, which shall determine an appropriate resolution of the dispute. Such
determination shall be binding upon the Practice and the Business Manager,
subject to either Party's right to petition the National Appeals Council to
consider the determination of Ernst & Young LLP (or its successor or
replacement), which petition may be granted at the discretion of the National
Appeals Council. In all situations described in this Agreement in which Ernst &
Young LLP or its successor or replacement is to act as an arbitrator of any
matter relating to this Agreement, Ernst & Young LLP (or its successor or
replacement) shall act as an impartial and independent arbitrator. The Parties
hereby waive and release and agree to indemnify and hold harmless Ernst & Young
LLP (and its successor or replacement) from and for any and all claims, demands,
liabilities, losses, damages, costs and expenses relating to its determinations
made in good faith pursuant to this Agreement and agree to execute any documents
reasonably requested by ▇▇▇▇▇
-▇▇-
▇▇
& ▇▇▇▇▇ ▇▇▇ (▇▇ its successor or replacement) to effectuate the same. Any final
decision of Ernst & Young LLP or its successor or replacement, or the National
Appeals Council concerning the Budget shall be retroactive to the first day of
the Budget period in question. Notwithstanding the above, should Business
Manager be in material default hereunder, the Practice shall have the exclusive
right to establish the Budget. Additionally, notwithstanding the above, no
change in an adopted Budget shall be contrary to the terms and spirit of this
Agreement nor shall it have any effect on the Management Fee expressly agreed to
herein, unless approved in advance in writing by the Parties hereto.
(b) Accounting and Financial Records. Business Manager shall
establish and administer accounting procedures, controls, and systems for the
development, preparation, and safekeeping of administrative or financial records
and books of account relating to the business and financial affairs of the
Practice and the provision of Professional Eye Care Services, all of which shall
be prepared and maintained in accordance with GAAP. Business Manager shall
prepare and deliver to the Practice (i) within sixty (60) days of the end of
each of the first three (3) fiscal quarters in each fiscal year, and (ii) within
one hundred twenty (120) days of the end of each fiscal year, a balance sheet
and a profit and loss statement reflecting the financial status of the Practice
in regard to the provision of Professional Eye Care Services as of the end of
such period, all of which shall be prepared in accordance with GAAP consistently
applied. In addition, Business Manager shall prepare or assist in the
preparation of any other financial statements or records as the Practice may
reasonably request.
(c) Sales and Use Taxes. Business Manager and the Practice
acknowledge and agree that to the extent that any of the services to be provided
by Business Manager hereunder may be subject to any state sales and use taxes,
Business Manager may have a legal obligation to collect such taxes from the
Practice and to remit the same to the appropriate tax collection authorities.
The Practice agrees to have applicable state sales and use taxes attributable to
the services to be provided by Business Manager hereunder treated as an Office
Expense.
3.12 Reports and Records.
(a) Health Care Records. To the extent permitted by applicable
law, Business Manager shall establish, monitor, and maintain procedures and
policies for the timely creation, preparation, filing and retrieval of all
health care records generated by the Practice in connection with the Practice's
provision of Professional Eye Care Services; and, subject to applicable law,
shall ensure that health care records are promptly available to Professionals
and any other appropriate persons. All such health care records shall be
retained and maintained by the Practice, and the Business Manager as agent for
the Practice, in accordance with all applicable State and federal laws relating
to the confidentiality and retention thereof. All health care records shall be
and remain the property of the Practice. The Practice shall at all times during
the term of this Agreement grant Business Manager unrestricted access to such
health
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care records and shall in the course of the Practice's business obtain the
written consent of the Practice's patients to Business Manager's access to, and
review and use of such records.
(b) Other Reports and Records. Business Manager shall timely
create, prepare, and file such additional reports and records as are reasonably
necessary and appropriate for the Practice's provision of Professional Eye Care
Services, and shall be prepared to analyze and interpret such reports and
records upon the request of the Practice.
3.13 Recruitment of the Practice's Professionals. Upon the Practice's
request, Business Manager shall perform all administrative services reasonably
necessary and appropriate to recruit potential Professionals to become employees
of the Practice. Business Manager shall provide the Practice with model
agreements to document the Practice's employment, retention or other service
arrangements with such individuals. It will be and remain the sole and complete
responsibility of the Practice to interview, select, contract with, supervise,
control and terminate all Professionals performing Professional Eye Care
Services or other professional services.
3.14 Confidential and Proprietary Information.
(a) Business Manager agrees and acknowledges that all
materials provided by the Practice to the Business Manager constitute
Confidential Information disclosed in confidence and with the understanding that
it constitutes valuable business information developed by the Practice at great
expenditures of time, effort, and money. Business Manager further agrees that it
shall not, directly or indirectly, disclose any Confidential Information of the
Practice to other persons without the Practice's express written authorization,
such Confidential Information shall not be used in any way directly or
indirectly detrimental to the Practice, and Business Manager will keep such
Confidential Information confidential and will ensure that its affiliates and
advisors who have access to such Confidential Information comply with these
nondisclosure obligations; provided, however, that Business Manager may disclose
Confidential Information to those of its Representatives who need to know
Confidential Information for the purposes of this Business Management Agreement,
it being understood and agreed to by Business Manager that such Representatives
will be informed of the confidential nature of the Confidential Information,
will agree to be bound by this Section, and will be directed by Business Manager
not to disclose to any other person any Confidential Information. Business
Manager agrees to be responsible for any breach of this Section by its
affiliates, advisors, or Representatives. If Business Manager is requested or
required (by oral questions, interrogatories, requests for information or
documents, subpoenas, civil investigative demands, or similar processes) to
disclose or produce any Confidential Information furnished in the course of its
dealings with the Practice or its affiliates, advisors, or Representatives,
Business Manager will (i) provide the Practice with prompt notice thereof and
copies, if possible, and, if not, a description, of the Confidential Information
requested or required to be produced so that the Practice may seek an
appropriate protective order or waive compliance with the provisions of this
Section and (ii) consult with the Practice as to the advisability of the
Practice's taking of legally available steps to resist or narrow such request.
Business Manager further agrees that,
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if in the absence of a protective order or the receipt of a waiver hereunder
Business Manager is nonetheless, in the written opinion of its legal counsel,
compelled to disclose or produce Confidential Information concerning the
Practice to any tribunal legally authorized to request and entitled to receive
such Confidential Information or to stand liable for contempt or suffer other
censure or penalty, Business Manager may disclose or produce such Confidential
Information to such tribunal without liability hereunder; provided, however,
that Business Manager shall give the Practice written notice of the Confidential
Information to be so disclosed or produced as far in advance of its disclosure
or production as is practicable and shall use its best efforts to obtain, to the
greatest extent possible, an order or other reliable assurance that confidential
treatment will be accorded to such Confidential Information so required to be
disclosed or produced. Upon expiration or termination of this Business
Management Agreement by either Party for any reason whatsoever, Business Manager
shall immediately return and shall cause its Representatives, affiliates, and
independent contractors to immediately return to the Practice all Confidential
Information, and Business Manager shall not, and will cause its Representatives,
affiliates, and independent contractors not to, thereafter use, appropriate or
reproduce such Confidential Information. Business Manager further expressly
acknowledges and agrees that any such use, appropriation, or reproduction of any
such Confidential Information by any of the foregoing after the expiration or
termination of this Agreement will result in irreparable injury to the Practice,
that the remedy at law for the foregoing would be inadequate, and that in the
event of any such use, appropriation, or reproduction of any such Confidential
Information after the termination or expiration of this Agreement, the Practice,
in addition to any other remedies or damages available to it, shall be entitled
to injunctive or other equitable relief without the necessity of posting a bond,
cash, or otherwise, and without the necessity of proving actual damages. Such
rights to relief shall not preclude the Practice from other remedies which may
be available to it hereunder.
(b) Notwithstanding clause (a) above, Business Manager may
share, subject to the restrictions of this Section, with other professional
corporations, associations, ophthalmology and optometry practices, or health
care delivery entities the practice statistics of the Practice, including
utilizing review data, quality assurance data, cost data, outcomes data, or
other practice data. In addition, Business Manager may disclose all
practice-related information necessary or desirable in connection with any
public or private offering of any debt or equity security. No such data will
disclose or divulge patient identifying information or, to the extent possible,
Professional identifying information.
3.15 Business Manager's Insurance. Throughout the Term, Business
Manager shall, as an Office Expense, obtain and maintain with commercial
carriers, through self-insurance or some combination thereof, appropriate
workers' compensation coverage for Business Manager's employed personnel
provided pursuant to this Business Management Agreement, and professional,
casualty and comprehensive general liability insurance covering Business
Manager, Business Manager's personnel, and all of Business Manager's equipment
in such amounts, on such basis and upon such terms and conditions as Business
Manager deems appropriate. Such insurance policies shall be issued by a carrier
or carriers having a current rating of not less than
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"A" as rated by A.M. Best Company, unless the Practice agrees in writing to the
purchase of a policy or policies from a carrier having a lesser rating than "A".
Business Manager shall cause the Practice to be named as an additional insured
on Business Manager's casualty and comprehensive general liability policy.
Business Manager hereby releases the Practice from any and all liability for
losses or damages caused by any act or neglect of the Practice occurring after
the effective date hereof to the extent that such losses or damages are covered
by insurance; provided, however, that such release shall not apply to any loss
or damage caused by the willful, wanton, or premeditated negligence of the
Practice. Business Manager shall obtain from any insurance company issuing the
foregoing policies its consent to the release from liability contained in this
Section. Upon the request of the Practice, Business Manager shall provide the
Practice with a certificate evidencing such insurance coverage. Business Manager
may also obtain key man life insurance policies on the life of any Shareholder
as is consistent with 1.18(n).
3.16 No Warranty. The Practice acknowledges that Business Manager has
not made and will not make any express or implied warranties or representations
that the Management Services provided by Business Manager will result in any
particular amount or level of ophthalmology or optometry practice or income to
the Practice. Specifically, Business Manager has not represented that its
Management Services will result in higher revenues, lower expenses, greater
profits or growth in the number of patients treated by the Practice's
Professionals.
3.17 Non-Competition Covenant from Business Manager. The Business
Manager hereby recognizes and acknowledges that the Practice shall incur
substantial costs in modifying its business activities to carry out this
Business Management Agreement and that in the process of Business Manager's
providing services under this Business Management Agreement, the Business
Manager will be privy to financial and Confidential Information, to which the
Business Manager would not otherwise be exposed. Business Manager agrees and
acknowledges that the non-competition covenants described hereunder are
necessary for the protection of the Practice, and that the Practice would not
have entered into this Business Management Agreement without such covenants.
Business Manager represents, warrants and covenants that during the Term of this
Business Management Agreement and for a period of two (2) years from the date
this Business Management Agreement is terminated, other than if terminated by
Business Manager for cause, neither Business Manager nor any person or entity
affiliated directly or indirectly with Business Manager will, anywhere within
five (5) miles of any Office existing on the effective date of this Business
Management Agreement, enter into a direct or indirect relationship similar to
the relationship between the Practice and Business Manager, or acquire the
nonmedical assets of, any professional practice group or engage in any other eye
care business currently engaged in by the Business Manager without approval of
the Practice. The Local Advisory Council shall consult with Business Manager
with respect to any acquisition of or merger with a health care practice outside
such five (5) mile area and within the region described in Exhibit 2.10.
Notwithstanding anything to the contrary in this Section, Business Manager (a)
may establish and maintain relationships with the entities described on Exhibit
3.17, (b) may enter into managed care agreements with (i) other practices on the
one hand, and national or regional payor
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entities on the other hand, if the Practice, upon being offered the opportunity
to enter into such managed care agreements, elects not to enter into such
managed care agreements, (ii) other health care practices within the
above-described five (5) mile area if and to the extent that the Practice is
unable to provide the specific services, reasonable access to, or minimum
standards as required by, a managed care payor for all of the patients to be
covered by a managed care agreement, and (iii) other health care practices where
Business Manager reasonably believes additional providers are required to obtain
a contract; provided, however, that the exceptions to Business Manager's
covenant not to compete contained in this subsection (b) shall not permit
Business Manager to enter into business management agreements with such other
health care practices. If the Business Manager breaches any obligation set forth
in this Section, in addition to any other remedies available under this Business
Management Agreement, at law or in equity, the Practice shall be entitled to
enforce this Business Management Agreement by injunctive relief and by specific
performance of the Business Management Agreement, such relief to be without the
necessity of posting a bond, cash or otherwise. Additionally, nothing in this
Section 3.17 shall limit the Practice's right to recover any other damages to
which it is entitled as a result of the Business Manager's breach. The time
period for which the non-competition covenants are effective shall be extended
day for day for the time period the Business Manager is in violation of the
non-competition covenants. If any provision of the covenants is held by a court
of competent jurisdiction to be unenforceable due to an excessive time period,
geographic area, or restricted activity, the covenants shall be reformed to
comply with such time period, geographic area, or restricted activity that would
be held enforceable. Following termination of this Agreement pursuant to Section
6.2(b) hereof, Business Manager shall be released from any and all of the
restrictions imposed in this Section 3.17.
3.18 Marketing and Public Relations. In accordance with applicable
laws, regulations and ethical standards, Business Manager shall use its best
efforts to provide such marketing, support, advertising and public relations
services as are appropriate to promote and market the Practice's Professional
Eye Care Services. Such services shall be subject to review by the Local
Advisory Council. At the option of Business Manager and to the extent permitted
by law, the Business Manager's corporate name may be included on any or all
signage, letterhead, advertisements, announcements and the like relating to
Professional Eye Care Services provided by the Practice. Marketing support
services include training the Practice's personnel concerning marketing
techniques, providing written materials that may be used in marketing, and
providing technical assistance to the Practice's personnel engaged in direct
marketing efforts such as administrative support and assistance in contract
negotiation and implementation. Business Manager shall not perform direct
marketing to potential sources of business, but shall provide assistance to the
Practice's personnel who perform any such direct marketing as set forth above.
Use of the Practice's name in any advertising or promotions shall require the
Practice's advance approval.
3.19 Inconsistent Transaction by Business Manager. The Business Manager
agrees that in performing the Management Services with respect to the Practice,
it shall not enter into any agreements, commitments or transactions or engage in
any activities which are exclusively within
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the authority and responsibility of the Practice as set forth in this Agreement
or are otherwise materially inconsistent with the provisions of this Agreement.
3.20 Payment of Cash Portion of Note. From and after the effective date
hereof, Business Manager covenants and agrees to use its best efforts to either
(a) obtain from a financially secure third party such third party's direct
unconditional guaranty of payment of the mandatory cash portion of any
promissory note delivered by Business Manager in connection with an Acquisition
Transaction, or arrange a commercially reasonable credit facility or financing
arrangement from a financial institution or investor to be used for the payment
or direct security in form acceptable to the Practice for the payment of the
mandatory cash portion of such promissory note. Until payment of the mandatory
cash portion of the promissory note is protected in the foregoing manner,
Business Manager shall accumulate and reserve all of its net income, shall not
make any distributions of such net income to its shareholders, and shall not use
any of such reserved funds for acquisitions of, or mergers with, additional
health care practices. Notwithstanding the foregoing, Business Manager and its
subsidiaries shall be entitled to (i) continue its acquisitions and mergers with
the founding practices from the effective date hereof until December 31, 1996,
(ii) enter into mergers with additional health care practices so long as no cash
consideration is used, and (iii) acquire or merge with additional health care
practices using such reserved funds so long as 2/3rds (66 2/3%) of the shares
held by the Founding Practices are voted in favor of such acquisition or merger.
For the purposes of this Section a "financially secure third party" shall be
deemed to be a financial institution or investor having a lending ability, fund
size or net worth in excess of $100.0 million.
4. OBLIGATIONS AND RESPONSIBILITIES OF THE PRACTICE.
4.1 Organization and Operation. The Practice, as a continuing
condition of Business Manager's obligations under this Business Management
Agreement, shall at all times during the Term be and remain legally organized
and operated to provide Professional Eye Care Services in a manner consistent
with all State, federal and local laws. The Practice shall operate and
maintain within the Practice Territory a full-time practice of ophthalmology
specializing in the provision of Professional Eye Care Services and shall
maintain and enforce employment agreements in the form of Exhibit 4.1A with
the Shareholders of the Practice specified in Exhibit 4.1B; provided, however,
that after the expiration of such employment agreements, and in the event that
such Shareholders continue a relationship with the Practice thereafter, the
Practice shall maintain and enforce employment agreements with such
Shareholders and all future Shareholders in the form of Exhibit 4.1C.
Shareholders agree and the Practice shall take steps to obtain the executed
employment agreements in the form of Exhibit 4.1C from such Shareholders after
the five (5) year period and all future Shareholders during the entire term of
this Agreement if the Shareholder elects to continue his relationship. After
five (5) years from the effective date of this Agreement, or earlier in the
event of death or permanent disability, a Shareholder may choose a successor
to replace him as a Shareholder. A Shareholder who wishes to have a successor
replace him as a Shareholder must first demonstrate to and obtain consent from
Business Manager that the successor is licensed to practice ophthalmology in the
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State, and is competent and capable to assume ownership of the Practice.
Business Manager Consent shall not be unreasonably withheld with respect to such
replacement. In the event of disability, death or planned retirement after five
years, Business Manager will make a good faith effort in assisting the Practice
in locating a possible successor. It is understood however that Business Manager
has no ultimate responsibility to find the ultimate successor, which shall be
the sole responsibility of the Shareholder. The Practice shall not amend the
employment agreements or waive any rights thereunder without the prior approval
of Business Manager. Recognizing that Business Manager would not have entered
into this Business Management Agreement but for the Practice's covenant to
maintain employment agreements with its Shareholders, the Practice shall pay to
Business Manager, in addition to the Management Fee, any damages, compensation,
payment, or settlement received by the Practice from each Shareholder specified
in Exhibit 4.1B pursuant to any non-competition covenant contained in Exhibit
4.1A. Such payment shall constitute liquidated damages of Business Manager for
the Practice's breach of the covenant contained in this Section 4.1. All
expenses and costs in enforcing the foregoing covenants not to compete shall be
deemed to be Office Expenses. The Practice shall take steps to have all future
Shareholders execute any reasonable documentation as required by Business
Manager in connection with this Section.
4.2 Practice Personnel. The Practice shall retain, as a Practice
Expense or Shareholder Expense, as the case may be, and not as an Office
Expense, that number of Professionals sufficient in the sole discretion of the
Practice as are reasonably necessary and appropriate for the provision of
Professional Eye Care Services, each of whom shall act in accordance with the
applicable provisions of this Business Management Agreement. Each
Ophthalmologist retained by the Practice shall hold and maintain a valid and
unrestricted license to practice ophthalmology in the State, and shall be
competent in the practice of ophthalmology. The Practice shall enter into and
maintain with each such retained Ophthalmologist and enforce a written
employment agreement substantially in the form of either Exhibit 4.1A for
Shareholders of the Practice or Exhibit 4.2A for non-shareholders. Each
Optometrist retained by the Practice shall hold and maintain a valid and
unrestricted license to practice optometry in the State, and shall be competent
in the practice of optometry. The Practice shall enter into and maintain with
each such retained Optometrist and enforce a written employment agreement
substantially in the form of Exhibit 4.2B. Notwithstanding the foregoing
provisions, the employment contracts currently in effect on the effective date
of this Agreement with the non-shareholder Professionals identified on Exhibit
4.2C shall remain in force during the existing term; provided, however, that
upon completion of such term should the non-shareholder remain at the Practice
or at such time the non-shareholder Professional is granted options by Vision
21, such Professionals' employment contracts shall then be immediately replaced
with employment contracts in substantially the form of Exhibit 4.1C. The
Practice shall be responsible for hiring, training, supervision, discipline,
termination and paying the compensation, and benefits as applicable, for all
Professional personnel and other contracted or affiliated Professionals, and for
withholding, as required by law, any sums for income tax, unemployment
insurance, social security, or any other withholding required by applicable law.
Business Manager shall, however, on behalf of the Practice, administer the
compensation with respect to such individuals
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in accordance with the written employment agreement between the Practice and
each Professional. The Practice shall cause its Professionals to obtain and
maintain all licenses and permits required in connection with the practice of
ophthalmology or optometry, any other business it has or the administration of
drugs by such Professionals. Business Manager shall neither control nor direct
any Professional in the performance of Professional Eye Care Services for
patients. All damages recovered for violations of non-competition covenants from
Professionals subject to employment agreements in the forms of Exhibit 4.1C,
Exhibit 4.2A, or Exhibit 4.2B shall be treated as Adjusted Gross Revenue.
4.3 Professional Standards. As a continuing condition of Business
Manager's obligations hereunder:
(a) Each Ophthalmologist and any other Ophthalmologist
personnel retained by the Practice to provide ophthalmology services must (i)
have and maintain a valid and unrestricted license to practice ophthalmology in
the State, (ii) have and maintain a D.E.A. number, (iii) comply with, be
controlled and governed by and otherwise provide ophthalmology services in
accordance with applicable federal, State and municipal laws, rules,
regulations, ordinances and orders, and the ethics and standard of care of the
medical community wherein the principal Office of the Practice is located and
(iv) unless otherwise approved by the Local Advisory Council, obtain and retain
appropriate medical staff membership with appropriate clinical privileges at any
hospital or health care facility at which ophthalmology services are to be
provided. Procurement of temporary staff privileges pending the completion of
the medical staff approval process shall satisfy this provision, provided the
Ophthalmologist actively pursues full appointment and actually receives full
appointment within a reasonable time.
(b) Each Optometrist and any other Optometrist personnel
retained by the Practice to provide optometry services must (i) have and
maintain a valid and unrestricted license to practice optometry in the State,
(ii) comply with, be controlled and governed by and otherwise provide optometry
services in accordance with applicable federal, State and municipal laws, rules,
regulations, ordinances and orders, and the ethics and standard of care of the
optometric community wherein the principal Office of the Practice is located,
(iii) obtain and retain appropriate staff membership with appropriate privileges
at any hospital or health care facility at which optometry services are to be
provided, and (iv) provide on a continual basis, quality care to its patients.
Procurement of temporary staff privileges pending the completion of the staff
approval process shall satisfy this provision, provided the Optometrist actively
pursues full appointment and actually receives full appointment within a
reasonable time.
4.4 Professional Eye Care Services. The Practice shall ensure that
Professionals are available as necessary to provide quality Professional Eye
Care Services to patients and shall assist the Business Manager in ensuring that
Clinical Personnel are available as necessary to provide quality Professional
Eye Care Services to patients. In the event that Professionals employed by, or
Shareholders of, the Practice are not available to provide Professional Eye Care
Services coverage, the Practice shall engage and retain locum tenens coverage.
Professionals
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retained on a locum tenens basis shall meet all of the requirements of Section
4.3, and the cost of providing locum tenens coverage shall be a Practice
Expense. With the assistance of the Business Manager, the Practice and the
Professionals shall be responsible for scheduling Professional and Clinical
Personnel coverage of all medical and optometric procedures. The Practice shall
cause all Professionals to exert their best efforts to develop and promote the
Practice in such manner as to ensure the Practice is able to serve the diverse
needs of the community.
4.5 Peer Review/Quality Assurance. The Practice shall adopt a peer
review/quality assurance program to monitor and evaluate the quality and
cost-effectiveness of Professional Eye Care Services provided by Professional
personnel of the Practice, the expenses of which shall be deemed an Office
Expense. Pursuant to such program, the Practice shall designate a committee of
Professionals to function as a medical peer review committee to review
credentials of potential recruits, perform quality assurance functions, and
otherwise resolve medical competence issues. The medical peer review committee
shall function pursuant to formal written policies and procedures. Upon request
of the Practice, Business Manager shall provide administrative assistance to the
Practice in performing its peer review/quality assurance activities, but only if
such assistance can be provided consistent with maintaining the confidentiality,
immunity, and non-discoverability of the processes and actions of the peer
review/quality assurance process of the Practice.
4.6 Practice's Insurance. The Practice shall, as a Practice Expense,
obtain and maintain with commercial carriers chosen by the Practice appropriate
workers' compensation coverage for the Practice's employed personnel, if any,
and professional and comprehensive general liability insurance covering the
Practice and each of the Professionals and Clinical Personnel the Practice
retains to provide Professional Eye Care Services. The comprehensive general
liability coverage with respect to each Professional and Clinical Personnel
shall be in the minimum amount of One Million Dollars ($1,000,000) and
professional liability coverage shall be in the minimum amount of One Million
Dollars ($1,000,000) for each occurrence and Three Million Dollars ($3,000,000)
annual aggregate; provided, however, that with Business Manager Consent, which
shall not be unreasonably withheld or delayed, the Practice may from
time-to-time change such liability coverage amounts to amounts which are
consistent with industry standards. The insurance policy or policies shall
provide for at least thirty (30) days' advance written notice to the Practice
from the insurer as to any alteration of coverage, cancellation, or proposed
cancellation for any cause. The Practice hereby releases Business Manager from
any and all liability for losses or damages caused by any act or neglect of
Business Manager occurring after the effective date hereof to the extent that
such losses or damages are covered by insurance; provided, however, that such
release shall not apply to any loss or damage caused by the willful, wanton, or
premeditated negligence of Business Manager. The Practice shall obtain from any
insurance company issuing the foregoing policies its consent to the release from
liability contained in this Section. The Practice shall cause to be issued to
Business Manager by such insurer or insurers a certificate reflecting such
coverage and obtain the consent of such insurer or insurers to provide prior
written notice to Business Manager equal to notice given to
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a Professional of the cancellation or proposed cancellation of such insurance
for any cause. Such insurance policies shall be issued by a carrier or carriers
having a current rating of not less than "A" as rated by A.M. Best Company,
unless Business Manager agrees in writing to the purchase of a policy or
policies from a carrier having a lesser rating than "A". The Local Advisory
Council may, from time-to-time, select a different commercial carrier or
carriers for such workers' compensation and professional and general liability
coverage upon the establishment of a program affecting substantially all
practice groups within the market in which the Practice is located for which
Business Manager provides management services, which decision shall be binding
upon the Practice. After such election of a single carrier or carriers by the
Local Advisory Council, the costs of such coverage shall continue to be treated
as a Practice Expense. Upon the termination of this Business Management
Agreement for any reason, the Practice shall continue to carry professional
liability insurance in the amounts specified herein for the shorter period of
(i) the period set forth in the State's statute of repose (or if no statute of
repose exists, the State's statute of limitations) for bringing professional
malpractice claims based upon injuries which are not immediately discoverable
plus any applicable tolling periods, or (ii) ten (10) years after termination;
or if the Practice dissolves or ceases to practice ophthalmology or optometry,
the Practice shall obtain and maintain as a Shareholder Expense "tail"
professional liability coverage, in the amounts specified in this Section for
the shorter period of (i) the period set forth in the State's statute of repose
(or if no statute of repose exists, the State's statute of limitations) for
bringing professional malpractice claims based upon injuries which are not
immediately discoverable plus any applicable tolling periods, or (ii) ten (10)
years. The Practice shall be responsible for paying all premiums for Shareholder
"tail" insurance coverage and such coverage shall be a Shareholder Expense;
provided, however, that the Practice may cause its Professionals to be
responsible for paying the premiums for such "tail" insurance coverage. Except
as determined by the Local Advisory Council, the professional liability
insurance carrier shall not be replaced or changed without Practice Consent and
Business Manager Consent.
4.7 Confidential and Proprietary Information. The Practice agrees and
acknowledges that all materials provided by Business Manager to the Practice
constitute Confidential Information disclosed in confidence and with the
understanding that it constitutes valuable business information developed by
Business Manager at great expenditures of time, effort, and money. The Practice
further agrees that it shall not, directly or indirectly, disclose any
Confidential Information of the Business Manager to other persons without
Business Manager's express written authorization, such Confidential Information
shall not be used in any way directly or indirectly detrimental to Business
Manager, and the Practice will keep such Confidential Information confidential
and will ensure that its affiliates and advisors who have access to such
Confidential Information comply with these nondisclosure obligations; provided,
however, that the Practice may disclose Confidential Information to those of its
Representatives who need to know Confidential Information for the purposes of
this Business Management Agreement, it being understood and agreed to by the
Practice that such Representatives will be informed of the confidential nature
of the Confidential Information, will agree to be bound by this Section, and
will be directed by the Practice not to disclose to any other person any
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Confidential Information. The Practice agrees to be responsible for any breach
of this Section by its affiliates, advisors, or Representatives. If the Practice
is requested or required (by oral questions, interrogatories, requests for
information or documents, subpoenas, civil investigative demands, or similar
processes) to disclose or produce any Confidential Information furnished in the
course of its dealings with Business Manager or its affiliates, advisors, or
Representatives, the Practice will (i) provide Business Manager with prompt
notice thereof and copies, if possible, and, if not, a description, of the
Confidential Information requested or required to be produced so that Business
Manager may seek an appropriate protective order or waive compliance with the
provisions of this Section and (ii) consult with Business Manager as to the
advisability of Business Manager's taking of legally available steps to resist
or narrow such request. The Practice further agrees that, if in the absence of a
protective order or the receipt of a waiver hereunder, the Practice is
nonetheless, in the written opinion of its legal counsel, compelled to disclose
or produce Confidential Information concerning Business Manager to any tribunal
legally authorized to request and entitled to receive such Confidential
Information or to stand liable for contempt or suffer other censure or penalty,
the Practice may disclose or produce such Confidential Information to such
tribunal without liability hereunder; provided, however, that the Practice shall
give Business Manager written notice of the Confidential Information to be so
disclosed or produced as far in advance of its disclosure or production as is
practicable and shall use its best efforts to obtain, to the greatest extent
possible, an order or other reliable assurance that confidential treatment will
be accorded to such Confidential Information so required to be disclosed or
produced. The Practice acknowledges that the disclosure of Confidential
Information to it by Business Manager is done in reliance upon its
representations and covenants in this Business Management Agreement. Upon
expiration or termination of this Business Management Agreement by either Party
for any reason whatsoever, the Practice shall immediately return and shall cause
its Representatives, affiliates, and independent contractors to immediately
return to Business Manager all Confidential Information, and the Practice will
not, and will cause its Representatives, affiliates, and independent contractors
not to, thereafter use, appropriate or reproduce such Confidential Information.
The Practice further expressly acknowledges and agrees that any such use,
appropriation, or reproduction of any such Confidential Information by any of
the foregoing after the expiration or termination of this Agreement will result
in irreparable injury to Business Manager, that the remedy at law for the
foregoing would be inadequate, and that in the event of any such use,
appropriation, or reproduction of any such Confidential Information after the
termination or expiration of this Agreement, Business Manager, in addition to
any other remedies or damages available to it, shall be entitled to injunctive
or other equitable relief without the necessity of posting a bond, cash, or
otherwise, and without the necessity of proving actual damages. Such rights to
relief shall not preclude Business Manager from other remedies which may be
available to it hereunder.
4.8 Non-Competition. The Practice hereby recognizes and acknowledges
that Business Manager will incur substantial costs in providing the equipment,
support services, personnel, management, administration, and other items and
services that are the subject matter of this Business Management Agreement and
that in the process of providing services under this
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Business Management Agreement, the Practice will be privy to financial and
Confidential Information, to which the Practice would not otherwise be exposed.
The Parties also recognize that the services to be provided by Business Manager
will be feasible only if the Practice operates an active practice to which the
Professionals associated with the Practice devote their full time and attention.
The Practice agrees and acknowledges that the non-competition covenants
described hereunder are necessary for the protection of Business Manager, and
that Business Manager would not have entered into this Business Management
Agreement without the following covenants.
(a) During the Term of this Business Management Agreement and
except for its obligations pursuant to this Business Management Agreement, the
Practice shall not establish, operate, or provide Professional Eye Care Services
at a medical office, clinic or other health care facility anywhere within twenty
(20) miles of any current or future location at which Business Manager provides
business management services similar to the services contemplated in this
Agreement; provided, however, that the Practice may carry on the activities
described in Exhibit 1.3 without violating this Section 4.8.
(b) Except as specifically agreed to by Business Manager in
writing, the Practice and its Shareholders covenant and agree that during the
Term of this Business Management Agreement and for a period of two (2) years
from the date this Business Management Agreement is terminated, other than if
terminated by the Practice for cause, or expires, the Practice shall not
directly or indirectly own (excluding ownership of less than one percent (1%) of
the equity of any publicly traded entity and excluding ownership of the common
stock of Business Manager), manage, operate, control, contract with, lend funds
to, lend its name to, maintain any interest whatsoever in, or be employed by,
any enterprise (i) having to do with the provision, distribution, promotion, or
advertising of any type of management or administrative services or products to
third parties in competition with Business Manager, located anywhere in the
United States of America; and/or (ii) offering any type of service(s) or
product(s) to third parties substantially similar to those offered by Business
Manager to the Practice located anywhere in the United States of America.
Notwithstanding the above restriction, nothing herein shall prohibit (i) the
Practice or any of its Shareholders from providing management and administrative
services to this or their own ophthalmology practices after the termination of
this Business Management Agreement, (ii) the Practice or its Shareholders from
contracting with a third-party manager to provide administrative or management
services for its or their professional eye care practices after termination of
this Business Management Agreement and two (2) years thereafter, as long as such
relationship complies with the provisions of this Section 4.8(b); (iii) any of
the Practice's Shareholders from providing management and administrative
services to their own ophthalmology practices after the termination of their
employment relationship with the Practice in accordance with this Business
Management Agreement, and (iv) such Shareholders from contracting with a
third-party manager to provide administrative or management services for their
professional eye care practices after the termination of their employment
relationship with the Practice in accordance with this Business Management
Agreement. If the Practice violates this Section, the Practice
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shall pay to Business Manager the amount received as consideration by the
Practice and/or the Shareholders in connection with the Acquisition Transaction,
as agreed upon liquidated damages. The Practice and the Shareholders acknowledge
and agree that such sum is reasonable in light of the severe harm that Business
Manager would suffer as a result of the Practice's breach of this restrictive
covenant. If the Practice fails to make payment of liquidated damages as
contemplated by this Section, Business Manager shall be entitled among all other
rights and remedies available at law or equity, to (i) cancel the number of
shares of Business Manager's common stock held by the Practice or the
Shareholders or, with respect to shares of Business Managers' common stock
entitled to be received by the Practice or the Shareholders pursuant to the
Acquisition Agreement, terminate its obligation to deliver such number of shares
of Business Manager's common stock, valued at the market price per share
representing such liquidated damages sum, or (ii) set off all or any of such
liquidated damages sum against amounts payable under any promissory note held by
the Practice or the Shareholders, or do both of the foregoing, but in no event
shall Business Manager be entitled to offset amounts in excess of the liquidated
damages sum pursuant to this Section.
(c) The written employment agreements in the form of Exhibit
4.1A shall contain covenants of the Shareholder employees pursuant to which the
Shareholders agree not to compete with the Practice or with the Business Manager
within the Practice Territory for two (2) years after termination or expiration
of the employment agreement.
(d) The Practice shall obtain and enforce formal written
agreements from its Ophthalmologist employees in the form of Exhibit 4.2A or
Exhibit 4.1C, as the case may be, and agreements from its Optometrist employees
in the form of Exhibit 4.2B, pursuant to which the employees agree not to
compete with the Practice or with the Business Manager within the Practice
Territory for one (1) year after termination or expiration of the employment
agreement.
(e) The Practice understands and acknowledges that Business
Manager shall suffer severe harm in the event that the foregoing non-competition
covenants in Section 4.8 are violated, and accordingly, if the Practice breaches
any obligation of Section 4.8, in addition to any other remedies available under
this Business Management Agreement, at law or in equity, Business Manager shall
be entitled to enforce this Business Management Agreement by injunctive relief
and by specific performance of the Business Management Agreement, such relief to
be without the necessity of posting a bond, cash or otherwise. Additionally,
nothing in this Section 4.8(e) shall limit Business Manager's right to recover
any other damages to which it is entitled as a result of the Practice's breach.
The time period for which the non-competition covenant is effective shall be
extended day for day for the time period the Practice is in violation of the
non-competition covenant. If any provision of the covenants is held by a court
of competent jurisdiction to be unenforceable due to an excessive time period,
geographic area, or restricted activity, the covenant shall be reformed to
comply with such time period, geographic area, or restricted activity that would
be held enforceable. Following termination of this Agreement pursuant to Section
6.2(b) hereof, the Practice shall not amend, alter or otherwise change any term
or provision of the restrictive covenants or liquidated damages provisions of
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the employment agreements with the Professionals. Following termination of this
Agreement pursuant to Section 6.2(a) hereof, the Practice and the Professionals
shall be relieved of the restrictions imposed by this Section 4.8.
4.9 Name, Trademark. The Practice represents and warrants that the
Practice conducts its professional practice under the name of, and only under
the name of "▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C.", "Millennium Vision, P.C." and
"Paradise Valley Eye Specialists" and that such names are duly registered,
qualified, or licensed under the law of the State, and that, to the Practice's
knowledge, the Practice is the sole and absolute owner of the names in the
State. The Practice covenants and promises that, without the prior written
consent of the Business Manager, the Practice will not:
(a) take any action that is reasonably likely to result in the
loss of registration, qualification or licensure of the names;
(b) fail to take any reasonably necessary action that will
maintain the registration, qualification, or licensure current;
(c) license, sell, give, or otherwise transfer the names or
the right to use the names to any medical practice, ophthalmology or optometry
practice, Ophthalmologist, Optometrist, professional corporation, or any other
entity; or
(d) cease conducting the professional practice of the Practice
under the names.
4.10 Lease Assignment. Upon Business Manager's request, if the Practice
is the lessee of the Office under a lease with an unrelated and unaffiliated
lessor, the Practice shall assign the lease to Business Manager upon receipt of
consent from the lessor. The Practice shall use its best efforts to assist in
obtaining the lessor's consent to the assignment. Upon request, the Practice
shall execute any instruments and shall take any acts that Business Manager may
deem necessary to accomplish the assignment of the lease.
4.11 Billing Information and Assignments; Establishment of Fees. The
Practice shall promptly provide the Business Manager with all billing and other
information reasonably requested by the Business Manager to enable it to ▇▇▇▇
and collect the Practice's fees and other charges and reimbursement claims
pursuant to Section 3.9, and the Practice shall use its best efforts to procure
consents to assignments and other approvals and documents necessary to enable
the Business Manager to obtain payment or reimbursement from third parties for
such fees, other charges and claims. The Practice shall establish reasonable
fees for all professional and ancillary services and pharmaceutical items in
connection with the provision of Professional Eye Care Services.
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4.12 Provider Agreements. The Practice shall not enter into contractual
arrangements with third parties for the Practice's provision of Professional Eye
Care Services which are inconsistent with guidelines established by the Local
Advisory Council or any capitated fee arrangement without the prior approval of
the Practice Advisory Council. Subject to the foregoing provision, the Practice
shall have the final authority with regard to all of such contractual
arrangements.
4.13 Inconsistent Transaction by the Practice. The Practice agrees that
it shall not enter into any agreements, commitments or transactions or engage in
any activities which are within the authority and responsibility of the Business
Manager as set forth in this Agreement or otherwise materially inconsistent with
the provisions of this Agreement.
4.14 Recommendations. The Practice shall make recommendations to
Business Manager regarding the Office, the equipment, the business operations,
and the services to be provided by Business Manager under this Business
Management Agreement.
4.15 General Obligations. The Practice shall take all lawful actions
reasonably necessary to maximize revenues and shall not take any action to
reduce revenues other than in the ordinary course of business.
4.16 Tax Matters. The Practice shall prepare or arrange for the
preparation by an accountant selected by the Practice of all appropriate
corporate tax returns and reports required of the Practice including such
returns and reports required with respect to the Account. All costs and expenses
relating to the preparation of such returns and reports shall be deemed a
Shareholder Expense.
4.17 Shareholders' Undertaking to Enforce Certain Provisions of
Agreement. The Practice shall cause to be executed by all Shareholders of the
Practice an undertaking in the form of Exhibit 4.17 by such Shareholders to
ensure that the corporate existence of the Practice is maintained and that the
covenants not to compete described in Sections 4.1 and 4.2 of this Agreement are
enforced by the Practice against any individuals violating such covenants.
5. BUSINESS MANAGER'S COMPENSATION.
5.1 Management Fee. The Practice and Business Manager agree to the
compensation set forth herein as being paid to Business Manager in consideration
of a substantial commitment made by Business Manager hereunder and that such
fees are fair and reasonable. Each month Business Manager shall be paid that
percentage set forth in Exhibit 5.1 of the amount remaining after (a) Office
Expenses and Practice Expenses (excluding optical supplies) are subtracted from
(b) Adjusted Gross Revenue (the "Management Fee"). Business Manager shall not be
liable for any losses generated by the Practice, and in no event shall the
Management Fee be less than zero dollars. The payment of the Management Fee
shall take into account any losses generated by the Practice arising after the
effective date of this Agreement, with losses being carried forward
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to offset future net revenues of the Practice (which for purposes of this
Section shall be deemed to be Adjusted Gross Revenue minus Office Expenses and
Practice Expenses).
5.2 Reasonable Value. Payment of the Management Fee is not intended to
be and shall not be interpreted or applied as permitting Business Manager to
share in the Practice's fees for Professional Eye Care Services or any other
services, but is acknowledged as the Parties' negotiated agreement as to the
reasonable fair market value of Business Manager's commitment to pay all Office
Expenses and the fair market value of the equipment, contract analysis and
support, other support services, purchasing, personnel, office space,
management, administration, strategic management and other items and services
furnished by Business Manager pursuant to the Business Management Agreement,
considering the nature and volume of the services required and the risks assumed
by Business Manager. The Practice and Business Manager recognize and acknowledge
that Business Manager will incur substantial costs and business risks in
undertaking to pay all Office Expenses, arranging for the Practice's use of the
Office and in providing the equipment, support services, personnel, marketing,
office space, management, administration, and other items and services that are
the subject matter of this Business Management Agreement, and certain of such
costs and expenses can vary to a considerable degree according to the extent of
the Practice's business and services. It is the intent of the Parties that the
Management Fee reasonably compensate Business Manager for the value to the
Practice of Business Manager's administrative expertise, given the considerable
business risk to Business Manager in providing the Management Services that are
the subject of this Business Management Agreement.
5.3 Payment of Management Fee. To facilitate the payment of the
Management Fee as provided in Section 5.1(a) hereof, the Practice hereby
expressly authorizes Business Manager to make withdrawals of the Management Fee
from the Account as such fee becomes due and payable during the Term in
accordance with Section 3.10(a) and after termination as provided in Section
6.3. Business Manager shall deliver to the Practice an invoice for the
Management Fee accompanied by a reasonably detailed statement of the information
upon which the Management Fee calculation is based.
5.4 Assignment of Fees for Medical and Optometry Services.
(a) As security for the performance of its obligations under
this Business Management Agreement, the Practice hereby irrevocably assigns and
sets over to Business Manager all of its right to receive payment for
Professional Eye Care Services (other than rights to receive payments relating
to the activities described in Exhibit 1.3) to the extent permitted by law (the
"Accounts Receivable") and retain such payment for its own account, and shall
obtain a like assignment from all Professionals. To the extent such rights to
receive payment cannot legally be assigned, the "Accounts Receivable" shall
include the right to have any amounts received by the Practice pursuant to such
non-assignable rights paid over to Business Manager upon receipt. The Practice
shall take such action as may be necessary to confirm to Business Manager the
rights set forth in this Section 5.4(a).
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(b) Without limiting the generality of the foregoing, it is
the intent of the Parties that the assignments to Business Manager of the rights
described in Section 5.4(a) above shall be inclusive of the rights of the
Practice and the Professionals to receive payment with respect to any services
rendered prior to the effective date of any expiration or termination of this
Agreement; provided, however, that the right to receive payments relating to the
activities described in Exhibit 1.3 shall be excluded from such assignment. The
Practice agrees and shall cause each Professional to agree, that Business
Manager shall retain the right to collect and hold as security any Accounts
Receivable relating to any such services rendered prior to the effective date of
any such expiration or termination ("Pre-Termination Accounts Receivable").
(c) The Practice acknowledges that it is the intent of
Business Manager to grant a security interest in (i) prior to an initial public
offering of Business Manager's common stock, seventy-eight percent (78%) of the
Pre-Termination Accounts Receivable, and (ii) after an initial public offering
of Business Manager's common stock, one hundred percent (100%) of the
Pre-Termination Accounts Receivable; to the lender(s) under its working capital
credit facility (whether one or more, the "Credit Facility Lender"), as in
effect from time-to-time. Pursuant to the 78% grant, the Credit Facility Lender
shall be entitled to collect and retain, upon default of Business Manager, 78%
of each dollar of the Pre-Termination Accounts Receivable amounts received, with
the remaining 22% received to be returned to the Account. The Practice agrees
that such security interest of the Credit Facility Lender is intended to be a
first priority security interest and is superior to any right, title or interest
which may be asserted by the Practice or any Professional with respect to the
then applicable portion of the Pre-Termination Accounts Receivable or the
proceeds thereof. The Practice further agrees, and shall cause each Professional
to agree, that, upon the occurrence of an event which, under the terms of such
working capital credit facility, would allow the Credit Facility Lender to
exercise its right to collect such portion of the Pre-Termination Accounts
Receivable and apply the proceeds thereof toward amounts due under such working
capital credit facility, the Credit Facility Lender will succeed to all rights
and powers of Business Manager under the powers of attorney provided for in
Section 3.9(f) above as if such Credit Facility Lender had been named as the
attorney-in-fact therein, and the Practice and each Professional hereby waive,
and the Credit Facility Lender shall not take the Pre-Termination Accounts
Receivable subject to, any and all defenses the Practice and/or such
Professionals may have with respect to money coming into the Account and any
defenses they may have against the Credit Facility Lender. The Practice shall,
and shall cause its Professionals to, execute any and all documents, financing
statements, and agreements reasonably requested by such Credit Facility Lender
to evidence and effectuate the Credit Facility Lender's rights contemplated in
this Section.
(d) In the event that, contrary to the mutual intent of
Business Manager and the Practice, the assignment of rights described in this
Section 5.4 shall be deemed, for any reason, to be ineffective as an outright
assignment, the Practice and each Professional shall, effective as of the date
of this Business Management Agreement, be deemed to have granted (and the
Practice does hereby grant, and shall cause each Professional to grant) to
Business Manager a first priority lien on and security interest in and to any
and all interests of the
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Practice and such Professionals in any accounts receivable generated by the
provision of Professional Eye Care Services by the Practice and its
Professionals or otherwise generated through the operations of the Office, and
all proceeds with respect thereto, to secure the payment to Business Manager of
all amounts due to Business Manager hereunder, and this Business Management
Agreement shall be deemed to be a security agreement to the extent necessary to
give effect to the foregoing. The Practice shall execute and deliver, and cause
each Professional to execute and deliver, all such financing statements as
Business Manager may request in order to perfect such security interest. The
Practice shall not grant (and shall not suffer any Professional to grant) any
other lien on or security interest in or to such accounts receivable or any
proceeds thereof.
(e) Upon termination of this Business Management Agreement,
Business Manager shall release the foregoing lien with respect to Accounts
Receivable generated after the effective date of such termination and shall
execute and cause to be filed any termination statements relating to such
release of lien. However, it is understood that all rights of the Parties to the
Accounts Receivable shall be subordinate to any interest of the Credit Facility
Lender.
5.5 Disputes Regarding Fees.
(a) It is the Parties' intent that any disputes regarding
performance standards of the Business Manager be resolved to the extent possible
by good faith negotiation. To that end, the Parties agree that if the Practice
in good faith believes that Business Manager has failed to perform its
obligations, and that as a result of such failure, the Practice is entitled to a
set-off or reduction in its Management Fees, the Practice shall give Business
Manager notice of the perceived failure and request in the notice a set-off or
reduction in Management Fees. Business Manager and the Practice shall then
negotiate the dispute in good faith, and if an agreement is reached, the Parties
shall implement the resolution without further action.
(b) If the Parties cannot reach a resolution within a
reasonable time, the Parties shall submit the dispute to mediation to be
conducted in accordance with the American Arbitration Association's Commercial
Mediation Rules.
(c) If the mediation process fails to resolve the dispute, the
dispute shall be submitted by either Party to binding arbitration under Section
8.7.
6. TERM AND TERMINATION.
6.1 Initial and Renewal Term. The Term of this Business Management
Agreement will be for an initial period of forty (40) years after the effective
date, and shall be automatically renewed for successive five (5) year periods
thereafter, provided that neither Business Manager nor the Practice shall have
given notice of termination of this Business Management Agreement at least one
hundred twenty (120) days before the end of the initial term or any renewal
term,
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or unless otherwise terminated as provided in Section 6.2 of this Business
Management Agreement.
6.2 Termination.
(a) Termination by the Practice. The Practice may immediately
terminate this Agreement at its discretion, upon written notice pursuant to
Section 8.3, as follows:
i) If Business Manager becomes insolvent by reason
of its inability to pay its debts as they mature; is adjudicated bankrupt or
insolvent; files a petition in bankruptcy, reorganization or similar proceeding
under the bankruptcy laws of the United States or shall have such a petition
filed against it which is not discharged within thirty (30) days; has a receiver
or other custodian, permanent or temporary, appointed for its business, assets
or property; makes a general assignment for the benefit of creditors; has its
bank accounts, property or accounts attached; has execution levied against its
business or property; or voluntarily dissolves or liquidates or has a petition
filed for corporate dissolution and such petition is not dismissed with thirty
(30) days;
ii) If the Business Manager fails to comply with any
material provision of this Agreement, or any other agreement with the Practice,
and does not correct such failure within sixty (60) days after written notice of
such failure to comply is delivered by the Practice specifying the nature of the
breach in reasonable detail.
(b) Termination by Business Manager. Business Manager may
immediately terminate this Agreement at its discretion, upon written notice
pursuant to Section 8.3, as follows:
i) If the Practice becomes insolvent by reason of
its inability to pay its debts as they mature; is adjudicated bankrupt or
insolvent; files a petition in bankruptcy, reorganization or similar
proceeding under the bankruptcy laws of the United States or shall have such a
petition filed against it which is not discharged within thirty (30) days; has
a receiver or other custodian, permanent or temporary, appointed for its
business, assets or property; makes a general assignment for the benefit of
creditors; has its bank accounts, property or accounts attached; has execution
levied against its business or property; or voluntarily dissolves or
liquidates or has a petition filed for corporate dissolution and such petition
is not dismissed with thirty (30) days; or
ii) If the Practice fails to comply with any material
provision of this Agreement, or any other agreement with Business Manager, and
does not correct such failure within sixty (60) days after written notice of
such failure to comply is delivered by Business Manager specifying the nature of
the breach in reasonable detail.
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(c) Termination by Agreement. In the event the Practice and
Business Manager shall mutually agree in writing, this Business Management
Agreement may be terminated on the date specified in such written agreement.
(d) Legislative, Regulatory or Administrative Change. In the
event there shall be a change in the Medicare or Medicaid statutes, federal
statutes, state statutes, case laws, administrative interpretations, regulations
or general instructions, the adoption of new federal or state legislation, or a
change in any third-party reimbursement system, any of which are reasonably
likely to materially and adversely affect the manner in which either Party may
perform or be compensated for its services under this Business Management
Agreement or which shall make this Business Management Agreement or any related
agreements unlawful or unenforceable, or which would be reasonably likely to
subject either Party to this Agreement, or any member, shareholder, officer,
director, employee, agent or affiliated organization to any civil or criminal
penalties or administrative sanctions, the Parties shall immediately use their
best efforts to enter into a new service arrangement or basis for compensation
for the services furnished pursuant to this Business Management Agreement that
complies with the law, regulation, or policy, or which minimizes the possibility
of such penalties, sanctions or unenforceability, and that approximates as
closely as possible the economic position of the Parties prior to the change. If
the Parties are unable to reach a new agreement within a reasonable time, then
either Party may submit the issue to arbitration pursuant to Section 8.7 for the
purpose of reaching an alternative arrangement that is equitable under the
circumstances.
6.3 Effects of Termination. Upon termination of this Business
Management Agreement, as hereinabove provided, neither Party shall have any
further obligations hereunder except for (i) obligations accruing prior to the
date of termination, including, without limitation, payment of the Management
Fee relating to services provided prior to the termination of this Business
Management Agreement, (ii) obligations, promises, or covenants set forth herein
that are expressly made to extend beyond the Term, including, without
limitation, insurance, indemnities and non-competition provisions, which
provisions shall survive the expiration or termination of this Business
Management Agreement, (iii) the obligation of the Practice described in Section
6.4, (iv) the obligation of Business Manager to repay amounts borrowed from the
Account pursuant to Section 5.4(a), and (v) the obligation of the Practice to
repay amounts advanced by Business Manager to the Practice. In effectuating the
provisions of this Section 6.3, the Practice specifically acknowledges and
agrees that if this Business Management Agreement terminates pursuant to
Sections 6.2(b) or (d), Business Manager shall continue for a period not to
exceed ninety (90) days to exclusively collect and receive on behalf of the
Practice all cash collections from accounts receivable in existence at the time
this Business Management Agreement is terminated, it being understood that (a)
such cash collections will represent compensation to Business Manager for
Management Services already rendered, (b) Business Manager shall not be entitled
to collect accounts receivables after the termination date if this Agreement is
terminated pursuant to Section 6.2(a), and (c) the Business Manager shall deduct
from such cash collections any other amounts owed to Business Manager under this
Business Management Agreement, including, without limitation, (i) ten percent
(10%) of such
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cash collections as its Management Fee during any period after the termination
of this Business Management Agreement while such collections are taking place,
(ii) any reasonable costs incurred by Business Manager in carrying out the post
termination procedures and transactions contemplated herein, and (iii) any
adjustments pursuant to Section 3.10(b). Business Manager shall remit remaining
amounts from such collection activities, if any, to the Practice. Upon the
expiration or termination of this Business Management Agreement for any reason
or cause whatsoever, Business Manager shall surrender to the Practice all books
and records pertaining to the Practice's ophthalmology and optometry practices.
All sums received or collected by either Party after termination for Adjusted
Gross Revenues earned prior to termination shall be split in accordance with
this Section 6.3.
6.4 Purchase Obligation. Upon expiration of this Business Management
Agreement in accordance with Section 6.1 or termination of this Business
Management Agreement by Business Manager, as set forth in Section 6.2(b) above,
the Practice shall upon Business Manager's demand:
(a) Pay to Business Manager the difference between the
consideration received in the Acquisition Transaction minus the book value of
the net tangible assets (for purposes of such repurchase obligations such
difference shall be amortized over a forty (40) year period), deferred charges,
and all other amounts on the books of the Business Manager relating to the
Business Management Agreement, as such amounts shall be established pursuant to
the Acquisition Transaction and including amounts, if any, for the covenants
described in Section 4.8 above, as adjusted through the last day of the month
most recently ended prior to the date of such termination in accordance with
GAAP to reflect amortization or depreciation of the intangible assets, deferred
charges, or covenants;
(b) Purchase from Business Manager any real estate owned by
Business Manager and used as an Office at the greater of the appraised fair
market value thereof or the then book value thereof. In the event of any
repurchase of real property, the appraised value shall be determined by Business
Manager and the Practice, each selecting a duly qualified appraiser, who in turn
will agree on a third appraiser. This agreed-upon appraiser shall perform the
appraisal which shall be binding on both Parties. In the event either Party
fails to select an appraiser within fifteen (15) days of the selection of an
appraiser by the other Party, the appraiser selected by the other Party shall
perform the appraisal which shall be binding on both Parties;
(c) Purchase at book value all improvements, additions, or
leasehold improvements that have been made by Business Manager at any Office and
that relate principally to the performance of Business Manager's obligations
under this Business Management Agreement;
(d) Assume all contracts and leases and the Practice's pro
rata share of all debts and payables that are obligations of Business Manager
and that relate principally to the
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performance of Business Manager's obligations under this Business Management
Agreement or the properties leased or subleased by Business Manager; provided,
however, that the Practice shall only be obligated to assume such contracts and
leases if the Practice will be able to enjoy the benefits of the contracts and
leases following such assumption;
(e) Purchase from Business Manager at book value all of the
equipment leased to the Practice, including all replacements and additions
thereto made by Business Manager pursuant to the performance of its obligations
under this Business Management Agreement, and all other assets, including
inventory and supplies, tangibles and intangibles, set forth on the books of
Business Manager as adjusted through the last day of the month most recently
ended prior to the date of such termination in accordance with GAAP to reflect
operations of the Office, depreciation, amortization, and other adjustments of
assets shown on the books of Business Manager; and
(f) Cause to be executed by Shareholders of the Practice such
personal guaranties and any security agreements reasonably required by Business
Manager in connection with the purchase described in this Section 6.4. For
purposes of this Section 6.4(f), the term "Shareholders" shall mean any
individual who is a Shareholder of the Practice on the date that notice is given
of the termination of this Business Management Agreement and any additional
individual who is a Shareholder of the Practice on the effective date of this
Business Management Agreement. However, such obligations of personal guaranties
by Shareholders shall expire effective five (5) years from the date hereof and
each Shareholder's guaranty shall terminate upon the death of such Shareholder.
All current Shareholders of the Practice shall on or before the effective date
of this Business Management Agreement, and all individuals who become
Shareholders of the Practice after the effective date of commencement of this
Business Management Agreement shall upon becoming a Shareholder of the Practice,
execute and deliver to Business Manager an undertaking to comply with this
Section 6.4(f) which shall be in the form of Exhibit 6.4(f). Notwithstanding the
above, the Practice and the Shareholders shall not permit without Business
Manager Consent, during any three (3) year period during which this Agreement is
in effect and only after five (5) years from the commencement hereof, the
transfer of over fifty percent (50%) of the ownership interests of the Practice
to any existing or new Shareholders of the Practice or combinations of existing
or new Shareholders of the Practice, except in cases of death, disability or
retirement of such transferring Shareholders or transfers to replacement
Shareholders described in Section 4.1 in accordance with the provisions set
forth in Section 4.1.
6.5 Purchase Option. Upon termination of this Business Management
Agreement by the Practice pursuant to Section 6.2(a), the Practice shall be
released from the restrictive covenants in Section 4.8 and shall have the option
but not the obligation to do all or none of the following:
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(a) Pay to Business Manager the difference between the
consideration received in the Acquisition Transaction minus the book value of
the net tangible assets (for purposes of such repurchase obligations such
difference shall be amortized over a forty (40) year period), deferred charges,
and all other amounts on the books of the Business Manager relating to the
Business Management Agreement, as such amounts shall be established pursuant to
the Acquisition Transaction and including amounts, if any, for the covenants
described in Section 4.8 above, as adjusted through the last day of the month
most recently ended prior to the date of such termination in accordance with
GAAP to reflect amortization or depreciation of the intangible assets, deferred
charges, or covenants;
(b) Purchase from Business Manager any real estate owned by
Business Manager and used as an Office at the greater of the appraised fair
market value thereof or the then book value thereof. In the event of any
repurchase of real property, the appraised value shall be determined by Business
Manager and the Practice, each selecting a duly qualified appraiser, who in turn
will agree on a third appraiser. This agreed-upon third appraiser shall perform
the appraisal which shall be binding on both Parties. In the event either Party
fails to select an appraiser within fifteen (15) days of the selection of an
appraiser by the other Party, the appraiser selected by the other Party shall
perform the appraisal which shall be binding on both Parties;
(c) Purchase at book value all improvements, additions, or
leasehold improvements that have been made by Business Manager at any Office and
that relate principally to the performance of Business Manager's obligations
under this Business Management Agreement;
(d) Assume all contracts and leases and the Practice's pro
rata share of all debts and payables that are obligations of Business Manager
and that relate principally to the performance of Business Manager's obligations
under this Business Management Agreement or the properties leased or subleased
by Business Manager; provided, however, that the Practice shall only be
obligated to assume such contracts and leases if the Practice will be able to
enjoy the benefits of the contracts and leases following such assumption; and
(e) Purchase from Business Manager at book value all of the
equipment leased to the Practice, including all replacements and additions
thereto made by Business Manager pursuant to the performance of its obligations
under this Business Management Agreement, and all other tangible assets,
including inventory and supplies, set forth on the books of the Business Manager
as adjusted through the last day of the month most recently ended prior to the
date of such termination in accordance with GAAP to reflect operations of the
Office, depreciation, amortization, and other adjustments of assets shown on the
books of the Business Manager.
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The Practice shall provide notice to Business Manager of its intent to
exercise the option above described at the same time that the Practice provides
notice to Business Manager of the Practice's election to terminate this Business
Management Agreement for cause.
6.6 Closing of Purchase. If the Practice purchases the assets pursuant
to Section 6.4 or 6.5, the Practice shall pay cash for the purchased assets;
provided, however, that the Practice may also use Business Manager's common
stock as consideration for the purchased assets, which stock shall be valued for
purposes of this Agreement as follows: (a) in the event of a Section 6.4
termination, the shares shall be valued at the lower of the value on the date
the shares were received by the Shareholder (as agreed to by the parties), and
the value on the date of the closing of this purchase, or (b) in the event of a
Section 6.5 termination, the shares shall be valued at the higher of the value
of such shares on the dates set forth in 6.6(a) above. The amount of the
purchase price shall be reduced by the amount of debt and liabilities of
Business Manager, if any, assumed by the Practice and by any unpaid portion of
any promissory notes payable by Business Manager to any Shareholder of the
Practice, which shall be offset against the purchase price. The Practice and all
Shareholders of the Practice shall execute such documents as may be required to
assume the liabilities set forth in Section 6.4(d) or Section 6.5(c) and to
remove Business Manager from any liability with respect to such repurchased
asset and with respect to any property leased or subleased by Business Manager.
The closing date for the purchase shall be determined by the Parties, but shall
in no event occur later than the expiration date of this Business Management
Agreement if this Agreement expires in accordance with Section 6.1, or sixty
(60) days from the date of the notice of termination for cause. The termination
of this Business Management Agreement shall become effective upon the closing of
the sale of the assets if the assets are purchased, and all Parties shall be
released from any restrictive covenants provided for in Section 3.17 or Section
4.8 on the closing date. If the Practice chooses not to purchase the assets
pursuant to Section 6.5, the termination shall be effective as of the notice
date given by the Practice under Section 6.2(b), at which time the parties shall
be released from the restrictive covenants in Section 3.17 and Section 4.8. From
and after any termination, each Party shall provide the other Party with
reasonable access of the books and records then owned by it to permit such
requesting Party to satisfy reporting and contractual obligations that may be
required of it.
6.7 Limitation of Liability. In no event shall Business Manager be
liable to the Practice for any indirect, special or consequential damages or
lost profits, arising out of or related to this Agreement or the performance or
breach thereof, even if Business Manager has been advised of the possibility
thereof.
7. INDEMNIFICATION; THIRD PARTY CLAIMS.
7.1 Indemnification by the Practice. The Practice shall indemnify and
hold harmless Business Manager and Business Manager's shareholders, directors,
officers, agents and employees, from and against all claims, demands,
liabilities, losses, damages, costs and expenses, including reasonable
attorneys' fees, resulting in any manner, directly or indirectly,
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from the negligent or intentional acts or omissions of the Practice or its
members, Shareholders, directors, officers, employees, agents or independent
contractors, including but not limited to any such claims, demands, liabilities,
losses, damages, costs and expenses which accrued or arose prior to the date of
execution of this Business Management Agreement.
7.2 Indemnification by Business Manager. Business Manager shall
indemnify and hold harmless the Practice, and the Practice's members,
Shareholders, directors, officers, agents and employees, from and against any
and all claims, demands, liabilities, losses, damages, costs and expenses,
including reasonable attorneys' fees, resulting in any manner, directly or
indirectly, from the negligent or intentional acts or omissions of Business
Manager or its shareholders, directors, officers, employees, agents or
independent contractors.
7.3 Notice of Claim for Indemnification. No claims for indemnification
under this Agreement relating to claims solely between the Parties shall be
valid unless notice of such claim is delivered to the Practice (in the case of a
claim by Business Manager) or Business Manager (in the case of a claim by the
Practice) within one (1) year after the Party making such claim first obtained
knowledge of the facts upon which such claim is based. Any such notice shall set
forth in reasonable detail, to the extent known by the Party giving such notice,
the facts on which such claim is based and the resulting estimated amount of
damages.
7.4 Matters Involving Third Parties.
(a) If the Practice or Business Manager receives notice or
acquires knowledge of any matter which may give rise to a claim by another
person and which may then result in a claim for indemnification under this
Agreement, then: (i) if such notice or knowledge is received or acquired by the
Practice, the Practice shall promptly notify Business Manager; and (ii) if such
notice or knowledge is received or acquired by Business Manager, the Business
Manager shall promptly notify the Practice; except that no delay in giving such
notice shall diminish any obligation under this Agreement to provide
indemnification unless (and then solely to the extent) the Party from whom such
indemnification is sought is prejudiced.
(b) Any Party from whom such indemnification (the
"Indemnifying Party") is sought shall have the right to defend the Party seeking
such indemnification (the "Indemnified Party") against such claim by another
person (the "Third Party Claim") with counsel of the Indemnifying Party's choice
reasonably satisfactory to the Indemnified Party so long as: (i) within fifteen
(15) days after the Indemnified Party has given notice of the Third Party Claim
to the Indemnifying Party, the Indemnifying Party notifies the Indemnified Party
that the Indemnifying Party will indemnify the Indemnified Party from and
against all adverse consequences the Indemnified Party may suffer caused by,
resulting from, arising out of or relating to such Third Party Claim; (ii) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
satisfactory to the Indemnified Party that the Indemnifying Party has the
financial resources necessary to defend against the Third Party Claim and
fulfill its indemnification obligations; (iii) the Third Party Claim seeks money
damages; (iv) settlement
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of, or an adverse judgment with respect to, the Third Party Claim (other than a
medical malpractice claim) is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice adverse to the
continuing business interests of the Indemnified Party; and (v) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 7.4(b): (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim; (ii) the Indemnified
Party shall not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior consent of
the Indemnifying Party; and (iii) the Indemnifying Party shall not consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior consent of the Indemnified Party.
(d) If any of the conditions specified in Section 7.4(b) is or
becomes unsatisfied, however; (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it may deem advisable (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith); (ii) the Indemnifying Party shall
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' and
accountants' fees and expenses); and (iii) the Indemnifying Party shall remain
responsible for any adverse consequences the Indemnified Party may suffer caused
by, resulting from, arising out of or relating to such Third Party Claim to the
fullest extent provided in this Agreement.
7.5 Settlement. Except as permitted by Section 7.4, a Party shall not
compromise or settle any claim for which the other Party is obligated to
indemnify it without the written consent of such Party.
7.6 Cooperation. The Indemnified Party shall make available all
information and assistance that the Indemnifying Party may reasonably request in
conjunction with assessing, defending and settling said claim.
8. MISCELLANEOUS.
8.1 Administrative Services Only. Nothing in this Business Management
Agreement is intended or shall be construed to allow Business Manager to
exercise control, authority or direction over the manner or method by which the
Practice and its Professionals perform Professional Eye Care Services or other
professional health care services. The rendition of all Professional Eye Care
Services, including, but not limited to, the prescription or administration of
medicine and drugs, shall be the sole responsibility of the Practice and its
Professionals, and Business Manager shall not interfere in any manner or to any
extent therewith. Nothing
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contained in this Business Management Agreement shall be construed to permit
Business Manager to engage in the practice of ophthalmology or optometry, it
being the sole intention of the Parties hereto that the services to be rendered
to the Practice by Business Manager are solely for the purpose of providing
nonmedical management and administrative services to the Practice so as to
enable the Practice to devote its full time and energies to the professional
conduct of its professional eye care practice and provision of Professional Eye
Care Services to its patients and not to administration or practice management.
8.2 Status of Independent Contractor. It is expressly acknowledged that
the Parties hereto are "independent contractors," and nothing in this Business
Management Agreement is intended and nothing shall be construed to create an
employer/employee, partnership, or joint venture relationship, or to allow
either to exercise control or direction over the manner or method by which the
other performs the services that are the subject matter of this Business
Management Agreement; provided always that the services to be provided hereunder
shall be furnished in a manner consistent with the standards governing such
services and the provisions of this Business Management Agreement. Each Party
understands and agrees that (i) the other will not be treated as an employee for
federal tax purposes, (ii) neither will withhold on behalf of the other any sums
for income tax, unemployment insurance, social security, or any other
withholding pursuant to any law or requirement of any governmental body or make
available any of the benefits afforded to its employees, (iii) all of such
payments, withholdings, and benefits, if any, are the sole responsibility of the
Party incurring the liability, and (iv) each will indemnify and hold the other
harmless from any and all loss or liability arising with respect to such
payments, withholdings, and benefits, if any.
8.3 Notices. Any notice, demand, or communication required, permitted,
or desired to be given hereunder shall be deemed effectively given when in
writing and personally delivered or mailed by prepaid certified or registered
mail, return receipt requested, addressed as follows:
The Practice: Millennium Vision, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
Sacks Tierney, P.A. Lawyers
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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Business Manager: Vision 21, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief
Executive Officer
with a copy to: ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or to such other address, or to the attention of such other person or officer,
as any party may by written notice designate.
8.4 Governing Law. This Business Management Agreement shall in all
respects be governed, interpreted and construed in accordance with the laws of
the State without giving effect to principles of comity or conflicts of laws
thereof.
8.5 Jurisdiction and Venue. Business Manager and the Practice hereby
consent to the personal jurisdiction and venue of the state and federal courts
in the judicial circuit where the Practice has its principal corporate office,
and do hereby waive all questions of personal jurisdiction and venue, including,
without limitation, the claim or defense that such courts constitute an
inconvenient forum.
8.6 Assignment. Except as may be herein specifically provided to the
contrary, this Business Management 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 the Practice may not assign
this Business Management Agreement without the prior written consent of Business
Manager, which consent may be withheld. The sale, transfer, pledge, or
assignment of any of the ownership interests held by any Shareholder of the
Practice, the sale of any material portion of its assets by the Practice, or the
issuance by the Practice of voting ownership interests to any other person
(except to replacement Shareholders as described in Section 4.1), or any
combination of such transactions within a period of five (5) years, such that
the existing Shareholders in the Practice fail to maintain a majority of the
voting interests in the Practice shall be deemed an attempted assignment by the
Practice, and shall be null and void unless consented to in writing by Business
Manager prior to any such transfer or issuance. Any breach of this provision,
whether or not void or voidable, shall constitute a material breach of the
Business Management Agreement, and in the event of such breach, Business Manager
may terminate this Business Management Agreement upon twenty-four (24) hours'
notice to the Practice and shall have all rights available at law or in equity.
Except as otherwise provided in
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this Agreement, the Parties agree that until an initial public offering of
Business Manager's common stock occurs, Business Manager may only assign or
transfer its rights and obligations under this Business Management Agreement
with the prior written consent of the Practice. Except as otherwise provided in
this Agreement, after an initial public offering of Business Manager's common
stock occurs, Business Manager may assign or transfer its rights and obligations
under this Business Management Agreement only in the following situations: (a)
pursuant to a merger of Business Manager into another entity or the sale of
substantially all of the assets of Business Manager to a health care company;
(b) pursuant to the sale of all of the health care contracts of Business Manager
within a multistate region in which the Practice is located with the Practice's
consent, which shall not be unreasonably withheld and which may not be withheld
where the proposed assignment or transfer is to a healthcare practice management
company with similar or greater financial standing, expertise and service
capabilities to that of Business Manager; (c) pursuant to a transfer or
assignment of this Agreement to one of Business Manager's subsidiaries or parent
organizations; or (d) pursuant to any transfer or assignment to or by any
financial lender of the Business Manager, and this Agreement is subordinate to
the rights of such lender. After such assignment and transfer, the Practice
agrees to look solely to such assignee or transferee for performance of this
Business Management Agreement. In addition, Business Manager or the assignee or
transferee shall have the right to (i) collaterally assign its interest in this
Business Management Agreement and its right to collect Management Fees hereunder
to any financial institution or other third party without the consent of the
Practice, and (ii) subject to the foregoing provisions, assign its rights and
obligations hereunder to any third party without the consent of the Practice. In
the event that Business Manager assigns its rights and obligations hereunder to
one or more of its subsidiaries, Business Manager shall unconditionally guaranty
the obligations of such subsidiary or subsidiaries. The Practice and executing
Shareholders agree to execute in the future any and all documentation reasonably
required to subordinate their rights pursuant to this Section 8.6 to that of a
lender.
8.7 Arbitration. The Parties shall use good faith negotiation to
resolve any controversy, dispute or disagreement arising out of or relating to
this Business Management Agreement or the breach of this Business Management
Agreement. Except as otherwise provided herein and except as it relates to
Sections 3.14, 3.17, 4.7 and 4.8 of this Business Management Agreement and
except for matters which are to be determined by the Local Advisory Council
and/or the National Appeals Council as contemplated in this Business Management
Agreement, any matter not resolved by negotiation shall be submitted to
mediation conducted in accordance with the Arizona Mediation Rules. If the
mediation process fails to resolve the dispute, the matter shall be submitted to
binding and confidential arbitration in accordance with the National Health
Lawyers Association Alternative Dispute Resolution Rules of Procedure for
Arbitration and with one individual knowledgeable in the health care business
serving as the arbitrator. Each Party will, upon the written request of the
other Party, promptly provide the other with copies of documents relevant to the
issues raised by any claim or counterclaim. Other discovery may be ordered by
the arbitrator to the extent the arbitrator
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deems additional discovery relevant and appropriate, and any dispute regarding
discovery shall be determined by the arbitrator, which determination shall be
conclusive.
8.8 Waiver of Breach. The waiver by either Party of a breach or
violation of any provision of this Business Management Agreement shall not
operate as, or be construed to constitute, a waiver of any subsequent breach of
the same or another provision hereof.
8.9 Enforcement. In the event either Party resorts to legal action to
enforce or interpret any provision of this Business Management Agreement, the
prevailing Party shall be entitled to recover the costs and expenses of such
action so incurred, including, without limitation, reasonable attorneys' fees.
8.10 Gender and Number. Whenever the context of this Business
Management 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.
8.11 Additional Assurances. Except as may be herein specifically
provided to the contrary, the provisions of this Business Management 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 Business
Management Agreement.
8.12 Consents, Approvals, and Exercise of Discretion. Whenever this
Business Management 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
that such discretion shall be reasonably exercised.
8.13 Force Majeure. Neither Party shall be liable or deemed to be in
default for any delay or failure in performance under this Business Management
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 unless
such delay or failure in performance is expressly addressed elsewhere in this
Business Management Agreement. Notwithstanding the same, the Parties hereto
agree to continue this Agreement to the best degree they can so long as
reasonably possible and the Practice shall not be excused from its obligations
under Sections 4.2, 6.4 and 6.6 pursuant to this Section 8.13.
8.14 Severability. The Parties hereto have negotiated and prepared the
terms of this Business Management Agreement in good faith with the intent that
each and every one of the terms, covenants and conditions herein be binding upon
and inure to the benefit of the respective Parties. Accordingly, if any one or
more of the terms, provisions, promises, covenants or
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conditions of this Business Management Agreement or the application thereof to
any person or circumstance shall be adjudged to any extent invalid,
unenforceable, void or voidable for any reason whatsoever by a court of
competent jurisdiction or an arbitration tribunal, such provision shall be
reformed, construed and enforced as if such unenforceable provision had not been
contained herein, and each and all of the remaining terms, provisions, promises,
covenants and conditions of this Business Management Agreement or their
application to other persons or circumstances shall not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law. To the
extent this Business Management Agreement is in violation of applicable law,
then the Parties agree to negotiate in good faith to amend the Business
Management Agreement, to the extent possible consistent with its purposes, to
conform to law. If the Parties are unable to amend the Business Management
Agreement in a manner which conforms with applicable law, then either Party may
submit the matter to arbitration pursuant to Section 8.7 for the purpose of
reaching an alternative arrangement that is equitable under the circumstances.
8.15 Press Releases and Public Announcements. Except as otherwise
required by law or by applicable rules of any securities exchange or association
of securities dealers, neither the Practice nor the Business Manager shall issue
any press release, make any public announcement or otherwise disclose any
information for the purpose of publication by any print, broadcast or other
public media, relating to the transactions contemplated by this Agreement,
without the prior approval of the other Party.
8.16 Divisions and Headings. The divisions of this Business Management
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 Business Management Agreement.
8.17 Amendments and Execution. This Business Management Agreement and
any amendments hereto shall be in writing and executed in multiple copies on
behalf of the Practice by its President, and on behalf of Business Manager by
its President. Each multiple copy shall be deemed an original, but all multiple
copies together shall constitute one and the same instrument.
8.18 Licenses, Permits and Certificates. Business Manager and the
Practice shall each obtain and maintain in effect, at all times during the term
of this Business Management Agreement, all licenses, permits and certificates
required by law which are applicable to the performance of their respective
obligations pursuant to this Business Management Agreement.
8.19 No Third Party Beneficiaries. Except as otherwise provided herein,
this Business Management Agreement shall not confer any rights or remedies upon
any person other than Business Manager and the Practice and their respective
successors and permitted assigns.
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8.20 Compliance with Applicable Laws. Business Manager and the Practice
shall comply with all applicable federal, state and local laws, regulations,
rules and restrictions in the conduct of their obligations under this Business
Management Agreement.
8.21 Language Construction. The Practice and Business Manager
acknowledge that each Party hereto and its counsel have reviewed and revised
this Business Management Agreement and 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 Business
Management Agreement.
8.22 Entire Business Management Agreement. With respect to the subject
matter of this Business Management Agreement, this Business Management Agreement
supersedes all previous contracts and constitutes the entire agreement between
the Parties. Neither Party shall be entitled to benefits other than those
specified herein. No prior oral statements or contemporaneous negotiations or
understandings or prior written material not specifically incorporated herein
shall be of any force and effect, and no changes in or additions to this
Business Management Agreement shall be recognized unless incorporated herein by
amendment as provided herein, such amendment(s) to become effective on the date
stipulated in such amendment(s). The Parties specifically acknowledge that, in
entering into and executing this Business Management Agreement, the Parties rely
solely upon the representations and agreements contained in this Business
Management Agreement and no others.
8.23 DISCLAIMER OF WARRANTY. BUSINESS MANAGER MAKES NO WARRANTY, EITHER
EXPRESS OR IMPLIED, WITH RESPECT TO THE OFFICE OR ANY EQUIPMENT PROVIDED BY
BUSINESS MANAGER PURSUANT TO THIS BUSINESS MANAGEMENT AGREEMENT, AND ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY
EXPRESSLY DISCLAIMED.
8.24 Control of Board of Directors. While there is no assurance that an
initial public offering of Business Manager's common stock shall occur, should
Business Manager fail to complete the same on or before April 1, 1998, the Board
of Directors shall be controlled and the Business Manager managed by individuals
designated by the founding health care practices acquired in December of 1996.
If such initial public offering does not occur on or before April 1, 1998, each
of such founding health care practices shall be entitled to vote that number of
shares of Business Manager then held by such founding practices and the number
of shares of Business Manager then held by the equity owners of such founding
practices to elect a new board of directors of Business Manager; provided,
however, that after April 1, 1998 and until February 28, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and his majority owned health care practice (and their respective
successors and assigns) shall not be entitled to vote their respective shares of
common stock of Business Manager in any election of directors during such
period.
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8.25 Agreement for Future Good Faith Negotiation. The Parties hereto
agree that should either the chosen underwriters to a future initial public
offering or Business Manager's accounting firm make recommendations regarding
changes to this Business Management Agreement at a later date and prior to the
offering which either such underwriters or accountants reasonably believe are
necessary based upon customs in the industry to prevent any material adverse
valuation issue or to obtain favorable accounting treatment for Business
Manager, the Parties shall negotiate in good faith to modify any terms which
could have such a negative effect or which could result in such favorable
accounting treatment. In such event, the revisions shall be deemed to be
retroactive to the effective date of this Business Management Agreement.
8.26 Agreement to Transfer Stock and Stock Pledge. Contemporaneously
with the execution of this Agreement and to ensure the continued viability and
production of a Practice owned by one (1) Shareholder (if applicable) the
Parties hereto have executed and delivered that certain Agreement to Transfer
Stock and Stock Pledge pursuant to which the Business Manager and the
Shareholder of the Practice have agreed to pledge all of the shares of common
stock of the Practice to the Business Manager and have agreed that upon the
death or disability of such Shareholder, the Practice shall be entitled to
designate a replacement Professional to acquire all such shares of common stock
of the Practice in return for payment of a fair value for such stock.
Additionally, any current or future Shareholder of a Practice that becomes a
sole Shareholder shall execute such agreement at the time the Shareholder gains
such status.
8.27 Authority. Business Manager and the Practice hereby warrant and
represent to each other that they have the requisite corporate authority to
execute and deliver this Business Management Agreement in their respective name.
8.28 Waiver of Jury Trial. Any right to trial by jury with respect to
any claim or proceeding relating to or arising out of this Business Management
Agreement is waived by the Parties.
8.29 Indemnification of Advisory Council Members. The parties hereto
(and their successors) agree to indemnify and hold harmless all future members
of any Advisory Council established pursuant to the terms hereof from any and
all liability, claims, damages, costs and attorneys fees resulting from their
decisions and actions as a member of such Advisory Council, so long as the
decision or action is made in good faith.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Practice and Business Manager have caused this
Business Management Agreement to be executed by their duly authorized
representatives, all as of the day and year first above written.
"PRACTICE"
MILLENNIUM VISION, P.C., an Arizona
professional corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
Title: President
"BUSINESS MANAGER"
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C., an Arizona
professional corporation, d/b/a Paradise Valley Eye
Specialists
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
Title: President
STATE OF ARIZONA )
COUNTY OF _________________)
The foregoing Business Management Agreement was executed before me this
___ day of December, 1996, by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., the President of
MILLENNIUM VISION, P.C., an Arizona professional corporation who is personally
known to me or who has produced identification and who did take an oath.
NOTARY PUBLIC:
Sign:
---------------------------------
Print:
--------------------------------
My Commission Expires:
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STATE OF ARIZONA )
COUNTY OF ______________________)
The foregoing Business Management Agreement was executed before me this
___ day of December, 1996, by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., the President of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, M.D., P.C., an Arizona professional corporation, d/b/a PARADISE VALLEY
EYE SPECIALISTS who is personally known to me or who has produced identification
and who did take an oath.
NOTARY PUBLIC:
Sign:
---------------------------------
Print:
--------------------------------
My Commission Expires:
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Exhibit 1.3
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Fees Excluded from Adjusted Gross Revenue
1. None.
59
Exhibit 1.8
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Description of Business Manager Expenses
As of the Closing Date, Business Manager Expenses shall specifically
include:
1. expenses relating to services provided to Business Manager and the
Practice under current service agreements by ▇▇▇▇▇ ▇▇▇▇▇▇ and BSM Consulting,
to the extent such expenses do not exceed the Practices' share (pro-rata
amongst all practices managed by the Business Manager, at any given moment,
e.g., 32 practices = 1/32nd of such expense) of the services currently
contracted for between ▇▇▇▇▇▇, BSM Consulting and Business Manager at an
anticipated annual cost of $480,000;
2. costs related to the current regional corporate structure, current
corporate overhead, strategic planning, and managed care administration;
3. expenses related to travel at the request of Business Manager except
as otherwise permitted in 1.18(h);
4. costs of stock option programs or grants to Physician and staff;
5. expenses related to services provided to Business Manager and the
Practice by Medical Director ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D. as part of the current
Medical Director Service Agreement; and
6. corporate overhead, except as defined in Section 1.18(k).
60
Exhibit 1.18
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Office Expenses
[Table depicting breakdown of Office Expenses,
Practice Expenses and Shareholder Expenses omitted.]
61
Exhibit 1.26
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Practice Territory
[Map(s) depicting twenty-mile radius
from each office location omitted.]
62
Exhibit 1.31
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Leasehold Obligations in Excess of Fair Market Value
1. None.
63
Exhibit 2.10
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Market Area
1. The State of Arizona.
64
Exhibit 3.7
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Unsettled Issues Regarding Personnel
1. None.
65
Exhibit 3.17
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Entities and Relationships Excluded from Non-Competition
Covenant from Business Manager
1. None.
66
Exhibit 4.1A
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Form of Founding Shareholder Employment Agreement
PHYSICIAN EMPLOYMENT AGREEMENT
(FOUNDING SHAREHOLDER)
This Physician Employment Agreement (this "Employment Agreement")
dated as of ____________, 199_, is by and between Millennium Vision, P.C., a
professional corporation (the "Practice"), and ____________________, M.D., an
individual (the "Ophthalmologist").
R E C I T A L S
A. The Practice is a professional corporation organized under the
laws of the State of Arizona (the "State") and is authorized to practice
medicine in the State through licensed individuals.
B. The Practice and Vision 21, Inc., a Florida corporation
("Vision 21") have acquired substantially all of the business assets of the
Ophthalmologist's wholly-owned professional corporation, pursuant to that
certain Agreement and Plan of Reorganization (the "Acquisition Agreement") of
even date herewith.
C. The Practice and Vision 21 have entered into a Business
Management Agreement (the "Business Management Agreement") of even date
herewith, whereby Vision 21 has agreed to provide various management services
to the Practice and the Practice has agreed to have its professional employees
execute employment agreements in a form substantially the same as this
Employment Agreement, and it is intended that except as otherwise limited
herein, Vision 21 be a third- party beneficiary of the restrictive covenants
contained in this Employment Agreement.
D. The Practice desires to employ Ophthalmologist upon the terms
and subject to the terms and conditions set forth in this Employment Agreement.
E. The Ophthalmologist is licensed to practice medicine in the
State and desires to be employed by the Practice upon the terms and subject to
the conditions set forth in this Employment Agreement.
F. The Ophthalmologist possesses special knowledge relating to
the business and assets acquired pursuant to the Acquisition Agreement and has
developed valuable, long-term relationships with patients to be cared for by
the Practice which make him valuable to the Practice and which will contribute
to the Practice's future success.
G. In consideration for and in connection with the Acquisition
Agreement and such employment arrangement, the parties hereto desire to enter
into a covenant not to compete and a non-disclosure covenant.
67
NOW, THEREFORE, in consideration of the premises, the mutual promises,
covenants and conditions herein contained and for other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto intending to be legally bound hereby agree as follows:
1. Employment. The Practice hereby employs Ophthalmologist, and
Ophthalmologist hereby accepts employment with the Practice, all upon the terms
and subject to the conditions set forth in this Employment Agreement.
2. Duties and Responsibilities.
2.01 Full Time Practice of Medicine. The Ophthalmologist is
employed pursuant to the terms of this Employment Agreement to practice
medicine on behalf of the Practice. The Ophthalmologist shall devote
substantially all of his time, best efforts and attention to the practice of
medicine on behalf of the Practice and shall provide patient care of the
highest quality. In addition to the foregoing duties, the Ophthalmologist
shall undertake additional duties as directed by the Practice. During the term
hereof and any renewal, the Ophthalmologist shall not, without the written
consent of the Practice and Vision 21, (1) render professional services to or
for any person, firm, corporation or other organization for compensation; or
(2) engage in any activity that competes with the interest of the Practice or
Vision 21 whether Ophthalmologist is acting by himself or as an officer,
director, shareholder, employee, partner or fiduciary. Any consent granted to
the Ophthalmologist shall be revocable by the Practice or Vision 21 at any time
upon thirty (30) days' notice, and the Ophthalmologist agrees to cease and
desist upon receipt of such notice. Notwithstanding the above, the Practice
recognizes that the Ophthalmologist shall have the right to engage in those
matters expressly described on Schedule 2.01 attached hereto so long as such
permitted activities do not result in materially reduced services to the
Practice as compared to the Ophthalmologist's previous services to his practice
and so long as the same does not materially impact the Ophthalmologist's
ability to perform hereunder or materially impact the Ophthalmologist's
anticipated productivity.
2.02 Subject to Board Standards and Requirements. The
Practice recognizes that professional regulatory groups and bodies such as the
State Board of Medicine may from time to time establish standards and
requirements with regard to the practice of medicine by physicians licensed to
practice medicine. All restrictions contained herein with respect to the
duties and obligations of the Ophthalmologist shall be subject to said
standards and requirements of the aforesaid groups and bodies.
3. Authority and Control of Practice.
Subject to Section 2.02 above and to the extent permitted by
law:
3.01 The Ophthalmologist recognizes that the Practice
shall have complete authority with regard to the acceptance for treatment of or
the refusal to treat any patient and the Practice shall have complete authority
with regard to the establishment of the appropriate fee for professional
service.
3.02 The Practice shall direct and control the assignment
of patients to the Ophthalmologist. Such determination shall be solely by the
Practice and in the best interests of the patient and the Practice. The
Ophthalmologist agrees to treat such patients as are assigned to him by the
Practice.
Exhibit 4.1A - Page 2
68
The Ophthalmologist recognizes that patients treated by him may subsequently
be assigned to other employees.
3.03 The Ophthalmologist shall perform all professional
services as are assigned to him by the Practice and all work performed by the
Practice shall be subject to the review and study of the Practice.
3.04 The performance of services by the Ophthalmologist on
behalf of the Practice shall be performed at such times and at such places as
shall be determined by the Practice and in accordance with such rules as the
Practice may establish.
3.05 Hours of employment of the Ophthalmologist shall be
determined by the Practice within reasonable standards within the profession.
3.06 The ophthalmologist of record for each patient treated
by Ophthalmologist shall be one of the individual owners of the Practice.
4. Term of Employment. The term of employment of Ophthalmologist
by the Practice pursuant to this Employment Agreement shall be for five (5)
years (the "Employment Period") commencing on the date of this Agreement (the
"Commencement Date").
5. Place of Employment. Ophthalmologist's principal place of
work shall be located where designated by the Practice.
6. Compensation. During the Employment Period, subject to all
the terms and conditions of this Employment Agreement and as compensation for
all services to be rendered by Ophthalmologist under this Employment Agreement,
the Practice shall pay to or provide Ophthalmologist with the compensation set
forth in Schedule 6 attached to this Agreement.
7. Adherence to Standards. Ophthalmologist shall comply with the
written policies, standards, rules and regulations of the Practice from time to
time established for all employees of the Practice.
8. Review of Performance. The Practice may periodically review
and evaluate the performance of Ophthalmologist under this Employment Agreement
with Ophthalmologist.
9. Expenses. The Practice may reimburse Ophthalmologist for
reasonable, ordinary and necessary expenses incurred by him in connection with
his employment hereunder that have been approved in advance by the Practice;
provided, however, Ophthalmologist shall render to the Practice a complete and
accurate accounting of all such expenses in accordance with the substantiation
requirements of Section 274 of the Internal Revenue Code of 1986, as amended
(the "Code"), as a condition precedent to such reimbursement.
10. Termination with Cause by the Practice. This Employment
Agreement may be terminated with Cause (as hereinafter defined) by the Practice
provided that the Practice shall (i) give Ophthalmologist the Notice of
Termination (as hereinafter defined) and (ii) pay Ophthalmologist his
Exhibit 4.1A - Page 3
69
annual base salary through the Date of Termination (as hereinafter defined) at
the rate in effect at the time the Notice of Termination is given plus any
bonus or incentive compensation which have been earned or have become payable
pursuant to the terms of any compensation or benefit plan or have vested as of
the Date of Termination, but which have not yet been paid.
11. Definitions. In addition to the words and terms elsewhere
defined in this Employment Agreement, certain capitalized words and terms used
in this Employment Agreement shall have the meanings given to them by the
definitions and descriptions in this Section 11 unless the context or use
indicates another or different meaning or intent, and such definition shall be
equally applicable to both the singular and plural forms of any of the
capitalized words and terms herein defined. The following words and terms are
defined terms under this Employment Agreement:
11.01 Cause. A termination with "Cause" by the Practice
shall mean a termination of this Employment Agreement for any of the following
reasons:
(i) Ophthalmologist's failure to promptly and
adequately perform the duties assigned by Practice after being notified by the
Practice of the specific act(s) constituting such failure and being given a
period of thirty (30) days after notification by the Practice to correct such
failure;
(ii) upon Ophthalmologist's breach of any provision
of this Employment Agreement which remains uncured for a period of thirty (30)
days after notification by Practice of the specific nature of the breach;
(iii) for good cause which shall include
insubordination, conduct reflecting moral turpitude, conduct diminishing the
goodwill or reputation of the Practice, conduct disloyal to the Practice,
material violation of any representation, warranty or covenant of this
Agreement; conviction of any felony, or suspension or revocation of
Ophthalmologist's license to practice medicine;
(iv) upon Ophthalmologist's death; or
(v) upon Ophthalmologist's disability if the
disability renders Ophthalmologist unable to practice medicine on a full-time
basis for a period of more than ninety (90) days in any consecutive six (6)
month period.
11.02 Date of Termination. "Date of Termination" shall mean
the date specified in the Notice of Termination which shall not be less than
thirty (30) days from the date such Notice of Termination is given unless the
Notice of Termination is provided pursuant to Sections 11.01(iii), (iv) or (v),
in which case the Date of Termination shall be the date that Notice of
Termination is received by the Ophthalmologist.
11.03 Notice of Termination. "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision
in this Employment Agreement relied upon; provided, however, no such purported
termination shall be effective without such Notice of Termination.
12. Fees and Expenses. The prevailing party in any contest or
dispute under this Employment Agreement shall receive from the other party all
legal fees and related expenses (including the costs of
Exhibit 4.1A - Page 4
70
experts, evidence and counsel incurred by the prevailing party in any and all
proceedings arising out of this Employment Agreement, including trial,
appellate and bankruptcy proceedings.
13. Notices. For the purposes of this Employment Agreement,
notices and all other communications provided for in the Employment Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage
prepaid, or by expedited (overnight) courier with an established national
reputation, shipping prepaid or billed to sender, in either case addressed to
the respective addresses last given by each party in writing to the other
(provided that all notices to the Practice shall be directed to the attention
of the Practice with a copy to the Secretary of the Practice). All notices and
communication shall be deemed to have been received on the date of delivery
thereof, on the third business day after the mailing thereof, or on the second
day after deposit thereof with an expedited courier service, except that notice
of change of address shall be effective only upon receipt.
14. Life Insurance. The Practice may, at any time after the
execution of this Employment Agreement, apply for and procure as owner and for
its own benefit, life insurance on Ophthalmologist, in such amounts and in such
form or forms as the Practice may determine. Ophthalmologist shall, at the
request of the Practice, submit to such medical examinations, supply such
information, and execute such documents as may be required by the insurance
company or companies to whom the Practice has applied for such insurance.
Ophthalmologist hereby represents that to his knowledge there are no facts or
circumstances that would preclude the Practice from obtaining life insurance on
Ophthalmologist.
15. Proprietary Information and Inventions. Ophthalmologist
understands and acknowledges that:
15.01 Trust. Ophthalmologist's employment creates a
relationship of confidence and trust between Ophthalmologist and the Practice
(and by virtue of the Business Management Agreement entered into by the
Practice and Vision 21, Ophthalmologist's employment creates a relationship of
confidence and trust between the Ophthalmologist and Vision 21) with respect to
certain information applicable to the business of the Practice and Vision 21,
which may be made known to Ophthalmologist by the Practice or Vision 21 or
learned by Ophthalmologist during the Employment Period.
15.02 Proprietary Information. The Practice and Vision 21
possess and will continue to possess information that has been created,
discovered, or developed by, or has otherwise become known to, the Practice or
Vision 21 (including, without limitation, information created, discovered, or
developed by or made known to Ophthalmologist during the period of or arising
out of employment by the Practice) or in which property rights have been or may
be assigned or otherwise conveyed to the Practice or Vision 21, which
information has commercial value in the respective businesses in which the
Practice and Vision 21 are engaged and is treated by the Practice and Vision 21
as confidential. Except as otherwise herein provided, all such information is
hereinafter called "Proprietary Information", which term, as used herein, shall
also include, but shall not be limited to, data, functional specifications,
computer programs, know-how, research, technology, improvements, developments,
designs, marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs, patient,
supplier and potential acquisition candidates lists, and patient files and
records. Notwithstanding anything contained in this Employment Agreement to
the contrary, the term "Proprietary Information" shall not include (i)
information which is in the public domain, (ii) information which is published
or
Exhibit 4.1A - Page 5
71
otherwise becomes part of the public domain through no fault of
Ophthalmologist, (iii) information which Ophthalmologist can demonstrate was in
Ophthalmologist's possession at the time of disclosure and was not acquired by
Ophthalmologist directly or indirectly from the Practice or Vision 21 on a
confidential basis, (iv) information which becomes available to Ophthalmologist
on a non-confidential basis from a source other than the Practice or Vision 21
and which source, to the best of Ophthalmologist's knowledge, did not acquire
the information on a confidential basis or (v) information required to be
disclosed by any federal or state law, rule or regulation or by any applicable
judgment, order or decree or any court or governmental body or agency having
jurisdiction in the premises.
All Proprietary Information shall be the sole property of the Practice
and Vision 21 and their respective assigns. Ophthalmologist assigns to the
Practice and Vision 21 any rights Ophthalmologist may have or acquire in such
Proprietary Information. At all times, both during Ophthalmologist's
employment by the Practice and after its termination or expiration,
Ophthalmologist shall keep in strictest confidence and trust all Proprietary
Information, and Ophthalmologist shall not use or disclose any Proprietary
Information without the written consent of the Practice and Vision 21, except
as may be necessary in the ordinary course of performing Ophthalmologist's
duties as an employee of the Practice. This Section 15 shall survive the
termination or expiration of this Employment Agreement.
16. Patient Files and Surrender of Documents. To the extent
permitted by law, all records contained in the files of patients shall be the
property of the Practice. Ophthalmologist shall, at the request of the
Practice, promptly surrender to the Practice any patient files, records, or
x-rays, as well as any Proprietary Information or document, memorandum, record,
patient record, letter or other paper in his possession or under his control
relating to the operation, business or affairs of the Practice or Vision 21.
17. Prior Employment Agreements; Successor Employment Agreements.
Ophthalmologist represents and warrants that Ophthalmologist's performance of
all the terms of this Employment Agreement and as an employee of the Practice
does not, and will not, breach any agreement to keep in confidence proprietary
information acquired by Ophthalmologist in confidence or in trust prior to
Ophthalmologist's employment by the Practice. Ophthalmologist has not entered
into, and shall not enter into, any agreement, either written or oral, which is
in conflict with this Employment Agreement or which would be violated by
Ophthalmologist's entering into, or carrying out his obligations under, this
Employment Agreement. Immediately following the expiration of the term of this
Employment Agreement, Ophthalmologist shall, if he intends to continue his
relationship with the Practice, execute a new Employment Agreement with the
Practice in substantially the form of Exhibit 4.1C of the Business Management
Agreement.
18. Restrictive Covenant. Ophthalmologist acknowledges and
recognizes (i) that Ophthalmologist shall come into possession of Proprietary
Information and (ii) the highly competitive nature of the respective businesses
of the Practice and Vision 21 and, accordingly, agrees that in consideration of
the premises contained herein Ophthalmologist will not, during the period of
Ophthalmologist's employment by the Practice and for a period of two (2) years
following the date of expiration or termination of this Employment Agreement,
directly or indirectly (i) except as otherwise permitted by the terms of this
Employment Agreement, practice medicine or engage in the business of managing
ophthalmology or optometry practices or related eye care medical facilities
within the area described in Schedule 18, whether such engagement shall be as
an employer, officer, director, owner,
Exhibit 4.1A - Page 6
72
employee, consultant, stockholder, partner or other participant.
Ophthalmologist further agrees that during the period of Ophthalmologist's
employment by Practice, and for a period of two (2) years following the
termination or expiration of this Employment Agreement, Ophthalmologist will
not, directly or indirectly, (i) solicit any employee or consultant of Vision
21 or the Practice for the purposes of hiring or retaining such employee or
consultant, (ii) utilize the services of any entity engaged in the business of
managing ophthalmology or optometry practices or related eye care or medical
facilities other than Vision 21, or (iii) contact any present or prospective
client of Vision 21 to solicit such person or entity to enter into a management
contract with any organization other than Vision 21. If Ophthalmologist
violates this Section, Ophthalmologist shall pay to Vision 21 the one half
(1/2) of the amount of the consideration received by Ophthalmologist in
connection with the Acquisition Agreement (including one half (1/2) of the
Ophthalmologist's pro rata share (based on his equity ownership in the
Practice) of any consideration received by the Practice in connection with the
Acquisition Agreement), as agreed upon liquidated damages. The Ophthalmologist
acknowledges that such sum is reasonable in light of the resulting loss of
intangible asset value associated with the Ophthalmologist's breach of this
restrictive covenant. The Ophthalmologist further acknowledges and agrees that
such liquidated damages sum shall be in addition to any liquidated damages
which may be owed by Ophthalmologist to the Practice in connection with a
breach by Ophthalmologist of Section 4 hereof. If the Ophthalmologist fails to
make payment of liquidated damages as contemplated by this Section 18 within
thirty (30) days of Ophthalmologist's receiving notice from the Practice or
Vision 21 of the violation of this Section, Vision 21, shall, in addition to
all other rights and remedies available at law or equity, be entitled to (i)
cancel the number of shares of Vision 21 common stock held by the
Ophthalmologist or, with respect to shares of Vision 21 common stock entitled
to be received by the Ophthalmologist pursuant to the Acquisition Agreement,
terminate its obligation to deliver such number of shares of Vision 21 common
stock, valued as set forth in Section 6.6(a) of the Business Management
Agreement representing all or a portion of such liquidated damages sum, or (ii)
set off all or any of such liquidated damages sum against amounts payable under
any promissory note held by the Ophthalmologist, or do both of the foregoing,
but in no event shall Vision 21 be entitled to offset amounts in excess of the
liquidated damages sum pursuant to this Section 18. Ophthalmologist further
agrees that (i) such liquidated damages shall be in addition to the remedies
available to the Practice or Vision 21 as set forth in Section 19 below, (ii)
Vision 21 is a third-party beneficiary of this Section 18, (iii) this Section
18 is intended for the benefit of Vision 21, (iv) this Section 18 may be
enforced by the Practice's and Vision 21's successors and/or assigns, and (v)
the enforcement of this Section 18 will not violate public policy. This
Section 18 shall survive the termination or expiration of this Employment
Agreement. Notwithstanding the foregoing, Vision 21 shall not have any right to
enforce any provisions of this Employment Agreement if the Business Management
Agreement terminates pursuant to Section 6.2(a) of the Business Management
Agreement.
19. Remedies. Ophthalmologist acknowledges and agrees that the
Practice's and Vision 21's remedy at law for a breach or a threatened breach of
the provisions herein would be inadequate, and in recognition of this fact, in
the event of a breach or threatened breach by Ophthalmologist of any of the
provisions of this Employment Agreement, it is agreed that the Practice and
Vision 21 shall be entitled to equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available, without posting bond
or other security. Ophthalmologist acknowledges that the granting of a
temporary injunction, a temporary restraining order or other permanent
injunction merely prohibiting Ophthalmologist from engaging in the practice of
medicine or engaging in the management of any medical practice during the
prohibited period within the prohibited area would not be an adequate remedy
upon breach or threatened breach of this
Exhibit 4.1A - Page 7
73
Employment Agreement, and consequently agrees, upon any such breach or
threatened breach, to the granting of injunctive relief prohibiting
Ophthalmologist from engaging in any activities prohibited by this Employment
Agreement. No remedy herein conferred is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to any other remedy given hereunder now or hereinafter existing at law
or in equity or by statute or otherwise. It is expressly understood and agreed
by Ophthalmologist that although the parties consider the restrictions
contained in this Employment Agreement to be reasonable, if a court determines
that the time or territory or any other restriction contained in this
Employment Agreement is an unenforceable restriction on the activities of
Ophthalmologist, such provision in this Employment Agreement shall not be
rendered void but shall be deemed to be amended to apply as to such maximum
time and territory and to such extent as such court may judicially determine or
indicate to be reasonable. This Section 19 shall survive the termination or
expiration of this Employment Agreement.
20. Successive Employment Notice. Within five (5) business days
after the Termination Date, Ophthalmologist shall provide notice to the
Practice of Ophthalmologist's next intended employment. If such employment is
not known by Ophthalmologist at such date, Ophthalmologist shall notify the
Practice immediately upon determination of such information. Ophthalmologist
shall continue to provide the Practice with notice of Ophthalmologist's place
and nature of employment and any change in place or nature of employment during
the period ending three (3) years after the expiration or termination of this
Employment Agreement. Failure of Ophthalmologist to provide the Practice with
such information in an accurate and timely fashion shall be deemed to be a
breach of this Employment Agreement and shall entitle the Practice to all
remedies provided for in this Employment Agreement as a result of such breach.
21. Business Management Agreement. Ophthalmologist agrees not to
commit any act or engage in any omission that would cause the Practice to
breach the Business Management Agreement with Vision 21.
22. Modification and Waiver. No provision of this Employment
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Ophthalmologist
and such officer as may be specifically designated by the Board of Directors of
the Practice and by such officer as may be specifically designated by the Board
of Directors of Vision 21. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Employment Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time, and such waiver shall not operate
or be construed as a waiver of any subsequent breach of the same provision or
condition by any of the Practice, Ophthalmologist or Vision 21.
23. Headings. Headings used in this Employment Agreement are for
convenience only and shall not be used to interpret or construe its provisions.
24. Amendments. No amendments or variations of the terms and
conditions of this Employment Agreement shall be valid unless the same are in
writing and signed by all of the parties hereto.
25. Severability. The invalidity or unenforceability of any
provision of this Employment Agreement, whether in whole or in part, shall not
in any way affect the validity and/or enforceability of
Exhibit 4.1A - Page 8
74
any other provision herein contained. Any invalid or unenforceable
provision shall be deemed severable to the extent of any such invalidity or
unenforceability. It is expressly understood and agreed that while the Practice
and Ophthalmologist consider the restrictions contained in this Employment
Agreement reasonable for the purpose of preserving for the Practice the good
will, other proprietary rights and intangible business value of the Practice,
if a final judicial determination is made by a court having jurisdiction that
the time or territory or any other restriction contained in this Employment
Agreement is an unreasonable or otherwise unenforceable restriction against
Ophthalmologist, the provisions of such clause shall not be rendered void but
shall be deemed amended to apply as to maximum time and territory and to such
other extent as such court may judicially determine or indicate to be
reasonable.
26. Third-Party Beneficiary. Vision 21 is a third-party
beneficiary of Sections 4, 15, 18, 19 and 25 of this Employment Agreement and
the restrictive covenants contained in this Employment Agreement are intended
for the benefit of Vision 21. Except as otherwise provided herein, this
Employment Agreement shall not confer any rights or remedies upon any person
other than the Practice, Ophthalmologist and Vision 21 and their respective
successors and permitted assigns.
27. Successors and Assigns. The Practice's and Vision 21's
successors and/or assigns are authorized to enforce the restrictive covenants
contained in this Employment Agreement.
28. Governing Law. This Employment Agreement shall be construed
and enforced pursuant to the laws of the State in which the Practice conducts
its business.
29. Counterparts. This Employment Agreement may be executed in
more than one (1) counterpart and each counterpart shall be considered an
original.
IN WITNESS WHEREOF, this Employment Agreement has been duly executed
by the Practice and Ophthalmologist as of the date first above written.
"PRACTICE"
MILLENNIUM VISION, P.C.
By:
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., its President
"OPHTHALMOLOGIST"
-------------------------------------------
--------------------------, M.D.
Exhibit 4.1A - Page 9
75
Exhibit 4.1B
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
List of Practice Shareholders
1. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
76
Exhibit 4.1C
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Form of Optometrist Employment Agreement (Shareholder - Key Professional)
OPTOMETRIST EMPLOYMENT AGREEMENT
(SHAREHOLDER - KEY PROFESSIONAL)
This Optometrist Employment Agreement (this "Employment Agreement")
dated as of ___________, 19__, is by and between Millennium Vision, P.C., an
Arizona professional corporation (the "Practice"), and
_____________________________, O.D., an individual (the "Optometrist").
R E C I T A L S
A. The Practice is a professional corporation organized under the
laws of the State of Arizona (the "State"), and is authorized to practice
optometry in the State through licensed individuals.
B. The Practice and Vision 21, Inc., a Florida corporation
("Vision 21") have entered into a Business Management Agreement (the "Business
Management Agreement") dated as of December 1, 1996, whereby Vision 21 has
agreed to provide various management services to the Practice and the Practice
has agreed to have its shareholder and key professional employees execute
employment agreements in a form substantially the same as this Employment
Agreement, and it is intended that except as otherwise limited herein, Vision
21 be a third-party beneficiary of the restrictive covenants contained in this
Employment Agreement.
C. The Practice desires to employ Optometrist upon the terms and
subject to the terms and conditions set forth in this Employment Agreement.
D. The Optometrist is licensed to practice optometry in the State
and desires to be employed by the Practice upon the terms and subject to the
conditions set forth in this Employment Agreement.
E. The Optometrist possesses special knowledge relating to the
business and assets of the Practice and Vision 21 and has developed valuable,
long-term relationships with patients to be cared for by the Practice which
make him valuable to the Practice and which will contribute to the Practice's
and Vision 21's future success.
NOW, THEREFORE, in consideration of the premises, the mutual promises,
covenants and conditions herein contained and for other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto intending to be legally bound hereby agree as follows:
1. Employment. The Practice hereby employs Optometrist, and
Optometrist hereby accepts employment with the Practice, all upon the terms and
subject to the conditions set forth in this Employment Agreement.
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2. Duties and Responsibilities.
2.01 Full Time Practice of Optometry. The Optometrist is
employed pursuant to the terms of this Employment Agreement to practice
optometry on behalf of the Practice. The Optometrist shall devote
substantially all of his time, best efforts and attention to the practice of
optometry on behalf of the Practice and shall provide patient care of the
highest quality. In addition to the foregoing duties, the Optometrist shall
undertake additional duties as directed by the Practice. During the term
hereof and any renewal, the Optometrist shall not, without the written consent
of the Practice and Vision 21, (1) render professional services to or for any
person, firm, corporation or other organization for compensation; or (2) engage
in any activity that competes with the interest of the Practice or Vision 21
whether Optometrist is acting by himself or as an officer, director,
shareholder, employee, partner or fiduciary. Any consent granted to the
Optometrist shall be revocable by the Practice or Vision 21 at any time upon
thirty (30) days' notice, and the Optometrist agrees to cease and desist upon
receipt of such notice. Notwithstanding the above, the Practice recognizes
that the Optometrist shall have the right to engage in those matters expressly
described on Schedule 2.01 attached hereto so long as such permitted activities
do not result in materially reduced services to the Practice as compared to the
Optometrist's previous services to his practice and so long as the same does
not materially impact the Optometrist's ability to perform hereunder or
materially impact the Optometrist's anticipated productivity.
2.02 Subject to Board Standards and Requirements. The
Practice recognizes that professional regulatory groups and bodies such as the
State Board of Optometry may from time to time establish standards and
requirements with regard to the practice of optometry by optometrists licensed
to practice optometry. All restrictions contained herein with respect to the
duties and obligations of the Optometrist shall be subject to said standards
and requirements of the aforesaid groups and bodies.
3. Authority and Control of Practice.
Subject to Section 2.02 above and to the extent permitted by
law:
3.01 The Optometrist recognizes that the Practice shall
have complete authority with regard to the acceptance for treatment of or the
refusal to treat any patient and the Practice shall have complete authority
with regard to the establishment of the appropriate fee for professional
service.
3.02 The Practice shall direct and control the assignment
of patients to the Optometrist. Such determination shall be solely by the
Practice and in the best interests of the patient and the Practice. The
Optometrist agrees to treat such patients as are assigned to him by the
Practice. The Optometrist recognizes that patients treated by him may
subsequently be assigned to other employees.
3.03 The Optometrist shall perform all professional
services as are assigned to him by the Practice and all work performed by the
Practice shall be subject to the review and study of the Practice.
3.04 The performance of services by the Optometrist on
behalf of the Practice shall be performed at such times and at such places as
shall be determined by the Practice and in accordance with such rules as the
Practice may establish.
Exhibit 4.1C - Page 2
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3.05 Hours of employment of the Optometrist shall be
determined by the Practice within reasonable standards within the profession.
3.06 The optometrist of record for each patient treated by
Optometrist shall be one of the individual owners of the Practice.
4. Term of Employment. The term of employment of Optometrist by
the Practice pursuant to this Employment Agreement shall be for three (3) years
(the "Employment Period") commencing on the date of this Agreement (the
"Commencement Date"). The term of this Agreement shall renew automatically at
the end of each term of this Agreement for an additional three (3) year term
unless either party hereto provides notice to the other at least ninety (90)
days prior to the expiration of any term.
5. Place of Employment. Optometrist's principal place of work
shall be located where designated by the Practice.
6. Compensation. During the Employment Period, subject to all
the terms and conditions of this Employment Agreement and as compensation for
all services to be rendered by Optometrist under this Employment Agreement, the
Practice shall pay to or provide Optometrist with the compensation set forth in
Schedule 6 attached to this Agreement.
7. Adherence to Standards. Optometrist shall comply with the
written policies, standards, rules and regulations of the Practice from time to
time established for all employees of the Practice.
8. Review of Performance. The Practice may periodically review
and evaluate the performance of Optometrist under this Employment Agreement
with Optometrist.
9. Expenses. The Practice may reimburse Optometrist for
reasonable, ordinary and necessary expenses incurred by him in connection with
his employment hereunder that have been approved in advance by the Practice;
provided, however, Optometrist shall render to the Practice a complete and
accurate accounting of all such expenses in accordance with the substantiation
requirements of Section 274 of the Internal Revenue Code of 1986, as amended
(the "Code"), as a condition precedent to such reimbursement.
10. Termination with Cause by the Practice. This Employment
Agreement may be terminated with Cause (as hereinafter defined) by the Practice
provided that the Practice shall (i) give Optometrist the Notice of Termination
(as hereinafter defined) and (ii) pay Optometrist his annual base salary
through the Date of Termination (as hereinafter defined) at the rate in effect
at the time the Notice of Termination is given plus any bonus or incentive
compensation which have been earned or have become payable pursuant to the
terms of any compensation or benefit plan or have vested as of the Date of
Termination, but which have not yet been paid.
11. Definitions. In addition to the words and terms elsewhere
defined in this Employment Agreement, certain capitalized words and terms used
in this Employment Agreement shall have the meanings given to them by the
definitions and descriptions in this Section 11 unless the context or use
indicates another or different meaning or intent, and such definition shall be
equally applicable to both
Exhibit 4.1C - Page 3
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the singular and plural forms of any of the capitalized words and terms herein
defined. The following words and terms are defined terms under this
Employment Agreement:
11.01 Cause. A termination with "Cause" by the Practice
shall mean a termination of this Employment Agreement for any of the following
reasons:
(i) Optometrist's failure to promptly and adequately
perform the duties assigned by Practice after being notified by the Practice of
the specific act(s) constituting such failure and being given a period of
thirty (30) days after notification by the Practice to correct such failure;
(ii) upon Optometrist's breach of any provision of
this Employment Agreement which remains uncured for a period of thirty (30)
days after notification by Practice of the specific nature of the breach;
(iii) for good cause which shall include
insubordination, conduct reflecting moral turpitude, conduct diminishing the
goodwill or reputation of the Practice, conduct disloyal to the Practice,
material violation of any representation, warranty or covenant of this
Agreement; conviction of any felony, or suspension or revocation of
Optometrist's license to practice optometry;
(iv) upon Optometrist's death; or
(v) upon Optometrist's disability if the
disability renders Optometrist unable to practice optometry on a full-time
basis for a period of more than ninety (90) days in any consecutive six (6)
month period.
11.02 Date of Termination. "Date of Termination" shall mean
the date specified in the Notice of Termination which shall not be less than
thirty (30) days from the date such Notice of Termination is given unless the
Notice of Termination is provided pursuant to Sections 11.01(iii), (iv) or (v),
in which case the Date of Termination shall be the date that Notice of
Termination is received by the Optometrist.
11.03 Notice of Termination. "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision
in this Employment Agreement relied upon; provided, however, no such purported
termination shall be effective without such Notice of Termination.
12. Fees and Expenses. The prevailing party in any contest or
dispute under this Employment Agreement shall receive from the other party all
legal fees and related expenses (including the costs of experts, evidence and
counsel incurred by the prevailing party in any and all proceedings arising out
of this Employment Agreement, including trial, appellate and bankruptcy
proceedings.
13. Notices. For the purposes of this Employment Agreement,
notices and all other communications provided for in the Employment Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
or by expedited (overnight) courier with an established national reputation,
shipping prepaid or billed to sender, in either case addressed to the
respective addresses last given by each party in writing to the other (provided
that all notices to the Practice shall be directed to the attention of the
Practice with a copy to the Secretary of the Practice). All notices and
communication shall be deemed to have been
Exhibit 4.1C - Page 4
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received on the date of delivery thereof, on the third business day after the
mailing thereof, or on the second day after deposit thereof with an expedited
courier service, except that notice of change of address shall be effective
only upon receipt.
14. Life Insurance. The Practice may, at any time after the
execution of this Employment Agreement, apply for and procure as owner and for
its own benefit, life insurance on Optometrist, in such amounts and in such
form or forms as the Practice may determine. Optometrist shall, at the request
of the Practice, submit to such medical examinations, supply such information,
and execute such documents as may be required by the insurance company or
companies to whom the Practice has applied for such insurance. Optometrist
hereby represents that to his knowledge there are no facts or circumstances
that would preclude the Practice from obtaining life insurance on Optometrist.
15. Proprietary Information and Inventions. Optometrist
understands and acknowledges that:
15.01 Trust. Optometrist's employment creates a relationship
of confidence and trust between Optometrist and the Practice (and by virtue of
the Business Management Agreement entered into by the Practice and Vision 21,
Optometrist's employment creates a relationship of confidence and trust between
the Optometrist and Vision 21) with respect to certain information applicable
to the business of the Practice and Vision 21, which may be made known to
Optometrist by the Practice or Vision 21 or learned by Optometrist during the
Employment Period.
15.02 Proprietary Information. The Practice and Vision 21
possess and will continue to possess information that has been created,
discovered, or developed by, or has otherwise become known to, the Practice or
Vision 21 (including, without limitation, information created, discovered, or
developed by or made known to Optometrist during the period of or arising out
of employment by the Practice) or in which property rights have been or may be
assigned or otherwise conveyed to the Practice or Vision 21, which information
has commercial value in the respective businesses in which the Practice and
Vision 21 are engaged and is treated by the Practice and Vision 21 as
confidential. Except as otherwise herein provided, all such information is
hereinafter called "Proprietary Information", which term, as used herein, shall
also include, but shall not be limited to, data, functional specifications,
computer programs, know-how, research, technology, improvements, developments,
designs, marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs, patient,
supplier and potential acquisition candidates lists, and patient files and
records. Notwithstanding anything contained in this Employment Agreement to
the contrary, the term "Proprietary Information" shall not include (i)
information which is in the public domain, (ii) information which is published
or otherwise becomes part of the public domain through no fault of Optometrist,
(iii) information which Optometrist can demonstrate was in Optometrist's
possession at the time of disclosure and was not acquired by Optometrist
directly or indirectly from the Practice or Vision 21 on a confidential basis,
(iv) information which becomes available to Optometrist on a non-confidential
basis from a source other than the Practice or Vision 21 and which source, to
the best of Optometrist's knowledge, did not acquire the information on a
confidential basis or (v) information required to be disclosed by any federal
or state law, rule or regulation or by any applicable judgment, order or decree
or any court or governmental body or agency having jurisdiction in the
premises.
All Proprietary Information shall be the sole property of the Practice
and Vision 21 and their respective assigns. Optometrist assigns to the
Practice and Vision 21 any rights Optometrist may have or acquire in such
Proprietary Information. At all times, both during Optometrist's employment by
the
Exhibit 4.1C - Page 5
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Practice and after its termination or expiration, Optometrist shall keep in
strictest confidence and trust all Proprietary Information, and Optometrist
shall not use or disclose any Proprietary Information without the written
consent of the Practice and Vision 21, except as may be necessary in the
ordinary course of performing Optometrist's duties as an employee of the
Practice. This Section 15 shall survive the termination or expiration of this
Employment Agreement.
16. Patient Files and Surrender of Documents. To the extent
permitted by law, all records contained in the files of patients shall be the
property of the Practice. Optometrist shall, at the request of the Practice,
promptly surrender to the Practice any patient files, records, or x-rays, as
well as any Proprietary Information or document, memorandum, record, patient
record, letter or other paper in his possession or under his control relating
to the operation, business or affairs of the Practice or Vision 21.
17. Prior Employment Agreements; Successor Employment Agreements.
Optometrist represents and warrants that Optometrist's performance of all the
terms of this Employment Agreement and as an employee of the Practice does not,
and will not, breach any agreement to keep in confidence proprietary
information acquired by Optometrist in confidence or in trust prior to
Optometrist's employment by the Practice. Optometrist has not entered into,
and shall not enter into, any agreement, either written or oral, which is in
conflict with this Employment Agreement or which would be violated by
Optometrist's entering into, or carrying out his obligations under, this
Employment Agreement. Following the expiration of the term of this Employment
Agreement, Optometrist shall, if he intends to continue his relationship with
the Practice, execute a new Employment Agreement with the Practice in
substantially the form of Exhibit 4.1C of the Business Management Agreement.
18. Restrictive Covenant. Optometrist acknowledges and recognizes
(i) that Optometrist shall come into possession of Proprietary Information and
(ii) the highly competitive nature of the respective businesses of the Practice
and Vision 21 and, accordingly, agrees that in consideration of the premises
contained herein Optometrist will not, during the period of Optometrist's
employment by the Practice and for a period of one (1) year following the date
of expiration or termination of this Employment Agreement, directly or
indirectly (i) except as otherwise permitted by the terms of this Employment
Agreement, practice optometry or engage in the business of managing optometry
practices or related eye care optometric facilities within the area described
in Schedule 18, whether such engagement shall be as an employer, officer,
director, owner, employee, consultant, stockholder, partner or other
participant. Optometrist further agrees that during the period of
Optometrist's employment by Practice, and for a period of three (3) years
following the termination or expiration of this Employment Agreement,
Optometrist will not, directly or indirectly, (i) solicit any employee or
consultant of Vision 21 or the Practice for the purposes of hiring or retaining
such employee or consultant, (ii) utilize the services of any entity engaged in
the business of managing optometry practices or related eye care or optometric
facilities other than Vision 21, or (iii) contact any present or prospective
client of Vision 21 to solicit such person or entity to enter into a management
contract with any organization other than Vision 21. If Optometrist violates
this Section, Optometrist shall pay to Vision 21 the sum of Three Hundred
Thousand Dollars ($300,000) as agreed upon liquidated damages. The Optometrist
acknowledges that such sum is reasonable in light of the resulting loss of
intangible asset value associated with the Optometrist's breach of this
restrictive covenant. Optometrist further agrees that (i) such liquidated
damages shall be in addition to the remedies available to the Practice and
Vision 21 as set forth in Section 19 below, (ii) Vision 21 is a third-party
beneficiary of this Section 18, (iii) this Section 18 is intended for the
benefit of Vision 21, (iv) this Section 18 may be enforced by the Practice's
and Vision 21's successors and/or assigns, and (v) the enforcement of this
Section 18 will not violate public policy. This Section 18 shall survive the
Exhibit 4.1C - Page 6
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termination or expiration of this Employment Agreement. Notwithstanding the
foregoing, Vision 21 shall not have any right to enforce any provisions of
this Employment Agreement if the Business Management Agreement terminates
pursuant to Section 6.2(a) of the Business Management Agreement.
19. Remedies. Optometrist acknowledges and agrees that the
Practice's and Vision 21's remedy at law for a breach or a threatened breach of
the provisions herein would be inadequate, and in recognition of this fact, in
the event of a breach or threatened breach by Optometrist of any of the
provisions of this Employment Agreement, it is agreed that the Practice and
Vision 21 shall be entitled to equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available, without posting bond
or other security. Optometrist acknowledges that the granting of a temporary
injunction, a temporary restraining order or other permanent injunction merely
prohibiting Optometrist from engaging in the practice of optometry or engaging
in the management of any optometric practice during the prohibited period
within the prohibited area would not be an adequate remedy upon breach or
threatened breach of this Employment Agreement, and consequently agrees, upon
any such breach or threatened breach, to the granting of injunctive relief
prohibiting Optometrist from engaging in any activities prohibited by this
Employment Agreement. No remedy herein conferred is intended to be exclusive
of any other remedy, and each and every such remedy shall be cumulative and
shall be in addition to any other remedy given hereunder now or hereinafter
existing at law or in equity or by statute or otherwise. It is expressly
understood and agreed by Optometrist that although the parties consider the
restrictions contained in this Employment Agreement to be reasonable, if a
court determines that the time or territory or any other restriction contained
in this Employment Agreement is an unenforceable restriction on the activities
of Optometrist, such provision in this Employment Agreement shall not be
rendered void but shall be deemed to be amended to apply as to such maximum
time and territory and to such extent as such court may judicially determine or
indicate to be reasonable. This Section 19 shall survive the termination or
expiration of this Employment Agreement.
20. Business Management Agreement. Optometrist agrees not to
commit any act or engage in any omission that would cause the Practice to
breach the Business Management Agreement with Vision 21.
21. Modification and Waiver. No provision of this Employment
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Optometrist and
such officer as may be specifically designated by the Board of Directors of the
Practice and by such officer as may be specifically designated by the Board of
Directors of Vision 21. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Employment Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time, and such waiver shall not operate
or be construed as a waiver of any subsequent breach of the same provision or
condition by any of the Practice, Optometrist or Vision 21.
22. Headings. Headings used in this Employment Agreement are for
convenience only and shall not be used to interpret or construe its provisions.
23. Amendments. No amendments or variations of the terms and
conditions of this Employment Agreement shall be valid unless the same are in
writing and signed by all of the parties hereto.
Exhibit 4.1C - Page 7
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24. Severability. The invalidity or unenforceability of any
provision of this Employment Agreement, whether in whole or in part, shall not
in any way affect the validity and/or enforceability of any other provision
herein contained. Any invalid or unenforceable provision shall be deemed
severable to the extent of any such invalidity or unenforceability. It is
expressly understood and agreed that while the Practice and Optometrist
consider the restrictions contained in this Employment Agreement reasonable for
the purpose of preserving for the Practice the good will, other proprietary
rights and intangible business value of the Practice, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in this Employment Agreement is an
unreasonable or otherwise unenforceable restriction against Optometrist, the
provisions of such clause shall not be rendered void but shall be deemed
amended to apply as to maximum time and territory and to such other extent as
such court may judicially determine or indicate to be reasonable.
25. Third-Party Beneficiary. Vision 21 is a third-party
beneficiary of Sections 4, 15, 18, 19 and 25 of this Employment Agreement and
the restrictive covenants contained in this Employment Agreement are intended
for the benefit of Vision 21.
26. Successors and Assigns. The Practice's and Vision 21's
successors and/or assigns are authorized to enforce the restrictive covenants
contained in this Employment Agreement.
27. Governing Law. This Employment Agreement shall be construed
and enforced pursuant to the laws of the State in which the Practice conducts
its business.
28. Counterparts. This Employment Agreement may be executed in
more than one (1) counterpart and each counterpart shall be considered an
original.
IN WITNESS WHEREOF, this Employment Agreement has been duly executed
by the Practice and Optometrist as of the date first above written.
"PRACTICE"
MILLENNIUM VISION, P.C.
By:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, its President
"OPTOMETRIST"
-----------------------------------
Exhibit 4.1C - Page 8
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Exhibit 4.2A
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Form of Physician Employment Agreement (Non-Shareholder)
PHYSICIAN EMPLOYMENT AGREEMENT
(NON-SHAREHOLDER)
This Physician Employment Agreement (this "Employment Agreement")
dated as of _____________, 19__, is by and between Millennium Vision, P.C., a
professional corporation (the "Practice"), and __________________________ M.D.,
an individual (the "Ophthalmologist").
R E C I T A L S:
A. The Practice is a professional corporation organized under the
laws of the State of Arizona (the "State") and is authorized to practice
medicine in the State through licensed individuals.
B. The Practice desires to employ Ophthalmologist upon the terms
and subject to the terms and conditions set forth in this Employment Agreement.
C. The Ophthalmologist is licensed to practice medicine in the
State and desires to be employed by the Practice upon the terms and subject to
the conditions set forth in this Employment Agreement.
D. The Practice and Vision 21, Inc. ("Vision 21") have entered
into a Business Management Agreement (the "Business Management Agreement")
whereby Vision 21 has agreed to have its professional employees execute
employment agreements in a form substantially the same as this Employment
Agreement, and it is intended that except as otherwise limited herein, Vision
21 be a third-party beneficiary of the restrictive covenants contained in this
Employment Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
promises, covenants and conditions herein contained and for other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound hereby agree as
follows:
1. Employment. The Practice hereby employs Ophthalmologist, and
Ophthalmologist hereby accepts employment with the Practice, all upon the terms
and subject to the conditions set forth in this Employment Agreement.
2. Duties and Responsibilities.
2.01 Full Time Practice of Medicine. The Ophthalmologist is
employed pursuant to the terms of this Employment Agreement to practice
medicine on behalf of the Practice. The Ophthalmologist shall devote
substantially all of his time, best efforts and attention to the practice of
medicine on behalf of the Practice and shall provide quality patient care. In
addition to the foregoing duties, the Ophthalmologist shall undertake
additional duties as directed by the Practice. During the term hereof and any
renewal, the Ophthalmologist shall not, without the written consent of the
Practice and Vision 21, (1) render professional services to or for any person,
firm, corporation or other organization for compensation;
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or (2) engage in any activity that competes with the interest of the
Practice or Vision 21 whether Ophthalmologist is acting by himself or as an
officer, director, shareholder, employee, partner or fiduciary. Any consent
granted to the Ophthalmologist shall be revocable by the Practice or Vision 21
at any time upon thirty (30) days' notice, and the Ophthalmologist agrees to
cease and desist upon receipt of such notice. Notwithstanding the above, the
Practice recognizes that the Ophthalmologist shall have the right to engage in
those matters expressly described on Schedule 2.01 attached hereto so long as
such permitted activities do not result in materially reduced services to the
Practice as compared to the Ophthalmologist's previous services to his practice
and so long as the same does not materially impact the Ophthalmologist's
ability to perform hereunder or materially impact the Ophthalmologist's
anticipated productivity.
2.02 Subject to Board Standards and Requirements. The
Practice recognizes that professional regulatory groups and bodies such as the
State Board of Medicine may from time to time establish standards and
requirements with regard to the practice of medicine by physicians licensed to
practice medicine. All restrictions contained herein with respect to the
duties and obligations of the Ophthalmologist shall be subject to said
standards and requirements of the aforesaid groups and bodies.
3. Authority and Control of Practice.
Subject to Section 2.02 above and to the extent permitted by
law:
3.01 The Ophthalmologist recognizes that the Practice
shall have complete authority with regard to the acceptance for treatment of or
the refusal to treat any patient and the Practice shall have complete authority
with regard to the establishment of the appropriate fee for professional
service.
3.02 The Practice shall direct and control the assignment
of patients to the Ophthalmologist. Such determination shall be solely by the
Practice and in the best interests of the patient and the Practice. The
Ophthalmologist agrees to treat such patients as are assigned to him by the
Practice. The Ophthalmologist recognizes that patients treated by him may
subsequently be assigned to other employees.
3.03 The Ophthalmologist shall perform all professional
services as are assigned to him by the Practice and all work performed by the
Practice shall be subject to the review and study of the Practice.
3.04 The performance of services by the Ophthalmologist on
behalf of the Practice shall be performed at such times and at such places as
shall be determined by the Practice and in accordance with such rules as the
Practice may establish.
3.05 Hours of employment of the Ophthalmologist shall be
determined by the Practice within reasonable standards within the profession.
3.06 The ophthalmologist of record for each patient treated
by Ophthalmologist shall be one of the individual owners of the Practice.
4. Term of Employment. The term of employment of Ophthalmologist by
the Practice pursuant to this Employment Agreement shall be for two (2) years
(the "Employment Period") commencing on the date of this Agreement (the
"Commencement Date") unless otherwise terminated earlier under
Exhibit 4.2A - Page 2
86
the provisions of this Employment Agreement. The term of this Agreement shall
renew automatically at the end of each term of this Agreement for an additional
two (2) year term unless either party hereto provides notice to the other at
least ninety (90) days prior to the expiration of the term.
5. Place of Employment. Ophthalmologist's principal place of work
shall be located where designated by the Practice.
6. Compensation. During the Employment Period, subject to all the
terms and conditions of this Employment Agreement and as compensation for all
services to be rendered by Ophthalmologist under this Employment Agreement, the
Practice shall pay to or provide Ophthalmologist with the compensation set
forth in Schedule 6 attached to this Agreement.
7. Adherence to Standards. Ophthalmologist shall comply with the
written policies, standards, rules and regulations of the Practice from time to
time established for all employees of the Practice.
8. Review of Performance. The Practice may periodically review and
evaluate the performance of Ophthalmologist under this Employment Agreement
with Ophthalmologist.
9. Expenses. The Practice may reimburse Ophthalmologist for
reasonable, ordinary and necessary expenses incurred by him in connection with
his employment hereunder that have been approved in advance by the Practice;
provided, however, Ophthalmologist shall render to the Practice a complete and
accurate accounting of all such expenses in accordance with the substantiation
requirements of Section 274 of the Internal Revenue Code of 1986, as amended
(the "Code"), as a condition precedent to such reimbursement.
10. Termination with Cause by the Practice. This Employment
Agreement may be terminated with Cause (as hereinafter defined) by the Practice
provided that the Practice shall (i) give Ophthalmologist the Notice of
Termination (as hereinafter defined) and (ii) pay Ophthalmologist his annual
base salary through the Date of Termination (as hereinafter defined) at the
rate in effect at the time the Notice of Termination is given plus any bonus or
incentive compensation which have been earned or have become payable pursuant
to the terms of any compensation or benefit plan or have vested as of the Date
of Termination, but which have not yet been paid.
11. Termination without Cause by the Practice or with Cause by
the Ophthalmologist. This Employment Agreement may be terminated by the
Practice without cause or by the Ophthalmologist with cause and in the event
that the Practice terminates the Ophthalmologist without cause, the Practice
shall give written notice to the Ophthalmologist at least ninety (90) days
prior to the Date of Termination.
12. Definitions. In addition to the words and terms elsewhere
defined in this Employment Agreement, certain capitalized words and terms used
in this Employment Agreement shall have the meanings given to them by the
definitions and descriptions in this Section 12 unless the context or use
indicates another or different meaning or intent, and such definition shall be
equally applicable to both the singular and plural forms of any of the
capitalized words and terms herein defined. The following words and terms are
defined terms under this Employment Agreement:
12.01 Cause. A termination with "Cause" by the Practice
shall mean a termination of this Employment Agreement for any of the following
reasons:
Exhibit 4.2A - Page 3
87
(i) Ophthalmologist's failure to promptly and
adequately perform the duties assigned by Practice after being notified by the
Practice of the specific act(s) constituting such failure and being given a
period of thirty (30) days after notification by the Practice to correct such
failure;
(ii) upon Ophthalmologist's breach of any provision
of this Employment Agreement which remains uncured for a period of thirty (30)
days after notification by Practice of the specific nature of the breach;
(iii) for good cause which shall include
absenteeism, theft, dishonesty, insubordination, conduct reflecting moral
turpitude, conduct diminishing the goodwill or reputation of the Practice;
conduct disloyal to the Practice, violation of any representation, warranty or
covenant of this Agreement; conviction of any felony, or suspension or
revocation of Ophthalmologist's license to practice medicine;
(iv) upon Ophthalmologist's death; or
(v) upon Ophthalmologist's disability if the
disability renders Ophthalmologist unable to practice medicine on a full-time
basis for a period of more than ninety (90) days in any consecutive six (6)
month period.
12.02 Date of Termination. "Date of Termination" shall mean
the date specified in the Notice of Termination.
12.03 Notice of Termination. "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision
in this Employment Agreement relied upon; provided, however, no such purported
termination shall be effective without such Notice of Termination.
13. Fees and Expenses. The prevailing party in any contest or
dispute under this Employment Agreement shall receive from the other party all
legal fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the prevailing party in any and all proceedings as a
result of a contest or dispute arising out of this Employment Agreement
including trial, appellate and bankruptcy proceedings.
14. Notices. For the purposes of this Employment Agreement, notices
and all other communications provided for in the Employment Agreement shall be
in writing and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
or by expedited (overnight) courier with an established national reputation,
shipping prepaid or billed to sender, in either case addressed to the
respective addresses last given by each party in writing to the other (provided
that all notices to the Practice shall be directed to the attention of the
Practice with a copy to the Secretary of the Practice. All notices and
communication shall be deemed to have been received on the date of delivery
thereof, on the third business day after the mailing thereof, or on the second
day after deposit thereof with an expedited courier service, except that notice
of change of address shall be effective only upon receipt.
15. Life Insurance. The Practice may, at any time after the
execution of this Employment Agreement, apply for and procure as owner and for
its own benefit, life insurance on Ophthalmologist, in such amounts and in such
form or forms as the Practice may determine. Ophthalmologist shall, at the
Exhibit 4.2A - Page 4
88
request of the Practice, submit to such medical examinations, supply such
information, and execute such documents as may be required by the insurance
company or companies to whom the Practice has applied for such insurance.
Ophthalmologist hereby represents that to his knowledge there are no facts or
circumstances that would preclude the Practice from obtaining life insurance on
Ophthalmologist.
16. Proprietary Information and Inventions. Ophthalmologist
understands and acknowledges that:
16.01 Trust. Ophthalmologist's employment creates a
relationship of confidence and trust between Ophthalmologist and the Practice
with respect to certain information applicable to the business of the Practice,
and Vision 21 which may be made known to Ophthalmologist by the Practice or
Vision 21 or learned by Ophthalmologist during the Employment Period.
16.02 Proprietary Information. The Practice and Vision 21
possess and will continue to possess information that has been created,
discovered, or developed by, or otherwise become known to, the Practice or
Vision 21 (including, without limitation, information created, discovered or
developed by, or made known to Ophthalmologist during the period of or arising
out of employment by the Practice) or in which property rights have been or may
be assigned or otherwise conveyed to the Practice or Vision 21, which
information has commercial value in the respective businesses in which the
Practice and Vision 21 are engaged and is treated by the Practice and Vision 21
as confidential. Except as otherwise herein provided, all such information is
hereinafter called "Proprietary Information", which term, as used herein, shall
also include, but shall not be limited to, data, functional specifications,
computer programs, know-how, research, technology, improvements, developments,
designs, marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs, patient,
supplier and potential acquisition candidates lists, and patient files and
records. Notwithstanding anything contained in this Employment Agreement to
the contrary, the term "Proprietary Information" shall not include (i)
information which is in the public domain, (ii) information which is published
or otherwise becomes part of the public domain through no fault of
Ophthalmologist, (iii) information which Ophthalmologist can demonstrate was in
Ophthalmologist's possession at the time of disclosure and was not acquired by
Ophthalmologist directly or indirectly from the Practice or Vision 21 on a
confidential basis, (iv) information which becomes available to Ophthalmologist
on a non-confidential basis from a source other than the Practice or Vision 21
and which source, to the best of Ophthalmologist's knowledge, did not acquire
the information on a confidential basis or (v) information required to be
disclosed by any federal or state law, rule or regulation or by any applicable
judgment, order or decree or any court or governmental body or agency having
jurisdiction in the premises.
All Proprietary Information shall be the sole property of the Practice
and Vision 21 and their respective assigns. Ophthalmologist assigns to the
Practice and Vision 21 any rights Ophthalmologist may have or acquire in such
Proprietary Information. At all times, both during Ophthalmologist's
employment by the Practice and after its termination or expiration,
Ophthalmologist shall keep in strictest confidence and trust all Proprietary
Information, and Ophthalmologist shall not use or disclose any Proprietary
Information without the written consent of the Practice and Vision 21, except
as may be necessary in the ordinary course of performing Ophthalmologist's
duties as an employee of the Practice. This Section 16 shall survive the
termination or expiration of this Employment Agreement.
17. Patient Files and Surrender of Documents. To the extent
permitted by law, all records contained in the files of patients shall be the
property of the Practice. Ophthalmologist shall, at the request of the
Practice, promptly surrender to the Practice any patient files, records, or
x-rays, as well as
Exhibit 4.2A - Page 5
89
any Proprietary Information or document, memorandum, record, patient record,
letter or other paper in his possession or under his control relating to the
operation, business or affairs of the Practice or Vision 21.
18. Prior Employment Agreements. Ophthalmologist represents and
warrants that Ophthalmologist's performance of all the terms of this Employment
Agreement and as an employee of the Practice does not, and will not, breach any
agreement to keep in confidence proprietary information acquired by
Ophthalmologist in confidence or in trust prior to Ophthalmologist's employment
by the Practice. Ophthalmologist has not entered into, and shall not enter
into, any agreement, either written or oral, which is in conflict with this
Employment Agreement or which would be violated by Ophthalmologist's entering
into, or carrying out his obligations under, this Employment Agreement.
19. Restrictive Covenant. Ophthalmologist acknowledges and
recognizes (i) that Ophthalmologist shall come into possession of Proprietary
Information and (ii) the highly competitive nature of the respective businesses
of the Practice and Vision 21 and, accordingly, agrees that in consideration of
the premises contained herein Ophthalmologist will not, during the period of
Ophthalmologist's employment by the Practice and for a period of one (1) year
following the date of expiration or termination of this Employment Agreement
(unless terminated without cause by the Practice), directly or indirectly (i)
except as otherwise permitted by the terms of this Employment Agreement,
practice medicine or engage in the business of managing ophthalmology or
optometry practices or related eye care medical facilities within the area
described in Schedule 19, whether such engagement shall be as an employer,
officer, director, owner, employee, consultant, stockholder, partner or other
participant. Ophthalmologist further agrees that during the period of
Ophthalmologist's employment by Practice, and for a period of one (1) year
following the termination or expiration of this Employment Agreement,
Ophthalmologist will not, directly or indirectly, (i) solicit any employee or
consultant of Vision 21 for the purposes of hiring or retaining such employee
or consultant, (ii) utilize the services of any entity engaged in the business
of managing ophthalmology or optometry practices or related eye care or medical
facilities other than Vision 21, or (iii) contact any present or prospective
client of Vision 21 to solicit such person or entity to enter into a management
contract with any organization other than Vision 21. Ophthalmologist further
agrees that (i) Vision 21 is a third-party beneficiary of this Section 19, (ii)
this Section 19 is intended for the benefit of Vision 21, (iii) this Section 19
may be enforced by Practice's and Vision 21's successors and/or assigns, and
(iv) the enforcement of this Section 19 will not violate public policy. This
Section 19 shall survive the termination or expiration of this Employment
Agreement. Notwithstanding the foregoing, Vision 21 shall not have any right
to enforce any provisions of this Employment Agreement if the Business
Management Agreement terminates pursuant to Section 6.2(a) of the Business
Management Agreement.
20. Remedies. Ophthalmologist acknowledges and agrees that the
Practice's and Vision 21's remedy at law for a breach or a threatened breach of
the provisions herein would be inadequate, and in recognition of this fact, in
the event of a breach or threatened breach by Ophthalmologist of any of the
provisions of this Employment Agreement, it is agreed that the Practice and
Vision 21 shall be entitled to, equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available, without posting bond
or other security. Ophthalmologist acknowledges that the granting of a
temporary injunction, a temporary restraining order or other permanent
injunction merely prohibiting Ophthalmologist from engaging in the practice of
medicine or engaging in the management of any medical practice during the
prohibited period within the prohibited area would not be an adequate remedy
upon breach or threatened breach of this Employment Agreement, and consequently
agrees upon any such breach or threatened breach to the
Exhibit 4.2A - Page 6
90
granting of injunctive relief prohibiting Ophthalmologist from engaging in any
activities prohibited by this Employment Agreement. No remedy herein conferred
is intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to any other remedy given
hereunder now or hereinafter existing at law or in equity or by statute or
otherwise. It is expressly understood and agreed by Ophthalmologist that
although the parties consider the restrictions contained in this Employment
Agreement to be reasonable, if a court determines that the time or territory or
any other restriction contained in this Employment Agreement is an
unenforceable restriction on the activities of Ophthalmologist, as such
provision in this Employment Agreement shall not be rendered void but shall be
deemed to be amended as to apply to such maximum time and territory and to such
extent as such court may judicially determine or indicate to be reasonable.
This Section 20 shall survive the termination or expiration of this Employment
Agreement.
21. Business Management Agreement. Ophthalmologist agrees not to
commit any act or engage in any omission that would cause the Practice to
breach the Business Management Agreement with Vision 21.
22. Modification and Waiver. No provision of this Employment
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Ophthalmologist
and such officer as may be specifically designated by the Board of Directors of
the Practice and by such officer as may be specifically designated by the Board
of Directors of Vision 21. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Employment Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time, and such waiver shall not operate
or be construed as a waiver of any subsequent breach of the same provision or
condition by any of the Practice, Ophthalmologist or Vision 21.
23. Headings. Headings used in this Employment Agreement are for
convenience only and shall not be used to interpret or construe its provisions.
24. Amendments. No amendments or variations of the terms and
conditions of this Employment Agreement shall be valid unless the same are in
writing and signed by all of the parties hereto.
25. Severability. The invalidity or unenforceability of any
provision of this Employment Agreement, whether in whole or in part, shall not
in any way affect the validity and/or enforceability of any other provision
herein contained. Any invalid or unenforceable provision shall be deemed
severable to the extent of any such invalidity or unenforceability. It is
expressly understood and agreed that while the Practice and Ophthalmologist
consider the restrictions contained in this Employment Agreement reasonable for
the purpose of preserving for the Practice the good will, other proprietary
rights and intangible business value of the Practice, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in this Employment Agreement is an
unreasonable or otherwise unenforceable restriction against Ophthalmologist,
the provisions of such clause shall not be rendered void but shall be deemed
amended to apply as to maximum time and territory and to such other extent as
such court may judicially determine or indicate to be reasonable.
26. Third Party Beneficiary. Vision 21 is a third-party beneficiary
of Sections 4, 16, 17, 19, 20 and 25 of this Employment Agreement and the
restrictive covenants contained in this Employment Agreement are intended for
the benefit of Vision 21.
Exhibit 4.2A - Page 7
91
27. Successors and Assigns. The Practice's and Vision 21's
successors and/or assigns are authorized to enforce the restrictive covenants
contained in this Employment Agreement.
28. Governing Law. This Employment Agreement shall be construed and
enforced pursuant to the laws of the State in which the Practice conducts its
business.
29. Counterparts. This Employment Agreement may be executed in more
than one (1) counterpart and each counterpart shall be considered an original.
IN WITNESS WHEREOF, this Employment Agreement has been duly executed
by the Practice and Ophthalmologist as of the date first above written.
"PRACTICE"
MILLENNIUM VISION, P.C.
By:
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., its President
"OPHTHALMOLOGIST"
-----------------------------------------
M.D.
-------------------------,
Exhibit 4.2A - Page 8
92
Exhibit 4.2B
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
Form of Optometrist Employment Agreement
OPTOMETRIST EMPLOYMENT AGREEMENT
(NON-SHAREHOLDER)
This Optometrist Employment Agreement (this "Employment Agreement")
dated as of ___________, 19__, is by and between Millennium Vision, P.C., an
Arizona professional corporation (the "Practice"), and
_________________________ O.D., an individual (the "Optometrist").
R E C I T A L S:
A. The Practice is a professional corporation organized under the
laws of the State of Arizona (the "State") and is authorized to practice
optometry in the State through licensed individuals.
B. The Practice desires to employ Optometrist upon the terms and
subject to the terms and conditions set forth in this Employment Agreement.
C. The Optometrist is licensed to practice optometry in the State
and desires to be employed by the Practice upon the terms and subject to the
conditions set forth in this Employment Agreement.
D. The Practice and Vision 21, Inc. ("Vision 21") have entered
into a Business Management Agreement (the "Business Management Agreement")
whereby Vision 21 has agreed to have its professional employees execute
employment agreements in a form substantially the same as this Employment
Agreement, and it is intended that except as otherwise limited herein, Vision
21 be a third-party beneficiary of the restrictive covenants contained in this
Employment Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
promises, covenants and conditions herein contained and for other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound hereby agree as
follows:
1. Employment. The Practice hereby employs Optometrist, and
Optometrist hereby accepts employment with the Practice, all upon the terms and
subject to the conditions set forth in this Employment Agreement.
2. Duties and Responsibilities.
2.01 Full Time Practice of Optometry. The Optometrist is
employed pursuant to the terms of this Employment Agreement to practice
optometry on behalf of the Practice. The Optometrist shall devote
substantially all of his time, best efforts and attention to the practice of
optometry on behalf of the Practice and shall provide quality patient care. In
addition to the foregoing duties, the Optometrist shall undertake additional
duties as directed by the Practice. During the term hereof and any renewal,
the Optometrist shall not, without the written consent of the Practice and
Vision 21, (1) render professional services to or for any person, firm,
corporation or other organization for compensation; or (2) engage in
93
any activity that competes with the interest of the Practice or Vision 21
whether Optometrist is acting by himself or as an officer, director,
shareholder, employee, partner or fiduciary. Any consent granted to the
Optometrist shall be revocable by the Practice or Vision 21 at any time upon
thirty (30) days' notice, and the Optometrist agrees to cease and desist upon
receipt of such notice. Notwithstanding the above, the Practice recognizes
that the Optometrist shall have the right to engage in those matters expressly
described on Schedule 2.01 attached hereto so long as such permitted activities
do not result in materially reduced services to the Practice as compared to the
Optometrist's previous services to his practice and so long as the same does
not materially impact the Optometrist's ability to perform hereunder or
materially impact the Optometrist's anticipated productivity.
2.02 Subject to Board Standards and Requirements. The
Practice recognizes that professional regulatory groups and bodies such as the
State Board of Optometry may from time to time establish standards and
requirements with regard to the practice of optometry by optometrists licensed
to practice optometry. All restrictions contained herein with respect to the
duties and obligations of the Optometrist shall be subject to said standards
and requirements of the aforesaid groups and bodies.
3. Authority and Control of Practice.
Subject to Section 2.02 above and to the extent permitted by
law:
3.01 The Optometrist recognizes that the Practice shall
have complete authority with regard to the acceptance for treatment of or the
refusal to treat any patient and the Practice shall have complete authority
with regard to the establishment of the appropriate fee for professional
service.
3.02 The Practice shall direct and control the assignment
of patients to the Optometrist. Such determination shall be solely by the
Practice and in the best interests of the patient and the Practice. The
Optometrist agrees to treat such patients as are assigned to him by the
Practice. The Optometrist recognizes that patients treated by him may
subsequently be assigned to other employees.
3.03 The Optometrist shall perform all professional
services as are assigned to him by the Practice and all work performed by the
Practice shall be subject to the review and study of the Practice.
3.04 The performance of services by the Optometrist on
behalf of the Practice shall be performed at such times and at such places as
shall be determined by the Practice and in accordance with such rules as the
Practice may establish.
3.05 Hours of employment of the Optometrist shall be
determined by the Practice within reasonable standards within the profession.
3.06 The optometrist of record for each patient treated by
Optometrist shall be one of the individual owners of the Practice.
4. Term of Employment. The term of employment of Optometrist by the
Practice pursuant to this Employment Agreement shall be for two (2) years (the
"Employment Period") commencing on the date of this Agreement (the
"Commencement Date") unless otherwise terminated earlier under the provisions
of this Employment Agreement. The term of this Agreement shall renew
automatically at the
Exhibit 4.2B - Page 2
94
end of each term of this Agreement for an additional two (2) year term
unless either party hereto provides notice to the other at least ninety (90)
days prior to the expiration of the term.
5. Place of Employment. Optometrist's principal place of work shall
be located where designated by the Practice.
6. Compensation. During the Employment Period, subject to all the
terms and conditions of this Employment Agreement and as compensation for all
services to be rendered by Optometrist under this Employment Agreement, the
Practice shall pay to or provide Optometrist with the compensation set forth in
Schedule 6 attached to this Agreement.
7. Adherence to Standards. Optometrist shall comply with the
written policies, standards, rules and regulations of the Practice from time to
time established for all employees of the Practice.
8. Review of Performance. The Practice may periodically review and
evaluate the performance of Optometrist under this Employment Agreement with
Optometrist.
9. Expenses. The Practice may reimburse Optometrist for reasonable,
ordinary and necessary expenses incurred by him in connection with his
employment hereunder that have been approved in advance by the Practice;
provided, however, Optometrist shall render to the Practice a complete and
accurate accounting of all such expenses in accordance with the substantiation
requirements of Section 274 of the Internal Revenue Code of 1986, as amended
(the "Code"), as a condition precedent to such reimbursement.
10. Termination with Cause by the Practice. This Employment
Agreement may be terminated with Cause (as hereinafter defined) by the Practice
provided that the Practice shall (i) give Optometrist the Notice of Termination
(as hereinafter defined) and (ii) pay Optometrist his annual base salary
through the Date of Termination (as hereinafter defined) at the rate in effect
at the time the Notice of Termination is given plus any bonus or incentive
compensation which have been earned or have become payable pursuant to the
terms of any compensation or benefit plan or have vested as of the Date of
Termination, but which have not yet been paid.
11. Termination without Cause by the Practice or with Cause by
the Optometrist. This Employment Agreement may be terminated by the Practice
without cause or by the Optometrist with cause and in the event that the
Practice terminates the Optometrist without cause, the Practice shall give
written notice to the Optometrist at least ninety (90) days prior to the Date
of Termination.
12. Definitions. In addition to the words and terms elsewhere
defined in this Employment Agreement, certain capitalized words and terms used
in this Employment Agreement shall have the meanings given to them by the
definitions and descriptions in this Section 12 unless the context or use
indicates another or different meaning or intent, and such definition shall be
equally applicable to both the singular and plural forms of any of the
capitalized words and terms herein defined. The following words and terms are
defined terms under this Employment Agreement:
12.01 Cause. A termination with "Cause" by the Practice
shall mean a termination of this Employment Agreement for any of the following
reasons:
Exhibit 4.2B - Page 3
95
(i) Optometrist's failure to promptly and adequately
perform the duties assigned by Practice after being notified by the Practice of
the specific act(s) constituting such failure and being given a period of
thirty (30) days after notification by the Practice to correct such failure;
(ii) upon Optometrist's breach of any provision of
this Employment Agreement which remains uncured for a period of thirty (30)
days after notification by Practice of the specific nature of the breach;
(iii) for good cause which shall include
absenteeism, theft, dishonesty, insubordination, conduct reflecting moral
turpitude, conduct diminishing the goodwill or reputation of the Practice;
conduct disloyal to the Practice, violation of any representation, warranty or
covenant of this Agreement; conviction of any felony, or suspension or
revocation of Optometrist's license to practice optometry;
(iv) upon Optometrist's death; or
(v) upon Optometrist's disability if the
disability renders Optometrist unable to practice optometry on a full-time
basis for a period of more than ninety (90) days in any consecutive six (6)
month period.
12.02 Date of Termination. "Date of Termination" shall mean
the date specified in the Notice of Termination.
12.03 Notice of Termination. "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision
in this Employment Agreement relied upon; provided, however, no such purported
termination shall be effective without such Notice of Termination.
13. Fees and Expenses. The prevailing party in any contest or
dispute under this Employment Agreement shall receive from the other party all
legal fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the prevailing party in any and all proceedings as a
result of a contest or dispute arising out of this Employment Agreement
including trial, appellate and bankruptcy proceedings.
14. Notices. For the purposes of this Employment Agreement, notices
and all other communications provided for in the Employment Agreement shall be
in writing and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
or by expedited (overnight) courier with an established national reputation,
shipping prepaid or billed to sender, in either case addressed to the
respective addresses last given by each party in writing to the other (provided
that all notices to the Practice shall be directed to the attention of the
Practice with a copy to the Secretary of the Practice. All notices and
communication shall be deemed to have been received on the date of delivery
thereof, on the third business day after the mailing thereof, or on the second
day after deposit thereof with an expedited courier service, except that notice
of change of address shall be effective only upon receipt.
15. Life Insurance. The Practice may, at any time after the
execution of this Employment Agreement, apply for and procure as owner and for
its own benefit, life insurance on Optometrist, in such amounts and in such
form or forms as the Practice may determine. Optometrist shall, at the request
of
Exhibit 4.2B - Page 4
96
the Practice, submit to such medical examinations, supply such information,
and execute such documents as may be required by the insurance company or
companies to whom the Practice has applied for such insurance. Optometrist
hereby represents that to his knowledge there are no facts or circumstances
that would preclude the Practice from obtaining life insurance on Optometrist.
16. Proprietary Information and Inventions. Optometrist understands
and acknowledges that:
16.01 Trust. Optometrist's employment creates a relationship
of confidence and trust between Optometrist and the Practice with respect to
certain information applicable to the business of the Practice, and Vision 21
which may be made known to Optometrist by the Practice or Vision 21 or learned
by Optometrist during the Employment Period.
16.02 Proprietary Information. The Practice and Vision 21
possess and will continue to possess information that has been created,
discovered, or developed by, or otherwise become known to, the Practice or
Vision 21 (including, without limitation, information created, discovered or
developed by, or made known to Optometrist during the period of or arising out
of employment by the Practice) or in which property rights have been or may be
assigned or otherwise conveyed to the Practice or Vision 21, which information
has commercial value in the respective businesses in which the Practice and
Vision 21 are engaged and is treated by the Practice and Vision 21 as
confidential. Except as otherwise herein provided, all such information is
hereinafter called "Proprietary Information", which term, as used herein, shall
also include, but shall not be limited to, data, functional specifications,
computer programs, know-how, research, technology, improvements, developments,
designs, marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs, patient,
supplier and potential acquisition candidates lists, and patient files and
records. Notwithstanding anything contained in this Employment Agreement to
the contrary, the term "Proprietary Information" shall not include (i)
information which is in the public domain, (ii) information which is published
or otherwise becomes part of the public domain through no fault of Optometrist,
(iii) information which Optometrist can demonstrate was in Optometrist's
possession at the time of disclosure and was not acquired by Optometrist
directly or indirectly from the Practice or Vision 21 on a confidential basis,
(iv) information which becomes available to Optometrist on a non-confidential
basis from a source other than the Practice or Vision 21 and which source, to
the best of Optometrist's knowledge, did not acquire the information on a
confidential basis or (v) information required to be disclosed by any federal
or state law, rule or regulation or by any applicable judgment, order or decree
or any court or governmental body or agency having jurisdiction in the
premises.
All Proprietary Information shall be the sole property of the Practice
and Vision 21 and their respective assigns. Optometrist assigns to the
Practice and Vision 21 any rights Optometrist may have or acquire in such
Proprietary Information. At all times, both during Optometrist's employment by
the Practice and after its termination or expiration, Optometrist shall keep in
strictest confidence and trust all Proprietary Information, and Optometrist
shall not use or disclose any Proprietary Information without the written
consent of the Practice and Vision 21, except as may be necessary in the
ordinary course of performing Optometrist's duties as an employee of the
Practice. This Section 16 shall survive the termination or expiration of this
Employment Agreement.
17. Patient Files and Surrender of Documents. To the extent
permitted by law, all records contained in the files of patients shall be the
property of the Practice. Optometrist shall, at the request of the Practice,
promptly surrender to the Practice any patient files, records, or x-rays, as
well as any
Exhibit 4.2B - Page 5
97
Proprietary Information or document, memorandum, record, patient
record, letter or other paper in his possession or under his control relating
to the operation, business or affairs of the Practice or Vision 21.
18. Prior Employment Agreements. Optometrist represents and
warrants that Optometrist's performance of all the terms of this Employment
Agreement and as an employee of the Practice does not, and will not, breach any
agreement to keep in confidence proprietary information acquired by Optometrist
in confidence or in trust prior to Optometrist's employment by the Practice.
Optometrist has not entered into, and shall not enter into, any agreement,
either written or oral, which is in conflict with this Employment Agreement or
which would be violated by Optometrist's entering into, or carrying out his
obligations under, this Employment Agreement.
19. Restrictive Covenant. Optometrist acknowledges and recognizes
(i) that Optometrist shall come into possession of Proprietary Information and
(ii) the highly competitive nature of the respective businesses of the Practice
and Vision 21 and, accordingly, agrees that in consideration of the premises
contained herein Optometrist will not, during the period of Optometrist's
employment by the Practice and for a period of one (1) year following the date
of expiration or termination of this Employment Agreement (unless terminated
without cause by the Practice), directly or indirectly (i) except as otherwise
permitted by the terms of this Employment Agreement, practice optometry or
engage in the business of managing optometry practices or related eye care
optometric facilities within the area described in Schedule 19, whether such
engagement shall be as an employer, officer, director, owner, employee,
consultant, stockholder, partner or other participant. Optometrist further
agrees that during the period of Optometrist's employment by Practice, and for
a period of one (1) year following the termination or expiration of this
Employment Agreement, Optometrist will not, directly or indirectly, (i) solicit
any employee or consultant of Vision 21 for the purposes of hiring or retaining
such employee or consultant, (ii) utilize the services of any entity engaged in
the business of managing optometry practices or related eye care or optometric
facilities other than Vision 21, or (iii) contact any present or prospective
client of Vision 21 to solicit such person or entity to enter into a management
contract with any organization other than Vision 21. Optometrist further
agrees that (i) Vision 21 is a third-party beneficiary of this Section 19, (ii)
this Section 19 is intended for the benefit of Vision 21, (iii) this Section 19
may be enforced by Practice's and Vision 21's successors and/or assigns, and
(iv) the enforcement of this Section 19 will not violate public policy. This
Section 19 shall survive the termination or expiration of this Employment
Agreement. Notwithstanding the foregoing, Vision 21 shall not have any right
to enforce any provisions of this Employment Agreement if the Business
Management Agreement terminates pursuant to Section 6.2(a) of the Business
Management Agreement.
20. Remedies. Optometrist acknowledges and agrees that the
Practice's and Vision 21's remedy at law for a breach or a threatened breach of
the provisions herein would be inadequate, and in recognition of this fact, in
the event of a breach or threatened breach by Optometrist of any of the
provisions of this Employment Agreement, it is agreed that the Practice and
Vision 21 shall be entitled to, equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available, without posting bond
or other security. Optometrist acknowledges that the granting of a temporary
injunction, a temporary restraining order or other permanent injunction merely
prohibiting Optometrist from engaging in the practice of optometry or engaging
in the management of any optometric practice during the prohibited period
within the prohibited area would not be an adequate remedy upon breach or
threatened breach of this Employment Agreement, and consequently agrees upon
any such breach or threatened breach to the granting of injunctive relief
prohibiting Optometrist from engaging in any activities prohibited by this
Employment Agreement. No
Exhibit 4.2B - Page 6
98
remedy herein conferred is intended to be exclusive of any other remedy, and
each and every such remedy shall be cumulative and shall be in addition to any
other remedy given hereunder now or hereinafter existing at law or in equity or
by statute or otherwise. It is expressly understood and agreed by Optometrist
that although the parties consider the restrictions contained in this
Employment Agreement to be reasonable, if a court determines that the time or
territory or any other restriction contained in this Employment Agreement is an
unenforceable restriction on the activities of Optometrist, as such provision
in this Employment Agreement shall not be rendered void but shall be deemed to
be amended as to apply to such maximum time and territory and to such extent as
such court may judicially determine or indicate to be reasonable. This Section
20 shall survive the termination or expiration of this Employment Agreement.
21. Business Management Agreement. Optometrist agrees not to commit
any act or engage in any omission that would cause the Practice to breach the
Business Management Agreement with Vision 21.
22. Modification and Waiver. No provision of this Employment
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Optometrist and
such officer as may be specifically designated by the Board of Directors of the
Practice and by such officer as may be specifically designated by the Board of
Directors of Vision 21. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Employment Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time, and such waiver shall not operate
or be construed as a waiver of any subsequent breach of the same provision or
condition by any of the Practice, Optometrist or Vision 21.
23. Headings. Headings used in this Employment Agreement are for
convenience only and shall not be used to interpret or construe its provisions.
24. Amendments. No amendments or variations of the terms and
conditions of this Employment Agreement shall be valid unless the same are in
writing and signed by all of the parties hereto.
25. Severability. The invalidity or unenforceability of any
provision of this Employment Agreement, whether in whole or in part, shall not
in any way affect the validity and/or enforceability of any other provision
herein contained. Any invalid or unenforceable provision shall be deemed
severable to the extent of any such invalidity or unenforceability. It is
expressly understood and agreed that while the Practice and Optometrist
consider the restrictions contained in this Employment Agreement reasonable for
the purpose of preserving for the Practice the good will, other proprietary
rights and intangible business value of the Practice, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in this Employment Agreement is an
unreasonable or otherwise unenforceable restriction against Optometrist, the
provisions of such clause shall not be rendered void but shall be deemed
amended to apply as to maximum time and territory and to such other extent as
such court may judicially determine or indicate to be reasonable.
26. Third Party Beneficiary. Vision 21 is a third-party beneficiary
of Sections 4, 16, 17, 19, 20 and 25 of this Employment Agreement and the
restrictive covenants contained in this Employment Agreement are intended for
the benefit of Vision 21. Except as otherwise provided herein, this
Exhibit 4.2B - Page 7
99
Employment Agreement shall not confer any rights or remedies upon any
person other than the Practice, ophthalmologist and Vision 21 and their
respective successors and permitted assigns.
27. Successors and Assigns. The Practice's and Vision 21's
successors and/or assigns are authorized to enforce the restrictive covenants
contained in this Employment Agreement.
28. Governing Law. This Employment Agreement shall be construed and
enforced pursuant to the laws of the State in which the Practice conducts its
business.
29. Counterparts. This Employment Agreement may be executed in more
than one (1) counterpart and each counterpart shall be considered an original.
IN WITNESS WHEREOF, this Employment Agreement has been duly executed
by the Practice and Optometrist as of the date first above written.
"PRACTICE"
MILLENNIUM VISION, P.C.
By:
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., its President
"OPTOMETRIST"
---------------------------------------
------------------------- , O.D.
Exhibit 4.2B - Page 8
100
Exhibit 4.2C
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
List of Non-Shareholder Professionals
in Non-Standard Employment Contracts
1. None.
101
Exhibit 4.17
to Business Management Agreement among Millennium Vision, P.C.
(the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C. ("Business
Manager")
SHAREHOLDERS' UNDERTAKING TO MAINTAIN PRACTICE'S
CORPORATE EXISTENCE AND ENFORCEMENT OF COVENANTS
NOT TO COMPETE
As an inducement to the Business Manager to enter into this Business
Management Agreement with the Practice or as required in the Business
Management Agreement, each of the undersigned person(s), having an ownership
interest in the Practice, irrevocably and unconditionally covenants and agrees
to maintain in good standing the corporate existence of the Practice under the
laws of the State and to cause the Practice to use its best efforts to enforce
employment agreements (including those covenants not to compete requirements
described in Sections 4.1 and 4.2) against any individuals violating such
employment agreements (and covenants not to compete). The undersigned persons
further unconditionally covenant and agree to indemnify and hold harmless
Business Manager from and against any and all claims requirements, demands,
liabilities, losses, damages, costs and expenses, including reasonable
attorneys' fees, resulting in any manner from the failure of the Practice to
remain in good standing under the laws of the State or the failure of the
Practice to use its best efforts to enforce those employment agreements and
covenants not to compete described in Section 4.1 and 4.2 of such Business
Management Agreement, a copy of which has been delivered to the undersigned for
his review. The undersigned acknowledges that he or she has received adequate
consideration for the execution hereof. After a period of five (5) years from
December 1, 1996, this Undertaking may be assumed by a successor Shareholder or
Shareholders, in accordance with the terms and conditions set forth in Section
4.1 of the Business Management Agreement, whereupon the undersigned shall be
released to the extent of such assumption, provided that any such successor
Shareholder executes a form similar to this.
IN WITNESS WHEREOF, the undersigned(s) have executed this
Shareholders' Undertaking as of the day and year written opposite such
shareholder's name.
Date:
----------------- -------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
102
Exhibit 5.1
to Business Management Agreement among Millennium Vision,
P.C. (the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C.
("Business Manager")
Management Fee Percentage
1. The Management Fee Percentage shall be 36.7% percent.
103
Exhibit 6.4(f)
to Business Management Agreement among Millennium Vision,
P.C. (the "Practice"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., P.C.
("Business Manager")
SHAREHOLDERS' UNDERTAKING TO CARRY OUT
PRACTICE'S PURCHASE OBLIGATION
As an inducement to the Business Manager to enter into this Business
Management Agreement with the Practice or as required in Business Management
Agreement, each of the undersigned person(s), having an ownership interest in
the Practice, irrevocably and unconditionally covenants and agrees subject to
the limitations contained in the Business Management Agreement to (i) cause the
Practice to carry out the purchase obligation described in Section 6.4(f) of
the Business Management Agreement, (ii) personally execute and deliver the
personal guarantees and security agreements referred to in Section 6.4(f) of
such Business Management Agreement, a copy of which has been delivered to the
undersigned for his review, and (iii) execute the documents described in
Section 6.6. The undersigned acknowledges that he or she has received adequate
consideration for the execution hereof.
IN WITNESS WHEREOF, the undersigned(s) have executed this
Shareholders' Undertaking as of the day and year written opposite such
shareholder's name.
Date:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.