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EXHIBIT 10.20
MANAGEMENT AGREEMENT
PARTIES: ▇▇▇▇ ▇▇▇▇▇▇, M.D., INC. (the "Practice")
AMERIPATH, INC. ("Ameripath")
EFFECTIVE DATE: OCTOBER 15, 1996 (the "Effective Date")
RECITALS:
- AmeriPath is a Delaware corporation engaged in the business
of providing administrative and management services, to
pathology and dermatopathology groups;
- The Practice is a professional association comprised of
medical practitioners who engage in the practice of
pathology and dermatology ("Practice Providers");
- The Practice desires to enter into this Agreement with
AmeriPath for the provision of comprehensive business
management services to enhance the efficiency of its
operations and to allow its Practice Providers to
concentrate fully on providing quality medical services;
- The Practice has designated a Managing Physician to oversee
the day to day operations of the Practice's business and to
make administrative and certain other decisions on its
behalf;
- The Practice and AmeriPath desire to enter into this
agreement (the "Agreement") to provide a statement of their
respective rights and responsibilities during its Term (as
defined in Section VI-A herein below).
FOR GOOD AND VALUABLE CONSIDERATION, AmeriPath and the Practice
agree as follows:
I. PRELIMINARY STATEMENTS
A. RECITALS. The recitals set forth above are true and
accurate and are incorporated as part of this Agreement.
B. DEFINITIONS. Many capitalized terms used in this Agreement
are defined in Attachment I to this Agreement; however, capitalized terms used
in this Agreement are also defined in the text of this Agreement, and
Attachments II and III hereof.
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C. ATTACHMENTS. All attachments to this Agreements are
incorporated into this Agreement by reference. The attachments to this
Agreement are the following:
Attachment I: Definitions
Attachment II: Attorney in Fact
Attachment III: Miscellaneous Contractual Provisions
I. AMERIPATH SERVICES
AmeriPath shall on behalf of Practice and as a Practice Expense,
provide the Practice and the Practice Providers with the following services for
the dermatopathology practice conducted by the Practice (the "Lab Practice"):
A. STRATEGIC PLANNING AND GOALS. AmeriPath shall prepare, in
consultation with the Managing Physician, an annual Operating Plan (as defined
in Section IV-B), reflecting in reasonable detail anticipated Practice
Revenues, Practice Expenses, Allocated Expenses and Practice Provider staffing.
The Operating Plan shall include, among other things, information relating to
the growth and enhancement of the Lab Practice, a budget for the Lab Practice
and the Management Fee to be paid to AmeriPath.
B. EXPANSION OF PRACTICE. AmeriPath shall assist the Practice
in developing relationships and affiliations with physicians and other
specialists, hospitals, networks, health maintenance organizations and
preferred provider organizations. Subject to the terms of this Agreement, each
of the Practice and AmeriPath shall cooperate and use their respective best
efforts to expand the Lab Practice.
C. MANAGED CARE RELATIONSHIPS. AmeriPath, together with the
Managing Physician, shall evaluate, negotiate, and administer managed care
contracts and other third party payor contracts on behalf of the Lab Practice
and its Practice Providers.
D. FACILITY RELATIONSHIPS. AmeriPath, together with the
Managing Physician, shall evaluate, negotiate, and administer all hospital and
other medical facility contracts on behalf of the Lab Practice and its Practice
Providers.
E. ESTABLISHMENT OF FEES. AmeriPath shall recommend, but
shall not set, fees, charges, premiums or other amounts due in connection with
services and goods provided by the Lab Practice. The Steering Committee (see
Section IV) may adopt recommendations in its reasonable discretion on behalf of
the Practice and its Practice Providers. The Practice shall retain sole
authority to decide how physician compensation will be divided among individual
physicians.
F. PRACTICE MANAGEMENT SERVICES. AmeriPath shall, in
consultation with the Managing Physician, assess business activity including
product line analysis, outcomes monitoring and customer satisfaction in respect
of the Lab Practice. AmeriPath shall develop systems to track
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revenues, expenses, cost accounting, utilization, quality assurance, physician
productivity and customer satisfaction in respect of the Lab Practice.
G. BUSINESS OFFICE AND SUPPORT SERVICES. With the prior
approval of the Management Committee, AmeriPath may, in consultation with the
Managing Physician, provide computer, bookkeeping, billing and collection,
accounts receivable and accounts payable services necessary for the management
of the Lab Practice pursuant to this Agreement and in accordance with the
Operating Plan. Billing and collections shall initially be performed by the
Practice, but may be performed at AmeriPath's option, by AmeriPath at a later
date. AmeriPath may also order and purchase on behalf of the Lab Practice
medical and office supplies required in the day-to-day operation of the Lab
Practice as determined by the Managing Physician consistent with the Operating
Plan. However, the Practice shall order, purchase, stock, and monitor the
inventory of pharmaceuticals and other medical supplies, substances, or items
whose purchase, maintenance, or security require licensure as a health-care
provider or require a permit, registration, certification, or identification
number that requires licensure or certification as a health-care provider.
AmeriPath shall provide access to management information systems services to
the Lab Practice, including risk contracting systems services. AmeriPath may
also arrange laundry, waste collection, and other necessary operational
services for the Lab Practice in accordance with applicable laws.
H. PROFESSIONAL AND CONSULTING SERVICES. AmeriPath shall
arrange for or render business and financial management consultation and advice
reasonably requested by the Managing Physician and directly related to the
operations of the Lab Practice pursuant to this Agreement. Except as
contemplated by the Operating Plan, AmeriPath shall not be responsible for any
services requested by or rendered to any individual, employee or agent of the
Practice, or any Practice Provider, not directly related to Lab Practice
operations.
I. FINANCIAL STATEMENTS. AmeriPath shall prepare Lab Practice
profit and loss and income statements, in accordance with the manner and form
in which AmeriPath normally keeps its accounts, books and records, and in
accordance with applicable laws. The statements shall reflect Practice
Revenues generated by or on behalf of the Practice and shall contain a
comparison of actual and budgeted Practice Revenues and expenses. AmeriPath
shall provide the Managing Physician with monthly statements within thirty (30)
days after the end of each month and shall provide a year-end statement within
ninety (90) days after the end of the calendar year.
III. PRACTICE OBLIGATIONS
A. EXCLUSIVITY. The Practice agrees that during the Term of
this Agreement it will not retain, engage or employ, directly or indirectly,
any other entity or individual to provide the services for the Lab Practice for
which it is contracting with AmeriPath.
B. PROFESSIONAL STANDARDS. Medical services shall be
performed solely by, or under the direct supervision of, the Practice
Providers. The Practice shall have complete and absolute control over the
methods by which the Practice, and Practice Providers practice medicine and/or
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render the professional services which they are licensed to provide under the
laws of the states in which they are practicing and Federal Law. The Practice
shall require that Practice Providers comply with applicable ethical standards,
laws and regulations. The Practice shall, with the assistance of AmeriPath (if
so requested by the Managing Physician), resolve utilization review or quality
assurance issues which may arise. In the event that disciplinary actions or
professional liability actions are initiated against any Practice Provider, the
Practice shall immediately inform AmeriPath of the action and the underlying
facts and circumstances. The Practice shall implement and maintain a program to
monitor the quality and utilization of medical care, and AmeriPath shall render
administrative assistance to the Lab Practice, as requested by the Managing
Physician.
C. MANAGED CARE ARRANGEMENTS. The Practice shall cooperate
with AmeriPath in the development and operation of managed care arrangements
for the Lab Practice. The Practice shall participate as a provider and in the
administrative operation of integrated delivery systems and managed care
arrangements for the Lab Practice. The Practice and its Practice Providers
agree to comply with the quality assurance and utilization review programs of
managed care arrangements for the Lab Practice.
D. CONTINUING MEDICAL EDUCATION. The Practice shall ensure
that each of its Practice Providers participates in continuing medical
education activities, as necessary to remain current in their respective
specialties, including, but not limited to, the minimum continuing medical
education requirements imposed by applicable laws and policies of applicable
specialty boards.
E. PHYSICIAN POWERS OF ATTORNEY AND BILLING. At such times as
AmeriPath performs Billing and Collection functions, the Practice shall appoint
AmeriPath to act as agent in the billing and collection of all Practice
Revenues, and shall require all Practice Providers to appoint AmeriPath as
attorney-in-fact for the Practice and each Practice Provider, as more
specifically set forth in Attachment II. The Practice shall cooperate and
shall cause its Practice Providers to cooperate with AmeriPath in all matters
relating to the billing and collection of all Practice Revenues. In this
regard, each Practice Provider shall review and approve the reports and other
information required to support complete and accurate bills. Additionally, the
Practice and its Practice Providers will provide such necessary support to
appeal or contest any denials of claims or other regulatory issues.
F. ADDITIONAL PRACTICE PROVIDERS. When the Practice desires
to add or change a Practice Provider for the Lab Practice, AmeriPath shall
provide a business analysis of the prospective change in the composition of the
Lab Practice. Additional Practice Providers for the Lab Practice (the
"Additional Practice Providers") shall be added to the Lab Practice as follows:
the Practice shall review and approve the credentials and the medical practices
of the prospective Additional Practice Provider. AmeriPath shall review the
business operations, financial condition and results of operations of the
prospective Additional Practice Provider and shall provide such information to
the Managing Physician. The decision to admit an Additional Practice Provider
shall be subject to the approval of the Steering Committee.
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G. ADDITIONAL PRACTICES. AmeriPath may, in its discretion,
seek to add additional practices for Dermatopathology services (each such
Practice being an "Additional Practice") to this Agreement. If AmeriPath
desires to add an Additional Practice, AmeriPath shall provide to the Steering
Committee a business analysis of the Additional Practice, including business
operations, financial condition and results of operations. The decision to
admit an Additional Practice shall be subject to the approval of the Steering
Committee. After an agreement to add an Additional Practice has been reached,
the Practice and AmeriPath shall enter into an amendment (the "New Practice
Amendment") to this Agreement. The New Practice Amendment shall include the
understanding of the parties with respect to AmeriPath's compensation and other
issues agreed upon by the Steering Committee and the Additional Practice. The
New Practice Amendment shall obligate the Additional Practice to be bound by
the New Practice Amendment.
H. PRACTICE EXPENSES. The Practice shall be solely
responsible for the payment of all Practice Expenses.
I. PRACTICE ORGANIZATIONAL DOCUMENTS. The Practice agrees
that it shall not, without the written consent of AmeriPath: (a) modify or
amend the Practice Organizational Documents (as defined in Attachment I); (b)
admit New Practice Providers, except as provided for in this Agreement; (c)
remove the Managing Physician; or (d) terminate or cancel any hospital
contracts (or similar contracts for the provision of services) under this
Agreement. Further, the Practice agrees that it shall consult with AmeriPath
prior to the termination or release of any Practice Provider from his or her
obligations.
J. STAFFING OF FACILITIES BY THE PRACTICE. To the extent that
the Practice or the Practice Providers are responsible for staffing facilities
provided by AmeriPath, the Practice shall use reasonable efforts to provide
adequate staffing to ensure that medical services are provided in a manner
consistent with applicable community and medical specialty standards. From
time to time AmeriPath may acquire new facilities that it wishes the Practice
to staff. The Practice agrees that in the event AmeriPath acquires or develops
a new facility that it wishes the Practice to staff, the Practice will use
reasonable efforts to staff the facility with Additional Practice Providers and
other new personnel. The parties agree that the Operating Plan will be revised
as necessary to accommodate staffing of the new facility.
K. EQUIPMENT. The Practice shall advise AmeriPath on the
maintenance, repair and proper operation of medical equipment. This obligation
shall relate to the medical functionality of the equipment. Upon receipt of
such advice, AmeriPath shall cause the medical equipment for the Lab Practice
to be maintained in good operating condition.
L. MEDICAL RECORDS. The Practice shall be responsible for the
preparation of, and direct the contents of, patient medical records. All
patient medical records shall remain the property of the Practice. The
Practice shall be responsible for proper documentation of medical services
provided by the Practice and the Practice Providers.
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IV. STEERING COMMITTEE
A. CREATION AND GENERAL DUTIES OF STEERING COMMITTEE.
AmeriPath and the Practice shall establish a Steering Committee composed of
three members, one of which shall be the Managing Physician and one of which
shall be designated by AmeriPath and one shall be designated by the Practice's
Board of Directors. The Steering Committee shall meet periodically and at the
reasonable request of either party. The Steering Committee shall consider,
review, determine and approve the following matters as they relate to the
operation of the Lab Practice: (i) the Operating Plan; (ii) employment and
recruitment of Additional Practice Providers; (iii) long term strategic
planning; (iv) establishment and maintenance of relationships with health care
providers and payors; (v) the fee schedule for services and items provided by
the Lab Practice; and (vi) approval of all marketing and advertising of
services performed by the Lab Practice or Practice Providers.
B. OPERATING PLAN. One of the Steering Committee's primary
responsibilities shall be the approval of a Lab Practice Operating Plan (the
"Operating Plan"). AmeriPath shall, not less often than one time each fiscal
year, develop a proposed Operating Plan. The proposed Operating Plan shall be
submitted to the Steering Committee for approval. When Approved by the
Steering Committee, both AmeriPath and the Managing Physician shall, as their
responsibilities are allocated in this Agreement, use reasonable efforts to
implement the Operating Plan. The Operating Plan shall set forth the estimated
income and expenditures of the Lab Practice for the period covered, such income
and expenditures to be set forth in reasonable detail. The Practice shall
retain sole authority for proposing the compensation levels and manner of
distribution of physician income among individual physicians. Such proposals
shall be included in the budget of the Lab Practice which shall be incorporated
into the Operating Plan as approved by the Steering Committee. The Operating
Plan shall include Practice Expenses, Allocated Expenses and AmeriPath
compensation. The Steering Committee may revise, from time to time, the
Operating Plan as it determines to be necessary or desirable (as revised, the
"Revised Operating Plan"). AmeriPath and the Managing Physician shall be
authorized without the need for further approval by AmeriPath, the Steering
Committee or the Practice Providers, to make the expenditures and incur the
obligations provided for in a Revised Operating Plan. Additionally, AmeriPath
or the Managing Physician may make expenditures and incur obligations that
differ from an Operating Plan, but incurred in the ordinary course of business.
For example, an increase in professional liability premiums shall create a
variance in the Operating Plan which may be incurred without a revision to the
Operating Plan.
V. FINANCIAL MATTERS
A. AMERIPATH COMPENSATION.
1. GENERAL. The compensation provided herein is
expected to provide AmeriPath with fair market
value payment commensurate with the services it
provides, its capital investment, use of its
tradename and its expertise in laboratory and
professional practice management. AmeriPath
shall, subject to compliance with any applicable
laws, receive compensation equal to all Practice
Revenues in excess of Practice Expenses and
Allocated Expenses paid to AmeriPath.
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2. PRACTICE EXPENSES AND ALLOCATED EXPENSES. All
Practice Expenses (as defined in Attachment I
hereto), including the compensation of Practice
Providers, shall be the sole responsibility of
Practice and shall be paid by the Practice out of
its first available Practice Revenues. Allocated
Expenses (as defined in ATTACHMENT I hereto)
incurred by AmeriPath in the course of the
performance of its duties under this Agreement on
behalf of or as agent for the Practice shall be
paid to AmeriPath. Allocated Expenses may include
an allocable portion of reasonable corporate
overhead of AmeriPath. Allocated Expenses shall
be billed to the Practice at their actual cost to
AmeriPath. An operating budget for Practice
Expenses and Allocated Expenses shall be reviewed
at least annually and shall be set forth in the
Operating Plan.
B. REIMBURSEMENT OF EXPENSES. AmeriPath may, from time to
time, incur Practice Expenses which are a part of the Operating Plan, a Revised
Operating Plan, or are Practice Expenses incurred in the ordinary course of
business. AmeriPath shall be entitled to be reimbursed by the Practice for
these expenses when incurred.
C. PRACTICE BANK ACCOUNT, PAYMENT OF FEES AND PAYMENT OF
EXPENSES. The Practice shall establish a bank account for the deposit of all
Practice Revenues arising from the Lab Practice (the "Practice Bank Account").
AmeriPath shall have a security interest in the Practice Bank Account pursuant
to this Section V. Additionally, it is understood and agreed that AmeriPath
may assign its security interest and all other interests that it may have in
the Practice Bank Account to its lender or lenders. Should AmeriPath assign
its interest, its assignee shall have a first lien on the Practice Bank
Account. AmeriPath shall have access to the Practice Bank Account solely for
the purposes stated herein. In connection herewith and throughout the Term,
Practice hereby grants to AmeriPath an exclusive special power of attorney for
the purposes herein and appoints AmeriPath as Practice's exclusive true and
lawful agent and attorney-in-fact, and AmeriPath hereby accepts such special
power of attorney and appointment, to deposit into the Practice Bank Account
all funds, fees, and revenues generated from the Lab Practice's provision of
Dermatopathology services and collected by AmeriPath, and to make withdrawals
from Practice Bank Account for payments specified in this Agreement and as
requested from time-to-time by Practice. Notwithstanding the exclusive special
power of attorney granted to AmeriPath hereunder, Practice may, with notice to
AmeriPath, draw checks on the Practice Bank Account; provided, however, that
Practice shall neither draw checks on the Practice Bank Account nor request
AmeriPath to do so if the balance remaining in the Practice Bank Account after
such withdrawal would be insufficient to enable AmeriPath to pay on behalf of
Practice any Practice Expense attributable to the operations of Practice or to
the provision of medical services, and/or any other obligations of Practice.
Disbursements made from the Practice Bank Account consent shall be consistent
with the type and amount of expenditures authorized by the Operating Plan.
Limits on authority to sign checks and purchase orders shall be mutually agreed
upon by AmeriPath and the Managing Physician.
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D. COLLATERAL. As collateral security for the payment of all
amounts owed to AmeriPath pursuant to this Agreement, Practice grants to
AmeriPath a security interest in all tangible and intangible assets of the
Practice used exclusively for the Lab Practice including Practice Revenues of
the Lab Practice which may be created or arise during the Term, together with
all proceeds regardless of the manner in which the entitlement to payment for
such Lab Practice Revenues exists whether as accounts, accounts receivable,
notes receivable or other evidence of entitlement to such Lab Practice Revenues
and all of its rights, title and interest (including right to control the
same), if any, in the Practice Bank Account and the sums on deposit
(collectively, the "Collateral") to the extent the same are not otherwise
assigned to AmeriPath. In granting this security interest, the Practice agrees
to the following, subject in each case to the obligations of the Practice and
the rights of Lenders under the Joinder dated as of October 15, 1996 to the
Credit Agreement dated as of May 29, 1996, among AmeriPath, Subsidiaries of
AmeriPath, the Lenders party thereto and the First National Bank of Boston, as
Agent: (i) this Agreement shall create and constitute a valid and perfected
first priority security interest in the Collateral enforceable against all
parties; (ii) the Practice has and shall continue to have good indefeasible and
merchantable title to and ownership of the Collateral free and clear of all
liens, other than liens created by AmeriPath or any AmeriPath Affiliate; (iii)
this grant of a security interest in the Collateral shall not result in a
violation of any other agreement to which Practice is or becomes a party; and
(iv) the Practice shall take all action necessary to perfect AmeriPath's
security interest in the Collateral, including the execution of financing
statements and authorization to file the same in the appropriate recording
office. AmeriPath and the Practice agree to execute such further documents and
instruments as may be deemed necessary or desirable, in AmeriPath's sole
discretion, to effect the provisions of this Section.
E. REMEDIES FOR NON-PAYMENT. AmeriPath shall have all rights
and remedies of a secured party and all rights, remedies, securities and liens
of the Practice with respect to the Collateral including, but not limited to,
extending the time of payment of, compromising, or settling for cash, credit,
or otherwise upon any terms, any part or all of the Collateral, but shall not
be liable for any failure to collect or enforce the payment thereof. AmeriPath
is authorized by the Practice, except as otherwise prohibited by applicable
law, to take possession of, and endorse in the name of the Practice any notes,
checks, money orders, drafts, cash, insurance payments and any other
instruments received in payment of the Collateral, or any part thereof; to
collect, ▇▇▇ for and give satisfactions for moneys due on account of the
Collateral; and to withdraw any claims, suits or proceedings pertaining to, or
arising out of, AmeriPath's and/or the Practice's rights to the Collateral.
AmeriPath's costs of collection and enforcement, including attorneys' fees and
out-of-pocket expenses, shall be borne solely by the Practice. The Practice
agrees that AmeriPath shall be permitted to place its representatives in the
Medical Offices, with full authority to take possession of and retain for
AmeriPath the books and records of the Lab Practice with reference to the Lab
Practice's operations pursuant to this Agreement with respect to the
Collateral.
F. RIGHT OF OFFSET. Notwithstanding any other provision in
this Agreement, AmeriPath is entitled to offset against any sums owed by
AmeriPath to the Practice any amounts payable or reimbursable to AmeriPath
under this Agreement.
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G. LEGAL LIMITATION ON ASSIGNMENT. This Agreement shall not
constitute an assignment of Practice Revenues to the extent that such
assignment is prohibited under applicable law. To the extent Practice Revenues
are not assignable, the Practice agrees that it shall promptly deliver
non-assigned Practice Revenues of the Lab Practice to AmeriPath.
VI. TERMS AND TERMINATIONS
A. TERM. The initial term of this Agreement shall be for a
period of forty (40) years commencing on October 15, 1996 and ending on October
14, 2036 (the "Initial Term"). This Agreement shall be extended for separate
and successive five (5) year periods (each such five (5) year period shall be
referred to as an "Extended Term" and the Initial Term and any Extended Term
shall be referred to in this Agreement as the "Term") unless either party
provides the other party notice not less than sixty (60) days prior to the end
of the Initial Term or an Extended Term, unless the Practice has defaulted
under the terms of this Agreement. The same terms and conditions of this
Agreement shall apply to an Extended Term unless the Practice and AmeriPath
mutually agree to alter the terms and conditions hereof with a writing signed
by each party hereto. All New Practice Amendments shall terminate at such time
as this Agreement terminates.
B. TERMINATION. A party (the "Terminating Party") may
terminate this Agreement on the basis of the following:
1. The other party breaches any material term or
condition of this Agreement, and the breach continues for sixty (60) days after
the receipt of written notice specifying the breach by the party which did not
perform or breached.
2. AmeriPath may terminate this Agreement if the
Practice is suspended or prohibited from participating in the Medicare or
Medicaid programs or excluded from entering into healthcare provider agreements
with any material portion of the managed care or healthcare insurance industry;
or (ii) the Practice breaches any material term of this Agreement.
C. EFFECTS OF AND OBLIGATIONS UPON TERMINATION. Upon the
termination or expiration of this Agreement: (i) neither party shall be
discharged from any previously accrued obligation which remains outstanding;
(ii) any sums of money owing by one party to the other shall be paid
immediately, prorated through the effective date of termination or expiration;
(iii) the Practice shall return to AmeriPath all originals and copies of any
Confidential Information in the possession of the Practice or any other person
or entity to whom it has delivered originals and/or copies; (iv) the Practice
and AmeriPath shall perform matters as are necessary to wind up their
activities under this Agreement in an orderly manner, including providing to
the Practice patient billing records on paper or electronic data; and (v) each
party shall have the right to pursue other legal or equitable relief as may be
available depending upon the circumstances of the termination.
VII. LEGAL COUNSEL
The Practice agrees to retain legal counsel recommended by
AmeriPath with respect to Lab Practice matters in which the interests of the
Practice are not adverse to AmeriPath or its business in
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any significant respect and further agrees to waive any conflicts of interest
in transactional matters which may exist for such recommended legal counsel
with respect to AmeriPath.
VIII. PRACTICE OF MEDICINE.
The parties acknowledge that AmeriPath is not authorized or
qualified to engage in any activity which constitutes the practice of medicine
and nothing required herein to be shall be construed as the practice of
medicine by AmeriPath. To the extent any act or service required to be
performed or provided by AmeriPath is construed or deemed by any governmental
authority, agency or court to constitute the practice of medicine, AmeriPath
shall be released from any obligation to provide such act or service and the
provision for such required act or service shall be deemed waived and forever
unenforceable without otherwise affecting the terms of this Agreement.
Practice and AmeriPath have duly executed this Agreement on the
day and year indicated above.
▇▇▇▇ ▇▇▇▇▇▇, M.D., INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇, M.D.
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇, M.D.
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Its: President
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AMERIPATH, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Its : Vice President
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ATTACHMENT I
DEFINITIONS
AGREEMENT means this agreement and any subsequent amendments
thereto.
ALLOCATED EXPENSES means the expenses relating to the operations of
the facilities of the Lab Practice and the
administrative expenses incurred by AmeriPath on
behalf of the Lab Practice in the performance of
AmeriPath's duties under this Agreement, including
the following: billing services (including
personnel), marketing, advertising, promotion,
allocated corporate overhead, legal expenses,
service of laboratory and other expenses as may be
approved from time to time by the Steering
Committee, all as permitted to be incurred in
accordance with this Agreement.
DOCUMENTS means the articles of incorporation and bylaws of
the Practice.
MANAGING PHYSICIAN means ▇▇▇▇ ▇▇▇▇▇▇, M.D., for so long as he is so
designated by Practices Board of Directors to
manage the administrative and medical functions of
the Practice.
OPERATING PLAN means the Practice Operating Plan referred to in
Section IV.B.
PRACTICE BANK ACCOUNT means the bank account referred to in Section V.C.
of which the Practice is the owner.
PRACTICE EXPENSES means the following expenses: Practice Providers'
compensation expenses, professional liability
insurance, continuing medical education, benefits,
dues and subscriptions, automobiles, facility
leases, repairs and maintenance, telephones and
pagers, utilities, billing services, courier
services, legal expenses, travel and
entertainment, outside medical consultants,
license fees and taxes, all expenses identified in
this Agreement as Practice Expenses, all expenses
identified in this Agreement as incurred by
Ameripath on behalf of Practice and other expenses
approved from time to time by the Steering
Committee, all as permitted to be incurred in
accordance with this Agreement and any New
Practice Amendment (as defined in Section III.G.).
Attachment I-1
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PRACTICE PROVIDERS means individuals who are duly licensed to
practice medicine and who are employed by the
Practice, or other individuals who are under
contract with the Practice to provide physician
services to patients of the Practice.
PRACTICE REVENUES means all revenues generated by or on behalf of
the Practice, after the date hereof, as a result
of professional medical services furnished to
patients, ancillary services provided to patients,
pharmaceuticals and other items and supplies sold
to patients and other fees or income generated by
the Practice or Practice Providers rendered in an
inpatient or outpatient setting and regardless of
whether rendered to health maintenance
organization, preferred provider organization,
Medicare, Medicaid or other patients, including,
but not limited to, payments received under
capitation arrangements, less account adjustments
for uncollectible accounts, discounts, Medicare,
Medicaid, workers' compensation, professional
courtesy discounts and other write-offs.
Attachment I-2
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ATTACHMENT II
APPOINTMENT OF AMERIPATH AS ATTORNEY IN FACT
On behalf of and for the account of Practice, AmeriPath shall
assist Practice in Practice's establishment and maintenance of credit and
billing and collection policies and procedures, and shall coordinate and
supervise Practice personnel to ensure the timely billing and collection of all
professional and other fees for all billable pathology services provided by
Practice or Physicians. AmeriPath shall advise and consult with Practice
regarding the fees for pathology services provided by Practice; it being
understood, however, that Practice shall establish the fees to be charged for
pathology services and that AmeriPath shall have no authority whatsoever with
respect to the establishment of such fees. In connection with the billing and
collection services to be provided hereunder, and throughout the term of this
Agreement, Practice hereby grants to AmeriPath an exclusive special power of
attorney and appoints AmeriPath as Practice's exclusive true and lawful agent
and attorney-in-fact, and AmeriPath hereby accepts such special power of
attorney and appointment, for the following purposes:
1. To supervise and coordinate the billing of Practice's
patients, in the name of Practice and on behalf of
Practice, as applicable, for all billable pathology
services provided by Practice to patients.
2. To supervise and coordinate the billing in Practice's name
and on Practice's behalf, as applicable, all claims for
reimbursement or indemnification from Blue Shield/Blue
Cross, insurance companies, Medicare, Medicaid, and all
other third party payors or fiscal intermediaries for all
covered billable pathology services provided by Practice to
patients.
3. To ensure the collection and receipt in AmeriPath's name
and for AmeriPath's account all accounts receivable of
Practice purchased by AmeriPath, and to deposit such
collections in an account selected by AmeriPath and
maintained in AmeriPath's name.
4. To ensure the collection and receipt in Practice's name and
on Practice's behalf, as applicable, of all accounts
receivable generated by such ▇▇▇▇▇▇▇▇ and claims for
reimbursement that have not been purchased by AmeriPath, to
administer such accounts including, but not limited to, (i)
extending the time of payment of any such accounts for
cash, credit or otherwise; (ii) discharging or releasing
the obligors of any such accounts; (iii) with the consent
of the Steering Committee, suing, assigning or selling at a
discount such accounts to collection agencies; or (iv) with
the consent of the Steering Committee, taking other
measures to require the payment of any such accounts.
Attachment II-1
14
5. To deposit all amounts collected in Practice's name and on
behalf of Practice into Practice Bank Account which shall
be and at all times remain in Practice's name. Practice
covenants to transfer and deliver to AmeriPath for deposit
into Practice Bank Account or itself to make such deposit
of all funds received by Practice from patients or third
party payors for pathology services. Upon receipt by
AmeriPath of any funds from patients or third party payors
or from Practice pursuant hereto for pathology services,
AmeriPath shall immediately deposit same into the Practice
Bank Account. AmeriPath shall disburse such deposited
funds to creditors and other persons on behalf of Practice,
maintaining records of such receipt and disbursement of
funds as directed by Practice.
6. To take possession of, endorse in the name of Practice, and
deposit into the Practice Bank Account any notes, checks,
money orders, insurance payments, and any other instruments
received in payment for pathology services.
7. To sign checks, drafts, bank notes or other instruments on
behalf of Practice, and to make withdrawals from the
Practice Bank Account for payments specified in this
Agreement and as requested from time to time by Practice.
Upon request of AmeriPath, Practice shall execute and deliver to the financial
institution wherein the Practice Bank Account is maintained, such additional
documents or instruments as may be necessary to evidence or effect the special
and limited power of attorney granted to AmeriPath by Practice pursuant to this
Agreement. The special and limited power of attorney granted herein shall be
coupled with an interest and shall be irrevocable except with AmeriPath's
written consent. The irrevocable power of attorney shall expire on the later
of when this Agreement has been terminated, when all accounts receivable
purchased by AmeriPath have been collected, or when all management fees due to
AmeriPath have been paid. If AmeriPath assigns this Agreement in accordance
with its terms, then Practice shall execute a power of attorney in favor of the
assignee.
Attachment II-2
15
ATTACHMENT III
MISCELLANEOUS CONTRACTUAL PROVISIONS
1. ADDITIONAL ACTS. Each party agrees to perform any further
acts and to execute and deliver any
documents which may be reasonably
necessary to carry out the provisions of
this Agreement.
2. CONTRACT CONSTRUCTION, INTERPRETATION
AND ENFORCEMENT PROVISIONS.
(a)Assignment Neither party may assign this Agreement
without the other's written consent.
Nevertheless: AmeriPath may assign this
Agreement to a parent, subsidiary or
affiliate. This Agreement shall be
binding on and shall inure to the
benefit of the parties to this
Agreement, and their successors and
permitted assigns. Subject to the
foregoing sentence, no person or entity
not a party to this Agreement shall have
any right under or by virtue of this
Agreement, except for AmeriPath, Inc. as
an intended third party beneficiary of
this Agreement.
(b)Captions The captions or headings in this
Agreement are made for convenience and
general reference only and shall not be
construed to describe, define or limit
the scope or intent of the provisions of
this Agreement.
(c)Costs of
Enforcement In the event that either party files
suit in any court against the other
party to enforce the terms of or to
obtain performance under this Agreement,
the prevailing party shall be entitled
to recover all reasonable costs,
including reasonable attorneys' fees,
from the other party as part of any
judgment in the suit. The term
"prevailing party" means the party in
whose favor final judgment after appeal
(if any) is rendered with respect to the
claims asserted in the complaint.
"Reasonable attorneys' fees" are those
attorneys' fees actually incurred in
obtaining a judgment in favor of the
prevailing party.
(d)Counterparts The parties may execute this Agreement
in several counterparts, each of which
shall be deemed to be an original, and
counterparts shall constitute and be one
and the same instrument.
Attachment III-1
16
(e) Governing Law. This Agreement shall be interpreted,
construed and enforced in accordance
with the laws of the State of Ohio,
applied without giving effect to any
conflicts of law principles.
(f) Modifications. This Agreement contains the entire
agreement of the parties with respect
to the subject matter hereof and
supersedes any prior or
contemporaneous negotiations,
understandings or agreements between
the parties, written or oral, with
respect to the transactions
contemplated by this Agreement. This
Agreement may not be changed or
terminated orally but may only be
changed by an agreement in writing
signed by AmeriPath and the Practice;
provided, however, that this Agreement
shall not be modified without the
consent of the Managing Physician for
so long as ▇▇▇▇ ▇▇▇▇▇▇, M.D., shall be
the Managing Physician, or AmeriPath,
Inc., shall have continuing financial
obligations (contingent or otherwise)
owing to ▇▇. ▇▇▇▇▇▇.
(g) Notices The parties to this Agreement shall
give notice under this Agreement by
U.S. mail, postage prepaid, by hand
delivery or by overnight express,
charges prepaid. Notices shall be
addressed as follows:
If to the Practice:
▇▇▇▇ ▇▇▇▇▇▇, M.D., Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, M.D.
If to AmeriPath:
AmeriPath, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. New, President
or other addresses as furnished in writing by a party to the other party. All
notices shall be considered received when received by the addressee, if by
mail, when hand delivered or one business day after delivery to the overnight
courier.
(h) Severability. A determination by a court of
competent jurisdiction that a
provision or part of any provision of
this Agreement is invalid or
unenforceable shall not affect the
remaining parts or provisions of this
Agreement which shall continue in full
force and effect.
Attachment III-2
17
3. LEGAL EVENTS TRIGGERING
CONTRACT MODIFICATION OR TERMINATION
(a)Changes in Reimbursement. In the event that Medicare,
Medicaid, Blue Shield or any other third party
payor, or any other Federal, state or local
laws, rules, regulations or interpretations, at
any time during the Term prohibit, restrict or
in any way materially and adversely change the
method or amount of reimbursement or
compensation for either party provided for in
this Agreement, then the parties shall negotiate
in good faith to amend this Agreement to provide
for payment of compensation in a manner
consistent with such changes, taking into
account any materially adverse change in
reimbursement or payment for physician services.
If the parties cannot reach agreement on an
amendment prior to the effective date of the
change, the parties agree to jointly select a
mediator and share equally in the cost of the
mediation. If mediation does not resolve such
dispute, then the matter shall be settled
exclusively by binding arbitration, which shall
be conducted in Broward County, Florida, in
accordance with the National Health Lawyer's
Association, Alternative Dispute Resolution
Service, Rules of Procedure for Arbitration. The
expenses of such arbitration shall be borne
equally by the parties, provided that each party
shall pay for the cost and its own experts,
evidence, and attorney's fees (unless otherwise
directed by the arbitrator).
(b)Enactment or Interpretation of Relevant Statutes and
Regulations. In the event any state or federal
laws or regulations, now existing or enacted or
promulgated after the date hereof, are
interpreted by judicial decision, a regulatory
agency, or legal counsel acceptable to both
AmeriPath and the Practice in such a manner as
to indicate that this Agreement or any provision
hereof may be in violation of such laws or
regulations, the Practice and AmeriPath shall
amend this Agreement as necessary to preserve
the underlying economic and financial
arrangements between the Practice and AmeriPath
and without substantial economic detriment to
any party. If such an amendment is not
possible, either party shall have the right to
terminate this Agreement.
Attachment III-3
18
4. INDEPENDENT CONTRACTOR STATUS.
The Practice and AmeriPath are to perform and
exercise their rights and obligations under this
Agreement as independent contractors.
AmeriPath's sole function under this Agreement
is to provide services, as requested, in a
competent and satisfactory manner, exercising
reasonable care in the performance of all such
duties. AmeriPath shall not become liable for
any of the obligations, liabilities, debts or
losses of the Practice unless otherwise
specifically provided by this Agreement.
AmeriPath shall have no liability whatsoever for
damages suffered on account of the willful
misconduct or negligence of any employee, agent
or independent contractor (other than AmeriPath)
of the Practice. Each party shall be solely
responsible for compliance with all state and
federal laws pertaining to employment taxes,
income withholding, unemployment compensation
contributions and other employment related
statutes regarding their respective employees,
agents and servants. In the event that any court
or regulatory authority (or AmeriPath, in good
faith) determines that the relationship
established by this Agreements creates an
employment relationship, the parties shall
negotiate in good faith to reach an arrangement
involving AmeriPath and the then current
Practice Providers which substantially preserves
for the parties the benefits of this Agreement.
If such an arrangement cannot be reached,
AmeriPath may terminate this Agreement upon
thirty (30) days prior written notice to the
Practice.
5. PROHIBITION AGAINST DISCRIMINATION.
The Practice and AmeriPath agree that, in
fulfilling their respective obligations and
duties under this Agreement, they shall not
discriminate against any individual on the basis
of race, religion, age, sex, disability or
national origin.
6. USE OF NAMES. Subject to the approval of the Managing
Physician, which approval shall not be
unreasonably withheld, AmeriPath may include the
name of the Practice, the Practice Providers and
the Practice Providers in any brochures,
promotional materials or the like relating to
AmeriPath.
Attachment III-4
19
7. SUBORDINATION. AmeriPath and the Company, for themselves and
on behalf of their respective successors and
assigns, hereby agree, for the benefit of ▇▇▇▇
▇▇▇▇▇▇, the Practice Providers, ▇▇▇▇ ▇▇▇▇▇▇ &
Associates, M.D., Inc. and their respective
successors and assigns (collectively, the "Other
Creditors") that AmeriPath's right to payment of
compensation and reimbursement of expenses
pursuant to this Agreement (the "Junior
Obligations") shall be junior and subordinate in
right of payment to the prior final payment in
full, in cash, of all amounts owed (whether
fixed or contingent, due or to become due) under
the Other Agreements (as defined in paragraph 8,
hereunder) and employment contracts with other
Practice Providers (collectively, the "Senior
Obligations"). AmeriPath agrees that it will
not take or demand, and the Company agrees that
it will not make, any payment of or on account
of any Senior Obligations, without the prior
written consent of the Other Creditors, prior to
final payment in full, in cash, of all Junior
Obligations.
8. CONFLICTING PROVISIONS.
Nothing in this Agreement shall expand the
obligations of or impair any rights of the
Managing Physician under his employment
agreement with the Company, and if any term or
provision in this Agreement conflicts with or is
consistent with any term or provision in the
employment agreement, the term or provision in
the employment agreement shall control. Nothing
in this Agreement shall affect in any way any
obligations of the Practice or AmeriPath under
the Stock Purchase Agreement pursuant to which
the Practice was acquired, the contingent notes
issued pursuant to the Stock Purchase Agreement,
the Employment Agreement between the Practice
and the Managing Physician, the Option Agreement
referred to in the Employment Agreement, or any
other agreement to which the Practice or
AmeriPath, on the one hand, and ▇▇▇▇ ▇▇▇▇▇▇ or
▇▇▇▇ ▇▇▇▇▇▇ & Associates, M.D., Inc., on the
other hand, are parties (collectively, the
"Other Agreements"), and if any term or
provision in this Agreement conflicts with or is
consistent with any term or provision in any
such Other Agreement, the term or provision in
such Other Agreement shall control the rights
and obligations of ▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇ &
Associates, M.D., Inc., as applicable.
Attachment III-5