Exhibit 99.4
TURNKEY LICENSE AND SERVICES AGREEMENT
PREMIER P.E.T. OF LONG ISLAND, LLC
and
LONG ISLAND POSITRON EMISSION TOMOGRAPHY SCANNING, P.C.
TABLE OF CONTENTS
-----------------
I. Preliminary Statements..........................................................1
A. Recitals..........................................................................1
B. Definitions.......................................................................1
C. Attachments.......................................................................1
D. Sole Manager......................................................................2
E. Qualifications of Practice Physicians.............................................2
F. Nature Of Relationships...........................................................2
1. PC Employees......................................................................2
2. PC Internal Responsibility........................................................2
3. Independent PC Practice...........................................................3
4. Retained Rights of LLC............................................................3
II. LLC's Obligations for Space, Equipment, Personnel, Supplies and Services........3
A. Strategic Planning and Goals......................................................3
B. Expansion of the PC...............................................................3
C. Contract Relationships............................................................3
D. Establishment of Fees.............................................................3
E. LLC Management Services...........................................................3
1. Custodial Services-Medical Records................................................4
2. Fee Setting Discretion/Payment for Medical Services...............................4
3. Medical Practice Identification...................................................4
4. Practice Management System........................................................4
5. Inventory and Supplies............................................................4
6. Maintenance.......................................................................4
7. LLC Personnel.....................................................................4
8. Practice Manager..................................................................5
9. At Will Personnel.................................................................5
10. Recruitment of Practice Providers................................................5
11. Premises, Utilities and Other Related Expenses...................................5
12. Furniture, Fixtures and Equipment................................................6
13. Business Office and Support Services and Supplies................................6
14. Professional or Consulting Services..............................................6
15. Reports..........................................................................7
16. Systems Policies and Procedures..................................................7
17. LLC Insurance Obligations........................................................7
18. Operational Expenses Generally...................................................7
III. Obligations of PC...............................................................7
A. Professional Standards............................................................7
B. Continuing Medical Education......................................................8
C. Billing...........................................................................8
D. Practice Expenses.................................................................8
E. Operations........................................................................8
F. Acknowledgement of Qualifications.................................................8
G. Reports...........................................................................8
IV. Compensation....................................................................9
The compensation payable to the LLC is set forth below...............................9
A. Administrative Fee................................................................9
B. Payment of Administrative Fees....................................................9
C. Reports of Scans and Minimum Retention............................................9
D. Deferral of Payment of Administrative Fees and PC's Minimum Retention.............9
1. Deferred Administrative Fees.....................................................10
2. Administrative Fees on Termination or Expiration.................................10
E. Security Interest................................................................10
F. Perfection of Security Interest..................................................11
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G. Remedies for Non-Payment.........................................................11
H. Advances.........................................................................12
I. Fair Market Value................................................................12
1. Initial Administrative Fee Adjustment............................................12
2. Other Administrative Fee Adjustments.............................................12
J. Renegotiation....................................................................12
K. PC Revenues Received by LLC......................................................13
V. Term and Termination...........................................................13
A. Term.............................................................................13
B. Termination......................................................................13
C. Effects of and Obligations Upon Termination......................................14
VI. Prohibited Services............................................................15
VII. Assignment Prohibited..........................................................15
VIII. Miscellaneous..................................................................15
IX. Representations and Warranties of the Parties..................................15
X. Medical Practice Issues........................................................17
A. Practice of Medicine............................................................17
B. Insurance.......................................................................17
C. No Reciprocation................................................................17
ATTACHMENT I...................................................................19
Definitions....................................................................19
ATTACHMENT II..................................................................22
FF&E...........................................................................22
Siemens Ecat Accel PET Scanner and Ancillary Equipment.........................22
ATTACHMENT III.................................................................23
Miscellaneous Contractual Provisions...........................................23
1. Additional Acts..................................................................23
2. Contract Construction, Interpretation and Enforcement Provisions.................23
a. Captions................................................................23
b. Costs of Enforcement....................................................23
c. Counterparts............................................................23
d. Governing Law...........................................................23
e. Modifications...........................................................23
f. No Rule of Construction.................................................23
g. Notices.................................................................23
h. Severability............................................................24
i. Access to Records.......................................................24
j. Binding Effect..........................................................25
k. Waiver of Right.........................................................25
3. Legal Events Triggering Contract Modification or Termination.....................25
a. Changes in Reimbursement................................................25
b. Enactment or Interpretation of Relevant Statutes and Regulations........25
c. Renegotiation...........................................................25
4. Independent Contractor Status....................................................25
5. Prohibition Against Discrimination...............................................26
6. Use of Names.....................................................................26
7. Reasonableness of Compensation...................................................26
8. Indemnification..................................................................26
a. Indemnification of LLC..................................................26
b. Indemnification of PC...................................................26
c. Right to Defend.........................................................26
d. Notice..................................................................27
9. Dispute Resolution...............................................................27
a. Preliminary Resolution..................................................27
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b. Arbitration.............................................................27
ATTACHMENT IV..................................................................29
Minimum Retention..............................................................29
ATTACHMENT V...................................................................30
HIPAA Rules....................................................................30
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TURNKEY LICENSE AND SERVICES AGREEMENT
Parties: Premier P.E.T. of Long Island, LLC ("LLC")
and
Long Island Positron Emission Tomography Scanning,
P.C. ("PC")
Effective Date: June 10, 2002
Recitals: The PC and LLC desire to enter into this agreement
("Agreement") to provide a full statement of their respective rights
and responsibilities during its Term (as defined herein).
LLC is a domestic limited liability company duly formed and organized
under the laws of the State of New York and is engaged in the business
of management of professional health care practices specializing in
positron emission tomography scanning;
The PC is a professional corporation duly formed and organized under
the laws of the State of New York and is engaged and authorized to
engage in the practice of medicine in the State of New York and in
particular is engaged in and qualified to engage in the subspecialty of
positron emission tomography scanning ("PET"), a nuclear diagnostic
procedure, in the State of New York, including the performance and
interpretation of PET scans ("PET Services") and whose President and
sole and controlling shareholder is, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D.
and wishes to license the office premises at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ (the "Practice Premises" as is more fully
defined in Attachment I). This Agreement and the terms hereof, insofar
as same shall effect or obligate the PC, shall be limited to the PC's
practice of medicine at or with respect to the aforementioned Practice
Premises and the term "Practice" shall mean the PC's PET Practice at
the Practice Premises. This Agreement shall in no event be interpreted
to govern or apply to the PC's, or PC's principal's, practice at any
other location.
The PC desires to enter into this Agreement with LLC for the exclusive
provision of non-medical advisory and management services at the
Practice Premises and to maintain and enhance the quality and
efficiency of the Practice's operations and to allow the licensed
medical professionals of the PC (the "Practice Providers" as more fully
defined in Attachment I) to concentrate fully on providing quality PET
services to patients.
FOR GOOD AND VALUABLE CONSIDERATION, LLC and the PC 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 by this reference.
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 in Attachments II through V.
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C. Attachments.
All attachments to this Agreement are incorporated into this Agreement by this
reference. The attachments to this Agreement are the following:
Attachment I: Definitions.
Attachment II: Furniture, Fixtures and Equipment.
Attachment III: Miscellaneous Contractual Provisions.
Attachment IV: Minimum Retention.
Attachment V: HIPAA Rules.
D. Sole Manager.
The PC hereby appoints LLC as its exclusive manager and administrator of its
day-to-day business functions. The PC agrees that the purpose and intent of this
Agreement is to relieve the PC's professional employees practicing at the
Practice Premises to the maximum extent possible of the administrative,
accounting, personnel and business aspects of the Practice, with the LLC
assuming responsibility and being given all necessary authority to perform those
functions. Neither LLC nor any of its employees, as they perform the obligations
of LLC hereunder, will have any authority, directly or indirectly, to perform,
and will not perform, any medical function. LLC may, however, advise PC as to
the relationship between its performance of medical functions and the overall
administrative and business functioning of the PET practice.
E. Qualifications of Practice Physicians.
The PC and all of its shareholders are, and will at all times remain, duly
licensed to practice medicine in the State of New York and they do, and will
continue to practice in accordance and compliance with any and all state laws,
rules and regulations applicable to the practice of medicine and professional
corporations; that any and all of the PC's employed, affiliated, or
independent-contractor physicians and other health care service professionals
are, and will at all times remain, duly licensed to practice their respective
professions in the State of New York, are Board Certified or Board eligible in a
specialty encompassing PET and qualified to perform and interpret the results of
PET procedures, and they do, and will continue to, practice in accordance and
compliance with any and all state laws, rules and regulations applicable to
their respective professions; and that the PC will notify LLC immediately if its
medical license or the professional license of any employed affiliated or
independent contractor physician or other health care service professional
practicing at the Practice Premises shall become impaired, suspended, revoked or
in any way limited.
F. Nature Of Relationships.
LLC and the PC are separate and independent companies and contractors hereunder.
This Agreement shall not be construed to initiate, suggest or create, directly
or indirectly, any employer-employee, master-servant, principal-agent or
landlord-tenant relationship between the LLC and PC. The PC and LLC shall
transact business as a purchaser and an independent supplier, respectively, of
non-professional services, equipment and Practice Premises and the following
limitations shall, at all times, be observed:
1. PC Employees.
The PC shall employ directly and be solely and completely responsible for the
compensation, recruitment, contracting, hiring and terms of employment of any
and all of its affiliated, employed and independent-contractor physicians, as
well as technicians and other allied health care service professionals and shall
pay all applicable salaries, remuneration, federal, state, local and similar
taxes and provide Workers Compensation and Disability insurance for such
individuals and the premiums for same shall be deemed PC Expenses (as more fully
defined in, and subject to the provisions of, Attachment I). LLC, as part of its
duties hereunder, shall assist the PC in locating and recruiting of such
professional personnel as needed in the opinion of the PC. LLC shall have no
authority to direct, control, train or supervise any of the PC's aforesaid
personnel and shall not, in any way, participate in, exercise any authority with
respect to, or otherwise engage in or interfere with any of PC's professional's
exercise of medical or professional judgment in the provision of PET Services.
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2. PC Internal Responsibility.
The PC shall be and remain solely responsible for all its internal agreements
and financial matters, including the distribution of professional fee income of
the PC.
3. Independent PC Practice.
The PC, through the Practice Providers, shall practice PET Services as an
independent professional and the PC shall be solely and completely responsible
for its affiliated, employed and independent-contractor physicians (including
the Practice Providers), technicians and other health care service professionals
functioning as its employees or under its orders or on its behalf, with respect
to its Practice, including its patient relationships, care and treatment,
assignment and referral, development and promulgation of all protocols and
standing orders as well as determinations regarding the need for and scheduling
of appointments, whether or not to perform particular procedures, how many
patients are to be seen by the PC and whether or not to accept certain patients.
LLC shall not, directly or indirectly, impinge upon patient-physician
relationships or the professional control of the PC by the shareholders/officers
of the PC. LLC will, however, provide switchboard and general reception services
and the scheduling of appointments for patients under the supervision of the
Practice, but shall have no other contact with, or responsibility with respect
to, the care and treatment of the PC's patients. LLC shall provide dictation and
duplication services, copying equipment and supplies therefore.
4. Retained Rights of LLC.
The rights afforded the PC hereunder, including, without limitation, the right
to practice in the Premises and use the FF&E (as defined in Attachment I), shall
be exclusive to the PC hereunder. LLC shall at all times during the Term of this
Agreement, and thereafter, have the right to enter into additional service
agreements providing for administrative support services to PET imaging
providers, subject to the provisions of the Ancillary Agreements (as defined in
Attachment I).
II. LLC's Obligations for Space, Equipment, Personnel, Supplies and
Services.
LLC shall provide the PC with the following general management services during
the Term hereof:
A. Strategic Planning and Goals.
LLC shall assist the PC in preparing a budget and reflecting in reasonable
detail: anticipated revenues, expenses, sources and uses of capital, personnel
staffing, support services arrangements and anticipated ancillary services.
B. Expansion of the PC.
LLC shall use its best efforts to assist the PC in developing relationships and
affiliations with physicians and other specialists, hospitals, networks, health
maintenance organizations and preferred provider organizations, which may result
in the expansion of the PC's patient and referral base. The PC shall cooperate
with LLC in such matters.
C. Contract Relationships.
LLC shall evaluate and negotiate managed care contracts including, without
limitation, contracts between PC and third party payors, insurance carriers and
HMO's for rendition of medical services in the PC to such organizations'
beneficiaries, members and patients. LLC shall notify and consult with PC, with
respect to any negotiations of such contracts and the terms thereof and no such
contract or commitment of the PC with respect thereto shall become effective
without the prior written approval of PC and the signature of PC's President and
principal shareholder thereon.
D. Establishment of Fees.
LLC shall advise the PC with respect to prevailing fees, charges, premiums or
other amounts due in connection with services provided by and billed in the name
of the PC. The PC shall consider any such advice and may or may not adopt
recommendations, in its sole and reasonable discretion and subject to applicable
contracts, laws, rules, regulations, and fee schedules and reimbursement rates
thereunder.
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E. LLC Management Services.
The parties agree that LLC has the authority to manage all non-professional
aspects of the PC's business at the Premises, including without limitation, the
following (subject to the terms and provisions of the Ancillary Agreements and
the following significant limitations and procedural requirements):
1. Custodial Services-Medical Records.
LLC may store any and all active and inactive patient records, medical charts
and vital statistics, however, these documents shall be identified as, and
remain, the property of the PC. LLC shall maintain and store files and records
relating to the operation of the Practice, including, without limitation,
customary financial records and patient files, medical charts and vital
statistics (which records shall at all times remain the property of the PC). All
files and records shall comply with applicable Federal, State and local
statutes, rules and regulations regarding their confidentiality and retention.
The PC shall be responsible for the preparation of, and shall direct the
contents of, the patient medical records. LLC shall have the right to access to
the records and to maintain copies thereof including, without limitation, for
the limited purpose of fulfilling its obligations hereunder, including, without
limitation, with respect to collection and as otherwise required by applicable
law, rule or regulation, subject to applicable laws, rules and regulations
governing privacy of patient records.
2. Fee Setting Discretion/Payment for Medical Services.
The PC shall be solely responsible for determining all fees and charges assessed
to patients and the Practice's letter or ▇▇▇▇ head will be used for all
invoices. PC, through personnel to be retained by the PC, shall perform all
billing and collection functions for the PC's PET Services in the Practice.
3. Medical Practice Identification.
All switchboard and general telephone reception services shall be handled at a
telephone number assigned to the PC's Practice and shall be restricted to the
business of the PC's Practice, its affiliated, employed and
independent-contractor physicians and the other health care service
professionals functioning as its employees, or under its orders, or on its
behalf and to employees of the LLC. All publications, media advertisements,
stationary, ▇▇▇▇ heads and invoices shall bear the name of the PC and contain no
reference to LLC unless agreed upon in advance by PC in writing in each
instance, all as is more fully set forth in Attachment III.
4. Practice Management System.
LLC shall establish and shall modify, from time to time, all as directed by the
PC, the procedures to be utilized for the management of the business and
operational functions of the Practice, including procedures for conducting
utilization review and quality assurance and for medical records system design,
and regulatory and HIPAA transactional security and privacy compliance at the
Practice and with respect to which programs and plans PC shall cooperate. In
such regard LLC shall adhere to the HIPAA privacy and business associate rules
set forth in Attachment V, as same shall be modified or amended from time to
time in accordance with HIPAA requirements with respect to which the PC shall
inform the LLC, if and when adopted.
5. Inventory and Supplies.
LLC shall caused to be purchased, inventory and supplies, and such other
ordinary, necessary and appropriate materials which are required in the
operation of the Practice, including without limitation, isotopes, which are
requested by the PC for the Practice and which are necessary to deliver quality
medical services in a cost-effective manner and uniforms, laundry, and linen for
the Practice.
6. Maintenance.
LLC shall arrange for the proper cleanliness of the Premises, including the
parking facilities, and maintenance and cleanliness of the medical equipment,
furniture, and furnishings located in the Practice Premises. LLC shall also
provide laundry, waste collection, (including "red-bag waste") and all other
routine non-medical operational services.
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7. LLC Personnel.
LLC shall employ and provide personnel necessary to fulfill the non-professional
service needs necessary for the PC to provide professional services at the
Premises, specifically excluding Practice Providers rendering services in
connection with the Practice, technicians and any allied health care
professionals (the "Incident Personnel" and billing personnel (collectively the
"PC Personnel"). LLC shall employ and/or retain such non-medical personnel
(i.e., including, without limitation, clerical, secretarial, and bookkeeping
personnel, front desk receptionist and scheduling personnel, marketing and
business development personnel and, subject to the approval of the PC, as
hereinafter provided, a Practice Manager (as defined below), but excluding PC
Personnel) as determined by the parties to be reasonably necessary for the PC's
effective operation. PC shall have the right to designate personnel for such
purposes, including from among such non-professional personnel of PC's
Affiliates. LLC shall provide personnel for the maintenance of patient records,
which at all times shall remain the property of and under the control of the PC
and maintenance of the financial records. LLC shall, subject to approval of the
Managers of the LLC pursuant to separate agreement, determine the salaries and
fringe benefits of all the non-medical personnel, and shall retain decision
making authority regarding all such personnel assignments. Non-medical personnel
may perform services from time to time for other individuals or entities,
including those of the LLC, PC, the LLC's Members and their Affiliates. No such
non-medical personnel shall be retained to work in the Practice at the Premises,
unless approved in advance by the PC, which approval shall not be unreasonably
withheld. LLC will have final authority to engage, dismiss, reprimand, reassign,
or otherwise deal with all LLC personnel, but shall take into consideration the
wishes of PC in this regard, and obtain the advance written approval of the PC
with respect to the hiring and terms of any employment agreement of any LLC
personnel working at the Practice Premises (which PC shall not unreasonably
withhold) and shall terminate any LLC Personnel with respect to whom PC has
reasonably expressed dissatisfaction of performance twice during any twelve (12)
month period or which person, in the reasonable opinion of the PC, represents an
immediate threat to the PC, its patients, or the continued operation or
reputation of the PC's Practice. PC expressly understands and agrees that such
actions with respect to the LLC personnel shall take place in accordance with
LLC's personnel policies and pursuant to the standards of salaries and benefits
which LLC may from time to time provide and pay to its employees. LLC shall
employ and provide benefits, if any, to non-medical personnel employed or
engaged by it for the Practice, in accordance with the Practice's operational
needs as determined in the mutual and reasonable discretion of LLC and PC.
8. Practice Manager.
LLC shall, subject to prior approval of the PC, and to the extent deemed
necessary by the PC, select and provide at the Premises a Practice Manager (the
"Practice Manager") to manage and administer for the PC, the Practice's business
functions and services. LLC shall employ the Practice Manager and determine the
salary and fringe benefits therefore, subject to approval of the Managers of the
LLC pursuant to separate agreement. The Practice Manager shall not have any
influence or control over the medical aspects of the Practice or the PC
Personnel.
9. At Will Personnel.
All LLC personnel working at the Premises shall be "at will" employees unless
agreed otherwise by PC in writing.
10. Recruitment of Practice Providers.
LLC shall perform administrative services relating to the recruitment of
Practice Providers including matters of credentialing, identifying potential
candidates, checking credentials, arranging interviews, and preparing and
negotiating agreements pursuant to the PC's instructions. It shall be a PC
responsibility to interview, retain and pay such Practice Providers. All
Practice Providers and PC Personnel shall be employees, independent contractors
or agents of the PC (and not of LLC).
11. Premises, Utilities and Other Related Expenses.
LLC shall provide to the PC, during the Term hereof, the full time and exclusive
use of the Practice Premises (as defined in Attachment I). PC's use of the
Practice Premises is subject to the provisions of the Sagemark Sublease (as
defined in Attachment I). In addition, LLC shall provide, manage and maintain
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the Practice Premises in good condition and repair, ordinary wear and tear
excepted, including the provision of routine janitorial, cleaning and
maintenance services, which shall be deemed Operational Expenses. LLC shall
provide utilities and shall pay all other operational expenses and personnel
compensation relating to the use of the Practice Premises, excluding for the
Practice Providers and PC Personnel. The use of the Practice Premises shall be
exclusive to the PC during the Term of this Agreement. LLC shall recommend to PC
the hours of operation of the PET Practice in accordance with customary
practices of similar PET Practices in the medical community. LLC shall be
responsible for the cost and construction of the Practice Premises. LLC
represents that all necessary consents and approvals for use by the PC of the
Practice Premises hereunder, shall be obtained from the lessor under the master
lease with respect to the Sagemark Sublease and the license of the leased
premises for use by the PC hereunder subsequent to the Effective Date, as a
condition precedent to the commencement of the parties obligations under this
Agreement.
12. Furniture, Fixtures and Equipment.
LLC shall provide to the Practice, during the Term hereof, the furniture,
fixtures and equipment, including a positron emission tomography scanner
(collectively the "FF&E") necessary to the operation of the Practice as listed
in Attachment II as part consideration for the Administrative Fees to be paid by
the PC hereunder. LLC shall be responsible for all repairs and maintenance of
the FF&E and shall provide new or replacement FF&E (other than a replacement
positron emission tomography scanner where same is not replaced by the
manufacturer pursuant to a warranty, guarantee or similar such replacement),
provided same shall, in the reasonable opinion of the Managers of the LLC, be
economically feasible, as and to the extent that the PC and LLC agree that any
such FF&E is necessary for the continued operation of the Practice by the PC. PC
shall be responsible for repairs, maintenance and replacements to FF&E
necessitated by the gross negligence or willful misconduct of PC's employees,
contractors or agents, except to the extent same shall be covered by proceeds of
applicable insurance maintained with respect thereto. The LLC acknowledges that
use of FF&E by the PC shall be exclusive to the PC. LLC shall provide, at no
cost to PC, all hardware and software upgrades which are supplied by the PET
manufacturer or the equipment lessor at no additional charge to LLC. Any
hardware or software upgrades for which the PET manufacturer or the equipment
lessor assesses a charge to LLC (to the extent that it is deemed reasonably
required for the operation of the Practice and economically feasible, as
determined in the reasonable opinion of the LLC) shall be acquired by LLC and
provided to PC subject to the parties' agreement to an appropriate adjustment of
the Administrative Fee set forth in Section IV. PC shall have the use of the
FF&E only during the Term of this Agreement and shall have no ownership interest
therein. Additions of new equipment shall also be accompanied by an appropriate
adjustment of the Administrative Fee set forth in Section IV as agreed to by the
LLC and the PC as provided in Section IV.
13. Business Office and Support Services and Supplies.
LLC shall provide computer and accounts payable services and collection services
(for the purposes of this provision collection services shall not include the
submission and/or resubmission of invoices for PC's services rendered under
customary billing and collection efforts but shall include supplemental
collection efforts, such as, retention of a collection agency and/or attorneys
to pursue unpaid claims and invoices) necessary for the operation of the
Practice by the PC pursuant to this Agreement. LLC shall, in consultation with
the PC, also order and medical and office supplies (including without
limitation, stationery, forms and postage) required in the day to day operation
of the PC, and shall assist and facilitate the PC's participation in group
purchasing arrangements, if available. To the extent same shall be possible, LLC
shall purchase and pay for such medical and office supplies and same shall be
deemed an Operating Expense as described in and subject to the terms of
Attachment I. To the extent a prescription or professional license shall be
required and payment therefore shall be required to be made directly by the PC,
same shall be purchased and paid for directly by the PC and shall be considered
a PC Expense. LLC shall provide access to management information systems
services to the PC to the extent same is available to and deemed warranted by
LLC. No supplemental collection efforts shall be pursued with respect to
patients of the PC without the prior written consent of the PC in each instance.
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14. Professional or Consulting Services.
LLC shall provide business and financial management consulting services to the
Practice and assist PC in its community relations, development of marketing
strategies and promotional planning (including LLC's responsibility for the cost
of advertising in the media and promotional campaigns). The foregoing shall not
be interpreted as requiring or intending that LLC shall provide or arrange for
any direct or consulting medical services with respect to patients of the PC. PC
shall provide accounting, tax, payroll and legal services (including labor
relations, contract preparation, and obtaining and maintaining all necessary
licenses) on behalf of the PC and the cost thereof shall be deemed PC Expenses.
15. Reports.
LLC shall furnish to PC periodic financial and other reports, on the reasonable
request of the PC, but not less frequently than monthly, reflecting the
financial and operational status of the Practice (to the extent reflected in any
books and records maintained by the LLC and without obligation to maintain, or
provide reports with respect to the PC's books and records).
16. Systems Policies and Procedures.
LLC shall establish for PC's review, and reasonable approval, business systems,
reasonable policies and procedures, and standardized clinical forms for the PC's
operation of the Practice, including: (i) feasibility studies to determine
clinical appropriateness and financial feasibility of future expansion; and (ii)
coordination in the relationship between PC's performance of services and the
overall administrative and business functioning of the Practice. Upon approval
of the foregoing by PC, which approval shall not be unreasonably withheld, PC
agrees to comply with such policies and procedures, provided, however, that PC
shall maintain exclusive control and supervision over the provision of all
medical services provided by the Practice. PC expressly acknowledges that it
shall have no property rights in the business systems, procedures, policies or
clinical forms established by the LLC.
17. LLC Insurance Obligations.
LLC shall carry, and at all times maintain in full force and effect: (i) public
liability insurance insuring against claims for bodily injury, including death,
and property damage occurring on, in, or about the Premises; (ii) general
liability and fire insurance for the Premises; (iii) business interruption
insurance for LLC; and (iv) worker's compensation coverage for all LLC
personnel. LLC shall indemnify and hold PC harmless with respect to any workers
compensation claims made by LLC personnel as and to the extent provided in
Section 8 of Attachment III. LLC shall take all reasonable steps to have, to the
extent same shall be available under the carrier's policies, all such insurance
policies name the PC as an additional insured as and to the extent its interest
shall appear, and provide for not less than thirty (30) days notice of
non-renewal or cancellation to PC. Written evidence of such policies being in
full force and effect shall be delivered to the PC by LLC subsequent to the date
of execution of this Agreement, but as a condition precedent to the commencement
of the parties obligations hereunder, and annually thereafter upon request of
the PC.
18. Operational Expenses Generally.
LLC shall be responsible for all Operational Expenses as same are defined in
Attachment I annexed hereto.
III. Obligations of PC.
A. Professional Standards.
Medical services shall be provided solely by, or under the direct supervision of
Practice Providers as required by law, rule or regulation, including those of
any governmental or third party payor. The PC shall have complete and absolute
control over the methods by which the PC, the Practice Providers, and PC
Personnel who practice medicine and/or render the professional services which
they are licensed or qualified to provide under the laws of the State of New
York (the "Incident to Professionals") as well as the manner in which the PC
Personnel otherwise provide their services., including billing and collection.
The PC shall require that the Practice Providers and PC Personnel comply with
applicable ethical standards, and all other applicable laws, rules and
regulations. The PC shall, with the assistance of LLC (if so requested by the
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PC), resolve utilization review or quality assurance issues which may arise. In
the event that disciplinary actions or professional liability actions are
initiated or threatened against any Practice Provider or other PC Personnel, the
PC shall immediately inform LLC thereof, including in such notice the underlying
facts and circumstances, all to the fullest extent permitted by applicable
privacy and confidentiality laws and regulations. PC shall indemnify the LLC
with respect thereto as and to the extent provided in Section 8 of Attachment
III. The PC shall, with the assistance of the LLC as described in Section II.
E.4., implement and maintain a program to monitor the quality of medical care
provided by it, and LLC shall render administrative assistance to the PC, as
requested, with respect thereto.
B. Continuing Medical Education.
The PC shall require that each of its PC Providers and Incident Professionals
participates in continuing medical education activities, as necessary to remain
current in their respective specialties or skills, including, without
limitation, the minimum continuing education requirements imposed by applicable
laws and policies of applicable specialty boards and licensing boards and
authorities.
C. Billing.
The PC shall perform the billing and collection function with respect to all PC
services. All Practice Revenues collected shall be deposited for credit to the
PC in a bank account established by, on behalf of and in the name of the PC for
that purpose, subject to and in accordance with the terms and provisions of
Section IV. E. below.
D. Practice Expenses.
The PC shall be solely responsible for the payment of all PC Expenses as defined
in Attachment I.
E. Operations.
PC shall continuously, throughout the Term of this Agreement, operate the
Practice on a full-time basis at the Premises. PC shall provide, at its own
expense, sufficient physician staff coverage to the Premises to enable the
Practice to operate in an efficient and lawful manner at all required times
during the hours of operation of the Practice. PC, or its designee, shall also
be responsible for the professional supervision of the clinical aspects, if any,
of services rendered by LLC personnel. In such regard the PC agrees to provide
the services of its principal, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D, who shall
supervise the medical activities of the PC, and such other PC Providers as and
to the extent necessary in the reasonable discretion of the PC to meet the day
to day needs of the PC Practice based on patient and referring physician needs
and demands.
F. Acknowledgement of Qualifications.
All physician and technical services provided at the Premises shall be performed
solely by Practice Providers or Incident Personnel licensed to practice and to
provide such services in the State of New York, and technicians with appropriate
certifications, as and to the extent required by the State of New York, and who
shall at all times during the Term of this Agreement be employees or independent
contractors of PC. PC shall have ultimate responsibility with respect to
ascertaining such licensure and certifications. PC shall cause medical services
to be provided to patients of the Practice in compliance at all times with
ethical standards, and all applicable, laws, rules and regulations applying to
the medical profession. In the event that any disciplinary, medical malpractice
or other action is initiated against any Practice Provider, technician or other
PC Personnel, PC shall immediately on receipt of actual notice thereof, inform
the LLC of such action and the underlying facts and circumstances.
G. Reports.
PC shall provide to LLC daily reports with respect to billing, collections and
services performed, as shall be reasonably requested by the LLC. PC's Personnel
shall cooperate with LLC's reasonable requests for reports and otherwise assist
in the preparation of any reports, including generating such reports as part of
their billing and collection functions. To the extent any reports required to be
made by PC hereunder shall require modification of PC software or hardware or
require special software and/or hardware, or training of PC Personnel, such
modifications, software and hardware (including installation and maintenance
thereof) shall be provided by the LLC, at LLC's sole cost and expense, subject
to the approval of the Managers of the LLC pursuant to separate agreement. The
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following monthly reports shall be provided to the LLC on forms and using
computer and software systems to be provided by LLC: (i) statement of all
revenues received and expenses paid by the PC during the prior month, (ii) copy
of the billing and collection report(s) for the prior month, (iii) statement of
accounts receivable including an aged receivables report; and (iv) balance sheet
(on an accrual basis). LLC shall have the right, at any time during normal
business hours and upon reasonable prior notice to PC, to examine and copy the
PC's books and records relating to the operation of the Practice. PC shall
provide the LLC with such other reports as shall be agreed upon between the PC,
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the LLC.
IV. Compensation.
The compensation payable to the LLC is set forth below.
A. Administrative Fee.
During the Term of this Agreement, in consideration of the services, supplies,
space, and FF&E to be provided by LLC herein, PC shall pay to LLC an
administrative fee (the "Administrative Fee") as set forth in this Section IV.
The Administrative Fee shall be Four Million Eight Hundred Thousand ($4,800,000)
DOLLARS per annum (pro-rated for any partial calendar year during the Term of
this Agreement) (subject to adjustment on or before the execution of the Loan
Documents as provided in Section IV. I, below), payable in twelve (12) equal
monthly installments of $400,000 each. Notwithstanding the foregoing, during the
first year of the Term of this Agreement, the Administrative Fee shall be
reduced as follows: for the first (1st) through ninth (9th) months of the Term
the Administrative Fee shall be one-half of the amount of the Administrative Fee
above (e.g. if the monthly amount of the Administrative Fee is $400,000 the
Administrative Fee for months one through nine shall be $200,000 and the monthly
Administrative Fee for each of the tenth (10th) through the twelfth (12th)
months shall be $400,000 for an aggregate Administrative Fee of $3,000,000 for
the first year of the Term. All monthly payments shall be in arrears, and each
of such payments shall be paid on or before the first day of each month during
the Term hereof with respect to the immediately preceding calendar month. In the
event that the first month of the Term of this Agreement is less than a full
calendar month, the Administrative Fee for that month shall be prorated and
payable on the first day of the following month, in an amount equal to the
monthly installment referred to above, multiplied by a fraction, the numerator
of which will be the number of days in the first month of the Term of this
Agreement, and the denominator of which will be the number of days in such
month.
B. Payment of Administrative Fees.
Subject to the terms of this Agreement, including but not limited to Section IV.
D. below, all Practice Revenues shall be used to pay the Administrative Fee. PC
its shareholders, officers, directors or agents shall not take any action to
divert payment of the Practice Revenues for application other than in accordance
with the terms of this Section IV ("Diversions"). PC shall and hereby agrees, to
be liable for all remaining payments due to LLC to the full extent of any such
Diversion(s) hereunder (without regard to any limitation of collections or
assets of the PC or other applicable remedies at law or in equity). The
Administrative Fee shall be reduced by an amount equal to the payment to be
received by the PC for any scan with respect to which (i) LLC's clerical
personnel at the Premises fail to obtain the necessary pre-authorization for
such scan, unless PC consents to perform such scan; (ii) the denial of payment
by the payor is expressly based upon such failure, and (iii) an explanation of
benefits or remittance advice from the applicable payor indicating such failure
as the reason for denial, is presented to the LLC with respect to such scan. The
PC will provide copies to the LLC of any such denials or explanations and will,
upon the reasonable request of the LLC, contest any such denial upon receipt of
proof of the LLC that such denial was unwarranted, provided the cost to PC in
contesting any such denial, including, without limitation, legal and accounting
fees in pursuing same, shall be deemed a PC Expense hereunder.
C. Reports of Scans and Minimum Retention.
PC shall provide LLC with a daily report (provided LLC shall assist PC in
setting up a system, including selection of software and instruction of PC
Personnel necessary to produce same) showing the actual number of scans
performed during the preceding business day. In the event the LLC and PC agree
9
in writing that the rendering of daily reports is overly burdensome, reports
shall be issued every two (2) days or at such other frequency as the parties
shall mutually agree. The PC shall provide the LLC, on or before the 5th day of
each month during the Term hereof, with a report of the Minimum Retention which
report will itemize each of the PC Expenses incurred in the prior month,
including the basis for the Billing and Collection Fee (as defined in Attachment
IV) incurred in such month and shall have a copy of the latest available bank
statement for the LIPET Account annexed thereto.
D. Deferral of Payment of Administrative Fees and PC's Minimum
Retention.
1. Deferred Administrative Fees.
The LLC will defer (but not ▇▇▇▇▇) payment of the Administrative Fee to the
extent that Practice Revenues, after payment of the Minimum Retention, are not
sufficient to pay all or any part of the Administrative Fee during the Term
hereof. Any such Administrative Fees which are so deferred will be referred to
herein as the "Deferred Administrative Fees." All Deferred Administrative Fees
shall accrue interest at the rate of five (5%) percent per annum from the date
of deferral through the date of payment. To the extent that the Practice
Revenues in any month during the Term hereof exceed the amount paid in that
particular month for the Minimum Retention and the Administrative Fee (the
"Excess Cash"), such Excess Cash shall be applied and paid as follows:
(i) First, to all Deferred Administrative Fees (including all
accrued interest thereon). To the extent that Deferred Administrative
Fees are paid, any such payments shall be applied first to the oldest
of such Deferred Administrative Fees (and, with respect to such
payments, to accrued interest thereon first and then to the amount of
any such Deferred Administrative Fees);
(ii) next, to the Reserves (as defined in Attachment I
hereto);
(iii) next, to all Advances (including accrued interest
thereon). To the extent that Advances are paid, any such payment shall
be applied first to accrued interest thereon and then to the amount of
any such Advances; and
(iv) the balance, if any, shall remain the property of the PC
subject to withdrawal as determined by the PC, its shareholders,
officers and directors, in their sole discretion.
2. Administrative Fees on Termination or Expiration.
In the event of any termination or upon the expiration of this Agreement,
Practice Revenues then in the LIPET Account and all accounts receivable (whether
or not billed on such date) relating to Practice Revenues as of the date of any
such termination or expiration (the "PC Receivables") which are collected after
the date of such termination or expiration shall be applied by the PC:
(i) first, to pay the PC the Billing and Collection Fee,
(ii) next, to reimburse the LLC for all direct costs incurred
by it,
(iii) next, to all Advances, including all accrued interest
thereon (to the extent that Advances are paid, any such payment shall
be applied first to accrued interest thereon and then to the amount of
any such Advances);
(iv) next, to all Deferred Administrative Fees (including all
accrued interest thereon) until such fees are fully paid; and
(v) the balance, if any, shall remain the property of the PC
subject to withdrawal as determined by the PC, its shareholders,
officers and directors, in their sole discretion.
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To the extent that Deferred Administrative Fees are paid, as aforesaid, any such
payments shall be applied first to the oldest of such deferred fees (and, with
respect to such payments, to accrued interest thereon first and then to the
amount of any such Deferred Administrative Fees). The foregoing obligations of
the PC shall expressly survive any termination or expiration of this Agreement.
E. Security Interest.
All Practice Revenues shall be deposited in a separate account at the Bank which
will be denominated: Long Island Positron Emission Tomography Scanning, P.C.
Special Account (the "LIPET Account"). PC through its principal or designee for
such purpose, shall be authorized to execute checks and instruments solely for
the purpose of withdrawals and payments from the LIPET Account for and to the
extent of Minimum Retention, Administrative Fees and Excess Cash as defined in
this Section IV. PC shall not make any other withdrawals or payment of sums from
the LIPET Account unless it first faxes or otherwise provides to the LLC written
notice of intent to make such withdrawal or payment accompanied by an
appropriate invoice or explanation of the purpose therefore and further provided
it does not receive written objection thereto from either of the Managers of LLC
by fax, or other method of notice hereunder, within two (2) business days after
receipt by the such Manager of the LLC of such notice of intent to make such
withdrawal or payment. PC will provide the LLC with a copy of all paid bills or
withdrawals on the date of payment or withdrawal.
All withdrawals and payments from the LIPET Account shall be made in accordance
with the terms of this Agreement and shall be consistent with the terms hereof.
Funds deposited in the LIPET Account shall be the property of PC. So long as any
amount of Administrative Fees, or any other sum which may be due to the LLC
under this Agreement remains unpaid, LLC shall have a continuing first priority
security interest in all assets of the PC, including without limitation, the
LIPET Account and all accounts receivable of the PC for PET Services (except as
otherwise prohibited by law, e.g. with respect to certain governmental
receivables and subject to PC's right to withdraw the Minimum Retention and make
withdrawals and payments as provided above), hereinafter existing or acquired,
evidencing any obligation to PC for services rendered at the Practice Premises
and all accessions thereto, substitutions therefor and replacements, products
and proceeds thereof (collectively the "Collateral"). Notwithstanding the
foregoing security interest, the PC shall have the right to withdraw and pay the
Minimum Retention, the Administrative Fee and Excess Cash as long as there is no
material default in the PC's obligations under this Agreement. LLC may assign or
subordinate this security interest to the Equipment Lender, and, if such rights
are assigned or subordinated, such third party shall have all rights of LLC
under this Section until all obligations of Sagemark and Premier to such third
party under the Sagemark Guaranty and Premier Guaranty are satisfied, whereupon
such security interest shall automatically revert to LLC.
F. Perfection of Security Interest.
PC agrees that from time to time, PC shall promptly execute and deliver all
instruments and documents, and take all further action, that may be necessary,
or that LLC may reasonably request, in order to perfect any security interest
granted or purported to be granted by PC herein or to enable LLC to exercise and
enforce its rights and remedies hereunder with respect to the Collateral in
which a security interest has been granted. Without limiting the generality of
the foregoing, PC shall execute, and the LLC shall be authorized to file, such
security agreements, financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as LLC may request, in order to perfect and preserve the security
interest granted or purported to be granted hereby by PC. Notwithstanding the
foregoing, LLC shall have no security interest in accounts of PC other than
accounts receivable relating to the Practice Revenues. PC will not at any time
during the Term hereof, grant any lien or security interest in, or otherwise
encumber, the Collateral (as defined in Section IV E above).
G. Remedies for Non-Payment.
In the event that PC shall breach any of its obligations to pay Administrative
Fees when due in accordance with the provisions of this Section IV, LLC shall
have, among and without limitation as to all other rights and remedies: all
rights and remedies of a secured party hereunder and under applicable law and
all rights, remedies, securities, and liens with respect to the Collateral
including, but not limited to, extending the time of payment of, compromising,
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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
its rights, as aforesaid. LLC is authorized by the PC, except as otherwise
prohibited by applicable law, upon default by the PC in its obligations with
respect to payment under this Section IV, which remains uncured after notice and
time to cure afforded under this Agreement, to take possession of and endorse in
the name of the PC 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, monies due on
account of the Collateral; and to withdraw any claims, suits, or proceedings
pertaining to, or arising out of LLC's and/or the PC's right to the Collateral.
LLC's costs of collection and enforcement, including attorneys' fees and
out-of-pocket expenses, shall be borne solely by the LLC and deemed Operating
Expenses. Nothing in this subsection G shall be construed to permit LLC to
interfere with the delivery of medical services by the PC.
H. Advances.
The LLC may, upon request of the PC, loan and/or advance sums to the PC (the
"Advances") from time to time during the Term hereof if Practice Revenues are
not sufficient to pay the Minimum Retention. Any such Advances that may be made
to the PC shall bear interest at the rate of five (5%) percent per annum from
the date of the Advance to the date of payment.
I. Fair Market Value.
1. Initial Administrative Fee Adjustment.
Notwithstanding that the Administrative Fees set forth herein and the manner of
determination thereof has been the result of arms length negotiation between the
respective parties in interest, the parties have agreed to obtain the opinion of
a third party as to the fair market value of the Administrative Fee in
accordance with the following procedure:
On or before the execution of the Loan Documents, and as a condition
precedent to the commencement of the obligations of the parties hereunder,
but in no event later than ten (10) days after the amount of the payments
on the prospective Loan Documents are ascertained, the firm of ▇▇▇▇▇
▇▇▇▇▇▇▇▇, P.C. a non-Affiliate Person, which is an accounting firm familiar
with the financial operations and costs of similar practices to those of
the PC hereunder (the "FMV Appraiser"), retained by the parties through the
LLC for such purpose, shall render an opinion on whether the Administrative
Fee set forth hereunder constitutes Fair Market Value (as such term is
construed in common usage in the health care industry) for the services,
space and equipment to be provided to the PC by the LLC hereunder,
including without limitation, by taking into consideration the cost to LLC
of the Operating Expenses, the value of LLC's administrative services and
capital investment, the cost of deferral of fees, the assumption of risk by
the parties and a reasonable return on LLC's investment in the Premises. To
the extent such FMV Appraiser shall determine that the Administrative Fee
set forth in Section IV. A. above exceeds fair market value, the
Administrative Fee shall be reduced by the amount of such excess. In the
event that the FMV Appraiser shall determine that the Administrative Fee
set forth in Section IV. A. above is less than fair market value, the LLC
hereby agrees to accept the Administrative Fee set forth in Section IV. A.
as its full annual fee for its services under this Agreement. Any such fair
market value opinion shall be in writing and shall set forth in detail the
basis for, and formulas employed in, arriving at the FMV Appraiser's
determination and the acknowledgement by the FMV Appraiser that the opinion
expressed by the FMV Appraiser and shall inure to the benefit of (and/or
can be used by) and may be relied upon by the LLC, the LLC Members, the PC
and the PC's shareholder with respect to audit and review by applicable
governmental and quasi-governmental authorities, including, without
limitation, those governing the practice of medicine in the State of New
York and third party payors.
2. Other Administrative Fee Adjustments.
In connection with the determination of any adjustments to the Administrative
Fee required by the addition of services, costs, supplies and services, the
parties shall in each instance seek the opinion of the FMV Appraiser (or in the
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event such FMV Appraiser shall refuse, fail or cease to provide such opinions a
FMV Appraiser agreed to in writing by the parties) as above, with respect to and
prior to the effective date of any adjustment.
J. Renegotiation.
The parties agree that on the first anniversary of the effective date hereof (or
within a reasonable time thereafter) and on each anniversary date thereof,
during the Term of this Agreement, the parties shall meet to consider the
Administrative Fee and the Minimum Retention based upon a material increase or
decrease in the costs to LLC of the Operational Expenses, and to PC of the PC
Expenses.
The Administrative Fees and the Minimum Retention shall be modified only upon
the mutual written agreement of the parties, in arms length negotiations at Fair
Market Value as such term is construed in common usage in the health care
industry. In the event that the parties shall be unable to agree on such
modifications same shall be resolved in accordance with the provisions of
Attachment III Section 9. Pending conclusion of such negotiations and resolution
of the modifications, if any, the PC shall continue to pay the Administrative
Fees as last fixed hereunder.
K. PC Revenues Received by LLC.
In the event LLC, including without limitation any of the LLC Members shall
receive any PC Revenues same shall be deemed held in trust by the LLC or such
recipient, and shall be turned over to the PC in the same form as received. To
the extent any such PC Revenues shall not be turned over as called for hereunder
same shall be deducted, on not less than five (5) days notice from PC to the
recipient, from the Administrative Fees payable by the PC hereunder.
V. Term and Termination.
A. Term.
The initial term of this Agreement shall be for a period of ten (10 ) years
commencing on the 10th day of June, 2002 (the "Effective Date") and ending on
the 9th day of June, 2012 (the "Initial Term"). This Agreement shall be extended
for separate and successive five (5) year periods (each successive 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") at the
option of PC, or its successor in interest so long as ▇▇. ▇▇▇▇▇▇▇, her Affiliate
or a successor in interest to ▇▇. ▇▇▇▇▇▇▇ or her Affiliate shall maintain a
controlling ownership interest in the PC or a successor in interest to the PC
conducting the PET Practice at the Premises (subject to and in accordance with
the provisions of the Operating Agreement of the LLC referenced under the
definition of Ancillary Agreements on Attachment I, including, without
limitation, regarding transfers of the LLC Members' interests therein). This
Agreement shall apply to the Premises and any subsequent locations or sites,
whether same be in addition to the Premises, or in lieu thereof, which the LLC
shall maintain and/or manage, and in which PET services shall be conducted.
B. Termination.
Either party (the "Terminating Party") may terminate this Agreement on the basis
of any of the following:
1. The other party (the "Defaulting Party") fails to make when
due and payable, any payment, distribution, or disbursement of any sum required
to be paid to or on behalf of the Terminating Party under this Agreement for a
period of twenty (20) days after the receipt by the Defaulting Party of written
notice from the Terminating Party; provided, however, that, if the payment,
distribution or disbursement shall be to a third party not a party to this
Agreement, and the amount of such sum due shall be subject to reasonable
dispute, such right of termination shall not be exercisable by the Terminating
Party so long as the party responsible for such payment, distribution or
disbursement shall be diligently pursuing any proceeding or remedy to contest
payment or to fix the amount of such sum due.
2. The Defaulting Party breaches any material term, provision
or condition of this Agreement not related to payment of sums due as described
in sub-section 1 above, provided that the Terminating Party first provides the
13
Defaulting Party with written notice of the breach, (specifying the details of
the breach including the specific terms and provisions of this Agreement alleged
to have been breached, and the date and manner and the identity of the parties
whose act(s) or failure(s) to act precipitated such breach on behalf of the
Defaulting Party) and a thirty (30) day period in which to cure such breach.
3. The other party becomes, whether voluntarily or
involuntarily, the subject of a petition in bankruptcy or an assignment for the
benefit of creditors or otherwise seeks relief from creditors under any federal
or state bankruptcy, insolvency, reorganization or moratorium statute, which
action or proceeding is not set aside, stayed, discontinued or removed within
sixty (60) days of its filing.
4. The Defaulting Party's material representations and
warranties in this Agreement are materially untrue or incorrect on the effective
date, if made as of the Effective Date, or cease to be true and accurate at any
future date if intended to continue beyond the Effective Date of this Agreement;
provided, however, that the Terminating Party shall notify the Defaulting Party
thereof within thirty (30) days of the date of receipt by the Terminating Party,
of written evidence of such untrue or incorrect representation or warranty. The
Defaulting Party shall have the right to notice and opportunity to cure, if
possible, as afforded the Defaulting Party under subsection 2 above for a
material breach, as to any representation or warranty which becomes untrue or
inaccurate as of or after the Effective Date.
5. The mutual written agreement of the parties.
6. Upon termination pursuant to section 3 of Attachment III.
7. Upon notice by the PC of election to terminate which shall
be preceded by not less than seven (7) months notice.
8. At such time as Rockville PET, Inc., its Affiliate or
successor in interest is no longer a Member of the LLC, (subject to and in
accordance with the provisions of the Operating Agreement of the LLC referenced
under the definition of Ancillary Agreements on Attachment I, regarding
transfers of the LLC Members' interests therein).
9. Notwithstanding the foregoing, and excluding subsections 1
and 8 above, to the extent a Defaulting Party shall be entitled to notice and
the opportunity to cure under this Agreement, in the event that the default or
breach is of a nature so as not to be curable within such cure period and so
long as the Defaulting Party shall be diligently pursuing such cure, the cure
period shall be extended for such additional thirty (30) day periods as are
reasonably necessary to cure such breach; provided, however, that such
extensions shall not exceed one hundred and eighty (180) days in the aggregate
unless otherwise agreed in writing by the Terminating Party.
10. In the event any of the foregoing events entitling LLC to
terminate this Agreement is with respect to the credentials or qualifications of
any Practice Provider, and such individual is immediately terminated by the PC,
whether permanently or pending the final disposition of such event, then the
right of termination set forth herein shall not be exercisable, unless upon a
final determination adverse to such individual, the PC continues to employ or
engage such individual.
C. Effects of and Obligations Upon Termination.
1. Except as otherwise agreed by the parties in writing or
provided otherwise in and subject to the provisions of this Agreement and any
other agreements between the parties and/or their Affiliates, including without
limitation the Ancillary Agreements, upon any 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 PC and LLC shall perform such matters as
14
are necessary to wind up their activities under this Agreement, in a prompt and
orderly manner; (v) the PC shall release LLC from any further obligation with
respect to the license of the Practice Premises and the FF&E, and shall
immediately vacate and cease use of the Practice Premises in accordance with
this Agreement; and (vii) each party shall have the right to pursue such other
legal and equitable remedies as may be applicable and available depending on the
circumstances of the termination. In addition, the PC shall continue to collect
all PC Receivables existing on the date of termination or expiration, deposit
the proceeds thereof in the LIPET Account and apply such proceeds as provided in
the applicable part of Section IV D hereof. The PC shall provide written reports
to the LLC, on a weekly basis, as to all amounts of the PC Receivables deposited
in the LIPET Account during the prior week, and all deductions or payments
therefrom and shall remit to the LLC, together with each such report, the
amounts due to it under the applicable part of Section IV D.
2. Upon termination of this Agreement, application of Practice
Revenues shall be made in accordance with and subject to the terms of Section
IV. D. 2.
3. Except as provided otherwise in the Ancillary Agreements,
upon termination and/or expiration of this Agreement, LLC, PC and their
shareholders, directors, members, officers, managers, employees, agents and
Affiliates, shall be free to pursue any and all business or other PET practice
management opportunities irrespective of whether they are in direct competition
with the other. This provision shall survive termination and/or expiration of
this Agreement.
4. The rights and remedies of the parties under this Section
V. C. shall be cumulative and not to the exclusion of each other or any other
remedy available to the party under this Agreement or the Ancillary Agreements
or under applicable law (including the Attachments hereto).
VI. Prohibited Services.
LLC shall not provide or otherwise engage in any services or activities which
would be held to constitute the practice of medicine, any other health care
service profession or nursing or be considered the operation of a hospital or
laboratory under the laws of the State of New York either in general or pursuant
to the terms of this Agreement. LLC is not entitled to and shall not seek from
patients any remuneration for the services provided by PC. The parties hereby
agree that there will be no illegal or unethical division of any of the fees of
any physician or other health care service professional and that any sums
collected from or on behalf of a patient, for physician or professional
services, shall be the property of the PC. All amounts charged patients for
professional services shall be payable to the PC.
VII. Assignment Prohibited.
Neither party may assign any of its rights, title or interest under this
Agreement without the prior written consent of the other. For purposes hereof,
any issuance, reissuance, sale, transfer or assignment of stock, warrants,
options or rights to subscribe to, purchase or otherwise acquire any shares of
stock in PC, alone or in the aggregate, including , without limitation by
operation of law whereby majority control of the PC shall vest in a party or
parties other than ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D. (excluding from the
prohibitions under this Section VII any transfer to a successor in interest to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D. in conjunction with a sale or transfer of the
interest of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D. in the PC or the private practice
conducted by her under Radiological Associates of Long Island, P.C. or in the
Percentage Interest of Rockville PET, Inc. as more fully set forth and permitted
in the Operating Agreement referenced in the definition of Ancillary Agreements
in Attachment I), shall constitute a prohibited assignment of this Agreement.
Notwithstanding the foregoing, an assignment of this Agreement to another entity
in which ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D. is the majority equity owner shall be
permitted, provided PC is not then in default hereunder and further provided
notice thereof shall be given to LLC in writing accompanied by the executed
documents of assignment whereby the assignee shall assume and agree to be bound
by all of the PC's obligations and provisions in this Agreement. No such
assignment shall relieve the PC of any of its obligations to the LLC existing on
15
the date of any such notice of assignment except as provided in the Ancillary
Agreements. In the event of a conflict between the terms of this Section VII and
the Operating Agreement of the LLC, the terms of the Operating Agreement of the
LLC shall preempt the provisions of this Section VII.
VIII. Miscellaneous.
The PC and LLC agree to take such further actions, and to create and execute
such further instruments and agreements, including, but not limited to, any
licenses, leases, assignments, assumptions and contracts that are necessary to
discharge and perform any of their respective duties, obligations and agreements
hereunder. See also Attachment III annexed hereto.
IX. Representations and Warranties of the Parties.
The PC and LLC each represent and warrant to the other as follows:
A. The PC represents and warrants that it is a professional
corporation duly authorized to and engaged in the practice of medicine and
organized and validly existing under the laws of the State of New York, in good
standing and that same is solely owned by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D.
B. LLC represents and warrants that it is a limited liability
company engaged in the business of health care practice management and duly
organized and validly existing under the laws of the State of New York, in good
standing.
C. It has all the necessary power to own all of its properties
and assets and to carry on its business as now being conducted.
D. It has the legal authority to execute and deliver and
perform this Agreement and all other agreements and documents executed and
delivered by it pursuant to this Agreement.
E. It has taken all actions required by law, its Certificate
of Incorporation, Articles of Organization, operating agreements, shareholders
agreements, Bylaws or otherwise to authorize the execution, delivery and
performance of this Agreement and related documents.
F. The execution and delivery of this Agreement does not and,
subject to the consummation of the transactions contemplated by this Agreement,
shall not, violate any provisions of its Certificate of Incorporation, Articles
of Organization, Bylaws or any agreement, instrument, order, arbitration award,
judgment or decree, to or by which it or any officer, director, shareholder,
member, or any Affiliate is a party or by which it or any of them is bound.
G. This Agreement has been duly executed and delivered by them
and constitutes the legal, valid and binding obligation of them enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other laws, rules or regulations
affecting generally the enforcement of creditors rights and by general
principles of equity.
H. Neither ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D. nor, to the best of the
PC's knowledge, the Practice Providers or any other Affiliate now or hereafter
employed or working for it: (i) has ever had his/her license to practice
medicine in any state or his/her DEA number suspended, relinquished, terminated,
restricted or revoked or been debarred from participating in or associating with
any third party payor program, whether temporarily or permanently; (ii) been
reprimanded, sanctioned or disciplined by any governmental authority or
specialty board, with respect to or under any securities laws, rules or
regulations, or with respect to the professional practice of medicine; (iii)
during the five (5) year period preceding the Effective Date of this Agreement
had entered against him, her or it final judgment in, or settled without
judgment, a securities fraud action or similar action; (iv) has any pending
16
action or claim for malpractice or has become the subject of a malpractice claim
during the five (5) year period preceding the Effective Date of this Agreement;
or (v) has ever had his/her medical staff privileges, if any, at any hospital or
medical facility suspended, terminated, restricted or revoked, (except as
otherwise listed on Exhibit A annexed hereto).
I. To the best knowledge of Premier P.E.T. Imaging
International, Inc. ("Premier"), as a member of LLC, neither Premier P.E.T.
Imaging International, Inc., Sagemark ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or any shareholder (excluding in the case of Sagemark
shareholders other than the aforementioned individuals), officer, or director of
said entities; (i) has ever had his/her license to practice medicine in any
state or his/her DEA number suspended, relinquished, terminated, restricted or
revoked or been debarred from participating in or associating with any third
party health care payor program, whether temporarily or permanently; (ii) been
reprimanded, sanctioned or disciplined by any governmental authority or
specialty board, with respect to or under any securities laws, rules or
regulations, or with respect to the professional practice of medicine (iii)
during the five (5) year period preceding the Effective Date of this Agreement
had entered against him, her or it final judgment in, or settled without
judgment, a securities fraud action or similar action; (iv) has any pending
action or claim for malpractice or has become the subject of a malpractice claim
during the five (5) year period preceding the Effective Date of this Agreement;
or (v) had his/her medical staff privileges, if any, at any hospital or medical
facility suspended, terminated, restricted or revoked, (except as otherwise
listed on Exhibit C annexed hereto).
X. Medical Practice Issues
A. Practice of Medicine.
The parties acknowledge that the LLC is not authorized or qualified to engage in
any activity which constitutes the practice of medicine and nothing in this
Agreement shall be construed as the practice of medicine by LLC. To the extent
that any act or service required by LLC is construed as or deemed to constitute
the practice of medicine, LLC is released from any obligation to provide any
such act or service without otherwise affecting the terms of this Agreement.
B. Insurance.
The PC shall provide, or arrange for the provision of and maintain throughout
the Term, for the PC, and each Practice Provider and its employees and agents,
professional liability and malpractice insurance coverage in the minimum amount
of $1,000,000 per occurrence and $3,000,000 annual aggregate, or in the minimum
amounts required by law, if greater, and workmen's compensation and disability
insurance coverage in the minimum amounts required by applicable law for PC
Personnel (same shall be deemed PC Expenses as defined in Attachment I). PC
shall take all reasonable steps to have, to the extent the following shall be
available under the carrier's policies, all such insurance policies name the LLC
as an additional insured as and to the extent its interest shall appear, and
provide for not less than thirty (30) days notice of non-renewal or cancellation
to LLC. Written evidence of such policies being in full force and effect shall
be delivered to the LLC by the PC subsequent to the date of execution of this
Agreement, but as a condition precedent to the commencement of the parties
obligations hereunder, and annually thereafter upon request of the LLC.
C. No Reciprocation.
The parties hereby acknowledge and agree that the benefits conferred upon each
of them hereunder neither require nor are in any way contingent upon:
1. the recommendation, referral or any other arrangement for
the provision of any item or service offered by LLC or any of its Affiliates to
any patient of PC, its shareholders, officers, directors, employees, contractors
or agents; or
17
2. the recommendation, referral or any other arrangement for
the provision of any item or service offered by PC or any of its Affiliates to
any patient by LLC's owners, officers, managers, employees, contractors or
agents.
IN WITNESS WHEREOF, the PC and LLC have duly executed this Agreement on the day
and year indicated above.
Long Island Positron Emission Tomography
Scanning, P.C.
by: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D., President
Premier P.E.T. Imaging International, Inc., as
managing member in and on behalf of Premier
P.E.T. of Long Island, LLC
by: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D., Chief Executive
Officer
18
ATTACHMENT I
Definitions
Affiliate, as used herein, shall mean: a party; any shareholder, officer,
member, partner or other person having an equity or financial interest or voting
control in a party; any corporation, limited liability company, partnership,
sole proprietorship or similar such entity, whether existing now or in the
future, which is owned, directly or indirectly, controlled, directly or
indirectly, or managed directly or indirectly by any party.
Ancillary Agreements means the following: the Sagemark Sublease, the Sagemark
Guaranty, the Premier Guaranty, the Operating Agreement of the LLC, the Loan
Documents, the PC Indemnity Guaranty, the Subordinated Promissory Notes executed
by the LLC as borrower to the LLC Members as lender, and the Subscription
Agreements and Questionnaires executed by the LLC Members.
Bank as such term is used in Section IV. E. of this Agreement shall mean the ▇.
▇. ▇▇▇▇▇▇ ▇▇▇▇▇ Bank branch at Rockville Centre, New York.
FF&E has the meaning ascribed to it in Section II E 12.
Fiscal Year means the period commencing on January 1 of each year and ending on
December 31 of each year.
LLC Members means the individuals or entities comprising the owners of LLC
including:
a) Premier P.E.T Imaging International, Inc. ("Premier") the sole
shareholder of which is Sagemark; and
b) Rockville PET, Inc. ("Rockville PET") the sole shareholder of which
is ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D.
Loan Documents means those certain loan agreements executed by the LLC as
borrower with DVI Financial Services, Inc. ("DVI") to finance the acquisition of
the FF&E.
Managers of the LLC or Managers shall mean the individuals designated by Premier
and Rockville PET as Managers of the LLC.
Operational Expenses means all expenses incurred by LLC in providing the
Practice Premises, services, supplies, FF&E and other services described in this
Agreement including, without limitation, in Section II hereof for, to and on
behalf of the PC including, but not limited to, the following: (i) all direct
and indirect expenses relating to the employment or engagement by LLC of LLC
personnel (including, but not limited to, the Practice Manager described in
Section II E 8) to provide services for the LLC with respect to the PC Practice,
including a pro-rata share (based on days of service per month) of expenses
relating to such employees who provide services to the LLC and to other persons
or entities and including, but not limited to, compensation, benefits, payroll
taxes and usual payroll deductions, worker's compensation insurance and all
similar items; (ii) all expenses associated with the use and operation of the
Premises, including but not limited to, rent, telephone, electric, gas and water
utility expenses, real property taxes and other lease pass through costs and all
other amounts payable under the Sagemark Sublease; (iii) the lease and/or
purchase payments, as applicable, of the FF&E including, without limitation, all
payments under the Loan Documents and the annual depreciation and all other
direct and indirect expenses (including any purchase or leasing costs and taxes)
related to the FF&E provided to the Practice by LLC and the FF&E, if any,
purchased by LLC for use hereunder on behalf of the Practice during the Term and
including maintenance, repair, replacement and personal property taxes with
respect thereto; (iv) costs regarding policies for all insurance to be obtained
and maintained by LLC under this Agreement including, without limitation,
19
premiums and deductibles under such policies of insurance, and any costs and
expenses incurred with respect to claims under such policies of insurance and
liability or other judgments assessed against the LLC in excess of policy limits
or within the deductible limit of any such policies of insurance (in all of such
instances as relating to the Practice); (v) all expenses associated with the
other support services listed in Section II or elsewhere in this Agreement; (vi)
obligations under licenses, leases or subleases of real and personal property
for the Premises, including without limitation under the Sagemark Sublease, and
the construction, preparation, maintenance and repair of such real and personal
property; (vii) personal property and intangible taxes assessed against assets
supplied by LLC and used by the Practice; (viii) state and local business taxes,
fees and charges; (ix) utility, waste collection and janitorial expenses
relating to the Practice at the Premises; (x) physician and non-physician
personnel recruitment expenses incurred by LLC; (xi) supplies (pharmaceuticals
shall always be acquired for, on behalf of, and in the name of the PC); (xii)
all such other items as shall be the responsibility of the LLC as Operational
Expenses in this Agreement or agreed to by the parties in writing from time to
time; and (xiii) insurance premium expenses for business office insurance (which
shall name PC as an additional insured if available). Reimbursement for all such
expenses shall be included in the Administrative Fee payable under Section IV.
PC Expenses means all direct expenses to be incurred by the PC hereunder,
including: (i) all federal, state or local income taxes of the PC; (ii) all
salaries and benefits, workers' compensation insurance, retirement plan
contributions, health, disability and life insurance premiums, payroll taxes or
cellular phone and automobile expenses incurred by the PC Personnel in
connection with the Practice (with appropriate adjustment with respect to PC
Personnel who work other than for the PC); (iii) Practice Provider licensure
fees, board certification fees and costs of membership in professional
associations which are paid by the PC and which are required solely for the
purpose of PET; (iv) the cost of maintaining the corporate existence of PC; (v)
costs of continuing professional education for the Practice Provider(s) which
are paid by the PC and which are required solely for the purpose of PET; (vi)
costs associated with accounting and professional services incurred by or on
behalf of the Practice; (vii) costs regarding policies of professional liability
or malpractice insurance premiums (provided premiums for malpractice insurance
maintained by the PC with respect to Practice Providers which covers such
Practice Providers services in practices of PC Affiliates shall not be included
hereunder), business interruption insurance and deductibles under such policies
of insurance; (viii) any costs and expenses incurred with respect to
professional liability, malpractice or other liability claims and settlements or
judgments assessed or entered against the PC in excess of policy limits or
within the customary deductible limit (that deductible maintained by ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D. with respect to such insurance in other practices in
which she renders medical services as per Exhibit D annexed) of any such
policies of insurance (in all of such instances as relating to the Practice at
the Premises); (viii) workers compensation, disability insurance premiums
(allocated for the year of coverage on each policy into 12 monthly installments)
payable by the PC with respect to PC Personnel hereunder; (ix) cost to PC of
professionals described in Section II E. 14; and (x) such other items designated
as Practice Expenses in this Agreement or by the parties in writing from time to
time. Notwithstanding the foregoing or any other provision of this Agreement to
the contrary, PC Expenses shall not include (a) any salary, benefits, payments
or other expenses paid to ▇▇. ▇▇▇▇▇▇▇ or any other Practice Provider by the PC
(other than the malpractice insurance premiums referred to in clause (vii)
above), or (b) any salaries, benefits, payments or other expenses paid to any PC
Personnel rendering billing and collection services for the PC.
PC Indemnity Agreement means that guaranty agreement entered into by
Radiological Associates of Long Island, P.C. and Sagemark and Premier
guaranteeing Rockville PET, Inc.'s obligation to indemnify Sagemark and Premier
with respect to the Sagemark Guaranty and Premier Guaranty as set forth in the
Operating Agreement of the LLC.
Practice Premises or Premises means the medical offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, licensed to the PC by LLC hereunder.
20
Practice Providers means individuals who are duly licensed to practice medicine
in the State of New York and who are retained, employed by and/or are
shareholders in the PC in the Practice, other individuals who are employees of
the PC or otherwise under contract with the PC to provide physician or other PET
services to patients of the Practice with or without physician supervision
(including, but not limited to, nurse practitioners, physician assistants, and
any other individuals required by contract, law or regulatory authority to be
employees of the PC for purposes of obtaining payment or reimbursement or
otherwise). Current Practice Providers are listed on Exhibit B.
Practice Revenues means all revenues received by or on behalf of the PC and the
Practice Providers in the Practice as a result of professional PET Services
furnished to Practice patients, including, but not limited to, payments under
capitation arrangements, less returns, contract allowances and reimbursement to
third party payors and patients, as applicable.
PET means positron emission tomography.
Premier Guaranty means that certain guaranty agreement given by Premier to DVI
as security with respect to the obligations of the LLC under the Loan Documents.
Reserves means the reserve from Practice Revenues established by the PC's
accountants using generally accepted accounting principles, reasonably and
consistently applied and consistent with past practice, which reserves will not,
however, be less than an amount equal to two months of Administrative Fees.
Sagemark means The Sagemark Company, Ltd., a New York publicly owned corporation
with offices at 1285 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇.
Sagemark Guaranty means that certain guaranty agreement given by Sagemark to DVI
as security with respect to the obligations of the LLC under the Loan Documents.
Sagemark Sublease means that certain sublease agreement dated as of the 10th day
of June, 2002, pursuant to which the Premises are subleased to the LLC under a
certain lease from Top Terrace Realty, LLC as lessor therein, to Sagemark as
lessee therein.
21
ATTACHMENT II
FF&E
Siemens Ecat Accel PET Scanner and Ancillary Equipment
Medical Instrumentation Equipment
Lab Equipment
Office Furniture
Office Furniture and Fixtures
Computer Equipment
Workstations
All the above as and to the extent reasonably necessary to permit PC to operate
the Practice in the Premises.
22
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. 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.
b. 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.
c. Counterparts.
The parties may execute this Agreement in several counterparts, each of which
shall be deemed to be an original, and all of such counterparts together shall
constitute and be one and the same instrument.
d. Governing Law.
This Agreement shall be interpreted, construed and enforced in accordance with
the laws of the State of New York, applied without giving effect to any
conflicts of law principles.
e. Modifications.
This Agreement and the Ancillary Documents contain the entire agreement of the
parties with respect to the subject matter hereof and supersede any prior or
contemporaneous negotiations, understandings or agreements between the parties,
written or oral, with respect to the transactions contemplated by this
Agreement. Neither this Agreement, nor any of its terms or the obligations of
the parties hereunder may be waived, changed, modified, discharged or terminated
or orally, but may only be waived, changed, modified, discharged or terminated
only by an agreement in writing signed by the party against whom enforcement of
any waiver, change, modification, discharge or termination is sought (except for
terminations in accordance with Section V hereof).
f. No Rule of Construction.
Both parties and their respective counsel have read, negotiated and participated
in the drafting of the language and terms used this Agreement. Accordingly, no
rule of construction shall apply to this Agreement which construes any language,
whether ambiguous, unclear or otherwise, in favor of, or against any party by
reason of that party's role in drafting this Agreement.
g. Notices.
All notices, demands, consents, requests, approvals or other communications
(collectively the "Notices") which are required or permitted to be given
pursuant to this Agreement must be in writing. Notices will be delivered
personally, by hand, receipt acknowledged, or sent by registered or certified
mail, postage prepaid, return receipt requested, or by overnight mail (Federal
Express or US Express Mail or equivalent), addressed to a party at the address
set forth below.
23
(i) LLC's Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
Attn: Manager
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
Premier P.E.T. International Imaging, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Financial Officer
(ii) PC's Address for Notices:
▇/▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇. P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D.
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(iii) Effective Date. Notice given personally will be
effective upon delivery. Notice given by United States mail will be effective on
the third United States Post Office delivery day after the date of mailing.
Notice given by US Express Mail or Federal Express or equivalent will be deemed
effective on the date of delivery as reported by the carrier, or if delivery is
refused, on the date following the date of attempted delivery thereof by US
Express Mail, Federal Express or other such overnight carrier as evidenced by
the carrier's notice of such refusal.
(iv) Change of Address. Either party may change its
address for Notices by notice given pursuant to this Section.
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.
i. Access to Records.
To the extent required by Section 1395x(v)(1) of Title 42 of the United States
Code, the clauses contained in that section are incorporated herein by reference
with like effect as though set forth herein at length.
24
j. Binding Effect.
This Agreement shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective successors and permitted assigns.
k. Waiver of Right.
No waiver of, or failure by either party, to enforce a provision, covenant,
condition or right under this Agreement (collectively, a "Right") will be
construed as a subsequent waiver of the same Right, or a waiver of any other
Right. No extension of time for the performance of any obligations or acts will
be deemed an extension of the time for the performance of any other obligations
or acts.
3. Legal Events Triggering Contract Modification or Termination
a. Changes in Reimbursement.
In the event that any 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 any
prohibition, restriction or limitation and which takes 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, this Agreement shall not terminate but the matter shall be
resolved as set forth in Section 9 below.
b. Enactment or Interpretation of Relevant Statutes and
Regulations. This Agreement shall be subject to termination at the option of
either party in the event of the invalidity, amendment, modification or
implementation of any applicable law, rule or regulation, at any time during the
Term which is determined by judicial decision, or decision ruling, letter of
opinion or similar such authority of a regulatory agency having jurisdiction
over the subject matter of this Agreement, or the parties hereto, to prohibit,
or in any way materially restrict or change the terms of this Agreement, or
which by virtue of this Agreement has or could reasonably be expected to have a
material adverse affect on the ability of the parties to participate in this
Agreement. Notwithstanding the foregoing, the parties hereby agree that in the
event of any such determination as described above in this Section b., they
shall enter into good faith negotiations to modify or amend this Agreement as
and to the extent necessary to bring this Agreement into compliance with
applicable law, rule or regulation while affording the parties the benefits
anticipated by this Agreement to the maximum extent available. In the event that
the parties cannot agree on an amendment or modification as above, same shall be
submitted for determination, by either party, in accordance with the provisions
of Section 9 below.
c. Renegotiation.
Notwithstanding the foregoing, any termination called for under subsections a or
b above, shall be subject to the parties negotiating in good faith for a minimum
of sixty (60) days to amend this Agreement to conform with such changes and the
intent of, including the financial benefits afforded, the parties under this
Agreement, as well as dispute resolution as called for under Section 9 of this
Attachment III.
4. Independent Contractor Status.
The PC and LLC are to perform and exercise their rights and obligations under
this Agreement as independent contractors. LLC's sole function under this
Agreement is to provide the Premises, FF&E and services, as required to be
provided in this Agreement, in a competent and satisfactory manner, exerting
reasonable care in the performance of all such duties. PC's sole function under
this Agreement is to operate the Practice at the Premises in a competent and
satisfactory manner, exerting reasonable care in the performance thereof.
Neither party shall become liable for any of the obligations, liabilities, debts
or losses of the other unless otherwise specifically provided by this Agreement.
Neither party shall have any liability whatsoever for damages suffered on
account of the willful misconduct or negligence of any employee, agent or
independent contractor of the other. Each party shall be solely responsible for
compliance with all state and federal laws pertaining to employment taxes,
25
income withholding, unemployment compensation contributions and other employment
related status regarding their respective employees, agents and servants.
5. Prohibition Against Discrimination.
The PC and LLC 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.
LLC shall not include its name or that of its parent, subsidiaries or Affiliates
on any letterhead, professional announcements, brochures, promotional materials,
or the like relating to the Practice and/or to LLC, without the prior written
consent of the PC, which shall not be unreasonably withheld, conditioned or
delayed, and further provided same shall in no event appear on any medical
record or report issued by the PC. LLC shall have the right to refer to the PC
and the activities of the PC at the Premises on its letterhead and in marketing
and promotional materials, provided LLC shall in no event refer to itself as
authorized to operate or as operating a PET, PET center or PET facility or
similar such facility, or as providing PET Services at the Premises. All such
promotional and marketing materials, including LLC stationary shall be approved
in advance by PC, such approval not to be unreasonably withheld, conditioned or
delayed.
7. Reasonableness of Compensation.
The parties hereto agree that the Compensation payable by the PC to LLC set
forth in Section IV. of this Agreement represents fair and reasonable
compensation to LLC, and is the result of arms length negotiations, for the
provision of the Premises, FF&E, supplies, and services to be provided by LLC
hereunder.
8. Indemnification.
a. Indemnification of LLC.
PC shall indemnify, hold harmless and defend LLC, its members, managers,
employees, contractors, and other agents and Affiliates from and against any and
all liabilities, losses, damages, claims, causes of action, costs and expenses
incurred by them (including reasonable attorneys' fees) caused or asserted to
have been caused, directly or indirectly, by or as a result of any acts or
omissions of PC, its shareholders, officers, directors, employees, contractors,
Affiliates, or other agents in connection with this Agreement or the performance
of services by such persons in connection with the Practice, including, but not
limited to, claims of professional malpractice, but excluding any right to
indemnification with respect to any such liabilities, losses, damages, claims,
causes of action, costs and expenses incurred by them (including reasonable
attorneys' fees) caused or asserted to have been caused in whole or in part,
directly or indirectly, by or as a result of any acts or omissions of LLC, its
members, managers, employees, contractors, Affiliates or agents in connection
with this Agreement or the performance of services by such persons hereunder
including, without limitation, at or with respect to the Practice or the
Practice Premises.
b. Indemnification of PC.
LLC shall indemnify, hold harmless and defend PC, its shareholders, officers,
directors, employees, contractors, other agents and Affiliates from and against
any and all liabilities, losses, damages, claims, causes of action, costs and
expenses incurred by them (including reasonable attorneys' fees) caused or
asserted to have been caused, directly or indirectly, by or as a result of acts
or omissions constituting negligence or gross negligence by LLC, its members,
managers, other agents or Affiliates in connection with this Agreement, but
excluding any right to indemnification with respect to any such liabilities,
losses, damages, claims, causes of action, costs and expenses incurred by them
(including reasonable attorneys' fees) caused or asserted to have been caused in
whole or in part, directly or indirectly, by or as a result of any acts or
omissions of PC, its shareholders, officers, directors, employees, contractors,
Affiliates or agents in connection with this Agreement or the performance of
services by such persons hereunder including, without limitation, at or with
respect to the Practice or the Practice Premises.
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c. Right to Defend.
The party from whom indemnification is sought hereunder, (the "Indemnitor")
shall have the right, but not the obligation, to contest, defend or litigate,
and to retain counsel of its choice in connection therewith, any claim, action,
suit or proceeding by any third party alleged or asserted against the party
seeking indemnification (the "Indemnitee") or any of its shareholders,
directors, members, managers, officers, employees, Affiliates or agents in
respect of, resulting from, related to or arising out of any such any claim,
action, suit or proceeding. The Indemnitee shall not be entitled to settle or
compromise any such claim, action, suit or proceeding without the prior written
consent of the Indemnitor, which consent shall not be unreasonably withheld.
d. Notice.
As a condition precedent to any right of indemnification hereunder, if any claim
or liability shall be asserted against either party hereunder which would give
rise to a right of indemnification hereunder by the other, the party against
whom such claim or liability has been asserted, shall promptly notify the other
party of the same. Failure to timely notify shall be deemed a waiver of any
right of indemnification hereunder. The party against whom such claim or
liability has been asserted shall cooperate in every way in the defense of such
claim or liability.
9. Dispute Resolution.
a. Preliminary Resolution.
The parties will make good faith efforts to resolve mutually any disputes which
arise between them regarding this Agreement or under the Ancillary Agreements.
As part of this dispute resolution process, either party will, at the request of
the other party, promptly provide a short and plain written statement setting
forth that party's position regarding the dispute and that party's suggested
resolution. The other party will then respond promptly with a short and plain
written statement setting forth its position and suggested resolution for the
dispute, if any. For a period of fifteen (15) days following the sending of the
statements, the parties shall negotiate in an effort to resolve the controversy.
There shall be excluded from the dispute resolution procedure established
hereunder, any defaults in the payment obligations of the PC to the LLC under
this Agreement. In the event there is a dispute as to the amount of any payments
due to the LLC, the PC shall be required to pay the undisputed amount of any
such payments then due to the LLC in accordance with the provisions of Section
IV and to give notice as to the specifics of the amount in dispute and then
resort to the dispute resolution procedure in an effort to resolve the disputed
amount. Similarly, in the event there is a dispute as to the amount of the
Minimum Retention or Excess Cash, the PC shall be entitled to withdraw the
undisputed amount thereof from the LIPET Account, in accordance with the
provisions of Section IV, and LLC shall give notice as to the specifics of the
amount in dispute and then resort to the dispute resolution procedure herein to
resolve the disputed amount.
b. Arbitration.
Any dispute covered by Subsection a. above which has not been resolved by the
parties under the procedure set forth in subsection a above, shall be submitted
to and decided by arbitration in accordance with the Rules of the American
Arbitration Association, as follows:
(i) There shall be one arbitrator who shall be selected in
accordance with the Rules of the American Arbitration Association;
(ii) The authority of the arbitrator shall be limited to a
determination of the facts, and to the interpretation and application
of specific provisions of this Agreement as they may apply to the
dispute. The arbitrator shall render an opinion and a final award, if
any, which shall be binding on both parties; and
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(iii) Each party shall bear its own fees, costs, and expenses
of an arbitration proceeding, including witnesses, travel, attorneys,
and other representatives; the general costs and expenses of the
arbitration, such as facilities rental and fees, costs, and expenses of
the arbitrator and the American Arbitration Association, shall be borne
equally by the parties. This paragraph shall govern costs with respect
to arbitration only, and the provisions of paragraph 2(b) of this
Attachment III shall not apply to arbitration under this dispute
resolution procedure. Notwithstanding the foregoing, the Arbitrators
may award costs and attorneys fees to the respective parties as part of
their determination and arbitration award.
(iv) The site of arbitration shall be in New York County, New
York.
(v) In the event that a dispute shall arise between or among
the parties or their Affiliates, members, shareholders, officers,
directors or managers under the Ancillary Agreements any disputes
hereunder or thereunder shall be consolidated in one arbitration and
the Affiliates, members, shareholders, officers, directors or managers
of each party in interest shall be deemed one party for the purpose
thereof.
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ATTACHMENT IV
Minimum Retention
PC's minimum retention (the "Minimum Retention" for the purposes of this
Agreement) shall be an amount to be withdrawn from the LIPET Account by the PC
and retained by it each month during the Term hereof from Practice Revenues
deposited into such account for such month, which amount shall be the sum of the
amounts described in subparagraphs (a) through (c) below:
(a) All PC Expenses, as defined in Attachment I and set forth in this Agreement,
incurred by PC in the applicable month; plus
(b) A fee for services rendered by the PC in billing and collecting all Practice
Revenues in an amount equal to 3% of the Practice Revenues deposited into such
account in the applicable month (the "Billing and Collection Fee"); plus
(c) A per scan reading/interpretation amount to cover costs of reading and
interpreting each PET scan performed in the applicable month in an amount equal
to $170 per scan (except that such reading/interpretation amount shall be
payable solely from 10% of the Practice Revenues deposited into such account in
such month and any portion of such reading/interpretation amount which is not
paid in a particular month shall be accrued and added to the amount of the
reading/interpretation amount in the following month and be accrued from month
to month thereafter until withdrawn by PC).
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ATTACHMENT V
HIPAA Rules
HIPAA Rules (the "Rules") Compliance
------------------------------------
Any Protected Health Information (PHI) as defined under the Health Care
Insurance Portability and Accountability Act of 1996 (HIPAA) and the rules and
regulations promulgated pursuant thereto (the "Rules") which shall come into the
possession of the LLC ( including for the purposes hereof the LLC Members.
managers, officers, employees, contractors, agents and Affiliates) shall be used
solely for the purpose of assisting in providing the services described in the
Agreement to which these rules are annexed (the "Agreement")
For the purposes hereof, PHI includes any individually, identifiable
information, whether oral or recorded in any form or medium, that is created by
a provider of medical services, a health plan or public health authority which
relates to the past, present or future physical or mental health condition of an
individual, the provision of health care to an individual; or the past, present,
or future payment for the provision of health care to an individual, all as is
more fully set forth in 44 CFR 160.103.
LLC agrees that it shall:
Not use or further disclose the information, other than as permitted or required
by the Agreement, or as required by law and shall limit access to PHI and its
requests therefor to the minimum PHI necessary for LLC to carry on its
obligations under the Agreement;
Use appropriate safeguards to prevent use or further disclosure of the
information other than as provided for by the Agreement;
Report to PC any use or disclosure of the information not provided for by the
Agreement of which LLC becomes aware;
Provide that any agents, including experts and subcontractors, to whom LLC
provides PHI received from, or created or received by LLC on PC's behalf, shall
agree in writing to the same restrictions and conditions that apply to LLC with
respect to such information;
Make available, subject to confidentiality laws, rules and regulations, PHI in
accordance with the HIPAA Privacy Rule's requirements for "Access of Individuals
to PHI;"
Make available, subject to confidentiality laws, rules and regulations, PHI for
amendment and incorporate any amendments to PHI in accordance with the Rule's
requirements for "Amendment of PHI;"
Make available, subject to confidentiality laws, rules and regulations, the
information required to provide an accounting of disclosures in accordance with
the Rule's requirements for "Accounting of Disclosures of PHI;"
Make available, subject to confidentiality laws, rules and regulations, LLC's
internal practices, books, and records relating to the use and disclosure of PHI
received from PC, or created or received by LLC on PC's behalf, to the Secretary
of the Department of Heath and Human Services for purposes of determining PC's
and LLC's compliance with the Rules; and upon termination of the Agreement, if
feasible, return or destroy all PHI received from, or created or received by LLC
on PC's behalf that LLC still maintains in any form and retain no copies of such
information, or, if such return or destruction is not feasible, to extend the
protections of this Agreement to the information and limit further uses and
disclosures to those purposes that make the return or destruction of the
information infeasible.
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Perform such other tasks for and on behalf of the PC as shall be directed by the
PC to maintain HIPAA compliance including, without limitation, development,
audit, review and enforcement of compliance policies and procedures.
At LLC's sole cost and expense, provide for the PC filing a compliance plan for
electronic billing requirements under HIPAA on or before October, 14, 2002 and
achieving billing compliance on or before October 14, 2003 and complying with
HIPAA security and compliance rules on or before April, 14, 2003, as such dates
may be extended.
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EXHIBIT A
---------
Pending Malpractice Claims or Malpractice
-----------------------------------------
Claims, Filed Against PC or Practice Providers
----------------------------------------------
Within the Five (5) Year Period Immediately
-------------------------------------------
Preceding The Effective Date Of This Agreement.
-----------------------------------------------
None
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EXHIBIT B
---------
Practice Providers
------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, M.D.
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EXHIBIT C
---------
Pending Claims or Suits, Settlements and Judgments Against
-----------------------------------------------------------
Premier P.E.T. Imaging International, Inc.,
Sagemark, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
NONE
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EXHIBIT D
---------
PC Insurance Deductibles
------------------------
None only as to professional liability malpractice insurance.
-------------------------------------------------------------
35