EXHIBIT 10.21
SERVICES AGREEMENT (HSO MODEL)
PRIME VISION HEALTH, INC.
TABLE OF CONTENTS
ARTICLE 1 - Definitions 1
Section 1.1 Certain Defined Terms 1
(a) "Affiliate" 1
(b) "Bankruptcy Act" 2
(c) "Company Event" 2
(d) "Contract Year 2
(e) "Management Information System" 2
(f) "Office" 2
(g) "Optometrists" 2
(h) "Owner Operations" 3
(i) "Person" 3
(j) "Physicians" 3
(k) "Physician Extender Employees" 3
(l) "Practice Revenues" 3
(m) "Shareholders" 3
Section 1.2 Other Defined Terms 3
Section 1.3 References 3
ARTICLE 2 - Company's Obligations 4
Section 2.1 No Medical Services 4
Section 2.2 Core Services 4
(a) Standard Marketing Program and Templates 4
(b) HSO Buying Group 5
(c) Managed Care Contract Priority 5
Section 2.3 Supplemental Services 6
Section 2.4 No Other Services6
ARTICLE 3 - Owner's Obligations 6
Section 3.1 Furniture, Fixtures and Equipment 6
Section 3.2 Employment of Medical and Non-Medical Staff 6
Section 3.3 Day-to-Day On-Site Operations 6
ARTICLE 4 - Compensation 6
Section 4.1 Services Fee 6
Section 4.2 Fee Fair and Reasonable; Not Payment for Referral 7
Section 4.3 Payment of Services Fee 7
Section 4.4 Statement of Practice Revenues 7
Section 4.5 Expenses 8
ARTICLE 5 - Term of Agreement 8
Section 5.1 Term 8
Section 5.2 Early Termination 8
Section 5.3 Buy-Out by Owner 9
Section 5.4 Effect of Early Termination Generally 9
ARTICLE 6 - Other Agreements of Parties 10
Section 6.1 Relationship of Parties 10
Section 6.2 No Warranty 10
Section 6.3 No Obligation or Inducement to Refer 10
Section 6.4 Confidentiality 11
Section 6.5 Access to Books and Records 12
Section 6.6 Retaining Business Records 12
Section 6.7 Exclusivity of Agreement 12
Section 6.8 Assistance to Company 13
Section 6.9 Release of Claims by Owner and Initial Shareholders 13
Section 6.10 Release of Claims by Company 13
Section 6.11 Admission of Shareholders 14
Section 6.12 Obligations of the Shareholders 14
Section 6.13 Sales and Use Tax 14
Section 6.14 Exclusion by Owner of Certain Sources of Revenue 14
ARTICLE 7 - Indemnification 15
Section 7.1 Indemnification by the Owner 15
Section 7.2 Indemnification by the Company 15
ARTICLE 8 - Representations of the Parties 16
Section 8.1 Representations of Company 16
(a) Organization and Good Standing 16
(b) No Violation 16
(c) No Claims Against Owner 16
Section 8.2 Representations of the Owner 16
(a) Organization and Good Standing 16
(b) No Violation 17
(c) No Claims Against Company 17
ARTICLE 9 - Miscellaneous 18
Section 9.1 Violation of Law 18
Section 9.2 Assignments 18
Section 9.3 Notices 19
Section 9.4 Severability 19
Section 9.5 Governing Law 20
Section 9.6 Entire Agreement; Amendment 20
Section 9.7 Headings 20
Section 9.8 Waiver 20
Section 9.9 Construction of Words 20
Section 9.10 Prevention of Performance by Company 20
Section 9.11 Remedies 21
Section 9.12 No Referrals 21
Section 9.13 Attorneys' Fees 21
Section 9.14 Survival 21
Section 9.15 Confidentiality of Records 21
Schedules:
Schedule 1.1(f) List of Owner Facilities
Schedule 1.1(l) Exceptions to Practice Revenues
Schedule 2.2(b) Exceptions to HSO Buying Group
Schedule 2.3 Supplemental Services
Schedule 4.4 Form of Statement of Practice Revenues
Schedule 6.9 Exceptions to Release of Claims by Owners and
Initial Shareholders
Schedule 6.10 Exceptions to Release of Claims by Company
Schedule 6.11 Joinder Agreement
Schedule 8.1(c) Company Claims
Schedule 8.2(c) Third Party Claims
SERVICES AGREEMENT
This Services Agreement (the "Agreement") is made and entered into this
____ day of __________, 1999 (the "Effective Date"), by and between Prime Vision
Health, Inc., a Delaware Corporation (the "Company"), and, P.A., a professional
corporation (the "Owner"), and, M.D., (collectively, the "Initial Shareholders")
(individually, a "Party" and collectively, the "Parties").
W I T N E S S E T H:
WHEREAS, the Owner is a professional corporation whose professional
employees provide ophthalmic and/or optometric care and products to the general
public; and
WHEREAS, the Company is in the business of providing consulting,
administrative, and other support services to ophthalmology and optometric
practices; and
WHEREAS, the Owner desires to obtain the services of the Company in
performing such services under the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
on the terms and subject to the conditions herein set forth, the Parties have
agreed and do hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 Certain Defined Terms. When used in this Agreement and any
attachment thereto, the following capitalized words and phrases shall have the
following meanings assigned to them:
(a) "AFFILIATE" means, with respect to any Person, a Person
that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with the
specified Person; provided, however, that neither the Company nor the
Owner shall be deemed to be an Affiliate of the other and provided,
further, that the Owner and the Company expressly agree that OptiCare
Eye Health Centers, Inc. and its Affiliates shall be deemed to be
Affiliates of the Company.
(b) "BANKRUPTCY ACT" means the Bankruptcy Code, as amended, of
the United States of America and any other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments or similar debtor
relief law (whether state or federal) from time to time in effect
affecting the rights of creditors generally.
(c) "COMPANY EVENT" means the occurrence of any of the
following events:
(i) The dissolution of the Company;
(ii) The filing of a voluntary petition in bankruptcy
or for reorganization under the Bankruptcy Act or a petition
for the appointment of a receiver of all or any substantial
portion of the property of the Company;
(iii) The consent by the Company to an order for relief
under the Bankruptcy Act or the failure to vacate such an
order for relief within ninety (90) days from and after the
date of entry thereof; or
(iv) The entry of any order, judgment, or decree
adjudging the Company as bankrupt or insolvent or which
appoints or provides for the taking of possession by a
receiver, trustee, liquidator, or similar official for any of
the property of the Company, and any such order, judgment, or
decree continuing unstayed and in effect for a period of
ninety (90) days.
(d) "CONTRACT YEAR" means any year beginning on the Effective
Date as set forth herein, or on any anniversary of the Effective Date.
(e) "MANAGEMENT INFORMATION SYSTEM" means the various
management information systems owned or licensed by the Company.
(f) "OFFICE" means any office space, clinic, or facility that
the Owner or the Company shall own or lease or otherwise procure for
use in the Owner's business or businesses and identified, from time to
time, on SCHEDULE 1.1(F).
(g) "OPTOMETRISTS" (O.D.s) means those individuals who are
Doctors of Optometry employed by or under contract or associated with
the Owner to provide professional optometrical services to patients of
the Owner.
(h) "OWNER OPERATIONS" means the businesses, operations and
activities of the Owner that are carried out at the Office or in
connection with the performance or delivery of professional
ophthalmology, optometric or optical services.
(i) "PERSON" means an individual, a corporation, a
partnership, a limited liability company, an association, a joint-stock
company, a trust, any unincorporated organization, or any government or
political subdivision thereof.
(j) "PHYSICIANS" means those Ophthalmologists (M.D.s or D.O.s)
who are physicians employed by or under contract or associated with the
Owner to provide professional medical services to patients of the
Owner.
(k) "PHYSICIAN EXTENDER EMPLOYEES" means nurse anesthetists,
physician assistants, nurse practitioners, or similar positions that
generate a professional or
technical charge who are employed by or under contract or associated
with the Owner to provide services to patients of the Owner.
(l) "PRACTICE REVENUES" means, for any month, any and all
revenue actually collected by or on behalf of the Owner and/or the
Shareholders, no matter where generated, that resulted from the
provision of ophthalmology, optometric and optical services, the sale
of optical products, or otherwise by any professional activities of the
Physicians, Optometrists or Physician Extender Employees, including
without limitation income from expert fees and income generated by
ambulatory surgical centers or Affiliates of the Owner; provided,
however, that Practice Revenues shall not include revenue described on
SCHEDULE 1.1(L), as such Schedule may be amended from time in
accordance with Section 6.14 hereof.
(m) "SHAREHOLDERS" means the Initial Shareholders and any
other Person who may from time to time become a shareholder of the
Owner after the Effective Date and who shall execute a Joinder
Agreement in accordance with Section 6.10 hereof.
Section 1.2 Other Defined Terms. Any capitalized term not specifically
defined in Section 1.1 shall have the meaning provided for the term in the
section in this Agreement in which such term is first used.
Section 1.3 References. All references in this Agreement to "Sections"
or "Articles" shall be to sections and articles of this Agreement unless
otherwise noted. The words "hereof," "herein," "hereby," "hereinafter,"
"heretofore," "hereunder" and words of similar import shall also refer to
material set forth in this Agreement as a whole and not to any particular
subdivision unless expressly so limited.
ARTICLE 2
Company's Obligations
Section 2.1 No Medical Services. The Parties expressly acknowledge and
agree that this Agreement is not intended to and shall not be construed to
permit the Company to make referrals of patients to the Owner nor to become
engaged in any services or activities which constitute the practice of
ophthalmology or optometry or to interfere with, control, direct or supervise
any Physician, Optometrist or other health care provider in the exercise of his
or her professional judgment. The Owner shall be responsible for the control and
direction of all medical and other health care providers for the care and
treatment of all patients or clients, for the provision of all medical and other
health care services, and for ensuring that all such services are provided in
accordance with applicable federal, state and local laws and regulations, the
requirements of Medicare and Medicaid and other third party payors and the
applicable cannons of professional ethics.
Section 2.2 Core Services. The Company shall provide the services set
forth below (the "Core Services"), for the compensation set forth in Article 4.
(a) Standard Marketing Program and Templates. The Company
shall provide the Owner with standardized marketing and promotional
materials, including brochures, print, and other media advertising
copy, all in a "camera-ready" format (the "Marketing Materials") for
potential use by the Owner. On a schedule and in a format to be
determined by the Parties, the Company shall provide the Owner with
updates to the Marketing Materials. The Owner agrees to use the
Marketing Materials in compliance with guidelines provided to the Owner
from time to time by the Company (the "Guidelines"). Any modifications
to the Marketing Materials by the Owner shall be in compliance with the
Guidelines and all costs and expenses relating to such modifications
shall be the responsibility of the Owner. The Owner may also request
that the Company modify or customize the Marketing Materials, provided,
however, that any such modification or customization shall be an Annual
Marketing Plan service subject to the terms and condition set forth in
SCHEDULE 2.3. Nothing herein shall be construed to grant to the Owner a
license to use any trade name owned or licensed by the Company;
provided, however, that the Owner shall be granted non-exclusive,
royalty-free license to use the trade name "OptiCare" in the event that
the Owner selects Annual Marketing Plan services as described in
SCHEDULE 2.3 hereof.
(b) HSO Buying Group. The Company shall provide to the Owner
purchasing services for various items useful to the business of the
Owner ("HSO Buying Group Goods"). HSO Buying Group Goods may, in the
discretion of the Company, include:
(i) optical goods;
(ii) office supplies, discounted services, including
telephone service, property and casualty insurance, general
and professional liability insurance, health insurance and
other ancillary services ("Value Added Services");
(iii) refractive surgery related equipment and
services; and
(iv) related goods and materials
Prices charged to the Owner for HSO Buying Group Goods shall be at the
same per unit prices as the Company is charged for such goods. On a
schedule and in a format to be determined by the Parties, the Company
shall advise the Owner of the HSO Buying Group Goods that are available
and the respective pricing for such goods. Costs of all HSO Buying
Group Goods so purchased shall be responsibility of the Owner. The
Owner hereby agrees that, except with respect to Value Added Services
which may be purchased by the Owner from any supplier thereof and
services described on SCHEDULE 2.2(b) hereof, it shall not purchase any
goods that are offered as HSO Buying Group Goods from any supplier of
goods other than the Company (an "Outside Supplier"); provided,
however, that the Owner may purchase certain enumerated goods from an
Outside Supplier in the event that (i) the Owner notifies the Company
in writing that the Owner can purchase certain goods from an Outside
Supplier, which goods shall be enumerated in such notice, at a per unit
price that is less than the per unit price charged by the Company; (ii)
the Owner provides to the Company written documentation of the price
for such goods offered by the Outside Supplier; and (iii) the Company
does not,
within thirty (30) days after receipt of the information described in
(i) and (ii), match the price offered by the Outside Supplier.
(c) Managed Care Contract Priority. The Company agrees to use
its best commercial efforts to secure contracts with managed care,
self-insured employer, institutional health care providers and payors,
health maintenance organizations, preferred provider organizations,
exclusive provider organizations, Medicare, Medicaid and other similar
persons in the geographic market of the Office, subject to reasonable
business prudence regarding the viability and pricing of such potential
contracts, as determined in the sole discretion of the Company. The
Company agrees, providing the Owner meets all of the credentialling
requirements for a particular contract, to include the Owner on panels
servicing the Owner's geographic area. Without the express prior
written consent of the Owner, which consent may be withheld in the sole
and absolute discretion of the Owner, the Company shall not negotiate a
Managed Care Contract, for or on behalf of Owner, nor shall it disclose
any confidential information concerning Owner to any third party for
the purpose of negotiating a Managed Care Contract.
Section 2.3 Supplemental Services. The Company shall offer to the Owner
certain additional services (the "Supplemental Services") as set forth in
SCHEDULE 2.3. In the event that the Owner elects to purchase any such
Supplemental Services, such services shall be provided by the Company for such
fees and under such terms and conditions as are forth in SCHEDULE 2.3 and in any
letter agreement of the Parties applicable to the provision of such Supplemental
Services.
Section 2.4 No Other Services. Except for the Core Services and any
Supplemental Services selected by the Owner in accordance with SCHEDULE 2.3, the
Company shall not be obligated to provide any other services to the Owner.
ARTICLE 3
Owner's Obligations
Section 3.1 Furniture, Fixtures and Equipment. The Owner shall provide,
purchase, repair and/or replace all furniture, fixtures and equipment necessary
or appropriate for the operation of the Office.
Section 3.2 Employment of Medical and Non-Medical Staff. The Owner
shall provide all medical and non-medical staff necessary for operation of the
Office. The Owner shall have complete control of and responsibility for the
hiring, compensation, supervision, training, evaluation and termination of its
Physicians, Optometrists, Physician Extender Employees and all other employees.
Section 3.3 Day-to-Day On-Site Operations. Unless otherwise provided
herein or in any letter agreement executed in accordance with SCHEDULE 2.3, the
Owner shall be responsible for staffing, oversight and management of all
day-to-day Owner Operations, including, but not limited to, scheduling,
housekeeping, records management, inventory, and ordering of supplies. The Owner
shall contract directly with payroll processor, collection agency, and all other
vendors of services, as applicable, at the Owner's cost.
ARTICLE 4
Compensation
Section 4.1 Services Fee. The Owner shall pay to the Company a services
fee ("Services Fee") in accordance with the following rates:
(a) On the first Seven Million Dollars ($7,000,000) of
Practice Revenues in a given Contract Year: three percent (3%) of such
Practice Revenues;
(b) On Practice Revenues between Seven Million Dollars
($7,000,000) and Twelve Million Dollars ($12,000,000) in the same
Contract Year: two percent (2%) of such Practice Revenues; and
(c) On Practice Revenues over Twelve Million Dollars
($12,000,000) in the same Contract Year: one percent (1%) of such
Practice Revenues.
Section 4.2 Fee Fair and Reasonable; Not Payment for Referral. The
Parties hereto agree that the Services Fee has been determined as a result of
arm's-length negotiation and is fair and reasonable for the services to be
performed by the Company hereunder. No amount paid hereunder is intended to be,
nor shall be construed as, an inducement or payment for referral of or
recommending referral of, patients of the Owner to the Company, or by the
Company to the Owner. Such fees do not include any discount, rebate, or other
reduction in charge.
Section 4.3 Payment of Services Fee. The Services Fee will be paid
monthly by the Owner based on Practice Revenues during the preceding month, and
is payable by the Owner in cash within fifteen (15) days of the end of the month
in question. The Owner hereby agrees that in the event that any payment
hereunder is not timely paid, in whole or in part, interest shall accrue on the
unpaid balance at the rate of ten percent (10%) per annum. The Owner further
agrees that in the event that the Company is required to institute suit to
collect any unpaid balance, the Company shall be entitled to recover, and any
judgment entered in favor of the Company shall include, the reasonable
accountants' fees, attorneys' fees and costs incurred by the Company in
collecting the monies due to the Company hereunder.
Section 4.4 Statement of Practice Revenues. Within ten (10) days after
the end of each month, the Owner shall provide to the Company an accounting of
Practice Revenues (the "Statement of Practice Revenues") in the form set forth
on SCHEDULE 4.4 hereof. The Company shall have the right, at any time, to notify
the Owner of any disagreement with the Statement of Practice Revenues. In the
event that the Company has notified the Owner of a disagreement regarding any
Statement of Practice Revenues, the Company and the Owner shall attempt in good
faith to resolve their dispute. If after thirty (30) days after the Company's
notice of disagreement the Company and the Owner shall have failed to reach a
written agreement with respect to such dispute, the matter shall be referred to
one of the so-called "Big Five" accounting firms mutually acceptable to the
Company and the Owner (the "Independent Accounting Firm") for final resolution.
Within thirty (30) days after referral to it, the Independent Accounting Firm
shall issue and deliver to the Company and the Owner a report as to its
calculation of the Practice Revenues, which shall be final, binding and
non-appealable. All costs relating to the preparation of the report of the
Independent Accounting Firm shall be shared equally by the Company and the
Owner.
Section 4.5 Expenses.
(a) Of the Company. The payments to be made to the Company
pursuant to this Article 4 will fully compensate the Company for its
provision of Core Services, and the Owner shall owe no other or further
compensation or commission of any kind with respect to the provision of
Core Services. Except as otherwise provided in this Agreement, the
Owner shall not have any liability for expenses incurred by the Company
in the performance of its obligations under this Agreement.
(b) Of the Owner. Except as otherwise provided in this
Agreement, the Company shall not have any liability for expenses
incurred by the Owner in the operation of the Office.
ARTICLE 5
Term of Agreement
Section 5.1 Term. Subject to the provisions of Section 5.2, the initial
term of this Agreement (the "Initial Term") shall consist of a fifteen (15)-year
period commencing on the Effective Date. The term of this Agreement shall be
extended thereafter upon mutual agreement of the Parties, for additional three
(3)-year periods (each an "Extended Term"), whether one or more, commencing on
the expiration of the Initial Term and on the expiration of each succeeding
Extended Term. The Owner shall provide the Company with written notice of its
desire to renew the Agreement at least three (3) months before the expiration of
the Initial Term or an Extended Term, as applicable, and the Company shall
provide a written response to the Owner within thirty (30) days indicating
whether it agrees to renew the Agreement.
Section 5.2 Early Termination. Notwithstanding anything contained in
Section 5.1 to the contrary, this Agreement may be terminated:
(a) By the Company, immediately upon delivery of written
notice of termination to the Owner, in the event that the Owner or any
Shareholder breaches any representation, warranty, covenant or any
other agreement contained herein, including any obligation to pay the
Services Fee, and such breach shall remain unremedied, after written
notice thereof shall have been given to the Owner by the Company, for a
period of sixty (60) days.
(b) By the Owner, immediately upon delivery of written notice
of termination to the Company, in the event that both of the following
occur:
(i) a Company Event; and
(ii) the Company fails to provide or arrange for the
provision of Core Services hereunder and such failure shall
remain unremedied, after written notice thereof shall have
been given to the Company by the Owner, for a period of sixty
(60) days.
(c) By either the Company or the Owner, immediately upon
delivery of written notice of termination to the other Party upon any
other right of termination as specifically provided herein.
Section 5.3 Buy-Out by Owner. Unless otherwise provided herein, in the
event of an early termination of this Agreement, for any reason, within the
first five (5) Contract Years, the Owner agrees to pay to the Company a sum
equal to $1,956,242 (the "Buy-Out Price"). In the event of early termination of
this Agreement, for any reason, at any time between the fifth and tenth Contract
Year, the Owner agrees to pay to the Company a sum equal to the Buy-Out Price,
reduced by twenty-five percent (25%). In the event of early termination of this
Agreement, for any reason, at any time after the tenth Contract Year, the Owner
agrees to pay to the Company a sum equal to the Buy-Out Price, reduced by fifty
percent (50%). The Buy-Out Price, as reduced if applicable by the preceding two
sentences, shall be paid in cash, less the amount of any outstanding
Subordinated Promissory Notes issued pursuant to section 2.3 of the Transition
Agreement, by the Owner to the Company within sixty (60) days following the
early termination of this Agreement; provided, however, that if such early
termination has been initiated by the Owner, the Buy-Out Price shall be paid in
cash by the Owner to the Company within five (5) business days following such
early termination. Notwithstanding the above, in the event of a termination
pursuant to Section 5.2(b), the Owner, but not the Shareholders, will be liable
for payment of the Buy-Out Price. Upon payment by the Owner to the Company of
the Buy-Out Price, all other obligations of the Owner to the Company (other than
payment of Services Fee and/or other fees relating to services provided by
Company prior to the termination date) shall be deemed discharged.
Notwithstanding the above, if after an early termination for any reason as
described above, the Owner and/or the Shareholders continue to pay the Company
the Services Fee, under the terms and conditions described in Section 4.3, the
Buy-Out Price described in this Section 5.3 shall not become due and payable.
Section 5.4 Effect of Early Termination Generally. Except as expressly
provided in Section 5.3 hereof, in the event of any early termination of this
Agreement, the Parties:
(a) shall thereupon have no further rights or obligations
hereunder, except for
(i) obligations accruing prior to the date of
termination,
(ii) obligations, promises, or covenants contained
herein which are expressly made to extend beyond, or which by
their terms or reasonable implication are to be performed in
whole or in part, after the termination of this Agreement,
including, without limitation, those relating to indemnities
and records retention and compensation, and
(iii) rights to pursue any remedies herein or at law;
(b) shall cooperate with one another for the appropriate
transfer of Core Services and Supplemental Services, if applicable; and
(c) shall provide each other with reasonable access to books
and records owned by it to permit the other to satisfy reporting and
contractual obligations which may be required of it.
ARTICLE 6
Other Agreements of Parties
Section 6.1 Relationship of Parties. In the performance of the Parties'
duties and obligations under this Agreement, it is mutually understood and
agreed that the Company and the Owner are independent contractors and that the
relationship between them is that of a professional corporation and an
independent supplier of non-medical services. It is expressly agreed by the
Parties hereto that no work, act, commission or omission of the Company pursuant
to the terms and conditions of this Agreement shall be construed to make or
render the Company (and/or its employees, agents, shareholders and servants) the
agent, employee, or servant of the Owner, or to make or render the Owner (and/or
its employees, agents, shareholders and servants) the agent, employee or servant
of the Company. Neither this Agreement, nor its performance, shall constitute or
be construed to create a principal-agent, employer-employee, master-servant,
joint venture or partnership relationship between the Parties.
Section 6.2 No Warranty.
(a) The Owner acknowledges that the Company has not made and
will not make any express or implied warranties or representations that
the services provided by the Company will result in any particular
amount or level of Practice Revenues to the Owner or distributions to
shareholders of the Owner.
(b) The Company acknowledges that the Owner has not made and
will not make any express or implied warranties or representations that
Practice Revenues will remain at, or increase above, any particular
amount or level.
Section 6.3 No Obligation or Inducement to Refer. The Parties
acknowledge and agree that the consideration being paid hereunder is not
intended, directly or indirectly, as an inducement to refer, or in return for
purchasing or recommending purchasing an item or service reimbursable under
Medicare, Medicaid or other government reimbursed health care program. No
provision hereof is intended to nor shall be construed as directing or
restricting referrals for items or services payable under Medicare, Medicaid or
other government reimbursed health care program.
Section 6.4 Confidentiality.
(a) All Marketing Materials designed and developed by the
Company to assist the Owner in the marketing of Owner Operations,
together with any and all such other marketing materials as may be
customized by the Company for the Owner, shall belong to and be the
exclusive property of the Company.
(b) Upon termination of this Agreement, the Owner shall
promptly relinquish to the Company all papers, documents, writings,
files, data, or materials, including, without limitation, the Marketing
Materials, belonging to the Company that are, at such time, in the
possession of the Owner.
(c) In the event of a breach or attempted breach by the Owner
of the provisions of this Section 6.4, the Owner and the Company
acknowledge and agree that irreparable harm would come to the Company,
as owner of such information in such event, that a remedy at law for
such a breach or attempted breach would be inadequate, and that the
Company shall be entitled, at its election, to seek injunctive relief
without the necessity of posting bond therefor, against such breach or
attempted breach, in addition to any other remedies at law or equity
available to the Company for such breach or attempted breach, including
the recovery of damages from the Owner therefor.
(d) All marketing materials, advertisements, programs, guides,
publications, pamphlets, flyers and all such other forms of information
and materials (collectively, "Owner Marketing Materials") designed and
developed by the Owner for its use in the marketing of Owner
Operations, together with any and all such other Owner Marketing
Materials designed and/or developed by the Owner, shall belong to and
be the exclusive property of the Owner.
(e) Upon termination of this Agreement, the Company shall
promptly relinquish to the Owner all papers, documents, writings,
files, data or materials belonging to the Owner that is, at such time,
in the possession of the Company, subject to the Company's rights to
retain copies of medical records as provided elsewhere herein.
(f) In the event of a breach or attempted breach by the
Company of the provisions of this Section 6.4, the Owner and the
Company acknowledge and agree that irreparable harm would come to the
Owner, as owner of such information in such event, that a remedy at law
for such a breach or attempted breach would be inadequate, and that the
Owner shall be entitled, at its election, to seek injunctive relief
without the necessity of posting bond therefor, against such breach or
attempted breach, in addition to any other remedies at law or equity
available to the Owner for such breach or attempted breach, including
the recovery of damages from the Company therefor.
Section 6.5 Access to Books and Records. Throughout the term of this
Agreement, the Owner shall permit the Company and its counsel, accountants and
other representatives full and free access, upon reasonable notice and during
normal business hours, to all those properties, books, tax returns, contracts,
commitments, records, officers and personnel of the Owner that the Company
reasonably deems necessary in order for it to (i) verify the Owner's calculation
of the
Services Fee or other amounts payable pursuant to the Transition Agreement and
the Services Agreement and/or (ii) attend to tax or regulatory issues relating
to the Owner's arrangements with the Company prior to the Effective Date. Such
access includes access to accountants and others who may have prepared relevant
financial statements, including monthly Statements of Practice Revenues, and
includes the furnishing by the Owner to the Company of all those materials and
information described above as the Company or its counsel, accountants and other
representatives may reasonably request. Notwithstanding the Company's right at
any time to verify the Owner's calculation of the Services Fee, as set forth
above, the Company agrees that it will not challenge the calculation of any
Services Fee in any particular Contract Year after September 30th of the
following year. All information that may be provided by the Owner pursuant to
this Section, or otherwise obtained by the Company or its representatives, shall
be confidential information, and the exclusive property of the Owner, and shall
not be disclosed by the Company or its representatives to any party without the
express prior written consent of the Owner.
Section 6.6 Retaining Business Records. During the term of this
Agreement and until the expiration of four (4) years (required by certain tax
law statutes) after the furnishing of the services to be provided hereunder, the
Owner and the Company shall make this Agreement and each of their books,
documents and records relating thereto available to the Secretary of the
Department of Health and Human Services, the Comptroller General of the United
States or their duly authorized representatives to the extent required by Title
42 of the United States Code. The Company further agrees that in the event it
carries out any of its duties under this Agreement through a subcontract with a
value or cost of Ten Thousand Dollars ($10,000) or more over a twelve (12)
-month period with a related organization, such subcontract shall contain a
clause to the effect that until the expiration of four (4) years after the
furnishing of such services pursuant to such subcontract, the related
organization shall make a copy of such subcontract and such of its books,
documents and records relating thereto, available to the Secretary of the
Department of Health and Human Services, the Comptroller General of the United
States or their duly authorized representatives to the extent required by Title
42 of the United States Code. Disclosure pursuant to this Section shall not be
construed as a waiver of any other legal right to which the Company may be
entitled under law or regulation.
Section 6.7 Exclusivity of Agreement.
(a) The Owner has the right to contract with other parties for
the provision of services that are the same or similar to the Core
Services or the Supplemental Services offered by the Company hereunder;
provided, however, that the Owner shall not be permitted to buy any
goods offered as HSO Buying Group Goods from any Outside Supplier,
except as provided in Section 2.2(b) hereof.
(b) The Company has the right to contract with other parties
for the provision by the Company of the same or similar services as
long as the provision of such services does not infringe materially
upon the ability of the Company to perform its duties under this
Agreement.
(c) The Company agrees that it shall not, without the prior
written consent of the Owner which consent shall not be unreasonably
withheld, contract in a Services Agreement (HSO model) with any other
Ophthalmology practice that (i) provides ophthalmic and/or optometric
care and products to the general public; and (ii) Alamance, Chatham,
▇▇▇▇▇▇▇ and Orange counties.
Section 6.8 Assistance to Company. The Owner agrees to assist the
Company in its efforts to identify other entities within its geographic area
that provide ophthalmic and/or optometric care and products to the general
public and that might be interested in contracting with the Company for the
provision of various services. Notwithstanding the foregoing, the Company shall
not enter into any contract or agreement in violation of Section 6.7(c) hereof.
Section 6.9 Release of Claims by Owner and Initial Shareholders. Except
as set forth in SCHEDULE 6.9, the Owner and the Initial Shareholders agree to
release any and all claims it or they may have against the Company or any of its
Affiliates, or against the Company's or any of its Affiliates' directors,
officers, shareholders, employees, or agents arising out of or in any way
connected to: (a) the Clinic Assets (as defined in that certain Administrative
Services Agreement, dated 1st day of July, 1996, by and among the Company, the
Owner and the Initial Owner Physician Shareholders named therein (the "ASA")) or
the repurchase thereof by the Owner; (b) the provision by the Company of
services pursuant to the ASA; or (c) any other agreement, arrangement or
relationship between the Owner and the Company or any Affiliate of the Company,
which agreement, arrangement or relationship was in existence as of or prior to
the Effective Date of this Agreement.
Section 6.10 Release of Claims by Company. Except as set forth in
SCHEDULE 6.10, the Company agrees to release any and all claims it may have
against the Owner or Initial Shareholders, or against the Owner's directors,
officers, shareholders, employees, or agents arising out of or in any way
connected to: (a) the Clinic Assets (as defined in the ASA) or the repurchase
thereof by the Owner; (b) the provision by the Company of services pursuant to
the ASA; or (c) any other agreement, arrangement or relationship between the
Owner and the Company or any Affiliate of the Company, which agreement,
arrangement or relationship was in existence as of or prior to the Effective
Date of this Agreement.
Section 6.11 Admission of Shareholders. Except for the person(s)
identified on Schedule 6.11(a), the Owner agrees that it will not, without the
express written consent of the Company, permit any Person to become a
shareholder of the Owner unless such Person (i) executes a Joinder Agreement in
the form attached hereto as SCHEDULE 6.11(B) or (ii) receives a written waiver
from the Company.
Section 6.12 Obligations of the Shareholders.
(a) Each Shareholder agrees that, except where indicated
otherwise, the obligations of the Owner hereunder are the ultimate
responsibility of the Shareholders. In accordance with the foregoing,
each Shareholder agrees that he or she shall not transfer his or her
shares in the Owner to any third party or to the Owner for repurchase
unless and until (i) he or she has obtained the Company's consent
thereto in writing, which
consent shall not be unreasonably withheld; and (ii) in the event that
the transferee is not already a party to this Agreement, the transferee
executes a Joinder Agreement in the form attached hereto as SCHEDULE
6.11.
(b) Notwithstanding anything herein to the contrary, the
obligations of any Shareholder hereunder shall terminate upon such
Shareholder's death, permanent and total disability, or permanent
retirement. For purposes of this Section 6.12, "permanent and total
disability" shall mean the inability, due to any illness, disability or
incapacity, of the Shareholder to perform the essential functions of
his or her position after reasonable accommodation. The Owner shall
immediately notify the Company in writing of any Shareholder's death,
permanent and total disability, or permanent retirement.
(c) In the case of a Shareholder who leaves the Owner, for
reasons other than death, disability or permanent retirement as set
forth in Section 6.12(b) above, such Shareholder's obligation to pay a
Services Fee based upon his or her collections shall be waived if, on
an annual basis, the Owner's Practice Revenues after such Shareholder's
departure equal or exceed the average annual Practice Revenues of the
Owner for the three (3) prior years.
Section 6.13 Sales and Use Tax. The Owner shall pay any and all
applicable sales and use taxes, if any, related to the Company's provision of
services hereunder.
Section 6.14 Exclusion by Owner of Certain Sources of Revenue. To the
extent that the Owner seeks, at any time after the Effective Date, to exclude
from Practice Revenues revenue sources not set forth on SCHEDULE 1.1(l), the
Owner shall notify the Company of its request and the Parties shall endeavor to
arrive at a mutually satisfactory arrangement; provided, however, that nothing
herein shall be construed to require the Company to grant the Owner's request,
and nothing herein shall relieve the Owner of its obligation hereunder should
the Company not grant the Owner's request.
ARTICLE 7
Indemnification
Section 7.1 Indemnification by the Owner.
(a) The Owner shall indemnify, hold harmless and defend the
Company and its Affiliates, and their respective officers, directors,
shareholders and employees, from and against any and all liability,
loss, damage, claim, causes of action, and expenses (including
reasonable attorneys' fees), to the extent not covered by insurance in
the name of the Owner, resulting from the grossly negligent performance
or grossly negligent omission of the Owner and/or any of its employees
and/or subcontractors during the term of this Agreement (other than
when acting at the direction of or in accordance with the written
instructions from the Company), or any breach of this Agreement or any
representation, warranty or covenant contained herein by the Owner
and/or its shareholders, agents, employees and/or subcontractors (other
than the Company).
(b) The obligations set forth in this Section 7.1 shall
continue in effect regardless of any expiration, termination, or
rescission of this Agreement.
Section 7.2 Indemnification by the Company.
(a) The Company shall indemnify and hold harmless the Owner
and its officers, directors, shareholders and employees, from and
against any and all liability, loss, damage, claim, causes of action,
and expenses (including reasonable attorneys' fees), to the extent not
covered by insurance in the name of the Company, resulting from the
grossly negligent performance or grossly negligent omission of the
Company and/or any of its employees and/or subcontractors during the
term of this Agreement (other than when acting at the direction of or
in accordance with the written instructions from the Owner), or any
breach of this Agreement by the Company and/or its shareholders,
agents, employees and/or subcontractors (other than the Owner).
(b) The obligations set forth in this Section 7.2 shall
continue in effect regardless of any expiration, termination, or
rescission of this Agreement.
ARTICLE 8
Representations of the Parties
Section 8.1 Representations of Company.
(a) Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware as of the date hereof, and has all
necessary power to own all of its properties and assets and to carry on
its business as now being conducted.
(b) No Violation. The Company has the corporate authority to
execute, deliver and perform this Agreement and all agreements executed
and delivered by it pursuant to this Agreement, and has taken all
action required by law, its certificate of incorporation, its bylaws or
otherwise to authorize the execution, delivery and performance of this
Agreement and such related documents. The execution and delivery of
this Agreement does not, and will not, violate any provisions of the
certificate of incorporation or bylaws of the Company or any provisions
of or result in the acceleration of, any obligation under any mortgage,
lien, lease, agreement, instrument, order, arbitration award, judgment
or decree, to which the Company is a party, or by which it is bound.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
(c) No Claims Against Owner. Other than as set forth on
SCHEDULE 8.1(c), the Company does not have any claims against the Owner
or any Initial Shareholder arising out of or in any way connected to:
(1) the Clinic Assets, or the repurchase thereof by the Owner; (2) the
provision by the Company of services pursuant to the ASA; or (3) any
other agreement, arrangement or relationship between the Owner and the
Company or any Affiliate of the Company, which agreement, arrangement
or relationship was in existence as of or prior to the Effective Date
of this Agreement.
Section 8.2 Representations of the Owner.
(a) Organization and Good Standing. The Owner is a
professional corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina, and has all
necessary power to own all of its properties and assets and to carry on
its business as now being conducted. Throughout the term of this
Agreement, the Owner shall immediately notify the Company in writing if
any event occurs that would render the Owner unable to make the
representation contained in this Section as of the date thereof.
(b) No Violation. The Owner has the corporate authority to
execute, deliver and perform this Agreement and all agreements executed
and delivered by it pursuant to this Agreement, and has taken all
action required by law, its articles or certificate of incorporation,
its bylaws or otherwise to authorize the execution, delivery and
performance of this Agreement and such related documents. The execution
and delivery of this Agreement does not and, subject to the
consummation of the transactions contemplated hereby, will not, violate
any provisions of the articles or certificate of incorporation or
bylaws of the Owner or any provisions of or result in the acceleration
of, any obligation under any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or decree, to which the
Owner is a party, or by which it is bound. This Agreement has been duly
executed and delivered by the Owner and constitutes the legal, valid
and binding obligation of the Owner, enforceable in accordance with its
terms. Throughout the term of this Agreement, the Owner shall
immediately notify the Company in writing if any event occurs that
would render the Owner unable to make the representation contained in
this Section as of the date thereof.
(c) No Claims Against Company. Other than as set forth on
SCHEDULE 6.9, neither the Owner nor the Initial Shareholders have any
claims against the Company or any of its Affiliates, or against the
Company's or any of its Affiliates' directors, officers, shareholders,
employees, or agents, arising out of or in any way connected to: (1)
the Clinic Assets, or the repurchase thereof by the Owner; (2) the
provision by the Company of services pursuant to the ASA; or (3) any
other agreement, arrangement or relationship between the Owner and the
Company or any Affiliate of the Company, which agreement, arrangement
or relationship was in existence as of or prior to the Effective Date
of this Agreement.
ARTICLE 9
Miscellaneous
Section 9.1 Violation of Law. In the event that (a) a law firm that has
a nationally recognized expertise in health care law and is mutually agreed upon
by both the Company and the Owner renders an opinion to the Parties that a
material provision of this Agreement violates applicable law, or any court or
regulatory agency enters an order finding that a material provision of this
Agreement violates applicable law, and (b) this Agreement cannot be amended
pursuant to Section 9.6 to cure such violation, then the Agreement may be
terminated by either Party hereto. In the event of such termination, the Owner
shall have the obligations set forth in Section 5.3, above.
Section 9.2 Assignments.
(a) The Company shall have the right at any time and from time
to time to assign any or all of its rights and delegate any or all of
its obligations hereunder without the prior written consent of the
Owner; provided, however, that any such assignment shall in no way
relieve the Company of its duties, obligations, liabilities, or
responsibilities hereunder without the consent of the Owner; and
provided, further, that the Company may assign all or any part of its
right, title and interest in any payments to be received hereunder by
the Company to a bank or any other financial institution or any person,
firm or corporation from which the Company or any Affiliate thereof has
obtained, or will obtain, financing and the Company may grant a
security interest in such payments.
(b) Notwithstanding the provisions of Section 9.2(a) above,
the Company may assign this Agreement to any corporation or other
entity of any kind succeeding to the business of the Company in
connection with the merger, consolidation or transfer of all or
substantially all of the assets and business of the Company to such
successor.
(c) The Owner shall not assign any of its rights or delegate
any of its duties or obligations hereunder without the prior written
consent of the Company, which consent shall not be unreasonably
withheld.
(d) Except as provided in Section 6.11 hereof, no Shareholder
shall be permitted to assign his or her rights or delegate any of his
or her duties hereunder.
(e) All of the terms, provisions, covenants, conditions, and
obligations of this Agreement shall be binding upon, and inure to the
benefit of, the successors in interest and permitted assigns of the
Parties hereto.
Section 9.3 Notices. Except as otherwise expressly set forth herein,
all notices required or permitted to be given hereunder shall be in writing and
shall be deemed effective when personally delivered, sent via overnight delivery
or, if mailed, three (3) days after the date deposited in the United States
mail, postage prepaid, registered or certified, and return receipt
requested. Unless changed by written notice given by one Party to the other as
provided herein, such notices shall be given to the Company at the following
address:
Prime Vision Health, Inc.
c/o OptiCare Eye Health Centers, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to: Day, ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
CityPlace I
Hartford, Connecticut 06103-3499
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
and such notices shall be given to the Owner at the following address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Section 9.4 Severability. In the event that any of the provisions of
this Agreement are held to be invalid or unenforceable by any court of competent
jurisdiction, the remaining provisions hereof shall not be affected thereby, and
the provision found invalid or unenforceable shall be revised or interpreted to
the extent permitted by law so as to uphold the validity and enforceability of
this Agreement and the intent of the Parties as expressed herein.
Notwithstanding the foregoing, if the compensation provisions herein or in
Schedule 2.3 hereof are held to be invalid or unenforceable by any court of
competent jurisdiction, and the Parties are unable, after a good faith effort,
to agree to an alternative compensation arrangement, then this Agreement may be
terminated by either Party. In the event of such termination, the Owner shall
have the obligations set forth in Section 5.3, above.
Section 9.5 Governing Law. This Agreement shall be governed by, and
interpreted, construed and enforced in accordance with, the laws of the State of
Delaware, applied without giving effect to any conflicts-of-law principles.
Section 9.6 Entire Agreement; Amendment. This Agreement constitutes the
entire agreement between the Parties with respect to the subject matter hereof
and supersedes any and all prior agreements, either oral or written, between the
Parties with respect thereto. Any modification to this Agreement must be made in
writing and signed by both of the Parties.
Section 9.7 Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect the interpretation of this
Agreement.
Section 9.8 Waiver. No term or condition of this Agreement shall be
deemed to have been waived except by written instrument of the Party charged
with such waiver. The waiver of any breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any subsequent breach
of the same or any other term or condition hereof.
Section 9.9 Construction of Words. The language herein shall be
construed, in all cases, according to its plain meaning, and not for or against
either Party. The Parties acknowledge that each Party and its counsel have
reviewed and revised this Agreement and that the rule of construction which
states that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement.
Section 9.10 Prevention of Performance by Company.
(a) The Company shall not be liable for any loss or damage to
the Owner or any of shareholder of the Owner (including, without
limitation, direct, indirect, incidental and consequential damages) due
to any failure in its performance hereunder (i) because of compliance
with any order, request or control of any governmental authority or
person purporting to act therefor, whether or not said order, request
or control ultimately proves to have been invalid; or (ii) when its
performance is interrupted, frustrated or prevented, or rendered
impossible or impractical because of wars, hostilities, public
disorders, acts of enemies, sabotage, strikes, lockouts, labor or
employment difficulties, fires, or acts of God, or any cause beyond its
control, whether or not similar to any of the foregoing. Without
limitation of the foregoing, the Company shall not be required to
challenge or resist any such order, request or control, or to proceed
or attempt to proceed with performance if such shall involve additional
expense or a departure from its normal practices, unless the Parties
shall expressly agree as to the further obligations (including, without
limitation, an obligation to bear all or part of any such additional
expense) to be borne by the Owner as a result thereof.
(b) Nothing herein contained shall relieve the Owner of any
obligation to pay the amounts to be paid hereunder to the Company under
Article 4 hereinabove.
Section 9.11 Remedies. The remedies provided to the Parties by this
Agreement are not exclusive or exhaustive, but cumulative and in addition to any
other remedies the Parties may have, at law or in equity.
Section 9.12 No Referrals. The Parties clearly understand and
acknowledge that the choice of services and the choice of providers made by the
Owner must be, and shall be, made only with regard to the best medical interests
of each patient. The Company and the Owner thus specifically assure one another,
and the Company and the Owner each specifically acknowledges, that the
performance by the Company and the Owner of their respective obligations
hereunder in no way obligate, and is in no way contingent upon, the admission,
recommendation, referral or any other form of arrangement by, the Company or the
Owner (or any Physician or Optometrist) for utilization by patients or others of
any item or service offered by the Company or any of its Affiliates or the
Owner.
Section 9.13 Attorneys' Fees. Each Party shall be responsible for any
attorneys' fees and related costs incurred by it in the event that legal action
is commenced by either Party to enforce or defend its rights under this
Agreement.
Section 9.14 Survival. The indemnities, representations and warranties
set forth herein shall survive the termination of this Agreement.
Section 9.15 Confidentiality of Records. The Company shall use its
reasonable efforts to protect the confidentiality of the records of the Owner
relating to Owner Operations, including, without limitation, patient medical
records, and shall comply with applicable federal, state, and local laws and
regulations, and medical ethical standards, pertaining to the records of the
Owner relating to Owner Operations. The Company shall take no action with
respect to such medical records to which the Owner objects, unless otherwise
required by law or to comply with an order of any court or governmental agency.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties have executed this Company Services
Agreement on the date set forth above:
The Company:
Prime Vision Health, Inc.
By:
--------------------------------
Title:
--------------------------------
The Owner:
, P.A.
By:
--------------------------------
Title:
--------------------------------
Initial Shareholders:
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