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EXHIBIT 10.24
BUSINESS MANAGEMENT AGREEMENT
(PROFESSIONAL)
This Business Management Agreement is made and entered into effective
as of December 1, 1996, by and between EYE INSTITUTE OF SOUTHERN ARIZONA, P.C.,
an Arizona professional corporation ("Business Manager"), and ExcelCare, P.C.,
a professional corporation, organized and existing under the laws of the State
of Arizona (the "Practice").
R E C I T A L S
A. The Practice is a professional corporation duly organized and
validly existing under the laws of the State of Arizona (the "State") which is
engaged in the provision of Professional Eye Care Services (as defined below)
to the general public in the State through individual Professionals (as defined
below) who are licensed to practice medicine or optometry in the State and who
are employed or otherwise retained by the Practice.
B. Business Manager is a professional corporation duly organized
and validly existing under the laws of the State.
C. The Practice desires to devote substantially all of its
energies, expertise and time on the delivery of Professional Eye Care Services
to patients.
D. The Practice desires to engage Business Manager to provide
facilities, equipment and such management, administrative and business services
as are necessary and appropriate for the day-to-day administration of the non-
medical and non-optometric aspects of the Practice's professional eye care
practice, and Business Manager desires to provide such, upon the terms and
conditions hereinafter set forth, for the purpose of enhancing the
cost-efficiency and quality of services rendered by the Practice to its
patients.
NOW, THEREFORE, for and in consideration of the mutual agreements,
terms, covenants and conditions contained herein and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:
1. DEFINITIONS. For the purposes of this Business Management
Agreement, the following terms shall have the following meanings ascribed
thereto, unless otherwise clearly required by the context in which such term is
used:
1.1. Account. The term "Account" shall mean the bank account
described in Sections 3.9 and 3.10(a) and (c).
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1.2. Acquisition Transaction. The term "Acquisition Transaction"
shall mean the completed Agreement and Plan of Reorganization entered into by
and between Business Manager and Vision 21, Inc.
1.3. Adjusted Gross Revenue. The term "Adjusted Gross Revenue"
shall mean all revenues, for Professional Eye Care Services and any other
revenues, calculated on an accrual basis under GAAP, generated by or on behalf
of the Practice and its Professionals and Capitation Revenues during the term
of this Business Management Agreement, including, without limitation, all
technical fees from ancillary services, all proceeds from key person life
insurance policies purchased by Business Manager in accordance with Section
3.15, all amounts paid by third parties for contractual liabilities, including
payments under non-shareholder Professionals' non-competition agreements, and
all medical director, consultant, teaching and expert witness fees except for
those fees set forth in Exhibit 1.3 (unless the time and efforts of the
individuals responsible for such excluded revenues are materially greater than
the historical time or efforts expended in obtaining such revenues or if such
excluded revenues historically flowed through the Practice), minus any
allowances for bad debts, uncollectible accounts, Medicare, Medicaid and other
payor contractual adjustments, discounts, workers' compensation adjustments,
reasonable professional courtesies, and other reductions in collectible revenue
that result from activities that do not result in collectible charges.
1.4. Agreement or Business Management Agreement. The term
"Agreement" or "Business Management Agreement" shall mean this instrument as
originally executed and delivered, or, if amended or supplemented, as so
amended or supplemented.
1.5. Budget. The term "Budget" shall mean an operating budget and
capital expenditure budget for each fiscal year as prepared in accordance with
Section 3.11(a).
1.6. Business Manager. The term "Business Manager" shall have the
meaning set forth in the Recitals hereto.
1.7. Business Manager Consent. The term "Business Manager Consent"
shall mean the consent granted by Business Manager's representatives (or either
representative) to the Practice Advisory Council created pursuant to Article II
herein, which consent shall not be unreasonably withheld or delayed and shall
be binding on the Business Manager.
1.8. Business Manager Expense. The term "Business Manager Expense"
shall mean an expense or cost incurred by the Business Manager, for which the
Business Manager is financially liable and is not entitled to reimbursement
from the Practice. Business Manager Expense shall specifically include: (a)
any amortization of intangible assets resulting from the Acquisition
Transaction, (b) any income or franchise taxes of the Business Manager, (c) any
expense or cost relating to any underwritten initial public offering of
Business Manager's common stock pursuant to which a registration statement is
filed under the Securities Act of 1933 (except for underwriter's commissions,
charges or discounts related to the sale of stock by
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any Shareholder of the Practice which shall be borne individually by them), (d)
expenses and costs relating to the acquisition of any other health care
companies unless all or a specific portion of such expenses and costs are
approved as an Office Expense by the Practice Advisory Council, or unless the
Practice participates in the acquisition through the Practice's acquisition of
medical assets of the acquired health care company, and (e) any other expense
or cost that are not reasonable and customary reimbursements based upon a usual
national practice management company's arrangement with a practice. Business
Manager Expenses (as of the date hereof) are more specifically identified in
Exhibit 1.8. In the case of any inconsistency between specifics in Exhibit 1.8
and the general descriptions in (a) through (d) above, Exhibit 1.8 shall govern
(as of the date hereof).
1.9. Capitation Revenues. The term "Capitation Revenues" shall
mean all collections from managed care organizations or third-party payors
where such payment is made periodically on a per member basis for the partial
or total needs of a subscribing patient, less amounts that are payable to other
providers of health care items and services to capitation patients. Capitation
Revenues shall include any co-payments and incentive bonuses received as a
result of a capitation plan.
1.10. Clinical Personnel. The term "Clinical Personnel" shall mean
those individuals who are (to the extent permitted by law) employed by or
otherwise under contract or associated with Business Manager as nurse
anesthetists, physician assistants, technicians, nurse practitioners or similar
positions, or any position that generates a professional charge except for
Professionals. In the event that such individuals are not permitted by the
laws of the State to be employed by or otherwise under contract with Business
Manager, such individuals shall instead be employed by or under contract with
the Practice, and all expenses associated with the employment of or contracting
with such individuals shall be Practice Expenses.
1.11. Confidential Information. The term "Confidential Information"
shall mean any information of Business Manager or the Practice, as appropriate
(whether written or oral), including all business management or economic
studies, patient lists, proprietary forms, proprietary business or management
methods, marketing data, fee schedules, or trade secrets of the Business
Manager or of the Practice, as applicable, whether or not such Confidential
Information is disclosed or otherwise made available to one Party by the other
Party pursuant to this Business Management Agreement. Confidential Information
shall also include the terms and provisions of this Business Management
Agreement and any transaction or document executed by the Parties pursuant to
this Business Management Agreement. Confidential Information does not include
any information that the receiving party can establish (a) is or becomes
generally available to and known by the public or medical community (other than
as a result of an unpermitted disclosure directly or indirectly by the
receiving party or its affiliates, advisors, or Representatives); (b) is or
becomes available to the receiving party on a nonconfidential basis from a
source other than the furnishing party or its affiliates, advisors or
Representatives, provided that such source is not and was not bound by a
confidentiality agreement with or other obligation of secrecy to the furnishing
party of which the receiving
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party has knowledge; or (c) has already been or is hereafter independently
acquired or developed by the receiving party without violating any
confidentiality agreement with or other obligation of secrecy to the furnishing
party.
1.12. GAAP. The term "GAAP" shall mean generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity or other
practices and procedures as may be approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date
of the determination. All financial reporting which is required pursuant to
this Agreement to be made in conformity with GAAP shall also be prepared in a
manner acceptable to the Securities and Exchange Commission for reports made
pursuant to the Securities and Exchange Commission's rules and regulations.
1.13. Local Advisory Council. The term "Local Advisory Council"
shall have the meaning set forth in Section 2.10 of this Agreement.
1.14. Management Fee. The term "Management Fee" shall mean the
Business Manager's compensation established as described in Article V hereof.
1.15. Management Services. The term "Management Services" shall
mean the business, administrative, and management services to be provided for
the Practice, including, without limitation, the provision of equipment,
inventory and supplies (including the use of all assets owned by Business
Manager which are located at the Office on the effective date hereof), support
services, personnel (including Clinical Personnel but excluding Professionals),
office space, management, administration, financial record keeping and
reporting, and other business office services, all as reasonably necessary for
the conduct of the Practice's business.
1.16. National Appeals Council. The term "National Appeals Council"
shall have the meaning set forth in Section 2.11 hereto.
1.17. Office. The term "Office" shall mean any office space,
clinic, or facility, including satellite facilities, that Business Manager
shall own or lease or otherwise procure for the use of the Practice.
1.18. Office Expense. The term "Office Expense" shall mean all
operating and non-operating expenses incurred by the Business Manager in the
provision of Management Services to the Practice and shall include all
operating and non- operating expenses incurred by the Practice relating to the
items set forth in this Section. The Business Manager shall be reimbursed by
the Practice for any Office Expense incurred by the Business Manager in the
provision of services to the Practice, upon request by the Business Manager.
Office Expense shall not include any Business Manager Expense, Practice Expense
or Shareholder Expense or
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any state, local or federal income or franchise tax. Without limitation,
Office Expense shall include the following expenses, as such expenses are more
specifically described in Exhibit 1.18:
(a) the salaries, benefits, payroll taxes, and other
direct costs of all employees of Business Manager (including Clinical
Personnel) primarily working at the Office and the salaries, benefits, payroll
taxes, and other direct costs of the non-Professional and non-clinical
employees of the Practice, but not the salaries, benefits, payroll taxes or
other direct costs of the Professionals;
(b) the direct cost of any employee or consultant that
provides services at or in connection with the Office for improved clinic
performance, such as management, billing and collections, business office
consultation, and accounting and legal services, but only when such services
are coordinated by Business Manager and/or included in the Budget;
(c) reasonable recruitment costs and out-of-pocket
expenses of Business Manager or the Practice associated with the recruitment of
additional Professionals and other employees of the Practice and Business
Manager's employees primarily located at the Office;
(d) personal property and intangible property taxes
assessed against Business Manager's assets used in connection with the
operation of the Office;
(e) comprehensive and general liability insurance
covering the Office and employees of the Practice and Business Manager at the
Office;
(f) the expense of using, leasing, purchasing or
otherwise procuring and maintaining the Office and related equipment, including
depreciation in the case of furniture, fixtures and equipment (not to exceed,
for any existing item, the amount of current depreciation for such existing
item) owned by Business Manager and used at the Office, except for those
equipment expenses described in Section 3.2(d), which shall be a Shareholder
Expense.
(g) the cost of capital (whether as actual interest on
indebtedness incurred on behalf of the Practice, as reasonable imputed interest
on capital advanced by Business Manager, which shall be equal to the average
cost of borrowing by Business Manager as reflected on its most recent published
financial statements, or in the absence of either of the foregoing, eight
percent (8%)), to finance or refinance obligations of the Practice, purchase
additional (new or used) medical or non-medical equipment to be used in
connection with the Office, or to finance new ventures of the Practice; in any
such case only as such cost of capital is set forth in the Budget or otherwise
approved in advance by the Practice Advisory Council;
(h) the reasonable travel expenses associated with
attending meetings, conferences, or seminars to benefit the Practice so long as
such expenses are related to individuals located at the Office and the
Practice's pro rata share for individuals who are consultants of or employed by
Business Manager who provide material services to the Practice;
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(i) the cost of non-medical office supplies, inventory
and utilities;
(j) billing and collection costs and expenses;
(k) the Practice's pro-rata share of reasonable
corporate overhead charges or other reasonable expenses (including computer and
data processing costs) which are incurred by Business Manager or any parent or
affiliate of Business Manager in connection with regional expenses or corporate
headquarters expenses which: (i) relate to the provisions of benefits or
services by Business Manager on behalf of the Practice as reflected in the
Budget, or (ii) are a substitute at the same or less cost as the existing level
of expenses historically incurred by the Practice or set forth in the Budget;
(l) all other expenses which are set forth in the
Budget and which directly or indirectly benefit the Practice incurred by
Business Manager in carrying out its obligations under this Business Management
Agreement;
(m) reasonable costs and expenses (to the extent not
covered by insurance) of lawsuits or claims against the Business Manager, the
Practice or its Professional(s) related to their performance of duties at the
Office or their interest in the leasehold or other assets used in connection
with the Office, provided that if the Business Manager, the Practice or its
Professional(s) does not prevail in the lawsuit or claim or settles the matter
with a material payment by the party (the party at "fault"), such costs and
expenses shall be deemed a Business Manager Expense in the event of Business
Manager's fault, and a Shareholder Expense in the event of fault by the
Practice or Professional, whereupon the Practice and such Professional(s) shall
be jointly responsible for the immediate reimbursement of the sums advanced
(which may at the option of Business Manager be offset by Business Manager
against sums otherwise due the Practice under Section 3.10(b)); provided
further that Business Manager shall not advance such costs and expenses from
the account if the Practice Advisory Council concludes that (i) it is unlikely
that the Account will be reimbursed if the party involved will not prevail in
the lawsuit or claim, or (ii) it is reasonable to believe that obtaining a
reimbursement of the advanced sums will be difficult to achieve.
(n) key person life insurance premiums related to
policies which the Parties agree to acquire on the life of the Practice's
Professionals, whereupon any proceeds shall be paid to the Account as Adjusted
Gross Revenues, unless the Parties agree to a specific split of the proceeds.
Should only the Practice choose to obtain key person life insurance, the
Practice shall pay all premiums as a Shareholder Expense and shall receive all
proceeds. Further, if only the Business Manager chooses to obtain such
insurance, Business Manager shall pay all premiums as a Business Manager
Expense and shall receive all proceeds. The Practice shall cause its
Professionals to submit to a medical examination necessary to obtain such
insurance.
In the event that any of the above described individuals described in
Section 1.18(b) devote a substantial amount of time to serving one or more
health care practices other than the
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Practice, which is not prohibited hereunder, or the above described equipment
or Office are utilized to a substantial degree by one or more health care
practices other than the Practice, the Office Expenses shall be allocated
between the Practice and such other health care practices to reflect each
practice's pro-rata share of any expenses or costs relating to such
individuals, equipment or Office (including the recruitment costs of such
individuals and the comprehensive and general liability insurance expenses with
respect to such individuals). Expenses contemplated in this paragraph which
potentially and primarily relate to Sections 1.18(b), (c), (d), (e), (f), (g),
(h), (k) and (l) shall be in the Budget or approved by the Practice Advisory
Council, and where reasonably determinable, are intended to be reasonable and
customary based upon similar relationships generally existing between national
practice management companies and practices they manage. The Practice's
pro-rata portion of expenses related to individuals who are consultants of or
employed by Business Manager and who provide services benefiting more than one
practice shall be based upon the actual time expended by the individuals in
performing such services as compared to the time spent by such individuals with
other practices managed by the Business Manager, or, if not reasonably
calculable, as determined by Business Manager, based upon the estimated
proportionate revenue size of the Practice as compared to the aggregate revenue
size as estimated in all of the Budgets of all other practices managed by the
Business Manager which are benefiting from such individual's services.
Likewise, equipment and other benefits provided by the Business Manager to
several Practices shall be split pro-rata based upon the use or benefit derived
by each Practice, but if not calculable, shall be based upon the estimated
proportionate revenue size as set forth in the preceding sentence.
Notwithstanding anything to the contrary herein, unless an expense is expressly
designated as a Business Manager Expense, a Practice Expense or a Shareholder
Expense in this Business Management Agreement or any exhibit thereto, all
expenses incurred by Business Manager in providing services pursuant to this
Business Management Agreement shall be considered an Office Expense.
1.19. Ophthalmologist. The term "Ophthalmologist" shall mean each
individually licensed physician who is employed or otherwise retained by or
associated with the Practice, each of whom shall meet at all times the
qualifications described in Section 4.2 and Section 4.3, including, without
limitation, any Shareholder of the Practice who is a licensed physician.
1.20. Optometrist. The term "Optometrist" shall mean each
individually licensed Optometrist, if any, who is employed or otherwise
retained by or associated with the Practice, each of whom shall meet at all
times the qualifications described in Section 4.2 and Section 4.3.
1.21. Parties. The term "Parties" shall mean the Practice and
Business Manager.
1.22. Practice. The term "Practice" shall have the meaning set
forth in the Recitals.
1.23. Practice Advisory Council. The term "Practice Advisory
Council" shall have the meaning set forth in Section 2.6 of this Agreement.
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1.24. Practice Consent. The term "Practice Consent" shall mean the
consent granted by the Practice's representatives (or either representative) to
the Practice Advisory Council created pursuant to Article II herein, which
consent shall not be unreasonably withheld or delayed and shall be binding on
the Practice.
1.25. Practice Expenses. The term "Practice Expenses" shall mean
(a) all reasonable non-shareholder Professionals' salaries, benefits, payroll
taxes and other direct costs related to their services at the Office (including
reasonable and customary professional dues, subscriptions, continuing education
expenses, severance payments, (b) the cost of medical supplies (including, but
not limited to, optical supplies, drugs, pharmaceuticals, products, substances,
items or medical devices), (c) reasonable and customary professional liability
insurance expenses of Professionals, (d) travel costs for continuing education
and necessary business travel for non-shareholder Professionals, and (e) costs
of goods sold in any optical business of the Practice. Notwithstanding the
foregoing, the term Practice Expenses shall specifically exclude (i) business
travel requested by Business Manager, which shall be an Office Expense, (ii)
any and all compensation or expenses attributable to Shareholders, which shall
be a Shareholder Expense (except reasonable and customary expenses for
malpractice insurance which shall be a Practice Expense), (iii) "tail"
insurance coverage for Shareholders, which shall be a Shareholder Expense, or
(iv) such other items agreed to in advance in writing by the Parties hereto.
During this Agreement, for so long as a current Shareholder of the Practice is
an employee of, or contractor to, or Shareholder of the Practice, such
Shareholder shall be deemed to be a Shareholder for the purposes of this
definition. Such expenses are to be approved annually in the Budget. Practice
Expenses are more specifically described in attached Exhibit "1.18."
1.26. Practice Territory. The term "Practice Territory" shall mean
the geographic area described in Exhibit 1.26, representing the geographic
boundaries in which the Practice renders Professional Eye Care Services.
1.27. Professional. The term "Professional" shall mean any
Ophthalmologist or Optometrist.
1.28. Professional Eye Care Services. The term "Professional Eye
Care Services" shall mean professional health care items and services,
including, but not limited to, the practice of ophthalmology, and the practice
of optometry, and all related professional health care services provided by the
Practice through the Practice's Ophthalmologists, Optometrists, if any, and
other professional health care providers that are retained by or professionally
affiliated with the Practice. The term shall also include any and all business
whatsoever in connection with any current or future ambulatory surgery centers
or optical businesses owned or operated, or to be owned or operated in the
future, in whole or in part, by the Practice or any of its Professionals during
the terms of this Agreement.
1.29. Representatives. The term "Representatives" shall mean a
Party's officers, directors, managers, employees, or other agents.
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1.30. Shareholder. The term "Shareholder" shall mean any current or
future shareholder of the Practice.
1.31. Shareholder Expense. The term "Shareholder Expense" shall be
limited to the following expenses, as such expenses are more specifically
described in Exhibit 1.18: (a) Shareholders' salaries, benefits, payroll
taxes, and other direct costs (including professional dues, subscriptions,
continuing education expenses, severance payments, entertainment, and travel
costs for continuing education or other business travel but excluding business
travel requested by Business Manager, which shall be an Office Expense, and
excluding any other expense of a Shareholder approved as an Office Expense in
advance by the Parties); (b) those portions of leasehold obligations of the
Business Manager which are deemed in excess of fair market value as set forth
in Exhibit 1.31; (c) to the extent not covered by insurance and subject to the
advance provisions contained herein, the defense costs of any litigation
brought against the Practice or the Professionals by any third party and any
liability judgment assessed against the Practice or the Professionals; (d)
certain equipment expenses described in Section 3.2(d); (e) interest on any
funds advanced to the Practice by Business Manager to the extent that Business
Manager is a net lender in accordance with the terms of this Agreement; (f)
"tail" coverage malpractice insurance expenses for the Shareholders and any
malpractice insurance expenses of any Professional which are in excess of those
which are customary and reasonable; (g) any income taxes or franchise tax of
the Practice; and (h) consulting, accounting, or legal fees which relate solely
to the Shareholders. The Practice shall reimburse the Business Manager for any
Shareholder Expense incurred by the Business Manager.Unless an expense is
expressly designated as a Business Expense, an Office Expense or a Practice
Expense in this Business Management Agreement or in any exhibit hereto, all
expenses incurred by the Practice shall be considered a Shareholder Expense.
Notwithstanding the above, the Practice may require certain Professionals to
pay certain expenses incurred for them specifically.
1.32. State. The term "State" shall have the meaning set forth in
the Recitals.
1.33. Term. The term "Term" shall mean the initial and any renewal
periods of duration of this Business Management Agreement as described in
Section 6.1.
2. APPOINTMENT OF BUSINESS MANAGER AND ESTABLISHMENT OF
PRACTICE ADVISORY COUNCIL, LOCAL ADVISORY COUNCIL AND
NATIONAL APPEALS COUNCIL.
2.1 Appointment. The Practice hereby appoints Business Manager as
its sole and exclusive agent for the management and administration of the
business functions and business affairs of the Practice and; Business Manager
hereby accepts such appointment, subject at all times to the provisions of this
Business Management Agreement.
2.2 Authority. Consistent with the provisions of this Business
Management Agreement, Business Manager shall have the responsibility and
commensurate authority to
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provide Management Services for the Practice. The Practice shall give Business
Manager thirty (30) days' prior notice of the Practice's intent to execute any
agreement creating a binding legal obligation on the Practice. The Parties
acknowledge and agree that the Practice, through its Professionals, shall be
responsible for and shall have complete authority, responsibility, supervision,
and control over the provision of all Professional Eye Care Services and other
professional health care services performed for patients, and that all
diagnoses, treatments, procedures, and other professional health care services
shall be provided and performed exclusively by or under the supervision of
Professionals as such Professionals, in their sole discretion, deem
appropriate. Business Manager shall have and exercise absolutely no control,
influence, authority or supervision over the provision of Professional Eye Care
Services.
2.3 Patient Referrals. Business Manager and the Practice agree
that the benefits to the Practice hereunder do not require, are not payment
for, and are not in any way contingent upon the referral, admission, or any
other arrangement for the provision of any item or service offered by Business
Manager to patients of the Practice in any facility, laboratory, center, or
health care operation controlled, managed, or operated by Business Manager.
2.4 Internal Decisions of the Practice. Matters involving the
Practice's allocation of professional income among its Shareholders and the
Professional employees of the Practice, tax planning, and investment planning
shall remain the responsibility of the Practice and the Shareholders of the
Practice.
2.5 Practice of Ophthalmology and Optometry. The Parties
acknowledge that Business Manager is not authorized or qualified to engage in
any activity that may be construed or deemed to constitute the practice of
ophthalmology or optometry. To the extent any act or service herein required
by Business Manager should be construed by a court of competent jurisdiction or
by the State Board of Medicine or the State Board of Optometry to constitute
the practice of ophthalmology or optometry, the requirement to perform that act
or service by Business Manager shall be deemed waived and unenforceable.
2.6 Formation and Operation of the Practice Advisory Council. The
Parties hereby establish a Practice Advisory Council which shall be responsible
for advising Business Manager and the Practice with respect to developing and
implementing management and administrative policies for the overall operation
of the Practice's facilities and for providing dispute resolution on certain
matters. The Practice Advisory Council shall consist of four (4) members.
Business Manager shall designate, in its sole discretion, two (2) members of
the Practice Advisory Council or may have one (1) member with two (2) votes.
The Practice shall designate, in its sole discretion, two (2) members of the
Practice Advisory Council or may have one (1) member with two (2) votes. The
Practice Advisory Council members selected by the Practice shall be full-time
Professional employees of the Practice. Each Party's representatives to the
Practice Advisory Council shall have the authority to make decisions on behalf
of the respective Party. Except as may otherwise be provided, the act of a
majority of the members of the Practice Advisory Council shall be the act of
the Practice Advisory Council. The decisions, resolutions,
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actions, or recommendations of the Practice Advisory Council shall be
implemented by Business Manager or the Practice, as appropriate.
2.7 Duties and Responsibilities of the Practice Advisory Council.
The Practice Advisory Council shall review, evaluate, make recommendations, and
where specifically authorized herein and permitted by law, make decisions with
respect to the following matters:
(a) Facility Improvements and Expansion. Any
renovation and expansion plans and capital equipment expenditures with respect
to the Practice's facilities (including with respect to any ambulatory surgical
center or optical business) shall be reviewed by the Practice Advisory Council
which shall make recommendations to Business Manager with respect to proposed
changes therein. Such renovation and expansion plans and capital equipment
expenditures shall be based upon economic feasibility, ophthalmology and
optometry support, productivity and then current market conditions.
(b) Marketing and Public Relations. The Practice
Advisory Council shall review and make recommendations to the Practice with
respect to all marketing and public relations services and programs promoting
the Practice's Professional Eye Care Services.
(c) Patient Fees; Collection Policies. As a part of
the annual operating budget, the Practice Advisory Council shall review and
make recommendations to the Practice concerning the fee schedule and collection
policies for all Professional Eye Care Services and ancillary services rendered
by the Practice.
(d) Ancillary Services. The Practice Advisory Council
must approve any new non-professional ancillary services to be rendered by the
Practice including ambulatory surgical center and optical business, and
concerning the pricing, continuation of, access to, and quality of such
services.
(e) Provider and Payor Relationships. The Practice
Advisory Council shall review and make recommendations to Business Manager and
the Practice regarding the establishment or maintenance of relationships
between the Practice and institutional health care providers and third-party
payors, and shall review and approve all agreements with institutional health
care providers and third-party payors which contain terms which are materially
different from those terms set forth in guidelines established by the Local
Advisory Council. The Practice Advisory Council shall also make
recommendations to Business Manager and the Practice concerning discounted fee
schedules, including capitated fee arrangements of which the Practice shall be
a party, and shall review and approve all such capitated fee arrangements.
(f) Strategic Planning. The Practice Advisory Council
may make recommendations to Business Manager concerning development of
long-term strategic planning objectives for the Practice.
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(g) Capital Expenditures. The Practice Advisory
Council shall make recommendations to Business Manager and the Practice
concerning the priority of major capital expenditures and shall review and
approve any commitment to make any capital expenditures for non-medical
equipment relating to the Office involving amounts in excess of $15,000
individually, or $50,000 in the aggregate, in any one fiscal year, which
amounts may be increased from time- to-time by the Local Advisory Council.
(h) Hiring of Professionals. The Practice Advisory
Council shall recommend to the Practice the number and type of Professionals
required for the efficient operation of the Practice's facilities.
(i) Fee Dispute Resolution. At the request of Business
Manager or the Practice, the Practice Advisory Council shall make
recommendations to Business Manager with respect to any dispute concerning a
set-off or reduction in Management Fees.
(j) Grievance Referrals. The Practice Advisory Council
shall consider and make recommendations to Business Manager and the Practice
regarding grievances pertaining to matters not specifically addressed in this
Business Management Agreement as referred to it by Business Manager or the
Practice's Board of Directors.
(k) Termination of Business Manager's Personnel. The
Practice Advisory Council shall review and approve any decision by the Business
Manager to terminate any of Business Manager's personnel primarily located at
the Office who occupy office manager or higher level positions.
(l) Approval of New Office. The Practice Advisory
Council shall approve any move of the current Office location or the expansion
to an additional Office location. Additionally, the Practice Advisory Council
shall approve the establishment of any ambulatory surgical center or optical
business of the Practice and the move or expansion of any such business.
(m) Approval of Budget. The Practice Advisory Council
shall have the power to adopt, approve and amend the Budget and to approve
various expenses as set forth herein, which shall be subject to change upon
submission of any dispute thereon to Ernst & Young LLP (or its successor or
replacement) and appeal to the National Appeals Council as provided in Section
3.11(a).
Except in those specific instances set forth above in which the Practice
Advisory Council has been granted the authority to make decisions binding upon
the Business Manager and the Practice, it is acknowledged and agreed that
recommendations of the Practice Advisory Council are intended for the advice
and guidance of Business Manager and the Practice and that the Practice
Advisory Council does not have the power to bind Business Manager or the
Practice. Where discretion with respect to any matter is vested in Business
Manager or the Practice under
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the terms of this Agreement, Business Manager or the Practice, as the case may
be, shall have ultimate responsibility for the exercise of such discretion,
notwithstanding any recommendations of the Practice Advisory Council. Business
Manager and the Practice shall, however, take such recommendations of the
Practice Advisory Council into account in good faith in the exercise of such
discretion.
2.8 Professional Health Care Decisions. Despite the above listing
of activities and areas of interest, all decisions required by applicable law
to be made solely by health care professionals will be made solely by the
appropriate Professionals, but non-Professional members of the Practice
Advisory Council may participate in the discussion process. The Professional
representatives of the Practice on the Practice Advisory Council shall have
exclusive authority to review and resolve issues related to:
(a) Types and levels of Professional Eye Care Services
to be provided; (provided, however, that the Practice Advisory Council shall
have the authority set forth in Section 2.7(d) with respect to new ambulatory
surgical centers and new optical business);
(b) Recruitment of Professionals to the Practice,
including the specific qualifications and specialties of recruited
Professionals;
(c) Any medical or optometric related functions;
(d) Fee schedules; and
(e) Any other decisions required by applicable law to
be made solely by Professionals and not by non-Professionals.
2.9 Meetings of the Practice Advisory Council. The Practice
Advisory Council shall meet on a regular basis as mutually agreed by the
Parties. A special meeting of the Practice Advisory Council may be called by
either Business Manager or the Practice upon two (2) weeks' notice, except in
the event of an emergency, in which case a special meeting may be called by
either Business Manager or the Practice upon three (3) business days' notice.
Meetings may be held telephonically or by any other means agreeable to the
Parties.
2.10 Formation and Operation of Local Advisory Council. Business
Manager shall, within six (6) months of the effective date of this Business
Management Agreement establish a Local Advisory Council composed of delegates
from health care practices for which Business Manager is then providing
management services similar to those services contemplated in this Business
Management Agreement. All of such health care practices shall be located
within the market area described on Exhibit 2.10, as such market area may be
expanded from time-to-time by the Local Advisory Council. For six (6) years
from the date hereof, the Practice shall be entitled to appoint one delegate to
the Local Advisory Council, of which the initial delegate shall serve an
initial two (2) year term. Thereafter, for the two (2) subsequent two (2) year
terms,
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the Practice may appoint the same or a different delegate to the Local Advisory
Council. After the six (6) year period, the Practice shall have the right to
vote, along with other Practices managed in the market by the Business Manager,
for the delegates to the Local Advisory Council in accordance with the by-laws,
as modified time by time as described below. Business Manager shall be
entitled to appoint two delegates to the Local Advisory Council who may be
replaced from time-to-time at the Business Manager's discretion, and who
together shall have a voting power equal to the combined voting power of all
delegates appointed by the health care practices. If any market contains only
one health care practice, such practice shall appoint one (1) individual to the
Local Advisory Council who shall have two (2) votes. Any matter to be
determined by the Local Advisory Council must receive the affirmative vote of a
majority of the votes cast of the delegates appointed to the Local Advisory
Council. The Local Advisory Council shall make recommendations to Business
Manager and such health care practices as to regional policy and strategy
issues within the market area and as to the following:
(a) The establishment of private pay fee schedules
where permitted by law;
(b) The establishment of guidelines for agreements with
institutional health care providers and third-party payors; and
(c) Any agreement with an institutional health care
provider or third-party payor which materially differs from guidelines
established by the Local Advisory Council.
The Local Advisory Council may, from time-to-time, select commercial
carriers for professional, casualty and comprehensive general liability
coverage for health care practices in the market area and such selection shall
be binding upon such health care practices.
The Local Advisory Council shall consider and determine any issue upon
which the Practice Advisory Council is deadlocked (except for the determination
of the Budget). In determining such disputes, the Local Advisory Council shall
make findings of fact relating to evidence presented by the Parties to the
dispute. Decisions by the Local Advisory Council may be appealed by any party
adversely affected to the National Appeals Council, which shall have the option
of hearing the appeal. The Local Advisory Council's rules of operation and
procedure shall be governed by by-laws to be adopted by the delegates, and such
by-laws may be amended or restated from time-to-time. Such by-laws shall be
reasonable and in accord with the terms and spirit of this Agreement. The
Practice and Business Manager covenant and agree to abide by the Local Advisory
Council's by-laws, as such by-laws may be amended from time-to-time.
2.11 Formation and Operation of the National Appeals Council.
Business Manager shall within six (6) months of the effective date of this
Business Management Agreement establish a National Appeals Council composed of
one (1) delegate appointed by each of the initial Local Advisory Councils to be
established by Business Manager, and two (2) delegates appointed by the
Business Manager. The initial delegates of the Local Advisory Councils shall
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serve an initial two (2) year term, and thereafter, if the local advisory
council qualifies under the then current by-laws of the National Appeals
Council with respect to the eligibility of Local Advisory Councils to appoint
delegates to the National Appeals Council, the local advisory council may
appoint the same or a different delegate to the National Appeals Council.
Business Manager's delegates to the National Appeals Council shall together
have a voting power equal to the combined voting power of all delegates
appointed by the Local Advisory Councils. Any matter to be determined by the
National Appeals Council must receive the affirmative vote of a majority of the
votes cast of the delegates appointed to the National Appeals Council. The
National Appeals Council shall serve as a forum of appeal of any determinations
of the Local Advisory Councils over which it chooses to have jurisdiction. In
resolving such appeals it determines to hear, the National Appeals Council
shall review findings of fact made by the applicable local advisory council and
shall only reverse a decision of the local advisory council if the local
advisory council's decision was based upon manifest error. The National
Appeals Council shall also determine disputes which it chooses to have
jurisdiction over and which cannot be decided because of a deadlock among the
delegates of any Local Advisory Council. In the event of a deadlock among the
delegates of the National Appeals Council, the dispute may be submitted by
either party to the dispute to arbitration in accordance with Section 8.7 of
this Agreement. In all other instances, the determination of a dispute by the
National Appeals Council shall be final. The National Appeals Council's rules
of operation and procedure shall be governed by by-laws to be adopted by the
Local Advisory Councils' and Business Manager's delegates, and such by-laws may
be amended or restated from time-to-time. Such by-laws shall be reasonable and
reflect the terms and spirit of this Agreement. The National Appeals Council's
decisions shall be binding upon the parties. The Practice and Business Manager
covenant and agree to abide by the National Appeal Council's by-laws, as such
by-laws may be amended from time-to-time.
3. OBLIGATIONS AND RESPONSIBILITIES OF BUSINESS MANAGER.
3.1 Management Services. Business Manager shall provide all
Management Services as are necessary and appropriate for the day-to-day
administration of the business aspects of the Practice's operations, pursuant
to the terms of this Business Management Agreement. Business Manager shall
operate in a reasonable and customary manner with due consideration to the
Practice's past business practices and shall operate in accordance with all
applicable laws, rules and regulations which are necessary and material to the
Business Manager's performance of the Management Services. Business Manager
will provide in good faith and with due diligence its services consistent with
management services generally provided in operations of a medical practice
similar in size, type and operations in the State of the Practice. All costs
and expenses related to Business Manager's duties contained in this Section 3
shall be Office Expenses unless limited or excluded as an Office Expense
pursuant to the terms of this Agreement.
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3.2 Office and Equipment.
(a) Business Manager shall lease, sublease, acquire or
otherwise procure one or more Offices that are deemed by the Parties to be
reasonably necessary and appropriate, and the expenses associated with such
lease, sublease, acquisition, or procurement shall be Office Expenses. Any
Office procured by Business Manager for the use by the Practice shall be
procured at commercially reasonable rates. Any relocation from the Practice's
present Office location or expansion of the Practice's Office into an
additional Office shall be done only after Business Manager has received
Practice Consent, which shall not be unreasonably withheld.
(b) In the event the Practice is the lessee of an
Office under a lease with an unrelated and nonaffiliated lessor, Business
Manager may require the Practice to assign such lease to Business Manager upon
receipt of consent from the lessor. The Practice shall use its best efforts to
assist in obtaining the lessor's consent to the assignment. Any expenses
incurred in the assignment shall be Office Expenses.
(c) Business Manager shall provide all non-health care
equipment, fixtures, office supplies, furniture and furnishings as are
reasonable and approved in the Budget for the operation of the Office and the
provision of Professional Eye Care Services. If the Practice wishes to choose
additional equipment, which the Business Manager determines not to acquire or
lease, the Practice may acquire or lease such equipment, and the expense
related thereto shall be deemed a Shareholder Expense.
(d) Business Manager shall provide, finance, or cause
to be provided or financed health care related equipment as reasonably required
by the Practice. The Practice shall have final authority in all health care
equipment selections; provided, however, that if the Practice chooses to
acquire health care equipment which is not in the Budget and which Business
Manager reasonably chooses not to acquire, expenses related thereto shall be
treated as a Shareholder Expense and such equipment shall be owned by the
Practice; provided further that following such acquisition or lease by the
Practice, if the Practice Advisory Council determines that after a period of
six months of use such equipment is reasonably certain to result in material
profit to Business Manager (taking into account the cost or expense and
anticipated revenues associated with such equipment), then Business Manager
shall acquire such equipment from the Practice by either (at Business Manager's
option), paying cash or by assuming the liability associated with such
equipment, or if such equipment is then being leased by the Practice, by
assuming such lease. In the event of such an acquisition by Business Manager,
it shall reimburse the Practice for previous expenses applied thereto.. Except
for equipment which Business Manager elects not to acquire or lease which are
acquired or leased by the Practice pursuant to Section 3.2(c) or (d), all
health care and non-health care equipment, other than Professional-owned
automobiles, acquired for the use of the Practice shall be owned by Business
Manager and the depreciation and related capital charge shall be an Office
Expense. Business Manager may make recommendations to the Practice on the
relationship between its health care equipment decisions and the overall
administrative and financial operations of the practice.
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(e) Business Manager shall be responsible for the
repair and maintenance of the Office, consistent with Business Manager's
responsibilities under the terms of any lease or other use arrangement, and for
the prompt repair, maintenance, and replacement of all equipment other than
such repairs, maintenance and replacement necessitated by the gross negligence
or willful misconduct of the Practice, its Professionals or other personnel
employed by the Practice, the repair or replacement of which shall be a
Shareholder Expense and not an Office Expense. Replacement equipment shall be
acquired where Business Manager in good faith determines that such replacement
is necessary or where the Budget has made allowances for such replacement.
(f) Any portion of the foregoing lease payments in
excess of fair market value (as set forth in Exhibit 1.31) relating to leases
of equipment or an Office shall be treated as a Shareholder Expense.
3.3 Health Care Supplies. Business Manager shall order, procure,
purchase and provide on behalf of and as agent for the Practice all reasonable
health care supplies unless otherwise prohibited by federal and/or state law.
Furthermore, Business Manager shall ensure that the Office is at all times
adequately stocked with the health care supplies that are necessary and
appropriate for the operation of the Practice and required for the provision of
Professional Eye Care Services. The ultimate oversight, supervision and
ownership for all health care supplies is and shall remain the sole
responsibility of the Practice and all costs and expenses relating to such
supplies shall be a Practice Expense. As used in this provision, the term
"health care supplies" shall mean all drugs, pharmaceuticals, optical supplies,
products, substances, items or devices the whose purchase, possession,
maintenance, administration, prescription or security of which requires the
authorization or order of a licensed health care provider or requires a permit,
registration, certification or other governmental authorization held by a
licensed health care provider as specified under any federal and/or state law.
3.4 Support Services. Business Manager shall provide or arrange
for all printing, stationery, forms, postage, duplication or photocopying
services, and other support services as are reasonably necessary and
appropriate for the operation of the Office and the provision of Professional
Eye Care Services therein.
3.5 Quality Assurance, Risk Management, and Utilization Review.
Business Manager shall assist the Practice in the Practice's establishment and
implementation of procedures to ensure the consistency, quality,
appropriateness, and medical necessity of Professional Eye Care Services
provided by the Practice, and shall provide administrative support for the
Practice's overall quality assurance, risk management, and utilization review
programs. Business Manager shall perform these tasks in a manner to ensure the
confidentiality and non-discoverability of these program actions to the fullest
extent allowable under state and federal law.
3.6 Licenses and Permits. Business Manager shall, on behalf of
and in the name of the Practice, coordinate all development and planning
processes, and apply for and use
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reasonable efforts to obtain and maintain all federal, state and local licenses
and regulatory permits required for or in connection with the operation of the
Practice and the equipment (existing and future) located at the Office, other
than those relating to the practice of ophthalmology or optometry or the
administration of drugs by Professionals retained by or associated with the
Practice. The expenses and costs associated with obtaining and maintaining
permits with respect to the Office and licenses for professional practice by
the non-shareholder Professionals shall be deemed an Office Expense.
3.7 Personnel. Except as specifically provided in Section 4.2 of
this Business Management Agreement, Business Manager shall employ or otherwise
retain and shall be responsible for selecting, hiring, training, supervising,
and terminating, all management, administrative, clerical, secretarial,
bookkeeping, accounting, payroll, billing and collection and other personnel
(including Clinical Personnel but excluding Professionals) as Business Manager
deems reasonably necessary and appropriate for Business Manager's performance
of its duties and obligations under this Business Management Agreement.
Consistent with reasonably prudent personnel management policies, Business
Manager shall seek and consider the advice, input, and requests of the Practice
in regard to personnel matters. Business Manager shall have sole
responsibility for determining the salaries and providing fringe benefits, and
for withholding, as required by law, any sums for income tax, unemployment
insurance, social security, or any other withholding required by applicable law
or governmental requirement. Business Manager does not currently intend to
change the existing composition or employment terms of any of Business
Manager's personnel which have employment arrangements with the Practice on the
effective date of this Agreement (unless there are unsettled issues regarding
such arrangements as described in Exhibit 3.7). Business Manager reserves the
right, however, to change the number, composition or employment terms of such
personnel in the future at Business Manager's discretion; provided, however,
that the termination of any of Business Manager's personnel who are Clinical
Personnel or occupy office manager or higher level positions, and are primarily
located at the Office must receive the approval of the Practice Advisory
Council. Business Manager and the Practice recognize and acknowledge that
Business Manager and personnel retained by Business Manager may from
time-to-time perform services for persons other than the Practice. This
Business Management Agreement shall not be construed to prevent or prohibit
Business Manager from performing such services for others or restrict Business
Manager from using its personnel to provide services to others. Business
Manager hereby disclaims any liability relating to the effect of its employees
on the qualification of the Practice's retirement plans under the Internal
Revenue Code, and all liabilities for such classification shall be solely the
responsibility of the Practice.
3.8 Contract Negotiations. Business Manager shall evaluate,
assist in negotiations and administer on behalf of the Practice contracts that
do not relate to the provision of Professional Eye Care Services as set forth
in this Agreement and/or as approved in the Budget. To the extent permitted by
law, Business Manager shall evaluate, assist in negotiations, administer and
execute on the Practice's behalf, all contractual arrangements with third
parties as are reasonably necessary and appropriate for the Practice's
provision of Professional Eye Care Services,
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including, without limitation, negotiated price agreements with third-party
payors, alternative delivery systems, or other purchasers of group health care
services. However, the Practice shall have the final authority with regard to
the entry into all of such contractual arrangements relating to the provision
of Professional Eye Care Services.
3.9 Billing and Collection. As an agent on behalf of and for the
account of the Practice, Business Manager shall establish and maintain credit
and billing and collection services, policies and procedures, and shall use
reasonable efforts to timely ▇▇▇▇ and collect all Professional and other fees
for all billable Professional Eye Care Services provided by the Practice, or
Professionals employed or otherwise retained by the Practice. The Practice
Advisory Council shall make recommendations to and consult with Business
Manager and the Practice regarding the fees for Professional Eye Care Services
provided by the Practice. In connection with the billing and collection
services to be provided hereunder, and throughout the Term (and thereafter as
provided in Section 6.3), the Practice hereby grants to Business Manager an
exclusive special power of attorney and appoints Business Manager as the
Practice's exclusive true and lawful agent and attorney-in-fact (which shall be
deemed revoked in the event of termination for cause by the Practice), and
Business Manager hereby accepts such special power of attorney and appointment,
for the following purposes:
(a) To ▇▇▇▇ the Practice's patients, in the Practice's
name using the Practice's tax identification number and on the Practice's
behalf, for all billable Professional Eye Care Services provided by the
Practice to patients.
(b) To ▇▇▇▇, in the Practice's name using the
Practice's tax identification number and on the Practice's behalf, all claims
for reimbursement or indemnification from health maintenance organizations,
self-insured employers, insurance companies, Medicare, Medicaid, and all other
third-party payors or fiscal intermediaries for all covered billable
Professional Eye Care Services provided by the Practice to patients.
(c) To collect and receive (to the extent permitted by
law), in the Practice's name and on the Practice's behalf, all accounts
receivable generated by such ▇▇▇▇▇▇▇▇ and claims for reimbursement, to
administer such accounts including, but not limited to, extending the time of
payment of any such accounts; suing, assigning or selling at a discount such
accounts to collection agencies; or taking other measures to require the
payment of any such accounts; provided, however, that the Practice shall review
and approve (which approval shall not be unreasonably withheld) any decision by
Business Manager to undertake extraordinary collection measures, such as filing
lawsuits, discharging or releasing obligors, or assigning or selling accounts
at a discount to collection agencies. Business Manager shall act in a
professional manner and in compliance with all federal and State fair debt
collection practices laws in rendering billing and collection services.
(d) To deposit all amounts collected into the Account
which shall be a cash collateral account held in the name of Business Manager
and shall be opened at a financial
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institution chosen by Business Manager. All amounts received or collected are
hereby pledged to the Business Manager and shall be held or deposited in the
Account to secure the performance of the Practice's obligations under this
Agreement. The Account shall be held under Business Manager's tax
identification number. The Practice covenants to transfer and deliver to the
Account all funds received by the Practice from patients or third-party payors
for Professional Eye Care Services. Upon receipt by Business Manager of any
funds from patients or third-party payors or from the Practice pursuant hereto
for Professional Eye Care Services, Business Manager shall immediately deposit
the same into the Account. Business Manager shall administer, be responsible
for, and be obligated to pay for all Office Expenses; provided, however, that
Business Manager shall only be liable for Office Expenses to the extent of
funds in the Account plus any amounts borrowed by Business Manager in
accordance with Section 5.4. Business Manager shall disburse such deposited
funds to creditors and other persons on behalf of the Practice, maintaining
records of such receipt and disbursement of funds. Business Manager may borrow
amounts from the Account in excess of amounts due Business Manager pursuant to
this Agreement and to the full extent of funds in the Account. Such borrowed
amounts shall bear interest to the Account in the amount of six percent (6%)
per annum, and any of such borrowed amounts outstanding shall be repaid by
Business Manager to the Account when needed to cover all expenses and
obligations under this Agreement and shall be repaid within thirty (30) days of
the termination of this Agreement.
(e) To take possession of, endorse in the name of the
Practice, and deposit into the Account any notes, checks, money orders,
insurance payments, and any other instruments received in payment of accounts
receivable for Professional Eye Care Services.
(f) To sign checks on behalf of the Practice, and to
make withdrawals from the Account for payments specified in this Business
Management Agreement. Upon request of Business Manager, the Practice shall
execute and deliver to the financial institution wherein the Account is
maintained, such additional documents or instruments as may be necessary to
evidence or effect the special power of attorney granted to Business Manager by
the Practice pursuant to this Section 3.9. The special power of attorney
granted herein shall be coupled with an interest and shall be irrevocable
except with Business Manager's written consent. The irrevocable power of
attorney shall expire when this Business Management Agreement has been
terminated, all accounts receivable payable to Business Manager pursuant to
this Business Management Agreement have been collected and all Management Fees
due to Business Manager have been paid. If Business Manager assigns this
Business Management Agreement in accordance with its terms, the Practice shall
execute a power of attorney in favor of the assignee in a form acceptable to
Business Manager.
3.10 Maintenance of Account. During the term of this Business
Management Agreement, all Adjusted Gross Revenues collected resulting from the
rendering of Professional Eye Care Services by the Practice shall be deposited
directly into the Account in which Business Manager shall have the sole signing
capacity.
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(a) Payments from the Account. Each month Business
Manager shall pay from funds that are in the Account all sums due and payable
as an Office Expense and Practice Expenses. Additionally, on or before the
15th day of the following month, (i) Business Manager shall pay from funds that
are in the Account to the Practice Adjusted Gross Revenue less accrued Office
Expense, accrued Practice Expense (excluding optical supplies), accrued
Management Fee, and (at the discretion of Business Manager) all sums advanced
by the Business Manager, and (ii) the accrued Management Fee for the previous
month shall be paid.
(b) Payments to the Practice's Account. To the extent
funds are available, the Business Manager shall be responsible for remitting
from the Account to an account to be owned by and held in the Practice's name,
separate from the Account, the amounts which the Practice is entitled to
receive under Section 3.10(a). Within sixty (60) days of the end of each of
the first three (3) fiscal quarters in each fiscal year and within one hundred
twenty (120) days of the end of each fiscal year, a settlement process shall be
undertaken pursuant to which adjustments, if necessary, shall be made in the
total payments to the Practice based upon the financial statements prepared in
accordance with Section 3.11(b). Any additional payment due to the Practice
will be made within thirty (30) days of the completion of the settlement
process. Any reduction in payments to the Practice as the result of such
settlement process shall be made by reducing future payments to the Practice,
commencing with the month following completion of the settlement process, until
such adjustments are made in full.
Business Manager and the Practice shall each have signing capacity to
withdraw funds from the Practice's account; provided however that Business
Manager shall only be entitled to withdraw funds relating to such account in
connection with the payment of Practice Expenses and Shareholders' salaries,
benefits and payroll taxes. Subject to the foregoing, the Practice hereby
grants to Business Manager a special power of attorney and appoints Business
Manager as the Practice's true and lawful agent and attorney-in-fact, and
Business Manager hereby accepts such special power of attorney and appointment,
to sign checks on behalf of the Practice for payments of the Practice Expenses
and Shareholders' salaries, benefits and payroll taxes in accordance with this
Business Management Agreement. Upon request of Business Manager, the Practice
shall execute and deliver to the financial institution wherein the Practice's
account is maintained, such additional documents or instruments as may be
necessary to evidence or effect the special power of attorney granted to
Business Manager by the Practice pursuant to this Section 3.10(b). The special
power of attorney granted herein shall be coupled with an interest and shall be
irrevocable except with Business Manager's written consent. The irrevocable
power of attorney shall expire when this Business Management Agreement has been
terminated. If Business Manager assigns this Business Management Agreement in
accordance with its terms, the Practice shall execute a power of attorney in
favor of the assignee in a form acceptable to Business Manager. Business
Manager shall not make any withdrawal from the Practice's account unless
expressly authorized in this Agreement.
A Practice payroll account shall be established on behalf of the
practice for payroll to non-shareholder Professionals of the Practice. Funds
for this account shall be received as
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Practice Expenses. Business Manager and the Practice shall each have signing
capacity to access the account for payroll.
(c) Insufficient Funds in Account. During the Term of
this Agreement, Business Manager shall advance sufficient funds to cover all
expenses and obligations only if, and to the extent that, the amount of such
advances, plus accrued interest thereon, does not exceed the reasonably
collectable value of the Practice's accounts receivable as determined by
Business Manager in its reasonable discretion plus any amounts borrowed by
Business Manager pursuant to Section 5.4. Business Manager may, however, elect
from time to time to advance additional funds to the Practice at its
discretion. Any of such advances shall be deemed loans to the Practice to be
repaid by the Practice along with interest at six percent (6%) per annum. Any
of such advanced amounts which have not been paid to Business Manager pursuant
to Section 3.10(a)(i) on the date of termination of this Agreement shall become
due and payable on the date of such termination.
3.11 Fiscal Matters.
(a) Annual Budget. Annually and at least thirty (30)
days prior to the commencement of each fiscal year of the Practice, the
Practice Advisory Council shall prepare and deliver to the Practice a proposed
budget, setting forth an estimate of the Practice's revenues and expenses for
the upcoming fiscal year (including, without limitation, the Management Fee
associated with the Management Services provided by Business Manager hereunder
and the salaries and benefits of all non-shareholder Professionals employed by
the Practice). The Budget may be amended by the Practice Advisory Council from
time-to-time during any applicable fiscal year to reflect changing
circumstances affecting the Practice. Disputes concerning the Budget will, at
the request of either Party hereto, be submitted to the accounting firm of
Ernst & Young LLP, any successor thereof, or such other big six accounting firm
agreed to by the Parties, which shall determine an appropriate resolution of
the dispute. Such determination shall be binding upon the Practice and the
Business Manager, subject to either Party's right to petition the National
Appeals Council to consider the determination of Ernst & Young LLP (or its
successor or replacement), which petition may be granted at the discretion of
the National Appeals Council. In all situations described in this Agreement in
which Ernst & Young LLP or its successor or replacement is to act as an
arbitrator of any matter relating to this Agreement, Ernst & Young LLP (or its
successor or replacement) shall act as an impartial and independent arbitrator.
The Parties hereby waive and release and agree to indemnify and hold harmless
Ernst & Young LLP (and its successor or replacement) from and for any and all
claims, demands, liabilities, losses, damages, costs and expenses relating to
its determinations made in good faith pursuant to this Agreement and agree to
execute any documents reasonably requested by Ernst & Young LLP (or its
successor or replacement) to effectuate the same. Any final decision of Ernst
& Young LLP or its successor or replacement, or the National Appeals Council
concerning the Budget shall be retroactive to the first day of the Budget
period in question. Notwithstanding the above, should Business Manager be in
material default hereunder, the Practice shall have the exclusive right to
establish the Budget. Additionally, notwithstanding the
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above, no change in an adopted Budget shall be contrary to the terms and spirit
of this Agreement nor shall it have any effect on the Management Fee expressly
agreed to herein, unless approved in advance in writing by the Parties hereto.
(b) Accounting and Financial Records. Business Manager
shall establish and administer accounting procedures, controls, and systems for
the development, preparation, and safekeeping of administrative or financial
records and books of account relating to the business and financial affairs of
the Practice and the provision of Professional Eye Care Services, all of which
shall be prepared and maintained in accordance with GAAP. Business Manager
shall prepare and deliver to the Practice (i) within sixty (60) days of the end
of each of the first three (3) fiscal quarters in each fiscal year, and (ii)
within one hundred twenty (120) days of the end of each fiscal year, a balance
sheet and a profit and loss statement reflecting the financial status of the
Practice in regard to the provision of Professional Eye Care Services as of the
end of such period, all of which shall be prepared in accordance with GAAP
consistently applied. In addition, Business Manager shall prepare or assist in
the preparation of any other financial statements or records as the Practice
may reasonably request.
(c) Sales and Use Taxes. Business Manager and the
Practice acknowledge and agree that to the extent that any of the services to
be provided by Business Manager hereunder may be subject to any state sales and
use taxes, Business Manager may have a legal obligation to collect such taxes
from the Practice and to remit the same to the appropriate tax collection
authorities. The Practice agrees to have applicable state sales and use taxes
attributable to the services to be provided by Business Manager hereunder
treated as an Office Expense.
3.12 Reports and Records.
(a) Health Care Records. To the extent permitted by
applicable law, Business Manager shall establish, monitor, and maintain
procedures and policies for the timely creation, preparation, filing and
retrieval of all health care records generated by the Practice in connection
with the Practice's provision of Professional Eye Care Services; and, subject
to applicable law, shall ensure that health care records are promptly available
to Professionals and any other appropriate persons. All such health care
records shall be retained and maintained by the Practice, and the Business
Manager as agent for the Practice, in accordance with all applicable State and
federal laws relating to the confidentiality and retention thereof. All health
care records shall be and remain the property of the Practice. The Practice
shall at all times during the term of this Agreement grant Business Manager
unrestricted access to such health care records and shall in the course of the
Practice's business obtain the written consent of the Practice's patients to
Business Manager's access to, and review and use of such records.
(b) Other Reports and Records. Business Manager shall
timely create, prepare, and file such additional reports and records as are
reasonably necessary and appropriate
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for the Practice's provision of Professional Eye Care Services, and shall be
prepared to analyze and interpret such reports and records upon the request of
the Practice.
3.13 Recruitment of the Practice's Professionals. Upon the
Practice's request, Business Manager shall perform all administrative services
reasonably necessary and appropriate to recruit potential Professionals to
become employees of the Practice. Business Manager shall provide the Practice
with model agreements to document the Practice's employment, retention or other
service arrangements with such individuals. It will be and remain the sole and
complete responsibility of the Practice to interview, select, contract with,
supervise, control and terminate all Professionals performing Professional Eye
Care Services or other professional services.
3.14 Confidential and Proprietary Information.
(a) Business Manager agrees and acknowledges that all
materials provided by the Practice to the Business Manager constitute
Confidential Information disclosed in confidence and with the understanding
that it constitutes valuable business information developed by the Practice at
great expenditures of time, effort, and money. Business Manager further agrees
that it shall not, directly or indirectly, disclose any Confidential
Information of the Practice to other persons without the Practice's express
written authorization, such Confidential Information shall not be used in any
way directly or indirectly detrimental to the Practice, and Business Manager
will keep such Confidential Information confidential and will ensure that its
affiliates and advisors who have access to such Confidential Information comply
with these nondisclosure obligations; provided, however, that Business Manager
may disclose Confidential Information to those of its Representatives who need
to know Confidential Information for the purposes of this Business Management
Agreement, it being understood and agreed to by Business Manager that such
Representatives will be informed of the confidential nature of the Confidential
Information, will agree to be bound by this Section, and will be directed by
Business Manager not to disclose to any other person any Confidential
Information. Business Manager agrees to be responsible for any breach of this
Section by its affiliates, advisors, or Representatives. If Business Manager
is requested or required (by oral questions, interrogatories, requests for
information or documents, subpoenas, civil investigative demands, or similar
processes) to disclose or produce any Confidential Information furnished in the
course of its dealings with the Practice or its affiliates, advisors, or
Representatives, Business Manager will (i) provide the Practice with prompt
notice thereof and copies, if possible, and, if not, a description, of the
Confidential Information requested or required to be produced so that the
Practice may seek an appropriate protective order or waive compliance with the
provisions of this Section and (ii) consult with the Practice as to the
advisability of the Practice's taking of legally available steps to resist or
narrow such request. Business Manager further agrees that, if in the absence
of a protective order or the receipt of a waiver hereunder Business Manager is
nonetheless, in the written opinion of its legal counsel, compelled to disclose
or produce Confidential Information concerning the Practice to any tribunal
legally authorized to request and entitled to receive such Confidential
Information or to stand liable for contempt or suffer other censure or penalty,
Business Manager may disclose or produce such Confidential Information
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to such tribunal without liability hereunder; provided, however, that Business
Manager shall give the Practice written notice of the Confidential Information
to be so disclosed or produced as far in advance of its disclosure or
production as is practicable and shall use its best efforts to obtain, to the
greatest extent possible, an order or other reliable assurance that
confidential treatment will be accorded to such Confidential Information so
required to be disclosed or produced. Upon expiration or termination of this
Business Management Agreement by either Party for any reason whatsoever,
Business Manager shall immediately return and shall cause its Representatives,
affiliates, and independent contractors to immediately return to the Practice
all Confidential Information, and Business Manager shall not, and will cause
its Representatives, affiliates, and independent contractors not to, thereafter
use, appropriate or reproduce such Confidential Information. Business Manager
further expressly acknowledges and agrees that any such use, appropriation, or
reproduction of any such Confidential Information by any of the foregoing after
the expiration or termination of this Agreement will result in irreparable
injury to the Practice, that the remedy at law for the foregoing would be
inadequate, and that in the event of any such use, appropriation, or
reproduction of any such Confidential Information after the termination or
expiration of this Agreement, the Practice, in addition to any other remedies
or damages available to it, shall be entitled to injunctive or other equitable
relief without the necessity of posting a bond, cash, or otherwise, and without
the necessity of proving actual damages. Such rights to relief shall not
preclude the Practice from other remedies which may be available to it
hereunder.
(b) Notwithstanding clause (a) above, Business Manager
may share, subject to the restrictions of this Section, with other professional
corporations, associations, ophthalmology and optometry practices, or health
care delivery entities the practice statistics of the Practice, including
utilizing review data, quality assurance data, cost data, outcomes data, or
other practice data. In addition, Business Manager may disclose all
practice-related information necessary or desirable in connection with any
public or private offering of any debt or equity security. No such data will
disclose or divulge patient identifying information or, to the extent possible,
Professional identifying information.
3.15 Business Manager's Insurance. Throughout the Term, Business
Manager shall, as an Office Expense, obtain and maintain with commercial
carriers, through self-insurance or some combination thereof, appropriate
workers' compensation coverage for Business Manager's employed personnel
provided pursuant to this Business Management Agreement, and professional,
casualty and comprehensive general liability insurance covering Business
Manager, Business Manager's personnel, and all of Business Manager's equipment
in such amounts, on such basis and upon such terms and conditions as Business
Manager deems appropriate. Such insurance policies shall be issued by a
carrier or carriers having a current rating of not less than "A" as rated by
A.M. Best Company, unless the Practice agrees in writing to the purchase of a
policy or policies from a carrier having a lesser rating than "A". Business
Manager shall cause the Practice to be named as an additional insured on
Business Manager's casualty and comprehensive general liability policy.
Business Manager hereby releases the Practice from any and all liability for
losses or damages caused by any act or neglect of the Practice occurring after
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the effective date hereof to the extent that such losses or damages are covered
by insurance; provided, however, that such release shall not apply to any loss
or damage caused by the willful, wanton, or premeditated negligence of the
Practice. Business Manager shall obtain from any insurance company issuing the
foregoing policies its consent to the release from liability contained in this
Section. Upon the request of the Practice, Business Manager shall provide the
Practice with a certificate evidencing such insurance coverage. Business
Manager may also obtain key man life insurance policies on the life of any
Shareholder as is consistent with 1.18(n).
3.16 No Warranty. The Practice acknowledges that Business Manager
has not made and will not make any express or implied warranties or
representations that the Management Services provided by Business Manager will
result in any particular amount or level of ophthalmology or optometry practice
or income to the Practice. Specifically, Business Manager has not represented
that its Management Services will result in higher revenues, lower expenses,
greater profits or growth in the number of patients treated by the Practice's
Professionals.
3.17 Non-Competition Covenant from Business Manager. The Business
Manager hereby recognizes and acknowledges that the Practice shall incur
substantial costs in modifying its business activities to carry out this
Business Management Agreement and that in the process of Business Manager's
providing services under this Business Management Agreement, the Business
Manager will be privy to financial and Confidential Information, to which the
Business Manager would not otherwise be exposed. Business Manager agrees and
acknowledges that the non-competition covenants described hereunder are
necessary for the protection of the Practice, and that the Practice would not
have entered into this Business Management Agreement without such covenants.
Business Manager represents, warrants and covenants that during the Term of
this Business Management Agreement and for a period of two (2) years from the
date this Business Management Agreement is terminated, other than if terminated
by Business Manager for cause, neither Business Manager nor any person or
entity affiliated directly or indirectly with Business Manager will, anywhere
within five (5) miles of any Office existing on the effective date of this
Business Management Agreement, enter into a direct or indirect relationship
similar to the relationship between the Practice and Business Manager, or
acquire the nonmedical assets of, any professional practice group or engage in
any other eye care business currently engaged in by the Business Manager
without approval of the Practice. The Local Advisory Council shall consult
with Business Manager with respect to any acquisition of or merger with a
health care practice outside such five (5) mile area and within the region
described in Exhibit 2.10. Notwithstanding anything to the contrary in this
Section, Business Manager (a) may establish and maintain relationships with the
entities described on Exhibit 3.17, (b) may enter into managed care agreements
with (i) other practices on the one hand, and national or regional payor
entities on the other hand, if the Practice, upon being offered the opportunity
to enter into such managed care agreements, elects not to enter into such
managed care agreements, (ii) other health care practices within the
above-described five (5) mile area if and to the extent that the Practice is
unable to provide the specific services, reasonable access to, or minimum
standards as required by, a managed care payor for all of the patients to be
covered by a managed care
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agreement, and (iii) other health care practices where Business Manager
reasonably believes additional providers are required to obtain a contract;
provided, however, that the exceptions to Business Manager's covenant not to
compete contained in this subsection (b) shall not permit Business Manager to
enter into business management agreements with such other health care
practices. If the Business Manager breaches any obligation set forth in this
Section, in addition to any other remedies available under this Business
Management Agreement, at law or in equity, the Practice shall be entitled to
enforce this Business Management Agreement by injunctive relief and by specific
performance of the Business Management Agreement, such relief to be without the
necessity of posting a bond, cash or otherwise. Additionally, nothing in this
Section 3.17 shall limit the Practice's right to recover any other damages to
which it is entitled as a result of the Business Manager's breach. The time
period for which the non-competition covenants are effective shall be extended
day for day for the time period the Business Manager is in violation of the
non-competition covenants. If any provision of the covenants is held by a
court of competent jurisdiction to be unenforceable due to an excessive time
period, geographic area, or restricted activity, the covenants shall be
reformed to comply with such time period, geographic area, or restricted
activity that would be held enforceable. Following termination of this
Agreement pursuant to Section 6.2(b) hereof, Business Manager shall be released
from any and all of the restrictions imposed in this Section 3.17.
3.18 Marketing and Public Relations. In accordance with applicable
laws, regulations and ethical standards, Business Manager shall use its best
efforts to provide such marketing, support, advertising and public relations
services as are appropriate to promote and market the Practice's Professional
Eye Care Services. Such services shall be subject to review by the Local
Advisory Council. At the option of Business Manager and to the extent
permitted by law, the Business Manager's corporate name may be included on any
or all signage, letterhead, advertisements, announcements and the like relating
to Professional Eye Care Services provided by the Practice. Marketing support
services include training the Practice's personnel concerning marketing
techniques, providing written materials that may be used in marketing, and
providing technical assistance to the Practice's personnel engaged in direct
marketing efforts such as administrative support and assistance in contract
negotiation and implementation. Business Manager shall not perform direct
marketing to potential sources of business, but shall provide assistance to the
Practice's personnel who perform any such direct marketing as set forth above.
Use of the Practice's name in any advertising or promotions shall require the
Practice's advance approval.
3.19 Inconsistent Transaction by Business Manager. The Business
Manager agrees that in performing the Management Services with respect to the
Practice, it shall not enter into any agreements, commitments or transactions
or engage in any activities which are exclusively within the authority and
responsibility of the Practice as set forth in this Agreement or are otherwise
materially inconsistent with the provisions of this Agreement.
3.20 Payment of Cash Portion of Note. From and after the effective
date hereof, Business Manager covenants and agrees to use its best efforts to
either (a) obtain from a
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financially secure third party such third party's direct unconditional guaranty
of payment of the mandatory cash portion of any promissory note delivered by
Business Manager in connection with an Acquisition Transaction, or arrange a
commercially reasonable credit facility or financing arrangement from a
financial institution or investor to be used for the payment or direct security
in form acceptable to the Practice for the payment of the mandatory cash
portion of such promissory note. Until payment of the mandatory cash portion
of the promissory note is protected in the foregoing manner, Business Manager
shall accumulate and reserve all of its net income, shall not make any
distributions of such net income to its shareholders, and shall not use any of
such reserved funds for acquisitions of, or mergers with, additional health
care practices. Notwithstanding the foregoing, Business Manager and its
subsidiaries shall be entitled to (i) continue its acquisitions and mergers
with the founding practices from the effective date hereof until December 31,
1996, (ii) enter into mergers with additional health care practices so long as
no cash consideration is used, and (iii) acquire or merge with additional
health care practices using such reserved funds so long as 2/3rds (66 2/3%) of
the shares held by the Founding Practices are voted in favor of such
acquisition or merger. For the purposes of this Section a "financially secure
third party" shall be deemed to be a financial institution or investor having a
lending ability, fund size or net worth in excess of $100.0 million.
4. OBLIGATIONS AND RESPONSIBILITIES OF THE PRACTICE.
4.1 Organization and Operation. The Practice, as a continuing
condition of Business Manager's obligations under this Business Management
Agreement, shall at all times during the Term be and remain legally organized
and operated to provide Professional Eye Care Services in a manner consistent
with all State, federal and local laws. The Practice shall operate and
maintain within the Practice Territory a full-time practice of ophthalmology
specializing in the provision of Professional Eye Care Services and shall
maintain and enforce employment agreements in the form of Exhibit 4.1A with the
Shareholders of the Practice specified in Exhibit 4.1B; provided, however, that
after the expiration of such employment agreements, and in the event that such
Shareholders continue a relationship with the Practice thereafter, the Practice
shall maintain and enforce employment agreements with such Shareholders and all
future Shareholders in the form of Exhibit 4.1C. Shareholders agree and the
Practice shall take steps to obtain the executed employment agreements in the
form of Exhibit 4.1C from such Shareholders after the five (5) year period and
all future Shareholders during the entire term of this Agreement if the
Shareholder elects to continue his relationship. After five (5) years from the
effective date of this Agreement, or earlier in the event of death or permanent
disability, a Shareholder may choose a successor to replace him as a
Shareholder. A Shareholder who wishes to have a successor replace him as a
Shareholder must first demonstrate to and obtain consent from Business Manager
that the successor is licensed to practice ophthalmology in the State, and is
competent and capable to assume ownership of the Practice. Business Manager
Consent shall not be unreasonably withheld with respect to such replacement.
In the event of disability, death or planned retirement after five years,
Vision 21 will make a good faith effort in assisting the Practice in locating a
possible successor. It is understood however that Vision 21 has no ultimate
responsibility to find the ultimate successor, which shall be the sole
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responsibility of the Shareholder. The Practice shall not amend the employment
agreements or waive any rights thereunder without the prior approval of
Business Manager. Recognizing that Business Manager would not have entered
into this Business Management Agreement but for the Practice's covenant to
maintain employment agreements with its Shareholders, the Practice shall pay to
Business Manager, in addition to the Management Fee, any damages, compensation,
payment, or settlement received by the Practice from each Shareholder specified
in Exhibit 4.1B pursuant to any non- competition covenant contained in Exhibit
4.1A. Such payment shall constitute liquidated damages of Business Manager for
the Practice's breach of the covenant contained in this Section 4.1. All
expenses and costs in enforcing the foregoing covenants not to compete shall be
deemed to be Office Expenses. The Practice shall take steps to have all future
Shareholders execute any reasonable documentation as required by Business
Manager in connection with this Section.
4.2 Practice Personnel. The Practice shall retain, as a Practice
Expense or Shareholder Expense, as the case may be, and not as an Office
Expense, that number of Professionals sufficient in the sole discretion of the
Practice as are reasonably necessary and appropriate for the provision of
Professional Eye Care Services, each of whom shall act in accordance with the
applicable provisions of this Business Management Agreement. Each
Ophthalmologist retained by the Practice shall hold and maintain a valid and
unrestricted license to practice ophthalmology in the State, and shall be
competent in the practice of ophthalmology. The Practice shall enter into and
maintain with each such retained Ophthalmologist and enforce a written
employment agreement substantially in the form of either Exhibit 4.1A for
Shareholders of the Practice or Exhibit 4.2A for non-shareholders. Each
Optometrist retained by the Practice shall hold and maintain a valid and
unrestricted license to practice optometry in the State, and shall be competent
in the practice of optometry. The Practice shall enter into and maintain with
each such retained Optometrist and enforce a written employment agreement
substantially in the form of Exhibit 4.2B. Notwithstanding the foregoing
provisions, the employment contracts currently in effect on the effective date
of this Agreement with the non-shareholder Professionals identified on Exhibit
4.2C shall remain in force during the existing term; provided, however, that
upon completion of such term should the non-shareholder remain at the Practice
or at such time the non-shareholder Professional is granted options by Vision
21, such Professionals' employment contracts shall then be immediately replaced
with employment contracts in substantially the form of Exhibit 4.1C. The
Practice shall be responsible for hiring, training, supervision, discipline,
termination and paying the compensation, and benefits as applicable, for all
Professional personnel and other contracted or affiliated Professionals, and
for withholding, as required by law, any sums for income tax, unemployment
insurance, social security, or any other withholding required by applicable
law. Business Manager shall, however, on behalf of the Practice, administer
the compensation with respect to such individuals in accordance with the
written employment agreement between the Practice and each Professional. The
Practice shall cause its Professionals to obtain and maintain all licenses and
permits required in connection with the practice of ophthalmology or optometry,
any other business it has or the administration of drugs by such Professionals.
Business Manager shall neither control nor direct any Professional in the
performance of Professional Eye Care Services
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for patients. All damages recovered for violations of non-competition
covenants from Professionals subject to employment agreements in the forms of
Exhibit 4.1C, Exhibit 4.2A, or Exhibit 4.2B shall be treated as Adjusted Gross
Revenue.
4.3 Professional Standards. As a continuing condition of Business
Manager's obligations hereunder:
(a) Each Ophthalmologist and any other Ophthalmologist
personnel retained by the Practice to provide ophthalmology services must (i)
have and maintain a valid and unrestricted license to practice ophthalmology in
the State, (ii) have and maintain a D.E.A. number, (iii) comply with, be
controlled and governed by and otherwise provide ophthalmology services in
accordance with applicable federal, State and municipal laws, rules,
regulations, ordinances and orders, and the ethics and standard of care of the
medical community wherein the principal Office of the Practice is located and
(iv) unless otherwise approved by the Local Advisory Council, obtain and retain
appropriate medical staff membership with appropriate clinical privileges at
any hospital or health care facility at which ophthalmology services are to be
provided. Procurement of temporary staff privileges pending the completion of
the medical staff approval process shall satisfy this provision, provided the
Ophthalmologist actively pursues full appointment and actually receives full
appointment within a reasonable time.
(b) Each Optometrist and any other Optometrist
personnel retained by the Practice to provide optometry services must (i) have
and maintain a valid and unrestricted license to practice optometry in the
State, (ii) comply with, be controlled and governed by and otherwise provide
optometry services in accordance with applicable federal, State and municipal
laws, rules, regulations, ordinances and orders, and the ethics and standard of
care of the optometric community wherein the principal Office of the Practice
is located, (iii) obtain and retain appropriate staff membership with
appropriate privileges at any hospital or health care facility at which
optometry services are to be provided, and (iv) provide on a continual basis,
quality care to its patients. Procurement of temporary staff privileges
pending the completion of the staff approval process shall satisfy this
provision, provided the Optometrist actively pursues full appointment and
actually receives full appointment within a reasonable time.
4.4 Professional Eye Care Services. The Practice shall ensure
that Professionals are available as necessary to provide quality Professional
Eye Care Services to patients and shall assist the Business Manager in ensuring
that Clinical Personnel are available as necessary to provide quality
Professional Eye Care Services to patients. In the event that Professionals
employed by, or Shareholders of, the Practice are not available to provide
Professional Eye Care Services coverage, the Practice shall engage and retain
locum tenens coverage. Professionals retained on a locum tenens basis shall
meet all of the requirements of Section 4.3, and the cost of providing locum
tenens coverage shall be a Practice Expense. With the assistance of the
Business Manager, the Practice and the Professionals shall be responsible for
scheduling Professional and Clinical Personnel coverage of all medical and
optometric procedures. The Practice shall cause all Professionals to exert
their best efforts to develop and promote the
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Practice in such manner as to ensure the Practice is able to serve the diverse
needs of the community.
4.5 Peer Review/Quality Assurance. The Practice shall adopt a
peer review/quality assurance program to monitor and evaluate the quality and
cost-effectiveness of Professional Eye Care Services provided by Professional
personnel of the Practice, the expenses of which shall be deemed an Office
Expense. Pursuant to such program, the Practice shall designate a committee of
Professionals to function as a medical peer review committee to review
credentials of potential recruits, perform quality assurance functions, and
otherwise resolve medical competence issues. The medical peer review committee
shall function pursuant to formal written policies and procedures. Upon
request of the Practice, Business Manager shall provide administrative
assistance to the Practice in performing its peer review/quality assurance
activities, but only if such assistance can be provided consistent with
maintaining the confidentiality, immunity, and non-discoverability of the
processes and actions of the peer review/quality assurance process of the
Practice.
4.6 Practice's Insurance. The Practice shall, as a Practice
Expense, obtain and maintain with commercial carriers chosen by the Practice
appropriate workers' compensation coverage for the Practice's employed
personnel, if any, and professional and comprehensive general liability
insurance covering the Practice and each of the Professionals and Clinical
Personnel the Practice retains to provide Professional Eye Care Services. The
comprehensive general liability coverage with respect to each Professional and
Clinical Personnel shall be in the minimum amount of One Million Dollars
($1,000,000) and professional liability coverage shall be in the minimum amount
of One Million Dollars ($1,000,000) for each occurrence and Three Million
Dollars ($3,000,000) annual aggregate; provided, however, that with Business
Manager Consent, which shall not be unreasonably withheld or delayed, the
Practice may from time-to-time change such liability coverage amounts to
amounts which are consistent with industry standards. The insurance policy or
policies shall provide for at least thirty (30) days' advance written notice to
the Practice from the insurer as to any alteration of coverage, cancellation,
or proposed cancellation for any cause. The Practice hereby releases Business
Manager from any and all liability for losses or damages caused by any act or
neglect of Business Manager occurring after the effective date hereof to the
extent that such losses or damages are covered by insurance; provided, however,
that such release shall not apply to any loss or damage caused by the willful,
wanton, or premeditated negligence of Business Manager. The Practice shall
obtain from any insurance company issuing the foregoing policies its consent to
the release from liability contained in this Section. The Practice shall cause
to be issued to Business Manager by such insurer or insurers a certificate
reflecting such coverage and obtain the consent of such insurer or insurers to
provide prior written notice to Business Manager equal to notice given to a
Professional of the cancellation or proposed cancellation of such insurance for
any cause. Such insurance policies shall be issued by a carrier or carriers
having a current rating of not less than "A" as rated by A.M. Best Company,
unless Business Manager agrees in writing to the purchase of a policy or
policies from a carrier having a lesser rating than "A". The Local Advisory
Council may, from time-to-time, select a different commercial carrier or
carriers for
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such workers' compensation and professional and general liability coverage upon
the establishment of a program affecting substantially all practice groups
within the market in which the Practice is located for which Business Manager
provides management services, which decision shall be binding upon the
Practice. After such election of a single carrier or carriers by the Local
Advisory Council, the costs of such coverage shall continue to be treated as a
Practice Expense. Upon the termination of this Business Management Agreement
for any reason, the Practice shall continue to carry professional liability
insurance in the amounts specified herein for the shorter period of (i) the
period set forth in the State's statute of repose (or if no statute of repose
exists, the State's statute of limitations) for bringing professional
malpractice claims based upon injuries which are not immediately discoverable
plus any applicable tolling periods, or (ii) ten (10) years after termination;
or if the Practice dissolves or ceases to practice ophthalmology or optometry,
the Practice shall obtain and maintain as a Shareholder Expense "tail"
professional liability coverage, in the amounts specified in this Section for
the shorter period of (i) the period set forth in the State's statute of repose
(or if no statute of repose exists, the State's statute of limitations) for
bringing professional malpractice claims based upon injuries which are not
immediately discoverable plus any applicable tolling periods, or (ii) ten (10)
years. The Practice shall be responsible for paying all premiums for
Shareholder "tail" insurance coverage and such coverage shall be a Shareholder
Expense; provided, however, that the Practice may cause its Professionals to be
responsible for paying the premiums for such "tail" insurance coverage. Except
as determined by the Local Advisory Council, the professional liability
insurance carrier shall not be replaced or changed without Practice Consent and
Business Manager Consent.
4.7 Confidential and Proprietary Information. The Practice agrees
and acknowledges that all materials provided by Business Manager to the
Practice constitute Confidential Information disclosed in confidence and with
the understanding that it constitutes valuable business information developed
by Business Manager at great expenditures of time, effort, and money. The
Practice further agrees that it shall not, directly or indirectly, disclose any
Confidential Information of the Business Manager to other persons without
Business Manager's express written authorization, such Confidential Information
shall not be used in any way directly or indirectly detrimental to Business
Manager, and the Practice will keep such Confidential Information confidential
and will ensure that its affiliates and advisors who have access to such
Confidential Information comply with these nondisclosure obligations; provided,
however, that the Practice may disclose Confidential Information to those of
its Representatives who need to know Confidential Information for the purposes
of this Business Management Agreement, it being understood and agreed to by the
Practice that such Representatives will be informed of the confidential nature
of the Confidential Information, will agree to be bound by this Section, and
will be directed by the Practice not to disclose to any other person any
Confidential Information. The Practice agrees to be responsible for any breach
of this Section by its affiliates, advisors, or Representatives. If the
Practice is requested or required (by oral questions, interrogatories, requests
for information or documents, subpoenas, civil investigative demands, or
similar processes) to disclose or produce any Confidential Information
furnished in the course of its dealings with Business Manager or its
affiliates, advisors, or Representatives,
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the Practice will (i) provide Business Manager with prompt notice thereof and
copies, if possible, and, if not, a description, of the Confidential
Information requested or required to be produced so that Business Manager may
seek an appropriate protective order or waive compliance with the provisions of
this Section and (ii) consult with Business Manager as to the advisability of
Business Manager's taking of legally available steps to resist or narrow such
request. The Practice further agrees that, if in the absence of a protective
order or the receipt of a waiver hereunder, the Practice is nonetheless, in the
written opinion of its legal counsel, compelled to disclose or produce
Confidential Information concerning Business Manager to any tribunal legally
authorized to request and entitled to receive such Confidential Information or
to stand liable for contempt or suffer other censure or penalty, the Practice
may disclose or produce such Confidential Information to such tribunal without
liability hereunder; provided, however, that the Practice shall give Business
Manager written notice of the Confidential Information to be so disclosed or
produced as far in advance of its disclosure or production as is practicable
and shall use its best efforts to obtain, to the greatest extent possible, an
order or other reliable assurance that confidential treatment will be accorded
to such Confidential Information so required to be disclosed or produced. The
Practice acknowledges that the disclosure of Confidential Information to it by
Business Manager is done in reliance upon its representations and covenants in
this Business Management Agreement. Upon expiration or termination of this
Business Management Agreement by either Party for any reason whatsoever, the
Practice shall immediately return and shall cause its Representatives,
affiliates, and independent contractors to immediately return to Business
Manager all Confidential Information, and the Practice will not, and will cause
its Representatives, affiliates, and independent contractors not to, thereafter
use, appropriate or reproduce such Confidential Information. The Practice
further expressly acknowledges and agrees that any such use, appropriation, or
reproduction of any such Confidential Information by any of the foregoing after
the expiration or termination of this Agreement will result in irreparable
injury to Business Manager, that the remedy at law for the foregoing would be
inadequate, and that in the event of any such use, appropriation, or
reproduction of any such Confidential Information after the termination or
expiration of this Agreement, Business Manager, in addition to any other
remedies or damages available to it, shall be entitled to injunctive or other
equitable relief without the necessity of posting a bond, cash, or otherwise,
and without the necessity of proving actual damages. Such rights to relief
shall not preclude Business Manager from other remedies which may be available
to it hereunder.
4.8 Non-Competition. The Practice hereby recognizes and
acknowledges that Business Manager will incur substantial costs in providing
the equipment, support services, personnel, management, administration, and
other items and services that are the subject matter of this Business
Management Agreement and that in the process of providing services under this
Business Management Agreement, the Practice will be privy to financial and
Confidential Information, to which the Practice would not otherwise be exposed.
The Parties also recognize that the services to be provided by Business Manager
will be feasible only if the Practice operates an active practice to which the
Professionals associated with the Practice devote their full time and
attention. The Practice agrees and acknowledges that the non-competition
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covenants described hereunder are necessary for the protection of Business
Manager, and that Business Manager would not have entered into this Business
Management Agreement without the following covenants.
(a) During the Term of this Business Management
Agreement and except for its obligations pursuant to this Business Management
Agreement, the Practice shall not establish, operate, or provide Professional
Eye Care Services at a medical office, clinic or other health care facility
anywhere within twenty (20) miles of any current or future location at which
Business Manager provides business management services similar to the services
contemplated in this Agreement; provided, however, that the Practice may carry
on the activities described in Exhibit 1.3 without violating this Section 4.8.
(b) Except as specifically agreed to by Business
Manager in writing, the Practice and its Shareholders covenant and agree that
during the Term of this Business Management Agreement and for a period of two
(2) years from the date this Business Management Agreement is terminated, other
than if terminated by the Practice for cause, or expires, the Practice shall
not directly or indirectly own (excluding ownership of less than one percent
(1%) of the equity of any publicly traded entity and excluding ownership of the
common stock of Business Manager), manage, operate, control, contract with,
lend funds to, lend its name to, maintain any interest whatsoever in, or be
employed by, any enterprise (i) having to do with the provision, distribution,
promotion, or advertising of any type of management or administrative services
or products to third parties in competition with Business Manager, located
anywhere in the United States of America; and/or (ii) offering any type of
service(s) or product(s) to third parties substantially similar to those
offered by Business Manager to the Practice located anywhere in the United
States of America. Notwithstanding the above restriction, nothing herein shall
prohibit (i) the Practice or any of its Shareholders from providing management
and administrative services to this or their own ophthalmology practices after
the termination of this Business Management Agreement, (ii) the Practice or its
Shareholders from contracting with a third-party manager to provide
administrative or management services for its or their professional eye care
practices after termination of this Business Management Agreement and two (2)
years thereafter, as long as such relationship complies with the provisions of
this Section 4.8(b); (iii) any of the Practice's Shareholders from providing
management and administrative services to their own ophthalmology practices
after the termination of their employment relationship with the Practice in
accordance with this Business Management Agreement, and (iv) such Shareholders
from contracting with a third-party manager to provide administrative or
management services for their professional eye care practices after the
termination of their employment relationship with the Practice in accordance
with this Business Management Agreement. If the Practice violates this
Section, the Practice shall pay to Business Manager the amount received as
consideration by the Practice and/or the Shareholders in connection with the
Acquisition Transaction, as agreed upon liquidated damages. The Practice and
the Shareholders acknowledge and agree that such sum is reasonable in light of
the severe harm that Business Manager would suffer as a result of the
Practice's breach of this restrictive covenant. If the Practice fails to make
payment of liquidated damages as
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contemplated by this Section, Business Manager shall be entitled among all
other rights and remedies available at law or equity, to (i) cancel the number
of shares of Business Manager's common stock held by the Practice or the
Shareholders or, with respect to shares of Business Managers' common stock
entitled to be received by the Practice or the Shareholders pursuant to the
Acquisition Agreement, terminate its obligation to deliver such number of
shares of Business Manager's common stock, valued at the market price per share
representing such liquidated damages sum, or (ii) set off all or any of such
liquidated damages sum against amounts payable under any promissory note held
by the Practice or the Shareholders, or do both of the foregoing, but in no
event shall Business Manager be entitled to offset amounts in excess of the
liquidated damages sum pursuant to this Section.
(c) The written employment agreements in the form of
Exhibit 4.1A shall contain covenants of the Shareholder employees pursuant to
which the Shareholders agree not to compete with the Practice or with the
Business Manager within the Practice Territory for two (2) years after
termination or expiration of the employment agreement.
(d) The Practice shall obtain and enforce formal
written agreements from its Ophthalmologist employees in the form of Exhibit
4.2A or Exhibit 4.1C, as the case may be, and agreements from its Optometrist
employees in the form of Exhibit 4.2B, pursuant to which the employees agree
not to compete with the Practice or with the Business Manager within the
Practice Territory for one (1) year after termination or expiration of the
employment agreement.
(e) The Practice understands and acknowledges that
Business Manager shall suffer severe harm in the event that the foregoing
non-competition covenants in Section 4.8 are violated, and accordingly, if the
Practice breaches any obligation of Section 4.8, in addition to any other
remedies available under this Business Management Agreement, at law or in
equity, Business Manager shall be entitled to enforce this Business Management
Agreement by injunctive relief and by specific performance of the Business
Management Agreement, such relief to be without the necessity of posting a
bond, cash or otherwise. Additionally, nothing in this Section 4.8(e) shall
limit Business Manager's right to recover any other damages to which it is
entitled as a result of the Practice's breach. The time period for which the
non-competition covenant is effective shall be extended day for day for the
time period the Practice is in violation of the non-competition covenant. If
any provision of the covenants is held by a court of competent jurisdiction to
be unenforceable due to an excessive time period, geographic area, or
restricted activity, the covenant shall be reformed to comply with such time
period, geographic area, or restricted activity that would be held enforceable.
Following termination of this Agreement pursuant to Section 6.2(b) hereof, the
Practice shall not amend, alter or otherwise change any term or provision of
the restrictive covenants or liquidated damages provisions of the employment
agreements with the Professionals. Following termination of this Agreement
pursuant to Section 6.2(a) hereof, the Practice and the Professionals shall be
relieved of the restrictions imposed by this Section 4.8.
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4.9 Name, Trademark. The Practice represents and warrants that
the Practice conducts its professional practice under the name of, and only
under the names of "ExcelCare", "Eye Institute of Southern Arizona" and "▇▇▇▇ &
▇▇▇▇▇▇" and that such names are duly registered, qualified, or licensed under
the law of the State, and that, to the Practice's knowledge, the Practice is
the sole and absolute owner of the names in the State. The Practice covenants
and promises that, without the prior written consent of the Business Manager,
the Practice will not:
(a) take any action that is reasonably likely to result
in the loss of registration, qualification or licensure of the names;
(b) fail to take any reasonably necessary action that
will maintain the registration, qualification, or licensure current;
(c) license, sell, give, or otherwise transfer the
names or the right to use the names to any medical practice, ophthalmology or
optometry practice, Ophthalmologist, Optometrist, professional corporation, or
any other entity; or
(d) cease conducting the professional practice of the
Practice under the names.
4.10 Lease Assignment. Upon Business Manager's request, if the
Practice is the lessee of the Office under a lease with an unrelated and
unaffiliated lessor, the Practice shall assign the lease to Business Manager
upon receipt of consent from the lessor. The Practice shall use its best
efforts to assist in obtaining the lessor's consent to the assignment. Upon
request, the Practice shall execute any instruments and shall take any acts
that Business Manager may deem necessary to accomplish the assignment of the
lease.
4.11 Billing Information and Assignments; Establishment of Fees.
The Practice shall promptly provide the Business Manager with all billing and
other information reasonably requested by the Business Manager to enable it to
▇▇▇▇ and collect the Practice's fees and other charges and reimbursement claims
pursuant to Section 3.9, and the Practice shall use its best efforts to procure
consents to assignments and other approvals and documents necessary to enable
the Business Manager to obtain payment or reimbursement from third parties for
such fees, other charges and claims. The Practice shall establish reasonable
fees for all professional and ancillary services and pharmaceutical items in
connection with the provision of Professional Eye Care Services.
4.12 Provider Agreements. The Practice shall not enter into
contractual arrangements with third parties for the Practice's provision of
Professional Eye Care Services which are inconsistent with guidelines
established by the Local Advisory Council or any capitated fee arrangement
without the prior approval of the Practice Advisory Council. Subject to the
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foregoing provision, the Practice shall have the final authority with regard to
all of such contractual arrangements.
4.13 Inconsistent Transaction by the Practice. The Practice agrees
that it shall not enter into any agreements, commitments or transactions or
engage in any activities which are within the authority and responsibility of
the Business Manager as set forth in this Agreement or otherwise materially
inconsistent with the provisions of this Agreement.
4.14 Recommendations. The Practice shall make recommendations to
Business Manager regarding the Office, the equipment, the business operations,
and the services to be provided by Business Manager under this Business
Management Agreement.
4.15 General Obligations. The Practice shall take all lawful
actions reasonably necessary to maximize revenues and shall not take any action
to reduce revenues other than in the ordinary course of business.
4.16 Tax Matters. The Practice shall prepare or arrange for the
preparation by an accountant selected by the Practice of all appropriate
corporate tax returns and reports required of the Practice including such
returns and reports required with respect to the Account. All costs and
expenses relating to the preparation of such returns and reports shall be
deemed a Shareholder Expense.
4.17 Shareholders' Undertaking to Enforce Certain Provisions of
Agreement. The Practice shall cause to be executed by all Shareholders of the
Practice an undertaking in the form of Exhibit 4.17 by such Shareholders to
ensure that the corporate existence of the Practice is maintained and that the
covenants not to compete described in Sections 4.1 and 4.2 of this Agreement
are enforced by the Practice against any individuals violating such covenants.
5. BUSINESS MANAGER'S COMPENSATION.
5.1 Management Fee. The Practice and Business Manager agree to
the compensation set forth herein as being paid to Business Manager in
consideration of a substantial commitment made by Business Manager hereunder
and that such fees are fair and reasonable. Each month Business Manager shall
be paid that percentage set forth in Exhibit 5.1 of the amount remaining after
(a) Office Expenses and Practice Expenses (excluding optical supplies) are
subtracted from (b) Adjusted Gross Revenue (the "Management Fee"). Business
Manager shall not be liable for any losses generated by the Practice, and in no
event shall the Management Fee be less than zero dollars. The payment of the
Management Fee shall take into account any losses generated by the Practice
arising after the effective date of this Agreement, with losses being carried
forward to offset future net revenues of the Practice (which for purposes of
this Section shall be deemed to be Adjusted Gross Revenue minus Office Expenses
and Practice Expenses).
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5.2 Reasonable Value. Payment of the Management Fee is not
intended to be and shall not be interpreted or applied as permitting Business
Manager to share in the Practice's fees for Professional Eye Care Services or
any other services, but is acknowledged as the Parties' negotiated agreement as
to the reasonable fair market value of Business Manager's commitment to pay all
Office Expenses and the fair market value of the equipment, contract analysis
and support, other support services, purchasing, personnel, office space,
management, administration, strategic management and other items and services
furnished by Business Manager pursuant to the Business Management Agreement,
considering the nature and volume of the services required and the risks
assumed by Business Manager. The Practice and Business Manager recognize and
acknowledge that Business Manager will incur substantial costs and business
risks in undertaking to pay all Office Expenses, arranging for the Practice's
use of the Office and in providing the equipment, support services, personnel,
marketing, office space, management, administration, and other items and
services that are the subject matter of this Business Management Agreement, and
certain of such costs and expenses can vary to a considerable degree according
to the extent of the Practice's business and services. It is the intent of the
Parties that the Management Fee reasonably compensate Business Manager for the
value to the Practice of Business Manager's administrative expertise, given the
considerable business risk to Business Manager in providing the Management
Services that are the subject of this Business Management Agreement.
5.3 Payment of Management Fee. To facilitate the payment of the
Management Fee as provided in Section 5.1(a) hereof, the Practice hereby
expressly authorizes Business Manager to make withdrawals of the Management Fee
from the Account as such fee becomes due and payable during the Term in
accordance with Section 3.10(a) and after termination as provided in Section
6.3. Business Manager shall deliver to the Practice an invoice for the
Management Fee accompanied by a reasonably detailed statement of the
information upon which the Management Fee calculation is based.
5.4 Assignment of Fees for Medical and Optometry Services.
(a) As security for the performance of its obligations
under this Business Management Agreement, the Practice hereby irrevocably
assigns and sets over to Business Manager all of its right to receive payment
for Professional Eye Care Services (other than rights to receive payments
relating to the activities described in Exhibit 1.3) to the extent permitted by
law (the "Accounts Receivable") and retain such payment for its own account,
and shall obtain a like assignment from all Professionals. To the extent such
rights to receive payment cannot legally be assigned, the "Accounts Receivable"
shall include the right to have any amounts received by the Practice pursuant
to such non-assignable rights paid over to Business Manager upon receipt. The
Practice shall take such action as may be necessary to confirm to Business
Manager the rights set forth in this Section 5.4(a).
(b) Without limiting the generality of the foregoing,
it is the intent of the Parties that the assignments to Business Manager of the
rights described in Section 5.4(a) above
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shall be inclusive of the rights of the Practice and the Professionals to
receive payment with respect to any services rendered prior to the effective
date of any expiration or termination of this Agreement; provided, however,
that the right to receive payments relating to the activities described in
Exhibit 1.3 shall be excluded from such assignment. The Practice agrees and
shall cause each Professional to agree, that Business Manager shall retain the
right to collect and hold as security any Accounts Receivable relating to any
such services rendered prior to the effective date of any such expiration or
termination ("Pre-Termination Accounts Receivable").
(c) Business Manager acknowledges that it is the intent
of Business Manager to grant a security interest in (i) prior to an initial
public offering of Business Manager's common stock, sixty-five percent (65%) of
the Pre-Termination Accounts Receivable, and (ii) after an initial public
offering of Business Manager's common stock, one hundred percent (100%) of the
Pre-Termination Accounts Receivable; to the lender(s) under its working capital
credit facility (whether one or more, the "Credit Facility Lender"), as in
effect from time-to-time. Pursuant to the 65% grant, the Credit Facility
Lender shall be entitled to collect and retain, upon default of Business
Manager, 65% of each dollar of the Pre-Termination Accounts Receivable amounts
received, with the remaining 35% received to be returned to the Account. The
Practice agrees that such security interest of the Credit Facility Lender is
intended to be a first priority security interest and is superior to any right,
title or interest which may be asserted by the Practice or any Professional
with respect to the then applicable portion of the Pre-Termination Accounts
Receivable or the proceeds thereof. The Practice further agrees, and shall
cause each Professional to agree, that, upon the occurrence of an event which,
under the terms of such working capital credit facility, would allow the Credit
Facility Lender to exercise its right to collect such portion of the
Pre-Termination Accounts Receivable and apply the proceeds thereof toward
amounts due under such working capital credit facility, the Credit Facility
Lender will succeed to all rights and powers of Business Manager under the
powers of attorney provided for in Section 3.9(f) above as if such Credit
Facility Lender had been named as the attorney-in-fact therein, and the
Practice and each Professional hereby waive, and the Credit Facility Lender
shall not take the Pre-Termination Accounts Receivable subject to, any and all
defenses the Practice and/or such Professionals may have with respect to money
coming into the Account and any defenses they may have against the Credit
Facility Lender. The Practice shall, and shall cause its Professionals to,
execute any and all documents, financing statements, and agreements reasonably
requested by such Credit Facility Lender to evidence and effectuate the Credit
Facility Lender's rights contemplated in this Section.
(d) In the event that, contrary to the mutual intent of
Business Manager and the Practice, the assignment of rights described in this
Section 5.4 shall be deemed, for any reason, to be ineffective as an outright
assignment, the Practice and each Professional shall, effective as of the date
of this Business Management Agreement, be deemed to have granted (and the
Practice does hereby grant, and shall cause each Professional to grant) to
Business Manager a first priority lien on and security interest in and to any
and all interests of the Practice and such Professionals in any accounts
receivable generated by the provision of Professional Eye Care Services by the
Practice and its Professionals or otherwise generated
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through the operations of the Office, and all proceeds with respect thereto, to
secure the payment to Business Manager of all amounts due to Business Manager
hereunder, and this Business Management Agreement shall be deemed to be a
security agreement to the extent necessary to give effect to the foregoing.
The Practice shall execute and deliver, and cause each Professional to execute
and deliver, all such financing statements as Business Manager may request in
order to perfect such security interest. The Practice shall not grant (and
shall not suffer any Professional to grant) any other lien on or security
interest in or to such accounts receivable or any proceeds thereof.
(e) Upon termination of this Business Management
Agreement, Business Manager shall release the foregoing lien with respect to
Accounts Receivable generated after the effective date of such termination and
shall execute and cause to be filed any termination statements relating to such
release of lien. However, it is understood that all rights of the Parties to
the Accounts Receivable shall be subordinate to any interest of the Credit
Facility Lender.
5.5 Disputes Regarding Fees.
(a) It is the Parties' intent that any disputes
regarding performance standards of the Business Manager be resolved to the
extent possible by good faith negotiation. To that end, the Parties agree that
if the Practice in good faith believes that Business Manager has failed to
perform its obligations, and that as a result of such failure, the Practice is
entitled to a set-off or reduction in its Management Fees, the Practice shall
give Business Manager notice of the perceived failure and request in the notice
a set-off or reduction in Management Fees. Business Manager and the Practice
shall then negotiate the dispute in good faith, and if an agreement is reached,
the Parties shall implement the resolution without further action.
(b) If the Parties cannot reach a resolution within a
reasonable time, the Parties shall submit the dispute to mediation to be
conducted in accordance with the Arizona Mediation Rules.
(c) If the mediation process fails to resolve the
dispute, the dispute shall be submitted by either Party to binding arbitration
under Section 8.7.
6. TERM AND TERMINATION.
6.1 Initial and Renewal Term. The Term of this Business
Management Agreement will be for an initial period of forty (40) years after
the effective date, and shall be automatically renewed for successive five (5)
year periods thereafter, provided that neither Business Manager nor the
Practice shall have given notice of termination of this Business Management
Agreement at least one hundred twenty (120) days before the end of the initial
term or any renewal term, or unless otherwise terminated as provided in Section
6.2 of this Business Management Agreement.
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6.2 Termination.
(a) Termination by the Practice. The Practice may
immediately terminate this Agreement at its discretion, upon written notice
pursuant to Section 8.3, as follows:
i) If Business Manager becomes insolvent by
reason of its inability to pay its debts as they mature; is adjudicated
bankrupt or insolvent; files a petition in bankruptcy, reorganization or
similar proceeding under the bankruptcy laws of the United States or shall have
such a petition filed against it which is not discharged within thirty (30)
days; has a receiver or other custodian, permanent or temporary, appointed for
its business, assets or property; makes a general assignment for the benefit of
creditors; has its bank accounts, property or accounts attached; has execution
levied against its business or property; or voluntarily dissolves or liquidates
or has a petition filed for corporate dissolution and such petition is not
dismissed with thirty (30) days;
ii) If the Business Manager fails to comply
with any material provision of this Agreement, or any other agreement with the
Practice, and does not correct such failure within sixty (60) days after
written notice of such failure to comply is delivered by the Practice
specifying the nature of the breach in reasonable detail.
(b) Termination by Business Manager. Business Manager
may immediately terminate this Agreement at its discretion, upon written notice
pursuant to Section 8.3, as follows:
i) If the Practice becomes insolvent by
reason of its inability to pay its debts as they mature; is adjudicated
bankrupt or insolvent; files a petition in bankruptcy, reorganization or
similar proceeding under the bankruptcy laws of the United States or shall have
such a petition filed against it which is not discharged within thirty (30)
days; has a receiver or other custodian, permanent or temporary, appointed for
its business, assets or property; makes a general assignment for the benefit of
creditors; has its bank accounts, property or accounts attached; has execution
levied against its business or property; or voluntarily dissolves or liquidates
or has a petition filed for corporate dissolution and such petition is not
dismissed with thirty (30) days; or
ii) If the Practice fails to comply with any
material provision of this Agreement, or any other agreement with Business
Manager, and does not correct such failure within sixty (60) days after written
notice of such failure to comply is delivered by Business Manager specifying
the nature of the breach in reasonable detail.
(c) Termination by Agreement. In the event the
Practice and Business Manager shall mutually agree in writing, this Business
Management Agreement may be terminated on the date specified in such written
agreement.
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(d) Legislative, Regulatory or Administrative Change.
In the event there shall be a change in the Medicare or Medicaid statutes,
federal statutes, state statutes, case laws, administrative interpretations,
regulations or general instructions, the adoption of new federal or state
legislation, or a change in any third-party reimbursement system, any of which
are reasonably likely to materially and adversely affect the manner in which
either Party may perform or be compensated for its services under this Business
Management Agreement or which shall make this Business Management Agreement or
any related agreements unlawful or unenforceable, or which would be reasonably
likely to subject either Party to this Agreement, or any member, shareholder,
officer, director, employee, agent or affiliated organization to any civil or
criminal penalties or administrative sanctions, the Parties shall immediately
use their best efforts to enter into a new service arrangement or basis for
compensation for the services furnished pursuant to this Business Management
Agreement that complies with the law, regulation, or policy, or which minimizes
the possibility of such penalties, sanctions or unenforceability, and that
approximates as closely as possible the economic position of the Parties prior
to the change. If the Parties are unable to reach a new agreement within a
reasonable time, then either Party may submit the issue to arbitration pursuant
to Section 8.7 for the purpose of reaching an alternative arrangement that is
equitable under the circumstances.
6.3 Effects of Termination. Upon termination of this Business
Management Agreement, as hereinabove provided, neither Party shall have any
further obligations hereunder except for (i) obligations accruing prior to the
date of termination, including, without limitation, payment of the Management
Fee relating to services provided prior to the termination of this Business
Management Agreement, (ii) obligations, promises, or covenants set forth herein
that are expressly made to extend beyond the Term, including, without
limitation, insurance, indemnities and non-competition provisions, which
provisions shall survive the expiration or termination of this Business
Management Agreement, (iii) the obligation of the Practice described in Section
6.4, (iv) the obligation of Business Manager to repay amounts borrowed from the
Account pursuant to Section 5.4(a), and (v) the obligation of the Practice to
repay amounts advanced by Business Manager to the Practice. In effectuating
the provisions of this Section 6.3, the Practice specifically acknowledges and
agrees that if this Business Management Agreement terminates pursuant to
Sections 6.2(b) or (d), Business Manager shall continue for a period not to
exceed ninety (90) days to exclusively collect and receive on behalf of the
Practice all cash collections from accounts receivable in existence at the time
this Business Management Agreement is terminated, it being understood that (a)
such cash collections will represent compensation to Business Manager for
Management Services already rendered, (b) Business Manager shall not be
entitled to collect accounts receivables after the termination date if this
Agreement is terminated pursuant to Section 6.2(a), and (c) the Business
Manager shall deduct from such cash collections any other amounts owed to
Business Manager under this Business Management Agreement, including, without
limitation, (i) ten percent (10%) of such cash collections as its Management
Fee during any period after the termination of this Business Management
Agreement while such collections are taking place, (ii) any reasonable costs
incurred by Business Manager in carrying out the post termination procedures
and transactions contemplated herein, and (iii) any adjustments pursuant to
Section 3.10(b). Business Manager
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shall remit remaining amounts from such collection activities, if any, to the
Practice. Upon the expiration or termination of this Business Management
Agreement for any reason or cause whatsoever, Business Manager shall surrender
to the Practice all books and records pertaining to the Practice's
ophthalmology and optometry practices. All sums received or collected by
either Party after termination for Adjusted Gross Revenues earned prior to
termination shall be split in accordance with this Section 6.3.
6.4 Purchase Obligation. Upon expiration of this Business
Management Agreement in accordance with Section 6.1 or termination of this
Business Management Agreement by Business Manager, as set forth in Section
6.2(b) above, the Practice shall upon Business Manager's demand:
(a) Pay to Business Manager the difference between the
consideration received in the Acquisition Transaction minus the book value of
the net tangible assets (for purposes of such repurchase obligations such
difference shall be amortized over a forty (40) year period), deferred charges,
and all other amounts on the books of the Business Manager relating to the
Business Management Agreement, as such amounts shall be established pursuant to
the Acquisition Transaction and including amounts, if any, for the covenants
described in Section 4.8 above, as adjusted through the last day of the month
most recently ended prior to the date of such termination in accordance with
GAAP to reflect amortization or depreciation of the intangible assets, deferred
charges, or covenants;
(b) Purchase from Business Manager any real estate
owned by Business Manager and used as an Office at the greater of the appraised
fair market value thereof or the then book value thereof. In the event of any
repurchase of real property, the appraised value shall be determined by
Business Manager and the Practice, each selecting a duly qualified appraiser,
who in turn will agree on a third appraiser. This agreed-upon appraiser shall
perform the appraisal which shall be binding on both Parties. In the event
either Party fails to select an appraiser within fifteen (15) days of the
selection of an appraiser by the other Party, the appraiser selected by the
other Party shall perform the appraisal which shall be binding on both Parties;
(c) Purchase at book value all improvements, additions,
or leasehold improvements that have been made by Business Manager at any Office
and that relate principally to the performance of Business Manager's
obligations under this Business Management Agreement;
(d) Assume all contracts and leases and the Practice's
pro rata share of all debts and payables that are obligations of Business
Manager and that relate principally to the performance of Business Manager's
obligations under this Business Management Agreement or the properties leased
or subleased by Business Manager;
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(e) Purchase from Business Manager at book value all of
the equipment leased to the Practice, including all replacements and additions
thereto made by Business Manager pursuant to the performance of its obligations
under this Business Management Agreement, and all other assets, including
inventory and supplies, tangibles and intangibles, set forth on the books of
Business Manager as adjusted through the last day of the month most recently
ended prior to the date of such termination in accordance with GAAP to reflect
operations of the Office, depreciation, amortization, and other adjustments of
assets shown on the books of Business Manager; and
(f) Cause to be executed by Shareholders of the
Practice such personal guaranties and any security agreements reasonably
required by Business Manager in connection with the purchase described in this
Section 6.4. For purposes of this Section 6.4(f), the term "Shareholders"
shall mean any individual who is a Shareholder of the Practice on the date that
notice is given of the termination of this Business Management Agreement and
any additional individual who is a Shareholder of the Practice on the effective
date of this Business Management Agreement. However, such obligations of
personal guaranties by Shareholders shall expire effective five (5) years from
the date hereof.
All current Shareholders of the Practice shall on or before the effective date
of this Business Management Agreement, and all individuals who become
Shareholders of the Practice after the effective date of commencement of this
Business Management Agreement shall upon becoming a Shareholder of the
Practice, execute and deliver to Business Manager an undertaking to comply with
this Section 6.4(f) which shall be in the form of Exhibit 6.4(f).
Notwithstanding the above, the Practice and the Shareholders shall not permit
without Business Manager Consent, during any three (3) year period during which
this Agreement is in effect and only after five (5) years from the commencement
hereof, the transfer of over fifty percent (50%) of the ownership interests of
the Practice to any existing or new Shareholders of the Practice or
combinations of existing or new Shareholders of the Practice, except in cases
of death, disability or retirement of such transferring Shareholders or
transfers to replacement Shareholders described in Section 4.1 in accordance
with the provisions set forth in Section 4.1.
6.5 Purchase Option. Upon termination of this Business Management
Agreement by the Practice pursuant to Section 6.2(a), the Practice shall be
released from the restrictive covenants in Section 4.8 and shall have the
option but not the obligation to do all or none of the following:
(a) Pay to Business Manager the difference between the
consideration received in the Acquisition Transaction minus the book value of
the net tangible assets (for purposes of such repurchase obligations such
difference shall be amortized over a forty (40) year period), deferred charges,
and all other amounts on the books of the Business Manager relating to the
Business Management Agreement, as such amounts shall be established pursuant to
the Acquisition Transaction and including amounts, if any, for the covenants
described in Section 4.8 above, as adjusted through the last day of the month
most recently ended prior to the date
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of such termination in accordance with GAAP to reflect amortization or
depreciation of the intangible assets, deferred charges, or covenants;
(b) Purchase from Business Manager any real estate
owned by Business Manager and used as an Office at the greater of the appraised
fair market value thereof or the then book value thereof. In the event of any
repurchase of real property, the appraised value shall be determined by
Business Manager and the Practice, each selecting a duly qualified appraiser,
who in turn will agree on a third appraiser. This agreed-upon third appraiser
shall perform the appraisal which shall be binding on both Parties. In the
event either Party fails to select an appraiser within fifteen (15) days of the
selection of an appraiser by the other Party, the appraiser selected by the
other Party shall perform the appraisal which shall be binding on both Parties;
(c) Purchase at book value all improvements, additions,
or leasehold improvements that have been made by Business Manager at any Office
and that relate principally to the performance of Business Manager's
obligations under this Business Management Agreement;
(d) Assume all contracts and leases and the Practice's
pro rata share of all debts and payables that are obligations of Business
Manager and that relate principally to the performance of Business Manager's
obligations under this Business Management Agreement or the properties leased
or subleased by Business Manager; and
(e) Purchase from Business Manager at book value all of
the equipment leased to the Practice, including all replacements and additions
thereto made by Business Manager pursuant to the performance of its obligations
under this Business Management Agreement, and all other tangible assets,
including inventory and supplies, set forth on the books of the Business
Manager as adjusted through the last day of the month most recently ended prior
to the date of such termination in accordance with GAAP to reflect operations
of the Office, depreciation, amortization, and other adjustments of assets
shown on the books of the Business Manager.
The Practice shall provide notice to Business Manager of its intent to
exercise the option above described at the same time that the Practice provides
notice to Business Manager of the Practice's election to terminate this
Business Management Agreement for cause.
6.6 Closing of Purchase. If the Practice purchases the assets
pursuant to Section 6.4 or 6.5, the Practice shall pay cash for the purchased
assets; provided, however, that the Practice may also use Business Manager's
common stock as consideration for the purchased assets, which stock shall be
valued for purposes of this Agreement as follows: (a) in the event of a Section
6.4 termination, the shares shall be valued at the lower of the value on the
date the shares were received by the Shareholder (as agreed to by the parties),
and the value on the date of the closing of this purchase, or (b) in the event
of a Section 6.5 termination, the shares shall be
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valued at the higher of the value of such shares on the dates set forth in
6.6(a) above. The amount of the purchase price shall be reduced by the amount
of debt and liabilities of Business Manager, if any, assumed by the Practice
and by any unpaid portion of any promissory notes payable by Business Manager
to any Shareholder of the Practice, which shall be offset against the purchase
price. The Practice and all Shareholders of the Practice shall execute such
documents as may be required to assume the liabilities set forth in Section
6.4(d) or Section 6.5(c) and to remove Business Manager from any liability with
respect to such repurchased asset and with respect to any property leased or
subleased by Business Manager. The closing date for the purchase shall be
determined by the Parties, but shall in no event occur later than the
expiration date of this Business Management Agreement if this Agreement expires
in accordance with Section 6.1, or sixty (60) days from the date of the notice
of termination for cause. The termination of this Business Management
Agreement shall become effective upon the closing of the sale of the assets if
the assets are purchased, and all Parties shall be released from any
restrictive covenants provided for in Section 3.17 or Section 4.8 on the
closing date. If the Practice chooses not to purchase the assets pursuant to
Section 6.5, the termination shall be effective as of the notice date given by
the Practice under Section 6.2(b), at which time the parties shall be released
from the restrictive covenants in Section 3.17 and Section 4.8. From and after
any termination, each Party shall provide the other Party with reasonable
access of the books and records then owned by it to permit such requesting
Party to satisfy reporting and contractual obligations that may be required of
it.
6.7 Limitation of Liability. In no event shall Business Manager
be liable to the Practice for any indirect, special or consequential damages or
lost profits, arising out of or related to this Agreement or the performance or
breach thereof, even if Business Manager has been advised of the possibility
thereof.
7. INDEMNIFICATION; THIRD PARTY CLAIMS.
7.1 Indemnification by the Practice. The Practice shall indemnify
and hold harmless Business Manager and Business Manager's shareholders,
directors, officers, agents and employees, from and against all claims,
demands, liabilities, losses, damages, costs and expenses, including reasonable
attorneys' fees, resulting in any manner, directly or indirectly, from the
negligent or intentional acts or omissions of the Practice or its members,
Shareholders, directors, officers, employees, agents or independent
contractors, including but not limited to any such claims, demands,
liabilities, losses, damages, costs and expenses which accrued or arose prior
to the date of execution of this Business Management Agreement.
7.2 Indemnification by Business Manager. Business Manager shall
indemnify and hold harmless the Practice, and the Practice's members,
Shareholders, directors, officers, agents and employees, from and against any
and all claims, demands, liabilities, losses, damages, costs and expenses,
including reasonable attorneys' fees, resulting in any manner, directly or
indirectly, from the negligent or intentional acts or omissions of Business
Manager or its shareholders, directors, officers, employees, agents or
independent contractors.
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7.3 Notice of Claim for Indemnification. No claims for
indemnification under this Agreement relating to claims solely between the
Parties shall be valid unless notice of such claim is delivered to the Practice
(in the case of a claim by Business Manager) or Business Manager (in the case
of a claim by the Practice) within one (1) year after the Party making such
claim first obtained knowledge of the facts upon which such claim is based.
Any such notice shall set forth in reasonable detail, to the extent known by
the Party giving such notice, the facts on which such claim is based and the
resulting estimated amount of damages.
7.4 Matters Involving Third Parties.
(a) If the Practice or Business Manager receives notice
or acquires knowledge of any matter which may give rise to a claim by another
person and which may then result in a claim for indemnification under this
Agreement, then: (i) if such notice or knowledge is received or acquired by
the Practice, the Practice shall promptly notify Business Manager; and (ii) if
such notice or knowledge is received or acquired by Business Manager, the
Business Manager shall promptly notify the Practice; except that no delay in
giving such notice shall diminish any obligation under this Agreement to
provide indemnification unless (and then solely to the extent) the Party from
whom such indemnification is sought is prejudiced.
(b) Any Party from whom such indemnification (the
"Indemnifying Party") is sought shall have the right to defend the Party
seeking such indemnification (the "Indemnified Party") against such claim by
another person (the "Third Party Claim") with counsel of the Indemnifying
Party's choice reasonably satisfactory to the Indemnified Party so long as: (i)
within fifteen (15) days after the Indemnified Party has given notice of the
Third Party Claim to the Indemnifying Party, the Indemnifying Party notifies
the Indemnified Party that the Indemnifying Party will indemnify the
Indemnified Party from and against all adverse consequences the Indemnified
Party may suffer caused by, resulting from, arising out of or relating to such
Third Party Claim; (ii) the Indemnifying Party provides the Indemnified Party
with evidence reasonably satisfactory to the Indemnified Party that the
Indemnifying Party has the financial resources necessary to defend against the
Third Party Claim and fulfill its indemnification obligations; (iii) the Third
Party Claim seeks money damages; (iv) settlement of, or an adverse judgment
with respect to, the Third Party Claim (other than a medical malpractice claim)
is not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice adverse to the continuing business
interests of the Indemnified Party; and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 7.4(b): (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim; (ii) the Indemnified
Party shall not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior consent of
the Indemnifying Party; and (iii) the Indemnifying Party shall not consent to
the entry of any judgment or enter into any
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settlement with respect to the Third Party Claim without the prior consent of
the Indemnified Party.
(d) If any of the conditions specified in Section
7.4(b) is or becomes unsatisfied, however; (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it may deem advisable (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith); (ii) the Indemnifying Party shall
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' and
accountants' fees and expenses); and (iii) the Indemnifying Party shall remain
responsible for any adverse consequences the Indemnified Party may suffer
caused by, resulting from, arising out of or relating to such Third Party Claim
to the fullest extent provided in this Agreement.
7.5 Settlement. Except as permitted by Section 7.4, a Party shall
not compromise or settle any claim for which the other Party is obligated to
indemnify it without the written consent of such Party.
7.6 Cooperation. The Indemnified Party shall make available all
information and assistance that the Indemnifying Party may reasonably request
in conjunction with assessing, defending and settling said claim.
8. MISCELLANEOUS.
8.1 Administrative Services Only. Nothing in this Business
Management Agreement is intended or shall be construed to allow Business
Manager to exercise control, authority or direction over the manner or method
by which the Practice and its Professionals perform Professional Eye Care
Services or other professional health care services. The rendition of all
Professional Eye Care Services, including, but not limited to, the prescription
or administration of medicine and drugs, shall be the sole responsibility of
the Practice and its Professionals, and Business Manager shall not interfere in
any manner or to any extent therewith. Nothing contained in this Business
Management Agreement shall be construed to permit Business Manager to engage in
the practice of ophthalmology or optometry, it being the sole intention of the
Parties hereto that the services to be rendered to the Practice by Business
Manager are solely for the purpose of providing nonmedical management and
administrative services to the Practice so as to enable the Practice to devote
its full time and energies to the professional conduct of its professional eye
care practice and provision of Professional Eye Care Services to its patients
and not to administration or practice management.
8.2 Status of Independent Contractor. It is expressly
acknowledged that the Parties hereto are "independent contractors," and nothing
in this Business Management Agreement is intended and nothing shall be
construed to create an employer/employee, partnership, or joint venture
relationship, or to allow either to exercise control or direction over the
manner or
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method by which the other performs the services that are the subject matter of
this Business Management Agreement; provided always that the services to be
provided hereunder shall be furnished in a manner consistent with the standards
governing such services and the provisions of this Business Management
Agreement. Each Party understands and agrees that (i) the other will not be
treated as an employee for federal tax purposes, (ii) neither will withhold on
behalf of the other any sums for income tax, unemployment insurance, social
security, or any other withholding pursuant to any law or requirement of any
governmental body or make available any of the benefits afforded to its
employees, (iii) all of such payments, withholdings, and benefits, if any, are
the sole responsibility of the Party incurring the liability, and (iv) each
will indemnify and hold the other harmless from any and all loss or liability
arising with respect to such payments, withholdings, and benefits, if any.
8.3 Notices. Any notice, demand, or communication required,
permitted, or desired to be given hereunder shall be deemed effectively given
when in writing and personally delivered or mailed by prepaid certified or
registered mail, return receipt requested, addressed as follows:
The Practice: ExcelCare, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
Business Manager: Eye Institute of Southern Arizona, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
with a copy to: ▇▇▇▇▇▇▇▇, Loop & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or to such other address, or to the attention of such other person or officer,
as any party may by written notice designate.
8.4 Governing Law. This Business Management Agreement shall in
all respects be governed, interpreted and construed in accordance with the laws
of the State without giving effect to principles of comity or conflicts of laws
thereof.
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8.5 Jurisdiction and Venue. Business Manager and the Practice
hereby consent to the personal jurisdiction and venue of the state and federal
courts in the judicial circuit where the Practice has its principal corporate
office, and do hereby waive all questions of personal jurisdiction and venue,
including, without limitation, the claim or defense that such courts constitute
an inconvenient forum.
8.6 Assignment. Except as may be herein specifically provided to
the contrary, this Business Management Agreement shall inure to the benefit of
and be binding upon the Parties hereto and their respective legal
representatives, successors, and assigns; provided, however, that the Practice
may not assign this Business Management Agreement without the prior written
consent of Business Manager, which consent may be withheld. The sale,
transfer, pledge, or assignment of any of the ownership interests held by any
Shareholder of the Practice, the sale of any material portion of its assets by
the Practice, or the issuance by the Practice of voting ownership interests to
any other person (except to replacement Shareholders as described in Section
4.1), or any combination of such transactions within a period of five (5)
years, such that the existing Shareholders in the Practice fail to maintain a
majority of the voting interests in the Practice shall be deemed an attempted
assignment by the Practice, and shall be null and void unless consented to in
writing by Business Manager prior to any such transfer or issuance. Any breach
of this provision, whether or not void or voidable, shall constitute a material
breach of the Business Management Agreement, and in the event of such breach,
Business Manager may terminate this Business Management Agreement upon
twenty-four (24) hours' notice to the Practice and shall have all rights
available at law or in equity. Except as otherwise provided in this Agreement,
the Parties agree that until an initial public offering of Business Manager's
common stock occurs, Business Manager may only assign or transfer its rights
and obligations under this Business Management Agreement with the prior written
consent of the Practice. Except as otherwise provided in this Agreement, after
an initial public offering of Business Manager's common stock occurs, Business
Manager may assign or transfer its rights and obligations under this Business
Management Agreement only in the following situations: (a) pursuant to a merger
of Business Manager into another entity or the sale of substantially all of the
assets of Business Manager to a health care company; (b) pursuant to the sale
of all of the health care contracts of Business Manager within a multistate
region in which the Practice is located with the Practice's consent, which
shall not be unreasonably withheld and which may not be withheld where the
proposed assignment or transfer is to a healthcare practice management company
with similar or greater financial standing, expertise and service capabilities
to that of Business Manager; (c) pursuant to a transfer or assignment of this
Agreement to one of Business Manager's subsidiaries or parent organizations; or
(d) pursuant to any transfer or assignment to or by any financial lender of the
Business Manager, and this Agreement is subordinate to the rights of such
lender. After such assignment and transfer, the Practice agrees to look solely
to such assignee or transferee for performance of this Business Management
Agreement. In addition, Business Manager or the assignee or transferee shall
have the right to (i) collaterally assign its interest in this Business
Management Agreement and its right to collect Management Fees hereunder to any
financial institution or other third party without the consent of the Practice,
and (ii) subject to the foregoing provisions, assign its rights
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and obligations hereunder to any third party without the consent of the
Practice. In the event that Business Manager assigns its rights and
obligations hereunder to one or more of its subsidiaries, Business Manager
shall unconditionally guaranty the obligations of such subsidiary or
subsidiaries. The Practice and executing Shareholders agree to execute in the
future any and all documentation reasonably required to subordinate their
rights pursuant to this Section 8.6 to that of a lender.
8.7 Arbitration. The Parties shall use good faith negotiation to
resolve any controversy, dispute or disagreement arising out of or relating to
this Business Management Agreement or the breach of this Business Management
Agreement. Except as otherwise provided herein and except as it relates to
Sections 3.14, 3.17, 4.7 and 4.8 of this Business Management Agreement and
except for matters which are to be determined by the Local Advisory Council
and/or the National Appeals Council as contemplated in this Business Management
Agreement, any matter not resolved by negotiation shall be submitted to
mediation conducted in accordance with the Arizona Mediation Rules. If the
mediation process fails to resolve the dispute, the matter shall be submitted
to binding and confidential arbitration in accordance with the National Health
Lawyers Association Alternative Dispute Resolution Rules of Procedure for
Arbitration and with one individual knowledgeable in the health care business
serving as the arbitrator. Each Party will, upon the written request of the
other Party, promptly provide the other with copies of documents relevant to
the issues raised by any claim or counterclaim. Other discovery may be ordered
by the arbitrator to the extent the arbitrator deems additional discovery
relevant and appropriate, and any dispute regarding discovery shall be
determined by the arbitrator, which determination shall be conclusive.
8.8 Waiver of Breach. The waiver by either Party of a breach or
violation of any provision of this Business Management Agreement shall not
operate as, or be construed to constitute, a waiver of any subsequent breach of
the same or another provision hereof.
8.9 Enforcement. In the event either Party resorts to legal
action to enforce or interpret any provision of this Business Management
Agreement, the prevailing Party shall be entitled to recover the costs and
expenses of such action so incurred, including, without limitation, reasonable
attorneys' fees.
8.10 Gender and Number. Whenever the context of this Business
Management Agreement requires, the gender of all words herein shall include the
masculine, feminine, and neuter, and the number of all words herein shall
include the singular and plural.
8.11 Additional Assurances. Except as may be herein specifically
provided to the contrary, the provisions of this Business Management Agreement
shall be self-operative and shall not require further agreement by the Parties;
provided, however, at the request of either Party, the other Party shall
execute such additional instruments and take such additional acts as are
reasonable and as the requesting Party may deem necessary to effectuate this
Business Management Agreement.
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8.12 Consents, Approvals, and Exercise of Discretion. Whenever
this Business Management Agreement requires any consent or approval to be given
by either Party, or either Party must or may exercise discretion, the Parties
agree that such consent or approval shall not be unreasonably withheld or
delayed, and that such discretion shall be reasonably exercised.
8.13 Force Majeure. Neither Party shall be liable or deemed to be
in default for any delay or failure in performance under this Business
Management Agreement or other interruption of service deemed to result,
directly or indirectly, from acts of God, civil or military authority, acts of
public enemy, war accidents, fires, explosions, earthquakes, floods, failure of
transportation, strikes or other work interruptions by either Party's
employees, or any other similar cause beyond the reasonable control of either
Party unless such delay or failure in performance is expressly addressed
elsewhere in this Business Management Agreement. Notwithstanding the same, the
Parties hereto agree to continue this Agreement to the best degree they can so
long as reasonably possible and the Practice shall not be excused from its
obligations under Sections 4.2, 6.4 and 6.6 pursuant to this Section 8.13.
8.14 Severability. The Parties hereto have negotiated and prepared
the terms of this Business Management Agreement in good faith with the intent
that each and every one of the terms, covenants and conditions herein be
binding upon and inure to the benefit of the respective Parties. Accordingly,
if any one or more of the terms, provisions, promises, covenants or conditions
of this Business Management Agreement or the application thereof to any person
or circumstance shall be adjudged to any extent invalid, unenforceable, void or
voidable for any reason whatsoever by a court of competent jurisdiction or an
arbitration tribunal, such provision shall be reformed, construed and enforced
as if such unenforceable provision had not been contained herein, and each and
all of the remaining terms, provisions, promises, covenants and conditions of
this Business Management Agreement or their application to other persons or
circumstances shall not be affected thereby and shall be valid and enforceable
to the fullest extent permitted by law. To the extent this Business Management
Agreement is in violation of applicable law, then the Parties agree to
negotiate in good faith to amend the Business Management Agreement, to the
extent possible consistent with its purposes, to conform to law. If the
Parties are unable to amend the Business Management Agreement in a manner which
conforms with applicable law, then either Party may submit the matter to
arbitration pursuant to Section 8.7 for the purpose of reaching an alternative
arrangement that is equitable under the circumstances.
8.15 Press Releases and Public Announcements. Except as otherwise
required by law or by applicable rules of any securities exchange or
association of securities dealers, neither the Practice nor the Business
Manager shall issue any press release, make any public announcement or
otherwise disclose any information for the purpose of publication by any print,
broadcast or other public media, relating to the transactions contemplated by
this Agreement, without the prior approval of the other Party.
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8.16 Divisions and Headings. The divisions of this Business
Management Agreement into articles, sections, and subsections and the use of
captions and headings in connection therewith are solely for convenience and
shall not affect in any way the meaning or interpretation of this Business
Management Agreement.
8.17 Amendments and Execution. This Business Management Agreement
and any amendments hereto shall be in writing and executed in multiple copies
on behalf of the Practice by its President, and on behalf of Business Manager
by its President. Each multiple copy shall be deemed an original, but all
multiple copies together shall constitute one and the same instrument.
8.18 Licenses, Permits and Certificates. Business Manager and the
Practice shall each obtain and maintain in effect, at all times during the term
of this Business Management Agreement, all licenses, permits and certificates
required by law which are applicable to the performance of their respective
obligations pursuant to this Business Management Agreement.
8.19 No Third Party Beneficiaries. Except as otherwise provided
herein, this Business Management Agreement shall not confer any rights or
remedies upon any person other than Business Manager and the Practice and their
respective successors and permitted assigns.
8.20 Compliance with Applicable Laws. Business Manager and the
Practice shall comply with all applicable federal, state and local laws,
regulations, rules and restrictions in the conduct of their obligations under
this Business Management Agreement.
8.21 Language Construction. The Practice and Business Manager
acknowledge that each Party hereto and its counsel have reviewed and revised
this Business Management Agreement and agree that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting Party shall not be employed in the interpretation of this Business
Management Agreement.
8.22 Entire Business Management Agreement. With respect to the
subject matter of this Business Management Agreement, this Business Management
Agreement supersedes all previous contracts and constitutes the entire
agreement between the Parties. Neither Party shall be entitled to benefits
other than those specified herein. No prior oral statements or contemporaneous
negotiations or understandings or prior written material not specifically
incorporated herein shall be of any force and effect, and no changes in or
additions to this Business Management Agreement shall be recognized unless
incorporated herein by amendment as provided herein, such amendment(s) to
become effective on the date stipulated in such amendment(s). The Parties
specifically acknowledge that, in entering into and executing this Business
Management Agreement, the Parties rely solely upon the representations and
agreements contained in this Business Management Agreement and no others.
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8.23 DISCLAIMER OF WARRANTY. BUSINESS MANAGER MAKES NO WARRANTY,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE OFFICE OR ANY EQUIPMENT PROVIDED
BY BUSINESS MANAGER PURSUANT TO THIS BUSINESS MANAGEMENT AGREEMENT, AND ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY
EXPRESSLY DISCLAIMED.
8.24 Control of Board of Directors. While there is no assurance
that an initial public offering of Business Manager's common stock shall occur,
should Business Manager fail to complete the same on or before April 1, 1998,
the Board of Directors shall be controlled and the Business Manager managed by
individuals designated by the founding health care practices acquired in
December of 1996. If such initial public offering does not occur on or before
April 1, 1998, each of such founding health care practices shall be entitled to
vote that number of shares of Business Manager then held by such founding
practices and the number of shares of Business Manager then held by the equity
owners of such founding practices to elect a new board of directors of Business
Manager; provided, however, that after April 1, 1998 and until February 28,
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and his majority owned health care practice (and
their respective successors and assigns) shall not be entitled to vote their
respective shares of common stock of Business Manager in any election of
directors during such period.
8.25 Agreement for Future Good Faith Negotiation. The Parties
hereto agree that should either the chosen underwriters to a future initial
public offering or Business Manager's accounting firm make recommendations
regarding changes to this Business Management Agreement at a later date and
prior to the offering which either such underwriters or accountants reasonably
believe are necessary based upon customs in the industry to prevent any
material adverse valuation issue or to obtain favorable accounting treatment
for Business Manager, the Parties shall negotiate in good faith to modify any
terms which could have such a negative effect or which could result in such
favorable accounting treatment. In such event, the revisions shall be deemed
to be retroactive to the effective date of this Business Management Agreement.
8.26 Agreement to Transfer Stock and Stock Pledge.
Contemporaneously with the execution of this Agreement and to ensure the
continued viability and production of a Practice owned by one (1) Shareholder
(if applicable) the Parties hereto have executed and delivered that certain
Agreement to Transfer Stock and Stock Pledge pursuant to which the Business
Manager and the Shareholder of the Practice have agreed to pledge all of the
shares of common stock of the Practice to the Business Manager and have agreed
that upon the death or disability of such Shareholder, the Practice shall be
entitled to designate a replacement Professional to acquire all such shares of
common stock of the Practice in return for payment of a fair value for such
stock. Additionally, any current or future Shareholder of a Practice that
becomes a sole Shareholder shall execute such agreement at the time the
Shareholder gains such status.
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8.27 Authority. Business Manager and the Practice hereby warrant
and represent to each other that they have the requisite corporate authority to
execute and deliver this Business Management Agreement in their respective
name.
8.28 Waiver of Jury Trial. Any right to trial by jury with respect
to any claim or proceeding relating to or arising out of this Business
Management Agreement is waived by the Parties.
8.29 Indemnification of Advisory Council Members. The parties
hereto (and their successors) agree to indemnify and hold harmless all future
members of any Advisory Council established pursuant to the terms hereof from
any and all liability, claims, damages, costs and attorneys fees resulting from
their decisions and actions as a member of such Advisory Council, so long as
the decision or action is made in good faith.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Practice and Business Manager have caused this
Business Management Agreement to be executed by their duly authorized
representatives, all as of the day and year first above written.
WITNESSES: "PRACTICE"
EXCELCARE, P.C.
/s/ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------- --------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
Title: President
--------------------------------
"BUSINESS MANAGER"
EYE INSTITUTE OF SOUTHERN ARIZONA, P.C.
/s/
-------------------------------- By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
Title: President
--------------------------------
STATE OF ARIZONA )
COUNTY OF )
----------------------
The foregoing Business Management Agreement was executed before me this
___ day of December, 1996, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D., the President of EYE
INSTITUTE OF SOUTHERN ARIZONA, P.C., an Arizona professional corporation, who
is personally known to me or who has produced as identification and who did
take an oath.
NOTARY PUBLIC:
Sign:
-------------------------
Print:
------------------------
My Commission Expires:
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STATE OF FLORIDA )
COUNTY OF ______________________)
The foregoing Business Management Agreement was executed before me this
___ day of December, 1996, by _______________________, as President of
ExcelCare, P.C., an Arizona professional corporation, who is personally known
to me or who has produced as identification and who did take an oath.
NOTARY PUBLIC:
Sign:_________________________
Print:________________________
My Commission Expires:
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Exhibit 1.3
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Fees Excluded from Adjusted Gross Revenue
1. None.
59
Exhibit 1.8
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Description of Business Manager Expenses
As of the Closing Date, Business Manager Expenses shall specifically
include:
1. expenses relating to services provided to Business Manager and the
Practice under current service agreements by ▇▇▇▇▇ ▇▇▇▇▇▇ and BSM Consulting,
to the extent such expenses do not exceed the Practices' share (pro-rata
amongst all practices managed by the Business Manager, at any given moment,
e.g., 32 practices = 1/32nd of such expense) of the services currently
contracted for between ▇▇▇▇▇▇, BSM Consulting and Business Manager at an
anticipated annual cost of $480,000;
2. costs related to the current regional corporate structure, current
corporate overhead, strategic planning, and managed care administration;
3. expenses related to travel at the request of Business Manager except
as otherwise permitted in 1.18(h);
4. costs of stock option programs or grants to Physician and staff;
5. expenses related to services provided to Business Manager and the
Practice by Medical Director ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, M.D. as part of the current
Medical Director Service Agreement; and
6. corporate overhead, except as defined in Section 1.18(k).
60
Exhibit 1.18
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Office Expenses
[Table depicting breakdown of Office Expenses,
Practice Expenses and Shareholder Expenses omitted.]
61
Exhibit 1.25
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Practice Territory
[Map(s) depicting twenty-mile radius
from each office location omitted.]
62
Exhibit 1.31
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Leasehold Obligations in Excess of Fair Market Value
1. None.
63
Exhibit 2.10
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Market Area
1. The State of Arizona.
64
Exhibit 3.7
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Unsettled Issues Regarding Personnel
1. None.
65
Exhibit 3.17
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Entities and Relationships Excluded from Non-Competition
Covenant from Business Manager
1. None.
66
Exhibit 4.1A
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Form of Founding Shareholder Employment Agreement
PHYSICIAN EMPLOYMENT AGREEMENT
(FOUNDING SHAREHOLDER)
This Physician Employment Agreement (this "Employment Agreement")
dated as of ____________, 19__, is by and between ExcelCare, P.C., an Arizona
professional corporation (the "Practice"), and ___________________, M.D., an
individual (the "Ophthalmologist").
R E C I T A L S
A. The Practice is a professional corporation organized under the
laws of the State of Arizona (the "State") and is authorized to practice
medicine in the State through licensed individuals.
B. The Practice and Vision 21, Inc., a Florida corporation
("Vision 21") have acquired substantially all of the business assets of the
Ophthalmologist's wholly-owned professional corporation, pursuant to that
certain Agreement and Plan of Reorganization (the "Acquisition Agreement") of
even date herewith.
C. The Practice and Vision 21 have entered into a Business
Management Agreement (the "Business Management Agreement") of even date
herewith, whereby Vision 21 has agreed to provide various management services
to the Practice and the Practice has agreed to have its professional employees
execute employment agreements in a form substantially the same as this
Employment Agreement, and it is intended that except as otherwise limited
herein, Vision 21 be a third- party beneficiary of the restrictive covenants
contained in this Employment Agreement.
D. The Practice desires to employ Ophthalmologist upon the terms
and subject to the terms and conditions set forth in this Employment Agreement.
E. The Ophthalmologist is licensed to practice medicine in the
State and desires to be employed by the Practice upon the terms and subject to
the conditions set forth in this Employment Agreement.
F. The Ophthalmologist possesses special knowledge relating to
the business and assets acquired pursuant to the Acquisition Agreement and has
developed valuable, long-term relationships with patients to be cared for by
the Practice which make him valuable to the Practice and which will contribute
to the Practice's future success.
G. In consideration for and in connection with the Acquisition
Agreement and such employment arrangement, the parties hereto desire to enter
into a covenant not to compete and a non-disclosure covenant.
67
NOW, THEREFORE, in consideration of the premises, the mutual promises,
covenants and conditions herein contained and for other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto intending to be legally bound hereby agree as follows:
1. Employment. The Practice hereby employs Ophthalmologist, and
Ophthalmologist hereby accepts employment with the Practice, all upon the terms
and subject to the conditions set forth in this Employment Agreement.
2. Duties and Responsibilities.
2.01 Full Time Practice of Medicine. The Ophthalmologist is
employed pursuant to the terms of this Employment Agreement to practice
medicine on behalf of the Practice. The Ophthalmologist shall devote
substantially all of his time, best efforts and attention to the practice of
medicine on behalf of the Practice and shall provide patient care of the
highest quality. In addition to the foregoing duties, the Ophthalmologist
shall undertake additional duties as directed by the Practice. During the term
hereof and any renewal, the Ophthalmologist shall not, without the written
consent of the Practice and Vision 21, (1) render professional services to or
for any person, firm, corporation or other organization for compensation; or
(2) engage in any activity that competes with the interest of the Practice or
Vision 21 whether Ophthalmologist is acting by himself or as an officer,
director, shareholder, employee, partner or fiduciary. Any consent granted to
the Ophthalmologist shall be revocable by the Practice or Vision 21 at any time
upon thirty (30) days' notice, and the Ophthalmologist agrees to cease and
desist upon receipt of such notice. Notwithstanding the above, the Practice
recognizes that the Ophthalmologist shall have the right to engage in those
matters expressly described on Schedule 2.01 attached hereto so long as such
permitted activities do not result in materially reduced services to the
Practice as compared to the Ophthalmologist's previous services to his practice
and so long as the same does not materially impact the Ophthalmologist's
ability to perform hereunder or materially impact the Ophthalmologist's
anticipated productivity.
2.02 Subject to Board Standards and Requirements. The
Practice recognizes that professional regulatory groups and bodies such as the
State Board of Medicine may from time to time establish standards and
requirements with regard to the practice of medicine by physicians licensed to
practice medicine. All restrictions contained herein with respect to the
duties and obligations of the Ophthalmologist shall be subject to said
standards and requirements of the aforesaid groups and bodies.
3. Authority and Control of Practice.
Subject to Section 2.02 above and to the extent permitted by
law:
3.01 The Ophthalmologist recognizes that the Practice
shall have complete authority with regard to the acceptance for treatment of or
the refusal to treat any patient and the Practice shall have complete authority
with regard to the establishment of the appropriate fee for professional
service.
3.02 The Practice shall direct and control the assignment
of patients to the Ophthalmologist. Such determination shall be solely by the
Practice and in the best interests of the patient and the Practice. The
Ophthalmologist agrees to treat such patients as are assigned to him by the
Practice.
Exhibit 4.1A - Page 2
68
The Ophthalmologist recognizes that patients treated by him may subsequently be
assigned to other employees.
3.03 The Ophthalmologist shall perform all professional
services as are assigned to him by the Practice and all work performed by the
Practice shall be subject to the review and study of the Practice.
3.04 The performance of services by the Ophthalmologist on
behalf of the Practice shall be performed at such times and at such places as
shall be determined by the Practice and in accordance with such rules as the
Practice may establish.
3.05 Hours of employment of the Ophthalmologist shall be
determined by the Practice within reasonable standards within the profession.
3.06 The ophthalmologist of record for each patient treated
by Ophthalmologist shall be one of the individual owners of the Practice.
4. Term of Employment. The term of employment of Ophthalmologist
by the Practice pursuant to this Employment Agreement shall be for five (5)
years (the "Employment Period") commencing on the date of this Agreement (the
"Commencement Date").
5. Place of Employment. Ophthalmologist's principal place of
work shall be located where designated by the Practice.
6. Compensation. During the Employment Period, subject to all
the terms and conditions of this Employment Agreement and as compensation for
all services to be rendered by Ophthalmologist under this Employment Agreement,
the Practice shall pay to or provide Ophthalmologist with the compensation set
forth in Schedule 6 attached to this Agreement.
7. Adherence to Standards. Ophthalmologist shall comply with the
written policies, standards, rules and regulations of the Practice from time to
time established for all employees of the Practice.
8. Review of Performance. The Practice may periodically review
and evaluate the performance of Ophthalmologist under this Employment Agreement
with Ophthalmologist.
9. Expenses. The Practice may reimburse Ophthalmologist for
reasonable, ordinary and necessary expenses incurred by him in connection with
his employment hereunder that have been approved in advance by the Practice;
provided, however, Ophthalmologist shall render to the Practice a complete and
accurate accounting of all such expenses in accordance with the substantiation
requirements of Section 274 of the Internal Revenue Code of 1986, as amended
(the "Code"), as a condition precedent to such reimbursement.
10. Termination with Cause by the Practice. This Employment
Agreement may be terminated with Cause (as hereinafter defined) by the Practice
provided that the Practice shall (i) give Ophthalmologist the Notice of
Termination (as hereinafter defined) and (ii) pay Ophthalmologist his annual
base salary through the Date of Termination (as hereinafter defined) at the
rate in effect at the time
Exhibit 4.1A - Page 3
69
the Notice of Termination is given plus any bonus or incentive compensation
which have been earned or have become payable pursuant to the terms of any
compensation or benefit plan or have vested as of the Date of Termination, but
which have not yet been paid.
11. Definitions. In addition to the words and terms elsewhere
defined in this Employment Agreement, certain capitalized words and terms used
in this Employment Agreement shall have the meanings given to them by the
definitions and descriptions in this Section 11 unless the context or use
indicates another or different meaning or intent, and such definition shall be
equally applicable to both the singular and plural forms of any of the
capitalized words and terms herein defined. The following words and terms are
defined terms under this Employment Agreement:
11.01 Cause. A termination with "Cause" by the Practice
shall mean a termination of this Employment Agreement for any of the following
reasons:
(i) Ophthalmologist's failure to promptly and
adequately perform the duties assigned by Practice after being notified by the
Practice of the specific act(s) constituting such failure and being given a
period of thirty (30) days after notification by the Practice to correct such
failure;
(ii) upon Ophthalmologist's breach of any provision
of this Employment Agreement which remains uncured for a period of thirty (30)
days after notification by Practice of the specific nature of the breach;
(iii) for good cause which shall include
insubordination, conduct reflecting moral turpitude, conduct diminishing the
goodwill or reputation of the Practice, conduct disloyal to the Practice,
material violation of any representation, warranty or covenant of this
Agreement; conviction of any felony, or suspension or revocation of
Ophthalmologist's license to practice medicine;
(iv) upon Ophthalmologist's death; or
(v) upon Ophthalmologist's disability if the
disability renders Ophthalmologist unable to practice medicine on a full-time
basis for a period of more than ninety (90) days in any consecutive six (6)
month period.
11.02 Date of Termination. "Date of Termination" shall mean
the date specified in the Notice of Termination which shall not be less than
thirty (30) days from the date such Notice of Termination is given unless the
Notice of Termination is provided pursuant to Sections 11.01(iii), (iv) or (v),
in which case the Date of Termination shall be the date that Notice of
Termination is received by the Ophthalmologist.
11.03 Notice of Termination. "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision
in this Employment Agreement relied upon; provided, however, no such purported
termination shall be effective without such Notice of Termination.
12. Fees and Expenses. The prevailing party in any contest or
dispute under this Employment Agreement shall receive from the other party all
legal fees and related expenses (including the costs of experts, evidence and
counsel incurred by the prevailing party in any and all proceedings arising out
of this Employment Agreement, including trial, appellate and bankruptcy
proceedings.
Exhibit 4.1A - Page 4
70
13. Notices. For the purposes of this Employment Agreement,
notices and all other communications provided for in the Employment Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
or by expedited (overnight) courier with an established national reputation,
shipping prepaid or billed to sender, in either case addressed to the
respective addresses last given by each party in writing to the other (provided
that all notices to the Practice shall be directed to the attention of the
Practice with a copy to the Secretary of the Practice). All notices and
communication shall be deemed to have been received on the date of delivery
thereof, on the third business day after the mailing thereof, or on the second
day after deposit thereof with an expedited courier service, except that notice
of change of address shall be effective only upon receipt.
14. Life Insurance. The Practice may, at any time after the
execution of this Employment Agreement, apply for and procure as owner and for
its own benefit, life insurance on Ophthalmologist, in such amounts and in such
form or forms as the Practice may determine. Ophthalmologist shall, at the
request of the Practice, submit to such medical examinations, supply such
information, and execute such documents as may be required by the insurance
company or companies to whom the Practice has applied for such insurance.
Ophthalmologist hereby represents that to his knowledge there are no facts or
circumstances that would preclude the Practice from obtaining life insurance on
Ophthalmologist.
15. Proprietary Information and Inventions. Ophthalmologist
understands and acknowledges that:
15.01 Trust. Ophthalmologist's employment creates a
relationship of confidence and trust between Ophthalmologist and the Practice
(and by virtue of the Business Management Agreement entered into by the
Practice and Vision 21, Ophthalmologist's employment creates a relationship of
confidence and trust between the Ophthalmologist and Vision 21) with respect to
certain information applicable to the business of the Practice and Vision 21,
which may be made known to Ophthalmologist by the Practice or Vision 21 or
learned by Ophthalmologist during the Employment Period.
15.02 Proprietary Information. The Practice and Vision 21
possess and will continue to possess information that has been created,
discovered, or developed by, or has otherwise become known to, the Practice or
Vision 21 (including, without limitation, information created, discovered, or
developed by or made known to Ophthalmologist during the period of or arising
out of employment by the Practice) or in which property rights have been or may
be assigned or otherwise conveyed to the Practice or Vision 21, which
information has commercial value in the respective businesses in which the
Practice and Vision 21 are engaged and is treated by the Practice and Vision 21
as confidential. Except as otherwise herein provided, all such information is
hereinafter called "Proprietary Information", which term, as used herein, shall
also include, but shall not be limited to, data, functional specifications,
computer programs, know-how, research, technology, improvements, developments,
designs, marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs, patient,
supplier and potential acquisition candidates lists, and patient files and
records. Notwithstanding anything contained in this Employment Agreement to
the contrary, the term "Proprietary Information" shall not include (i)
information which is in the public domain, (ii) information which is published
or otherwise becomes part of the public domain through no fault of
Ophthalmologist, (iii) information which Ophthalmologist can demonstrate was in
Ophthalmologist's possession at the time of disclosure and was not acquired by
Ophthalmologist directly or indirectly from the Practice or Vision 21 on a
confidential basis, (iv) information which becomes available to Ophthalmologist
on a non-confidential basis from a
Exhibit 4.1A - Page 5
71
source other than the Practice or Vision 21 and which source, to the best of
Ophthalmologist's knowledge, did not acquire the information on a confidential
basis or (v) information required to be disclosed by any federal or state law,
rule or regulation or by any applicable judgment, order or decree or any court
or governmental body or agency having jurisdiction in the premises.
All Proprietary Information shall be the sole property of the Practice
and Vision 21 and their respective assigns. Ophthalmologist assigns to the
Practice and Vision 21 any rights Ophthalmologist may have or acquire in such
Proprietary Information. At all times, both during Ophthalmologist's
employment by the Practice and after its termination or expiration,
Ophthalmologist shall keep in strictest confidence and trust all Proprietary
Information, and Ophthalmologist shall not use or disclose any Proprietary
Information without the written consent of the Practice and Vision 21, except
as may be necessary in the ordinary course of performing Ophthalmologist's
duties as an employee of the Practice. This Section 15 shall survive the
termination or expiration of this Employment Agreement.
16. Patient Files and Surrender of Documents. To the extent
permitted by law, all records contained in the files of patients shall be the
property of the Practice. Ophthalmologist shall, at the request of the
Practice, promptly surrender to the Practice any patient files, records, or
x-rays, as well as any Proprietary Information or document, memorandum, record,
patient record, letter or other paper in his possession or under his control
relating to the operation, business or affairs of the Practice or Vision 21.
17. Prior Employment Agreements; Successor Employment Agreements.
Ophthalmologist represents and warrants that Ophthalmologist's performance of
all the terms of this Employment Agreement and as an employee of the Practice
does not, and will not, breach any agreement to keep in confidence proprietary
information acquired by Ophthalmologist in confidence or in trust prior to
Ophthalmologist's employment by the Practice. Ophthalmologist has not entered
into, and shall not enter into, any agreement, either written or oral, which is
in conflict with this Employment Agreement or which would be violated by
Ophthalmologist's entering into, or carrying out his obligations under, this
Employment Agreement. Immediately following the expiration of the term of this
Employment Agreement, Ophthalmologist shall, if he intends to continue his
relationship with the Practice, execute a new Employment Agreement with the
Practice in substantially the form of Exhibit 4.1C of the Business Management
Agreement.
18. Restrictive Covenant. Ophthalmologist acknowledges and
recognizes (i) that Ophthalmologist shall come into possession of Proprietary
Information and (ii) the highly competitive nature of the respective businesses
of the Practice and Vision 21 and, accordingly, agrees that in consideration of
the premises contained herein Ophthalmologist will not, during the period of
Ophthalmologist's employment by the Practice and for a period of two (2) years
following the date of expiration or termination of this Employment Agreement,
directly or indirectly (i) except as otherwise permitted by the terms of this
Employment Agreement, practice medicine or engage in the business of managing
Exhibit 4.1A - Page 6
72
ophthalmology or optometry practices or related eye care medical facilities,
within the area described in Schedule 18, whether such engagement shall be as
an employer, officer, director, owner, employee, consultant, stockholder,
partner or other participant. Ophthalmologist further agrees that during the
period of Ophthalmologist's employment by Practice, and for a period of two (2)
years following the termination or expiration of this Employment Agreement,
Ophthalmologist will not, directly or indirectly, (i) solicit any employee or
consultant of Vision 21 or the Practice for the purposes of hiring or retaining
such employee or consultant, (ii) utilize the services of any entity engaged in
the business of managing ophthalmology or optometry practices or related eye
care or medical facilities other than Vision 21, or (iii) contact any present
or prospective client of Vision 21 to solicit such person or entity to enter
into a management contract with any organization other than Vision 21. If
Ophthalmologist violates this Section, Ophthalmologist shall pay to Vision 21
the one half (1/2) of the amount of the consideration received by
Ophthalmologist in connection with the Acquisition Agreement (including one
half (1/2) of the Ophthalmologist's pro rata share (based on his equity
ownership in the Practice) of any consideration received by the Practice in
connection with the Acquisition Agreement), as agreed upon liquidated damages.
The Ophthalmologist acknowledges that such sum is reasonable in light of the
resulting loss of intangible asset value associated with the Ophthalmologist's
breach of this restrictive covenant. The Ophthalmologist further acknowledges
and agrees that such liquidated damages sum shall be in addition to any
liquidated damages which may be owed by Ophthalmologist to the Practice in
connection with a breach by Ophthalmologist of Section 4 hereof. If the
Ophthalmologist fails to make payment of liquidated damages as contemplated by
this Section 18 within thirty (30) days of Ophthalmologist's receiving notice
from the Practice or Vision 21 of the violation of this Section, Vision 21,
shall, in addition to all other rights and remedies available at law or equity,
be entitled to (i) cancel the number of shares of Vision 21 common stock held
by the Ophthalmologist or, with respect to shares of Vision 21 common stock
entitled to be received by the Ophthalmologist pursuant to the Acquisition
Agreement, terminate its obligation to deliver such number of shares of Vision
21 common stock, valued as set forth in Section 6.6(a) of the Business
Management Agreement representing all or a portion of such liquidated damages
sum, or (ii) set off all or any of such liquidated damages sum against amounts
payable under any promissory note held by the Ophthalmologist, or do both of
the foregoing, but in no event shall Vision 21 be entitled to offset amounts in
excess of the liquidated damages sum pursuant to this Section 18.
Ophthalmologist further agrees that (i) such liquidated damages shall be in
addition to the remedies available to the Practice or Vision 21 as set forth in
Section 19 below, (ii) Vision 21 is a third-party beneficiary of this Section
18, (iii) this Section 18 is intended for the benefit of Vision 21, (iv) this
Section 18 may be enforced by the Practice's and Vision 21's successors and/or
assigns, and (v) the enforcement of this Section 18 will not violate public
policy. This Section 18 shall survive the termination or expiration of this
Employment Agreement. Notwithstanding the foregoing, Vision 21 shall not have
any right to enforce any provisions of this Employment Agreement if the
Business Management Agreement terminates pursuant to Section 6.2(a) of the
Business Management Agreement.
19. Remedies. Ophthalmologist acknowledges and agrees that the
Practice's and Vision 21's remedy at law for a breach or a threatened breach of
the provisions herein would be inadequate, and in recognition of this fact, in
the event of a breach or threatened breach by Ophthalmologist of any of the
provisions of this Employment Agreement, it is agreed that the Practice and
Vision 21 shall be entitled to equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available, without posting bond
or other security. Ophthalmologist acknowledges that the granting of a
temporary injunction, a temporary restraining order or other permanent
injunction merely prohibiting Ophthalmologist from engaging in the practice of
medicine or engaging in the management of any medical practice during the
prohibited period within the prohibited area would not be an adequate remedy
upon breach or threatened breach of this Employment Agreement, and consequently
agrees, upon any such breach or threatened breach, to the granting of
injunctive relief prohibiting Ophthalmologist from engaging in any activities
prohibited by this Employment Agreement. No remedy herein conferred is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to any other remedy given
hereunder now or hereinafter existing at law or in equity or by statute or
otherwise. It is expressly understood and agreed by Ophthalmologist that
although the parties consider the restrictions contained in
Exhibit 4.1A - Page 7
73
this Employment Agreement to be reasonable, if a court determines that the time
or territory or any other restriction contained in this Employment Agreement is
an unenforceable restriction on the activities of Ophthalmologist, such
provision in this Employment Agreement shall not be rendered void but shall be
deemed to be amended to apply as to such maximum time and territory and to such
extent as such court may judicially determine or indicate to be reasonable.
This Section 19 shall survive the termination or expiration of this Employment
Agreement.
20. Successive Employment Notice. Within five (5) business days
after the Termination Date, Ophthalmologist shall provide notice to the
Practice of Ophthalmologist's next intended employment. If such employment is
not known by Ophthalmologist at such date, Ophthalmologist shall notify the
Practice immediately upon determination of such information. Ophthalmologist
shall continue to provide the Practice with notice of Ophthalmologist's place
and nature of employment and any change in place or nature of employment during
the period ending three (3) years after the expiration or termination of this
Employment Agreement. Failure of Ophthalmologist to provide the Practice with
such information in an accurate and timely fashion shall be deemed to be a
breach of this Employment Agreement and shall entitle the Practice to all
remedies provided for in this Employment Agreement as a result of such breach.
21. Business Management Agreement. Ophthalmologist agrees not to
commit any act or engage in any omission that would cause the Practice to
breach the Business Management Agreement with Vision 21.
22. Modification and Waiver. No provision of this Employment
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Ophthalmologist
and such officer as may be specifically designated by the Board of Directors of
the Practice and by such officer as may be specifically designated by the Board
of Directors of Vision 21. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Employment Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time, and such waiver shall not operate
or be construed as a waiver of any subsequent breach of the same provision or
condition by any of the Practice, Ophthalmologist or Vision 21.
23. Headings. Headings used in this Employment Agreement are for
convenience only and shall not be used to interpret or construe its provisions.
24. Amendments. No amendments or variations of the terms and
conditions of this Employment Agreement shall be valid unless the same are in
writing and signed by all of the parties hereto.
25. Severability. The invalidity or unenforceability of any
provision of this Employment Agreement, whether in whole or in part, shall not
in any way affect the validity and/or enforceability of any other provision
herein contained. Any invalid or unenforceable provision shall be deemed
severable to the extent of any such invalidity or unenforceability. It is
expressly understood and agreed that while the Practice and Ophthalmologist
consider the restrictions contained in this Employment Agreement reasonable for
the purpose of preserving for the Practice the good will, other proprietary
rights and intangible business value of the Practice, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in this Employment Agreement is an
unreasonable or otherwise unenforceable restriction against Ophthalmologist,
the provisions of such
Exhibit 4.1A - Page 8
74
clause shall not be rendered void but shall be deemed amended to apply as to
maximum time and territory and to such other extent as such court may
judicially determine or indicate to be reasonable.
26. Third-Party Beneficiary. Vision 21 is a third-party
beneficiary of Sections 4, 15, 18, 19 and 25 of this Employment Agreement and
the restrictive covenants contained in this Employment Agreement are intended
for the benefit of Vision 21. Except as otherwise provided herein, this
Employment Agreement shall not confer any rights or remedies upon any person
other than the Practice, Ophthalmologist and Vision 21 and their respective
successors and permitted assigns.
27. Successors and Assigns. The Practice's and Vision 21's
successors and/or assigns are authorized to enforce the restrictive covenants
contained in this Employment Agreement.
28. Governing Law. This Employment Agreement shall be construed
and enforced pursuant to the laws of the State in which the Practice conducts
its business.
29. Counterparts. This Employment Agreement may be executed in
more than one (1) counterpart and each counterpart shall be considered an
original.
IN WITNESS WHEREOF, this Employment Agreement has been duly executed
by the Practice and Ophthalmologist as of the date first above written.
"PRACTICE"
EXCELCARE, P.C.
By_______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D., its President
"OPHTHALMOLOGIST"
_________________________________________
__________________, M.D.
Exhibit 4.1A - Page 9
75
Exhibit 4.1B
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
List of Practice Shareholders
1. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
2. ▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
76
Exhibit 4.1C
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Form of Physician Employment Agreement (Shareholder - Key Professional)
PHYSICIAN EMPLOYMENT AGREEMENT
(SHAREHOLDER - KEY PROFESSIONAL)
This Physician Employment Agreement (this "Employment Agreement")
dated as of ____________, 19__, is by and between ExcelCare, P.C., an Arizona
professional corporation (the "Practice"), and ______________________________,
an individual (the "Ophthalmologist").
R E C I T A L S
A. The Practice is a professional corporation organized under the
laws of the State of Arizona (the "State") and is authorized to practice
medicine in the State through licensed individuals.
B. The Practice and Vision 21, Inc., a Florida corporation
("Vision 21") have entered into a Business Management Agreement (the "Business
Management Agreement") dated as of December 1, 1996, whereby Vision 21 has
agreed to provide various management services to the Practice and the Practice
has agreed to have its shareholder and key professional employees execute
employment agreements in a form substantially the same as this Employment
Agreement, and it is intended that except as otherwise limited herein, Vision
21 be a third-party beneficiary of the restrictive covenants contained in this
Employment Agreement.
C. The Practice desires to employ Ophthalmologist upon the terms
and subject to the terms and conditions set forth in this Employment Agreement.
D. The Ophthalmologist is licensed to practice medicine in the
State and desires to be employed by the Practice upon the terms and subject to
the conditions set forth in this Employment Agreement.
E. The Ophthalmologist possesses special knowledge relating to
the business and assets of the Practice and Vision 21 and has developed
valuable, long-term relationships with patients to be cared for by the Practice
which make him valuable to the Practice and which will contribute to the
Practice's and Vision 21's future success.
NOW, THEREFORE, in consideration of the premises, the mutual promises,
covenants and conditions herein contained and for other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto intending to be legally bound hereby agree as follows:
1. Employment. The Practice hereby employs Ophthalmologist, and
Ophthalmologist hereby accepts employment with the Practice, all upon the terms
and subject to the conditions set forth in this Employment Agreement.
77
2. Duties and Responsibilities.
2.01 Full Time Practice of Medicine. The Ophthalmologist is
employed pursuant to the terms of this Employment Agreement to practice
medicine on behalf of the Practice. The Ophthalmologist shall devote
substantially all of his time, best efforts and attention to the practice of
medicine on behalf of the Practice and shall provide patient care of the
highest quality. In addition to the foregoing duties, the Ophthalmologist
shall undertake additional duties as directed by the Practice. During the term
hereof and any renewal, the Ophthalmologist shall not, without the written
consent of the Practice and Vision 21, (1) render professional services to or
for any person, firm, corporation or other organization for compensation; or
(2) engage in any activity that competes with the interest of the Practice or
Vision 21 whether Ophthalmologist is acting by himself or as an officer,
director, shareholder, employee, partner or fiduciary. Any consent granted to
the Ophthalmologist shall be revocable by the Practice or Vision 21 at any time
upon thirty (30) days' notice, and the Ophthalmologist agrees to cease and
desist upon receipt of such notice. Notwithstanding the above, the Practice
recognizes that the Ophthalmologist shall have the right to engage in those
matters expressly described on Schedule 2.01 attached hereto so long as such
permitted activities do not result in materially reduced services to the
Practice as compared to the Ophthalmologist's previous services to his practice
and so long as the same does not materially impact the Ophthalmologist's
ability to perform hereunder or materially impact the Ophthalmologist's
anticipated productivity.
2.02 Subject to Board Standards and Requirements. The
Practice recognizes that professional regulatory groups and bodies such as the
State Board of Medicine may from time to time establish standards and
requirements with regard to the practice of medicine by physicians licensed to
practice medicine. All restrictions contained herein with respect to the
duties and obligations of the Ophthalmologist shall be subject to said
standards and requirements of the aforesaid groups and bodies.
3. Authority and Control of Practice.
Subject to Section 2.02 above and to the extent permitted by law:
3.01 The Ophthalmologist recognizes that the Practice
shall have complete authority with regard to the acceptance for treatment of or
the refusal to treat any patient and the Practice shall have complete authority
with regard to the establishment of the appropriate fee for professional
service.
3.02 The Practice shall direct and control the assignment
of patients to the Ophthalmologist. Such determination shall be solely by the
Practice and in the best interests of the patient and the Practice. The
Ophthalmologist agrees to treat such patients as are assigned to him by the
Practice. The Ophthalmologist recognizes that patients treated by him may
subsequently be assigned to other employees.
3.03 The Ophthalmologist shall perform all professional
services as are assigned to him by the Practice and all work performed by the
Practice shall be subject to the review and study of the Practice.
3.04 The performance of services by the Ophthalmologist on
behalf of the Practice shall be performed at such times and at such places as
shall be determined by the Practice and in accordance with such rules as the
Practice may establish.
3.05 Hours of employment of the Ophthalmologist shall be
determined by the Practice within reasonable standards within the profession.
78
3.06 The ophthalmologist of record for each patient treated
by Ophthalmologist shall be one of the individual owners of the Practice.
4. Term of Employment. The term of employment of Ophthalmologist
by the Practice pursuant to this Employment Agreement shall be for three (3)
years (the "Employment Period") commencing on the date of this Agreement (the
"Commencement Date"). The term of this Agreement shall renew automatically at
the end of each term of this Agreement for an additional three (3) year term
unless either party hereto provides notice to the other at least ninety (90)
days prior to the expiration of any term.
5. Place of Employment. Ophthalmologist's principal place of
work shall be located where designated by the Practice.
6. Compensation. During the Employment Period, subject to all
the terms and conditions of this Employment Agreement and as compensation for
all services to be rendered by Ophthalmologist under this Employment Agreement,
the Practice shall pay to or provide Ophthalmologist with the compensation set
forth in Schedule 6 attached to this Agreement.
7. Adherence to Standards. Ophthalmologist shall comply with the
written policies, standards, rules and regulations of the Practice from time to
time established for all employees of the Practice.
8. Review of Performance. The Practice may periodically review
and evaluate the performance of Ophthalmologist under this Employment Agreement
with Ophthalmologist.
9. Expenses. The Practice may reimburse Ophthalmologist for
reasonable, ordinary and necessary expenses incurred by him in connection with
his employment hereunder that have been approved in advance by the Practice;
provided, however, Ophthalmologist shall render to the Practice a complete and
accurate accounting of all such expenses in accordance with the substantiation
requirements of Section 274 of the Internal Revenue Code of 1986, as amended
(the "Code"), as a condition precedent to such reimbursement.
10. Termination with Cause by the Practice. This Employment
Agreement may be terminated with Cause (as hereinafter defined) by the Practice
provided that the Practice shall (i) give Ophthalmologist the Notice of
Termination (as hereinafter defined) and (ii) pay Ophthalmologist his annual
base salary through the Date of Termination (as hereinafter defined) at the
rate in effect at the time the Notice of Termination is given plus any bonus or
incentive compensation which have been earned or have become payable pursuant
to the terms of any compensation or benefit plan or have vested as of the Date
of Termination, but which have not yet been paid.
11. Definitions. In addition to the words and terms elsewhere
defined in this Employment Agreement, certain capitalized words and terms used
in this Employment Agreement shall have the meanings given to them by the
definitions and descriptions in this Section 11 unless the context or use
indicates another or different meaning or intent, and such definition shall be
equally applicable to both the singular and plural forms of any of the
capitalized words and terms herein defined. The following words and terms are
defined terms under this Employment Agreement:
Exhibit 4.1C - Page 3
79
11.01 Cause. A termination with "Cause" by the Practice
shall mean a termination of this Employment Agreement for any of the following
reasons:
(i) Ophthalmologist's failure to promptly and
adequately perform the duties assigned by Practice after being notified by the
Practice of the specific act(s) constituting such failure and being given a
period of thirty (30) days after notification by the Practice to correct such
failure;
(ii) upon Ophthalmologist's breach of any provision
of this Employment Agreement which remains uncured for a period of thirty (30)
days after notification by Practice of the specific nature of the breach;
(iii) for good cause which shall include
insubordination, conduct reflecting moral turpitude, conduct diminishing the
goodwill or reputation of the Practice, conduct disloyal to the Practice,
material violation of any representation, warranty or covenant of this
Agreement; conviction of any felony, or suspension or revocation of
Ophthalmologist's license to practice medicine;
(iv) upon Ophthalmologist's death; or
(v) upon Ophthalmologist's disability if the
disability renders Ophthalmologist unable to practice medicine on a full-time
basis for a period of more than ninety (90) days in any consecutive six (6)
month period.
11.02 Date of Termination. "Date of Termination" shall mean
the date specified in the Notice of Termination which shall not be less than
thirty (30) days from the date such Notice of Termination is given unless the
Notice of Termination is provided pursuant to Sections 11.01(iii), (iv) or (v),
in which case the Date of Termination shall be the date that Notice of
Termination is received by the Ophthalmologist.
11.03 Notice of Termination. "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision
in this Employment Agreement relied upon; provided, however, no such purported
termination shall be effective without such Notice of Termination.
12. Fees and Expenses. The prevailing party in any contest or
dispute under this Employment Agreement shall receive from the other party all
legal fees and related expenses (including the costs of experts, evidence and
counsel incurred by the prevailing party in any and all proceedings arising out
of this Employment Agreement, including trial, appellate and bankruptcy
proceedings.
13. Notices. For the purposes of this Employment Agreement,
notices and all other communications provided for in the Employment Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
or by expedited (overnight) courier with an established national reputation,
shipping prepaid or billed to sender, in either case addressed to the
respective addresses last given by each party in writing to the other (provided
that all notices to the Practice shall be directed to the attention of the
Practice with a copy to the Secretary of the Practice). All notices and
communication shall be deemed to have been received on the date of delivery
thereof, on the third business day after the mailing thereof, or on the second
day after deposit thereof with an expedited courier service, except that notice
of change of address shall be effective only upon receipt.
Exhibit 4.1C - Page 4
80
14. Life Insurance. The Practice may, at any time after the
execution of this Employment Agreement, apply for and procure as owner and for
its own benefit, life insurance on Ophthalmologist, in such amounts and in such
form or forms as the Practice may determine. Ophthalmologist shall, at the
request of the Practice, submit to such medical examinations, supply such
information, and execute such documents as may be required by the insurance
company or companies to whom the Practice has applied for such insurance.
Ophthalmologist hereby represents that to his knowledge there are no facts or
circumstances that would preclude the Practice from obtaining life insurance on
Ophthalmologist.
15. Proprietary Information and Inventions. Ophthalmologist
understands and acknowledges that:
15.01 Trust. Ophthalmologist's employment creates a
relationship of confidence and trust between Ophthalmologist and the Practice
(and by virtue of the Business Management Agreement entered into by the
Practice and Vision 21, Ophthalmologist's employment creates a relationship of
confidence and trust between the Ophthalmologist and Vision 21) with respect to
certain information applicable to the business of the Practice and Vision 21,
which may be made known to Ophthalmologist by the Practice or Vision 21 or
learned by Ophthalmologist during the Employment Period.
15.02 Proprietary Information. The Practice and Vision 21
possess and will continue to possess information that has been created,
discovered, or developed by, or has otherwise become known to, the Practice or
Vision 21 (including, without limitation, information created, discovered, or
developed by or made known to Ophthalmologist during the period of or arising
out of employment by the Practice) or in which property rights have been or may
be assigned or otherwise conveyed to the Practice or Vision 21, which
information has commercial value in the respective businesses in which the
Practice and Vision 21 are engaged and is treated by the Practice and Vision 21
as confidential. Except as otherwise herein provided, all such information is
hereinafter called "Proprietary Information", which term, as used herein, shall
also include, but shall not be limited to, data, functional specifications,
computer programs, know-how, research, technology, improvements, developments,
designs, marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs, patient,
supplier and potential acquisition candidates lists, and patient files and
records. Notwithstanding anything contained in this Employment Agreement to
the contrary, the term "Proprietary Information" shall not include (i)
information which is in the public domain, (ii) information which is published
or otherwise becomes part of the public domain through no fault of
Ophthalmologist, (iii) information which Ophthalmologist can demonstrate was in
Ophthalmologist's possession at the time of disclosure and was not acquired by
Ophthalmologist directly or indirectly from the Practice or Vision 21 on a
confidential basis, (iv) information which becomes available to Ophthalmologist
on a non-confidential basis from a source other than the Practice or Vision 21
and which source, to the best of Ophthalmologist's knowledge, did not acquire
the information on a confidential basis or (v) information required to be
disclosed by any federal or state law, rule or regulation or by any applicable
judgment, order or decree or any court or governmental body or agency having
jurisdiction in the premises.
All Proprietary Information shall be the sole property of the Practice
and Vision 21 and their respective assigns. Ophthalmologist assigns to the
Practice and Vision 21 any rights Ophthalmologist may have or acquire in such
Proprietary Information. At all times, both during Ophthalmologist's
employment by the Practice and after its termination or expiration,
Ophthalmologist shall keep in strictest confidence and trust all Proprietary
Information, and Ophthalmologist shall not use or disclose any Proprietary
Information without the written consent of the Practice and Vision 21, except
as may be necessary in the
Exhibit 4.1C - Page 5
81
ordinary course of performing Ophthalmologist's duties as an employee of the
Practice. This Section 15 shall survive the termination or expiration of this
Employment Agreement.
16. Patient Files and Surrender of Documents. To the extent
permitted by law, all records contained in the files of patients shall be the
property of the Practice. Ophthalmologist shall, at the request of the
Practice, promptly surrender to the Practice any patient files, records, or
x-rays, as well as any Proprietary Information or document, memorandum, record,
patient record, letter or other paper in his possession or under his control
relating to the operation, business or affairs of the Practice or Vision 21.
17. Prior Employment Agreements; Successor Employment Agreements.
Ophthalmologist represents and warrants that Ophthalmologist's performance of
all the terms of this Employment Agreement and as an employee of the Practice
does not, and will not, breach any agreement to keep in confidence proprietary
information acquired by Ophthalmologist in confidence or in trust prior to
Ophthalmologist's employment by the Practice. Ophthalmologist has not entered
into, and shall not enter into, any agreement, either written or oral, which is
in conflict with this Employment Agreement or which would be violated by
Ophthalmologist's entering into, or carrying out his obligations under, this
Employment Agreement. Following the expiration of the term of this Employment
Agreement, Ophthalmologist shall, if he intends to continue his relationship
with the Practice, execute a new Employment Agreement with the Practice in
substantially the form of Exhibit 4.1C of the Business Management Agreement.
18. Restrictive Covenant. Ophthalmologist acknowledges and
recognizes (i) that Ophthalmologist shall come into possession of Proprietary
Information and (ii) the highly competitive nature of the respective businesses
of the Practice and Vision 21 and, accordingly, agrees that in consideration of
the premises contained herein Ophthalmologist will not, during the period of
Ophthalmologist's employment by the Practice and for a period of one (1) year
following the date of expiration or termination of this Employment Agreement,
directly or indirectly (i) except as otherwise permitted by the terms of this
Employment Agreement, practice medicine or engage in the business of managing
ophthalmology or optometry practices or related eye care medical facilities
within the area described in Schedule 18, whether such engagement shall be as
an employer, officer, director, owner, employee, consultant, stockholder,
partner or other participant. Ophthalmologist further agrees that during the
period of Ophthalmologist's employment by Practice, and for a period of three
(3) years following the termination or expiration of this Employment Agreement,
Ophthalmologist will not, directly or indirectly, (i) solicit any employee or
consultant of Vision 21 or the Practice for the purposes of hiring or retaining
such employee or consultant, (ii) utilize the services of any entity engaged in
the business of managing ophthalmology or optometry practices or related eye
care or medical facilities other than Vision 21, or (iii) contact any present
or prospective client of Vision 21 to solicit such person or entity to enter
into a management contract with any organization other than Vision 21. If
Ophthalmologist violates this Section, Ophthalmologist shall pay to Vision 21
the sum of Three Hundred Thousand Dollars ($300,000) as agreed upon liquidated
damages. The Ophthalmologist acknowledges that such sum is reasonable in light
of the resulting loss of intangible asset value associated with the
Ophthalmologist's breach of this restrictive covenant. Ophthalmologist further
agrees that (i) such liquidated damages shall be in addition to the remedies
available to the Practice and Vision 21 as set forth in Section 19 below, (ii)
Vision 21 is a third-party beneficiary of this Section 18, (iii) this Section
18 is intended for the benefit of Vision 21, (iv) this Section 18 may be
enforced by the Practice's and Vision 21's successors and/or assigns, and (v)
the enforcement of this Section 18 will not violate public policy. This
Section 18 shall survive the
Exhibit 4.1C - Page 6
82
termination or expiration of this Employment Agreement. Notwithstanding the
foregoing, Vision 21 shall not have any right to enforce any provisions of this
Employment Agreement if the Business Management Agreement terminates pursuant
to Section 6.2(a) of the Business Management Agreement.
19. Remedies. Ophthalmologist acknowledges and agrees that the
Practice's and Vision 21's remedy at law for a breach or a threatened breach of
the provisions herein would be inadequate, and in recognition of this fact, in
the event of a breach or threatened breach by Ophthalmologist of any of the
provisions of this Employment Agreement, it is agreed that the Practice and
Vision 21 shall be entitled to equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available, without posting bond
or other security. Ophthalmologist acknowledges that the granting of a
temporary injunction, a temporary restraining order or other permanent
injunction merely prohibiting Ophthalmologist from engaging in the practice of
medicine or engaging in the management of any medical practice during the
prohibited period within the prohibited area would not be an adequate remedy
upon breach or threatened breach of this Employment Agreement, and consequently
agrees, upon any such breach or threatened breach, to the granting of
injunctive relief prohibiting Ophthalmologist from engaging in any activities
prohibited by this Employment Agreement. No remedy herein conferred is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to any other remedy given
hereunder now or hereinafter existing at law or in equity or by statute or
otherwise. It is expressly understood and agreed by Ophthalmologist that
although the parties consider the restrictions contained in this Employment
Agreement to be reasonable, if a court determines that the time or territory or
any other restriction contained in this Employment Agreement is an
unenforceable restriction on the activities of Ophthalmologist, such provision
in this Employment Agreement shall not be rendered void but shall be deemed to
be amended to apply as to such maximum time and territory and to such extent as
such court may judicially determine or indicate to be reasonable. This Section
19 shall survive the termination or expiration of this Employment Agreement.
20. Business Management Agreement. Ophthalmologist agrees not to
commit any act or engage in any omission that would cause the Practice to
breach the Business Management Agreement with Vision 21.
21. Modification and Waiver. No provision of this Employment
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Ophthalmologist
and such officer as may be specifically designated by the Board of Directors of
the Practice and by such officer as may be specifically designated by the Board
of Directors of Vision 21. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Employment Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time, and such waiver shall not operate
or be construed as a waiver of any subsequent breach of the same provision or
condition by any of the Practice, Ophthalmologist or Vision 21.
22. Headings. Headings used in this Employment Agreement are for
convenience only and shall not be used to interpret or construe its provisions.
23. Amendments. No amendments or variations of the terms and
conditions of this Employment Agreement shall be valid unless the same are in
writing and signed by all of the parties hereto.
Exhibit 4.1C - Page 7
83
24. Severability. The invalidity or unenforceability of any
provision of this Employment Agreement, whether in whole or in part, shall not
in any way affect the validity and/or enforceability of any other provision
herein contained. Any invalid or unenforceable provision shall be deemed
severable to the extent of any such invalidity or unenforceability. It is
expressly understood and agreed that while the Practice and Ophthalmologist
consider the restrictions contained in this Employment Agreement reasonable for
the purpose of preserving for the Practice the good will, other proprietary
rights and intangible business value of the Practice, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in this Employment Agreement is an
unreasonable or otherwise unenforceable restriction against Ophthalmologist,
the provisions of such clause shall not be rendered void but shall be deemed
amended to apply as to maximum time and territory and to such other extent as
such court may judicially determine or indicate to be reasonable.
25. Third-Party Beneficiary. Vision 21 is a third-party
beneficiary of Sections 4, 15, 18, 19 and 25 of this Employment Agreement and
the restrictive covenants contained in this Employment Agreement are intended
for the benefit of Vision 21. Except as otherwise provided herein, this
Employment Agreement shall not confer any rights or remedies upon any person
other than the Practice, Ophthalmologist and Vision 21 and their respective
successors and permitted assigns.
26. Successors and Assigns. The Practice's and Vision 21's
successors and/or assigns are authorized to enforce the restrictive covenants
contained in this Employment Agreement.
27. Governing Law. This Employment Agreement shall be construed
and enforced pursuant to the laws of the State in which the Practice conducts
its business.
28. Counterparts. This Employment Agreement may be executed in
more than one (1) counterpart and each counterpart shall be considered an
original.
IN WITNESS WHEREOF, this Employment Agreement has been duly executed
by the Practice and Ophthalmologist as of the date first above written.
"PRACTICE"
EXCELCARE, P.C.
By___________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D., its President
"OPHTHALMOLOGIST"
_____________________________________________
, Ophthalmologist
Exhibit 4.1C - Page 8
84
Exhibit 4.2A
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Form of Physician Employment Agreement (Non-Shareholder)
PHYSICIAN EMPLOYMENT AGREEMENT
(NON-SHAREHOLDER)
This Physician Employment Agreement (this "Employment Agreement")
dated as of ____________, 19__, is by and between ExcelCare, P.C., an Arizona
professional corporation (the "Practice"), and ______________________________,
an individual (the "Ophthalmologist").
R E C I T A L S:
A. The Practice is a professional corporation organized under the
laws of the State of Arizona (the "State") and is authorized to practice
medicine in the State through licensed individuals.
B. The Practice desires to employ Ophthalmologist upon the terms
and subject to the terms and conditions set forth in this Employment Agreement.
C. The Ophthalmologist is licensed to practice medicine in the
State and desires to be employed by the Practice upon the terms and subject to
the conditions set forth in this Employment Agreement.
D. The Practice and Vision 21, Inc. ("Vision 21") have entered
into a Business Management Agreement (the "Business Management Agreement")
whereby Vision 21 has agreed to have its professional employees execute
employment agreements in a form substantially the same as this Employment
Agreement, and it is intended that except as otherwise limited herein, Vision
21 be a third-party beneficiary of the restrictive covenants contained in this
Employment Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
promises, covenants and conditions herein contained and for other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound hereby agree as
follows:
1. Employment. The Practice hereby employs Ophthalmologist, and
Ophthalmologist hereby accepts employment with the Practice, all upon the terms
and subject to the conditions set forth in this Employment Agreement.
2. Duties and Responsibilities.
2.01 Full Time Practice of Medicine. The Ophthalmologist is
employed pursuant to the terms of this Employment Agreement to practice
medicine on behalf of the Practice. The Ophthalmologist shall devote
substantially all of his time, best efforts and attention to the practice of
medicine on behalf of the Practice and shall provide quality patient care. In
addition to the foregoing duties, the Ophthalmologist shall undertake
additional duties as directed by the Practice. During the term hereof and any
renewal, the Ophthalmologist shall not, without the written consent of the
Practice and Vision 21, (1) render professional services to or for any person,
firm, corporation or other organization for compensation;
85
or (2) engage in any activity that competes with the interest of the Practice
or Vision 21 whether Ophthalmologist is acting by himself or as an officer,
director, shareholder, employee, partner or fiduciary. Any consent granted to
the Ophthalmologist shall be revocable by the Practice or Vision 21 at any time
upon thirty (30) days' notice, and the Ophthalmologist agrees to cease and
desist upon receipt of such notice. Notwithstanding the above, the Practice
recognizes that the Ophthalmologist shall have the right to engage in those
matters expressly described on Schedule 2.01 attached hereto so long as such
permitted activities do not result in materially reduced services to the
Practice as compared to the Ophthalmologist's previous services to his practice
and so long as the same does not materially impact the Ophthalmologist's
ability to perform hereunder or materially impact the Ophthalmologist's
anticipated productivity.
2.02 Subject to Board Standards and Requirements. The
Practice recognizes that professional regulatory groups and bodies such as the
State Board of Medicine may from time to time establish standards and
requirements with regard to the practice of medicine by physicians licensed to
practice medicine. All restrictions contained herein with respect to the
duties and obligations of the Ophthalmologist shall be subject to said
standards and requirements of the aforesaid groups and bodies.
3. Authority and Control of Practice.
Subject to Section 2.02 above and to the extent permitted by
law:
3.01 The Ophthalmologist recognizes that the Practice
shall have complete authority with regard to the acceptance for treatment of or
the refusal to treat any patient and the Practice shall have complete authority
with regard to the establishment of the appropriate fee for professional
service.
3.02 The Practice shall direct and control the assignment
of patients to the Ophthalmologist. Such determination shall be solely by the
Practice and in the best interests of the patient and the Practice. The
Ophthalmologist agrees to treat such patients as are assigned to him by the
Practice. The Ophthalmologist recognizes that patients treated by him may
subsequently be assigned to other employees.
3.03 The Ophthalmologist shall perform all professional
services as are assigned to him by the Practice and all work performed by the
Practice shall be subject to the review and study of the Practice.
3.04 The performance of services by the Ophthalmologist on
behalf of the Practice shall be performed at such times and at such places as
shall be determined by the Practice and in accordance with such rules as the
Practice may establish.
3.05 Hours of employment of the Ophthalmologist shall be
determined by the Practice within reasonable standards within the profession.
3.06 The ophthalmologist of record for each patient treated
by Ophthalmologist shall be one of the individual owners of the Practice.
4. Term of Employment. The term of employment of Ophthalmologist by
the Practice pursuant to this Employment Agreement shall be for two (2) years
(the "Employment Period") commencing on the date of this Agreement (the
"Commencement Date") unless otherwise terminated earlier under the provisions
of this Employment Agreement. The term of this Agreement shall renew
automatically at the
Exhibit 4.2A - Page 2
86
end of each term of this Agreement for an additional two (2) year term unless
either party hereto provides notice to the other at least ninety (90) days
prior to the expiration of the term.
5. Place of Employment. Ophthalmologist's principal place of work
shall be located where designated by the Practice.
6. Compensation. During the Employment Period, subject to all the
terms and conditions of this Employment Agreement and as compensation for all
services to be rendered by Ophthalmologist under this Employment Agreement, the
Practice shall pay to or provide Ophthalmologist with the compensation set
forth in Schedule 6 attached to this Agreement.
7. Adherence to Standards. Ophthalmologist shall comply with the
written policies, standards, rules and regulations of the Practice from time to
time established for all employees of the Practice.
8. Review of Performance. The Practice may periodically review and
evaluate the performance of Ophthalmologist under this Employment Agreement
with Ophthalmologist.
9. Expenses. The Practice may reimburse Ophthalmologist for
reasonable, ordinary and necessary expenses incurred by him in connection with
his employment hereunder that have been approved in advance by the Practice;
provided, however, Ophthalmologist shall render to the Practice a complete and
accurate accounting of all such expenses in accordance with the substantiation
requirements of Section 274 of the Internal Revenue Code of 1986, as amended
(the "Code"), as a condition precedent to such reimbursement.
10. Termination with Cause by the Practice. This Employment
Agreement may be terminated with Cause (as hereinafter defined) by the Practice
provided that the Practice shall (i) give Ophthalmologist the Notice of
Termination (as hereinafter defined) and (ii) pay Ophthalmologist his annual
base salary through the Date of Termination (as hereinafter defined) at the
rate in effect at the time the Notice of Termination is given plus any bonus or
incentive compensation which have been earned or have become payable pursuant
to the terms of any compensation or benefit plan or have vested as of the Date
of Termination, but which have not yet been paid.
11. Termination without Cause by the Practice or with Cause by
the Ophthalmologist. This Employment Agreement may be terminated by the
Practice without cause or by the Ophthalmologist with cause and in the event
that the Practice terminates the Ophthalmologist without cause, the Practice
shall give written notice to the Ophthalmologist at least ninety (90) days
prior to the Date of Termination.
12. Definitions. In addition to the words and terms elsewhere
defined in this Employment Agreement, certain capitalized words and terms used
in this Employment Agreement shall have the meanings given to them by the
definitions and descriptions in this Section 12 unless the context or use
indicates another or different meaning or intent, and such definition shall be
equally applicable to both the singular and plural forms of any of the
capitalized words and terms herein defined. The following words and terms are
defined terms under this Employment Agreement:
12.01 Cause. A termination with "Cause" by the Practice shall mean a
termination of this Employment Agreement for any of the following reasons:
Exhibit 4.2A - Page 3
87
(i) Ophthalmologist's failure to promptly and
adequately perform the duties assigned by Practice after being notified by the
Practice of the specific act(s) constituting such failure and being given a
period of thirty (30) days after notification by the Practice to correct such
failure;
(ii) upon Ophthalmologist's breach of any provision
of this Employment Agreement which remains uncured for a period of thirty (30)
days after notification by Practice of the specific nature of the breach;
(iii) for good cause which shall include
absenteeism, theft, dishonesty, insubordination, conduct reflecting moral
turpitude, conduct diminishing the goodwill or reputation of the Practice;
conduct disloyal to the Practice, violation of any representation, warranty or
covenant of this Agreement; conviction of any felony, or suspension or
revocation of Ophthalmologist's license to practice medicine;
(iv) upon Ophthalmologist's death; or
(v) upon Ophthalmologist's disability if the
disability renders Ophthalmologist unable to practice medicine on a full-time
basis for a period of more than ninety (90) days in any consecutive six (6)
month period.
12.02 Date of Termination. "Date of Termination" shall mean
the date specified in the Notice of Termination.
12.03 Notice of Termination. "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision
in this Employment Agreement relied upon; provided, however, no such purported
termination shall be effective without such Notice of Termination.
13. Fees and Expenses. The prevailing party in any contest or
dispute under this Employment Agreement shall receive from the other party all
legal fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the prevailing party in any and all proceedings as a
result of a contest or dispute arising out of this Employment Agreement
including trial, appellate and bankruptcy proceedings.
14. Notices. For the purposes of this Employment Agreement, notices
and all other communications provided for in the Employment Agreement shall be
in writing and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
or by expedited (overnight) courier with an established national reputation,
shipping prepaid or billed to sender, in either case addressed to the
respective addresses last given by each party in writing to the other (provided
that all notices to the Practice shall be directed to the attention of the
Practice with a copy to the Secretary of the Practice. All notices and
communication shall be deemed to have been received on the date of delivery
thereof, on the third business day after the mailing thereof, or on the second
day after deposit thereof with an expedited courier service, except that notice
of change of address shall be effective only upon receipt.
15. Life Insurance. The Practice may, at any time after the
execution of this Employment Agreement, apply for and procure as owner and for
its own benefit, life insurance on Ophthalmologist, in such amounts and in such
form or forms as the Practice may determine. Ophthalmologist shall, at the
request of the Practice, submit to such medical examinations, supply such
information, and execute such documents as may be required by the insurance
company or companies to whom the Practice has applied
Exhibit 4.2A - Page 4
88
for such insurance. Ophthalmologist hereby represents that to his knowledge
there are no facts or circumstances that would preclude the Practice from
obtaining life insurance on Ophthalmologist.
16. Proprietary Information and Inventions. Ophthalmologist
understands and acknowledges that:
16.01 Trust. Ophthalmologist's employment creates a
relationship of confidence and trust between Ophthalmologist and the Practice
with respect to certain information applicable to the business of the Practice,
and Vision 21 which may be made known to Ophthalmologist by the Practice or
Vision 21 or learned by Ophthalmologist during the Employment Period.
16.02 Proprietary Information. The Practice and Vision 21
possess and will continue to possess information that has been created,
discovered, or developed by, or otherwise become known to, the Practice or
Vision 21 (including, without limitation, information created, discovered or
developed by, or made known to Ophthalmologist during the period of or arising
out of employment by the Practice) or in which property rights have been or may
be assigned or otherwise conveyed to the Practice or Vision 21, which
information has commercial value in the respective businesses in which the
Practice and Vision 21 are engaged and is treated by the Practice and Vision 21
as confidential. Except as otherwise herein provided, all such information is
hereinafter called "Proprietary Information", which term, as used herein, shall
also include, but shall not be limited to, data, functional specifications,
computer programs, know-how, research, technology, improvements, developments,
designs, marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs, patient,
supplier and potential acquisition candidates lists, and patient files and
records. Notwithstanding anything contained in this Employment Agreement to
the contrary, the term "Proprietary Information" shall not include (i)
information which is in the public domain, (ii) information which is published
or otherwise becomes part of the public domain through no fault of
Ophthalmologist, (iii) information which Ophthalmologist can demonstrate was in
Ophthalmologist's possession at the time of disclosure and was not acquired by
Ophthalmologist directly or indirectly from the Practice or Vision 21 on a
confidential basis, (iv) information which becomes available to Ophthalmologist
on a non-confidential basis from a source other than the Practice or Vision 21
and which source, to the best of Ophthalmologist's knowledge, did not acquire
the information on a confidential basis or (v) information required to be
disclosed by any federal or state law, rule or regulation or by any applicable
judgment, order or decree or any court or governmental body or agency having
jurisdiction in the premises.
All Proprietary Information shall be the sole property of the Practice
and Vision 21 and their respective assigns. Ophthalmologist assigns to the
Practice and Vision 21 any rights Ophthalmologist may have or acquire in such
Proprietary Information. At all times, both during Ophthalmologist's
employment by the Practice and after its termination or expiration,
Ophthalmologist shall keep in strictest confidence and trust all Proprietary
Information, and Ophthalmologist shall not use or disclose any Proprietary
Information without the written consent of the Practice and Vision 21, except
as may be necessary in the ordinary course of performing Ophthalmologist's
duties as an employee of the Practice. This Section 16 shall survive the
termination or expiration of this Employment Agreement.
17. Patient Files and Surrender of Documents. To the extent
permitted by law, all records contained in the files of patients shall be the
property of the Practice. Ophthalmologist shall, at the request of the
Practice, promptly surrender to the Practice any patient files, records, or
x-rays, as well as any Proprietary Information or document, memorandum, record,
patient record, letter or other paper in his possession or under his control
relating to the operation, business or affairs of the Practice or Vision 21.
Exhibit 4.2A - Page 5
89
18. Prior Employment Agreements. Ophthalmologist represents and
warrants that Ophthalmologist's performance of all the terms of this Employment
Agreement and as an employee of the Practice does not, and will not, breach any
agreement to keep in confidence proprietary information acquired by
Ophthalmologist in confidence or in trust prior to Ophthalmologist's employment
by the Practice. Ophthalmologist has not entered into, and shall not enter
into, any agreement, either written or oral, which is in conflict with this
Employment Agreement or which would be violated by Ophthalmologist's entering
into, or carrying out his obligations under, this Employment Agreement.
19. Restrictive Covenant. Ophthalmologist acknowledges and
recognizes (i) that Ophthalmologist shall come into possession of Proprietary
Information and (ii) the highly competitive nature of the respective businesses
of the Practice and Vision 21 and, accordingly, agrees that in consideration of
the premises contained herein Ophthalmologist will not, during the period of
Ophthalmologist's employment by the Practice and for a period of one (1) year
following the date of expiration or termination of this Employment Agreement
(unless terminated without cause by the Practice), directly or indirectly (i)
except as otherwise permitted by the terms of this Employment Agreement,
practice medicine or engage in the business of managing ophthalmology or
optometry practices or related eye care medical facilities within the area
described in Schedule 19, whether such engagement shall be as an employer,
officer, director, owner, employee, consultant, stockholder, partner or other
participant. Ophthalmologist further agrees that during the period of
Ophthalmologist's employment by Practice, and for a period of one (1) year
following the termination or expiration of this Employment Agreement,
Ophthalmologist will not, directly or indirectly, (i) solicit any employee or
consultant of Vision 21 for the purposes of hiring or retaining such employee
or consultant, (ii) utilize the services of any entity engaged in the business
of managing ophthalmology or optometry practices or related eye care or medical
facilities other than Vision 21, or (iii) contact any present or prospective
client of Vision 21 to solicit such person or entity to enter into a management
contract with any organization other than Vision 21. Ophthalmologist further
agrees that (i) Vision 21 is a third-party beneficiary of this Section 19, (ii)
this Section 19 is intended for the benefit of Vision 21, (iii) this Section 19
may be enforced by Practice's and Vision 21's successors and/or assigns, and
(iv) the enforcement of this Section 19 will not violate public policy. This
Section 19 shall survive the termination or expiration of this Employment
Agreement. Notwithstanding the foregoing, Vision 21 shall not have any right
to enforce any provisions of this Employment Agreement if the Business
Management Agreement terminates pursuant to Section 6.2(a) of the Business
Management Agreement.
20. Remedies. Ophthalmologist acknowledges and agrees that the
Practice's and Vision 21's remedy at law for a breach or a threatened breach of
the provisions herein would be inadequate, and in recognition of this fact, in
the event of a breach or threatened breach by Ophthalmologist of any of the
provisions of this Employment Agreement, it is agreed that the Practice and
Vision 21 shall be entitled to, equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available, without posting bond
or other security. Ophthalmologist acknowledges that the granting of a
temporary injunction, a temporary restraining order or other permanent
injunction merely prohibiting Ophthalmologist from engaging in the practice of
medicine or engaging in the management of any medical practice during the
prohibited period within the prohibited area would not be an adequate remedy
upon breach or threatened breach of this Employment Agreement, and consequently
agrees upon any such breach or threatened breach to the granting of injunctive
relief prohibiting Ophthalmologist from engaging in any activities prohibited
by this Employment Agreement. No remedy herein conferred is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to any other remedy given hereunder now or
hereinafter existing at law or in equity or by statute or otherwise. It is
expressly understood and agreed by Ophthalmologist that although the parties
consider the restrictions contained in this Employment Agreement to be
reasonable, if a court determines that the time or territory or any other
Exhibit 4.2A - Page 6
90
restriction contained in this Employment Agreement is an unenforceable
restriction on the activities of Ophthalmologist, as such provision in this
Employment Agreement shall not be rendered void but shall be deemed to be
amended as to apply to such maximum time and territory and to such extent as
such court may judicially determine or indicate to be reasonable. This Section
20 shall survive the termination or expiration of this Employment Agreement.
21. Business Management Agreement. Ophthalmologist agrees not to
commit any act or engage in any omission that would cause the Practice to
breach the Business Management Agreement with Vision 21.
22. Modification and Waiver. No provision of this Employment
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Ophthalmologist
and such officer as may be specifically designated by the Board of Directors of
the Practice and by such officer as may be specifically designated by the Board
of Directors of Vision 21. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Employment Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time, and such waiver shall not operate
or be construed as a waiver of any subsequent breach of the same provision or
condition by any of the Practice, Ophthalmologist or Vision 21.
23. Headings. Headings used in this Employment Agreement are for
convenience only and shall not be used to interpret or construe its provisions.
24. Amendments. No amendments or variations of the terms and
conditions of this Employment Agreement shall be valid unless the same are in
writing and signed by all of the parties hereto.
25. Severability. The invalidity or unenforceability of any
provision of this Employment Agreement, whether in whole or in part, shall not
in any way affect the validity and/or enforceability of any other provision
herein contained. Any invalid or unenforceable provision shall be deemed
severable to the extent of any such invalidity or unenforceability. It is
expressly understood and agreed that while the Practice and Ophthalmologist
consider the restrictions contained in this Employment Agreement reasonable for
the purpose of preserving for the Practice the good will, other proprietary
rights and intangible business value of the Practice, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in this Employment Agreement is an
unreasonable or otherwise unenforceable restriction against Ophthalmologist,
the provisions of such clause shall not be rendered void but shall be deemed
amended to apply as to maximum time and territory and to such other extent as
such court may judicially determine or indicate to be reasonable.
26. Third Party Beneficiary. Vision 21 is a third-party beneficiary
of Sections 4, 16, 17, 19, 20 and 25 of this Employment Agreement and the
restrictive covenants contained in this Employment Agreement are intended for
the benefit of Vision 21. Except as otherwise provided herein, this Employment
Agreement shall not confer any rights or remedies upon any person other than
the Practice, Ophthalmologist and Vision 21 and their respective successors and
permitted assigns.
27. Successors and Assigns. The Practice's and Vision 21's
successors and/or assigns are authorized to enforce the restrictive covenants
contained in this Employment Agreement.
28. Governing Law. This Employment Agreement shall be construed and
enforced pursuant to the laws of the State in which the Practice conducts its
business.
Exhibit 4.2A - Page 7
91
29. Counterparts. This Employment Agreement may be executed in more
than one (1) counterpart and each counterpart shall be considered an original.
IN WITNESS WHEREOF, this Employment Agreement has been duly executed
by the Practice and Ophthalmologist as of the date first above written.
"PRACTICE"
EXCELCARE, P.C.
By_______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D., its President
"OPHTHALMOLOGIST"
_________________________________________
, Ophthalmologist
Exhibit 4.2A - Page 8
92
Exhibit 4.2B
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Form of Optometrist Employment Agreement
OPTOMETRIST EMPLOYMENT AGREEMENT
(NON-SHAREHOLDER)
This Optometrist Employment Agreement (this "Employment Agreement")
dated as of _________, 199_, is by and between ExcelCare, P.C., an Arizona
professional corporation (the "Practice"), and ______________, an individual
(the "Optometrist").
R E C I T A L S:
A. The Practice is a professional association organized under the
laws of the State of Arizona (the "State") and is authorized to practice
optometry in the State through licensed individuals.
B. The Practice desires to employ Optometrist upon the terms and
subject to the terms and conditions set forth in this Employment Agreement.
C. The Optometrist is licensed to practice optometry in the State
and desires to be employed by the Practice upon the terms and subject to the
conditions set forth in this Employment Agreement.
D. The Practice and Vision 21, Inc. ("Vision 21") have entered
into a Business Management Agreement (the "Business Management Agreement")
whereby Vision 21 has agreed to have its professional employees execute
employment agreements in a form substantially the same as this Employment
Agreement, and it is intended that except as otherwise limited herein, Vision
21 be a third-party beneficiary of the restrictive covenants contained in this
Employment Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
promises, covenants and conditions herein contained and for other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound hereby agree as
follows:
1. Employment. The Practice hereby employs Optometrist, and
Optometrist hereby accepts employment with the Practice, all upon the terms and
subject to the conditions set forth in this Employment Agreement.
2. Duties and Responsibilities.
2.01 Full Time Practice of Optometry. The Optometrist is
employed pursuant to the terms of this Employment Agreement to practice
optometry on behalf of the Practice. The Optometrist shall devote
substantially all of his time, best efforts and attention to the practice of
optometry on behalf of the Practice and shall provide quality patient care. In
addition to the foregoing duties, the Optometrist shall undertake additional
duties as directed by the Practice. During the term hereof and any renewal,
the Optometrist shall not, without the written consent of the Practice and
Vision 21, (1) render professional services to or for any person, firm,
corporation or other organization for compensation; or (2) engage in any
activity that competes with the interest of the Practice or Vision 21 whether
Optometrist is acting by
93
himself or as an officer, director, shareholder, employee, partner or
fiduciary. Any consent granted to the Optometrist shall be revocable by the
Practice or Vision 21 at any time upon thirty (30) days' notice, and the
Optometrist agrees to cease and desist upon receipt of such notice.
Notwithstanding the above, the Practice recognizes that the Optometrist shall
have the right to engage in those matters expressly described on Schedule 2.01
attached hereto so long as such permitted activities do not result in
materially reduced services to the Practice as compared to the Optometrist's
previous services to his practice and so long as the same does not materially
impact the Optometrist's ability to perform hereunder or materially impact the
Optometrist's anticipated productivity.
2.02 Subject to Board Standards and Requirements. The
Practice recognizes that professional regulatory groups and bodies such as the
State Board of Optometry may from time to time establish standards and
requirements with regard to the practice of optometry by optometrists licensed
to practice optometry. All restrictions contained herein with respect to the
duties and obligations of the Optometrist shall be subject to said standards
and requirements of the aforesaid groups and bodies.
3. Authority and Control of Practice.
Subject to Section 2.02 above and to the extent permitted by
law:
3.01 The Optometrist recognizes that the Practice shall
have complete authority with regard to the acceptance for treatment of or the
refusal to treat any patient and the Practice shall have complete authority
with regard to the establishment of the appropriate fee for professional
service.
3.02 The Practice shall direct and control the assignment
of patients to the Optometrist. Such determination shall be solely by the
Practice and in the best interests of the patient and the Practice. The
Optometrist agrees to treat such patients as are assigned to him by the
Practice. The Optometrist recognizes that patients treated by him may
subsequently be assigned to other employees.
3.03 The Optometrist shall perform all professional
services as are assigned to him by the Practice and all work performed by the
Practice shall be subject to the review and study of the Practice.
3.04 The performance of services by the Optometrist on
behalf of the Practice shall be performed at such times and at such places as
shall be determined by the Practice and in accordance with such rules as the
Practice may establish.
3.05 Hours of employment of the Optometrist shall be
determined by the Practice within reasonable standards within the profession.
3.06 The optometrist of record for each patient treated by
Optometrist shall be one of the individual owners of the Practice.
4. Term of Employment. The term of employment of Optometrist by the
Practice pursuant to this Employment Agreement shall be for two (2) years (the
"Employment Period") commencing on the date of this Agreement (the
"Commencement Date") unless otherwise terminated earlier under the provisions
of this Employment Agreement. The term of this Agreement shall renew
automatically at the end of each term of this Agreement for an additional two
(2) year term unless either party hereto provides notice to the other at least
ninety (90) days prior to the expiration of the term.
Exhibit 4.2B - Page 2
94
5. Place of Employment. Optometrist's principal place of work shall
be located where designated by the Practice.
6. Compensation. During the Employment Period, subject to all the
terms and conditions of this Employment Agreement and as compensation for all
services to be rendered by Optometrist under this Employment Agreement, the
Practice shall pay to or provide Optometrist with the compensation set forth in
Schedule 6 attached to this Agreement.
7. Adherence to Standards. Optometrist shall comply with the
written policies, standards, rules and regulations of the Practice from time to
time established for all employees of the Practice.
8. Review of Performance. The Practice may periodically review and
evaluate the performance of Optometrist under this Employment Agreement with
Optometrist.
9. Expenses. The Practice may reimburse Optometrist for reasonable,
ordinary and necessary expenses incurred by him in connection with his
employment hereunder that have been approved in advance by the Practice;
provided, however, Optometrist shall render to the Practice a complete and
accurate accounting of all such expenses in accordance with the substantiation
requirements of Section 274 of the Internal Revenue Code of 1986, as amended
(the "Code"), as a condition precedent to such reimbursement.
10. Termination with Cause by the Practice. This Employment
Agreement may be terminated with Cause (as hereinafter defined) by the Practice
provided that the Practice shall (i) give Optometrist the Notice of Termination
(as hereinafter defined) and (ii) pay Optometrist his annual base salary
through the Date of Termination (as hereinafter defined) at the rate in effect
at the time the Notice of Termination is given plus any bonus or incentive
compensation which have been earned or have become payable pursuant to the
terms of any compensation or benefit plan or have vested as of the Date of
Termination, but which have not yet been paid.
11. Termination without Cause by the Practice or with Cause by
the Optometrist. This Employment Agreement may be terminated by the Practice
without cause or by the Optometrist with cause and in the event that the
Practice terminates the Optometrist without cause, the Practice shall give
written notice to the Optometrist at least ninety (90) days prior to the Date
of Termination.
12. Definitions. In addition to the words and terms elsewhere
defined in this Employment Agreement, certain capitalized words and terms used
in this Employment Agreement shall have the meanings given to them by the
definitions and descriptions in this Section 12 unless the context or use
indicates another or different meaning or intent, and such definition shall be
equally applicable to both the singular and plural forms of any of the
capitalized words and terms herein defined. The following words and terms are
defined terms under this Employment Agreement:
12.01 Cause. A termination with "Cause" by the Practice
shall mean a termination of this Employment Agreement for any of the following
reasons:
(i) Optometrist's failure to promptly and adequately
perform the duties assigned by Practice after being notified by the Practice of
the specific act(s) constituting such failure and being given a period of
thirty (30) days after notification by the Practice to correct such failure;
Exhibit 4.2B - Page 3
95
(ii) upon Optometrist's breach of any provision of
this Employment Agreement which remains uncured for a period of thirty (30)
days after notification by Practice of the specific nature of the breach;
(iii) for good cause which shall include
absenteeism, theft, dishonesty, insubordination, conduct reflecting moral
turpitude, conduct diminishing the goodwill or reputation of the Practice;
conduct disloyal to the Practice, violation of any representation, warranty or
covenant of this Agreement; conviction of any felony, or suspension or
revocation of Optometrist's license to practice optometry;
(iv) upon Optometrist's death; or
(v) upon Optometrist's disability if the
disability renders Optometrist unable to practice optometry on a full-time
basis for a period of more than ninety (90) days in any consecutive six (6)
month period.
12.02 Date of Termination. "Date of Termination" shall mean
the date specified in the Notice of Termination.
12.03 Notice of Termination. "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision
in this Employment Agreement relied upon; provided, however, no such purported
termination shall be effective without such Notice of Termination.
13. Fees and Expenses. The prevailing party in any contest or
dispute under this Employment Agreement shall receive from the other party all
legal fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the prevailing party in any and all proceedings as a
result of a contest or dispute arising out of this Employment Agreement
including trial, appellate and bankruptcy proceedings.
14. Notices. For the purposes of this Employment Agreement, notices
and all other communications provided for in the Employment Agreement shall be
in writing and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
or by expedited (overnight) courier with an established national reputation,
shipping prepaid or billed to sender, in either case addressed to the
respective addresses last given by each party in writing to the other (provided
that all notices to the Practice shall be directed to the attention of the
Practice with a copy to the Secretary of the Practice. All notices and
communication shall be deemed to have been received on the date of delivery
thereof, on the third business day after the mailing thereof, or on the second
day after deposit thereof with an expedited courier service, except that notice
of change of address shall be effective only upon receipt.
15. Life Insurance. The Practice may, at any time after the
execution of this Employment Agreement, apply for and procure as owner and for
its own benefit, life insurance on Optometrist, in such amounts and in such
form or forms as the Practice may determine. Optometrist shall, at the request
of the Practice, submit to such medical examinations, supply such information,
and execute such documents as may be required by the insurance company or
companies to whom the Practice has applied for such insurance. Optometrist
hereby represents that to his knowledge there are no facts or circumstances
that would preclude the Practice from obtaining life insurance on Optometrist.
16. Proprietary Information and Inventions. Optometrist understands
and acknowledges that:
Exhibit 4.2B - Page 4
96
16.01 Trust. Optometrist's employment creates a relationship
of confidence and trust between Optometrist and the Practice with respect to
certain information applicable to the business of the Practice, and Vision 21
which may be made known to Optometrist by the Practice or Vision 21 or learned
by Optometrist during the Employment Period.
16.02 Proprietary Information. The Practice and Vision 21
possess and will continue to possess information that has been created,
discovered, or developed by, or otherwise become known to, the Practice or
Vision 21 (including, without limitation, information created, discovered or
developed by, or made known to Optometrist during the period of or arising out
of employment by the Practice) or in which property rights have been or may be
assigned or otherwise conveyed to the Practice or Vision 21, which information
has commercial value in the respective businesses in which the Practice and
Vision 21 are engaged and is treated by the Practice and Vision 21 as
confidential. Except as otherwise herein provided, all such information is
hereinafter called "Proprietary Information", which term, as used herein, shall
also include, but shall not be limited to, data, functional specifications,
computer programs, know-how, research, technology, improvements, developments,
designs, marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs, patient,
supplier and potential acquisition candidates lists, and patient files and
records. Notwithstanding anything contained in this Employment Agreement to
the contrary, the term "Proprietary Information" shall not include (i)
information which is in the public domain, (ii) information which is published
or otherwise becomes part of the public domain through no fault of Optometrist,
(iii) information which Optometrist can demonstrate was in Optometrist's
possession at the time of disclosure and was not acquired by Optometrist
directly or indirectly from the Practice or Vision 21 on a confidential basis,
(iv) information which becomes available to Optometrist on a non-confidential
basis from a source other than the Practice or Vision 21 and which source, to
the best of Optometrist's knowledge, did not acquire the information on a
confidential basis or (v) information required to be disclosed by any federal
or state law, rule or regulation or by any applicable judgment, order or decree
or any court or governmental body or agency having jurisdiction in the
premises.
All Proprietary Information shall be the sole property of the Practice
and Vision 21 and their respective assigns. Optometrist assigns to the
Practice and Vision 21 any rights Optometrist may have or acquire in such
Proprietary Information. At all times, both during Optometrist's employment by
the Practice and after its termination or expiration, Optometrist shall keep in
strictest confidence and trust all Proprietary Information, and Optometrist
shall not use or disclose any Proprietary Information without the written
consent of the Practice and Vision 21, except as may be necessary in the
ordinary course of performing Optometrist's duties as an employee of the
Practice. This Section 16 shall survive the termination or expiration of this
Employment Agreement.
17. Patient Files and Surrender of Documents. To the extent
permitted by law, all records contained in the files of patients shall be the
property of the Practice. Optometrist shall, at the request of the Practice,
promptly surrender to the Practice any patient files, records, or x-rays, as
well as any Proprietary Information or document, memorandum, record, patient
record, letter or other paper in his possession or under his control relating
to the operation, business or affairs of the Practice or Vision 21.
18. Prior Employment Agreements. Optometrist represents and
warrants that Optometrist's performance of all the terms of this Employment
Agreement and as an employee of the Practice does not, and will not, breach any
agreement to keep in confidence proprietary information acquired by Optometrist
in confidence or in trust prior to Optometrist's employment by the Practice.
Optometrist has not entered into, and shall not enter into, any agreement,
either written or oral, which is in conflict with this
Exhibit 4.2B - Page 5
97
Employment Agreement or which would be violated by Optometrist's entering into,
or carrying out his obligations under, this Employment Agreement.
19. Restrictive Covenant. Optometrist acknowledges and recognizes
(i) that Optometrist shall come into possession of Proprietary Information and
(ii) the highly competitive nature of the respective businesses of the Practice
and Vision 21 and, accordingly, agrees that in consideration of the premises
contained herein Optometrist will not, during the period of Optometrist's
employment by the Practice and for a period of one (1) year following the date
of expiration or termination of this Employment Agreement (unless terminated
without cause by the Practice), directly or indirectly (i) practice optometry
or engage in the business of managing optometry practices or related eye care
optometric facilities within the area described in Schedule 19, whether such
engagement shall be as an employer, officer, director, owner, employee,
consultant, stockholder, partner or other participant. Optometrist further
agrees that during the period of Optometrist's employment by Practice, and for
a period of one (1) year following the termination or expiration of this
Employment Agreement, Optometrist will not, directly or indirectly, (i) solicit
any employee or consultant of Vision 21 for the purposes of hiring or retaining
such employee or consultant, (ii) utilize the services of any entity engaged in
the business of managing optometry practices or related eye care or optometric
facilities, or (iii) contact any present or prospective client of Vision 21 to
solicit such person or entity to enter into a management contract with any
organization other than Vision 21. Optometrist further agrees that (i) Vision
21 is a third-party beneficiary of this Section 19, (ii) this Section 19 is
intended for the benefit of Vision 21, (iii) this Section 19 may be enforced by
Practice's and Vision 21's successors and/or assigns, and (iv) the enforcement
of this Section 19 will not violate public policy. This Section 19 shall
survive the termination or expiration of this Employment Agreement.
Notwithstanding the foregoing, Vision 21 shall not have any right to enforce
any provisions of this Employment Agreement if the Business Management
Agreement terminates pursuant to Section 6.2(a) of the Business Management
Agreement.
20. Remedies. Optometrist acknowledges and agrees that the
Practice's and Vision 21's remedy at law for a breach or a threatened breach of
the provisions herein would be inadequate, and in recognition of this fact, in
the event of a breach or threatened breach by Optometrist of any of the
provisions of this Employment Agreement, it is agreed that the Practice and
Vision 21 shall be entitled to, equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available, without posting bond
or other security. Optometrist acknowledges that the granting of a temporary
injunction, a temporary restraining order or other permanent injunction merely
prohibiting Optometrist from engaging in the practice of optometry or engaging
in the management of any optometric practice during the prohibited period
within the prohibited area would not be an adequate remedy upon breach or
threatened breach of this Employment Agreement, and consequently agrees upon
any such breach or threatened breach to the granting of injunctive relief
prohibiting Optometrist from engaging in any activities prohibited by this
Employment Agreement. No remedy herein conferred is intended to be exclusive
of any other remedy, and each and every such remedy shall be cumulative and
shall be in addition to any other remedy given hereunder now or hereinafter
existing at law or in equity or by statute or otherwise. It is expressly
understood and agreed by Optometrist that although the parties consider the
restrictions contained in this Employment Agreement to be reasonable, if a
court determines that the time or territory or any other restriction contained
in this Employment Agreement is an unenforceable restriction on the activities
of Optometrist, as such provision in this Employment Agreement shall not be
rendered void but shall be deemed to be amended as to apply to such maximum
time and territory and to such extent as such court may judicially determine or
indicate to be reasonable. This Section 20 shall survive the termination or
expiration of this Employment Agreement.
Exhibit 4.2B - Page 6
98
21. Business Management Agreement. Optometrist agrees not to commit
any act or engage in any omission that would cause the Practice to breach the
Business Management Agreement with Vision 21.
22. Modification and Waiver. No provision of this Employment
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Optometrist and
such officer as may be specifically designated by the Board of Directors of the
Practice and by such officer as may be specifically designated by the Board of
Directors of Vision 21. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Employment Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time, and such waiver shall not operate
or be construed as a waiver of any subsequent breach of the same provision or
condition by any of the Practice, Optometrist or Vision 21.
23. Headings. Headings used in this Employment Agreement are for
convenience only and shall not be used to interpret or construe its provisions.
24. Amendments. No amendments or variations of the terms and
conditions of this Employment Agreement shall be valid unless the same are in
writing and signed by all of the parties hereto.
25. Severability. The invalidity or unenforceability of any
provision of this Employment Agreement, whether in whole or in part, shall not
in any way affect the validity and/or enforceability of any other provision
herein contained. Any invalid or unenforceable provision shall be deemed
severable to the extent of any such invalidity or unenforceability. It is
expressly understood and agreed that while the Practice and Optometrist
consider the restrictions contained in this Employment Agreement reasonable for
the purpose of preserving for the Practice the good will, other proprietary
rights and intangible business value of the Practice, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in this Employment Agreement is an
unreasonable or otherwise unenforceable restriction against Optometrist, the
provisions of such clause shall not be rendered void but shall be deemed
amended to apply as to maximum time and territory and to such other extent as
such court may judicially determine or indicate to be reasonable.
26. Third Party Beneficiary. Vision 21 is a third-party beneficiary
of Sections 4, 16, 17, 19, 20 and 25 of this Employment Agreement and the
restrictive covenants contained in this Employment Agreement are intended for
the benefit of Vision 21. Except as otherwise provided herein, this Employment
Agreement shall not confer any rights or remedies upon any person other than
the Practice, ophthalmologist and Vision 21 and their respective successors and
permitted assigns.
27. Successors and Assigns. The Practice's and Vision 21's
successors and/or assigns are authorized to enforce the restrictive covenants
contained in this Employment Agreement.
28. Governing Law. This Employment Agreement shall be construed and
enforced pursuant to the laws of the State in which the Practice conducts its
business.
29. Counterparts. This Employment Agreement may be executed in more
than one (1) counterpart and each counterpart shall be considered an original.
Exhibit 4.2B - Page 7
99
IN WITNESS WHEREOF, this Employment Agreement has been duly executed
by the Practice and Optometrist as of the date first above written.
"PRACTICE"
EXCELCARE, P.C.
By_____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇, M.D., its President
"OPTOMETRIST"
_______________________________________
__________________, Optometrist
Exhibit 4.2B - Page 8
100
Exhibit 4.2C
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
List of Non-Shareholder Professionals
in Non-Standard Employment Contracts
1. None.
Exhibit 4.2B - Page 9
101
Exhibit 4.17
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
SHAREHOLDERS' UNDERTAKING TO MAINTAIN PRACTICE'S
CORPORATE EXISTENCE AND ENFORCEMENT OF COVENANTS
NOT TO COMPETE
As an inducement to the Business Manager to enter into this Business
Management Agreement with the Practice or as required in the Business
Management Agreement, each of the undersigned person(s), having an ownership
interest in the Practice, irrevocably and unconditionally covenants and agrees
to maintain in good standing the corporate existence of the Practice under the
laws of the State and to cause the Practice to use its best efforts to enforce
employment agreements (including those covenants not to compete requirements
described in Sections 4.1 and 4.2) against any individuals violating such
employment agreements (and covenants not to compete). The undersigned persons
further unconditionally covenant and agree to indemnify and hold harmless
Business Manager from and against any and all claims requirements, demands,
liabilities, losses, damages, costs and expenses, including reasonable
attorneys' fees, resulting in any manner from the failure of the Practice to
remain in good standing under the laws of the State or the failure of the
Practice to use its best efforts to enforce those employment agreements and
covenants not to compete described in Section 4.1 and 4.2 of such Business
Management Agreement, a copy of which has been delivered to the undersigned for
his review. The undersigned acknowledges that he or she has received adequate
consideration for the execution hereof. After a period of five (5) years from
December 1, 1996, this Undertaking may be assumed by a successor Shareholder or
Shareholders, in accordance with the terms and conditions set forth in Section
4.1 of the Business Management Agreement, whereupon the undersigned shall be
released to the extent of such assumption, provided that any such successor
Shareholder executes a form similar to this.
IN WITNESS WHEREOF, the undersigned(s) have executed this
Shareholders' Undertaking as of the day and year written opposite such
shareholder's name.
Date:________________________ __________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
Date:_______________________ __________________________
▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
Exhibit 4.2B - Page 10
102
Exhibit 5.1
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
Management Fee Percentage
1. The Management Fee percentage shall be thirty-five percent
(35%).
Exhibit 4.2B - Page 11
103
Exhibit 6.4(f)
to Business Management Agreement among ExcelCare, P.C. (the
"Practice"), and Eye Institute of Southern Arizona, P.C.
("Business Manager")
SHAREHOLDERS' UNDERTAKING TO CARRY OUT
PRACTICE'S PURCHASE OBLIGATION
As an inducement to the Business Manager to enter into this Business
Management Agreement with the Practice or as required in Business Management
Agreement, each of the undersigned person(s), having an ownership interest in
the Practice, irrevocably and unconditionally covenants and agrees subject to
the limitations contained in the Business Management Agreement to (i) cause the
Practice to carry out the purchase obligation described in Section 6.4(f) of
the Business Management Agreement, (ii) personally execute and deliver the
personal guarantees and security agreements referred to in Section 6.4(f) of
such Business Management Agreement, a copy of which has been delivered to the
undersigned for his review, and (iii) execute the documents described in
Section 6.6. The undersigned acknowledges that he or she has received adequate
consideration for the execution hereof.
IN WITNESS WHEREOF, the undersigned(s) have executed this
Shareholders' Undertaking as of the day and year written opposite such
shareholder's name.
Date:_____________________ ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
Date:____________________ ______________________________
▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
Exhibit 4.2B - Page 12