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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 7, 1998
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NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION
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(Exact name of small business issuer as specified in its charter)
Nevada 0-25344 25-1741216
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(State or other juris- (Commission file (I.R.S. Employer
diction of organization) number) Identification No.)
1315 Greg Street, Suite 103, Sparks, Nevada 89431
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 356-2315
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On August 7, 1998, the Registrant entered into an Asset Purchase
Agreement and other agreements with Jorge Perez, Sr., Jorge Perez, Jr. and
Advanced Physician Billing Inc., a Florida corporation (collectively, the
"Agreements"). Pursuant to the transaction, the Registrant acquired the
assets and business operations of certain medical billing businesses
effective July 1, 1998. The purchase price for the assets and business
operations was $1,725,000, consisting of $75,000 in cash and $1,649,000 in
form of a 7% promissory note due on or before July 1, 2003 (the "Maturity
Date"). Under the terms of the Agreements, the purchase price may be subject
to adjustment if the net income of the Miami office of Advanced Physician
Billing Inc. during the twelve-month period preceding the Maturity Date
exceeds certain levels. In addition, Advanced Physician Billing Inc. received
a cash advance of $400,000 against the purchase price in the form of a 7%
promissory note, which is due on the Maturity Date. The Agreements include
customary representations and warranties, indemnifications and covenants,
including five-year non-competition agreements; a five-year buy-back
agreement; and five-year employment contracts.
The description contained herein of the acquisition is qualified in its
entirety by reference to the Agreements, dated as of July 1, 1998, by and among
the Registrant, Jorge Perez, Sr., Jorge Perez, Jr. and Advanced Physician
Billing Inc., which are attached hereto as exhibits and are incorporated herein
by reference.
Item 7. Financial Statements and Exhibits.
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(a) Financial Statements.
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As of the date of the filing of this Current Report
on Form 8-K, it is impracticable for the Registrant
to provide the financial statements required by this
Item 7(a). In accordance with Item 7(a)(4) of Form
8-K, such financial statements will be filed by
amendment to this Form 8-K no later than 60 days
after August 22, 1998.
(b) Pro Forma Financial Information.
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As of the date of the filing of this Current Report
on Form 8-K, it is impracticable for the Registrant
to provide the pro forma financial required by this
Item 7(b). In accordance with Item 7(b) of Form 8-K,
such financial statements will be filed by amendment
to this Form 8-K no later than 60 days after August
22, 1998.
(c) Exhibits
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10.1 Form of Asset Purchase Agreement dated as of
July 1, 1998 by and between Jorge Perez,
Sr., Jorge Perez, Jr., Advanced Physician
Billing Inc. and National Medical Financial
Services Corporation.
10.2 Form of Employment Agreement dated July 1,
1998 by and between Jorge Perez, Sr. and
National Medical Financial Services
Corporation.
10.3 Form of Employment Agreement dated July 1,
1998 by and between Jorge Perez, Jr. and
National Medical Financial Services
Corporation.
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10.4 Form of Employment Agreement dated July 1,
1998 by and between Ricardo Perez and
National Medical Financial Services
Corporation.
10.5 Form of Buy-Back Agreement dated July 1,
1998 by and between Advance Physician
Billing Inc. and National Medical Financial
Services Corporation.
10.6 Form of Noncompetition Agreement dated July 1,
1998 by and between Jorge Perez, Sr.,
Advanced Physician Billing Inc., and
National Medical Financial Services
Corporation.
10.7 Form of Noncompetition Agreement dated July 1,
1998 by and between Jorge Perez, Jr.,
Advanced Physician Billing Inc., and
National Medical Financial Services
Corporation.
10.8 Form of Promissory Note of National Medical
Financial Services Corporation dated July 1,
1998 by and between Advanced Physician
Billing Inc. and National Medical Financial
Services Corporation.
10.9 Form of Promissory Note of Advanced
Physician Billing Inc. dated July 1, 1998 by
and between Advanced Physician Billing Inc.
and National Medical Financial Services
Corporation.
10.10 Form of Lease Agreement dated July 1, 1998
by and between The RADS Group, Inc. and
National Medical Financial Services
Corporation.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION
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(Registrant)
Date: August 20, 1998 By: /s/ Robert W. Horner, Jr.
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Robert W. Horner, Jr., Vice President,
Chief Financial Officer, Secretary
and Treasurer
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Exhibit 10.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of July 1, 1998 by and among NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION
a Nevada corporation ("NMFS"); JORGE PEREZ, SR. and JORGE PEREZ, JR., each
residents of the State of Florida ("Shareholders"); and ADVANCED PHYSICIAN
BILLING INC., a Florida corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller owns and operates a medical billing business at 7315 S.W.
87th Avenue, Suite 200, Miami, FL 33173 (the"Business");
WHEREAS, Shareholders own all of the outstanding stock of Seller;
WHEREAS, it is Seller's intention to cause the sale of Seller's assets in
order to liquidate Seller's investment in said assets, after which Shareholders
will become employees of NMFS, each pursuant to a certain Employment Agreement
dated as of the even date hereof;
WHEREAS, NMFS desires to buy, and Seller desires to sell, substantially all
of the assets owned by Seller and used in the operation of the Business, upon
the terms and conditions hereinafter set forth;
WHEREAS, to induce NMFS to perform under this Agreement and as a condition
thereto, Shareholders (and Seller) have each agreed to execute a noncompetition
agreement in favor of NMFS (the "Noncompetition Agreements");
WHEREAS, to induce NMFS to perform under this Agreement, Shareholders have
each agreed to execute a certain employment agreement between such Shareholder
and NMFS (the "Employment Agreements"); and
WHEREAS, to induce Seller to enter into this Agreement, NMFS and Seller
have agreed under certain circumstances Seller may reacquire the assets of
Seller conveyed under this Agreement and Seller may reacquire the assets of
Seller conveyed under this Agreement, and in furtherance of that agreement
Seller and NMFS have executed a Buy-Back Agreement dated as of the even date
hereof (the "Buy-Back Agreement");
NOW, THEREFORE, in consideration of the premises and the agreements
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby agree as follows:
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Section 1. Sale of Assets; Assumption of Specified Liabilities
1.1 Sale of Assets. On the terms, subject to the conditions, and for the
consideration hereinafter stated, Seller, hereby agrees to sell, convey,
transfer, assign and deliver to NMFS, and NMFS agrees to buy and acquire as
hereinafter provided, at the "Closing" (as hereinafter defined), all assets of
Seller, tangible or intangible, real or personal, including, without limitation,
the following described assets owned and used by Seller:
(a) all equipment, business machines, computers, furniture, furnishings,
and other tangible personal property of Seller including, without
limitation, that listed in Exhibit 1.1(a) hereto;
(b) all accounts receivable and unbilled amounts for service of Seller as
of midnight of the day before the Closing Date, which shall be
consistent with the aged accounts receivable listing as of June 30,
1998 set forth at Exhibit 1.1(b) attached hereto except for additions
and collections in the ordinary course of business;
(c) all claims and rights under the contracts of Seller listed in Exhibit
1.1(c) (the "Assigned Contracts");
(d) all business records, all customer lists, and all personnel lists
(whether past or present, whether stored in computer memory or on hard
copy);
(e) all sales literature, promotional material and other general files and
printed forms used by Seller;
(f) all goodwill, trademarks, services marks and trade names used by
Seller (including, without limitation, the name "Advanced Physician
Billing").
(g) all rights of Seller under licenses and other governmental approvals
or permits (to the extent transferable);
(h) all telephone numbers and telephone and yellow pages directory
listings;
(i) all prepaid expenses and deposits of Seller;
(j) all inventory and supplies of Seller;
(k) all rights to leasehold improvements and fixtures;
(l) all software used by Seller;
(m) all payroll records for all employees of Seller;
(n) all information and documentation relating names, addresses and
telephone numbers of referral sources;
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(o) all records and lists of third party payor and case manager contacts
including names, addresses and telephone numbers;
(p) all records relating to vendors dealing with Seller; and
(q) all financial records of Seller. The foregoing assets may be referred
to herein collectively as the "Assets". The "Assets" shall not include
any "Excluded Assets", as defined in Section 1.2 below.
The "Assets" shall include, without limitation, all properties and assets
of Seller and the Business as reflected in the 1997 Financial Statements
referred to in Section 4.3 hereof and all properties and assets acquired by
Seller after December 31, 1997, except those properties and assets disposed of
thereafter in the ordinary course of business and except for the "Excluded
Assets" as defined below.
1.2 Excluded Assets. Notwithstanding the provisions of Section 1.1 hereof,
the following described assets of Seller shall not be acquired by NMFS, shall
not constitute "Assets," and shall be defined herein as the "Excluded Assets":
(a) the minute books and stock ledger books of Seller;
(b) all cash of Seller as of midnight the day before the Closing Date;
(c) any land or buildings owned by Seller; all pension plan assets of
Seller;
(d) all pension plan assets of Seller;
(e) any vehicles used in the Business; and
(f) the assets described in Exhibit 1.2(f) hereof.
1.3 No Assumption of Liabilities. It is expressly acknowledged and agreed
that, except in respect of the Assigned Contracts, NMFS is assuming no
obligations, debts or liabilities of Seller or Shareholders (and Seller and
Shareholders shall jointly and severally indemnify NMFS against any and all suck
debts, obligations and liabilities) including, without limitation, the following
described debts, obligations or liabilities:
(a) any liability, indebtedness or obligation of Seller or Shareholders
for borrowed money, whether absolute or contingent, direct or
indirect;
(b) liabilities and obligations of Seller or Shareholders,the existence of
which
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constitute a breach of any of the representations or warranties
made by Seller or Shareholders in this Agreement or in any document
delivered by Seller or Shareholders pursuant to this Agreement;
(c) any liabilities or obligations arising out of or in connection with
any litigation, claim, investigation or proceeding (including, without
limitation, losses, costs, expenses, attorneys' fees, and damages
incurred in connection therewith) which relate to Seller or
Shareholders or relate to services performed or products delivered
prior to the Closing or which arise out of actions taken by, or
omissions of, Seller or Shareholders prior to the Closing (whether or
not scheduled on Exhibit 4.8);
(d) any federal, state, local or other income taxes payable by Seller or
Shareholders or any interest or penalties with respect thereto;
(e) any liability under any employee benefit or welfare plan or regarding
any compensation or withholding taxes owed to or with respect to any
employee or independent contractor of Seller or Shareholders;
(f) liabilities and obligations of Seller or Shareholders for payroll,
wages, salaries, bonuses, vacation, sick pay and severance pay and
other like amounts due as of the Closing Date to officers, directors,
employees, contractors and agents of Seller or Shareholders, all of
which amounts are listed in Exhibit 1.3(f) attached hereto;
(g) liabilities and obligations of Seller or Shareholders based upon
tortuous or illegal conduct;
(h) liabilities and obligations of Seller or Shareholders for any breach
or violation, as of the Closing, of any contracts of Seller or
Shareholders including, without limitation the Assigned Contracts;
(i) liabilities and obligations of Seller or Shareholders for
environmental or ecological matters, including those relating to the
use, transport, disposal, handling or storage of hazardous or toxic
materials, pollutants, contaminants, petroleum products, or waste;
(j) liabilities and obligations of Seller or Shareholders incurred in
connection with the preparation of this Agreement and the consummation
of transaction contemplated hereby, including, without limitation,
legal and accounting fees; and
(k) trade payables and operating expenses of Seller incurred or accrued
prior to the Closing Date.
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All of the foregoing items described in clauses (a) through (k) above are
referred to herein collectively as the "Excluded Liabilities".
In addition, Seller or Shareholders will immediately reimburse NMFS upon
demand for any sales or similar tax (or any interest or penalties with respect
thereto) which NMFS may be required to pay or become liable for as a result of
the consummation of the transactions and the sale of the Assets contemplated
hereby; provided, however, that such taxes to be reimbursed by Seller or
Shareholder, as the case may be, shall not include any taxes levied by the State
of Nevada.
Notwithstanding the foregoing, NMFS will assume the obligations of Seller
under the "Assigned Contracts", but only to the extent that they represent
obligations which are by their stated terms to be performed, in the ordinary
course, subsequent to the Closing Date.
1.4 Freedom from Encumbrances. The conveyance of the Assets to NMFS
hereunder shall be free and clear of all claims, security interests, pledges,
options, rights of first refusal, liens, financing statements, deeds of trust,
mortgages, charges, assessments, restrictions, leases, and encumbrances (all
such claims, security interests, pledges, options, rights -of first refusal,
liens, financing statements, deeds of trust, mortgages, charges, assessments,
restrictions, leases and encumbrances being referred to individually as an
"Encumbrance" and collectively as "Encumbrances"), except solely for the
Assigned Contracts.
Section 2. Amount, Payment and Allocation of Consideration.
2.1 Amount and Payment. At the "Closing" (as defined in Section 3.1
hereof), NMFS shall deliver the following "Consideration" for the Assets and for
the execution, delivery and performance by Seller and Shareholders of the
Noncompetition Agreements (as defined in Section 3.4(i) hereof)
(i) a promissory note in the principal amount of $1,649,000 in
substantially the form attached hereto as Exhibit 2.1(i) (the
"Promissory Note") shall be delivered to Seller in consideration of
the sale of the Assets to NMFS; and
(ii) $50,000 cash shall be delivered to Shareholders (and Seller) in
consideration of the execution, delivery and performance by Seller and
Shareholders of the Noncompetition Agreements.
2.2 Allocation. The Consideration shall be allocated for tax purposes as
provided in Exhibit 2.2 hereof and as otherwise required by Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code"). Each party will timely
file IRS Form 8594 as required under the Code, which shall be completed in
conformity with the allocations set forth in this Agreement.
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Section 3. Closing.
3.1 Closing and Closing Date. The closing (the "Closing") of the sale
and purchase of the Assets and the execution and delivery of the other
agreements and documents contemplated herein shall take place on or before
July 1, 1998 at 10:00 a.m., Miami, Florida time at 7315 S.W. 87th Avenue,
Suite 200, Miami, FL 33173, or at such other place and time as may be deemed
appropriate by the parties hereto, at which time the cash consideration as
stated in Section 2.1(ii) shall be delivered in immediately available funds
pursuant to Seller's further direction. For purposes of this Agreement and
for accounting purposes, the "Closing Date" shall be July 14, 1998. If the
parties agree, the Closing may be consummated by exchange of signature pages
by facsimile transmission, with the originals thereof to be delivered by mail
as soon thereafter as practicable. At the Closing, all charges for rent,
utilities, payroll, payments under Assigned Contracts, and other current
operating expenses of the Business shall be prorated based on actual days
elapsed for the appropriate period, with Seller being responsible for its
share of such perorations through midnight of the day preceding the Closing
Date.
3.2 Action by NMFS. Upon the terms and subject to the conditions herein
contained, at the Closing on the Closing Date, NMFS will deliver to Seller and
Shareholders the following:
(i) The certificate referred to in Section 6.1 hereof;
(ii) The opinion of counsel for NMFS referred to in Section 6.3 hereof;
(iii) Resolutions of NMFS, certified by an appropriate officer, authorizing
the execution, delivery and performance of this Agreement and the
other agreements to be delivered by NMFS in connection with the
Closing hereunder; and
(iv) The Consideration in the manner specified in Section 2.1 hereof and in
the form specified in Section 3.1 hereof.
3.3 Action by Seller. Upon the terms and subject to the conditions herein
contained, at the Closing on the Closing Date, Seller and Shareholders will
deliver to NMFS the following:
(i) A duly executed Bill of Sale and Assignment in substantially the form
of Exhibit 3.3(i) hereto;
(ii) The certificate referred to in Section 7.1 hereof;
(iii) The opinion of counsel for Seller and Shareholders referred to in
Section 7.3 hereof; and
(iv) Resolutions of Seller, certified by an appropriate officer,
authorizing the execution, delivery and performance of this Agreement
and the other agreements to be delivered by Seller in connection with
the Closing hereunder.
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3.4 Action by All Parties. Upon the terms and subject to the conditions
herein contained, at the Closing on the Closing Date, the parties will, as
appropriate, execute and deliver to each other the following:
(i) The "Noncompetition Agreements" in substantially the form attached
hereto as Exhibit 3.4(i);
(ii) The "Employment Agreements" in substantially the form attached hereto
as Exhibit 3.4(ii);
(iii) The "Lease" in substantially the form attached hereto as Exhibit
3.4(iii) relating to the 7315 S.W. 87th Avenue, Suite 200, Miami, FL
33173 offices;
(iv) The "Buy-Back Agreement" in substantially the form attached hereto as
Exhibit 3.4 (iv); and
(v) Loan proceeds of $400,000 delivered to Seller by NMFS in exchange for
a "Promissory Note" of Seller in substantially the form attached
hereto as Exhibit 3.4(v).
3.5 Further Acts. and Assurances. From time to time and at any time, at
NMFS's request, whether on or after the Closing Date, and without further
consideration, Seller shall, at its expense, execute and deliver such further
documents and instruments of conveyance and transfer and shall take such further
actions (i) as may be reasonably necessary to transfer and convey to NMFS all of
the right, title and interest in and to the Assets, free and clear of any
Encumbrance whatsoever, or (ii) as may be reasonably necessary to carry out the
intent of this Agreement and the transactions contemplated hereby, or (iii) as
may be reasonably, necessary in connection with any audit which NMFS may conduct
of Seller's financial statements in compliance with SEC financial reporting
requirements, which audit (if any) shall be at NMFS's sole expense.
3.6 Audit. To the extent required by SEC financial reporting regulations,
NMFS shall have the right to cause its accounting firm to audit the financial
statements of Seller limited to the current year and the two years prior to the
current year at NMFS's expense. Seller shall cooperate reasonably in connection
with any such audit or audits and will execute management letters and other
documents reasonably requested in connection with any such audit or audits or
any equity offering by NMFS.
Section 4. Representations and Warranties of Seller and Shareholders.
Seller and Shareholders hereby jointly and severally represent, warrant,
covenant and agree to and with NMFS as follows:
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4.1 Seller's Existence and Power. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
The nature of Seller's business as now conducted and the character or location
of its properties do not require qualification by it to do business in any other
jurisdiction. Seller has the corporate power to own its property and to carry on
the Business as now being conducted.
4.2 Insider Transactions. Except as disclosed in Exhibit 4.2 hereto, Seller
is not, directly or indirectly, a party to any contract, lease or commitment
with any officer or director of Seller or any affiliate of any such director or
officer. As used in this Section 4.2, the term "affiliate" shall mean any member
of the immediate family of such officer or director or any corporation,
partnership, trust or other entity in Which such officer or director has a
substantial interest or is a director, officer, partner or trustee.
4.3 Accuracy of Financial Statements. Seller has delivered to NMFS as
Exhibit 4.3 the financial statements of Seller for the periods ended December
31, 1997 and June 30, 1998 (the Financial Statements"). The balance sheet and
income statement for the year ended December 31, 1997 are referred to
hereinafter as the "1997 Financial Statements". The Financial Statements are
complete and accurate and fairly present the financial condition of Seller and
the income and expenses of Seller as of the respective dates thereof. Except as
noted in Exhibit 4.3, the Financial Statements have been prepared on a cash
basis and are accurate. Seller has no material liabilities or obligations
(including, without limitation, any liability for federal, state or local taxes
of Seller), for any period ended on or prior to the 1997 Financial Statements or
any liability or obligation in connection with any transaction or state of
affairs entered into or existing on or before the date thereof, which is not
fully reflected on the 1997 Financial Statements or otherwise disclosed to NMFS
in the Exhibit 4.10 hereto.
4.4 Properties of Seller.
(i) The 1997 Financial Statements reflect all of the properties presently
owned by Seller and used in the Business.
(ii) Exhibit 4.4(ii) attached hereto is an accurate and complete list of
all real or personal property which is used by Seller in the Business
and which either is not owned by Seller or is leased or rented by
Seller.
4.5 Taxes and Tax Returns. Seller has filed all federal, state and local
tax returns and reports of Seller which have become due to be filed (including,
without limitation, those due in respect of its properties, income, franchises,
licenses, sales and payrolls), and such returns are complete and accurate in all
material respects. A copy of Seller's most recent federal income tax return is
attached as Exhibit 4.5 hereto. Seller has paid all taxes, assessments, fees,
interest, penalties (if any) and other governmental charges due with respect to
the periods covered by such tax returns and reports and as reflected on said
returns and reports. Seller is not delinquent in the payment of any taxes,
assessments or governmental charges, and there are no assessments of
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additional taxes threatened against Seller or any of Seller's properties. No
waiver of any statute of limitations or agreement for extension of time for
assessment in respect of any tax liability of Seller has been given by
Shareholders or Seller which is presently in effect. Without limiting the
foregoing, (a) Seller has timely filed all FICA, FUTA and similar state and
local tax returns and withholding of employee tax returns and reports of Seller
which have become due to be filed and has paid all amounts required to be paid
thereunder, and (b) Seller has paid over to the appropriate taxing authorities
all amounts required to have been withheld by Seller from employee compensation,
except such withheld amounts not yet due to have been paid over, all of which
amounts not yet paid over are being held by Seller for the account of the
appropriate taxing authority. The income tax returns of Seller have never been
audited by any taxing authority. Neither Seller nor any Shareholder knows of any
questions which have been raised by any federal, state or local taxing authority
relating to taxes or assessments of Seller which, if determined adversely to
Seller, would result in the assertion of any tax deficiency.
4.6 Contracts. Exhibit 1.1(c) is a list of the Assigned Contracts. Exhibit
4.6 is a list of all agreements of Seller other than the Assigned Contracts.
Except as set forth in Exhibit 1.1(c) or in Exhibit 4.6 hereto, Seller is not a
party to any material contract, agreement, lease, or power of attorney of any
kind whatsoever. As to Seller, all Assigned Contracts are valid and are in full
force and effect according to their material terms, and no material default by
Seller exists under any such contract, lease or agreement and no condition or
state of facts exists which, with notice or the passage of time, or both, would
constitute a default under any such contract, lease or agreement. To Seller's
knowledge, all Assigned Contracts are valid as to the other contracting parties
thereto and there is no material default by any such party existing under the
Assigned Contracts and no condition or state of facts exists which, with notice
or the passage of time, or both would constitute a default by any such party
thereunder. All Assigned Contracts are enforceable in accordance with their
terms by Seller against all other parties thereto in all material respects.
Neither the execution, the delivery nor the performance of this Agreement by
Seller will cause any default in or breach of any provision of Seller's Articles
of Incorporation, as amended, bylaws or any agreement or commitment to which
Seller is a party or by which Seller is bound, and none of such actions will
result in either acceleration, or any similar right of any other party, under
any Assigned Contract, or constitute a default under any Assigned Contract, or
result in the creation or imposition of any Encumbrance against the Assets.
4.7 Compliance with Laws. To the best of Shareholder's knowledge, Seller is
in compliance in all material respects with the laws, regulations, rules and
decrees of all governmental authorities whatsoever relating to the conduct of
its business, including, without limitation, the Fair Labor Standards Act.
4.8 Litigation. Except as scheduled in Exhibit 4.8, there is no litigation,
action, suit, proceeding or governmental investigation pending or (to the best
of Seller's or Shareholder's knowledge) threatened against Seller or
Shareholders or affecting Seller or its business or any of its assets, at law or
in equity or before any federal, state, municipal, local or other governmental
authority, or before any arbitrator, nor does Seller or any Shareholder know of
any reasonable
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basis for any such litigation, action, suit, proceeding or investigation.
Neither Seller nor any Shareholder is subject to any order, writ or decree of
any court or other governmental authority.
4.9 Employee Plans and Agreements. Seller is not a party to any collective
bargaining or labor agreement or to any written employment agreement, profit
sharing, deferred compensation, bonus, stock option, stock purchase, pension,
retainer, consulting, retirement, welfare, or incentive plan or any other like
agreement or plan; nor does it have in place any policy or commitment relating
to increases in the rate of remuneration for the benefit of present or former
employees, whether or not unionized, of Seller, other than as set forth in
Exhibit 4.9.
4.10 Liabilities. All liabilities and obligations of Seller, direct,
indirect or contingent, are either listed on the 1997 Financial Statements or on
Exhibit 4.10 attached hereto.
4.11 Insurance. All insurance maintained by Seller is listed and described
on Exhibit 4.11 attached hereto.
4.12 Absence of Certain Changes. From December 31, 1997 until the Closing,
(a) the operations of Seller shall have been conducted in the ordinary course of
business, (b) no event shall have occurred or have been threatened which has or
would have a material and adverse affect upon Seller, and (c) Seller shall not
have sustained any loss or damage to its assets or property, whether or not
insured, or union activity that affects materially and adversely its ability to
conduct its business. Except as described in Exhibit 4.12, since December
31,1997, Seller has not:
(i) incurred or suffered any obligations or liabilities (absolute or
contingent) except current liabilities incurred in the ordinary course
of business none of which exceed $5,000 to any entity and all of which
together do not exceed $25,000;
(ii) issued any stock or other corporate securities or granted any option
or right with respect to the acquisition of any of its corporate
securities;
(iii) declared or made (or became obligated for) any payment or
distribution or dividend (other than cash or cash equivalents) to
shareholders or purchased or redeemed (or became obligated to purchase
or redeem) any shares of its capital stock;
(iv) mortgaged, pledged or subjected (whether or not voluntarily) to any
Encumbrance, any of its assets, other than Encumbrances incidental to
the conduct of its business or the-ownership of its property and
assets which were not incurred in connection with the borrowing of
money, or the obtaining of advances or credit, and which do not in the
aggregate impair the use or value thereof in the operation of the
business of Seller;
(v) sold, assigned or transferred or agreed to sell, assign or transfer
any of its tangible assets or cancelled any debts or claims, except in
each case in the ordinary course
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of business;
(vi) sold, assigned, or transferred or agreed to sell, assign or transfer
any trade names, or other intangible assets, or permitted existing
rights with respect thereto to lapse;
(vii) suffered any extraordinary loss or knowingly waived or permitted to
lapse any right of substantial value;
(viii) made any capital expenditures, or otherwise entered into any
executory transactions or commitments to make any capital
expenditures, in excess of $5,000 per item or $25,000 in the
aggregate;
(ix) failed to comply in any material respect with any applicable local,
state or federal law, rule or regulation; or
(x) suffered any event or condition of any character, materially and
adversely affecting the business, properties or prospects of Seller or
the Business.
4.13 Employees. A listing of all employees (including their rates of pay
and their accrued but unpaid vacation and sick days) of Seller is attached as
Exhibit 4.13.
4.14 Authority. Seller has the corporate power to execute and deliver this
Agreement and consummate the transactions contemplated hereby and has taken (or
by the Closing Date will have taken) all action required by law, its Articles of
Incorporation, bylaws or otherwise to authorize such execution and delivery and
the consummation of the transactions contemplated hereby, including, without
limitation, execution and delivery of the Bill of Sale and Assignment.
4.15 Licenses. Exhibit 4.15 contains a list of all governmental or other
licenses and permits held by (i) Seller relating to the operation of the
Business (including, as to each such license or permit, the name of the owner of
the license or permit, the issuing authority, a description of the subject
matter of the license or permit, and the termination date, if any, or notice
requirement with respect to termination and renewal options) and (ii)
Shareholders and all other personnel in connection with their services for the
Business. Except for the licenses and permits held by Seller and Shareholders
and described on Exhibit 4.15, there are no other licenses or permits required
for Seller and Shareholders to operate the Business. All such licenses and
permits are in full force and effect and have not been and there currently are
not any material default or deficiencies thereunder by any party; and no event
has occurred which (whether with or without notice, lapse of time, or the
happening or occurrence of any other event) would constitute a material default
or deficiency thereunder. To Shareholder's knowledge, the validity, continuation
and effectiveness of all of the licenses and permits is in no way affected by
the transfer of such licenses under this Agreement, or, if any would be
affected, Seller has delivered to NMFS, to the transferee or to the Business an
appropriate consent to such transfer. Neither Seller nor any Shareholder is
aware of any proceeding or investigation by any governmental agency
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relating to the Business.
4.16 Medical Fitness. Neither Shareholder knows of any medical, health or
other reason that would impair his ability to perform the Employment Agreement.
4.17 No Finders or Brokers. Neither Shareholder, nor Seller, nor any
officer or director thereof has engaged any finder or broker in connection with
the transactions contemplated hereunder. Seller and Shareholders will indemnify
and hold NMFS harmless against claims (and attorneys' fees and expenses in the
defense thereof) of any person, firm or corporation for finder's fees, broker's
fees, brokerage commissions, sales commissions or the like alleged in connection
with the transactions contemplated hereunder due to acts of Seller or
Shareholder.
4.18 Disclosure. No representation or warranty by Seller or any Shareholder
in this Agreement and no statement pertaining to Seller or Shareholder in this
Agreement or any document, exhibit or certificate furnished or to be furnished
to NMFS pursuant hereto will contain any untrue statement which, if corrected,
would have a material adverse effect on the fair market value of the property
being transferred hereunder. There are no facts known to Seller or any
Shareholder not described herein which would adversely affect the future
operations of the Business or the use of the Assets in the conduct of a similar
business at the same location by NMFS:
4.19 Validity of Agreements. Upon execution and delivery by all parties,
the obligations of Seller and Shareholders under this Agreement and all other
agreements to be executed by Seller or Shareholders in connection herewith, will
constitute the valid and binding obligation of Seller or Shareholders, as the
case may be, and be binding against them and enforceable in accordance with
their respective terms (except as enforceability may be restricted, limited, or
delayed by bankruptcy, insolvency, moratorium or similar laws affecting or
relating to the enforcement of creditors' rights in general and except as the
enforceability is subject to general principles of equity, regardless of whether
enforceability is considered in a proceeding at law or in equity).
4.20 Bulk Sales. Seller and Shareholders shall jointly and severally hold
NMFS harmless from any and all liability, damages or attorneys' fees suffered or
incurred by NMFS resulting from any failure by Seller or Shareholders to comply
with any applicable bulk sales law relating to the transactions contemplated
hereby.
4.21 Title to Assets. Except as described in the 1997 Financial Statements
referred to in Section 4.3 or in Exhibits 4.10 and 4.12 hereof, Seller holds
good and marketable title to the Assets, free and clear of restrictions on or
conditions to transfer or assignment, and free and clear of Encumbrances.
4.22 Transfer Not Subject to Encumbrances or Third-Party Approval. Except
as disclosed in Exhibit 4.2 hereto, the execution and delivery of this Agreement
by Seller and Shareholders, and the consummation of the contemplated
transactions, will not result in the
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creation or imposition of any Encumbrance on any of the Assets, and will not
require the authorization, consent, or approval of any third party, including
any governmental subdivision or regulatory agency.
4.23 Condition of Personal Property. All tangible personal property,
equipment, fixtures and inventories included within the Assets or required to be
used in the ordinary course of Seller's business are in good condition and are
suitable for the purposes for which they are being used. No value in excess of
applicable reserves has been given to any inventory with respect to obsolete or
discontinued products.
4.24 Investment Representation. Seller is acquiring the Promissory Note for
its own account for investment and without a view to, or for sale in connection
with, any distribution thereof, or with any present intention of selling or
distributing all or any part thereof. Seller is an "accredited investor" within
the meaning of Regulation D promulgated under the Securities Act of 1933, as
amended. Seller acknowledges that the Promissory Note has not been registered
under the Securities Act of 1933, as amended, or under any state securities laws
and cannot be resold unless so registered or unless an exception from
registration is available. Seller has had sufficient opportunity to ask
questions of the executive officers of NMFS and to obtain information from NMFS
and acknowledges that NMFS is not under any obligation to register for public
sale the Promissory Note.
4.25 Accounts Receivable. The accounts receivable set forth in Exhibit
1.1(b) hereto and the accounts receivable conveyed to NMFS pursuant to the terms
of this Agreement are to the best of Shareholder's knowledge valid, bona fide
subsisting claims for the aggregate amounts thereof.
Section 5. Representations and Warranties of NMFS.
NMFS represents, warrants, covenants and agrees to and with Seller as
follows:
5.1 Organization and Standing of NMFS. NMFS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has full corporate power and authority to conduct its business as now
being conducted; and is duly qualified to do business in each jurisdiction in
which the nature of the property owned or leased or the nature of the businesses
conducted would require such qualification, specifically including the State of
Florida.
5.2 Authority. NMFS has corporate power to execute and deliver this
Agreement and consummate the transactions contemplated hereby and has taken (or
by the Closing Date will have taken) all action required by law, its Articles of
Incorporation, bylaws or otherwise to authorize such execution and delivery and
the consummation of the transactions contemplated hereby, including, without
limitation, execution and delivery of the Promissory Note.
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5.3 No Finders or Brokers. Neither NMFS nor any officer or director thereof
has engaged any finder or broker in connection with the transactions
contemplated hereunder. NMFS will indemnify and hold Seller harmless against
claims (and attorneys' fees and expenses in the defense thereof) of any person,
firm or corporation for finder's fees, broker's fees, brokerage commissions,
sales commissions or the like alleged in connection with the transactions
contemplated hereunder due to acts of NMFS.
5.4 Validity of Agreements. Upon execution and delivery by all parties
hereto, this Agreement and all other agreements to be executed by NMFS in
connection herewith will constitute the valid and binding obligation of NMFS and
be binding against NMFS and enforceable in accordance with their respective
terms (except as enforceability may be restricted, limited, or delayed by
bankruptcy, insolvency, moratorium or similar laws affecting or relating to the'
enforcement of creditors' rights in general and except as the enforceability is
subject to general principles of equity, regardless of whether enforceability is
considered in a proceeding at law or in equity).
Section 6. Conditions precedent to the Obligations of Seller.
All obligations of Seller which are to be discharged under this Agreement
at the Closing are subject to the performance, at or prior to the Closing, of
all covenants and agreements contained herein which are to be performed by NMFS
at or prior to the Closing and to the fulfillment at, or prior to, the Closing,
of each of the following conditions (unless expressly waived in writing by
Seller at any time at or prior to the Closing):
6.1 Representations and Warranties True. All of the representations and
warranties made by NMFS contained in Section 5 of this Agreement shall be true
as of the date of this Agreement, shall be deemed to have been made again at and
as of the date of Closing, and shall be true at and as of the date of Closing in
all material respects; NMFS shall have performed and complied with all covenants
and conditions required by this Agreement to be performed or complied with by
NMFS prior to or at the Closing; and Seller shall have been furnished with a
certificate of the President or any Vice President of NMFS dated the Closing,
certifying to the truth of such representations and warranties as of the Closing
and to the fulfillment of such covenants and conditions.
6.2 Authority. All action required to be taken by or on the part of NMFS to
authorize the execution, delivery and performance of this Agreement by NMFS and
the consummation of the transactions contemplated hereby shall have been duly
and validly taken by the Board of Directors of NMFS.
6.3 Opinion Of Counsel. Seller shall have been furnished with an opinion,
dated as of the Closing Date, of Marcy L. Colkitt & Associates, P.C., counsel to
NMFS, to the effect set forth in Exhibit 6.3 attached hereto.
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6.4 No Obstructive Proceeding. No action or proceedings shall have been
instituted against, and no order, decree or judgment of any court, agency,
commission or governmental authority shall be subsisting against Seller which
seeks to, or would, render it unlawful as of the Closing to effect the
transactions contemplated hereby, and no such action shall seek damages in a
material amount by reason of the transactions contemplated hereby. Also, no
substantive legal objection to the transactions contemplated by this Agreement
shall have been received from or threatened by any governmental department or
agency.
Section 7. Conditions Precedent to the Obligations of NMFS.
All obligations of NMFS which are to be discharged under this Agreement at
the Closing are subject to the performance, at or prior to the Closing, of all
covenants and agreements contained herein which are to be performed by Seller
and Shareholders at or prior to the Closing and to the fulfillment at or prior
to the Closing of each of the following conditions (unless expressly waived in
writing by NMFS at any time at or prior to the Closing):
7.1 Representations and Warranties True. All of the representations and
warranties of Seller and Shareholders contained in Section 4 of this Agreement
shall be true as of the date of this Agreement, shall be deemed to have been
made again at and as of the Closing, and shall be true at and as of the date of
Closing in all material respects; Seller and Shareholders shall have performed
or complied with all covenants and conditions required by this Agreement to be
performed or complied with by Seller or Shareholders prior to or at the Closing;
and NMFS shall be furnished with a certificate of an officer of Seller and of
Shareholders, dated the Closing, certifying to the truth of such representations
and warranties as of the time of the Closing and to the fulfillment of such
covenants and conditions.
7.2 Authority. All action required to be taken by or on the part of Seller
to authorize the execution, delivery and performance of this Agreement by Seller
and the consummation of the transactions contemplated hereby shall have been
duly and validly taken by the Board of Directors of Seller.
7.3 Opinion of Counsel. Seller and Shareholders shall have delivered to
NMFS an opinion, dated as of the Closing Date, of the Law Office of Christopher
M. Brown, P.A., counsel to Seller and Shareholders, in form and substance to the
effect set forth in Exhibit 7.3 attached hereto or as otherwise acceptable to
NMFS.
7.4 No Obstructive Proceeding. No action or proceedings shall have been
instituted against, and no order, decree or judgment of any court, agency,
commission or governmental authority shall be subsisting against NMFS or its
affiliates which seeks to, or would, render it unlawful as of the Closing to
effect the asset sale in accordance with the terms hereof, and no such action
shall seek damages in a material amount by reason of the transactions
contemplated hereby. Also, no substantive legal objection to the transactions
contemplated by this Agreement shall have been received from or threatened by
any governmental department or agency.
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7.5 Consents and Approvals. Each of the parties to any of the Assigned
Contracts under which the asset sale contemplated hereby would constitute or
result in a default or acceleration of obligations shall have given such consent
as may be necessary to permit the consummation of the transactions contemplated
hereby without constituting or resulting in a default or acceleration under such
agreement, and any consents required from any public or regulatory agency or
organization having jurisdiction shall have been given.
7.6 Release Of Encumbrances. All Encumbrances shall have been released at
or prior to the closing.
7.7 Licenses. All applications. for the transfer of all licenses, permits
and provider numbers and agreements required in order to continue to operate the
Business shall have been properly filed and NMFS shall be satisfied that all
such licenses, permits and provider numbers and agreements shall in due course
be properly transferred to NMFS or the designee thereof, effective as of the
Closing.
7.8 Key Employee. Ricardo Perez shall have entered into an employment
agreement with NMFS in substantially the form attached hereto as Exhibit 7.8.
Section 8. Identification.
8.1 Indemnity by Shareholders and Seller. Each Shareholder and Seller
jointly and severally shall indemnify, defend and hold harmless NMFS and each
affiliate of NMFS from and against:
(a) all Excluded Liabilities;
(b) any and all losses, damages, costs or deficiencies resulting from any
and all misrepresentations or breaches of warranty or failures to
perform agreements or undertakings by Seller or Shareholder contained
in or made pursuant to this Agreement or in other agreements executed
by Seller or Shareholder in connection with this Agreement; and
(c) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses (including, without limitation,
attorneys' fees, interest, penalties and amounts paid in settlement of
any such claim) relating to any of the foregoing.
Seller and each Shareholder shall jointly and severally pay to NMFS or any
affiliate of NMFS, as the case may be, all amounts owed to NMFS pursuant to this
Section 8.1 within thirty (30) days after written demand therefor. In the event
that any third person, including, without limitation, any governmental taxing
authority, shall assert any claim or action in excess of $1,000 against NMFS or
an affiliate of NMFS which, if successful, might result in a claim for indemnity
hereunder (collectively, an "indemnifiable loss"), NMFS shall notify Seller, in
writing, of such
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claim or action, and at Shareholder's and Seller's option, Shareholders and
Seller may, at their sole expense, assume control over the defense of such claim
or action, but in any event NMFS (and its affiliate, as the case may be) shall
have the right to participate in the. defense of any such claim or action. If,
after notice thereof, Shareholders and Seller shall not assume the defense of,
or if after so assuming such defense they shall fail to continue to defend, any
such claim or action, NMFS (and its affiliate, as the case may be) may defend
any such claim or action and NMFS (and its affiliate, as the case may be) may
then settle or compromise such claim or action on terms it deems reasonable.
Shareholders and Seller shall promptly satisfy and pay any final judgment
rendered with respect to any such claim or action or any compromise or
settlement thereof and shall pay the reasonable expenses, legal or otherwise of
NMFS (and its affiliate, as the case may be) in the defense of any such claim or
action. If Seller and Shareholders do not pay any such indemnifiable loss
pursuant to any such judgment, settlement or compromise within thirty (30) days
after written demand, NMFS may pay the same and set off the amount paid against
payments otherwise due to Shareholder or to Seller under the Promissory Note. If
NMFS (or an affiliate of NMFS) suffers an indemnifiable loss directly (not as a
result of a third party claim or action), NMFS may set off the amount of the
same against payments to Seller under the Promissory Note or otherwise due to
Shareholder or Seller.
8.2 Remedies Cumulative. The remedies provided herein shall be cumulative
and shall not preclude any party from asserting any other rights or seeking any
other remedies to which such party is entitled by law. Section 9. Miscellaneous.
Section 9. Miscellaneous
9.1 Expenses. All expenses incurred by the parties in connection with the
preparation of this Agreement and the other agreements contemplated hereby and
in connection with the closing of the transactions contemplated hereby,
including, without limitation, attorneys' fees, accounting fees, investment
advisor's fees and disbursements, shall be borne by the respective parties
incurring such expense.
9.2 Notices. All notices, demands and other communications hereunder shall
be written and shall be deemed to have been duly given if delivered in person or
mailed by certified mail, postage prepaid, to the address set forth below:
To NMFS: National Medical Financial
Services Corporation
1315 Greg St., Suite 103
Sparks, NV 89431
Attention: Eric D. Robinson, Pres.
with a copy to: Marcy L. Colkitt & Associates, P.C.
P.O. Box 607
Indiana, PA 15701-0607
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To Seller: Advanced Physician Billing Inc.
7315 S.W. 87th Avenue, Suite 200
Miami, FL 33173
Attention: Mr. Jorge Perez, Sr.
with a copy to: Christopher M. Brown, Esq.
600 W. Andrews Ave., Suite 600
Ft. Lauderdale, FL 33301
To Shareholders: 7315 S.W. 87th Avenue, Suite 200
Miami, FL 33173
with a copy to: Christopher N. Brown, Esq.
600 W. Andrews Ave., Suite 600
Ft. Lauderdale, FL 33301
or to such other address as NMFS or Seller may designate by written notice to
the other. Notices delivered in person shall be deemed delivered on the date of
delivery and notices mailed, as aforesaid, shall be deemed delivered forty-eight
(48) hours after the date mailed. Rejection or other refusal to accept or
inability to deliver because of a changed address of which no notice was given
shall be deemed to be a receipt of the notice, request or other communication.
Any notice, request or other communication required or permitted to be given by
any party may be given by such party's legal counsel.
9.3 Form of Transaction. If after the execution hereof, NMFS determines
that the sale of the Assets can be better achieved through a different form of
transaction without economic injury to Seller or Shareholder, or delay of the
consummation of the transaction, Seller and Shareholders shall cooperate in
revising the structure of the transaction to a stock sale or merger or similar
transaction and shall negotiate in good faith to so amend this Agreement;
provided, that NMFS shall reimburse Seller and Shareholders at Closing for all
reasonable additional expenses, including attorneys' fees, incurred by Seller
and Shareholders as a result of such change in form.
9.4 Entire Agreement. This Agreement and the Exhibits, and the other
agreements, schedules and documents delivered pursuant hereto, constitute the
entire agreement between the parties hereto pertaining to the subject matter
hereof and supersede all prior and contemporaneous agreements, understandings,
letters of intent negotiations and discussions, whether written or oral, of the
parties, and there are no representations, warranties or other agreements
between the parties in connection with the subject matter hereof, except as
specifically set forth herein. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the parties to be
bound. thereby.
9.5 Governing Law; Arbitration. This Agreement shall be construed and
interpreted under the laws of the State of Florida, exclusive of the principles
of conflicts of laws. The parties
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agree that all disputes concerning this Agreement shall be submitted to binding
arbitration in accordance with the commercial arbitration rules of the American
Arbitration Association and the provisions contained herein. The arbitration
shall be conducted in Tampa, Florida, by one arbitrator. The party initiating
arbitration shall give the other notice of the matter in dispute and, if such
party is the obligor, shall deposit any disputed amount in escrow during the
pendency of arbitration. If the parties fail to agree upon an arbitrator within
ten days after notice of initiation of the arbitration is given, the American
Arbitration Association shall select the arbitrator. All determinations and the
final decision of the arbitrator shall be made in writing. The fees and expenses
of the arbitrator shall be awarded by the arbitrator in his discretion as part
of the award. The arbitrator's award shall be binding on the parties hereto and
may be entered in any court of competent jurisdiction. The parties reserve the
right to seek a judicial temporary restraining order, preliminary injunction, or
other similar short term equitable relief prior to the appointment of the
arbitrator. The arbitrator will have the right to make a final determination of
the parties' rights including, without limitation, whether to make permanent,
modify or dissolve the judicial order.
9.6 Section and Exhibit Headings. The Section and Exhibit headings are for
reference only and shall not limit or control the meaning of any provisions of
this Agreement.
9.7 Waiver. No delay or omission on the part of any party hereto in
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement.
9.8 Nature and Survival of Representations. All statements contained in any
certificate delivered by or on behalf of a party to this Agreement pursuant
hereto in connection with the transactions contemplated hereby shall be deemed
to be representations and warranties made by such party hereunder. The
covenants, representations and warranties made by the parties each to the other
in this Agreement or pursuant hereto shall survive the Closing for the
applicable period of the statute of limitations.
9.9 Exhibits. All Exhibits, schedules and documents referred to in or
attached to this Agreement are integral parts of this Agreement as if fully set
forth herein and all statements appearing therein shall be deemed to be
representations. All items disclosed hereunder shall be deemed disclosed only in
connection with the specific representation to which they are explicitly
referenced.
9.10 Assignment. Except as provided below, neither party shall assign this
Agreement without first obtaining the written consent of the other party.
Notwithstanding the foregoing to the contrary, NMFS shall have the right,
without any other party's consent, to assign all or any portion of this
Agreement to any entity controlled by, controlling or under common control with,
NMFS, and/or to any lender providing financing or refinancing funds or credit
facilities to NMFS or its affiliates, and/or to any transferee of any of the
stock, assets or business of NMFS; provided no such assignment shall release
NMFS from any liability hereunder.
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9.11 Binding on Successors and Assigns. Subject to Section this Agreement
shall inure to the benefit of and bind the respective heirs, administrators,
successors and assigns of the parties hereto. Nothing expressed or referred to
in this Agreement is intended or shall be construed to give any person other
than the parties to this Agreement or their respective successors or permitted
assigns any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein, it being the intention of the
parties to this
Agreement that this Agreement shall be for the sole and exclusive benefit of
such parties or such successors and assigns and not for the benefit of any other
person.
9.12 Amendments. This Agreement may be amended, but only in writing, signed
by the parties hereto.
9.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall comprise one and the same instrument.
9.14 Nonarbitral Attorneys' Fees. In the event that a suit, action, or
other proceeding of any nature whatsoever (other than arbitration), including,
without limitation, any proceeding under the U.S. Bankruptcy Code and involving
issues peculiar to federal bankruptcy law, any action seeking a declaration of
rights or any action for rescission, is instituted to interpret or enforce this
Agreement or any provision of this Agreement, the prevailing party shall be
entitled to recover from the losing party the prevailing party's reasonable
attorneys', paralegals', accountants', and other experts' professional fees and
all other fees, costs, and expenses actually incurred and reasonably necessary
in connection therewith, as determined by the judge at trial or other
proceeding, or on any appeal or review, in addition to all other amounts
provided by law.
9.15 No Other Parties. Seller and Shareholders acknowledge and agree that
the only other party to this Agreement is NMFS and that Douglas R. Colkitt, M.D.
individually is not a party, in any capacity, to this Agreement.
9.16 Rules of Construction. All references herein to the singular shall
include the plural, and vice versa, and all references herein to the neuter
shall include the masculine or feminine, as the case may be, and vice versa.
When general words or terms are used herein followed by the word "including" (or
another form of the word "include") and words of particular and specific
meaning, the general words shall be construed in their widest extent, and shall
not be limited to persons or things of the same general kind or class as those
specifically mentioned in the words of particular and specific meaning. All
parties have participated in the drafting of this Agreement. No provision of
this Agreement shall be construed against or interpreted to the disadvantage of
a party by reason of such party having or being deemed to have drafted,
structured or dictated such provisions. Time is of the essence of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day
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and year first above written.
NATIONAL MEDICAL FINANCIAL SERVICES
CORPORATION, a Nevada corporation ("NMFS")
By: /s/ Douglas R. Colkitt, M.D.
--------------------------------
Title: CEO
/s/Jorge Perez, SR. (SEAL)
--------------------------------
JORGE PEREZ, SR. ("Shareholder")
/s/Jorge Perez, JR. (SEAL)
--------------------------------
JORGE PEREZ, JR. ("Shareholder")
ADVANCED PHYSICIAN BILLING INC., a Florida
Corporation ("Seller")
By: /s/ Jorge E. Perez, Sr.
--------------------------------
Title: President
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Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of July
1, 1998 by and between NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION, a Nevada
corporation (the Company"), and JORGE PEREZ, SR., a resident of the State of
Florida ("Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the provision of medical billing
services to the public; and
WHEREAS, Employee warrants that he is the owner and operator of a medical
billing business with its principal business office being located at 7315 S.W.
87th Avenue, Suite 200, Miami, Florida 33173 and desires to continue to remain
active in the medical billing business by rendering services to the Company on
the terms and conditions set out in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises in this Agreement
and the payments to be made or received by each party, the Company and Employee
agree as follows:
ARTICLE I. DEFINITIONS
Capitalized terms used in the Agreement shall have their defined meaning
throughout the Agreement. The following terms shall have the meanings set forth
below, unless the context clearly requires otherwise.
1.1 Commencement Date means July 1, 1998.
1.2 Confidential Information means information that; is proprietary to the
Company or proprietary to others and entrusted to the Company, to the
extent such information is a trade secret under applicable law.
1.3 Full-Time means 5 days per week for 46 weeks per year.
1.4 DELETED
1.5 Territory means the geographical area with the boundaries of the
Counties of Dade, Broward, Monroe, Collier and Palm Beach in the State
of Florida.
ARTICLE II. EMPLOYMENT, DUTIES AND TERM
2.1 Employment. Upon the terms and conditions set forth in this Agreement,
the
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Company hereby employs Employee, and Employee accepts such employment
by the Company.
2.2 Services and Duties.
(a) During the term of this Agreement, and excluding any periods of
personal time to which Employee is entitled, Employee agrees to
devote his best efforts and attention during normal business
hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to
Employee hereunder, to use Employee's best efforts to perform
faithfully and efficiently such responsibilities, to abide by the
policies and procedures of the Company and to accept no other
gainful employment without the consent of the Company. Employee
will work Full-Time as a staff employee of the Company, the
duties and responsibilities of which are set forth in Exhibit "A"
attached hereto.
(b) All monies paid to or received by Employee for teaching,
research, honoraria, writing and. the like, shall be income to
and the property of Employee;
(c) Employee shall perform the services required hereunder
principally at 7315 S.W. 87th Avenue, Suite 200, Miami, Florida
and at such other locations as the Company shall reasonably
direct.
2.3 DELETED
2.4 Certain Proprietary Information. If Employee possesses any proprietary
information of another person or entity as a result of prior
employment or relationship, Employee shall honor any legal obligation
that Employee has with that person or entity with respect to such
proprietary information.
2.5 Term. The employment pursuant to this Agreement shall begin on the
Commencement Date and shall end on the day immediately prior to the
fifth anniversary of the Commencement Date year, unless sooner
terminated as set forth in Article IV hereof.
At the expiration of the initial five-year term of this Agreement,
Employee shall have the option (the exercise of-which must be given in
writing at least 180 days prior to the end of the initial term) to
renew this Agreement for two (2) additional five-year period upon the
same terms and conditions as set forth in this Agreement.
In the event that Employee should remain employed with the Company
beyond the term of this Agreement and no new employment agreement has
been executed: (a) Employee shall be deemed an employee at will, and
his employment may then be terminated upon ninety (90) days written
notice by either party, and (b) all terms
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and conditions of this Agreement shall continue to apply.
2.7 Corporate Development. The development area shall be the Territory.
The Company and Employee will work to develop a medical billing
network in the Territory, with the Company providing capital and
necessary administrative and marketing support, subject to the
Company's historic and current investment and development models.
Employee's responsibilities would include, but not be limited to,
organizing interested parties who may participate in the network,
training of such parties, and providing administrative services to
manage the network. All the foregoing services of Employee are covered
in his compensation under this Agreement.
If the Company acquires the assets of any other medical billing
business in the "Territory" (as defined in Section 1.5), Employee
shall have the option (to be exercised within thirty (30) days after
notice of the acquisition by the Company) to have the net income of
the business included in Net Income for purposes of Article III
hereof, in which case the purchase price of the acquired business will
be amortized as a expense over an 18-year period in the computation of
Net Income.
ARTICLE III. COMPENSATION, BENEFITS AND EXPENSES
3.1 Compensation. During the term of Employee's employment by the Company,
Employee shall be entitled to compensation in consideration of his
services hereunder equal to: SIXTY PERCENT (60%) of the "Net Income"
(as hereinafter defined) of the Company attributable to services
rendered at 7315 S.W. 87th Avenue, Suite 200, Miami, Florida 33173
(the "Business"), less any compensation paid by the Company to Jorge
Perez, Jr. and Ricardo Perez, consistent with the example of the
compensation pool described in Exhibit "B" attached hereto. The
Company shall pay Employee an advance or draw, against anticipated
compensation due hereunder, in the sum of $120,000 per annum, payable
semi-monthly in accordance with the Company's customary payroll
practices. This advance or draw is not additional or guaranteed
compensation, and shall be reconciled on the first anniversary date of
this Agreement and thereafter on a quarterly basis against the actual
compensation due under this Agreement.
3.2 Net Income. "Net Income" shall be computed in accordance with
generally accepted principles using the accrual method of accounting
and shall be equal to net revenues for the period in question,
initially commencing on the Commencement Date, less: (a) all direct
operating expenses of the Company for the period in question,
including but not limited to, all employees' salaries, compensation
and benefits (other than to the Employee, Jorge Perez, Jr. and Ricardo
Perez), rent, office and supplies, payroll taxes, health insurance,
general
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liability insurance, telephones, computers, repairs and maintenance,
equipment rental and leases; (b) depreciation and amortization over a
5-year period of leasehold improvements, equipment, other fixed assets
and intangibles purchased after the Commencement Date; (c) interest
costs associated with the acquisition of fixed assets and intangibles
for the Business after the Commencement Date; and (d) an allowance of
four percent (4%) of net revenues for corporate overhead/management
services. For purposes Of this Agreement, the term "net revenues"
shall mean gross revenues, minus contractual adjustments and
uncollectible accounts, computed on an accrual basis in accordance
with generally accepted accounting principles consistently applied.
3.3 Personal Time. Employee shall be entitled during the term of this
Agreement to absent himself voluntarily or due to actual illness from
the performance of his employment under this Agreement, all such
voluntary absences to count as personal time, provided that:
(a) Such personal time shall not exceed six (6) work weeks (30
working days) during each calendar year(prorated for any partial
calendar year) during the period Employee is employed full-time
hereunder.
(b) The timing of personal time shall be scheduled in a reasonable
manner that is consistent with the best interest of the Company.
(c) In addition to the aforesaid personal time, Employee shall be
entitled to the following holidays: New Year's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
In addition, Employee shall be entitled to take as holidays any
additional days that the Company is closed for a holiday.
(d) Employee shall not be entitled to receive any additional
compensation from the Company (or to receive any additional
compensation upon termination or expiration of employment) on
account of his failure to take personal time. Unused personal
time during a calendar year may not be used in a subsequent
calendar year.
Vacation time, educational and sick leave (other than for educational
activities the cost of which is reimbursed under Section 3.6 hereof)
shall be deemed personal time, and shall be subject to the provision
of this Section 3.3. Business-related travel away from the office, for
which expenses are reimbursed pursuant to Section 3.6 below, shall not
be treated as personal time.
3.4 Employee Benefits. During the term of the Employee's employment under
this Agreement, Employee shall be entitled to participate in all of
the employee benefit
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programs which are available to the Company.
3.5 Office and Facilities. During the term of Employee's employment under
this Agreement, the Company shall provide Employee the use of the
Company's facilities and support services.
3.6 Business Expenses. During the term of Employee's employment under this
Agreement, the Company shall bear all ordinary and necessary business
expenses incurred by Employee on behalf of Company, in accordance
with, and to the extent of, its uniform policies in effect from time
to time and subject to Internal Revenue Service guidelines for
business expense reimbursement. Employee is responsible to promptly
account for such expenses to the Company in the manner prescribed from
time to time by the Company, including such records as are required by
the Internal Revenue Service.
Notwithstanding anything to the contrary in the preceding paragraph,
the Company shall reimburse Employee up to $10,000 annually (which
shall accrue ratably on a monthly basis) for dues, continuing
education seminars and association meeting expenses (including travel
expenses related thereto), journals and books and fees, automobile
expenses, entertainment and any other expenses for which Employee
presents receipts as required by Internal Revenue Service regulations
(the "Expense Allowance"), such expenses to be reimbursed to Employee
within thirty (30) days following delivery of such receipts to the
Company.
Fifty percent (50%) of the difference between $10,000 and the Expense
Allowance during any calendar year shall be paid to Employee in cash
within forty-five (45) days following the end of such calendar year.
This amount shall be in addition to the compensation due under Section
3.1 hereof.
3.7 DELETED
3.8 Earnout Payment. On the fifth anniversary of the Commencement Date,
the Company agrees to pay Employee an amount equal to three (3.0)
times the difference, if positive, between (i) his compensation
hereunder during the preceding twelve (12) months and (iii) 21.50% of
net revenues of the Company attributable to its facilities at 7315
S.W. 89th Avenue, Suite 200, Miami, Florida 33173 (the "Miami Office")
during the preceding twelve (12) months; provided that, Employee
agrees that the combined compensation of Employee, Jorge Perez, Jr.
and Ricardo Perez (the "Compensation Pool") thereafter will change to
21.50% of net revenues of the Company attributable to the Miami
Office.
Example: Suppose that on the fifth anniversary of the Commencement
Date Employee elects to receive the above-described earnout payment.
Suppose that,
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during the previous 12 months, the net revenues of the Company
attributable to the Miami Office were $3,000,000 and that the
Compensation Pool, based on 60% of net income was $700,000. Since the
Compensation Pool ($700,000) was in excess of 21.50% of the relevant
net revenues of the Company (21.50% x $3,000,000 =$645,000), i.e., the
difference ($55,000) was positive, the Company will to pay Employee
the difference ($55,000) times 3.0, or $165,000 as the earnout
payment. Thereafter, the Compensation Pool will be changed to 21.50%
of the net revenues of the Company attributable to the Miami Office,
and no longer be based on a percentage of Net Income.
ARTICLE IV. EARLY TERMINATION
4.1 Early Termination. Subject to the respective continuing obligations of
the parties elsewhere provided in this Agreement, this Article IV sets
forth the terms for early termination of Employee's employment under
this Agreement.
4.2 No Termination Without Cause. This Agreement may not be terminated
without cause.
4.3 Termination by the Company for Cause. The Company may terminate
Employee's employment under this Agreement effective immediately for
cause. For purposes of this Agreement, "Cause" means (a) an act or
acts of personal dishonesty taken by Employee resulting in personal
enrichment of Employee at the expense of the Company, (b) any material
breach by Employee of his duties and other obligations under this
Agreement, after written notice and thirty (30) days in which to cure
the same, (c) if Employee is convicted of or pleads nolo, (or
equivalent) with respect to, a felony or a crime involving moral
turpitude, (d) if any representation of Employee to the Company is
materially untrue and Employee knew or should have known the
representation was untrue, (e) habitual absenteeism (in excess of
personal time permitted hereunder), alcoholism or any form of drug
abuse having an adverse effect on Employee's performance of his duties
or an adverse effect on the Company, and (f) intentional conduct or
activities (excluding conduct or activities engaged in by Employee in
good faith exercise of his business judgment on behalf of the Company)
materially damaging to the Company.
4.4 Termination in the Event of Death. Employee's employment under this
Agreement shall terminate in the event of Employee's death.
4.5 Notice of Termination; Date of Termination. The provisions of this
Section 4.5 shall apply in connection with any early termination of
Employee's employment under this Agreement pursuant to this Article
IV.
(a) For purposes of this Agreement, a "Notice of Termination" shall
mean a
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notice which shall indicate the specific termination provisions
in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide the basis
for such termination.
(b) For purposes of the Agreement, "Date of Termination" shall mean:
(1) if Employee's employment is terminated due to death, the day
Employee's death occurs; (2) if Employee's employment is
terminated by the Company for Cause, the date specified in the
Notice of Termination; (3) if Employee's employment is terminated
by mutual agreement of the parties, the date specified in such
agreement; (4) if this Agreement is terminated pursuant to
Section 4.2 hereof, the date specified in the Notice of
Termination, which in no event shall be a date earlier than one
hundred and eighty (180) calendar days after the date on which a
Notice of Termination is given, unless an earlier date has been
expressly agreed to by Employee in writing either in advance of,
or after, receiving such Notice of Termination; or (5) in any
other instance not referred to in clauses (1) through (4) above,
the last day of Employee's employment with the Company.
4.6 Compensation upon Termination of Employment. Upon termination of
Employee's employment under this Agreement, the Company shall, within
thirty (30) days following the Date of Termination, pay any amounts
earned by Employee and reimburse Employee amounts due for reimbursable
business expenses incurred by Employee through the Date of Termination
and any additional amounts due Employee in accordance with the terms
of any Plan. Upon termination of employment for any reason whatsoever,
Employee shall not be entitled to be paid for any accumulated (but
unused) personal time under Section 3.2.
4.7 Termination by Employee. In the event that (i) the Company is
determined to be guilty of criminal activity and has exhausted its
right to appeal such determination, or (ii) any payment owed to
Employee under Article III hereof is not made when due and such
default is not cured within thirty (30) days after Employee gives the
Company written notice of such default, then Employee may, within ten
(10) days thereafter, give written Notice of Termination of this
Agreement to the Company and in such case the provisions of Section
6.2 and Section 6.3 hereof shall not apply. In the event Employee
terminates this Agreement under this Section 4.7, then Employee shall
be entitled to keep any compensation to the extent actually received
or accrued (whichever is greater) under Section 3.1 hereof through the
Date of Termination.
4.8 Termination by Exercise of Buy-Back Right. This Agreement is subject
to that certain Buy-Back Agreement dated as of the even date hereof
between the Company and Advanced Physician Billing Inc., and this
Agreement shall terminate in its entirety in accordance with the terms
of said Buy-Back Agreement.
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ARTICLED V. CONFIDENTIAL INFORMATION
Prohibitions Against Use. Employee will not during or subsequent to
the termination or expiration of Employee's employment under this
Agreement use or disclose, other than in connection with Employee's
employment with the Company, any Confidential information to any
person not employed by the Company or not authorized by the Company to
receive such Confidential Information] without the prior written
consent of the Company. Employee will use reasonable and prudent care
to safeguard and protect and prevent the unauthorized use and
disclosure of Confidential Information. The obligations contained in
this Section 5.1 will survive for as long as the Company in its sole
judgment considers the information to be Confidential Information.
ARTICLE VI. NON-COMPETITION
6.1 Acknowledgements. Employee agrees and acknowledges that: (i) he shall
be in a position of confidence and trust with the Company and he shall
have access to Confidential Information; (ii) the nature and periods
of restrictions imposed by the covenants set forth in this Article VI
are fair, reasonable and necessary to protect and preserve for the
Company the benefits of this Agreement and that such restrictions
shall not prevent this Employee from earning a livelihood; (iii) the
Company would sustain irreparable loss and damage if Employee were to
breach any of such covenants; (iv) the Territory is reasonably sized
inasmuch as the business of the Company is conducted over a wide
geographical area and is based on serving customers in the entire
Territory to be successful; and (vi) the covenants herein set forth
are made as an inducement to and have been relied upon by the Company
in entering this Agreement. Employee represents and warrants that
Employee has not, prior to the date hereof, disclosed to any person or
used or otherwise exploited for Employee's own benefit or for the
benefit of any other person any Confidential Information.
6.2 Non-Competition by Employee. Employee agrees that, during the term of
his employment by the Company and for a period of two (2) years
following the termination or expiration of Employee's employment with
the Company for any reason, Employee will not directly or indirectly,
alone or as a partner, officer, director, shareholder or employee of
any other firm, engage in any commercial activity in competition with
any part of the Company's business as conducted during the term of the
Agreement or as of the date of such termination or expiration of
employment or with any part of the Company's contemplated business
with respect to which Employee has Confidential Information as
governed by Article VI, within the Territory.
6.3 Solicitation of Customers. Employee will not solicit any person or
entity who is
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or was a customer of the Company, for a period of two (2) years after
the termination or expiration of Employee's employment with the
Company for any reason.
6.4 Covenant Not to Recruit. Employee recognizes that the Company
workforce represents a substantial financial and educational
investment and constitutes an important and vital aspect of its
business. Employee agrees that, during the term of his employment by
the Company and for a period of two (2) years following the
termination or expiration of Employee's employment with the Company
for any reason whatsoever, he shall not solicit, or assist anyone else
in the solicitation of, any of the Company's then current employees to
terminate their employment with the Company and to become employed by
any business enterprise with which Employee may then be associated,
affiliated or connected.
6.5 Severability. If any of the provisions of this Article VI should in
whole or part be held invalid in a final judgment by a court of
competent jurisdiction, such invalidity shall not affect the validity
of the rest of this Article VI, the parties intending that Such
provision be severable.
6.6 Injunctive Relief. The parties hereto recognize and hereby acknowledge
that iris impossible to measure in money the damages which would
result to the Company or its successors or assigns by reason of a
failure by Employee to perform any of the obligations imposed upon him
under Article VI of this Agreement. Therefore, the Company or its
successors or assigns shall be entitled to injunctive and other
equitable relief to enforce the terms of Article VI of this Agreement.
If the Company or its successors or assigns should institute an action
or proceeding to enforce the provisions of Article VI hereof, Employee
hereby waives the claim or defense that any such party has an adequate
remedy at law, and Employee shall not urge in any action or proceeding
the claim or defense that such a remedy at law exists. At the
discretion of the court or arbitrator before which an injunctive
proceeding is brought, the running of the covenants herein may be
tolled and extended for a period of time equal to the time period
Employee shall be in violation of any such covenant.
ARTICLE VII. GENERAL PROVISIONS
7.1 DELETED
7.2 DELETED
7.3 Physical and Mental Condition. Employee represents that he is in good
physical and mental health, has no chronic illness nor any prior
physical or mental problems, the recurrence of which would impair his
ability to function under all
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the terms and conditions of this Agreement.
7.4 Assignment. The Agreement is not assignable by Employee. This
Agreement may be assigned by Company.
7.5 Offsets. Any amount payable to Employee pursuant to this Agreement may
be reduced for purposes of offsetting, either directly or indirectly,
any indebtedness or liability of Employee to the Company.
7.6 Withholding. To the extent required by any applicable law, including
without limitation, any federal or state income tax or excise tax law
or laws, the Federal Insurance Contributions Act, the Federal
Unemployment Tax Act or any comparable federal, state or local laws,
the Company retains the right to withhold such portion of any amount
or amounts payable to Employee under this Agreement as the Company
deems necessary.
7.7 Governing Law; Arbitration. The validity and construction of this
Agreement shall be governed by the laws of the State of Florida. The
parties (meaning Employee on one hand and the Company on the other
hand) agree that all disputes concerning this Agreement shall be
submitted to binding arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association and the
provisions contained herein. The arbitration shall be conducted in
Tampa, Florida, by one arbitrator. The party initiating arbitration
shall give the other party notice of the matter in dispute and, if
such party is the obligor, shall deposit any disputed amount in escrow
during the pendency of the arbitration. If the parties fail to agree
upon an arbitrator within ten days after notice of initiation of the
arbitration is given, then the American Arbitration Association shall
select the arbitrator. All determinations and the final decision of
the arbitrator shall be made in writing. The fees and expenses of the
arbitrator shall be awarded by the arbitrator in his discretion as
part of the award. The arbitrator's award shall be binding on the
parties hereto and may be entered in any court of competent
jurisdiction. The parties reserve the right to seek a judicial
temporary restraining order, preliminary injunction, or other similar
short term equitable relief prior to the appointment of the
arbitrator. The arbitrator will have the right to make a final
determination of the parties' rights including, without limitation,
whether to make permanent, modify or dissolve the judicial order.
7.8 Rules of Construction. No provision of this Agreement shall be
construed against or interpreted to the disadvantage of a party by
reason of such party having or being deemed to have drafted,
structured or dictated such provisions.
7.9 Waivers. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy hereunder shall operate as a
waiver thereof; nor
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shall any single or partial exercise of any right or remedy hereunder
preclude any other or further exercise thereof or the exercise of any
other right or remedy granted hereby or by any related document or by
law.
7.10 Modification. This Agreement may not be modified or amended except by
written instrument signed by the parties hereto and, if on behalf of
the Company, only by its President.
7.11 Notices. All notices, demands and other communications hereunder shall
be written and shall be deemed to have been duly given if delivered in
person or mailed by certified mail, postage prepaid, to the address
set forth below:
To the Company: National Medical Financial
Services Corporation
1315 Greg St., Suite 103
Sparks, NV 89431
with a copy to: Marcy L. Colkitt & Associates, P.C.
P.O. 607
Indiana, PA 15701-0607
To Employee: Jorge Perez, Sr.
7315 S.W. 87th Ave., Suite 200
Miami, FL 33173
with a copy to: Christopher M. Brown, Esq..
600 W. Andrews Ave., Suite 600
Ft.Lauderdale, FL 33301.
or to such other address as either party may designate by written
notice to the other. Notices delivered in person shall be deemed
delivered on the date of delivery and notices mailed, as aforesaid,
shall be deemed delivered forty-eight (48) hours after the date
mailed. Rejection or other refusal to accept or inability to deliver
because of a changed address of which no notice, was given shall be
deemed to be a receipt of the notice, request or other communication.
Any notice, request or other communication required or permitted to be
given by any party may be given by such party' s legal counsel.
7.12 No Restrictive Covenants. Employee represents and warrants that he is
not subject to any restrictive covenant which would prohibit or limit
any of the services that Employee must perform as contemplated by this
Agreement.
7.13 Sole Employer; No Guarantor. The Company shall be the sole employer of
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Employee hereunder, and no officer, director, employee or shareholder
of the Company shall be a guarantor of this Agreement.
7.14 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto in reference to the subject
matter hereof all the matters herein agreed upon. This Agreement
replaces in full all prior employment agreements or understandings of
the parties hereto, and any and all such prior agreements or
understandings are hereby rescinded by mutual agreement.
7.15 Non-arbitral Attorneys Fees. In the event that a suit, action, or
other proceeding of any nature whatsoever other than arbitration),
including, without limitation, any proceeding under the U.S.
Bankruptcy Code and involving issues peculiar to federal bankruptcy
law, any action seeking a declaration of rights or any action for
rescission, is instituted to interpret or enforce this Agreement or
any provision of this Agreement, the prevailing party shall be
entitled to recover from the losing party the prevailing party's
reasonable attorneys', paralegals', accountants' and other experts'
professional fees and all other fees, costs, and expenses actually
incurred and reasonably necessary in connection therewith, as
determined by the judge at trial or other proceeding, or on any appeal
or review, in addition to all other amounts provided by law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
EMPLOYEE: COMPANY:
/s/ Jorge Perez, Sr. NATIONAL MEDICAL FINANCIAL
- --------------------- SERVICES CORPORATION
JORGE PEREZ, SR.
By: /s/ Douglas R. Colkitt, M.D.
-----------------------------
CEO
Address: Address:
7315 S.W. 87th Ave., Suite 200 1315 Greg Street, Suite 103
- --------------------------------
Miami, FL 33173 Sparks, NV 89431
- --------------------------------
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Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
July 1, 1998 by and between NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION, a
Nevada corporation ("the Company"), and JORGE PEREZ, JR., a resident of the
State of Florida ("Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the provision of medical billing
services to the public; and
WHEREAS, Employee warrants that he is the owner and operator of a
medical billing business with its principal business office being located at
7315 S.W. 87th Avenue, Suite 200, Miami, Florida 33173 and desires to continue
to remain active in the medical billing business by rendering services to the
Company on the terms and conditions set out in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises in this
Agreement and the payments to be made or received by each party, the Company and
Employee agree as follows:
ARTICLE I. DEFINITIONS
Capitalized terms used in the Agreement shall have their defined meaning
throughout the Agreement. The following terms shall have the meanings set forth
below, unless the context clearly requires otherwise.
1.1 Commencement Date means July 1, 1998.
1.2 Confidential Information means information that is proprietary
to the Company or proprietary to others and entrusted to the
Company, to the extent such information is a trade secret
under applicable law.
1.3 Full-Time means 5 days per week for 46 weeks per year.
1.4 DELETED
1.5 Territory means the geographical area with the boundaries of
the Counties of Dade, Broward, Monroe, Collier and Palm Beach
in the State of Florida.
ARTICLE II. EMPLOYMENT, DUTIES AND TERM
2.1 Employment. Upon the terms and conditions set forth in this
Agreement, the
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Company hereby employs Employee, and Employee
accepts such employment by the Company.
2.2 Services and Duties.
(a) During the term of his Agreement, and excluding any
periods of personal time to which Employee is entitled,
Employee agrees to devote his best efforts and attention
during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the
responsibilities assigned to Employee hereunder, to use
Employee's best efforts to perform faithfully and efficiently
such responsibilities, to abide by the policies And procedures
of the Company and to accept no other gainful employment
without the consent of the Company. Employee will work
full-time as a staff employee of the Company, the duties and
responsibilities of which are set forth in Exhibit "A"
attached hereto.
(b) All monies paid to or received by Employee for teaching,
research, honoraria, writing and the like, shall be income to
and the property of Employee;
(c) Employee shall perform the services required hereunder
principally at 7315 S.W. 87th Avenue, Suite 200, Miami,
Florida and at such other locations as the Company shall
reasonably direct.
2.3 DELETED
2.4 Certain Proprietary Information. If Employee possesses any
proprietary information of another person or entity as a
result of. prior employment or relationship, Employee shall
honor any legal obligation that Employee has with that person
or entity with respect to such proprietary information.
2.5 Term. The employment pursuant to this Agreement shall begin on
the Commencement Date and shall end on the day immediately
prior to the fifth anniversary of the Commencement Date year,
unless sooner terminated as set forth in Article IV hereof.
At the expiration of the initial five-year term of this
Agreement, Employee shall have the option (the exercise of
which must be given in writing at least 180 days prior to
the end of the initial term) to renew this Agreement for
two (2) additional five-year period upon the same terms and
conditions as set forth in this Agreement.
In the event that Employee should remain employed with the
Company beyond the term of this Agreement and no new
employment agreement has been executed: (a) Employee shall be
deemed an employee at will, and his employment may then be
terminated upon ninety (90) days written notice by either
party, and (b) all
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terms and conditions of this Agreement shall continue to
apply.
ARTICLE III. COMPENSATION, BENEFITS AND EXPENSES
3.1 Compensation. During the term of Employee's employment by the
Company, Employee shall -be entitled to compensation in
consideration of his services hereunder equal to: SIXTY
PERCENT (60%) of the "Net Income" (as hereinafter defined) of
the Company attributable to services rendered at 7315 S.W.
87th Street, Suite 103, Miami, Florida 33173 (the "Business"),
less any compensation paid by the Company to Jorge Perez, Sr.
and Ricardo Perez, consistent with the example of the
compensation pool described in Exhibit "B" attached hereto.
The Company shall pay Employee an advance or draw against
anticipated compensation due hereunder, in the sum of $96,000
per annum, payable semi-monthly in accordance with the
Company' s customary payroll practices. This advance or draw
is not additional or guaranteed compensation, and shall be
reconciled on the first anniversary date of this Agreement and
thereafter on a quarterly basis against the actual
compensation due under this Agreement.
3.2 Net Income. "Net Income" shall be computed in accordance with
generally accepted principles using the accrual method of
accounting and shall be equal to net revenues for the period
in question, initially commencing on the Commencement Date,
less: (a) all direct operating expenses of the Company for the
period in question, including but not limited to, all
employees' salaries, compensation and benefits (other than to
the Employee, Jorge Perez, Sr. and Ricardo Perez), rent,
office and supplies, payroll taxes, health insurance, general
liability insurance, telephones, computers, repairs and
maintenance, equipment rental and leases; (b) depreciation and
amortization over a 5-year period of leasehold improvements,
equipment, Other fixed assets and intangibles purchased after
the Commencement Date; (c) interest costs associated with the
acquisition of fixed assets and intangibles for the Business
after the Commencement Date; and (d) an allowance of four
percent (4%) of net revenues for corporate overhead/management
services. For purposes of this Agreement, the term "net
revenues" shall mean gross revenues, minus contractual
adjustments and uncollectible accounts, computed on an accrual
basis in accordance with generally accepted accounting
principles consistently applied.
3.3 Personal Time. Employee shall be entitled during the term of
this Agreement to absent himself voluntarily or due to actual
illness from the performance of his employment under this
Agreement, all such voluntary absences to count as personal
time, provided that:
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(a) Such personal time shall not exceed six (6) work weeks (30
working days) during each calendar year (prorated for any
partial calendar year) during the period Employee is employed
Full-Time hereunder.
(b) The timing of personal time shall be scheduled in a
reasonable manner that is consistent with the best interest of
the Company.
(c) In addition to the aforesaid personal time, Employee shall
be entitled to. the following holidays: New Year's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. In addition, Employee shall be entitled to
take as holidays any additional days that the Company is
closed for a holiday.
(d) Employee shall not be entitled to receive any additional
compensation from the Company (or to receive any additional
compensation upon termination or expiration of employment) on
account of his failure to take personal time. Unused personal
time during a calendar year may not be used in a subsequent
calendar year.
Vacation time, educational and sick leave (other than for
educational activities the cost of which is reimbursed under
Section 3.6 hereof) shall be deemed personal time, and shall
be subject to the provision of this Section 3.3.
Business-related travel away from the office, for which
expenses are reimbursed pursuant to Section 3.6 below, shall
not be treated as personal time.
3.4 Employee Benefits. During the term of the Employee's
employment under this Agreement, Employee shall be entitled to
participate in all of the employee benefit programs which are
available to the Company.
3.5 Office and Facilities. During the term of Employee's
employment under this Agreement, the Company shall provide
Employee the use of the Company's facilities and support
services.
3.6 Business Expenses. During the term of Employee's employment
under this Agreement, the Company shall bear all ordinary and
necessary business expenses incurred by Employee on behalf of
Company, in accordance with, and' to the extent of, its
uniform policies effect from time to time and subject to
Internal Revenue Service guidelines for business expense
reimbursement. Employee is responsible to promptly account for
such expenses to the Company in the manner prescribed from
time to time by the Company, including such records as are
required by the Internal Revenue Service.
Notwithstanding anything to the contrary in the preceding
paragraph, the Company
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shall reimburse Employee up to $10,000 annually (which shall
accrue ratably on a monthly basis) for dues, continuing
education seminars and association meeting expenses (including
travel expenses related thereto), journals and books and fees,
automobile expenses, entertainment and any other expenses for
which Employee presents receipts as required by Internal
Revenue Service regulations (the "Expense Allowance"), such
expenses to be reimbursed to Employee within thirty (30) days
following delivery of such receipts to the Company.
Fifty percent (50%) of the difference between $10,000 and the
Expense Allowance during any calendar year shall be paid to
Employee in cash within forty-five (45) days following the end
of such calendar year. This amount shall be in addition to the
compensation due under Section 3.1 hereof.
ARTICLE IV. EARLY TERMINATION
4.1 Early Termination. Subject to the respective continuing
obligations of the parties elsewhere provided in this
Agreement, this Article IV sets forth the terms for early
termination of Employee's employment under this Agreement.
4.2 No Termination Without Cause. This Agreement may not be
terminated without cause.
4.3 Termination by the Company for Cause. The Company may
terminate Employee's employment under this Agreement effective
immediately for cause. For purposes of this Agreement, "Cause"
means (a) an act or acts of personal dishonesty taken by
Employee resulting in personal enrichment of Employee at the
expense of the Company, (b) any material breach by Employee of
his duties and other obligations under this agreement, after
written notice and thirty (30) days in which to cure the same,
(c) if Employee is convicted of or pleads nolo contendre (or
equivalent) with respect to, a felony or a crime involving
moral turpitude,(d) if any representation of Employee to the
Company is materially untrue and Employee knew or should have
known the representation was untrue, (e) habitual absenteeism
(in excess of personal time permitted hereunder), alcoholism
or any form of drug abuse having an adverse effect on
Employee's performance of his duties or an adverse effect on
the Company, and (f) intentional conduct or activities
(excluding conduct or activities engaged in by Employee in
good faith exercise of his business judgment on behalf of the
Company) materially damaging to the Company.
4.4 Termination in the Event of Death. Employee's employment under
this Agreement shall terminate in the event of Employee's
death.
4.5 Notice of Termination; Date of Termination. The provisions of
this Section 4.5
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shall apply in connection with any early termination of
Employee's employment under this Agreement pursuant to this
Article IV.
(a) For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate
the specific termination provisions in this Agreement
relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide the
basis for such termination.
(b) For purposes of the Agreement, "Date of Termination"
shall mean: (1) if Employee's employment is
terminated due to death, the day Employee's death
occurs; (2) if Employee's employment is terminated by
the Company for Cause, the date specified in the
Notice. of Termination; (3) if Employee's
employment is terminated by mutual agreement of the
parties, the date specified in such agreement; (4) if
this Agreement is terminated pursuant to Section 4.2
hereof, the date specified in the Notice of
Termination, which in no event shall be a date
earlier than one hundred and eighty (180)'calendar
days after the date on which a Notice of
Termination is given, unless an earlier date has been
expressly agreed to by Employee in writing either in
advance of, or after, receiving such Notice of
Termination; or (5) in any other instance not
referred to in clauses (1) through (4) above, the
last day of Employee's employment with the Company.
4.6 Compensation upon Termination of Employment. Upon termination
of Employee employment under this Agreement, the Company
shall, within thirty (30) days following the Date of
Termination, pay any amounts earned by Employee and reimburse
Employee amounts due for reimbursable business expenses
incurred by Employee through the Date of Termination and any
additional amounts due Employee in accordance with the terms
of any Plan. Upon termination of employment for any reason
whatsoever, Employee shall not be entitled to be paid for any
accumulated (but unused) personal time under Section 3.2.
4.7 Termination by Employee. In the event that (i)the Company is
determined to be guilty of criminal activity and has exhausted
its right to appeal such determination, or (ii) any payment
owed to Employee under Article III hereof is not made when due
and such default is not cured within thirty (30) days after
Employee gives the Company written notice of such default,
then Employee may, within ten (10) days thereafter, give
written Notice of Termination of this Agreement to the Company
and in such case the provisions of Section 6.2 and Section 6.3
hereof shall not apply. In the event Employee terminates this
Agreement under this Section 4.7, then Employee shall be
entitled to compensation paid or accrued (whichever is
greater) under Section 3.1 hereof through the Date of
Termination.
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4.8 Termination by Exercise of Buy-Back Right. This Agreement is
subject to that certain Buy-Back Agreement dated as of the
even date hereof between the Company and Advanced Physician
Billing Inc., and this Agreement shall terminate in its
entirety in accordance with the terms of said Buy-Back
Agreement.
ARTICLE V. CONFIDENTIAL INFORMATION
Prohibitions Against Use. Employee will not during or
subsequent to the termination or expiration of Employee's
employment under this Agreement use or disclose, other than in
connection with Employee's employment with the Company, any
Confidential Information to any person not employed by the
Company or not authorized by the Company to receive such
Confidential Information, without the prior written consent of
the Company. Employee will use reasonable and prudent care to
safeguard and protect and prevent the unauthorized use and
disclosure of Confidential Information. The obligations
contained in this Section 5.1 will survive for as long as the
Company in its sole judgment considers the information to be
Confidential Information.
ARTICLE VI. NON-COMPETITION
6.1 Acknowledgements. Employee agrees and acknowledges that: (i)
he shall be in a position of confidence and trust with the
Company and he shall have access to Confidential Information;
(ii) the nature and periods of restrictions imposed by the
covenants set forth in this Article VI are fair, reasonable
and necessary to protect and preserve for the Company the
benefits of this Agreement and that such restrictions shall
not prevent this Employee from earning a livelihood; (iii) the
Company would sustain irreparable loss and damage if Employee
were to breach any of such covenants; (iv) the Territory is
reasonably sized inasmuch as the business of the Company is
conducted over a wide geographical area and is based on
serving customers in the entire Territory to be successful;
and (vi) the covenants herein set forth are made as an
inducement to and have been relied upon by the Company in
entering this Agreement. Employee represents and warrants that
Employee has not, prior to the date hereof, disclosed to any
person or used or otherwise exploited for Employee's own
benefit or for the benefit of any other person any
Confidential Information.
6.2 Non-Competition by Employee. Employee agrees that, during the
term of his employment by the Company and for i a period of
two (2) years following the termination or expiration of
Employee's employment with the Company for any reason,
Employee will not directly or indirectly, alone or as a
partner, officer, director, shareholder or employee of any
other firm, engage in any commercial activity in competition
with any part of the Company's business as conducted
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during the term of the Agreement or as of the date of such
termination or expiration of employment or with any part of
the Company's contemplated business with respect to which
Employee has Confidential Information as governed by
Article VI, within the Territory.
6.3 Solicitation of Customers. Employee will not solicit any
person or entity who is or was a customer of the Company, for
a period of two (2) years after the termination or expiration
of Employee's employment with the Company for any reason.
6.4 Covenant Not to Recruit. Employee recognizes that the Company
workforce represents a substantial financial and educational
investment and constitutes an important and vital aspect of
its business. Employee agrees that, during the term of his
employment by the Company and for a period of two (2) years
following the termination or expiration of Employee's
employment with the Company for any reason whatsoever, he
shall not solicit, or assist anyone else in the solicitation
of, any of the Company's then current employees to terminate
their employment with the Company and to become employed by
any business enterprise with which Employee may then be
associated, affiliated or connected.
6.5 Severability. If any of the provisions of this Article VI
should in whole or part be held invalid in a final judgment by
a court of competent jurisdiction, such invalidity shall not
affect the validity of the rest of this Article VI, the
parties intending that such provision be severable.
6.6 Injunctive Relief. The parties hereto recognize and hereby
acknowledge that it is impossible to measure in money the
damages which would result to the Company or its successors or
assigns by reason of a failure by Employee to perform any of
the obligations imposed upon him under Article VI of this
Agreement. Therefore, the Company or its successors or assigns
shall be entitled to injunctive and other equitable relief to
enforce the terms of Article VI of this Agreement If the
Company or its successors or assigns should institute an
action or proceeding to enforce the provisions of Article VI
hereof, Employee hereby waives the claim or defense that any
such party has an adequate remedy at law, and Employee shall
not urge in any action or proceeding the claim or defense that
such a remedy at law exists. At the discretion of the court or
arbitrator before which an injunctive proceeding is brought,
the running of the covenants herein may be tolled and extended
for a period of time equal to the time period Employee shall
be in violation of any such covenant.
ARTICLE VII. GENERAL PROVISIONS
7.1 DELETED
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7.2 DELETED
7.3 Physical and Mental Condition. Employee represents that he is
in good physical and mental health, has no chronic illness nor
any prior physical or mental problems, the recurrence of which
would impair his ability to function under all the terms and
conditions of this Agreement.
7.4 Assignment. The Agreement is not assignable by Employee. This
Agreement may be assigned by the Company.
7.5 Offsets. Any amount payable to Employee pursuant to this
Agreement may be reduced for purposes of offsetting, either
directly or indirectly, any indebtedness or liability of
Employee to the Company.
7.6 Withholding. To the extent required by any applicable law,
including without limitation, any federal or state income tax
or excise tax law or laws, the Federal Insurance Contributions
Act, the Federal Unemployment Tax Act or any comparable
federal, state or local laws, the Company retains the right to
withhold such portion of any amount or amounts payable to
Employee under this Agreement as the Company deems necessary.
7.7 Governing Law; Arbitration. The validity and construction of
this Agreement shall be governed by the laws of the State of
Florida. The parties (meaning Employee on one hand and the
Company on the other hand) agree that all disputes concerning
this Agreement shall be submitted to binding arbitration in
accordance with the commercial arbitration rules of the
American Arbitration Association and the provisions contained
herein. The arbitration shall be conducted in Tampa, Florida,
by one arbitrator. The party initiating arbitration shall give
the other party notice of the matter in dispute and, if such
party is the obligor, shall deposit any disputed amount in
escrow during the pendency of the arbitration. If the parties
fail to agree upon an arbitrator within ten days after notice
of initiation of the arbitration is given, then the American
Arbitration Association shall select the arbitrator. All
determinations and the final decision of the arbitrator shall
be made in writing. The fees and expenses of the arbitrator
shall be awarded by the arbitrator in his discretion as part
of the award. The arbitrator's award shall be binding on the
parties hereto and may be entered in any court of competent
jurisdiction. The parties reserve the right to seek a judicial
temporary restraining order, preliminary injunction, or other
similar short term equitable relief prior to the appointment
of the arbitrator. The arbitrator will have the right to make
a final determination of the parties' rights including,
without limitation, whether to make permanent, modify or
dissolve the judicial order.
7.8 Rules of Construction. No provision of this Agreement shall be
construed against
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or interpreted to the disadvantage of a party by reason of
such party having or being deemed to have drafted,
structured or dictated such provisions.
7.9 Waivers. No failure on the part of either party to exercise,
and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other
right or remedy granted hereby or by any related document or
by law.
7.10 Modification. This Agreement may not be modified or amended
except by written instrument signed by the parties hereto and,
if on behalf of the Company, only by its President.
7.11 Notices. All notices, demands and other communications
hereunder shall be written and shall be deemed to have been
duly given if delivered in person or mailed by certified mail,
postage prepaid, to the address set forth below:
To the Company: National Medical Financial
Services Corporation
1315 Greg St., Suite 103
Sparks, NV 89431
with a copy to: Marcy L. Colkitt & Associates, P.C.
P.O. 607
Indiana, PA 15701-0607
To Employee: Jorge Perez, Jr.
1315 S.W. 87th Ave., Suite 200
Miami, FL 3133
with a copy to: Christopher M. Brown, Esq.
600 W. Andrews Ave., Suite 600
Ft. Lauderdale, FL 33301
or to such other address as either party may designate by
written notice to the other. Notices delivered in person shall
be deemed delivered on the date of delivery and notices
mailed, as aforesaid, shall be deemed delivered forty-eight
(48) hours after the date mailed. Rejection or other refusal
to accept or inability to deliver because of a changed address
of which no notice was given shall be deemed to be a receipt
of the notice, request or other communication. Any notice,
request or other communication required or permitted to be
given by any party may be given by such party's legal counsel.
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7.12 No Restrictive Covenants. Employee represents and warrants
that he is not subject to any restrictive covenant which would
prohibit or limit any of the services that Employee must
perform as contemplated by this Agreement.
7.13 Sole Employer; No Guarantor. The Company shall be the sole
employer of Employee hereunder, and no officer, director,
employee or shareholder of the Company shall be a guarantor of
this Agreement.
7.14 Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto in
reference to the subject matter hereof all the matters herein
agreed upon. This Agreement replaces in full all prior
employment agreements or understandings of the parties hereto,
and any and all such prior agreements or understandings are
hereby rescinded by mutual agreement.
7.15 Non-arbitral Attorneys Fees. In the event that a suit, action,
or other proceeding of any nature whatsoever (other than
arbitration), including, without limitation, any proceeding
under the U.S. Bankruptcy Code and involving issues peculiar
to federal bankruptcy law, any action seeking a declaration of
rights or any action for rescission, is instituted to
interpret or enforce this Agreement or any provision of this
Agreement, the prevailing party shall be entitled to recover
from the losing party the prevailing party's reasonable
attorneys', paralegals', accountants',and other experts'
professional fees and all other fees, costs, and expenses
actually incurred and reasonably necessary in connection
therewith, as determined by the judge at trial or other
proceeding, or on any appeal or review in addition to all
other amounts provided by law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
EMPLOYEE: COMPANY:
/s/ Jorge Perez, Jr. NATIONAL MEDICAL FINANCIAL
- ---------------------- SERVIVES CORPORATION
JORGE PEREZ, Jr.
By: /s/ Douglas R. Colkitt, M.D.
---------------------------------
CEO
Address: Address:
7315 S.W. 87th Ave., Suite 200 1315 Greg Street, Suite 103
- ------------------------------ Sparks, NV 89431
Miami, FL 33173
- ------------------------------
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Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
July 1, 1998 by and between NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION, a
Nevada corporation (the Company"), and RICARDO PEREZ, a resident of the State of
Florida ("Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the provision of medical billing
services to the public; and
WHEREAS, Employee warrants that he is the owner and operator of a
medical billing business with its principal business office being located at
7315 S.W. 87th Avenue, Suite 200, Miami, Florida 33173 and desires to continue
to remain active in the medical billing business by rendering services to the
Company on the terms and conditions set out in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises in this
Agreement and the payments to be made or received by each party, the Company and
Employee agree as follows:
ARTICLE I. DEFINITIONS
Capitalized terms used in the Agreement shall have their defined meaning
throughout the Agreement. The following terms shall have the meanings set forth
below, unless the context clearly requires otherwise.
1.1 Commencement Date means July 1, 1998.
1.2 Confidential Information means information that is proprietary
to the Company or proprietary to others and entrusted to the
Company, to the extent such information is a trade secret
under applicable law.
1.3 Full-Time means 5 days per week for 46 weeks per year.
1.4 DELETED
1.5 Territory means the geographical area- with the boundaries of
the Counties of Dade, Broward, Monroe, Collier and Palm Beach
in the State of Florida.
ARTICLE II. EMPLOYMENT, DUTIES AND TERM
2.1 Employment. Upon the terms and conditions set forth in this
Agreement, the
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Company hereby employs Employee, and Employee accepts such
employment by the Company.
2.2 Services and Duties.
(a) During the term of this Agreement, and excluding any
periods of personal time to which Employee is entitled,
Employee agrees to devote his best efforts and attention
during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the
responsibilities assigned to Employee hereunder, to use
Employee's best efforts to perform faithfully and efficiently
such responsibilities, to abide by the policies and procedures
of the Company and to accept no other gainful employment
without the consent of the Company. Employee will work
Full-Time as a staff employee of the Company, the duties and
responsibilities of which are set forth in Exhibit "A"
attached hereto.
(b) All monies paid to or received by Employee for teaching,
research, honoraria, writing and the like, shall be income to
and the property of Employee.
(c) Employee shall perform the services required hereunder
principally at 7315 S.W. 87th Avenue, Suite 200, Miami,
Florida and at such other locations as the Company shall
reasonably direct.
2.3 DELETED
2.4 Certain Proprietary Information. If Employee possesses. any
proprietary information of another person or entity as a
result of prior employment or relationship, Employee shall
honor any legal obligation that Employee has with that person
or entity with respect to such proprietary information.
2.5 Term. The employment pursuant to this Agreement shall begin on
the Commencement Date and shall end on the day immediately
prior to the fifth anniversary of the Commencement Date year,
unless sooner terminated as set forth in Article IV hereof.
At the expiration of the initial five-year term of this
Agreement, Employee shall have the option (the exercise of
which must be given in writing at least 180 days prior to the
end of the initial term) to renew this Agreement for two (2)
additional five-year period upon the same terms and conditions
as set forth in this Agreement.
In the event that Employee should remain employed with the
Company beyond the term of this Agreement and no new
employment agreement has been executed: (a) Employee shall be
deemed an employee at will, and his employment may then be
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terminated upon ninety (90) days written notice by either
party, and
(b) all terms and conditions of this Agreement shall continue
to apply.
ARTICLE III. COMPENSATION, BENEFITS AND EXPENSES
3.1 Compensation. During the term of Employee's employment by the
Company, Employee shall be entitled to compensation in
consideration of his services hereunder, equal to: SIXTY
PERCENT (60%) of the "Net Income" (as hereinafter defined) of
the Company attributable to services rendered at 7315 S.W.
87th Street, Suite 103, Miami, Florida 33173 (the "Business"),
less any compensation paid by the Company to Jorge Perez, Sr.
and Jorge Perez, Jr., consistent with the example of the
compensation pool described in Exhibit "B" attached hereto.
The Company shall pay Employee an advance or draw, against
anticipated compensation due hereunder, in the sum of $72,000
per annum, payable semi-monthly in accordance with the
Company's customary payroll practices. This advance or draw is
not additional or guaranteed compensation, and shall be
reconciled on the first anniversary date of this Agreement and
thereafter on a quarterly basis against the actual
compensation due under this Agreement.
3.2 Net Income. "Net Income" shall be computed in accordance with
generally accepted principles using the accrual method of
accounting and shall be equal to net revenues for the period
in question, initially commencing on the Commencement Date,
less: (a) all direct operating expenses of the Company for the
period in question, including but not limited to, all
employees' salaries, compensation and benefits (other than to
the Employee, Jorge Perez, Sr. and Jorge Perez, Jr., rent,
office and supplies, payroll taxes, health insurance, general
liability insurance, telephones, computers, repairs and
maintenance, equipment rental and leases; (b) appreciation and
amortization over a 5-year period of leasehold improvements,
equipment, other fixed assets and intangibles purchased after
the Commencement Date; (c) interest costs associated with the
acquisition of fixed assets and intangibles for the Business
after the Commencement Date; and (d) an allowance of four
percent (4%) of net revenues for corporate overhead/management
services. For purposes of this Agreement, the term "net
revenues" shall mean gross revenues, minus contractual
adjustments and uncollectible accounts, computed on an accrual
basis in accordance with generally accepted accounting
principles consistently applied.
3.3 Personal Time. Employee shall be entitled during the term of
this Agreement to absent himself voluntarily or due to actual
illness from the performance of his employment under this
Agreement, all such voluntary absences to count as personal
time, provided that:
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(a) Such personal time shall not exceed six (6) work weeks
(30 working days) during each calendar year (prorated for
any partial calendar year) during the period Employee is
employed Full-Time hereunder.
(b) The timing of personal time shall be scheduled in a
reasonable manner that is consistent with the best interest of
the Company.
(c) In addition to the aforesaid personal time, Employee shall
be entitled to the following holidays: New Year's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. In addition, Employee shall be entitled to
take as holidays any additional days that the Company is
closed for a holiday.
(d) Employee shall not be entitled to receive any additional
compensation from the Company (or to receive any additional
compensation upon termination or expiration of employment) on
account of his failure to take personal time. Unused personal
time during a calendar year may not be used in a subsequent
calendar year.
Vacation time, educational and sick leave (other than for
educational activities the cost of which is reimbursed under
Section 3.6 hereof) shall be deemed personal time, and shall
be subject to the provision of this Section 3.3.
Business-related travel away from the office, for which
expenses are reimbursed pursuant to Section 3.6 below, shall
not be treated as personal time.
3.4 Employee Benefits. During the term of the Employee's
employment under this Agreement, Employee shall be entitled to
participate in all of the employee benefit programs which are
available to the Company.
3.5 Office and Facilities. During the term of Employee's
employment under this Agreement, the Company shall provide
Employee the use of the Company's facilities and support
services.
3.6 Business Expenses. During the term of Employee's employment
under this Agreement, the Company shall bear all ordinary and
necessary business expenses incurred by Employee on behalf of
Company, in accordance with, and to the extent of, its uniform
policies in effect from time to time and subject to Internal
Revenue Service guidelines for business expense reimbursement.
Employee is responsible to promptly account for such expenses
to the Company in the manner prescribed from time to time by
the Company, including such records as are required by the
Internal Revenue Service.
Notwithstanding anything to the contrary in the preceding
paragraph, the Company
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shall reimburse Employee up to $10,000 annually (which
shall accrue ratably on a monthly basis) for dues,
continuing education seminars and association meeting
expenses (including travel expenses related thereto),
journals and books and fees, automobile expenses,
entertainment and any other expenses for which Employee
presents receipts as required by Internal Revenue Service
regulations (the "Expense Allowance") such expenses to be
reimbursed to Employee within thirty (30) days following
delivery of such receipts to the Company.
Fifty percent (50%) of the difference between $10,000 and the
Expense Allowance during any calendar year shall be paid to
Employee, in cash within forty-five (45) days following the
end of such calendar year. This amount shall be in addition to
the compensation due under Section 3.1 hereof.
3.7 Sign-up Bonus. In addition to the compensation set forth in
Section 3.1, Employee will receive a signing bonus from the
Company in the form of $25,000 cash, upon the execution and
delivery of this Agreement by Employee. The bonus described in
this Section 3.7 shall be deemed fully earned when this
Agreement is fully executed and effective and shall not be
affected by Employee's subsequent death or disability or the
termination or expiration of this Agreement for any reason
whatsoever.
ARTICLE IV. EARLY TERMINATION
4.1 Early Termination. Subject to the respective continuing
obligations of the parties elsewhere provided in this
Agreement, this Article IV sets forth the terms for early
termination of Employee's employment under this Agreement.
4.2 No Termination Without Cause. This Agreement may not be
terminated without cause.
4.3 Termination by the Company for Cause. The Company may
terminate Employee's employment under this Agreement effective
immediately for cause. For purposes of this Agreement, "Cause"
means (a) an act or acts of personal dishonesty taken by
Employee resulting in personal enrichment of Employee at the
expense of the Company, (b) any material breach by Employee of
his duties and other obligations under this Agreement, after
written notice and thirty (30) days in which to cure the same,
(c) if Employee is convicted of or pleads nolo contendere (or
equivalent) with respect to, a felony or a crime involving
moral turpitude, (d) if any representation of Employee to the
Company is materially untrue and Employee knew or should have
known the representation was untrue, (e) habitual absenteeism
(in excess of personal time permitted hereunder), alcoholism
or any form of drug abuse having an adverse effect on
Employee's performance of his duties or an adverse effect on
the Company, and (f) intentional conduct or activities
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(excluding conduct or activities engaged in by Employee in
good faith exercise of his business judgment on behalf of the
Company) materially damaging to the Company.
4.4 Termination in the Event of Death. Employee's employment under
this Agreement shall terminate in the event of Employee's
death.
4.5 Notice of Termination; Date of Termination. The provisions of
this Section 4.5 shall apply in connection with any early
termination of Employee's employment under this Agreement
pursuant to this Article IV.
(a) For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific
termination provisions in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances
claimed to provide the basis for such termination.
(b) For purposes of the Agreement, "Date Of Termination" shall
mean: (1) if Employee's employment is terminated due to death,
the day Employee's death occurs; (2) if Employee's employment
is terminated by the Company for Cause, the date specified in
the Notice of Termination; (3) if Employee's employment is
terminated by mutual agreement of the parties, the date
specified in such agreement; (4) if this Agreement is
terminated pursuant to Section 4.2 hereof, the date specified
in the Notice of Termination, which in no event shall be a
date earlier than one hundred and eighty (180) calendar days
after the date on which a Notice of Termination is given,
unless an earlier date has been expressly agreed to by
Employee in writing either in advance of, or after, receiving
such Notice of Termination; or (5) in any other instance not
referred to in clauses (1) through (4) above, the last day of
Employee's employment with the Company.
4.6 Compensation upon Termination of Employment. Upon termination
of Employee's employment under this Agreement, the Company
shall, within thirty (30) days following the Date of
Termination, pay any amounts earned by Employee and reimburse
Employee amounts due for reimbursable business expenses
incurred by Employee through the Date of Termination and any
additional amounts due Employee in accordance with the terms
of any Plan. Upon termination of employment for any reason
whatsoever, Employee shall not be entitled to be paid for any
accumulated (but unused) personal time under Section 3.2.
4.7 Termination by Employee. In the event that (i) the Company is
determined to be guilty of criminal activity and has exhausted
its right to appeal such determination, or (ii) any payment
owed to Employee under Article III hereof is not made when due
and such default is not cured within thirty (30) days after
Employee gives the Company written notice of such default,
then Employee may, within ten (10) days
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thereafter, give written Notice of Termination of this
Agreement to the Company and in such case the provisions of
Section 6.2 and Section 6.3 hereof shall not apply. In the
event Employee terminates this Agreement under this Section
4.7, then Employee shall be entitled to compensation
actually received or accrued (whichever is greater) under
Section 3.1 hereof through the Date of Termination.
4.8 Termination by Exercise of Buy-Back Right. This Agreement is
subject to that certain Buy-Back Agreement dated as of the
even date hereof between the Company and Advanced Physician
Billing Inc., and this Agreement shall terminate in its
entirety in accordance with the terms of said Buy-Back
Agreement.
ARTICLE V. CONFIDENTIAL INFORMATION
Prohibitions Against Use. Employee will not during or
subsequent to the termination or expiration of Employee's
employment under this Agreement use or disclose, other than in
connection with Employee's employment with the Company, any
Confidential Information to any person not employed by the
Company or not authorized by the Company to receive such
Confidential Information, without the prior written consent of
the Company. Employee will use reasonable and prudent care to
safeguard and protect and prevent the unauthorized use and
disclosure of Confidential Information. The obligations
contained in this Section, 5.1 will survive for as long as the
Company in its sole judgment considers the information to be
Confidential Information.
ARTICLE VI. NON-COMPETITION
6.1 Acknowledgements. Employee agrees and acknowledges that: (i)
he shall be in a position of confidence and trust with the
Company and he shall have access to Confidential Information;
(ii) the nature and periods of restrictions imposed by the
covenants set forth in this Article VI are fair, reasonable
and necessary to protect and preserve for the Company the
benefits of this Agreement and that such restrictions shall
not prevent this Employee from earning a livelihood; (iii) the
Company would sustain irreparable loss and damage if Employee
were to breach any of such covenants; (iv) the Territory is
reasonably sized inasmuch as the business of the Company is
conducted over a wide geographical area and is based on
serving customers in the entire Territory to be successful;
and (vi) the covenants herein set forth are made as an
inducement to and have been relied upon by the Company in
entering this Agreement. Employee represents and warrants that
Employee has not, prior to the date hereof, disclosed to any
person or used or otherwise exploited for Employee's own
benefit or for the benefit of any other person any
Confidential Information.
7
<PAGE>
6.2 Non-Competition by Employee. Employee agrees that, during
the term of his employment by the Company and for a period
of two (2) years following the termination or expiration of
Employee's employment with the Company for any reason,
Employee will not directly or indirectly, alone or as a
partner, officer, director, shareholder or employee of any
other firm, engage in any commercial activity in
competition with any part of the Company's business as
conducted during the term of the Agreement or as of the
date of such termination or expiration of employment or
with any part of the Company's contemplated business with
respect to which Employee has Confidential Information as
governed by Article VI, within the Territory.
6.3 Solicitation of Customers. Employee will not solicit any
person or entity who is or was a customer of the Company, for
a period of two (2) years after the termination or expiration
of Employee's employment with the Company for any reason.
6.4 Covenant Not to Recruit. Employee recognizes that the Company
workforce represents a substantial financial and, educational
investment and constitutes an important and vital aspect of
its business. Employee agrees that, during the term of his
employment by the Company and for a period of two (2) years
following the termination or expiration of Employee's
employment with the Company for. any reason whatsoever, he
shall not solicit, or assist anyone else in the solicitation
of, any of the Company's then current employees to terminate
their employment with the Company and to become employed by
any business enterprise with which Employee may then be
associated, affiliated or connected.
6.5 Severability. If any of the provisions of this Article VI
should in whole or part be held invalid in a final judgment by
a court of competent jurisdiction, such invalidity shall not
affect the validity of the rest of this Article VI, the
parties intending that such provision be severable.
6.6 Injunctive Relief. The parties hereto recognize and hereby
acknowledge that it is impossible to measure in money the
damages which would result to the Company or its successors or
assigns by reason of a failure by Employee to perform any of
the obligations imposed upon him under Article VI of this
Agreement. Therefore, the Company or its successors or assigns
shall be entitled to injunctive and other equitable relief to
enforce the terms of Article VI of this Agreement. If the
Company or its successors or assigns should institute an
action or proceeding to enforce the provisions of Article VI
hereof, Employee hereby waives the claim or defense that any
such party has an adequate remedy at law, and Employee shall
not urge in any action or proceeding the claim or defense that
such a remedy at law exists. At the discretion of the court or
arbitrator before which an injunctive proceeding is brought,
the running of the covenants herein may be tolled and
8
<PAGE>
extended for a period of time equal to the time period
Employee shall be in violation of any such covenant.
ARTICLE VII. GENERAL PROVISIONS
7.1 DELETED
7.2 DELETED
7.3 Physical and Mental Condition. Employee represents that he is
in good physical and mental health, has no chronic illness nor
any prior physical or mental problems, the recurrence of which
would impair his ability to function, under all the terms and
conditions of this Agreement.
7.4 Assignment. The Agreement is not assignable by Employee. This
Agreement may be assigned by the Company.
7.5 Offsets. Any amount payable to Employee pursuant to this
Agreement may be reduced for purposes of offsetting, either
directly or indirectly, any indebtedness or liability of
Employee to the Company.
7.6 Withholding. To the extent required by any applicable law,
including without limitation, any federal or state income tax
or excise tax law or laws, the Federal Insurance Contributions
Act, the Federal Unemployment Tax Act or any comparable
federal, state or local laws, the Company retains the right to
withhold such portion of any amount or amounts payable to
Employee under this Agreement as the Company deems necessary.
7.7 Governing Law; Arbitration. The validity and construction of
this Agreement shall be governed by the laws of the State of
Florida. The parties (meaning Employee on one hand and the
Company on the other hand) agree that all disputes concerning
this Agreement shall be submitted to binding arbitration in
accordance with the commercial arbitration rules of the
American Arbitration Association and the provisions contained
herein. The arbitration shall be conducted in Tampa, Florida,
by one arbitrator. The party initiating arbitration shall give
the other party notice of the matter in dispute and, if such
party is the obligor, shall deposit any disputed amount in
escrow during the pendency of the arbitration. If the parties
fail to agree upon an arbitrator within ten days after notice
of initiation of the arbitration is given, then the American
Arbitration Association shall select the arbitrator. All
determinations and the final decision of the arbitrator shall
be made in writing. The fees and expenses of the arbitrator
shall be awarded by the arbitrator in his discretion as part
of the award. The arbitrator's award shall be binding on the
parties hereto and may be entered in any court of competent
9
<PAGE>
jurisdiction. The parties reserve the right to seek a judicial
temporary restraining order, preliminary injunction, or other
similar short term equitable relief prior to the appointment
of the arbitrator. The arbitrator will have the right to make
a final determination of the parties' rights including,
without limitation, whether to make permanent, modify or
dissolve the judicial order.
7.8 Rules of Construction. No provision of this Agreement shall be
construed against or interpreted to the disadvantage of a
party by reason of such party having or being deemed to have
drafted, structured or dictated such provisions.
7.9 Waivers. No failure on the part of either party to exercise
and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other
right or remedy granted hereby or by any related document or
by law.
7.10 Modification. This Agreement may not be modified or amended
except by written instrument signed by the parties hereto and,
if on behalf of the Company, only by its President.
7.11 Notices. All notices, demands and other communications
hereunder shall be written and shall be deemed to have been
duly given if delivered in person or mailed by certified mail,
postage prepaid, to the address set forth below:
To the Company: National Medical Financial
Services Corporation
1315 Greg St., Suite 103
Sparks, NV 89431
with a copy to: Marcy L. Colkitt & Associates, P.C.
P.O. 607
Indiana, PA 15701-0607
To Employee: Ricardo Perez
7315 S.W. 87th Ave., Suite 200
Miami, FL 33173
with a copy to: Christopher M. Brown, Esq.
600 W. Andrews Ave., Suite 600
Ft. Lauderdale, FL 33301
or to such other address as either party may designate by
written notice to the other. Notices delivered in person
shall be deemed delivered on the date of
10
<PAGE>
delivery and notices mailed, as aforesaid, shall be deemed
delivered forty-eight (48) hours after the date mailed.
Rejection or other refusal to accept or inability-to
deliver because of a changed address of which no notice was
given shall be deemed to be a receipt of the notice,
request or other communication. Any notice, request or
other communication required or permitted to be given by
any party may be given by such party's legal counsel.
7.12 No Restrictive Covenants. Employee represents and warrants
that he is not subject to any restrictive covenant which would
prohibit or limit any of the services that Employee must
perform as contemplated by this Agreement.
7.13 Sole employer; No Guarantor. The Company shall be the sole
employer of Employee hereunder, and no officer, director,
employee or shareholder of the Company shall be a guarantor of
this Agreement.
7.14 Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto in
reference to the subject matter hereof all the matters herein
agreed upon. This Agreement replaces in full all prior
employment agreements or understandings of the parties hereto,
and any and all such prior agreements or understandings are
here by rescinded by mutual agreement.
7.15 Non-arbitral Attorneys Fees. In the event that a suit, action,
or other proceeding of any nature whatsoever (other than
arbitration), including, without limitation, any proceeding
under the U.S. Bankruptcy Code and involving issues peculiar
to federal bankruptcy law, any action seeking a declaration of
rights or any action for rescission, is instituted to
interpret or enforce this Agreement or any provision of this
Agreement, the prevailing party shall be entitled to recover
from the losing party the prevailing party's reasonable
attorneys', paralegals', accountants' and other experts'
professional fees and all other fees, costs, and expenses
actually incurred and reasonably necessary in connection
therewith, as determined by the judge at trial or other
proceeding, or on any appeal or review, in addition to all
other amounts provided by law.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
EMPLOYEE: COMPANY:
/s/ Ricardo Perez NATIONAL MEDICAL FINANCIAL
- ------------------------------
RICARDO PEREZ SERVICES CORPORATION
By: /s/ Douglas R. Colkitt, M.D.
----------------------------------
CEO
Address: Address:
7315 S.W. 87th Ave., Suite 200 1315 Greg Street, Suite 103
- ------------------------------ Sparks, NV 89431
Miami, FL 33178
- ------------------------------
12
<PAGE>
Exhibit 10.5
BUY-BACK AGREEMENT
THIS BUY-BACK AGREEMENT (this "Agreement") is made and entered into as of
July 1, 1998 by and between ADVANCED PHYSICIAN BILLING INC., a Florida
corporation ("Repurchaser"); and NATIONAL MEDICAL FINANCIAL SERVICES
CORPORATION, a Nevada corporation ("NMFS").
W I T N E S S E T H:
WHEREAS, NMFS proposes to acquire substantially all of the assets of
Repurchaser, pursuant to that certain Asset Purchase Agreement dated as of the
even date hereof (the "Asset Purchase Agreement");
WHEREAS, in consideration for the delivery of assets pursuant to the Asset
Purchase Agreement, NMFS delivered to Repurchaser that certain Promissory Note
of NMFS dated as of the even date hereof in favor of Repurchaser for the
principal indebtedness amount of $1,649,000 (the "NMFS Note");
WHEREAS, Jorge Perez, Sr. and Jorge Perez, Jr. are shareholders of
Repurchaser (the "Shareholders");
WHEREAS, in conjunction with said asset purchase pursuant to the Asset
Purchase Agreement, NMFS has made and entered into certain Employment Agreements
with the Shareholders and with Ricardo Perez (the "Employment Agreements"),
certain Noncompetition Agreements with the Shareholders (the "Noncompetition
Agreements"), and that certain Lease (the "Lease"), each dated as of the even
date hereof;
WHEREAS, in conjunction with said asset purchase pursuant to the Asset
Purchase Agreement, NMFS has made a loan to Repurchaser in the amount of
$400,000, the repayment obligation of which loan is evidenced by that certain
Promissory Note of Repurchaser dated as of the even date hereof in favor of NMFS
for the principal indebtedness of $400,000 (the "Repurchaser Note");
WHEREAS, to induce Repurchaser to enter into said Asset Purchase Agreement,
NMFS and Repurchaser hereby agree that Repurchaser should have the right under
certain circumstances as set forth herein to reacquire the assets conveyed to
NMFS pursuant to the Asset Purchase Agreement;
NOW, THEREFORE, IN CONSIDERATION OF the premises and the covenants and
agreements contained herein, the parties hereto do hereby agree as follows:
Section 1. Buy-Back Right. In the event of any failure of
1
<PAGE>
NMFS to make any payment due pursuant to the NMFS Note (the "Event of Default")
and the failure by NMFS to cure such Event of Default within ten (10) days after
receipt of written notice thereof, then Repurchaser shall have the right (which
right may be exercised at any time within thirty (30) thereafter): (i) to
repurchase from NMFS all of the assets of Repurchaser acquired by NMFS pursuant
to the Asset Purchase Agreement, and (ii) to purchase from NMFS all of the
assets acquired by NMFS subsequent to the date hereof to replace any assets
described in preceding clause (i) for use at 7315 S.W. 87th Street, Suite 103,
Miami, FL 33173 (the assets described in the preceding clauses (i) and (ii)
being hereinafter referred to collectively as the "Assets").
Section 2. Repurchase Price. In the event that Repurchaser exercises the
buy-back right under Section 1 hereof, the purchase price (the "Purchase Price")
shall be One U.S. Dollar ($1.00) payable to NMFS for the Assets.
Section 3. Repurchase.
3.1 Closing. The "Closing" of the transfer of the Assets shall be held at
the offices of Repurchaser on the date (the "Closing Date") specified in the
notice exercising the buy-back right, said Closing Date to be no later than 60
days after the exercise of the buy-back right. At the Closing, NMFS will deliver
the Assets described in Section 1 hereof against payment of the Purchase Price
in cash. Effective upon consummation of the Closing, the NMFS Note, the
Repurchaser Note, the Employment Agreements, the Lease, and the Noncompetition
Agreement shall be terminated.
3.2 Bill of sale and Assignment. In conjunction with the execution of this
Agreement, NMFS hereby delivers to Christopher M. Brown, Esq., as escrowee, an
executed Bill of Sale and Assignment in substantially the form attached hereto
as Exhibit "A", intended for the purposes of effecting the transfer of Assets
hereunder in the event of and subject to exercise of the buy-back right under
Section 1 hereof.
3.3 Standstill Obligation. From the date of receipt of any notice hereunder
of an Event of Default pursuant to Section 1 hereof until the Closing hereunder,
NMFS shall not mortgage, pledge or subject (whether or not voluntarily) to any
encumbrance, any of the Assets.
3.4 Further Acts and Assurances. From time to time and at any time, at
Repurchaser's request, whether on or after the Closing Date, and without further
consideration, NMFS' shall, at its expense, execute and deliver such further
documents and instruments of conveyance and transfer and shall take such further
actions (i) as may be reasonably necessary to transfer and convey to Repurchaser
all of the right, title and interest in and to the Assets, free and clear of any
encumbrance whatsoever, or (ii) as may be reasonably necessary to carry out the
intent of this Agreement and the transactions contemplated hereby.
2
<PAGE>
Section 4. Miscellaneous.
4.1 Expenses. All expenses of the preparation of this Agreement and of the
other agreements and transactions contemplated hereby, including, without
limitation, counsel fees, accounting fees, investment advisor's fees and
disbursements, shall be borne by the respective parties incurring such expense.
4.2 Notices. All notices, demands and other communications hereunder shall
be written and shall be deemed to have been duly given if delivered in person or
mailed by Federal Express (or other national air courier service), charges
prepaid, to the address set forth below:
To Repurchaser: Advanced Physician Billing Inc.
7315 S.W. 87th Avenue, Suite 200
Miami, FL 33173
with a copy to: Christopher M. Brown, Esq.
600 S. Andrews Ave., Suite 600
Ft. Lauderdale, FL 33301
To NMFS: National Medical Financial
Services Corporation
1315 Greg St., Suite 103
Sparks, NV 89431
with a copy to: Marcy L. Colkitt & Associates, P.C.
P.O. Box 607
Indiana, PA 15701-0607
or to such other address as NMFS or Repurchaser may designate by notice to the
other. Notices delivered in person shall be deemed delivered on the date of
delivery and notices sent via air courier service, as aforesaid, shall be deemed
delivered on the date of delivery as indicated by the records of the courier
service. Rejection or other refusal to accept or inability to deliver because of
a changed address of which no notice was given shall be deemed to be a receipt
of the notice, request or other communication. Any notice, request or other
communication required or permitted to be given by any party may be given by
such party's legal counsel.
4.3 Entire Agreement. This Agreement and the Exhibits, and the other
agreements and schedules and documents delivered pursuant hereto constitute the
entire agreement between the parties hereto pertaining to the subject matter
hereof and supersede all prior and contemporaneous agreements, understandings,
letters of intent negotiations and discussions, whether written or oral, of the
parties, and there are no representations, warranties or other agreements
between the parties in connection with the subject matter hereof, except as
specifically set forth herein. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the parties to be bound
thereby.
3
<PAGE>
4.4 Governing Law; Arbitration. The validity and construction of this
Agreement shall be governed by the laws of the State of Florida. The parties
(meaning Repurchaser on one hand and NMFS on the other hand) agree that all
disputes concerning this Agreement or any of the other agreements executed and
delivered in connection with the Closing shall be submitted to binding
arbitration in accordance with the commercial arbitration rules of the American
Arbitration Association and the provisions contained herein. The arbitration
shall be conducted in Tampa, Florida, by one arbitrator. The party initiating
arbitration shall give the other party notice of the matter in dispute. If the
parties fail to agree upon an arbitrator within ten days after notice of
initiation of the arbitration is given, then the American Arbitration
Association shall select the arbitrator. All determinations and the final
decision of the arbitrator shall be made in writing. The fees and expenses of
the arbitrator shall be awarded by the arbitrator in his discretion as part of
the award. The arbitrator's award shall be binding on the parties hereto and may
be entered in any court of competent jurisdiction. The parties reserve the right
to seek a judicial temporary restraining order, preliminary injunction, or other
similar short term equitable relief prior to the appointment of the arbitrator.
The arbitrator will have the right to make a final determination of the parties'
rights including, without limitation, whether to make permanent, modify or
dissolve the judicial order.
4.5 Section and Exhibit Headings. The Section and Exhibit headings are for
reference only and shall not limit or control the meaning of any provisions of
this Agreement.
4.6 Waiver. No delay or omission on the part of any party hereto in
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement.
4.7 Nature and Survival of Representations. All statements contained in any
certificate delivered by or on behalf of a party to this Agreement in connection
with the transactions contemplated hereby shall be deemed to be representations
and warranties made by such party hereunder. The covenants, representations and
warranties made by the parties each to the other in this Agreement or pursuant
hereto shall survive the Closing for the applicable period of the statute of
limitations.
4.8 Exhibits. All exhibits, schedules and documents referred to in or
attached to this Agreement are integral parts of this Agreement as if fully set
forth herein and all statements appearing therein shall be deemed to be
representations. All items disclosed hereunder shall be deemed disclosed only in
connection with the specific representation to which they are explicitly
referenced.
4.9 Amendments. This Agreement may be amended, but only in writing, signed
by the parties hereto.
4.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall comprise one and the same instrument.
4
<PAGE>
4.11 Nonarbitral Attorneys' Fees. In the event that a suit, action, or other
proceeding of any nature whatsoever (other than arbitration), including, without
limitation, any proceeding under the U.S. Bankruptcy Code and involving issues
peculiar to federal bankruptcy law, any action seeking a declaration of rights
or any action for rescission, is instituted to interpret or enforce this
Agreement or any provision of this Agreement, the prevailing party shall be
entitled to recover from the losing party the prevailing party's reasonable
attorneys', paralegals', accountants', and other experts' professional fees and
all other fees, costs, and expenses actually incurred and reasonably necessary
in connection therewith, as determined by the judge at trial or other
proceeding, or on any appeal or review, in addition to all other amounts
provided by law.
4.12 No Other Parties. Repurchaser acknowledges and agrees that the only
other party to this Agreement is NMFS and that Douglas R. Colkitt, M.D.
individually is not a party, in any capacity to this Agreement.
4.13 Rules of Construction. All references herein to the singular shall
include the plural, and vice versa, and all references herein to the neuter
shall include the masculine or feminine, as the case may be, and vice versa.
When general words or terms are used herein followed by the word "including" (or
another form of the word "include") and words of particular and specific
meaning, the general words shall be construed in their widest extent, and shall
not be limited to persons or things of the same general kind or class as those
specifically mentioned in the words of particular and specific meaning. All
parties have participated in the drafting of this Agreement. No provision of
this Agreement shall be construed against or interpreted to the disadvantage of
a party by reason of such party having or being deemed to have drafted,
structured or dictated such provisions. Time is of the essence of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written,
ADVANCED PHYSICIAN BILLING INC.,
a Florida corporation ("Repurchaser")
By: /s/ Jorge Perez, Sr.
-----------------------------------
Title: President
-----------------------------
NATIONAL MEDICAL FINANCIAL
SERVICES CORPORATION, a Delaware
corporation ("NMFS")
By: /s/ Douglas R. Colkitt, M.D.
-----------------------------------
Title: CEO
-----------------------------
5
<PAGE>
Exhibit 10.6
NONCOMPETITION AGREEMENT
------------------------
THIS NONCOMPETITION AGREEMENT (this "Agreement") is made and entered
into as of July 1, 1998, by and among NATIONAL MEDICAL FINANCIAL SERVICES
CORPORATION, a Nevada corporation ("NMFS"); ADVANCED PHYSICIAN BILLING INC., a
Florida corporation ("Seller"); and JORGE PEREZ, SR., a resident of the State of
Florida ("Shareholder"),
W I T N E S S E T H:
WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of
the even date hereof (the "Asset Purchase Agreement") among NMFS, Shareholder,
and Seller, NMFS proposes to acquire substantially all of the assets of the
Seller;
WHEREAS, Shareholder owns 50% of the issued and outstanding common
stock of Seller;
WHEREAS, to induce NMFS to perform under the Asset Purchase Agreement,
Shareholder has agreed not to engage in certain businesses within a certain time
period and within certain specified geographic areas, and subject to certain
conditions, all as more particularly set forth herein;
WHEREAS, in conjunction with this Agreement and to induce NMFS to
perform under the Asset Purchase Agreement,;Shareholder has agreed to execute an
employment agreement of even ate herewith (the "Employment Agreement") by which
Shareholder will be employed by NMFS;
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and adequacy of which are acknowledged by the parties
hereto, the parties hereto hereby agree as follows:
Section 1. Noncompetition.
---------- ---------------
(a) Shareholder agrees that for a period ending on the later
of (i) the fifth anniversary of the date of this Agreement or (ii) the second
anniversary of the date that Shareholder is no longer employed under the
Employment Agreement for any reason, Shareholder will not, directly or
indirectly (either alone or as a partner, officer, director, employee,
independent contractor, consultant, investor, partner, lender or stockholder of
any company or business organization):
(1) recruit, solicit, or otherwise seek to induce
employees or customers of NMFS to terminate their
employment or customer relationship with NMFS or to
violate any agreement with NMFS; or
<PAGE>
(2) own, lease, manage or operate any medical billing
business in the "Territory" (as hereinafter defined);
or
(3) engage in any business activity in the "Territory"
which is directly or indirectly in competition with
any medical billing business of NMFS;
(4) otherwise provide any medical billing services within
the "Territory";
provided, however, that:
- ------------------
(A) the record or beneficial ownership by Shareholder of
1% or less of the outstanding publicly traded capital
stock of any company providing services described in
clauses (2), (3), and (4) above shall not be deemed
to be in violation of clause (2), (3), or (4) above
so long as Shareholder is not an officer, consultant,
director, independent contractor or employee of such
company; and
(B) services provided by Shareholder to NMFS under the
Employment Agreement shall not be deemed in violation
of this Section 1.
(b) Shareholder will not, without the prior written consent of
NMFS, disclose, other than in connection with the Employment Agreement, any
"Confidential Information" of Seller or NMFS to any person not authorized by
NMFS to receive such information. This covenant shall not apply to any
Confidential Information now or hereafter voluntarily disseminated by NMFS to
the public, or which otherwise has become part of the public domain through
lawful means. "Confidential Information", for purposes of this Agreement, shall
mean information that is (i) proprietary to NMFS whether or not such information
is deemed to be a trade secret of NMFS, or (ii) proprietary to others and
entrusted to NMFS, or (iii) proprietary to Seller and acquired by NMFS pursuant
to the Asset Purchase Agreement, and which is a trade secret under applicable
law.
(c) Shareholder acknowledges and agrees (i) that Shareholder
has received pursuant to the Asset Purchase Agreement adequate consideration for
the covenants and obligations of Shareholder contained in this Agreement, and
(ii) that the nature and the periods of restriction imposed in this Section 1
are fair, reasonable and necessary to protect and preserve for NMFS the benefits
of this Agreement and that such restrictions shall not prevent Shareholder from
earning a livelihood.
(d) The term "Territory" as used herein shall mean the
geographical area within the boundaries of the Counties of Dade, Broward,
Monroe, Collier and Palm Beach in the State of Florida.
2
<PAGE>
Section 2. Notices. Service of all notices given under this Agreement
will be sufficient if in writing, and if given personally, or if mailed to the
party involved at the address of such party set forth below (or at such other
address as such party shall have designated by written notice hereunder to the
others). Any mailed notice will be effective (a) 48 hours after deposited in the
United States mail, certified or registered, duly addressed and with postage
prepaid, or (b) when received, if sent by recognized overnight courier service
with signed confirmation of receipt. The parties hereto may, from time to time,
by written notice to the other parties, designate a different address which will
be substituted for the address previously specified.
Section 3. Successors. This Agreement and NMFS's rights and obligations
hereunder may be assigned or transferred by NMFS in whole or in pare at any time
without the consent of Shareholder.
Section 4. Governing Law; Attorneys' Fees. This Agreement is executed
in and is governed by the laws of the State of Florida, exclusive of the
principles of conflicts of laws. In the event that a suit, action, arbitration,
or other proceeding of any nature whatsoever, including, without limitation, any
proceeding under the U.S. Bankruptcy Code and involving issues peculiar to
federal bankruptcy law, any action seeking a declaration of rights or any action
for rescission, is instituted to interpret or enforce this Agreement or any
provision of this Agreement, the prevailing party shall be entitled to recover
from the losing party, prevailing party's reasonable attorneys', paralegals',
accountants', and other experts' professional fees and all other fees, costs,
and expenses actually incurred and reasonably necessary in connection therewith,
as determined by the judge or arbitrator at trial or other proceeding, or on any
appeal or review, in addition to all other amounts provided by law.
Section 5. Severability; Reformation. If any of the provisions, or
portions thereof, of this Agreement are held to be unenforceable or invalid by
any arbitrator or court, the validity and enforceability of the remaining
provisions, or portions thereof, will not be affected and shall continue in
force. If any arbitrator or court determines that the scope, duration or
geographical limit of any of the restrictions contained in this Agreement is
unenforceable, it is the intention of the parties that the restrictions and
covenants shall not thereby be terminated but rather shall be amended and
revised to the extent required to render them valid and enforceable.
Section 6. Separate Agreement. Shareholder agrees that the covenants
and agreements contained herein shall be construed as agreements independent of
any other agreements with NMFS and are independently supported by good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and further agrees that this Agreement shall be interpreted,
construed and enforced separate and apart from any other agreements between or
among the parties hereto. Shareholder further agrees that any claim or cause of
action of Shareholder against NMFS and any other party hereto arising out of any
other agreement or arising out of any set of facts shall not constitute a
defense to the enforcement by NMFS or its successors or assigns of the covenants
and agreements of Shareholder contained herein; provided however, that if
Article VI (Non-Competition) of the Employment Agreement is no longer
3
<PAGE>
effective pursuant to the Employment Agreement, then this Agreement shall
terminate; and provided further, that this Agreement is subject to that certain
Buy-Back Agreement dated as of the even date hereof between NMFS and Advanced
Physician Billing Inc., and this Agreement shall terminate in its entirety in
accordance with the terms of the Buy-Back Agreement.
Section 7. Injunctive Relief. The parties hereto recognize and hereby
acknowledge that it is impossible to measure in money the damages which would
result to NMFS or its successors or assigns by reason of a failure by
Shareholder to perform any of the obligations imposed upon him under this
Agreement. Therefore, NMFS and its successors or assigns shall be entitled to
injunctive and other equitable relief to enforce the terms of this Agreement,
without the necessity of showing irreparable harm. If NMFS or its successors or
assigns should institute an action or proceeding to enforce the provisions
hereof, Shareholder hereby waives the claim or defense that any such party has
an adequate remedy at law, and Shareholder agrees he shall not urge in any
action or proceeding the claim or defense that such a remedy at law exists. At
the discretion of the court or arbitrator before which an injunctive proceeding
is brought, the running of the covenants in Section 1(a) hereof may be tolled
and extended for a period of time equal to the time period Shareholder shall be
in violation of any such covenant.
Section 8. Arbitration. All disputes hereunder shall be resolved by
arbitration in the manner specified in the Asset Purchase Agreement.
4
<PAGE>
IN WITNESS WHEREOF, this Agreement is entered into and effective as of
the day and year first written above.
NMFS:
NATIONAL MEDICAL FINANCIAL
SERVICES CORPORATION, a Nevada
corporation.
By: /s/ Douglas R. Colkitt, M.D.
-------------------------------
Title: CEO
-------------------
Address:
1315 Greg St., Suite 103
Sparks, NV 89431
SELLER:
ADVANCED PHYSICIAN BILLING INC., a
Florida corporation
By: Jorge Perez, Sr.
-------------------------------
Title: President
-------------------
SHAREHOLDER:
/s/ Jorge Perez, Sr.
----------------------------------
JORGE PEREZ, SR.
Address:
7315 S.W. 87th Avenue, Suite 200
Miami, FL 33173
5
<PAGE>
Exhibit 10.7
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is made and entered
into as of July 1, 1998, by and among NATIONAL MEDICAL FINANCIAL SERVICES
CORPORATION, a Nevada corporation ("NMFS"); ADVANCED PHYSICIAN BILLING INC.,
a Florida corporation ("Seller"); and JORGE PEREZ, JR., a resident of the
State of Florida ("Shareholder").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of
the even date hereof (the "Asset Purchase Agreement") among NMFS,
Shareholder, and Seller, NMFS proposes to acquire substantially all of the
assets of the Seller;
WHEREAS, Shareholder owns 50% of the issued and outstanding common stock
of Seller;
WHEREAS, to induce NMFS to perform under the Asset Purchase Agreement,
Shareholder has agreed not to engage in certain businesses within a certain
time period and within certain specified geographic areas, and subject to
certain conditions, all as more particularly set forth herein;
WHEREAS, in conjunction with this Agreement and to induce NMFS to
perform under the Asset Purchase Agreement, Shareholder has agreed to execute
an employment agreement of even date herewith (the "Employment Agreement") by
which Shareholder will be employed by NMFS;
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and adequacy of which are acknowledged by the
parties hereto, the parties hereto hereby agree as follows:
Section 1. Noncompetition.
(a) Shareholder agrees that for a period ending on the later
of (i) the fifth anniversary of the date of this Agreement or (ii) the second
anniversary of the date that Shareholder is no longer employed under the
Employment Agreement for any reason, Shareholder will not, directly or
indirectly (either alone or as a partner, officer, director, employee,
independent contractor, consultant, investor, partner, lender or stockholder
of any company or business organization):
(1) recruit, solicit, or otherwise seek to induce employees
or customers of NMFS to terminate their employment or
customer relationship with NMFS or to violate any
agreement with NMFS; or
1
<PAGE>>
(2) own, lease, manage or operate any medical billing
business in the "Territory." (as hereinafter defined); or
(3) engage in any business activity in the "Territory" which
is directly or indirectly in competition with any medical
billing business of NMFS;
(4) otherwise provide any medical billing services within the
"Territory";
provided, however, that:
(A) the record or beneficial ownership by Shareholder of 1%
or less of the outstanding publicly traded capital stock
of any company providing services described in clauses
(2), (3), and (4) above shall not be deemed to be in
violation of clause (2), (3), or (4) above so long as
Shareholder is not an officer, consultant, director,
independent contractor or employee of such company; and
(B) services provided by Shareholder to NMFS under the
Employment Agreement shall not be deemed in violation of
this Section 1.
(b) Shareholder will not, without the prior written consent
of NMFS, disclose, other than in connection with the Employment Agreement,
any "Confidential Information" of Seller or NMFS to any person not authorized
by NMFS to receive such information. This covenant shall not apply to any
Confidential Information now or hereafter voluntarily disseminated by NMFS to
the public, or which otherwise has become part of the public domain through
lawful means. "Confidential Information", for purposes of this Agreement,
shall mean information that is (i) proprietary to NMFS whether or not such
information is deemed to be a trade secret of NMFS, or (ii) proprietary to
others and entrusted to NMFS, or (iii) proprietary to Seller and acquired by
NMFS pursuant to the Asset Purchase Agreement, and which is a trade secret
under applicable law.
(c) Shareholder acknowledges and agrees (i) that Shareholder
has received pursuant to the Asset Purchase Agreement adequate consideration
for the covenants and obligations of Shareholder contained in this Agreement,
and (ii) that the nature and the periods of restriction imposed in this
Section 1 are fair, reasonable and necessary to protect and preserve for NMFS
the benefits of this Agreement and that such restrictions shall not prevent
Shareholder from earning a livelihood.
(d) The term "Territory" as used herein shall mean the
geographical area within the boundaries of the Counties of Dade, Broward,
Monroe, Collier and Palm Beach in the State Of Florida.
2
<PAGE>
Section 2. Notices. Service of all notices given under this
Agreement will be sufficient if in writing, and if given personally, or if
mailed to the party involved at the address of such party set forth below (or
at such other address as such party shall have designated by written notice
hereunder to the others). Any mailed notice will be effective (a) 48 hours
after deposited in the United States mail, certified or registered, duly
addressed and with postage prepaid, or (b) when received, if sent by
recognized overnight courier service with signed confirmation of receipt. The
parties hereto may, from time to time, by written notice to the other
parties, designate a different address which will. be substituted for the
address previously specified.
Section 3. Successors. This Agreement and NMFS's rights and
obligations hereunder may be assigned or transferred by NMFS in whole or in
part at any time without the consent of Shareholder.
Section 4. Governing Law; Attorneys' Fees. This Agreement is
executed in and is governed by the laws of the State of Florida, exclusive of
the principles' of conflicts of laws. In the event that a suit, action,
arbitration, or other proceeding of any nature whatsoever, including, without
limitation, any proceeding under the U.S. Bankruptcy Code and involving
issues peculiar to federal bankruptcy law, any action seeking a declaration
of rights or any action for rescission, is instituted to interpret or enforce
this Agreement or any provision of this Agreement, the prevailing party shall
be entitled to recover from the losing party, prevailing party's reasonable
attorneys', paralegals', accountants', and other experts' professional fees
and all other fees, costs, and expenses actually incurred and reasonably
necessary in connection therewith, as determined by the judge or arbitrator
at trial or other proceeding, or on any appeal or review, in addition to all
other amounts provided by law.
Section 5. Severability: Reformation. If any of the provisions, or
portions thereof, of this Agreement are held to be unenforceable or invalid
by any arbitrator or court, the validity and enforceability of the remaining
provisions, or portions thereof, will not be affected and shall Continue in
force. If any arbitrator or court determines that the scope, duration or
geographical limit of any of the restrictions contained in this Agreement is
unenforceable, it is the intention of the parties that the restrictions and
covenants shall not thereby be terminated but rather shall be amended and
revised to the extent required to render them valid and enforceable.
Section 6. Separate Agreement. Shareholder agrees that the
covenants and agreements contained herein shall be construed as agreements
independent of any other agreements with NMFS and are independently supported
by good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and further agrees that this Agreement shall be
interpreted, construed and enforced separate and apart from any other
agreements between or among the parties hereto. Shareholder further agrees
that any claim or cause of action of Shareholder against NMFS and any other
party hereto arising out of any other agreement or arising out of any set of
facts shall not constitute a defense to the enforcement by NMFS or its
successors or assigns of the covenants and
3
<PAGE>
agreements of Shareholder contained herein; provided however, that if Article
VI (Non-Competition) of the Employment Agreement is no longer effective
pursuant to the Employment Agreement, then this Agreement shall terminate;
and provided further, that this Agreement is subject to that certain Buy-Back
Agreement dated as of the even date hereof between NMFS and Advanced
Physician Billing Inc., and this Agreement shall terminate in its entirety in
accordance with the terms of the Buy-Back Agreement.
Section 7. Injunctive Relief. The parties hereto recognize and
hereby acknowledge that it is impossible to measure in money the damages
which would result to NMFS or its successors or assigns by reason of a
failure by Shareholder to perform any of the obligations imposed upon him
under this Agreement. Therefore, NMFS and its successors or assigns shall be
entitled to injunctive and other equitable relief to enforce the terms of
this Agreement, without the necessity of showing irreparable harm. If NMFS
or its successors or assigns should institute an action or proceeding to
enforce the provisions hereof, Shareholder hereby waives the claim or defense
that any such party has an adequate remedy at law, and Shareholder agrees he
shall not urge in any action or proceeding the claim or defense that such a
remedy at law exists. At the discretion of the court or arbitrator before
which an injunctive proceeding is brought, the running of the covenants in
Section 1(a) hereof may be tolled and extended for a period of time equal to
the time period Shareholder shall be in violation of any such covenant.
Section 8. Arbitration. All disputes hereunder shall be resolved by
arbitration in the manner specified in the Asset Purchase Agreement.
4
<PAGE>
IN WITNESS WHEREOF, this Agreement is entered into and effective as of
the day and year first written above.
NMFS:
NATIONAL MEDICAL FINANCIAL SERVICES
CORPORATION, a Nevada
corporation
By: /s/ Douglas R. Colkitt, M.D.
----------------------------------
Title: CEO
--------------------------
Address:
1315 Greg St., Suite 103
Sparks, NV 89431
SELLER:
ADVANCED PHYSICIAN BILLING INC., a
Florida corporation
By: Jorge Perez, Sr.
----------------------------------
Title: President
--------------------------
SHAREHOLDER:
/s/ Jorge Perez, Jr.
-------------------------------------
JORGE PEREZ, JR.
Address:
7315 S.W. 87th Avenue, Suite 200
Miami, FL 33173
5
<PAGE>
Exhibit 10.8
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE
TRANSFERRED ABSENT SUCH REGISTRATION OR DELIVERY OF A LEGAL OPINION, IN FORM AND
SUBSTANCE SATISFACTORY TO NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION, THAT
SUCH REGISTRATION IS NOT REQUIRED.
PROMISSORY NOTE
$1,649,000 July 1, 1998
Sparks, Nevada
FOR VALUE RECEIVED, the undersigned, NATIONAL MEDICAL FINANCIAL SERVICES
CORPORATION, a Nevada corporation (hereinafter referred to as "Maker"), hereby
promises to pay to ADVANCED PHYSICIAN BILLING INC., a Florida corporation
(hereinafter referred to as "Holder"), at 33173 S.W. 87th Avenue, Suite 200,
Miami, Florida 33173 or at such other address as Holder may from time to time
hereafter direct in writing, in legal tender of the United States of America,
the principal sum of ONE MILLION SIX HUNDRED FORTY-NINE THOUSAND AND NO/100THS
U.S. DOLLARS ($1,649,000.00), subject to the adjustments on the Maturity Date as
defined below and consistent.]with the examples set forth in Exhibit "A"
attached hereto, together with simple interest on the unpaid balance of such
principal amount at the rate of seven percent (7%) per annum from the date
hereof until the unpaid principal balance shall have been paid in full.
Interest shall be computed on a 365 day year simple interest basis. Payments
of interest only shall be due and payable quarterly in arrears on the first day
of September, 1998 and on the first day of each succeeding December, March, June
and September.
If not sooner paid, the outstanding principal amount of this Note and all
accrued interest owing shall be paid in full on July 1, 2003 (the "Maturity
Date").
This Note shall terminate in accordance with the terms of that certain
Buy-Back Agreement entered into by Maker as of the even date hereof, in the
event that the Holder elects to exercise its buyback rights thereunder.
On the Maturity Date, the principal indebtedness hereunder and the principal
payment otherwise due at such time shall be
(A) increased by an amount equal to SIXTY PERCENT (60%) of the
positive difference, if any, between (i) the greater of (a) the
average annual Net Income (as defined below) of the Maker
attributable to its facilities located at 7315 S.W. 87th Avenue,
Suite 200, Miami, Florida 33173 (the "Miami Office") during the
period beginning on the even date of this Note and ending on the
Maturity Date or (b) the
1
<PAGE>
Net Income of the Maker attributable to the Miami Office during
the twelve-month period preceding the Maturity Date, in either
case minus (ii) $718,228.00; provided, however, that such formula
shall include (b) only in the event that (a) is greater than
$718,228.00;
(B) reduced by an amount equal to the product of (i) the positive
difference; if any, between (a) $718,228.00, minus (b) the average
annual Net Income of the Maker attributable to the Miami Office
during the period beginning on the even date of this Note and
ending on the Maturity Date, times (ii) the ratio of $1,724',000
over $1,649,000, i.e., 1.045482, to gross up the reduction amount
by the non- Note consideration delivered to Holder in connection
with the acquisition of the Miami Office business by Maker from
Holder; and
(c) reduced by an amount equal to the indebtedness of Holder to Maker
pursuant to that certain Promissory Note dated as of the even date
hereof in the face amount of $400,000 the "Seller Promissory
Note"), provided that the Seller. Promissory Note shall be
cancelled and deemed satisfied upon payment in full of this Note
(taking into account this reduction).
For purposes of this Note, the term "Net Income" shall mean the amount be
computed in accordance with generally accepted principles using the accrual
method of accounting and equal to net revenues of NMFS attributable to the Miami
Office for the period in question, less: (a) all direct operating expenses of
NMFS for the period in question, including but not limited to, all employees'
salaries, compensation and benefits (other than to Jorge Perez, Sr., Jorge
Perez, Jr., and Ricardo Perez), rent, office supplies,' payroll taxes, health
insurance, general liability insurance, telephones, computers, repairs and
maintenance, Expense Allowances pursuant to Section 3.6 of the Employment
Agreements dated the even date hereof between Jorge Perez, Sr., Jorge Perez,
Jr., and Ricardo Perez and the Maker, equipment rental and leases; (b)
depreciation and amortization over a 5-year period of leasehold improvements,
equipment, other fixed assets and intangibles purchased by the Maker and used at
the Miami Office after the date of this Note; (c) interest costs associated with
the acquisition of fixed assets and intangibles acquired by the Maker and used
at the Miami Office after the date of this Note; and (d) an allowance of four
percent (4%) of net revenues for corporate overhead/management services.
The term "net revenues", for purposes of the above calculation, means gross
revenues, minus contractual adjustments and uncollectible accounts, computed on
ah accrual basis in accordance with generally accepted accounting principles
consistently applied.
In addition, the principal indebtedness hereunder and the principal payment
due and payable on the Maturity Date shall be further decreased by the amount of
interest paid since the even date of this Note on the amount of any (A)
adjustment, if any, of principal indebtedness, as determined pursuant to the
preceding paragraph.
2
<PAGE>
If the (B) adjustment is in excess of the remaining payment otherwise due on
the Maturity Date, Holder agrees to pay the amount of such excess to the Maker
on the Maturity Date.
Maker has set off rights with respect to this Note, as more particularly set
forth in that certain Asset Purchase Agreement dated as of the even date hereof,
by and among Maker, Holder, Jorge Perez, Sr. and Jorge Perez, Jr.
In the event this Note, or any part thereof, is collected by or through an
attorney-at-law, Maker agrees to pay all costs of collection including, but not
limited to, reasonable attorneys' fees.
Maker's failure to pay in full any amount of principal or interest due under
this Note, which is not cured within ten (10) days after receipt by Maker of
notice of such default, shall constitute an event of default hereunder. Upon the
occurrence of any such event of default, the entire unpaid principal balance
hereof and all interest owed thereon and due hereunder shall, at the option of
the Holder, and upon notice to or demand upon Maker (all of which notices and
demands Maker hereby expressly waives), become immediately due and payable.
TIME IS OF THE ESSENCE OF THIS NOTE. MAKER HEREBY WAIVES PRESENTMENT FOR
PAYMENT, PROTEST, NOTICE OF PROTEST, NOTICE OF DISHONOR AND OF NONPAYMENT
HEREOF, NOTICE OF ACCELERATION AND DILIGENCE IN COLLECTION.
No extension of the time for the payment of this Note or any part thereof,
made by agreement with any person now or hereafter liable for the payment of
this Note shall operate to release, discharge, modify, change or affect the
original liability of Maker of this Note, either in whole or 'in part, unless
Holder agrees otherwise in writing. This Note may not be changed orally, but
only by an agreement in writing signed by the party against whom enforcement of
any waiver, change or modification is sought.
In no event, whether by acceleration of the maturity of the indebtedness
evidenced hereby or otherwise shall the amount of interest due or payable
hereunder exceed the maximum rate of interest that may be paid by Maker under
applicable law; and, in the event of any such payment inadvertently paid by
Maker or inadvertently received by Holder, such excess sum shall be, at Maker's
option, returned to Maker forthwith or credited as a payment of principal, but
shall not be applied to the payments of interest. It is the intent hereof that
Maker not pay or contract to pay, and that Holder not receive or contract to
receive, directly or indirectly in any manner whatsoever, interest in excess of
that which may be paid by Maker under applicable law.
Wherever possible each provision of this Note shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining
4
<PAGE>
provisions of this Note. No delay or failure on the part of Holder in the
exercise of any right or remedy hereunder shall operate as a waiver thereof, nor
as an acquiescence in any default, nor shall any single or partial exercise by
Holder of any right or remedy preclude any other right or remedy. Holder, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against Maker or any other property or indebtedness due or
to become due to Maker. Maker agrees that Holder shall have no responsibility
for the protection or preservation of the value of, and may at any time release,
surrender, substitute or exchange, any collateral securing this Note.
The word "Maker" as used herein shall include transferees, successors and
assigns of Maker, and all rights of Holder hereunder shall inure to the benefit
of its transferees, successors and assigns. All obligations of Maker shall bind
its successors and assigns. This Note shall be governed by, and construed and
enforced in accordance with, the laws of the State of Florida.
<PAGE>
IN WITNESS WHEREOF, Maker has signed, sealed and delivered this Note on the
day and year first written above.
NATIONAL MEDICAL FINANCIAL
SERVICES CORPORATION, a Nevada
corporation
By: /s/ Douglas R. Colkitt, M.D.
-----------------------------
Title: CEO
----------------------
Agreed and accepted:
ADVANCED PHYSICIAN BILLING INC.,
a Florida Corporation
By: /s/Jorge Perez, Sr.
-----------------------------
Jorge Perez, Sr.
President
/s/ Jorge Perez, Sr.
- --------------------------------
JORGE PEREZ, SR.
/s/ Jorge Perez, Jr.
- --------------------------------
JORGE PEREZ, JR.
Date July 1, 1998
4
<PAGE>
EXHIBIT "A"
EXAMPLES OF THE
COMPUTATION OF (A), (B), AND (C) ADJUSTMENTS
<TABLE>
<CAPTION>
Example Example Example
#1 #2 #3
------- ------- -------
<S> <C> <C> <C>
Net Income:
07/01/98-06/30/99 $ 1,000,000 $ 700,000 $ 700,000
07/01/99-06/30/00 1,500,000 1,000,000 725,000
07/01/00-06/30/01 2,000,000 1,500,000 700,000
07/01/01-06/30/01 2,500,000 2,000,000 725,000
07/01/02-06/30/03 3,000,000 1,000,000 725,000
----------- ---------- ----------
Total Net Income: $10,000,000 $6,200,000 $3,575,000
Average Annual Net Income $ 2,000,000 $1,240,000 $ 715,000
Maturity Date Payment:
Note Face Amount $ 1,649,000 $1,649,000 $1,649,000
plus
(A) Adjustment +1,369,000(1) +313,063(2) +0
minus
(B) Adjustment(3) 0 0 -4,555
minus
(C) Adjustment(4) -561,021 -561,021 -561,021
Maturity Date
Principal Payment $ 2,457,042 $1,401,042 $1,083,424
</TABLE>
- ----------
1 Formula (A)(i)(b): Since average annual Net Income during the term of the
Note is in excess of $718,228 and formula (A)(i)(b) is greater than formula
(A)(i)(a), 60% of excess of Net Income during the twelve months preceding
the Maturity Date (83,000,000) over $718,228.
2 Formula (A)(i)(a): $60% of excess of average annual Net Income during term
of the Note ($1,240,000) over $718,228.
3 Shortfall between $718,228 and average annual Net Income during term of Note
($715,000) times 1.04548, plus 7% p.a. simple interest.
4 $400,000, plus 7% p.a. interest, compounded annually.
5
<PAGE>
Exhibit 10.9
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE
MAY NOT BE TRANSFERRED ABSENT SUCH REGISTRATION OR DELIVERY OF A LEGAL
OPINION, IN FORM AND SUBSTANCE SATISFACTORY TO ADVANCED PHYSICIAN BILLING
INC., THAT SUCH REGISTRATION IS NOT REQUIRED.
PROMISSORY NOTE
---------------
$400,000.00 July 1, 1998
Miami, Florida
FOR VALUE RECEIVED, the undersigned, ADVANCED PHYSICIAN BILLING INC., a
Florida corporation (hereinafter referred to as "Maker"), hereby promises to
pay to NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION, a Nevada corporation
(hereinafter referred to as "Holder"), at 1315 Greg St., Suite 103, Sparks,
NV 89431 or at such other address as Holder may from time to time hereafter
direct in writing, in legal tender of the United States of America, on the
Maturity Date (as defined below) the principal sum of Four Hundred Thousand
and no/100ths U.S. Dollars ($400,000.00), together with interest on the
unpaid balance of such principal amount at the rate of seven percent (7%) per
annum, compounded annually, from the date hereof until the Maturity Date.
The Maturity date shall be the same as the maturity date of that certain
Promissory Note dated the even date hereof of Holder, as maker, to Maker, as
holder, in the face amount of $1,649,000.
This Note shall terminate in accordance with the terms of that certain
Buy Back Agreement entered into by Holder as of the even date here, in the
event that the Maker has the right to, and elects to, exercise its buyback
rights thereunder.
This Note may not be prepaid in whole at any time or in part prior to
the Maturity Date.
In the event this Note, or any part thereof, is collected by or through
an attorney-at-law, Maker agrees to pay all costs of collection including,
but not limited to, reasonable attorneys' fees.
Maker's failure to pay in full any amount of principal or interest due
under this Note, which is not cured within ten (10) days after receipt by
Maker of notice of such default, shall constitute an event of default
hereunder. Upon the occurrence of any such event of default, the entire
unpaid principal balance hereof and all interest owed thereon and due
hereunder shall, at the option of the Holder, and upon notice to or demand
upon Maker (all of which
1
<PAGE>
notices and demands Maker hereby expressly waives), become immediately due
and payable.
TIME IS OF THE ESSENCE OF THIS NOTE. MAKER HEREBY WAIVES PRESENTMENT
FOR PAYMENT, PROTEST, NOTICE OF PROTEST, NOTICE OF DISHONOR AND OF NONPAYMENT
HEREOF, NOTICE OF ACCELERATION AND DILIGENCE IN COLLECTION.
No extension of the time for the payment of this Note or any part
thereof, made by agreement with any person now or hereafter liable for the
payment of this Note shall operate to release, discharge, modify, change or
affect the original liability of Maker of this Note, either in whole or in
part, unless Holder agrees otherwise in writing. This Note may not be
changed orally, but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change or modification is sought.
In no event, whether by acceleration of the maturity of the indebtedness
evidenced hereby or otherwise shall the amount of interest due or payable
hereunder exceed the maximum rate of interest that may be paid by Maker under
applicable law; and, in the event of any such payment inadvertently paid by
Maker or inadvertently received by Holder, such excess sum shall be, at
Maker's option, returned to Maker forthwith or credited as a payment of
principal, but shall not be applied to the payments of interest. It is the
intent hereof that Maker not pay or contract to pay, and that Holder not
receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by Maker under
applicable law.
Wherever possible each provision of this Note shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or remaining
provisions of this Note. No delay or failure on the part of Holder in the
exercise of any right or remedy hereunder shall operates a waiver thereof,
nor as an acquiescence in any default, nor shall any single or partial
exercise by Holder of any right or remedy preclude any other right or
remedy. Holder, at its option, may enforce its rights against any collateral
securing this Note without enforcing its rights against Maker or any other
property or indebtedness due or to become due to Maker. Maker agrees that
Holder shall have no responsibility for the protection or preservation of
the value of, and may at any time release, surrender, substitute or
exchange, any collateral securing this Note.
The word "Maker" as used herein shall include transferees, successors
and assigns of Maker, and all rights of Holder hereunder shall inure to the
benefit of its transferees, successors and assigns. All obligations of Maker
shall bind its successors and assigns. This Note shall be governed by, and
construed and enforced in accordance with, the laws of the State of Florida.
2
<PAGE>
IN WITNESS WHEREOF, Maker has signed, sealed and delivered this Note on
the day and year first written above.
ADVANCED PHYSICIAN BILLING,
INC., a Florida corporation
By: /s/ Jorge Perez, Sr.
------------------------
Title: President
-----------------
3
<PAGE>
Exhibit 10.10
LEASE
THIS LEASE (sometimes referred to herein as the "Lease" or the
"Agreement"), made effective as of July 1, 1998 by and between THE RADS
GROUP, INC., a Florida corporation, ("Landlord"), and NATIONAL MEDICAL
FINANCIAL SERVICES CORPORATION, a Nevada corporation ("Tenant").
W I T N E S S E T H:
1. Premises. Landlord, for and in consideration of the rents,
covenants, agreements and stipulations herein contained, to be paid, kept and
performed by Tenant by these presents, does lease and rent to Tenant, and
Tenant hereby agrees to lease and take upon the terms and conditions hereof,
the premises (the "Premises") located at 7315 S.W. 87th Avenue, Suite 200,
Miami, FL 33173 and as more particularly described in Exhibit "A" attached
hereto and made a part hereof. The Premises include sufficient adjacent
parking for Tenant and its employees, customers and invitees.
2. Term; Renewal Option; Security Deposit.
2.1 Initial Term. The initial term of this Lease shall commence on
July 1, 1998 (the "Commencement Date") and shall end on June 30, 2003 (the
"Initial Termination Date") at midnight unless sooner terminated as provided
in this Lease.
2.2 Renewal Option. Tenant shall have the option, by giving Landlord
written notice at least ninety (90) days prior to the expiration of the
initial term hereof, to renew this Lease upon the same terms and conditions
(except for the rental rate which shall be established pursuant to Section
3.2 hereof) for an-additional five-year term to commence at the expiration of
the initial term hereof.
2.3 Security Deposit. There shall be no security deposit required;
provided, however, that in the event that each of the Employment Agreements
dated as of the even date hereof between the Tenant and Jorge Perez, Sr.,
Jorge Perez, Jr., and Ricardo Perez, respectively, either is terminated or
expires by its terms, then the Tenant shall be required to deposit with the
Landlord an amount equal to one month's rent hereunder at such time as
security for Tenant's performance of its obligations hereunder, the balance
of which amount (without interest) shall be returned to Tenant at the
expiration or termination of this Lease after the satisfaction of all Tenant
obligations hereunder. If all or any part of the deposit is applied to
satisfy an obligation of Tenant hereunder, Tenant shall restore the portion
of the security deposit so applied within thirty (30) days of notice from the
Landlord.
3. Rental.
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3.1 Initial Rent. Tenant shall pay Landlord total rent of $90,000 per
year during the initial term of this Lease, payable in monthly installments
of $7,500.00 each. The first installment of rent shall be paid upon the
execution of this Lease, and the succeeding installments of rent shall be due
on the first day of each succeeding month during the term hereof.
3.2 Rent During Renewal Term. If Tenant exercises its option to renew
this Lease, then the monthly rent for the renewal term shall be increased by
multiplying the monthly rent amount for the initial term by a fraction, the
numerator of which shall be the Consumer Price Index for All Urban
Consumers-All Items published by the Bureau of Labor Statistics of the United
States Department of' Labor (1982-84 = 100) (the "CPI Index") for the
effective date of the renewal term and the denominator of which shall be the
CPI Index for the Commencement Date; provided that in no event shall the
monthly rent for the renewal term exceed the monthly rent for the initial
term by more than 15 percent (15%). If the CPI Index is discontinued or
revised, such other governmental index shall be used in order to obtain
substantially the same result as would be obtained if the CPI Index had not
been discontinued or revised.
4.1 Taxes On Rent. If any governmental authority imposes upon
Landlord, pursuant to statute, ordinance, regulation, order or otherwise, a
tax, levy or other imposition based upon the gross rentals received by
Landlord under the terms of this Lease, Tenant shall, without prior demand,
pay to Landlord the amount thereof at the time or times the same may fall due
with respect to the term of this Lease. The tax, levy or imposition to which
reference is herein above made shall include sales, excise or similar tax,
but shall not include any net income, franchise, capital stock, estate or
inheritance taxes imposed upon Landlord. These sums shall be paid in
addition to the rent due under Paragraph 3. All of said charges provided to
be paid by Tenant hereunder shall constitute additional rent and upon any
non-payment thereof, Landlord shall have the same rights and remedies as
otherwise provided in this Lease for failure of Tenant to pay rent.
4.2 Ad Valorem Taxes. Landlord shall be responsible for all ad valorem
taxes on the Premises, and Tenant shall be responsible for all ad valorem
taxes on Tenant's personal property located in the Premises.
5. Utilities. Landlord shall provide all utilities to the Premises,
such as water, heat, electricity and sewer. Tenant shall pay, before
delinquency, all ordinary and usual changes for water, gas, heat,
electricity, sewer and garbage services furnished to the Premises during the
term of this Lease. If there is any interruption in any such services which
is not caused by the fault of Tenant and which continues for a period of
thirty (30) consecutive days, Tenant shall have the right, upon notice to
Landlord, to terminate this Lease.
6. Use of Premises. The Premises shall be used for medical office
purposes and related activities or for any other lawful use. The Premises
shall not be used for any illegal purposes nor in any manner to create any
nuisance or trespass.
7. Repairs. Landlord shall, at all times during the term hereof,
keep, maintain and
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repair the building and other improvements upon the Premises in good and
sanitary order and condition, including without limitation the maintenance
and repair of the roof, outside walls, grounds, doors, window casements,
glazing, heating and air conditioning system (if any), plumbing, pipes,
electrical wiring and conduits.
8. Tenant Maintenance Obligations. Tenant agrees to maintain the
interior of the Premises in good condition and to return the Premises to
Landlord at the expiration or termination of this Lease in as good condition
and repair as when first received, damages caused by casualty and by wear and
tear excepted. Tenant shall be responsible for all janitorial maintenance and
routine HVAC maintenance with respect to the Premises.
9. Destruction of or Damage to Premises. If the Premises are totally
destroyed by storm, fire, lightning, earthquake or other casualty, this Lease
shall terminate as of the date of such destruction, and rental shall be
accounted for as between Landlord and Tenant as of that date. If the
Premises are damaged but not wholly destroyed by any such Casualty, rental
shall abate in such proportion as use of the Premises has been destroyed and
Tenant shall have the option, to be exercised within sixty (60) days after
such damage, to terminate this Lease.
10. Condemnation. If the whole of the Premises, or such portion
thereof as will make the Premises unusable for the purposes herein leased, is
condemned by any legally constituted authority for any public use or purpose,
then in either of said events the term hereby granted shall cease from the
date when possession thereof is taken by public authorities, and rental shall
be' accounted for as between Landlord and Tenant as of said date. Tenant
shall not be entitled to share in any condemnation proceeds.
11. Indemnity. Each of Tenant and Landlord agrees to indemnify, defend
and save harmless the other, and the tenants, licensees, invitees, agents,
servants and employees of the other against and from any and all claims,
suits or actions arising by reason of injury to persons or property occurring
on the Premises occasioned in whole or in part by any act or omission on the
part of the indemnifying party or any employee (whether or not acting within
the scope of employment), agent, visitor, assignee or subtenant of the
indemnifying party. Further, each of Tenant and Landlord shall indemnify the
other against any damages or expenses (including, without limitation,
reasonable attorneys' fees) incurred by the indemnified party by reason of
any breach, violation or nonperformance of any covenant in this Lease on the
part of the indemnifying party to be observed or performed.
12. Assignment and Subletting. Tenant may assign this Lease, or any
interest herein, or sublet the Premises, or any portion thereof, or permit
the use of the Premises by any party which will occupy the Premises for the
purposes herein leased, with the prior written consent of the Landlord, which
consent shall not be unreasonably withheld; provided that Tenant shall not be
released from its liability hereunder as a result of any approved assignment
or sublease. Consent to any one sublease shall not be deemed to be a consent
to any other or future subleases of the Premises. If Landlord shall not have
approved any proposed sublease within ten (10) days
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after Tenant shall have given Landlord notice of the proposed sublease,
together with a copy of the proposed sublease and the name of the subtenant,
then Tenant, at its option, shall have the right upon written notice to
Landlord to terminate this Lease at any time thereafter.
13. Alterations; Equipment. Tenant shall make no material alterations
in or additions to the Premises, without first obtaining Landlord's written
consent to such alterations or additions. Tenant will not permit any
mechanic's or materialmen's or other liens to stand against the Premises for
any labor or material furnished Tenant in connection with alterations,
repairs or work of any character performed on the Premises by or at the
direction of Tenant. All repairs, alterations and additions shall be
completed and paid for within a reasonable time. All such alterations and
additions, and all fixtures placed within the Premises by Tenant, and all
permanent leasehold improvements to the Premises made by Landlord or Tenant,
excluding Tenant's movable office furniture and equipment and its detachable
fixtures, shall be Landlord's property and shall remain in and upon the
Premises upon the expiration or early termination of this Lease.
14. Removal of Fixtures. Tenant may (if not in default hereunder)
remove all detachable fixtures and equipment which it has placed in the
Premises, provided Tenant repairs all damage to the Premises caused by such
removal. Tenant shall not remove any non-equipment built-ins existing at the
commencement of the Lease without Landlord's consent.
15. Default. In the event Tenant shall default in the payment of rent
when due and fails to cure said default within 10 days after written notice
thereof from Landlord; or if either party shall be in default in performing
any of the terms or provisions of this Lease (other than the provision
requiring the payment of rent) and fails to cure such default within 30 days
after written notice of such default from the other party; or if either party
is adjudicated bankrupt; or if a permanent receiver is appointed for either
party's property and such receiver is not removed within 60 days; or if,
whether voluntarily or involuntarily, Tenant takes advantage of any debtor
relief proceedings under any present or future law, whereby the rent or any
part thereof is, or is proposed to be, reduced or payment thereof deferred;
or if either party makes an assignment for benefit of creditors; or if
Tenant's effects should be levied upon or attached under process against
Tenant and not satisfied or dissolved within 30 days after written notice
from Landlord to Tenant to obtain satisfaction thereof; then, and in any of
said events (each of which being referred to as an "Event of Default"), all
remaining payments called for by this Lease shall be accelerated and become
immediately due and payable and the non-defaulting party, at its option, may
terminate this Lease by written notice to the defaulting party, whereupon
this Lease shall end. Upon any such termination by Landlord, Tenant will at
once surrender possession of the Premises to Landlord and remove all of
Tenant's effects therefrom; and Landlord may forthwith re-enter the Premises
and repossess itself thereof, and remove all persons and effects therefrom.
16. Reletting By Landlord. Upon the occurrence of an Event or Default
by Tenant, Landlord may, as Tenant's agent, without terminating this Lease,
at Landlord's option, enter upon and rent the Premises at the best price
obtainable by reasonable effort, without advertisement and by private
negotiations and for any term Landlord deems proper.
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17. Expenses; Service of Process. Upon termination after an Event of
Default, the non-defaulting party shall be entitled to recover all damages it
may suffer by reason of such termination including, without limitation, in
the case of a default by Tenant the cost (including legal expenses and
reasonable attorneys' fees) of recovering possession of the Premises and the
cost of any alteration or repair to the Premises which are necessary to
prepare the Premises for reletting.
18. Effect of Termination of Lease. No termination of this Lease prior
to the normal ending thereof, by lapse of time or otherwise, shall affect
Landlord's right to collect rent for the period prior to termination thereof.
19. Holding Over. Subject to the renewal option hereof provided for
inspection 2.2, if Tenant remains in possession of the Premises after
expiration of the term hereof, with Landlord's acquiescence and without any
express agreement of the parties, Tenant shall be a tenant at will at the
rental rate in effect at the end of the Lease; and there shall be no renewal
of this Lease by operation of law.
20. Insurance.
20.1 Tenant's Insurance. Tenant agrees to carry, at its sole
expense, public liability insurance coverage on the Premises, in a company
qualified to transact business in the State of Florida, stipulating limits of
liability of not less than $1,000,000 per claim and $3,000,000 in the
aggregate.
Such policy or policies of insurance shall name Landlord as an additional
insured. Such policy or policies shall not be cancelled without 30 days prior
notice to Landlord. Tenant agrees to provide Landlord with proof that such
insurance is in force upon request.
20.2 Landlord's Insurance. Landlord shall carry, at its sole expense,
fire and casualty insurance with respect to the Premises, in a company
qualified to transact business in the State of Florida, in accordance with
applicable office condominium rules and regulations. A copy of the cover
sheet of the existing insurance policy shall be provided to Tenant at Closing.
20.3 Certificate of Insurance. Each party will provide the other, upon
written request of the other, with a current certificate of insurance
evidencing coverage as required hereunder.
21. No Estate. This Lease creates the relationship of Landlord and
Tenant, and no estate passes out of Landlord by virtue hereof.
22. Time of Essence. Time is of the essence of this Lease.
23. Definitions.
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(a) "Landlord" as used in this Lease shall include the first party and
his heirs, legal representatives, assigns and successors in title to the
Premises. Landlord may assign its rights in this Lease without the consent of
Tenant.
(b) "Tenant" shall include the second party, its successors and
assigns, and if this Lease shall be validly assigned or sublet, shall include
also Tenant's assignees or subleases, as to the Premises covered by such
assignment or sublease.
(c) "Landlord" and "Tenant" include male and female, singular and
plural, corporation, partnership or individual, as may fit the particular
parties.
25. Right of First Refusal During. The term hereof, Landlord shall not
sell, grant or convey any fee simple interest in the Premises, any ground
leasehold interest in the Premises or any other interest in the Premises to
any person or entity, except that Landlord may sell the Premises to an
unrelated third party subject to the terms and conditions hereof. If
Landlord receives a bona fide offer from a purchaser who is unaffiliated with
Landlord (a "third party purchaser") to purchase the Premises, and Landlord
desires to accept such third party offer, Landlord shall deliver to Tenant
written notice of Landlord's intent to sell the Premises to the third party
purchaser, together with a true, complete and correct copy of the third party
offer. Tenant shall have ten (10) days from the date on which Tenant
receives notice of such offer (the "offer period") in which to deliver a
notice to Landlord of the Tenant's election to acquire the Premises on the
same terms and conditions set forth in the third party offer. If the Tenant
provides Landlord with notice of its acceptance of the third party offer,
then the closing of the transaction contemplated thereby shall be consummated
at the Premises no sooner than ten (10) business days after and no later than
forty-five days after the date of Tenant's acceptance. If Tenant fails to
accept the third party offer within the offer period, Landlord may consummate
the transaction with the third party purchaser substantially in accordance
with the terms of the third party offer and Landlord shall deliver to Tenant
within ten days after such closing, a certification under oath verifying that
the third party transaction was closed substantially in accordance with the
third party offer. A third party sale shall be deemed to have been closed
substantially in accordance with the third party offer if the sale price is
no less than the price set forth in the offer and if the terms of the third
party sale are not, in the aggregate, materially less favorable to Landlord
than the terms contained in the original offer. If the transaction is not so
consummated, then Tenant shall retain its right of first refusal rights
hereunder with respect to all future proposed transactions.
26. Miscellaneous.
26.1 Amendment. This Agreement may be amended by the parties. No
amendment will be effective unless in writing, and signed by both of the
parties.
26.2 Arbitration. The parties agree that all disputes concerning
this Agreement shall be submitted to binding arbitration in accordance with
the commercial arbitration rules of the
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American Arbitration Association and the provisions contained herein. The
arbitration shall be conducted in Tampa, Florida, by one arbitrator. The
party initiating arbitration shall give the-other notice of the matter in
dispute. If the parties fail to agree upon an arbitrator within ten days
after notice of initiation of the arbitration is given, the American
Arbitration Association shall select the arbitrator. All determinations and
the final decision of the arbitrator shall be made in writing. The fees and
expenses of the arbitrator shall be awarded by the arbitrator in his
discretion as part of the award. The arbitrator's award shall be binding on
the parties hereto and may be entered in any court of competent jurisdiction.
The parties reserve the right to seek a judicial temporary restraining
order, preliminary injunction, or other equitable relief (including eviction)
prior to the appointment of the arbitrator. The arbitrator will have the
right to make a final determination of the parties' rights including, without
limitation, whether to make permanent, modify or dissolve the judicial order.
26.3 Assignability. Except as otherwise expressly provided in this
Agreement, neither party may assign any rights or delegate any duties under
this Agreement without the prior written consent of the other party. Any
attempted assignment or delegation without the required consent shall be void.
26.4 Nonarbitral Attorneys' Fees. If either party institutes
litigation to interpret or enforce this Agreement, or to recover damages for
breach of this Agreement, the prevailing party shall be entitled to recover
costs of suit, and to recover actual attorneys' fees. A party can be the
prevailing party even if the proceedings are not brought to a final judgment
or award. No sum of attorneys' fees shall be included in any computation of
the amount of judgment or award for the purpose of determining whether a
party is entitled to recover costs or attorneys' fees.
26.5 Authority. Any entity signing this Agreement on behalf of any
other entity hereby represents and warrants in its individual capacity that
it has full authority to do so on behalf of the other entity. Any individual
signing this Agreement on behalf of an entity hereby represents and warrants
in his/her individual capacity that he/she has full authority to do so on
behalf of that entity.
26.6 Captions. The titles and captions are included only as a
matter of convenience. They shall not affect the interpretation of any
provision.
26.7 Consents and Approvals. A party shall not unreasonably
withhold a consent provided for in this Agreement, unless the Agreement
specially permits otherwise. Consents shall be effected only by notice.
26.8 Construction of Agreement. Both parties and their counsels
have participated fully in the review and revision of this Agreement. Any
rule of construction to the effect that ambiguities are to be resolved
against the drafting party shall not apply to the interpretation of this
Agreement.
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26.9 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but taken together
shall constitute one instrument.
26.10 Effective Date. Upon the execution hereof by the parties
hereto, this Agreement shall be effective as of the date first above written.
26.11 Expenses. Except as may be specifically provided for in this
Agreement, both parties shall bear their own expenses incurred in connection
with this Agreement and the transactions contemplated in it including, but
not limited to, legal and accounting fees.
26.12 Force Majeure. Neither party will be liable or in default for
any delay or failure in performance under this Agreement, or for any other
interruption of service or employment resulting 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 similar or dissimilar cause beyond the reasonable control of
either party.
26.13 Further Assurances. Each party will do such further acts,
including, without limitation, executing and delivering additional agreements
or instruments as the other may reasonably require, to consummate, evidence
or' confirm the agreements contained in this Agreement.
26.14 Governing Law. This Agreement shall be construed and enforced
according to the laws of the State of Florida.
26.15 Integration. The making, execution and delivery of this
Agreement by the parties has not been induced by any representations,
statements, warranties, or agreements other than those expressed in this
Agreement. This Agreement embodies the entire understanding of the parties
with respect to the subject matter hereof.
26.16 No Joint Venture. Neither party is an agent, partner, or
joint venturer with or of the other.
26.17 No Third Party Rights. The parties do not intend the benefits
of this Agreement to inure to any person or entity not a party to this
Agreement.
26.18 Notices.
(a) Written notices. All notices, demands, or requests
("Notices") which are required or permitted to be given pursuant to this
Agreement shall be in writing. Notices shall be delivered personally, by
commercial carrier, by fax or by registered or certified mail, postage
prepaid, addressed to a party as stated below.
(b) Landlord's address for notices.
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RADS Group, Inc.
7315 S.W. 87th Ave., Suite 200
Miami, FL 33173
(c) Tenant's address for notices.
National Medical Financial
Services Corporation
1315 Greg St., Suite 103
Sparks, NV 89431
(d) Effective date. Notice given personally, by commercial carrier and
by fax is effective upon delivery. Notice given by United States mail is
effective the third (3rd) United States Post Office delivery day after the
date of mailing.
(e) Change of address. Either party may change his/her/its address for
Notices by notice given pursuant to this section.
26.19 Partial Invalidity. If any provision of this Agreement is found
to be invalid or unenforceable by any court or arbitral tribunal, only that
provision will be ineffective, unless its invalidity or unenforceability will
defeat an essential business purpose of this Agreement.
26.20 Successors and Assigns. This Agreement and the rights and
obligations of the parties shall be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns.
26.21 Survival. Except as otherwise expressly provided in this
Agreement, all covenants, representations and warranties, express or implied,
shall survive the execution of this Agreement and shall bind the parties
until the parties have fulfilled all of their obligations. The statute of
limitations shall not commence to run until the time for performance of a
party's obligations has occurred.
26.22 Waiver of Right. No waiver of or failure by either party to
enforce a provision, covenant, condition or right under this Agreement shall
be construed as a subsequent waiver of the same right, or a waiver of any
other right. No extension of time for performance of any obligations or acts
shall be deemed an extension of the time for performance of any other
obligations or acts.
26.23 Special Termination Right. If each of the Employment Agreements
dated as of the even date hereof by and between Tenant and Jorge Perez, Sr.,
Jorge Perez, Jr. and Ricardo Perez, respectively, is terminated prior to the
expiration thereof according to its terms, Tenant shall have the option, by
giving written notice to Landlord at any time thereafter to terminate this
Agreement
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effective ninety (90) days following the receipt of such notice.
26.24 Termination with Exercise of Buyback. This Lease is subject to
that certain Buy-Back Agreement dated as of the even date hereof between NMFS
and Advanced Physician Billing Inc., and this Lease shall terminate in its
entirety in accordance with the terms of the Buy-Back Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals the day and year first above written.
LANDLORD:
RADS GROUP, INC., a Florida corporation
By: /s/ Jorge Perez, Sr.
------------------------------------
Title: President
TENANT:
NATIONAL MEDICAL FINANCIAL
SERVICES CORPORATION, a Nevada
corporation
By: /s/ Douglas R. Colkitt, M.D.
------------------------------------
Title: CEO
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