INVO INVO BioScience Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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 10, 2023

 

INVO BIOSCIENCE, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		001-39701		20-4036208
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

5582 Broadcast Court

Sarasota, FL 34240

(Address of principal executive offices, including zip code)

 

(978) 878-9505

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value		INVO		The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 1.01

Entry Into Material Definitive Agreement

 

On August 10, 2023, INVO Bioscience Inc., a Nevada corporation (“INVO”), consummated the acquisition of the Clinic (as defined under Item 2.01 below) described under Item 2.01 below) by, Wood Violet Fertility LLC, a Delaware limited liability company (“Buyer”) and wholly owned subsidiary of INVO Centers LLC, a Delaware company wholly-owned of INVO. In connection with such acquisition of the Clinic, the following material agreements were entered into on August 10, 2023, the effective date of INVO’s acquisition of the Clinic:

 

Physician Employment Agreement

 

Effective August 10, 2023, Wisconsin Fertility and Reproductive Surgery Associates (the “Practice”) and Elizabeth Pritts, M.D. (“Physician”) entered into a Physician Employment Agreement (“Physician Employment Agreement”) under which the Practice employed Physician, duly licensed The State of Wisconsin Medical Examining Board to provide medical services in the State for use in the diagnosis and treatment of patients seeking fertility treatment services, upon the terms set forth in the Physician Employment Agreement. Physician agrees to provide quality medical services (the “Services”) to all patients assigned by the Practice and shall devote her full-time efforts under this agreement. As a continuing condition of employment, Physician agrees to maintain all necessary and applicable state and federal licenses, certifications, and authorizations to perform the Services as determined by Practice. For the Services provided under the Physician Employment Agreement, Practice shall pay Physician annual compensation of $450,000 and the Practice shall also pay premiums to maintain Physician’s medical malpractice insurance coverage for the Services.

 

The term of the Physician Employment Agreement is for three (3) years, unless terminated sooner as provided in the Physician Employment Agreement. Such agreement automatically and immediately terminates in the event of: (a) Physician’s death; (b) Physician is debarred under any Law or is excluded, or otherwise made ineligible, from participating in any federal or state healthcare program; (c) the revocation, loss, limitation, suspension for more than thirty (30) days, or curtailment of Physician’s: (i) license to practice medicine in the State, (ii) federal DEA license or other right to prescribe controlled substances, (iii) enrolled provider status with a Payer or, if applicable, a Federal Health Care Program, (iv) other licenses, certifications, or authorizations required to perform the Services, or (v) privileges at any of the area hospital used by Practice or its subsidiaries; (d) Physician’s incapability of being covered by professional liability insurance at rates reasonably equivalent to those available with respect to the other physician employees of Practice; or (e) at the discretion of Practice, if Physician suffers a permanent disability and is unable to perform the essential duties of the employment contemplated by this Agreement, and within then applicable laws protecting disabled workers. The Practice may also terminate Physician for cause (as defined in the Physician Employment Agreement) upon thirty (30) days’ written notice. Either party may terminate upon expiration of the term or any time thereafter upon one hundred eighty (180) days’ prior written notice. The Physician Employment Agreement contains a two (2) year non-compete provision.

 

The foregoing description of the Physician Employment Agreement is qualified in its entirety by reference to a copy of the Physician Employment Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

 

Management Services Agreement

 

Effective August 10, 2023, Buyer (“Manager”), Wisconsin Fertility and Reproductive Surgery Associates (“Provider”) and Elizabeth Pritts Revocable Living Trust (“Owner”) entered into a Management Service Agreement (the “MSA”).

 

Pursuant to the MSA, Manager shall provide the management, consulting, administrative, business, laboratory and other support services required for the operation of medical practices for an initial term of ten (10) years. Following the initial term, the MSA shall renew automatically for additional five (5) year terms thereafter, unless otherwise terminated as provided for in the MSA. Either party may terminate the MSA by mutual written agreement, by either party immediately upon the filing of a petition in bankruptcy or the insolvency of the other party; or (c) by either party, upon thirty (30) days advance written notice of a breach of any material provision of the MSA by the other party which is not cured within thirty (30) days after written notice is given, provided that such breach continues for a period of thirty (30) days after written notice is given by the non-breaching party to the other party.

 

Manager may terminate the MSA at any time without cause upon ninety (90) days advance written notice. Manager shall also have the right, but not the obligation, to terminate the MSA immediately upon notice to the Provider in the event of: (a) the cancellation or non-renewal of the professional or malpractice insurance of Provider, any member of Provider or any Physician or Non-Physician Practitioner employed or engaged by Provider (other than due to the failure to pay premiums); (b) the dissolution of Provider; (c) if Provider participates in any Federal Healthcare Program(s), the suspension or exclusion of Provider from same; (d) the suspension or exclusion of any member of Provider, Physician, or any Non-Physician Practitioner (as may be applicable) who is employed or engaged by Provider from any Federal Healthcare Program provided that Provider did not terminate the employment or engagement of such employee or contractor within thirty (30) days of becoming aware of such fact; (e) the date upon which any of the membership interests of Provider are transferred or attempted to be transferred voluntarily, by operation of law or otherwise, to any person without the prior written approval of Manager; (f) the merger, consolidation, reorganization, sale, liquidation, dissolution, or other disposition of all or substantially all of the membership interests or assets of Provider without the prior written approval of Manager; (g) failure of Provider to pay the Management Fee in the time frames set forth in the MSA; (h) Provider materially altering or changing the scope of the Professional Services furnished by Provider; or (i) Provider’s breach of any provision set forth in the MSA.

 

Provider shall have the right, but not the obligation, to terminate the MSA immediately upon notice to Manager of the suspension, exclusion or debarment of Manager, any employee, contractor, or agent of Manager, or any Provider Support Personnel or Licensed Support Personnel (as defined therein) provided by Manager, from any Federal Healthcare Program; provided that Manager did not terminate the employment or engagement of such employee, contractor, or agent of Manager, including any Provider Support Personnel or Licensed Support Personnel, within sixty (60) days of becoming aware of such fact.

 

In consideration for the services performed by Manager under the MSA, Provider shall pay fees (the “Management Fee”) to the Manager on a monthly basis. The Management Fee shall equal the Net Pre-Tax Income (as defined below) of Provider attributable to Provider’s operations in the State of Wisconsin. “Net Pre-Tax Income” means all revenues net of refunds, repayments or recoupments, less the total of the Providers expenses, and other reasonable and necessary operating expenses incurred by Provider in conducting its business, but without regard for the provision of income taxes. In addition to the Management Fee, Manager shall be entitled to full reimbursement for all costs, expenses and liabilities paid or satisfied by Manager in connection with its rendering of services under the MSA or otherwise arising out of the operation, ownership or maintenance of the business by Provider.

 

The foregoing description of the MSA is qualified in its entirety by reference to a copy of the MSA is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.

 

Commercial Lease Agreement

 

On July 1, 2023, but effective August 10, 2023, Buyer (“Tenant”) entered into a Commercial Lease Agreement (the “Lease Agreement”) with Taylyn Holdings, LLC (“Landlord”) pursuant to which Tenant leased nine thousand six hundred eighty (9,680) rentable square feet from Landlord at 3146 Deming Way, City of Middleton, Wisconsin (the “Leased Premises”).

 

 

The initial term of the Lease Agreement ends on August 10, 2033. The term will automatically renew for five (5) yar period unless either party provides notice of non-renewal at least twelve (12) months prior to the expiration of the then-current term or another of the specified events of termination occurs.

 

Tenant shall pay to Landlord base rent of $219,989.16 annually, payable in installments of $18,332.43 per month. Beginning January 1, 2023, the base rent shall be increased annually by Landlord at a rate of three percent (3%) per annum.

 

The Leased Premises shall be used for administrative services, medical office space and clinical laboratory space in the areas of infertility and gynecology.

 

The foregoing description of the Lease Agreement is qualified in its entirety by reference to a copy of the Lease Agreement filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.

 

Megid Employment Agreement

 

Effective August 10, 2023, Buyer (“Company”) and Wael Megid, Ph.D. (“Employee”) entered into an Employment Agreement (the “Megid Employment Agreement”) pursuant to which the Company employed Employee to provide high-complexity clinical laboratory director services on behalf of the Company at the Practice.

 

Pursuant to the Megid Employment Agreement, Employee agrees to provide fertility laboratory and other management services as directed by Company and required by the Practice upon the terms set forth in the Megid Employment Agreement and shall devote his full-time efforts under such agreement. As a continuing condition of employment, Employee agrees to maintain all necessary and applicable state and federal licenses, certifications, and authorizations to perform the services as determined by Practice.

 

For the services rendered by Employee under the Megid Employment Agreement, Company shall pay Employee an initial amount of annual compensation with an aggregate value equal to $275,000.00 (“Total Compensation”) based on services performed by Employee as a full-time employee. Employee shall also receive an annual raise equal to three percent (3%) of the Total Compensation of the preceding year; provided, that Company determines that Employee has met or exceeded Employee’s duties and performance requirements.

 

On each anniversary of the effective date during the first three (3) years of the initial term, the Company shall pay to Employee a bonus equal to $100,000, for a total amount not to exceed $300,000. The Company may pay the Employee an annual discretionary bonus upon satisfaction of certain threshold targets and performance goals established by the Company’s executive board. At the end of each fiscal year, Company will review the performance of the Employee against the performance goals to determine whether the Employee has earned a discretionary bonus. If Company determines Employee has satisfied such performance goals, Company shall pay Employee the discretionary bonus no later than thirty (30) days following the release of the Company’s annual earnings report. In additional, Company shall pay premiums to maintain Employee’s malpractice insurance coverage for the services performed pursuant to the Megid Employment Agreement and reimburse Employee for reasonable expenses associated with require licensure and registration requirements.

 

The initial term of the Megid Employment Agreement begins on the effective date and continues for a period of seven (7) years. Following the initial term, the Megid Employment Agreement shall automatically renew for successive periods of one (1) year each, unless earlier terminated as provided for under the agreement. The Megid Employment Agreement shall automatically and immediately terminate in the event of: (a) Employee’s death; (b) Employee is debarred under any Law or is excluded, or otherwise made ineligible, from participating in any federal or state healthcare program; (c) the revocation, loss, limitation, suspension for more than thirty (30) days, or curtailment of Employee’s licenses, certifications, or authorizations required to perform the services set forth in the Megid Employment Agreement; (d) Employee’s incapability of being covered by professional liability insurance at rates reasonably equivalent to those available with respect to the other Employee employees of Company; or (e) at the discretion of Company, if Employee suffers a permanent disability and is unable to perform the essential duties of the employment contemplated by the Megid Employment Agreement, and within then applicable laws protecting disabled workers. The Company may also terminate Employee for cause (as defined in the Megid Employment Agreement) upon thirty (30) days’ written notice. Either party may terminate upon expiration of the term or by parties mutual agreement in writing.

 

 

The foregoing description of the Megid Employment Agreement is qualified in its entirety by reference to a copy of the Megid Employment Agreement filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.

 

Security Agreement

 

On August 10, 2023, Wisconsin Fertility and Reproductive Surgery Associates, S.C. (“Debtor”) and Buyer (“Secured Party”) entered into a Security Agreement (the “Security Agreement”) to grant a security interest to Secured Party in the Collateral to secure the Obligations (as each such term is defined below).

 

Pursuant to the Security Agreement, Debtor granted and assigned to Secured Party, a continuing security interest in all of Debtor’s right, title and interest in the Collateral (as defined below) and the security interest created attached immediately upon execution of the Security Agreement. The security interest secures the following obligations: (i) the payment and performance of Debtor’s obligations under the MSA, including without limitation, any payment owed to Secured Party pursuant to Article 9 of the MSA, (ii) the payment and performance of Debtor’s obligations under the Security Agreement, (iii) all amounts under any modifications, renewals or extensions of any of the foregoing obligations, and (iv) any of the foregoing that arises after the filing of a petition by or against Debtor under Title 11 of the United States Code (the “Bankruptcy Code”), even if the obligations do not accrue because of the automatic stay under Bankruptcy Code § 362 or otherwise (collectively, the “Obligations”).

 

The collateral covered by the Security Agreement and in which a security interest has been granted and transferred to Secured Party is as follows: all present and future right, title and interest in and to all personal and real property of Debtor of whatever type or description, wherever located, whether now or hereafter existing or acquired by Debtor, including without limitation the following (the “Collateral”): (a) all goods, including (i) equipment in all of its forms, including all parts thereof and all accessions, additions, attachments, improvements, substitutions and replacements thereto and therefor and (ii) all inventory, (b) all accounts (including health-care-insurance receivables), contracts, contract rights, chattel paper, documents, instruments, and general intangibles, including, but not limited to, Debtor’s right to receive, directly or indirectly, any rents or other payments due and payable under such agreements, (c) all books and records relating to, used or useful in connection with, any of the foregoing, (d) all general intangibles, (e) all investment property, (f) all intellectual property, and (g) all products, rents, issues, profits, returns, income and proceeds of and from any of the foregoing Collateral.

 

In the event of a Default (as defined below), subject to any restrictions imposed by applicable law, Secured Party shall have all the rights and remedies afforded a secured party by the Code, as amended from time to time, and may, in connection therewith, subject to any restriction imposed by applicable law, also: (a) enter on Debtor’s premises to assemble and take possession of the Records; (b) require Debtor to assemble the Records and make their possession available to Secured Party at a place designated by Secured Party that is reasonably convenient to both Debtor and Secured Party; (c) after giving Debtor written notice, notify the account debtors obligated on any or all of the Collateral to make payment directly to Secured Party, and to take control of all proceeds of any such Collateral, and to compromise said Collateral; (d) apply the proceeds received from the sale or other disposition of the Collateral upon Default, in addition to the items specified in Division 9 of the Code, to the payment of reasonable attorneys’ fees and legal expenses incurred by Secured Party as a result of Debtor’s Default; and (e) take immediate possession of the Collateral and use and operate said Collateral. For the purpose of taking immediate possession of the Collateral, Secured Party may enter into any premises upon which the Collateral is located, and search for the same and take possession and keep and store the same on said premises until sold or delivered or, in the alternative, may remove the Collateral or any part thereof to such other place as Secured Party may desire.

 

 

The term “Default” is defined under the Security Agreement to include any of the following events: (a) failure to keep or perform and cure within any applicable grace period as provided therein any of the terms or provisions of the Security Agreement; (b) failure to keep or perform any of the material terms or provisions of the MSA, or any ancillary agreements, exhibits or schedules attached thereto; (c) the levy of or any attachment, execution, or other process against Debtor that is not cured or dismissed within any applicable grace period as provided in the Security Agreement in excess of ten thousand dollars ($10,000) against the Collateral; (d) the insolvency or dissolution of Debtor; (e) (i) the application for the appointment of a receiver or custodian for Debtor or the property of Debtor, (ii) the entry of an order for relief or the filing of a petition by or against Debtor under the provisions of the Bankruptcy Code, or any other bankruptcy or insolvency law, or (iii) any assignment for the benefit of creditors by or against Debtor; (f) any representation, warranty or certification made by Debtor in connection with the Security Agreement or the MSA shall be false in any material respect on the date as of which made; (g) without the prior written consent of Secured Party, Debtor shall permit the filing by any person of any financing statement or similar instrument in effect covering all or any part of the Collateral in any recording office (unless otherwise permitted by the Security Agreement); or (h) Debtor shall fail, breach or default in the performance of any of the obligations or covenants owing by Debtor to Secured Party pursuant to any agreement.

 

The foregoing description of the Security Agreement is qualified in its entirety by reference to a copy of the Security Agreement filed as Exhibit 10.5 to this Current Report on Form 8-K and incorporated herein by reference.

 

Physician Liaison Agreement

 

On August 10, 2023, Buyer (“Manager”) and Elizabeth Pritts, M.D., (“Physician”) entered into a Physician Liaison Agreement (the “Physician Liaison Agreement”).

 

Pursuant to the Physician Liaison Agreement, Physician shall provide such liaison services as Manager may reasonably request from time to time with respect to Manager and Wisconsin Fertility and Reproductive Surgery Associates, S.C. (“Provider”), including but not limited to: (a) assisting Manager in communicating to Provider and its employee and independent contractor physicians, nurse practitioners, physician assistants, and registered nurses, as applicable information regarding Manager’s mission, vision, core values and quality standards; (b) requesting from Provider such information as Manager may reasonably request regarding the activities and practices of Provider so that Manager may determine whether such activities and practices are consistent with Manager’s mission, vision, core values and quality standards and providing such information to Manager upon receipt; and (c) serving as a liaison between Manager and Provider in connection with all other communications between Manager and Provider.

 

As consideration for the services rendered under the Physician Liaison Agreement, Manager shall pay Physician $1,200 annually through a monthly fee of $100, payable in arrears, within five (5) days following the end of each month during the term of the Physician Liaison Agreement; provided that payment of such fee by Manager more than five (5) days following the end of each month shall be subject to Manager’s cure rights set forth under Section 4 of the Physician Liaison Agreement.

 

The term of the Physician Liaison Agreement began on August 10, 2023 and shall continue until otherwise terminated in accordance with the termination provisions set forth in such agreement. Manager may terminate this Agreement for any reason upon five (5) days’ prior written notice or, sooner, if Physician ceases to provide services to Manager (including but not limited to by reason of Physician’s death or disability, or by mutual agreement), or upon the Physician’s inability to satisfy the qualifications set forth in Section 2 of the Physician Liaison Agreement. Manager may terminate the Physician Liaison Agreement immediately upon Physician’s breach of the Physician Liaison Agreement or any other agreement to which Manager (and/or its affiliates) and Physician are parties. In the event the Physician Liaison Agreement is so terminated, Physician shall be entitled to receive the liaison fee described above and expenses through such termination, but Physician shall not be required to render any services hereunder after the date in which they receive notice. Physician may terminate the Physician Liaison Agreement: (a) upon one hundred twenty (120) days’ prior written notice to Manager without cause; or (b) upon thirty (30) days’ prior written notice for good cause upon Manager’s breach of the Physician Liaison Agreement. Notwithstanding the foregoing, Physician may not terminate the Physician Liaison Agreement for Manager’s breach if Manager has cured such breach within such thirty (30) day period.

 

The foregoing description of the Physician Liaison Agreement is qualified in its entirety by reference to a copy of the Physician Liaison Agreement filed as Exhibit 10.6 to this Current Report on Form 8-K and incorporated herein by reference.

 

 

Directed Equity Transfer Agreement

 

On August 10, 2023, Buyer (“Manager”) entered into a Directed Equity Transfer Agreement (the “Equity Transfer Agreement”) by and among Provider and Elizabeth Pritts Living Revocable Trust (“Member”) to restrict the transferability of the issued and outstanding membership interests, distribution rights, voting interests and percentage interests of Provider (the “Membership Interests”) to promote the ongoing continuity of the enterprise for the benefit of the patients of Provider.

 

Pursuant to the Equity Transfer Agreement, Member is restricted, except as otherwise provided for under the agreement, to sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose of, whether by operation of law or otherwise, the Membership Interests of any other equity of Provider that Member may acquire. Any attempted transfer of Membership Interests by Member in violation of the Equity Transfer Agreement shall by null and void ab initio.

 

Upon the occurrence of a Membership Interest Transfer Event (as defined below), Member shall transfer the Membership Interests including all legal and beneficial rights connected with the Membership Interests, to one or more persons or entities designated by the Manager in its sole discretion, who shall be an individual or entity permitted to hold the Membership Interests under the laws, rules and regulations of the State of Wisconsin in effect at the time of such transfer and who has entered into a liaison agreement and a directed equity transfer agreement in forms acceptable to the Manager in its sole discretion. Further, upon any Membership Interest Transfer, the Liaison Agreement shall automatically terminate, and Member shall resign as an officer, director, or manager of Provider, or in the absence of a written resignation by Member, be deemed to have resigned such positions, in each case, without any liability of Manager or Provider to the Member, and no action taken by the Member following a Membership Interest Transfer shall be valid or binding on Provider.

 

The occurrence of any of the following events shall cause a Membership Interest Transfer in accordance with the terms of the Equity Transfer Agreement (each a “Membership Interest Transfer Event”): (a) the death of Elizabeth Pritts, M.D., the sole trustee of the Member (the “Trustee”); (b) the retirement of Trustee; (c) a determination by a court of competent jurisdiction or a physician selected by Manager, that Trustee is incompetent or disabled so as to be unable to render any professional services; (dd) the suspension, revocation, voluntary surrender, lapse, or any other restriction of Trustee’s license which lawfully prohibits Trustee from rendering professional services; € the disqualification of Member under applicable law to hold the Membership Interests in Provider; (f) the breach by member of the Physician Liaison Agreement; (g) the termination of Member’s Physician Liaison Agreement; the (h) the breach by Trustee of her Physician Employment Agreement, if not cured within the applicable cure period provided thereunder; (i) the termination of the Physician Employment Agreement; (j) the breach or violation by Member of Provider’s organizational or formation documents or company or operating agreement; (k) the purported transfer by Member of the Membership Interests in Provider, except in accordance with the Equity Transfer Agreement (l) a breach of any provision of the MSA by Provider, due solely to an act or omission by Member or Trustee, subject to the applicable cure provisions set forth thereunder; (m) any attempt to terminate the MSA by Provider, other than in accordance with the terms of the MSA; (n) termination of the MSA by either party; (o) the voluntary or involuntary filing for bankruptcy by Provider; (p) the violation or breach by Member or Provider of the Equity Transfer Agreement; (q) the exclusion or debarment or other discipline of Trustee from participation in a federal and/or state health care program or the conviction or plea of guilty or no contest to a criminal charge under federal or state laws relating to Trustee’s practice of medicine or participation in any governmental health program; or (r) receipt by Member of a written notice from Manager requesting Member to transfer all or a part of the Membership Interests held by Member to one or more persons designated by Manager.

 

The aggregate purchase price for all of a transferring Member’s total units transferred to one or more designated transferees pursuant to the Equity Transfer Agreement shall be one hundred dollars ($100), payable in cash or by check by the designated transferee as soon as reasonably practicable after the occurrence of a Membership Interest Transfer Event.

 

The foregoing description of the Equity Transfer Agreement is qualified in its entirety by reference to a copy of the Equity Transfer Agreement filed as Exhibit 10.7 to this Current Report on Form 8-K and incorporated herein by reference.

 

 

Item 2.01

Completion of Acquisition of Disposition of Assets

 

On August 10, 2023, INVO through Buyer consummated its acquisition of the Wisconsin Fertility Institute (the “Clinic”) for a combined purchase price of $10 million, of which $2.5 million was paid on the closing date (net $2,150,000 after a $350,000 holdback) plus assumption of the inter-company loan owed by WFRSA in the amount of $528,756 and the remaining three installments of $2.5 million each will be paid on the subsequent three anniversaries of closing. The sellers have the option to take all or a portion of the final three installments in shares of INVO common stock valued at $125.00, $181.80, and $285.80, for the second, third, and final installments, respectively.

 

The Clinic is comprised of (a) a medical practice, Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/a Wisconsin Fertility Institute (“WFRSA”), and (b) a laboratory services company, Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company (“FLOW”). WFRSA owns, operates and manages the Clinic’s fertility practice that provides direct treatment to patients focused on fertility, gynecology and obstetrics care and surgical procedures, and employs physicians and other healthcare providers to deliver such services and procedures. FLOW provides WFRSA with related laboratory services.

 

INVO is purchasing the non-medical assets of WFRSA and one hundred percent of FLOW’s membership interests. As reflected in the WFRSA purchase agreement, the Buyer and WFRSA will enter into a management services agreement pursuant to which WFRSA will outsource all its non-medical activities to the Buyer.

 

The acquisition of the Clinic was consummated pursuant to the terms of the following agreements:

 

1. Asset Purchase Agreement (the “APA”) dated March 16, 2023, by and among Buyer, WFRSA, and The Elizabeth Pritts Revocable Living Trust (the “Seller,” together with the WFRSA, the “Seller Parties”) pursuant to which Buyer agreed to acquire the Purchased Assets (as defined in the APA) related to WFRSA’s business. Buyer also agreed to assume certain liabilities of WFRSA as set forth in the APA. Certain non-clinical assets, properties, and rights of WFRSA shall be excluded from the Purchased Assets including patient lists, charts, records and ledgers, all contracts with Payors (as defined in the APA); all Health Care Permits (as defined in the APA) and

 

2. Membership Interest Purchase Agreement (the “MIPA”) dated March 16, 2023 by and among Buyer, FLOW, IVF Science, LLC, a Wisconsin limited liability company (“IVF Science”), owned by Wael Megid, Ph.D. (“Dr. Megid”), and Dr. Elizabeth Pritts as trustee for the Elizabeth Pritts Revocable List Trust, a Trust created under the laws of the State of Wisconsin (each, a “Selling Member” and collectively, the “Selling Members”). Under the MIPA, the Selling Members agreed to sell to Buyer 100% of the Membership Interests of FLOW for a purchase price equal to (all capitalized terms as defined in the MIPA) the Initial Purchase Price, which is equal to (i) two million dollars ($2,000,000) minus (ii) the Closing Indebtedness minus (iii) any Transaction Expenses minus (iv) the Holdback Amount of $70,000. In addition to the Initial Closing Payment, Purchaser has agreed to pay to the Selling Members additional payments of $2,000,000 within 90-days of each of the first three anniversaries of closing provided that Selling Members may elect to receive shares of INVO common stock in lieu of such cash payments as follows: Members may elect to receive shares of INVO common stock (as adjusted per the Closing Agreements below) in lieu of such cash payments as follows: (i) 16,000 shares of INVO common stock on the first additional payment date; (ii) 11,000 shares of INVO common stock on the second additional payment date and (iii) 7,000 shares of INVO common stock on the third additional payment date. These additional payments are secured by the Selling Members having a lien on the assets of FLOW

 

3. Closing Agreements dated July 7, 2023 for each of the APA and the MIPA (the “Closing Agreements’) under which Buyer agreed to complete the closing by July 31, 2023. The Parties also agreed under each Closing Agreement that any INVO common stock received as an Additional Payment on any Additional Payment Date shall be adjusted for any stock splits and combinations effectuated in INVO Parent Stock on or after the date hereof as follows: if INVO at any time on or after the date hereof (A) subdivides (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of INVO common stock into a greater number of shares, the amount of shares of INVO common stock to be received as an Additional Payment on any Additional Payment Date will be proportionately increased and (B) combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of INVO Parent Stock into a smaller number of shares, the amount of shares of INVO common stock to be received as an Additional Payment on any Additional Payment Date will be proportionately decreased.

 

 

4. Letter Agreement dated as of July 31, 2023 between Buyer and the Clinic (the “Letter Agreement”) to extend the deadline to close the acquisition set forth in the closing agreements to August 10, 2023 in consideration for certain accommodations under the acquisition agreements which include: (i) Buyer’s agreement that under the Asset Purchase Agreement, Buyer would assume the inter-company loan owed by WFRSA (initially estimated at $268,054.32); (ii) that the sellers under each of the Asset Purchase Agreement and the Membership Interest Purchase Agreement will retain accounts receivable earned prior to the Closing Date of each such Agreement and the Management Services Agreement to be entered into at closing of the Asset Purchase Agreement, and the parties may revise such Agreements if necessary prior to the Closing Date solely to effect the foregoing; (iii) Buyer’s acknowledgement and agreement that pursuant to the current terms of the Management Services Agreement and Employee Leasing Agreement, the payroll and benefits of all employees will be paid prior to any payments remitted to us and (iv) Buyer’s agreement to amend Dr. Megid’s Employment Agreement to provide for an additional $300,000 in compensation (total) over the next three years.

 

The paragraphs above describe certain of the material terms of the APA, MIPA, the Closing Agreements and the Letter Agreement. Such description is not a complete description of the material terms of the APA, the MIPA, the Closing Agreements and the Letter Agreement and is qualified in its entirety by reference to each of (i) the APA and the MIPA which were previously files as Exhibits 10.1 and 10.2 to INVO’s Current Report on Form 8-K filed on March 20, 2023; (ii) the Closing Agreements which were previously filed as Exhibits 10.1 and 10.2 to INVO’s Current Report on Form 8-K filed on July 13, 2023; and (iii) the Letter Agreement which was previously filed as Exhibit 10.1 to INVO’s Current Report on Form 8-K filed on August 2, 2023.

 

Item 8.01

Other Events

 

On August 11, 2023, INVO issued a press release announcing the closing of its acquisition of the Clinic. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is hereby incorporated by reference herein.

 

Item 9.01

Financial Statements and Exhibits

 

(a)	Financial Statements of Business Acquired.

 

The following combined financial statements of Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/t Wisconsin Fertility Institute (“WFRSA”) and Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company (“FLOW”) are being filed as exhibits to this Current Report on Form 8-K:

 

(i) The audited combined financial statements of WFRSA and FLOW as of and for the years ended December 31, 2021 and 2020 and related notes, attached as Exhibit 99.2

 

(ii) The unaudited combined financial statements of WFRSA and FLOW as of September 30, 2022 and for the nine months ended September 30, 2022 and 2021 and related notes, attached as Exhibit 99.3.

 

(b)	Pro Forma Financial Information*

 

(i) The unaudited combined pro forma Balance Sheet and Statement of Operations of INVO, WFRSA, and FLOW for the three month period ended March 31, 2023; and

 

(ii) The unaudited combined pro forma Statement of Operations of INVO, WFRSA, and FLOW for the fiscal years ended December 31, 2021 and 2022.

 

*Attached as Exhibit 99.4

 

(d) Exhibits.

 

Exhibit No.		Exhibit
10.1		Physician Employment Agreement
10.2		Management Services Agreement
10.3		Lease Agreement
10.4		Megid Employment Agreement
10.5		Security Agreement
10.6		Physician Liaison Agreement
10.7		Directed Equity Transfer Agreement
99.1		Press Release dated August 11, 2023
99.2		Audited combined financial statements of Wisconsin Fertility and Reproductive Surgery Associates, S.C. and Fertility Labs of Wisconsin, LLC as of and for the years ended December 31, 2021 and 2022, filed as Exhibit 99.4 to our Current Report on Form 8-K/A filed with the Securities and Exchange Commission on June 21, 2023 and incorporated herein by reference.
99.3		Unaudited combined financial statements of Wisconsin Fertility and Reproductive Surgery Associates, S.C. and Fertility Labs of Wisconsin, LLC as of March 31, 2023 and for the three months ended March, 2023 and 2022, filed as Exhibit 99.5 to our Current Report on Form 8-K/A filed with the Securities and Exchange Commission on June 21, 2023 and incorporated herein by reference.
99.4		Pro Forma Financial Statements listed under Item 9.01(b) above.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 11, 2023	INVO BIOSCIENCE, INC.
	/s/ Steven Shum
	Steven Shum
	Chief Executive Officer

 

 

 

 

 

Exhibit 10.1

 

PHYSICIAN EMPLOYMENT AGREEMENT

 

This Physician Employment Agreement (“Agreement”), effective August 10, 2023 (the “Effective Date”), is between Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional corporation (“Practice”) and Elizabeth Pritts, M.D. (“Physician”). Each of Practice and Physician may be referred to herein as a “Party” or collectively as the “Parties”.

RECITALS

 

WHEREAS, Practice is a limited liability company which is duly organized under the laws of the State of Wisconsin (the “State”) for the provision of medical services to patients of its operated medical clinic located at 364 Deming Way, Middleton, WI 53562 (the “Clinic”); and

 

WHEREAS, Practice employs and/or contracts with one or more physicians (each a “Physician”) and midlevel providers to provide professional services within their respective authorized scope of practice; and

 

WHEREAS, Physician is duly licensed by The State of Wisconsin Medical Examining Board to provide medical services in the State for use in the diagnosis and treatment of patients seeking fertility treatment services; and;

 

WHEREAS, Practice desires to employ Physician, and Physician desires to be employed by Practice, all on the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of, and incorporating the above recitals, the Parties, intending to be legally bound, and in consideration of the mutual promises contained herein, agree as follows:

 

1. Employment. Practice employs Physician and Physician accepts employment with Practice, each upon all of the terms and conditions described in this Agreement.

 

2. Duties. At all times during the Term of this Agreement:

 

2.1 Full Time. Physician agrees to provide quality medical services (the “Services”) as an employee of Practice to all patients assigned by Practice to Physician, and shall devote her full-time efforts in the performance of the Services during hours reasonably scheduled by Practice at the Clinic. “Full-time efforts” shall mean hours consistent with full time employment of 40 hours per week, as well as reasonable hours of on-call duties as mutually agreed to between Employee and Practice. Employee acknowledges as an exempt employee, Employee may from time-to-time work more than 1.0 FTE in a given week and is not eligible for or entitled to overtime. Employee shall not engage in any other medical practice or professional activities during the term of this Agreement, whether for gain, profit, or other pecuniary advantage unless approved in advance and in writing by Practice, which approval may be granted or denied by Practice and/or subject to such conditions as Practice may determine are necessary and appropriate, in its sole discretion. Notwithstanding the above, Employee shall be permitted to engage in duties as a consultant for INVO Bioscience, Inc., and its affiliates, and shall further be permitted to engage in duties as a board and/or committee member on professional associations and groups related to medical services, and such reasonable services by her shall not be construed as breaching the terms of this section provided that Employee shall not serve on a board or committee for another medical services entity engaged directly in the provision of fertility and/or OB/GYN services without the prior consent of the Practice.

 

 

2.2 Compliance with Laws and Rules; Physician to Exercise Independent Professional Medical Judgment. Physician shall comply with all: (a) applicable federal, state, and local laws, rules, and regulations, and court and administrative rules, writs, and standards, including, without limitation, those relating to the practice of medicine (collectively, “Law”); (b) policies, practices, standards, rules, and regulations (collectively, “Rules”) established by Practice and its affiliates, and the Clinic, provided that the Rules do not materially alter Physician’s duties, rights, or obligations set forth herein; and (c) agreements to which Practice or any of its affiliates is a party, or to which Practice or its affiliates may become a party, including, without limitation, agreements with Payers (as defined below). The Agreement is intended by the Parties to comply with the exception to the Stark Law for personal service arrangements at 42 C.F.R. 411.357(d) and the safe harbor from the federal Anti-Kickback Statute for personal services and management contracts at 42 C.F.R. 1001.952(d). The Parties acknowledge and agree that Physician shall exercise, and shall be solely responsible for, her independent professional judgment regarding the treatment of any particular patient, provided that Physician’s treatment of patients shall be in accordance with generally accepted standards of medical care, established methods of her clinical specialty, clinical standards established by Practice, any requirements set forth by Physician’s and Practice’s professional liability insurance carrier, and in accordance with Law.

 

2.3 Compliance Warranty. Physician acknowledges that she has reviewed and agrees to comply with the Compliance Warranty attached to this Agreement as Schedule A.

 

2.4 Other Duties. Physician shall perform such administrative and other duties and functions incidental and related to her duties and assist Practice, as requested by Practice, with administrative duties, which are relevant to the Services and necessary for the on-going operation of Practice, and shall use Practice’s facilities, clinical and non-clinical equipment, instruments, pharmaceuticals, medical devices, supplies and services of Practice’s clinical and non-clinical staff only for the professional purposes for which they are intended and not for any personal or private use. Physician must also maintain, at Physician’s sole expense, a telephone number where Physician can be contacted by staff and patients at all times.

 

2.5 In-Office and On-Call Hours. Practice shall have the right and responsibility to prescribe the reasonable working hours for physicians employed by Practice, including, but not limited to, Physician. Physician and Practice shall mutually agree to schedules for Physician’s services and shall cooperate in setting reasonable schedules for Physician. Physician shall ensure that she is available when reasonably scheduled by Practice to provide in-office and on-call services for patients.

 

 

2.6 Licensure and Certifications; Representations and Warranties; Incident Reporting. As a continuing condition of employment, Physician agrees to maintain all necessary and applicable state and federal licenses, certifications, and authorizations to perform the Services as determined by Practice. Physician represents and warrants that Physician has never, at any time: (a) had Physician’s professional license, DEA license, any license or authorization required under State law to prescribe controlled substances, board certification in her specialty, status as a provider in Medicaid, Medicare or Tricare (if enrolled) (each, a “Federal Health Care Program”), or staff privileges at any hospital or medical facility limited, suspended, relinquished, terminated, restricted or revoked, or (b) been reprimanded, sanctioned, disciplined, suspended, debarred or excluded by any licensing board or any federal, state or local society or agency, governmental body, hospital, third party payer or specialty board. Physician agrees to immediately notify Practice in writing if any of the events enumerated in (a)-(b) of this Section 2.6 should occur during the Term, which notice must describe the allegation or occurrence in reasonable detail and provide Practice with sufficient information to evaluate the issue. Physician shall cooperate in good faith with Practice to provide any necessary requested follow-up information. Physician further covenants that she has disclosed and will promptly disclose to Practice: (x) the existence and basis of any proceeding against Physician instituted in any jurisdiction by any plaintiff, governmental agency, health care facility, peer review organization or professional society which involves any allegation of substandard care, substance abuse, professional misconduct or violation of Law raised against Physician; and (y) any allegation of substandard care, substance abuse, professional misconduct or violation of Law raised against Physician by any person or agency during the Term hereof. Finally, Physician shall immediately notify Practice of any incidents, unfavorable occurrences, adverse events, notices or claims arising out of or relating to the Services (each an “Incident” and collectively, the “Incidents”) as soon as she becomes aware of an Incident. Physician shall cooperate with Practice and its representatives in good faith in the investigation and defense of any such Incidents.

 

2.7 Limitation of Authority. Physician acknowledges and agrees that she may not enter into any transactions or agreements on Practice’s behalf without the express prior written consent of Practice, which may be withheld in Practice’s sole discretion.

 

2.8 Cooperation in Proceedings. During and after the Term, the Parties shall provide all reasonable assistance to each other in order to (a) assert any rights under any insurance policies that provide liability or other coverage for the Services or Practice, or (b) assist either Party in defense of professional liability or other legal, regulatory, or administrative actions in which it appears that the other Party may be a fact witness, with reimbursement of reasonable expenses.

 

2.9 HIPAA. At all times, Physician shall: (a) comply with the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations (collectively, “HIPAA”), and all other federal and state privacy and security laws, rules and regulations related to the provision of medical services; (b) comply with the privacy and security policies of Practice; and (c) access only those medical records required for Physician’s provision of patient care and any other Practice-approved purposes.

 

 

2.10 Medical and Other Records. Physician agrees to timely and accurately complete all medical, time, financial and other records, forms, and other documentation with respect to patient care in accordance with Law and the policies and procedures of Practice and all of its applicable Payers. All files and records of every type pertaining to Practice’s patients for whom Physician renders services under this Agreement shall belong to Practice, and Physician shall not, during or after the Term, without the express written consent of Practice and the patient, remove them from Practice’s premises, copy them, or allow them to be so removed or copied, except as reasonably required in the ordinary course of patient care provided by Physician as an employee of Practice. Upon the expiration or earlier termination of Physician’s employment with Practice, Physician shall promptly return to Practice all such records in her possession; provided that in such instance, Practice shall retain and maintain all such records through any applicable statute of limitations for claims by a patient for professional malfeasance. To the extent permitted by law, following the expiration or termination of this Agreement, Physician or her representative shall have access to records to the extent necessary to defend a malpractice case, peer review, licensure or similar administrative or professional matters.

 

2.11 Access to Records. Upon written request, and in accordance with applicable Law, Physician and Practice each agrees, to the extent that the records are within such a Party’s or its agent’s possession, to make available to the appropriate governmental agencies and other applicable, authorized third parties any records and documentation necessary to certify the nature and extent of the Services provided by Physician under this Agreement.

 

2.12 Duty to Account; Power of Attorney. Physician agrees that all fees, collections, consideration, accounts receivable and monies due for Physician’s professional services and for ancillary services furnished for Practice during the Term shall be the exclusive property of Practice (the “Practice Receivables”). Physician shall not seek additional payments for the Services performed hereunder and shall accept the payment made from Practice as payment in full for the Services. Physician shall timely complete all appropriate, accurate and complete information and documentation necessary for Practice to timely bill for such Services. Physician irrevocably assigns to Practice all Practice Receivables and acknowledges that she shall not be entitled to any Practice Receivables. Physician appoints Practice as her attorney-in-fact to execute, deliver and/or endorse checks, applications for payments, insurance claim forms or other instruments or documents necessary for Practice to collect fully all Practice Receivables and other sums due with respect to the Services. Physician agrees to execute and deliver to Practice any additional agreement(s), acknowledgment(s), or other instrument(s) necessary to effectuate such assignment. This power of attorney is coupled with an interest, is irrevocable, and shall survive the expiration or termination of this Agreement (with respect to any services rendered by Physician on behalf of Practice prior to such expiration or termination). Physician also agrees that whenever necessary, Practice shall be entitled to obtain and maintain, or transfer, any of Physician’s registration, identification or similar numbers necessary to bill and collect for services rendered by Physician hereunder, including but not limited to her National Provider Identifier.

 

 

2.13 Payers. Practice shall have the sole and exclusive right and authority to enter into contractual relationships with patients, HMOs, IPAs, PPOs, ACOs, integrated delivery networks, employers, employer groups, governmental entities (including Federal Health Care Programs), public or private healthcare exchanges, or other managed care or reimbursement arrangements (collectively, “Payers”) on Physician’s behalf. Physician shall at all times remain credentialed as a participating provider by the Payers designated by Practice. Physician shall not contract with any Payers without Practice’s prior written consent. Physician agrees to solely accept the compensation paid to her by Practice for the Services under this Agreement and shall not seek or accept compensation from any Payer or any other person or entity for the Services. Upon request from Practice, Physician shall promptly provide any information and execute any relevant documents required by a Payer for credentialing or any other purpose.

 

3. Total Compensation; Withholding. For the Services to be rendered by Physician under this Agreement, Practice shall pay to Physician an initial amount of annual compensation with an aggregate value equal to $450,000.00 (“Total Compensation”), based on services performed by Physician as a full-time employee. Practice shall withhold and/or deduct from all compensation payable to Physician under this Agreement any and all sums required to be withheld and/or deducted for income taxes, social security, unemployment taxes, and all other taxes, charges and amount required to be withheld and/or deducted under the Internal Revenue Code of 1986, as amended, and any other applicable Law in effect at any time during the Term. The Parties represent and agree that the Total Compensation is consistent with, as of the Effective Date, and during the Term, will be no greater than, the fair market value of the services provided by Physician and is not, and will not be, determined in a manner that takes into account in any manner Physician’s referrals or other business generated for Practice.

 

4. Benefits, Professional Liability Insurance Premium Reimbursements. In addition to Physician’s compensation, Practice shall pay premiums due to maintain Physician’s medical malpractice insurance coverage for the Services. Practice shall, at is sole discretion, determine the carrier, the amount of coverage, and all other matters related to medical malpractice insurance. Physician shall be eligible to participate in all of Practice’s health and welfare and retirement benefit plans in accordance with Practice’s policies and the applicable plan documents. Practice retains the right to terminate or alter, in its sole and absolute discretion, any benefit plans or policies at any time.

 

5. Expenses. Practice shall compensate Physician for reasonable expenses associated with required licensure and registration, upon approval of documentation submitted by Physician, the sufficiency of which shall be determined by Practice in its sole discretion.

 

6. Scheduled Time Off. Physician shall be entitled to paid time off (“PTO”) for vacation and sick leave. Physician’s PTO allotment is twenty-five (25) days. Unused PTO during any calendar year will be forfeited and may not be carried over to a subsequent year. PTO shall only be used at times and intervals mutually agreed to by Physician and Practice. Practice’s consent to Physician’s request to use PTO shall not be unreasonably withheld. Upon termination of this Agreement for any reason whatsoever, Physician shall not be entitled to any compensation for any unused PTO. For the avoidance of doubt, Physician will not accrue PTO and will be paid solely in accordance with the compensation methodology described herein during the period of any time off. [Physician shall also be entitled to seven (7) days paid time off for continuing medical education (“CME”), and shall be entitled to reimbursement of CME expenses of up to $3,000 per annum].

 

 

7. Term and Termination.

 

7.1 Term. The term of this Agreement shall begin on the Effective Date and continue for a period of three (3) years, unless earlier terminated as provided herein (the “Term”).

 

7.2 Automatic Termination. Notwithstanding anything herein to the contrary, this Agreement shall automatically and immediately terminate in the event of: (a) Physician’s death; (b) Physician is debarred under any Law or is excluded, or otherwise made ineligible, from participating in any federal or state healthcare program; (c) the revocation, loss, limitation, suspension for more than thirty (30) days, or curtailment of Physician’s: (i) license to practice medicine in the State, (ii) federal DEA license or other right to prescribe controlled substances, (iii) enrolled provider status with a Payer or, if applicable, a Federal Health Care Program, (iv) other licenses, certifications, or authorizations required to perform the Services, or (v) privileges at any of the area hospital used by Practice or its subsidiaries; (d) Physician’s incapability of being covered by professional liability insurance at rates reasonably equivalent to those available with respect to the other physician employees of Practice; or (e) at the discretion of Practice, if Physician suffers a permanent disability and is unable to perform the essential duties of the employment contemplated by this Agreement, and within then applicable laws protecting disabled workers. For purposes of this Agreement, “permanent disability” is defined as the inability by reason of physical or mental illness, accident, or other cause to perform the essential duties for which Physician was hired for a period of six (6) weeks or more. The term “permanent disability” shall not include or mean maternity leave or an injury hindering mobility such as a badly broken leg. As an equal opportunity employer, Practice shall comply with all laws protecting Physician’s right to return to work in the event Physician becomes temporarily disabled or suffers an injury or illness that the medical practice can accommodate.

 

7.3 Termination by Agreement. In the event Practice and Physician shall mutually agree in writing, this Agreement may be terminated on the terms agreed by the Parties. Thereafter, this Agreement may be mutually extended upon written agreement of the Parties.

 

7.4 Practice’s Termination With Cause. Practice may terminate this Agreement for cause upon Physician’s breach of any term of this Agreement that remains uncured to Practice’s satisfaction within thirty (30) days after written notice from Practice, including any failure to comply with the Compliance Warranty terms set forth at Schedule A; provided, that notwithstanding anything herein to the contrary, Practice shall have the right, exercisable in its sole and absolute discretion, to terminate this Agreement immediately in the event of any of the circumstances set forth below, which shall not be subject to any advance notice or cure period:

 

 

7.4.1 Physician’s commission of any felony or crime involving (i) moral turpitude; (ii) dishonesty, or (iii) Physician’s employment hereunder;

 

7.4.2 Subject to Section 2.2, Physician’s (i) refusal or intentional failure to perform the Services or otherwise comply with her duties hereunder, following a lawful direction from Practice or one of its supervisors, managers or delegates to perform an act within the scope of Physician’s employment, or comply with a lawful directive or policy, rule or regulation or procedure of Practice, and which refusal or intentional failure is not cured within two (2) business days of written notice thereof, or (ii) negligent failure to comply with any of the foregoing, which negligent failure is not corrected by Physician to Practice’s reasonable satisfaction within ten (10) business days of written notice thereof, provided that Practice shall not be required to provide Physician with a cure right for any subsequent failure to abide by a duty or violation hereunder for which she was previously given a cure right;

 

7.4.3 Physician’s violation of Practice’s substance abuse policy described in Section 8;

 

7.4.4 Physician’s: (a) misappropriation or diversion of assets or business opportunities of Practice; (b) commission of fraud, or embezzlement; (c) violation of applicable healthcare Laws, (d) violation of Law or a personal act of dishonesty, either of which affect Practice, its business operations, financial conditions, assets, or prospects; or (e) violation of Law that materially affects Physician’s performance or ability to perform any of her duties or responsibilities under this Agreement;

 

7.4.5 Physician’s (i) commission of a material act of professional misconduct; (ii) commission of an act that endangers patient health and safety, (iii) failure to otherwise perform Physician’s duties and responsibilities to the reasonable satisfaction of Practice, or (iv) Physician’s breach of any fiduciary duty to Practice;

 

7.4.6 Physician’s commission of acts that in any material way jeopardize or damage the professional integrity or reputation of Practice or the relationships of Practice; or

 

7.4.7 Physician’s substantial or repeated unprofessional behavior, which continues after written notice thereof to Physician, and which includes without limitation, insubordination; disruptive conduct; disrespect of any office or facility staff or nursing or hospital staff, or any patients; repeated tardiness; failure to come to work or adhere to the published schedule; verbal or physical altercations; harassment or discrimination of any kind, including but not limited to, statements or gestures that are derogatory or of a sexual nature; retaliation; or any other behavior that interferes with the Services.

 

7.5 Physician’s Termination With Cause. Physician shall have the right to terminate this Agreement in the event of Practice’s material breach of any term of this Agreement that is not corrected by Practice within thirty (30) days of written notice given to Practice of the occurrence of such breach, specifying the material breach with sufficient detail to enable Practice to cure.

 

 

7.6 Termination by Either Party Without Cause After the Term. Either Party may terminate this Agreement upon the expiration of the Term of this Agreement, or at any time thereafter, by providing the other party written notice at least 180 days prior to the effective date of the termination.

 

7.7 Termination of Relationship; Obligations on Termination. Upon the expiration or termination of Physician’s employment pursuant to this Agreement, Physician shall (i) immediately vacate Practice’s premises at the Clinic, (ii) promptly deliver, within five (5) days, to Practice all Practice property, including without limitation any telephone, pager, keys, electronic or medical equipment or other item that was supplied to Physician by Practice, Confidential Information and other materials (in any form, whether written or otherwise) relating to Practice, its business affairs, patients and potential patients, (iii) fully cooperate with respect to any required notifications and communications in connection with the cessation of employment, and (iv) promptly complete all medical charts and other documentation for Services performed through such date. Neither Party shall have any further obligations hereunder except for: (i) obligations accruing prior to the date of expiration or termination, and (ii) obligations, promises, or covenants contained in this Agreement which are expressly made to extend beyond the Term, including but not limited to Practice’s obligation to compensate Physician through the date of the expiration or earlier lawful termination of this Agreement. Physician must, in addition the duties set forth herein, perform any transition services reasonably necessary or appropriate for Practice to transition its clinical management and operations to one (1) or more additional physicians, as mutually agreed to by Physician and Wood Violet Fertility LLC (the “Transition Services”). Physician expressly acknowledges and agrees that she will not be entitled to any additional compensation hereunder in connection with the Transition Services, and further, that any failure by Physician to comply with the terms of this Section 7.6 will constitute a material breach of this Agreement.

 

8. Non-Competition. Physician agrees that during the Term of this Agreement and for the period of two (2) years following the termination of Physician’s employment, Physician will not directly or indirectly engage in, own, manage, operate, control, be employed by, act as an agent for, receive any monetary benefits from or in connection with, or be connected in any other manner with the ownership, management, operation or control of any individual, association, corporation, partnership or other entity which is engaged in businesses which are or may be competitive to the business of the Practice in any geographic area within twenty (20) miles of any location owned or operated by Practice, or any location at which Practice has taken substantial steps to commence operations during Physician’s employment with Practice.

 

9. Substance Abuse. Physician shall not at any time during the Term abuse controlled substances, prescription drugs, over-the-counter medications, alcohol or illegal drugs or substances, nor use, be under the influence, or be impaired by any of the foregoing when performing the Services. Nothing in this Section 8 shall prohibit Physician from taking medications lawfully prescribed by a medical doctor or over-the-counter medications or drinking alcohol socially so long as such activities do not interfere with Physician’s capacity to perform the Services. Physician shall comply with any additional specialty specific or state-specific drug and alcohol testing policies and other requirements adopted by Practice from time to time.

 

 

10. Confidentiality. Physician acknowledges that, in connection with the provision of Services under this Agreement, Physician will acquire and make use of confidential information and trade secrets of Practice, including, but not limited to, business plans, methods of operation, pricing policies, marketing strategies, patient records (including but not limited to patient names, addresses, contact information, or medical history), patient lists, financial statements, research, experimental work, contracts, and other materials or records of a proprietary nature (collectively, the “Confidential Information”). Physician agrees that the Confidential Information, even though Physician may have participated in its creation, is Practice’s exclusive property. Accordingly, except as required by Law or for the performance of the Services, Physician shall not, at any time, either during or after termination of this Agreement, use, reveal, report, publish, copy, transcribe, transfer, or otherwise disclose to any person, corporation, or other entity any of the Confidential Information without the prior written consent of Practice, which may be withheld in Practice’s sole discretion. Physician acknowledges that the information identified above is valuable to Practice and that disclosure cannot be fully compensated by monetary damages and will result in irreparable harm to Practice. Physician consequently waives the defense of the adequacy of money damages in connection with any effort by Practice to obtain equitable enforcement of this Section and agrees that Practice shall be entitled to injunctive relief to enforce the terms of this Section without the necessity of posting a bond or undertaking. If Physician is requested, subpoenaed, ordered, or directed by a court or administrative body having jurisdiction over Physician to make such use or divulgence, Physician shall promptly inform Practice of such request, subpoena, order, or direction and afford Practice the opportunity to seek a protective order or other relief limiting or prohibiting that disclosure. In the event that Physician is required to disclose Confidential Information, she shall do so with the least amount of disclosure possible to comply. Physician shall be permitted to disclose such Confidential Information to Physician’s attorney and/or accountant or other advisors in connection with their provision of professional services to Physician if disclosure of such Confidential Information is required to permit such person to provide professional services to Physician and if such person is informed of the confidential nature of the Confidential Information and the restrictions contained in this Agreement and before that disclosure is made agrees to be bound by the same.

 

11. Miscellaneous.

 

11.1 Entire Agreement; Further Assurances. This Agreement supersedes any prior or contemporaneous agreements between the Parties relating to this Agreement’s subject matter and constitutes the sole and entire agreement of the Parties with respect to the matters contained in this Agreement, and any representation, inducement, promise, or agreement, whether oral or written, which pertains to those matters and is not embodied in this Agreement shall be of no force or effect. Each Party shall execute and deliver such documents and perform such acts that are or may become necessary to effectuate and carry out the purposes of this Agreement.

 

 

11.2 Governing Law; Jurisdiction, and Venue. This Agreement shall be interpreted, construed and governed according to the laws of the State, without reference to its choice of law rules. Any suit involving any dispute or matter arising under this Agreement shall be brought in a state or federal court located in the State having jurisdiction over the subject matter. The Parties hereby irrevocably consent to the exercise of personal jurisdiction and venue by any such court for any such proceeding(s).

 

11.3 Dispute Resolution. If a dispute arises between Practice and Physician with regard to this Agreement, either Party may give notice to the other Party invoking the dispute resolution process to discuss the areas of disagreement and to negotiate in good faith regarding possible solutions. Such discussion will take place within seven (7) days. If the informal discussions between the Parties do not result in a resolution of the dispute, then the Parties will name a neutral mediator. However, if the Parties are unable to agree on a single mediator within fourteen (14) days after receipt of notice invoking the dispute resolution process, the mediator will be selected in accordance with the alternative dispute resolution process established by the American Health Lawyers Association. The mediator will have no authority to impose a resolution, but will work with the Parties to reach a mutually acceptable solution. Each Party will give the mediator their full cooperation and will participate in good faith in all sessions convened by the mediator, which must take place within thirty (30) days of selecting the mediator. The costs of engaging such mediator shall be borne by the Practice. The Parties each expressly acknowledge and agree that this Section 10.3 is permissive in nature only, and nothing set forth herein will in any way abridge either Party’s rights under this Agreement (including with respect to termination as permitted pursuant to Sections 7.2 , 7.3, 7.4, and 7.5) or provided by applicable law.

 

11.4 Counterparts; Electronic Signatures and Transmission. This Agreement may be executed in counterparts, each of which shall be deemed an original and together shall constitute one and the same Agreement. The Parties may deliver executed signature pages to this Agreement by facsimile, electronic mail or other transmission method. No Party may raise as a defense to the formation or enforceability of this Agreement, and each Party forever waives any such defense, to either (a) the use of a facsimile, email, or such other transmission method to deliver a signature or (b) the fact that any signature was signed and transmitted by facsimile, email, or such other transmission method.

 

11.5 Severability. In the event that any of the provisions of this Agreement shall be held to be invalid or unenforceable, the remaining provisions thereof shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable parts had not been included therein. In the event that any provision of Agreement shall be declared by a court of competent jurisdiction to exceed the maximum restrictiveness such court deems reasonable and enforceable, the time period and/or areas of restriction and/or related aspects deemed reasonable and enforceable by the court shall become and thereafter be the maximum restriction in such regard, and the restriction shall remain enforceable to the fullest extent deemed reasonable by such court.

 

 

11.6 Waiver of Breach. No waiver of any breach of any provision of this Agreement shall constitute a waiver of any prior, concurrent, or subsequent breach of the same or any other provision of this Agreement and no waiver shall be effective unless made in writing. No waiver of any of the provisions of this Agreement shall be deemed a waiver of any other provision, irrespective of similarity, or shall constitute a continuing waiver unless otherwise expressly provided. Except as otherwise provided in this Agreement, no delay or omission in the exercise of any right, power or remedy accruing to any Party as a result of any breach or default by any other Party under this Agreement shall impair any such right, power, or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later.

 

11.7 Notices. Any notice or other communication required or permitted hereunder shall be in writing and furnished either by personal delivery, overnight mail, or by certified mail, return receipt requested. Any such notice or communication shall be deemed received (i) at the time of delivery if sent by personal delivery, or (ii) on the date of delivery in the case of overnight mail, and (iii) three (3) business days following proper mailing thereof with postage prepaid in the case of certified mail.

 

11.8 Review by Counsel; Expenses. Each Party acknowledges that such Party has been given an opportunity to have this Agreement reviewed by the counsel of such Party’s choice, and that this Agreement has either been so reviewed or such Party has determined to waive such review. Each Party shall pay its own expenses incident to the negotiation and preparation of this Agreement.

 

11.9 Paragraph Headings; Terms. The paragraph headings herein are for convenience only and in no manner shall be construed as a part of this Agreement. Terms, nouns, and pronouns shall be deemed to refer to the masculine, feminine, neuter, singular, and plural, as the context may require.

 

11.10 Amendment; Assignment; Mergers and Consolidation; Successors and Assigns. This Agreement may be amended only by a written instrument signed by both Parties. Physician shall not have the right to assign or delegate this personal service agreement or any of her rights or obligations under this Agreement. Practice may freely assign and/or delegate any or all of its rights and duties under this Agreement to an affiliate of Practice, including as a result of a change of control. The rights and obligations of Practice under this Agreement shall inure to the benefit of and be binding upon and enforceable by its respective successors and permitted assigns.

 

11.11 Remedies. Physician agrees that the covenants contained in Section 9 of this Agreement as well as the provisions of this Agreement concerning Physician’s duty to account (as set forth in Section 2.12), and Physician’s obligation to provide access to records (as set forth in Section 2.12) are necessary for the protection of Practice’s legitimate business and professional duties, and are reasonable in scope and content. These legitimate business interests include, without limitation, Confidential Information; substantial business relationships with existing and prospective customers, clients, and patients; client and patient goodwill associated with Practice’s ongoing business and as evidenced by the various trademarks, trade names, service marks, and trade dress used by Practice or any of its affiliates in connection with its business; and the extraordinary and specialized training provided by Practice. Physician further agrees that, if Physician breaches any of the provisions referenced in Section 2.11, Section 2.12, and Section 9, Practice will suffer irreparable harm and monetary damages may not provide Practice with an adequate remedy. Accordingly, Physician agrees that Practice may, to the extent permitted by applicable Law, seek and obtain injunctive relief (without the posting of a bond or proving any other surety) against the breach or threatened breach of the referenced provisions as well as all other rights and remedies available at Law and equity, including, without limitation, the right to be indemnified by Physician for all claims, damages, actions, and suits whatsoever for a breach of these provisions. Practice may, to the extent awardable by a court of competent jurisdiction, also seek compensatory and punitive damages from Physician for any material breach of this Agreement to the extent permitted by applicable Law.

 

11.12 No Third Party Beneficiaries. All obligations of Practice under this Agreement are imposed solely and exclusively for Physician’s benefit. No other person shall have standing or any right to enforce Practice’s obligations under this Agreement.

 

11.13 WAIVER OF JURY TRIAL. EACH PARTY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ALL LITIGATION RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP OF THE PARTIES. PHYSICIAN ACKNOWLEDGES THAT THIS JURY TRIAL WAIVER APPLIES TO ANY CLAIM THAT IS BROUGHT AGAINST THE PRACTICE AND/OR ITS AFFILIATES.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.

 

PRACTICE:

 

Wisconsin Fertility and Reproductive Associates, S.C.,

a Wisconsin corporation

 

By:	/s/ Elizabeth Pritts, M.D.
Name:	Elizabeth Pritts, M.D.
Its:	President
PHYSICIAN:
/s/ Elizabeth Pritts, M.D.
Elizabeth Pritts, M.D., an individual

 

 

Schedule A

 

COMPLIANCE WARRANTY

 

Practice has a mission to provide quality healthcare in compliance with all federal and state laws and applicable healthcare practice standards. Practice maintains a compliance program to ensure compliance with federal and state laws and regulations among all employees, including Physicians, and the effectiveness of the compliance program depends on the diligence and efforts of every person contributing to Practice’s success. Physician understands Practice’s commitment to compliance and agrees to abide by this Compliance Warranty, Practice’s compliance program, and applicable federal and state laws and regulations. Physician shall report to Practice’s compliance officer any known or suspected violations of this compliance program.

 

COMPLIANCE ESSENTIALS

 

1. Patient-Related Services Documentation

 

	a.	Physician will accurately and completely document Services rendered by Physician.
	b.	Physician will familiarize himself or herself with the features of the electronic medical record system utilized by Clinic and avoid taking shortcuts that could result in unintended medical record deficiencies.
	c.	Physician will not document Services not rendered.

 

2. Privacy and Security Information

 

	a.	Practice provides privacy and security information tools for the purpose of encrypting sensitive information.
	b.	Physician shall securely handle all PHI and other sensitive information in Physician’s possession.
	c.	Physician will log off of any systems, lock Physician’s access to any systems, and avoid sharing username and passwords.
	d.	When discussing health information with a patient or authorized party, Physician will do so privately or, if in a public space, speak softly. Physician will never divulge sensitive health information (i) in public or (ii) in the presence of family and friends without patient consent.
	e.	Physician will avoid unauthorized photographs, and will refrain from posting any patient’s private information on any social media.
	f.	Physician will immediately notify Practice if Physician becomes aware of an unauthorized use, access or disclosure, or if Physician believes he/she has lost any equipment or device containing private information.

 

3. Patient Referral Prohibitions

 

	a.	Physician will refrain from accepting any gifts from or providing any gifts to Facility without the advance written authorization of Practice.
	b.	Physician will refrain from referring patients that Physician treats under contract with Practice to any other health organization wherein Physician has a financial interest, unless Physician has a permitted contractual obligation with Practice.

 

 

 

Exhibit 10.2

 

MANAGEMENT SERVICES AGREEMENT

 

This Management Services Agreement (this “Agreement”) is effective as of August 10, 2023 (the “Effective Date”), by and between Wood Violet Fertility LLC, a Delaware limited liability company (“Manager”), Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin corporation (“Provider”), and Elizabeth Pritts Living Revocable Trust (“Owner”). Manager, Provider and Owner are sometimes herein referred to as a “Party,” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Manager is engaged in the business of providing and/or arranging for the provision of a comprehensive range of administrative, business, facilities, equipment, information technology, infrastructure, management, laboratory and other support services required for the operation of medical practices (collectively, “Management Services”); and

 

WHEREAS, Provider specializes in the provision of medical care, treatment, and goods and services relating to advanced fertility treatments delivered by or through the Owner and Practice’s other employed or contracted physicians (collectively, “Physicians”) who specialize in reproductive endocrinology, infertility, obstetrics and gynecology and/or other specialties related to the provision of advanced fertility treatments (collectively, “Professional Services”), and who are fully licensed and authorized to practice medicine in the State of Wisconsin; and

 

WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of the Effective Date, by and among the Manager, Provider, the Seller, and Dr. Elizabeth Pritts, Manager will, subject to the terms set forth therein, assist Provider in managing a fertility center that will offer reproductive and fertility related treatments, gynecology, and other women’s healthcare services, along with related procedures (the “Clinic”); and

 

WHEREAS, Provider desires to engage Manager to provide the management, consulting, administrative, business, billing, laboratory and other services described in this Agreement so that Provider may focus on the rendering of Professional Services at the Clinic, and Manager desires to provide such services to Provider, all upon the terms and subject to the conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual promises and agreements set forth below, and/or other good, valuable and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, and incorporating the foregoing recitals, Provider, Manager and Owner agree as follows:

 

1. Appointment.

 

1.1 Exclusivity. During the Term (as defined in Section 10.1), Provider hereby appoints Manager as its sole and exclusive provider of Management Services, and Manager shall serve as Provider’s sole and exclusive manager. Provider shall not engage any other persons to perform any of the duties or functions that Manager is explicitly required to provide hereunder or that are reasonably expected to be able to be provided by a manager of a health care practice. In light of the scope of the Management Services provided and investment to be made by Manager hereunder, and the considerable impact such actions could have on Manager’s ability to perform its duties and functions hereunder, during the Term, Provider shall not, and shall cause the Physicians to not, engage in the Professional Services at or on behalf of any group practice, hospital, health clinic, not-for-profit, public, nonprofit or for-profit entity, or any other person or entity without obtaining the prior written approval of Manager, which approval may be withheld in the sole discretion of Manager. Manager shall provide such Management Services in a manner that meets the requirements of the business functions of Provider, including, without limitation, delegating any duties under this Agreement to Manager’s affiliates or to one or more subcontractors in compliance with all applicable federal and state laws and regulations.

 

 

1.2 Representations and Warranties.

 

(a) Provider represents and warrants to Manager that Provider is a corporation duly formed, validly existing, in good standing under the laws of the State of Wisconsin, properly qualified to do business in other states in which it operates, and has all necessary legal power and authority to own all of its properties and assets and to carry on its business as now being conducted.

 

(b) Manager represents and warrants to Provider that Manager is a Delaware limited liability company duly formed, validly existing, and in good standing under the laws of the State of Delaware, properly qualified to do business in other states in which it operates, and has all necessary legal power and authority to own all of its properties and assets and to carry on its business as now being conducted.

 

(c) Manager and Provider represent and warrant to each other as follows: (i) each such Party has the legal authority to execute, deliver and perform its obligations under this Agreement and all agreements executed and delivered by it pursuant to this Agreement, and has taken all action required by law, its articles of incorporation, its bylaws, its articles of organization, its certificate of formation, its operating agreement, its limited liability company agreement or otherwise, as applicable, to authorize the execution, delivery and performance of this Agreement and such related documents; (ii) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite legal action of such Party and no other legal action on the part of such Party is necessary to authorize this Agreement or to carry out the transactions contemplated hereby; (iii) the execution and delivery of this Agreement does not, and will not, violate any provisions of the articles of incorporation, bylaws, articles of organization, certificate of formation, operating agreement or limited liability company agreement, as applicable, of such Party or any provisions of or result in the acceleration of, any obligation under any mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment or decree, to which such Party is a party, or by which it is bound; (iv) this Agreement has been duly executed and delivered by such Party and constitutes the legal, valid, and binding obligation of such Party, enforceable in accordance with its terms, except as may be limited by bankruptcy or other operation of law; (v) neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby will: (A) violate any law, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency or court that such Party is subject to; or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any third party the right to accelerate, terminate, modify or cancel, or require any notice or approval or consent under any agreement (including any non-compete or other restrictive covenant), contract, lease, license, instrument or other arrangement to which such Party is bound or to which such Party’s assets are subject (or result in the imposition of any encumbrance upon any of the assets of such Party); and (vi) such Party is not required to give any notice to, make any filing with or obtain any authorization, registration, qualification, consent, waiver or approval of any government or governmental agency or any third party in connection with the execution, delivery and performance of the transactions contemplated by this Agreement by such Party.

 

 

(d) Each of Owner and Provider represents and warrants to Manager that neither: (1) Provider; (2) Provider’s Owners, officers, members, managers and employees, (3) Provider’s contractors and agents involved in the delivery of Professional Services (excluding the Licensed Support Personnel and Provider Support Personnel); nor (4) the Physicians nor Non-Physician Practitioners (as defined below), as may be applicable of Provider: (i) are currently excluded, debarred, or otherwise ineligible to participate in the federal health care programs as defined in 42 USC § 1320a-7b(f) (the “Federal Healthcare Programs”) or any General Services Administration program; (ii) have, to Provider’s actual knowledge, been convicted of a criminal offense related to the provision of healthcare items or services; and (iii) are, to Provider’s knowledge, under investigation or otherwise aware of any circumstances which may result in Provider, its officers, members, managers, or employees, or, to the extent involved in the delivery of Professional Services, its contractors, agents, joint ventures, affiliates or subsidiaries, or its Physicians or Non-Physician Practitioners, being excluded from participation in the Federal Healthcare Programs or General Services Administration agreement, for offenses and based upon events beyond those which have been disclosed to Manager as of the Effective Date. This representation and warranty shall be an ongoing representation and warranty during the Term, and Provider shall immediately notify Manager of any change in the status of the representations and warranty set forth in this section and of any action Provider becomes aware of that could reasonably be foreseen to lead to such an event.

 

(e) Manager represents and warrants to Provider and Owner that neither: (1) Manager; (2) Manager’s officers, managers, members, and employees; (3) Manager’s contractors, vendors, or agents providing Management Services under this Agreement; nor (4) any Licensed Support Personnel or Provider Support Personnel (as defined below) provided to Provider hereunder: (i) are currently excluded, debarred, or otherwise ineligible to participate in the Federal Healthcare Programs or any General Services Administration program; (ii) have, to Manager’s actual knowledge, been convicted of a criminal offense related to the provision of healthcare items or services; or (iii) are, to Manager’s knowledge, under investigation or otherwise aware of any circumstances which may result in Manager, its officers, managers, or employees, or, to the extent involved in the delivery of Management Services under this Agreement, its contractors, vendors, or agents, being excluded from participation in the Federal Healthcare Programs or General Services Administration agreement. This representation and warranty shall be an ongoing representation and warranty during the Term, and Manager shall immediately notify Provider of any change in the status of the representations and warranty set forth in this section and of any action Manager becomes aware of that could reasonably be foreseen to lead to such an event.

 

 

(f) Owner represents and warrants to the other Parties that the execution and the delivery of this Agreement, or the consummation of the transactions contemplated hereby, will not conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any third party the right to accelerate, terminate, modify or cancel, or require any notice or approval or consent under any agreement (including any non-compete or other restrictive covenant), contract, lease, license, instrument or other arrangement to which Owner is bound or to which Owner’s assets are subject (or result in the imposition of any encumbrance upon any of the assets of Owner).

 

1.3 Exclusive Control over Professional Services. UNDER THIS AGREEMENT, PROVIDER SHALL HAVE THE EXCLUSIVE AUTHORITY AND CONTROL OVER THE PROVISION OF PROFESSIONAL SERVICES, CLINICAL DECISION-MAKING, AND ANY ACTIVITIES CONSTITUTING THE PRACTICE OF MEDICINE. MANAGER SHALL HAVE THE AUTHORITY TO MANAGE THE NON-CLINICAL ASPECTS OF THE CLINIC, IN ALL CASES SUBJECT TO THE TERMS OF THIS AGREEMENT AND APPLICABLE LAW.

 

2. Duties and Responsibilities of Manager.

 

2.1 Performance of Duties. Manager shall provide the Management Services in a professional and efficient manner in accordance with generally accepted management, administrative and accounting practices consistent with the standard of care for a Manager specialized in the operation and management of a medical practice.

 

2.2 Attorney-in-Fact. For good and valuable consideration, and to secure Manager’s performance of certain obligations under this Agreement on behalf of Provider, Provider shall irrevocably appoint Manager as its lawful attorney-in-fact solely for the purposes set forth in Sections 2.3 through 2.29 during the Term, below, and shall execute a power of attorney agreement in the form attached as Exhibit E (the “Power of Attorney”), and such appointment shall be construed as being coupled with an interest.

 

2.3 Billing. On behalf of Provider and the Clinic, Manager shall submit, process and collect all billings and claims for payment from and to patients and, as applicable, third party payors and fiscal intermediaries, for all goods, items, and services provided by Provider to its patients at the Clinic (including any globally billed services or services involving a professional and/or technical component). Manager shall bill or cause to be billed all fees charged by Provider for Professional Services rendered by the Physicians and any nurse practitioners or physician assistants employed by or contracting with Provider (collectively, “Non-Physician Practitioners”) for Professional Services provided at the Clinic. Provider shall promptly notify Manager upon becoming aware of any actual or alleged billing or coding errors. To the extent permitted by law, Manager and Provider shall reasonably cooperate in the investigation of matters involving billing or coding errors arising under this Agreement, and in responding to any such investigations conducted by governmental authorities or third party payors.

 

 

2.4 Collections. Manager shall: (i) collect all revenue from whatever source, including accounts receivable, due to Provider in connection with Provider’s operations at the Clinic (“Gross Revenue”); (ii) receive all Gross Revenue on Provider’s behalf, except, if applicable at any time, for Federal Healthcare Program receivables (“Government Receivables”), which amounts will be treated consistent with Section 2.7 below; and (iii) sue for and give satisfaction for monies due on account and to withdraw any claims, suits or proceedings pertaining to or arising out of Manager’s or Provider’s right to collect such accounts; provided, however, that Manager shall not initiate a lawsuit to collect from a patient of Provider without Provider’s consent, which shall not be unreasonably withheld, conditioned or delayed. This Section 2.4 shall not be construed to permit Provider to assign its right to receive governmental receivables to Manager, which rights are hereby expressly reserved by Provider.

 

2.5 Endorsement. Manager shall take possession of and endorse in Provider’s name any notes, checks, drafts, bank notes, money orders, insurance payments and any other instruments received as Gross Revenue.

 

2.6 Banking Powers. Manager shall deposit or cause to be deposited all Gross Revenue of Provider into a Provider Account or Government Lockbox Account (as such terms are defined in Section 2.7). Provider shall not make any withdrawals from any bank account if to do so would impair Manager’s ability to fulfill Manager’s obligations under this Agreement. Manager (and any subcontractor designated by Manager) shall have the right to enter into deposit account control agreements and make withdrawals from any Provider Account to pay all costs and expenses incurred in the operation of Provider, including payment of the Management Fee as set forth in Section 9.1 and to fulfill all other tenets of this Agreement. Neither Provider, Owner, nor any other individual or entity shall make any withdrawals from any Provider Account if doing so would impair Manager’s ability to fulfill Manager’s obligations under this Agreement. Manager (and any subcontractor designated by Manager) shall have the right to make withdrawals from any Provider Account.

 

2.7 Provider Bank Accounts.

 

(a) Subject to Section 2.7(c) below, for the deposit of receivables, Provider shall open and/or maintain, with the assistance of Manager, at a bank designated by Manager, one or more Provider bank accounts (“Provider Accounts”), in the name of and under the taxpayer identification number of Provider. For each such Provider Account, Provider shall enter into a deposit account control agreement with Manager under which Manager will have the right to make withdrawals pursuant to this Agreement. Provider shall take such action as is necessary to maintain Manager’s authority to make withdrawals from and deposits into its respective Provider Accounts, in accordance with Section 2.2 and Section 2.6, Provider and Manager agree that no interest shall be payable from Manager to Provider on such funds.

 

 

(b) Provider shall not maintain any bank account for cash or Gross Revenue deposits that is not a Provider Account or a Government Lockbox Account for purposes of this Agreement in connection with Professional Services rendered through Provider at the Clinic.

 

(c) If, at any time during the term hereunder, Provider will receive any Government Receivables, then prior to Provider’s receipt of such Government Receivables, Provider will establish or maintain a bank account in the sole control of Provider at the depository bank (the “Government Lockbox Account”) in the name of and under the taxpayer identification number of Provider. All such Governmental Receivables will be first be deposited in a bank account controlled by Provider and then, at the direction of Provider, such deposits shall be swept daily to an account controlled by Manager in conformity with an agreement between Provider and Manager (a “Government Lockbox Agreement”), pursuant to which Provider will retain the right to revoke such instruction to sweep deposits into an account of Manager, and to make adjustments to Gross Revenue for any write-offs or discounts due to insurance, customer satisfaction or bad debt. With regard to any Governmental Receivables, Provider shall (i) instruct all applicable payors to remit all Government Receivables to the Government Lockbox Account; (ii) deposit payment of any Government Receivables received by Provider into the Government Lockbox Account; and (iii) direct the transfer or remittance of all cash proceeds in such Government Lockbox Account to an account of Manager on a daily basis in accordance with the Government Lockbox Agreement.

 

2.8 Clinical Laboratory Services. At Provider’s expense, Manager shall provide to Provider all andrology and embryology laboratory services necessary for Provider to furnish Professional Services at the Clinic (the “Clinical Laboratory Services”), as set forth in Schedule 1. Manager represents and warrants that all personnel involved in its provision of the Clinical Laboratory Services shall be appropriately licensed, shall perform all services within the scope of any applicable licenses and certifications, and shall perform all services in accordance with all laws and with prevailing and applicable standards of care.

 

2.9 Personnel.

 

(a) At Provider’s expense, Manager shall provide to Provider the support services of non-clinical, clerical and administrative personnel who may be employed by Manager as applicable law permits who are necessary for Provider to furnish its services (“Provider Support Personnel”), pursuant to an agreement between Provider and Manager (the “Employee Leasing Agreement”) in the form attached hereto as Exhibit A. The cost of providing such services to Provider shall be set forth in the Employee Leasing Agreement. Manager represents and warrants that all Provider Support Personnel shall be appropriately licensed, shall perform all services within the scope of any applicable licenses and certifications, shall perform all services in accordance with all laws and with prevailing and applicable standards of care and in accordance with the Policies.

 

 

(b) At Provider’s expense, Manager shall provide to Provider the support services of licensed healthcare personnel, other than Physicians and Non-Physician Practitioners, each of whom will be directly employed by Provider, as applicable. Such personnel shall include, but not be limited to, medical assistants and registered nurses who may be employed by Manager as applicable law permits who are necessary for Provider to furnish its services (“Licensed Support Personnel”), pursuant to the Employee Leasing Agreement. The cost of providing such services to Provider shall be set forth in the Employee Leasing Agreement. Manager represents and warrants that all Licensed Support Personnel shall be appropriately licensed, shall perform all services within the scope of their licenses and certifications, shall perform all services in accordance with all laws and with prevailing and applicable standards of care and in accordance with the Policies. Provider may request in writing to Manager that Licensed Support Personnel be replaced or be removed from the provision of services to Provider patients for good cause shown. Upon receipt of such request, Manager may investigate the issue and, at its sole discretion, issue a warning, performance improvement plan, or other disciplinary measure to the Licensed Support Personnel. If such Licensed Support Personnel fails to remedy the issue within thirty (30) days to Manager’s and Provider’s satisfaction, Manager shall replace such Licensed Support Personnel and take other action as Manager deems necessary.

 

2.10 Contract Assistance. Manager shall advise Provider with respect to, and may, as appropriate and permitted by applicable law, negotiate in the name of and at the expense of Provider, such contractual arrangements with commercial payors and such other third parties as are reasonably necessary and appropriate for Provider’s operation, including, without limitation, agreements with health care facilities, third-party payors, accountable care organizations, alternative payment models, or other purchasers of healthcare services (“Contracts”) in consultation with Provider. Manager is hereby expressly authorized, as Provider’s agent and at Provider’s expense, to execute and deliver any of such Contracts, in the name of and on behalf of Provider, each Physician, and each Non-Physician Practitioner by presentation of a copy of the Power of Attorney, which shall constitute conclusive evidence of such agency. Manager may, in the name and on behalf of Provider, each Physician, and each Non-Physician Practitioner modify, supplement, amend, or terminate, or grant waivers or releases of obligations under, any of such Contracts. In its performance of the services contemplated under this Section 2.10, Manager: (i) shall comply with all federal and state laws, including any antitrust laws; (ii) shall not disclose to Provider, use as a basis for its recommendations to Provider or use in negotiations on behalf of Provider, any fee or pricing information for any other medical practice, surgery center or hospital in a market area overlapping in whole or in part with Provider; (iii) shall not engage in any conduct or activity which might be construed to constitute price fixing or collusion; and (iv) shall not obligate Provider, its Physicians, or its Non-Physician Practitioners, in any manner, that impedes on their medical practice decisions. Manager shall not provide services contemplated by this Section 2.10 to the extent that the provision of services by Manager would violate any applicable law.

 

 

2.11 Insurance.

 

(a) Manager shall arrange for the purchase by Provider, at Provider’s cost and expense, of necessary insurance coverage for Provider, including but not limited to workers’ compensation insurance and professional liability insurance. Manager shall be responsible for ensuring that Provider maintains at all times during the Term, workers’ compensation insurance required by law, professional liability insurance, covering Provider, Physicians, Non-Physician Practitioners, and Licensed Support Personnel, as required by law and under the contracts of Provider, and general commercial liability insurance sufficient to cover any liabilities arising from Provider’s obligations under this Agreement. Upon request by Provider, Manager shall provide Provider with certificates of insurance or other satisfactory written evidence of insurance coverage. If Manager, through no fault of Provider, fails to procure the insurance coverage specified under this Section 2.11, Manager shall indemnify and hold harmless Provider for claims which such coverage would otherwise have insured against.

 

(b) Manager shall maintain comprehensive general liability insurance and directors’ and officers’ insurance in commercially reasonable amounts that are customary for companies that provide management services to physician practices.

 

(c) Provider shall use commercially reasonable efforts to assign all rights to any benefit proceeds under key man life insurance policies for which Provider serves as owner or beneficiary to Manager and any amount payable under such policies shall be transferred to Manager upon receipt.

 

2.12 Assets, Equipment and Supplies; Computer and Information Technology Systems.

 

(a) Assets, Equipment and Supplies. Manager shall, in consultation with Provider, select and purchase, lease, license or otherwise acquire or arrange for the use of all assets necessary for Provider to provide the Professional Services, including, without limitation, medical, computer and other equipment, software, supplies, inventory, and other materials and items, in such quantities and at such times as Manager reasonably shall determine to be adequate or appropriate to provide the Professional Services. Manager agrees to provide Provider with a royalty-free non-exclusive license to use such assets, equipment and supplies necessary to provide the Professional Services. Manager shall consult with Provider to ensure that such assets, equipment and supplies are necessary and appropriate with respect to the delivery of the Professional Services. Unless otherwise herein specifically provided, all right, title and interest in and to such assets, equipment and supplies shall at all times remain with Manager. Provider shall not remove such assets, equipment or supplies from any Provider location without Manager’s prior written consent. Provider shall reimburse Manager for all of the costs and expenses related or incident to Manager’s obligations under this Section 2.12(a), regardless of whether Manager provides such assets or procures such assets on Provider’s behalf. To the extent that there are pharmaceuticals that must under the law be directly procured by Provider, Manager shall assist Provider with such procurement.

 

 

(b) Computer Systems. Without limiting the generality of the provisions of Section 2.12(a) above, Manager shall provide Provider with computer hardware (including, without limitation, any and all necessary wiring) and software. Manager may determine from time to time that said hardware and software requires upgrading or replacement, the cost of which shall be the responsibility of Manager. All computer software, including, without limitation, such upgrades, shall remain the property of Manager during the Term of this Agreement and shall be returned to Manager upon termination hereof. Provider, and its Physicians and Non-Physician Practitioners during their employment or engagement with Provider, are hereby granted a non-exclusive right to use said software and hardware during the Term. The computer hardware, including, without limitation, any upgrades, provided to Provider may be retained by Provider following termination of this Agreement.

 

2.13 Physician Liaison. Owner shall provide certain liaison services on behalf of Manager pursuant to an agreement with Manager (the “Physician Liaison Agreement”) in the form attached hereto at Exhibit B. Each Physician Liaison shall perform, or arrange for Provider’s delegate to perform, certain administrative duties set forth in the Physician Liaison Agreement on behalf of Manager and facilitate communication and cooperation among the Physicians and Manager. In the event that a Physician Liaison Agreement expires or terminates for any reason, the Manager may enter into a Physician Liaison Agreement with a new individual of Manager’s choosing to serve as the liaison.

 

2.14 Accounting and Financial Administrative Services. Manager shall provide financial administrative services necessary and appropriate for Provider’s operations, including accounting, bookkeeping, capital and operating budgets, tax matters, payroll services, accounts receivable and accounts payable processing, and electronic data processing. If Provider has an affiliation or affiliations with an entity, other than Manager, for which financial administrative services are required (i.e., collection of accounts receivable), then Manager, at Manager’s sole discretion, shall provide financial administrative services necessary and appropriate to Provider’s other affiliation(s), and Manager shall have the right to assess Provider for these services in addition to any fees contemplated under this Agreement.

 

2.15 Tax Matters. Manager shall, on Provider’s behalf and at Provider’s expense, prepare and file, or cause to be prepared and filed by qualified professionals, the annual report, tax reports and tax returns required to be filed by Provider in compliance with all federal and state laws and regulations. All amounts payable with respect to any taxes shall be the responsibility of and shall be for the account of Provider.

 

2.16 Budgets. Manager shall prepare all capital and annual operating budgets for Provider in consultation with Provider.

 

2.17 Expenditures. Manager shall manage all cash receipts and disbursements of Provider, including, without limitation, the payment on behalf of Provider of all payroll and income taxes, assessments, licensing fees, insurance premiums, and other fees of any nature whatsoever in connection with its operation as the same become due and payable, unless payment thereof is being contested in good faith by Provider.

 

 

2.18 Provider Offices. Manager will, at Provider’s cost and expense, provide or otherwise arrange for the provision to Provider of office space (the “Offices”) for such days and times as mutually agreed upon by Manager and Provider for Provider’s use in order to perform the Professional Services, and these Offices may be provided to Provider pursuant to a separate written sublease agreement as mutually agreed to by the Parties. The cost of providing the Offices to Provider will be reimbursed to Manager in accordance with the terms and conditions set forth in Section 9.2 and as may be set forth in any respective written sublease agreement. The Offices and leasehold improvements, whether currently existing or added during the Term, provided by Manager and utilized by Provider under this Agreement, at all times will be and remain the sole and exclusive property of the Manager. Provider shall use and occupy such Offices, and shall cause Physicians, Non-Physician Practitioners, and other Licensed Support Personnel to use and occupy the Offices, solely in connection with the business of Provider and the provision of Professional Services during Provider’s normal business hours as may be determined to be appropriate by Manager from time to time. Provider acknowledges that Manager may lease one or more Offices from a third party pursuant to the terms of an office lease or similar agreement or document (each, a “Master Lease”). Provider shall: (i) not do anything which would constitute a breach of the terms and conditions of any Master Lease; (ii) be bound by all provisions of each Master Lease, including without limitation, any terms relating to the termination of such Master Lease(s); (iii) not sublet or assign any Office or any part of such Office, or permit its use by others for any purpose unless Manager gives Provider its prior written consent, which consent may be withheld by Manager in Manager’s sole discretion; (iv) not pledge, loan, create a security interest in, or abandon possession of, an Office: (v) not attempt to dispose of any Office or any part of it; or (vi) not permit any liens, attachments, charge, or other judicial process to be incurred or levied on any Office or any part thereof. Manager shall ensure that such Offices and Master Leases comply with all applicable laws and regulations, including applicable zoning regulations. Provider covenants and agrees that Manager and its agents and affiliates shall have reasonable access to each Office during regular business hours for purposes of inspection. Provider shall immediately notify Manager of any damage or loss to person or property at or in an Office to which Provider becomes aware.

 

2.19 Licenses. Manager shall apply for, obtain and maintain in the name and at the expense of Provider, all reasonable and necessary licenses, permits, registrations, certificates and Medicare, Medicaid and third party payor provider agreements required or appropriate in connection with the business and operation of the Clinic and Provider’s provision of Professional Services. Upon the request of Provider, Manager shall provide evidence to Provider of any licenses, permits, certificates, registrations and provider numbers.

 

2.20 Agency. Except as otherwise provided herein, Manager shall have access to Provider Accounts solely for the purposes stated herein and shall use all funds on deposit therein in accordance with the terms of this Agreement.

 

2.21 Litigation Management. Manager shall, at the expense of Provider, (a) manage and direct the defense of all claims, actions, proceedings or investigations against Provider or any of its officers, members, managers, employees or agents in their capacity as such, (b) manage and direct the initiation and prosecution of all claims, actions, proceedings or investigations brought by Provider against any person other than Manager, and (c) cancel, modify, or terminate any Contract for the breach of or default by any other party thereto. Manager shall: (i) promptly notify Provider of all legal actions filed on behalf of or (as Manager becomes aware thereof) against Provider; and (ii) provide all information or documentation requested by Provider regarding such legal actions.

 

 

2.22 Training. Manager shall furnish training services to Provider with respect to all aspects of the operations of Provider (other than matters related to clinical decision-making), including, without limitation, administrative, financial, billing, compliance and equipment maintenance matters.

 

2.23 Quality Assurance and Utilization Management. Manager agrees to develop for Provider’s approval, and to implement for Provider, a quality assurance and improvement and utilization management program in accordance with recommendations made to Provider by Manager or as required by law or any third-party payor. Provider shall cause Physicians, Non-Physician Practitioners, and Licensed Support Personnel to participate in the development of such programs and to comply with the standards, protocols or practice guidelines established thereby.

 

2.24 Compliance; Policies and Procedures. Manager shall assist Provider in operating in compliance with all laws, and shall develop and implement a comprehensive corporate compliance plan for Provider that complies with all laws and other guidance published by the Office of Inspector General of the Department of Health and Human Services. Manager shall assist Provider in establishing a culture that fosters the prevention, detection and resolution of instances of misconduct. Manager shall be responsible for providing compliance training to Physicians, Non-Physician Practitioners, Licensed Support Personnel, Provider Support Personnel and all of Manager’s employees, contractors, or agents providing services under this Agreement. Manager shall ensure that Manager, all Licensed Support Personnel, all Provider Support Personnel, and all of Manager’s employees, contractors, or agents providing services under this Agreement comply with the corporate compliance plan. In addition to the corporate compliance plan, Manager shall develop, provide and revise all necessary policies and operating procedures pertaining to Provider’s business operations (the “Policies”). Upon request of Provider, Manager shall assist Provider in its development and implementation of clinical practice guidelines, which shall be subject to the ultimate approval of Provider. Nothing in this Section 2.24 shall be construed to give Manager any control or influence over the practice of medicine by Providers or any of the Physicians, Non-Physician Practitioners, or Licensed Support Personnel.

 

2.25 Patient Medical Records. Manager shall assist Provider in the completion, maintenance and storage of patient medical records, including by periodically reviewing medical records to confirm completeness. With regard to the privacy of medical records, Manager shall establish plans, policies and/or procedures designed to comply in all material respects with the Health Insurance Portability and Accountability Act of 1996 and regulations promulgated thereunder, as the same may be from time to time amended (“HIPAA”), including the Standards for Privacy of Individually Identifiable Health Information, the Security Standards for the Protection of Electronic Protected Health Information and the Standards for Electronic Transactions and Code Sets promulgated pursuant to HIPAA and any laws of any state where Provider conducts business relating to patient privacy and/or the security, use or disclosure of health care records.

 

 

2.26 Disclaimer. To the extent Manager provides Provider with equipment or Offices, Provider acknowledges that Manager is not the manufacturer of the equipment or the manufacturer’s agent or the developer, architect or owner of the Offices. ACCORDINGLY, CLINIC HEREBY AGREES TO TAKE THE OFFICES, IF ANY, AND EQUIPMENT, IF ANY, IN AN “AS IS” CONDITION. MANAGER HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER RELATING TO THE EQUIPMENT OR THE OFFICES, INCLUDING WITHOUT LIMITATION. THE DESIGN OR CONDITION OF THE OFFICES AND THE EQUIPMENT AND THE OFFICES AND THE EQUIPMENT’S MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, DESIGN, CONDITION, QUALITY, CAPACITY, MATERIAL OR WORKMANSHIP, OR AS TO PATENT INFRINGEMENT OR THE LIKE. The Parties shall have the benefit of any existing manufacturers’ warranties.

 

2.27 Day-to-Day Services. Manager shall furnish or obtain all telephones, paging devices, office services (including secretarial, reception, scheduling, duplication, facsimile services and document disposal services), janitorial services, maintenance services, security services, and any other services of a similar nature reasonably necessary in connection with the day-to-day operations of Provider.

 

2.28 Waste Management. Manager shall arrange for the proper disposal of all medical and non-medical waste generated by Provider, provided that such waste is generated in the ordinary course of Professional Services. Provider and its Physicians, Non-Physician Practitioners, Licensed Support Personnel, and Provider Support Personnel shall comply with all guidelines established by Manager with respect to the disposal of Provider’s waste.

 

2.29 Manager’s Right to Subcontract. Manager may subcontract with other persons or entities for any of the Management Services that Manager is required to perform under this Agreement.

 

3. Marketing, Advertising, or Business Development. Manager may, at its sole discretion but in consultation with Provider, engage in advertising, marketing or other activities on behalf of Provider.

 

4. Professional Control Retained by Provider. Provider shall be responsible for and shall have complete authority, responsibility, supervision and control over its provision of Professional Services. Any purported delegation of authority by Provider to Manager that would require or permit Manager to engage in the practice of medicine or provide the Professional Services shall be prohibited and deemed ineffective, and Provider shall have the sole authority with respect to such matters. Manager shall not be required or permitted to engage in, and Provider shall not request Manager to engage in activities that constitute the practice of a licensed profession in any state in which Provider operates. Manager shall not direct, control, influence, restrict or interfere with the exercise of independent clinical, medical or professional judgment by Provider or any Physician, Non-Physician Practitioners, or other Licensed Support Personnel in providing Professional Services. In furtherance thereof, Manager shall not engage in any of the following: (i) assumption of responsibility for the care of patients; and (ii) any activity that involves the unlicensed practice of medicine.

 

 

5. No Inducement; No Income Guarantee. Manager and Provider agree that they have reached agreement regarding the terms and conditions of this Agreement in accordance with a good faith determination of the fair market value thereof. Manager shall neither have nor exercise any control or direction over the number, type, or recipient of patient referrals and nothing in this Agreement shall be construed as directing or influencing such referrals. Nothing in this Agreement is to be construed to restrict the professional judgment of Provider or any Physician or Non-Physician Practitioner to use any facility where necessary or desirable in order to provide proper and appropriate treatment or care to a patient or to comply with a patient’s wishes. No part of this Agreement shall be construed to induce, encourage, solicit or reimburse the referral of any patients or business. The Parties acknowledge that neither this Agreement nor any other agreement between the Parties requires or encourages the referral of patients to one another or any of their respective affiliates. Each Party represents and warrants to the other that no payment made under this Agreement shall be in return for the referral of patients or business. Furthermore, Manager has not guaranteed to Provider that the arrangements contemplated hereunder will guarantee any amount of income to Provider.

 

6. Relationship of the Parties. The Parties expressly understand and agree that nothing contained in this Agreement shall be construed to create a joint venture, partnership, association, or other affiliation or like relationship between the Parties, it being specifically agreed that their relationship is and shall remain that of independent parties to a contractual relationship as set forth in this Agreement. The Parties agree that their respective employees shall not have any claim under this Agreement or otherwise against the other Party or any of the other Party’s affiliates for vacation pay, paid sick leave, retirement benefits, social security, worker’s compensation, health, disability, professional malpractice or unemployment insurance benefits or other employment benefits of any kind.

 

7. Responsibilities of Provider.

 

7.1 Physicians; Non-Physician Practitioners. Provider shall have the authority to engage (whether as employees or as independent contractors), promote, discipline, suspend and terminate the services of Physicians and Non-Physician Practitioners only to the extent required by applicable law; provided, however, that Provider shall retain that number of Physicians and Non-Physician Practitioners as are reasonably necessary and appropriate for the provision of the Professional Services as determined by Manager after consultation with Provider. Manager, after consultation with Provider, shall determine the salaries and provision of fringe benefits for Physicians and Non-Physician Practitioners. Nothing contained herein shall limit Provider’s duty and obligation to control all aspects of the practice of medicine, including, without limitation, clinical training and clinical supervision of the Physicians, and the care and safety of patients. Manager shall neither control nor direct any Physician or Non-Physician Practitioner in the performance of Professional Services. Notwithstanding the foregoing, Manager shall have the ability, as part of the Management Services, to establish guidelines for the hiring or retention of Physicians, Non-Physician Practitioners, and registered nurses, and Provider covenants to hire or retain as well as terminate Physicians and Non-Physician Practitioners in accordance with Manager’s guidelines. With the assistance of Manager, Provider shall establish work schedules for all Physicians and Non-Physician Practitioners necessary to ensure adequate coverage; provided that Manager shall control all non-clinical decisions relating to Licensed Support Personnel and Provider Support Personnel. Provider and its supervising Physician(s) shall have full responsibility for and shall supervise and control all medical or health related services provided by the registered nurses and Licensed Support Personnel.

 

 

7.2 Licenses, Certifications, Standards of Care. Provider shall require each Physician and Non-Physician Practitioner to: (a) maintain without restriction all licenses, certifications, registrations and professional liability insurance necessary to provide the Professional Services; (b) perform all Professional Services in accordance with all laws and with prevailing and applicable standards of care and in accordance with the Policies (subject to the exercise of independent professional judgment in accordance with Section 4 herein); and (c) maintain his or her skills through continuing education and training.

 

7.3 Cooperation with Manager on Billing. Provider shall, and Provider shall require all Physicians and Non-Physician Practitioners to, provide Manager with complete and accurate charge slips, claims or encounter reports and other similar documentation under a system administered and managed by Manager, whether as part of a hard copy or electronic record, specifically identifying items or services furnished and, to the extent applicable, service and diagnosis codes, drug codes, or supply codes, in a form and substance as indicated by Manager in advance from time to time. Provider shall be responsible for all coding and billing decisions with respect to the provision of Professional Services to Provider’s patients, which shall include the selection of codes and services submitted for payment. Manager shall engage in the preparation and submission of such claims for payment subject to the billing and coding decisions made by Provider. Nothing in this Agreement shall be construed to limit Manager’s duties under Section 2.3 of this Agreement.

 

7.4 Peer Review. Provider shall implement appropriate peer review and corrective action procedures for the Physicians. Provider shall provide Manager with prompt notice of any complaints relating to any Physicians or arising out of the Professional Services rendered.

 

7.5 Actions Requiring Manager’s Approval. Notwithstanding anything herein to the contrary, Provider agrees that the following actions shall require prior written approval of Manager:

 

(a) The issuance of membership interests of Provider or of any security convertible into Provider membership interests;

 

(b) Commencing any new Professional Service or terminating or materially modifying the types of Professional Services or other services furnished by Provider, except where Provider reasonably determines that such change is required by law in which case Provider shall give such written notice promptly;

 

 

(c) The payment of any dividends, profits, or capital gains on Provider’s membership interests or other distribution to the Owner. Notwithstanding this Section 7.5(c), Provider shall pay Owner cash distributions in respect of his or her respective membership interests in an amount necessary for payment of any applicable federal, state, and local income tax liabilities attributable to taxable income of Provider that is properly allocated to Owner;

 

(d) Any consolidation of Provider;

 

(e) Any sale, assignment, pledge, lease, exchange, transfer or other disposition, including, without limitation, a mortgage or other security device, of assets, leases or equity of the Provider, including Provider’s accounts receivable;

 

(f) Any purchase or other acquisition of assets at any aggregate cost to Provider exceeding One Thousand Dollars ($1,000.00);

 

(g) Any incurrence of loans or other indebtedness by Provider, or any grant of a lien, security interest or other encumbrance on the assets of Provider;

 

(h) Any reclassification or recapitalization of the membership interests of Provider;

 

(i) Any redemption, sale or purchase of the membership interests of Provider;

 

(j) The dissolution or liquidation of Provider;

 

(k) Subject to the terms and conditions set forth under Section 7.1, the authorization for the employment or discharge of any individual, the engagement or termination of any independent contractor, or the execution and delivery of any employment agreements or contracts with employees, independent contractors or consultants, or any amendments, modifications or terminations thereof;

 

(l) The entering into of any contract by Provider committing Provider to incur more than One Thousand Dollars ($1,000.00) in expenses on an annual basis;

 

(m) Any amendment to a contract between Provider and a Physician or Non-Physician Practitioner; and

 

(n) The creation of any indebtedness or any other obligation of Provider to Owner.

 

 

7.6 Provider Governing Documents. Provider shall consistently and uniformly utilize its governance and operational documents (including but not limited to its articles of organization, operating agreement, employment agreements and independent contractor agreements with Physicians and Non-Physician Practitioners) in the conduct of its business and shall comply with and require performance of all of the provisions contained therein. Provider hereby agrees that, after Manager’s approval of these governance and operational documents, no revision or modification or termination shall be made to these governance and operational documents, and no new agreement or arrangement affecting the ownership or voting of the equity of Provider shall be made, without Manager’s reasonable prior written approval thereof.

 

7.7 Scope. Provider shall provide all of its office-based services at the Offices and shall not provide such services at other locations unless the provision of such services at such other locations is contemplated by an approved budget or if necessary for immediate treatment of an applicable emergency clinical condition. If Provider provides services at locations not contemplated under an approved budget or otherwise within the scope of this Agreement, it shall be a breach of this Agreement, and, among other things, Provider, and not Manager, shall be responsible for all costs associated with such out of scope activities.

 

7.8 Security Agreement. Except to the extent the granting of a security interest is limited by application of law with respect to the Government Lockbox Account, Provider and Manager shall execute a Security Agreement in the form attached as Exhibit C, which shall be executed and attached, that grants and assigns to Manager a continuing security interest in all of Provider’s right, title and interest in: (i) all furniture, fixtures, equipment and supplies, (ii) all leases, whether for personal or real property, (iii) all accounts, all payments and rights to payment from all sources, including, without limitation, those that are not evidenced by instruments or chattel paper, and whether or not they have been earned by performance, (iv) deposit accounts, (v) proceeds of letters of credit of which Provider is named beneficiary, (vi) general intangibles, (vii) contract rights, (viii) chattel paper, (ix) instruments, (x) documents, (xi) insurance proceeds, and (xii) all other indebtedness and obligations whatsoever owing to or owned or acquired by Provider, together with all instruments and all documents of title representing any of the foregoing, all rights in any property that the same may represent, and all right, title, security and guarantees with respect to each of the foregoing, whether now owned or hereafter acquired (the “Collateral”). Provider shall execute and deliver, in a form acceptable to Manager, all documents that are reasonably necessary to perfect and maintain the security interest in its Collateral, including, without limitation, financing statements, or any other security agreement, statements or notices that Manager may, from time to time, present to Provider, and which Manager may file, record, or disclose as Manager may determine.

 

8. Compliance. The Parties agree to cooperate with one another in the fulfillment of their respective obligations under this Agreement, and to comply with all applicable laws, ordinances, statutes, regulations, directives, orders, or other lawful enactments or pronouncements of any federal, state, municipal, local or other lawful authority and all third party payor requirements. Manager further agrees to comply with all applicable federal and state laws, regulations and guidance in the performance of its duties to provide Management Services under this Agreement.

 

 

9. Payments and Fees.

 

9.1 Management Fee. As compensation for the Management Services provided by Manager under this Agreement, Provider shall pay fees to Manager as set forth in Schedule 2 (the “Management Fee”). In any state in which Provider operates that restricts Manager from engaging in or being compensated for advertising, marketing, business development or similar activities, such activities will be addressed in a separate agreement and will not be considered “Management Services” for purposes of determining the Management Fee in this Section 9.1. Manager shall withdraw the Management Fee for each full or partial calendar month of Management Services provided during the Term from any Provider Account on the 15th day of the month following each calendar month. Manager shall, upon request from Provider, furnish Provider with a statement detailing the Management Fee and all expenses and compensation due to Manager for the immediately preceding month.

 

9.2 Reimbursement of Costs and Expenses. In addition to the Management Fee, Manager shall be entitled to full reimbursement (without mark-up) for all costs, expenses and liabilities paid or satisfied by Manager in connection with its provision of Management Services under this Agreement or otherwise arising out of the operation, ownership or maintenance of the business of Provider. Manager shall, upon request from Provider, submit an invoice to Provider, dated no earlier than the thirtieth (30^th) day of the month following the month in which the costs and expenses being invoiced were incurred. Each such invoice shall state with reasonable detail the costs and expenses that were incurred.

 

9.3 Application of Payments.

 

(a) Provider hereby directs Manager to apply Provider’s Gross Revenues monthly for the following purposes, in the order of priority set forth below:

 

(1) to pay any refunds or other amounts owed to patients or third party payors;

 

(2) to pay all cumulative direct costs and expenses of operating Provider’s business, including, without limitation, insurance premiums, payroll and benefits for Provider’s employees, marketing expenses, supply expenses, equipment purchase and lease expenses, auditing and tax preparation fees and fees of professional advisors, such as attorneys, taxes of Provider, including federal, state and local income, sales, use and other taxes and tax distributions payable to Owner to pay any federal, state and local income tax liabilities attributable to taxable income of Provider that is allocated to Owner;

 

(3) to pay all cumulative direct or indirect expenses incurred by Manager (including, without limitation, an allocable percentage of Manager’s corporate overhead) in providing the Management Services, and in carrying out its duties hereunder on behalf of Provider; and

 

(4) subject to Section 9.3(b), to pay Manager the Management Fee.

 

 

(b) If, at any time, Provider’s Gross Revenues are insufficient to cover all, or a portion of, the Management Fee that may be due to Manager pursuant to this Agreement, such amount of the Management Fee that is at any time owed to Manager (including any amounts not paid in any prior periods), but which is not paid when due, shall be paid by Provider to Manager in the immediately-succeeding month (together with the Management Fee due in such succeeding month) with interest at the prime rate per annum, as published in the Wall Street Journal on the date such shortfall originates, from the due date to the date payment is actually made to Manager; provided that such payment must be made only to the extent Provider has sufficient resources to pay it in such month after payment of the obligations outlined in the foregoing Sections 9.3(a)(1) to 9.3(a)(3) that are due and payable at such time, or, in the event previously not paid pursuant hereto, at such time Provider has sufficient resources to pay it after payment of the obligations outlined in the foregoing Sections 9.3(a)(1) to 9.3(a)(3) that are due and payable at such time.

 

9.4 Evaluation of Reasonableness. The Parties agree that the Management Fee reflects the fair market value of the Management Services. Payment of the Management Fee is not intended to be and shall not be interpreted or applied as permitting Manager to share in or split Provider’s fees for the Professional Services, but is acknowledged as the Parties’ negotiated agreement as to the reasonable fair market value of the Management Services furnished by Manager pursuant to this Agreement and related agreements, considering the nature and extent of the Management Services required and the investment made by Manager.

 

10. Term and Termination.

 

10.1 Term. This Agreement shall have an initial term commencing as of the Effective Date and continuing in full force and effect for ten (10) years (the “Initial Term”) and shall renew automatically for additional five (5) year terms thereafter, unless terminated as provided herein (the Initial Term and any subsequent terms shall be referred to as the, “Term”).

 

10.2 Termination by Manager Without Cause. Manager may terminate this Agreement at any time without cause upon ninety (90) days advance written notice.

 

10.3 Immediate Termination By Manager. Manager shall have the right, but not the obligation, to terminate this Agreement immediately upon notice to Provider of any of the following events:

 

(a) the cancellation or non-renewal of the professional or malpractice insurance of Provider, any member of Provider or any Physician or Non-Physician Practitioner employed or engaged by Provider (other than due to the failure to pay premiums);

 

(b) the dissolution of Provider;

 

(c) if Provider participates in any Federal Healthcare Program(s), the suspension or exclusion of Provider from same;

 

 

(d) the suspension or exclusion of any member of Provider, Physician, or any Non-Physician Practitioner (as may be applicable) who is employed or engaged by Provider from any Federal Healthcare Program provided that Provider did not terminate the employment or engagement of such employee or contractor within thirty (30) days of becoming aware of such fact;

 

(e) the date upon which any of the membership interests of Provider are transferred or attempted to be transferred voluntarily, by operation of law or otherwise, to any person without the prior written approval of Manager;

 

(f) the merger, consolidation, reorganization, sale, liquidation, dissolution, or other disposition of all or substantially all of the membership interests or assets of Provider without the prior written approval of Manager;

 

(g) failure of Provider to pay the Management Fee in the time frames set forth in Section 9;

 

(h) Provider materially altering or changing the scope of the Professional Services furnished by Provider; or

 

(i) Provider’s breach of any provision of Section 12 herein.

 

10.4 Immediate Termination by Provider. Provider shall have the right, but not the obligation, to terminate this Agreement immediately upon notice to Manager of the suspension, exclusion or debarment of Manager, any employee, contractor, or agent of Manager, or any Provider Support Personnel or Licensed Support Personnel provided by Manager, from any Federal Healthcare Program; provided that Manager did not terminate the employment or engagement of such employee, contractor, or agent of Manager, including any Provider Support Personnel or Licensed Support Personnel, within sixty (60) days of becoming aware of such fact.

 

10.5 Termination By Either Party. This Agreement may be terminated as follows:

 

(a) by mutual written agreement of the Parties;

 

(b) by either Party immediately upon the filing of a petition in bankruptcy or the insolvency of the other Party; or

 

(c) by either Party, upon thirty (30) days advance written notice of a breach of any material provision of this Agreement by the other Party which is not cured within thirty (30) days after written notice is given, provided that such breach continues for a period of thirty (30) days after written notice is given by the non-breaching Party to the other Party.

 

10.6 Termination Obligations. In the event of termination or expiration of this Agreement, Provider shall pay all Management Fee and costs and expenses owing to Manager hereof up through and including the date of termination or expiration. In the event of termination or expiration of this Agreement, Manager will, upon request by Provider, immediately provide Provider a hardcopy or computer disk of all Provider-related billing, collection, accounts receivable, financial, personnel, and practice management data and information maintained by Manager in electronic form. Furthermore, after termination or expiration of this Agreement, the Parties shall reasonably cooperate with one another, and provide each other access to such books, records and information as either party may reasonably request, for purposes of defending against any subpoena, government or third-party payor investigation, audit, or any lawsuit or proceeding instituted by any third party and relating to any alleged or actual acts or omissions of either Party during the Term of this Agreement, or for any other legitimate purpose. Finally, any Loans owed by Provider to Manager at the time of termination will remain due and payable in accordance with their respective terms.

 

 

10.7 Effect of Termination. In the event of termination or expiration of this Agreement, Provider shall no longer have any right to the equipment, supplies, personnel and Management Services provided by Manager hereunder. Neither Party shall have the right to use or receive Confidential Information (as such term is defined in Section 12.2 herein) in any form or fashion. Subject to Section 10.6 and Section 11.5, Provider shall immediately return to Manager any equipment, records and other items provided hereunder (including all copies thereof) and both Parties shall cease using any Confidential Information of the other Party. For avoidance of doubt, Provider shall maintain, retain, and store patient medical records in accordance with applicable law upon termination or expiration of this Agreement. In the event of termination under this Article 10, the Parties will not enter into another agreement for the Management Services with each other on materially different financial terms prior to the one (1) year anniversary of the Effective Date.

 

11. Records and Record Keeping.

 

11.1 Access to Information. Provider hereby authorizes and grants to Manager full and complete access during the Term to all information, instruments and documents relating to Provider that may be reasonably requested by Manager to perform its obligations hereunder and shall disclose and make available to representatives of Manager for review and photocopying all relevant books, agreements, papers and records of Provider.

 

11.2 Manager’s Records and Systems. At all times during and after the Term, all business records and information, including, without limitation, all books of account and general administrative records and all information generated under or contained in the management information system pertaining to Provider, relating to the business and activities of Manager, shall be and remain the sole property of Manager. No provision in this Agreement shall be interpreted to limit in any way Provider’s access to, and Manager shall provide Provider with full access to, Provider’s financial and business information, including but not limited to bank statements, cash disbursements, cash receipts, accounts payable and receivable, and contractual obligations of any kind.

 

11.3 Manager’s Electronic Systems. Provider acknowledges that Manager is the sole owner of any proprietary electronic records systems/software and that Provider shall have no license or other right to copy, use, or transfer any rights to such systems/software, except for the right of access to the patient medical records as set forth herein as required by law and as necessary to provide the Professional Services.

 

 

11.4 Confidentiality of Records. Manager and Provider will adopt procedures to assure the confidentiality of the records relating to the operations of Manager and Provider, including, without limitation, all statistical, financial and personnel data related to the operations of Manager and Provider that is not otherwise available to third parties publicly or by law.

 

11.5 Maintenance, Retention and Storage of Records. The Management Services shall include oversight of the maintenance and storage of all patient medical records of Provider in its possession in accordance with applicable law, which patient medical records are, for the avoidance of doubt, owned by Provider. Manager shall maintain patient medical records for a minimum of seven (7) years from the last date of service to the patient, and longer if required by law. Provider shall have access to all patient medical records as necessary to defend against any subpoena, government or third-party payor investigation, audit, or any lawsuit or proceeding instituted by any third party and relating to any alleged or actual acts or omissions of Provider.

 

11.6 Privacy and Security of Medical Records. The Parties agree to discharge their respective duties hereunder in accordance with the applicable provisions of HIPAA and the regulations promulgated thereunder and all applicable state and federal laws governing the privacy and security of medical records. In furtherance of the foregoing, the Parties shall execute the HIPAA Business Associate Addendum attached as Exhibit D.

 

12. Protective Covenants.

 

12.1 Confidential Information. The Parties expressly acknowledge that, pursuant to this Agreement, each Party and its respective officers, members, managers, shareholders, directors, employees, agents and contractors will be given access to, and be provided with, business methods, trade secrets and other proprietary information of the other Party in connection with their respective duties and activities. Each Party expressly acknowledges and agrees that Confidential Information, as defined below in Section 12.2, is proprietary and confidential and if any of the Confidential Information was imparted to or became known by any persons engaging in a business in any way competitive with that of the other Party, including, without limitation, the Party receiving Confidential Information and its members, shareholders, officers, directors, managers, employees, agents and contractors, such disclosure would result in hardship, loss, irreparable injury and damage to the non-disclosing Party, the measurement of which would be difficult, if not impossible, to determine. Accordingly, each Party expressly agrees that the other Party has a legitimate interest in protecting the Confidential Information and its business goodwill, that it is necessary for each Party to protect its business from such hardship, loss, irreparable injury and damage, that the following covenants are a reasonable means by which to accomplish those purposes, and that violation of any of the protective covenants contained herein shall constitute a breach of trust and is grounds for immediate termination of the Agreement and for appropriate legal action for damages, enforcement and/or injunction.

 

 

12.2 Trade Secrets, Proprietary and Confidential Information. For purposes of this Agreement, “Confidential Information” is information obtained by a Party (“Receiving Party”) from or regarding the other Party (“Disclosing Party”) and includes, without limitation: (a) lists containing the names of past, present and prospective clients, patients, vendors, or suppliers; (b) the past, present and prospective methods, procedures and techniques utilized in identifying prospective clients or patients and in soliciting the business thereof; (c) the past, present and prospective methods, procedures and techniques used in the operation of the Party’s business, including, without limitation, the methods, procedures and techniques utilized in marketing, provision of services and pricing; (d) compilations of information, records and processes which are owned by a Party and/or which are used in the operation of the Party’s business; (e) statistical, personal, client information, private information concerning a Party; (f) historical and financial information, business strategies, operating data, organizational and cost structures, product descriptions, pricing information, technology, know-how, processes, software, databases, trade secrets, contracts; and (g) any information directly or indirectly obtained pursuant to this Agreement (including the terms and conditions of this Agreement). Notwithstanding the foregoing, Confidential Information shall not include information: (i) which is or becomes part of the public knowledge or literature, not as a result of any breach of the provisions of this Agreement or (ii) which is lawfully disclosed, without any restriction on additional disclosure, to the receiving Person by a third party who is free lawfully to disclose the same. All Confidential Information is the property of the Disclosing Party and shall include proprietary information protected under the Uniform Trade Secrets Act. Receiving Party shall not, and shall require that its personnel not, disclose to any Person or entity, directly or indirectly, either during the Term or at any time thereafter, any Confidential Information, or use any Confidential Information other than in the course of meeting such entity’s obligations under this Agreement unless such Confidential Information is reasonably necessary in order for Provider to litigate any claim against Manager. In the event the disclosure of Confidential Information is required by applicable law, an order of a court having competent jurisdiction or under subpoena from an appropriate government agency, Receiving Party shall use its reasonable best efforts to consult with Disclosing Party prior to making such required disclosure. Receiving Party agrees to return all Confidential Information to Disclosing Party, at Receiving Party’s expense, upon the termination of this Agreement. This provision shall survive the termination of this Agreement.

 

12.3 Trade Names and Service Marks. Provider shall not, absent Manager’s prior written consent, use the trade names or service marks of Manager other than in a manner approved by Manager.

 

12.4 Intellectual Property Ownership. Provider acknowledges and agrees that all copyrights, trademarks, inventions, and other intellectual property and proprietary rights conceived, developed or created by Provider during or in connection with the provision of Professional Services or Provider’s receipt of the Management Services or otherwise owned by Provider through its employment of the Physicians whether complete or works in progress, whether prepared or acquired by Provider, the Physicians or by any third party (collectively “Provider Work Product”) shall be solely owned by Manager. Provider agrees to assign and does hereby assign to Manager any and all right, title and interest in and to such Provider Work Product. Provider Work Product shall include, but not be limited to, all information, data, reports, studies, writings, programs, methods, forms, systems, services, designs, marketing and other ideas and concepts, products or processes, tests, techniques, developments, inventions, discoveries, innovations or materials (and any improvements or know-how related to any of the foregoing) developed, conceived, created, invented, contributed to, reduced to practice, or authored by Provider (either solely or jointly with another or others) in the course of providing the Professional Services or receiving the Management Services or otherwise owned by Provider through its employment of the Physicians provided, however, that Provider Work Product shall not include patient health information protected by applicable law, including PHI (as defined in Exhibit D) Use and disclosure of PHI shall be governed by the Parties’ HIPAA Business Associate Addendum. Provider agrees to at all times promptly disclose to the Manager in such form and manner as the Manager may reasonably require, any Provider Work Product, particularly including, but not limited to, Provider Work Product subject to protection as Confidential Information (as described in Section 12.2), or which may be patentable or copyrightable. Provider shall deliver the originals and all copies of any Provider Work Product to the Manager promptly upon the Manager’s request or the termination, for cause or otherwise, or expiration of this Agreement.

 

 

12.5 Further Assurances. If by operation of law or otherwise Provider or the Physicians acquire any ownership rights in any of the intellectual property rights held by Manager (“Manager IP Rights”) or Provider Work Product, by virtue of their respective activities pursuant to this Agreement or otherwise, such rights shall automatically vest in, or if not legally possible, be assigned promptly without restriction upon request to, Manager. To the extent any such rights cannot be assigned under applicable law, and to the extent allowed by applicable law, Provider and the Physicians hereby waive such rights and hereby consent to any action of the Manager that otherwise would violate such rights in the absence of such waiver or consent. Provider agrees to perform such acts as Manager may request, at Provider’s expense, in order to protect or confirm Manager’s interest in any of the Manager IP Rights, Provider Work Product or in any other intellectual property owned by Manager, including executing and delivering, without additional compensation, any and all documents that Manager reasonably determines may be necessary or desirable to perfect Manager’s ownership of the Manager IP Rights, Provider Work Product or other intellectual property owned by Manager from time to time. Provider will not, and will not permit anyone else to, use, adopt, register or attempt to register any Manager IP Rights or Provider Work Product. This Section 12.5 shall survive expiration or termination of this Agreement.

 

12.6 Non-Solicitation; Non-Disparagement; Goodwill. Provider and Owner (during the time period that the Owner holds an equity interest in Provider) agree that he, she or it shall not, during the Term, for any cause whatsoever, directly or indirectly, take any action that constitutes, results or may reasonably be expected to result in: (i) soliciting, diverting or interfering with any relationship that Manager or any of its affiliates has with any patients, health care providers or suppliers; (ii) soliciting the termination of, or diverting or interfering with any relationship that Manager has with any person or entity affiliated with it or any of its affiliates as an independent contractor, supplier or provider; (iii) entering into any agreement, the purpose of which would violate this Section 12.6; and (iv) soliciting, inducing or encouraging any individual employed or engaged by or affiliated with Manager or any of its affiliates (presently or in the then most recent twelve (12) month period) to curtail or terminate such affiliation or employment, or take any action that results in, or might reasonably be expected to result in any employee or contractor ceasing to perform services for Manager or its affiliates. Nothing in this Section 12.6 is intended to prohibit ordinary course employment decisions or the placement of general advertisements for employment, or to prohibit either Party or any of its affiliates who is a practicing physician from engaging in the professional practice of medicine or exercising such person’s independent medical judgment, without consideration for any pecuniary interests of the applicable physician, nor to restrict patient choice or require the referral of any patients for any service provided by either Party or its affiliates. Additionally, nothing in this Section 12.6 is intended to prohibit the Owner from providing emergency medical services to any patient or providing charity care as a medical professional. Each of Manager, Provider and Owner agrees that it shall not, during the Term and for a period of twelve (12) months following the termination of this Agreement, make any derogatory or disparaging statement or communication regarding the other Parties or their respective affiliates or employees. Each Party acknowledges and agrees that this Section 12.6 is intended to protect each Party’s legitimate business interests, including Manager’s substantial investment in managing Provider’s non-clinical operations.

 

 

12.7 Survival of Covenants. Each covenant in this Article 12 shall be construed as an agreement independent of any other provision of this Agreement, unless otherwise indicated herein, and shall survive the termination of this Agreement, and the existence of any claim or cause of action of either Party against the other Party, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of such covenant.

 

12.8 Extension of Restrictive Periods. If a Party violates the protective covenants set forth in this Article 12 and the aggrieved Party brings legal action for injunctive or other relief hereunder, the aggrieved Party shall not, as a result of the time involved in obtaining the relief, be deprived of the benefit of the full restrictive periods of the protective covenants contained in this Article 12. Accordingly, such restrictive periods for the purposes of this Article 12 shall be deemed to have a duration of the respective time periods stated in this Article 12 computed from the date relief is granted, but reduced by the time between the period when the restriction began to run and the date of the first violation of the covenant by such Party.

 

12.9 Specific Performance and Other Remedies. The Parties understand and acknowledge that violation of this Article 12 will cause irreparable harm to the non-violating Party, the exact amount of which will be impossible to ascertain, and for that reason the Parties agree that a Party shall be entitled to seek, without the necessity of showing any actual damage (unless required by law), from any court of competent jurisdiction temporary or permanent injunctive relief and/ or specific performance of this Agreement restraining a Party or any person from any act prohibited by this Article 12. Nothing in this Section 12.9 shall limit a Party’s right to recover any other damages or remedies to which it is entitled as a result of the other Party’s breach. If any one or more of the provisions of this Article 12 or any word, phrase, clause, sentence or other portion of this Article 12 shall be held to be unenforceable or invalid for any reason, such provision or portion of provision shall be modified or deleted in such a manner so as to make this Article 12, as modified, legal and enforceable to the fullest extent permitted under applicable law.

 

 

12.10 Severability of Restrictive Covenants; No Right of Set Off. The Parties each expressly agree and stipulate that the covenants and agreements contained in this Article 12 are separate, severable and divisible, and in the event any portion or portions of the covenants and agreements contained herein are declared invalid or unenforceable by any court of competent jurisdiction, the validity of the remaining covenants and agreements shall not be affected thereby. In addition, the enforceability of the covenants and agreements contained in this Article 12 shall not in any way be affected by any claim, action, cause of action, defense or right which Provider or an Owner may have against Manager, it being the intention of the Parties that Manager have the right to enforce the covenants and agreements contained in this Article 12, regardless of the existence of any such claim, action, cause of action, defense or right.

 

13. Indemnification.

 

13.1 Provider Indemnification. Provider hereby agrees to defend, indemnify and hold Manager and its affiliates and their respective officers, members, managers, employees, successors and assigns (“Manager Indemnified Parties”) harmless from and against any and all liabilities, causes of action, damages, losses, demands, claims, penalties, judgments, costs and expenses (including, without limitation, reasonable attorneys’ fees and related costs) of any kind or nature whatsoever (“Losses”) that may be sustained or suffered by any Manager Indemnified Party in any way caused by or arising from: (i) Provider’s provision of Professional Services, or (ii) any breach by Provider of any of its representations, warranties, covenants, obligations or duties under this Agreement and any other agreement entered into hereunder, in each case if, and only to the extent to which, such Losses are not (i) covered by Provider’s insurance, or (ii) caused by the gross negligence or willful misconduct of Manager or a Manager Indemnified Party.

 

13.2 Manager Indemnification. Manager hereby agrees to defend, indemnify and hold Provider and Owner and its affiliates and their respective members, managers, officers, employees, successors and assigns (“Provider Indemnified Parties”) harmless from and against any and all Losses that may be sustained or suffered by any Provider Indemnified Party in any way caused by or arising from: (i) the performance of, or failure to perform, of the Manager or any subcontractor of Manager’s duties under this Agreement, or (ii) any breach by Manager of any of its representations, warranties, covenants, obligations, or duties under this Agreement and any other agreement entered into hereunder, in each case if, and only to the extent to which, such Losses are not (i) covered by Manager’s insurance, or (ii) caused by the gross negligence or willful misconduct of Provider, Owner or a Provider Indemnified Party.

 

13.3 Survival. The provisions of this Article 13 shall survive the termination of this Agreement for the duration of the applicable statute of limitation.

 

14. Notices. All notices, requests, consents, and other communications provided for by this Agreement shall be in writing, shall be addressed to the receiving Party’s address set forth below or to such other address as a Party may designate by notice hereunder, and shall be either: (i) delivered by hand, (ii) sent by recognized overnight courier, or (iii) sent by certified mail, return receipt requested, postage prepaid to such address as each Party shall provide the other Party from time to time, or (iv) delivered via electronic mail, return receipt requested, provided that any notice sent via electronic mail must also be accompanied by another form of notice set forth in the foregoing sub-sections (i)-(iii). Notice shall be deemed given (A) upon delivery, if hand delivered, (B) on the next business day, if sent next day delivery by a recognized overnight courier, (C) if sent by certified mail, five (5) business days following the day such mailing is made; and (D) if sent via electronic mail, followed by notice consistent with the foregoing sub-sections (i)-(iii), upon delivery (regardless of whether the recipient confirms such receipt as requested).

 

 

15. Entire Agreement: Amendment. This Agreement, together with the exhibits attached hereto, contains the entire agreement between the Parties. No amendment, alteration or modification of this Agreement shall be valid unless in each instance such amendment, alteration or modification is expressed in a written instrument duly executed in the name of the Party or Parties making such amendment, alteration or modification.

 

16. General.

 

16.1 Duty to Cooperate. The Parties acknowledge that the Parties’ mutual cooperation is critical to the ability of Manager to perform successfully and efficiently its duties hereunder. Accordingly, each Party agrees to cooperate fully with the other in formulating and implementing goals and objectives that are in Provider’s best interest.

 

16.2 Limited Renegotiation.

 

(a) This Agreement shall be construed to be in accordance with any and all federal and state laws, including, without limitation, laws governing the state and federal health care programs and private third party payors. In the event there is a change in such laws, whether by statute, regulation, agency or judicial decision or guidance that has any material effect on any term of this Agreement, then the applicable term(s) of this Agreement shall be subject to renegotiation, and either Party may request renegotiation of the affected term or terms of this Agreement, upon written notice to the other Party, to remedy such condition.

 

(b) The Parties expressly recognize that upon request for renegotiation, each Party has a duty and obligation to the other only to renegotiate the affected term(s) in good faith and, further, each Party expressly agrees that its consent to proposals submitted by the other Party during renegotiation efforts shall not be unreasonably withheld provided such proposals would not materially alter the economic outcome of the Agreement.

 

16.3 Choice of Law. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Delaware, without regard to the conflict of laws provisions thereof. Both Provider and Manager expressly waive any right that either Party has or may have to a jury trial of any dispute arising out of or in any way related to this Agreement or any breach thereof.

 

16.4 Waiver of Breach. The waiver by either of the Parties of a breach or violation of any provision of this Agreement shall not operate as, or be construed to be, a waiver of any subsequent breach of the same or other provision hereof.

 

 

16.5 Force Majeure. Neither Party shall be liable or be deemed in default of this Agreement for any delay or failure to perform cause by Acts of God, war, disasters, strikes, or any similar cause beyond the control of either Party, including any federal, state and/or local directives limiting or prohibiting the provision of any Professional Services performed by Provider at the Clinic in response to SARS-CoV-2 (also known as COVID-19).

 

16.6 Severability. If any provision of this Agreement is held to be unenforceable for any reason, the unenforceability thereof shall not affect the remainder of this Agreement, which shall remain in full force and effect and enforceable in accordance with its terms.

 

16.7 Successors and Assigns. This Agreement shall bind each of the Parties and their respective successors and permitted assignees. Assignment by Provider or any Owner of any rights or obligations under this Agreement without the prior written consent of Manager is expressly prohibited. Manager is permitted to assign this Agreement or any rights or obligations hereunder to any third party (including any lender, purchaser, or affiliate of Manager) without the prior written consent of Provider and any such assignee is an intended third party beneficiary of this Agreement.

 

16.8 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

16.9 Waiver. No term or condition of this Agreement shall be deemed to have been waived except by written instrument of the Party charged with such waiver.

 

16.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall be one and the same document.

 

16.11 Survival. The provisions of Article 12, Article 13 and such other articles and sections of this Agreement which either expressly or by their natures survive expiration or other termination of this Agreement shall survive such expiration or other termination of this Agreement until each such provision expires in accordance with its respective terms.

 

16.12 Construction. This Agreement has been drafted and negotiated jointly by the Parties, and this Agreement will be construed neither against nor in favor of either Party.

 

16.13 Exhibits. Any exhibits attached are an integral part of this Agreement and are incorporated herein by this reference.

 

16.14 Condition Precedent. The effectiveness of this Agreement is contingent on the closing of the transactions contemplated in the Joint Venture Agreement.

 

 

16.15 Remedies; Limitation of Liability. The remedies provided to the Parties by this Agreement are not exclusive or exhaustive, but cumulative and in addition to any other remedies the Parties may have, law or in equity. Notwithstanding the foregoing, the total limit of liability for Manager in connection with the Management Services or any other matter relating to this Agreement (whatever the basis for the cause of action) shall not exceed the cumulative value of the Management Fee paid to Manager during the twelve (12) months immediately prior to the termination or expiration of this Agreement.

 

16.16 Attorneys’ Fees. If legal action is commenced by either Party to enforce or defend its rights under this Agreement, the Prevailing Party in such action shall be entitled to recover its costs and reasonable attorney’s fees in addition to any other relief granted. The term “Prevailing Party” shall mean the Party in whose favor final judgment after appeal (if any) is rendered with respect to the claims asserted in the complaint, and the term “reasonable attorney’s fees” are those attorney’s fees reasonably incurred in obtaining a judgment in favor of the Prevailing Party.

 

16.17 Dispute Resolution.

 

(a) Subject to this Section 16.17(a), if at any time during the Term or upon its termination, any dispute or disagreement arises as to the validity, construction, enforceability or performance of this Agreement, which cannot be resolved by the mutual agreement of the Parties, and mindful of the high cost of litigation, not only in dollars but time and energy as well, the Parties intend to and do hereby establish a quick, final and binding out-of-court dispute resolution procedure to be followed in the unlikely event any controversy should arise out of or concerning the performance of this Agreement. Any controversy, dispute, or claim of whatever nature arising out of, in connection with, or in relation to the interpretation, performance or breach of this Agreement, including any claim based on contract, tort, or statute, shall be settled, at the request of any Party to this Agreement through arbitration to be conducted by the American Health Law Association.

 

(b) Notwithstanding Section 16.17(a), in the event that either Party has breached a provision of this Agreement that entitles the other Party to injunctive or other equitable relief, the non-breaching Party may commence an action for such relief in any federal or state court with jurisdiction.

 

16.18 No Third Party Beneficiaries. The Parties do not intend this Agreement to create any third party beneficiaries, including without limitation, individuals who are the subject of PHI.

 

16.19 Advice of Counsel. The Parties acknowledges that they have been advised to seek independent legal counsel for advice regarding the effect of the terms and provisions hereof, and have either obtained such advice of independent legal counsel, or have voluntarily and without compulsion elected to enter into and be bound by the terms of this Agreement without such advice of independent legal counsel.

 

16.20 Further Assurance: At any time, and from time to time, after the Effective Date, each Party will execute such additional instruments and take such action as may be reasonably requested by the other Parties to carry out the intent and purpose of this Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of the Effective Date.

 

“Manager”			“Practice”
Wood Violet Fertility LLC			Wisconsin Fertility and Reproductive Surgery Associates, S.C.
By:	/s/ Steve Shum		By:	/s/ Elizabeth Pritts, M.D.
Name:	Steve Shum		Name:	Elizabeth Pritts, M.D.
Title:	President		Title:	President

 

Address for Notices:	Address for Notices:
Wood Violet Fertility LLC	Wisconsin Fertility and Reproductive
5582 Broadcast Court	Associates, S.C.
Sarasota, Florida 342240	3146 Deming Way
Email: legal@invobio.com	Middleton, WI 53562
	Attention: Elizabeth Pritts, M.D.
	Email:

 

With a copy (which shall not constitute notice) to:	With a copy (which shall not constitute notice) to:
Sheppard, Mullin, Richter and Hampton LLP	Palmersheim Dettmann, S.C.
30 Rockefeller Plaza	1424 N. High Point Rd., Ste 202
New York, NY 10112-0015	Middleton, WI 53562
Attention: Amanda L. Zablocki, Esq.	Email: palmersheim@pdbusinesslaw.com
Email: azablocki@sheppardmullin.com	Attention: Kevin J. Palmersheim

 

[Signature Page to Management Services Agreement]

 

 

IN WITNESS WHEREOF, the undersigned Owner has caused this Agreement to be executed as of the Effective Date, for the limited purpose of acknowledging and agreeing to those certain terms and covenants set forth in Sections 1.2(f), 1.3, 2.13, 7.5, and 12.6 herein that by their express terms apply to Owner.

 

“Owner”
Elizabeth Pritts Revocable Living Trust, Member
	/s/ Elizabeth Pritts, M.D.
By:	Elizabeth Pritts, M.D.
Title:	Trustee

 

Address for Notices:

 

Elizabeth Pritts, M.D.

3146 Deming Way

Middleton, WI 53562

Email:

 

 

Schedule 1

 

CLINICAL LABORATORY SERVICES

 

1. Services. Upon receipt of a valid order from Provider, Manager will perform or facilitate the delivery of the Clinical Laboratory Services described below.

 

1.1 INVO Embryology. Upon receipt from Provider of sperm and eggs collected by Provider from patients, such patient materials are fertilized in a petri dish and then placed into an INVOcell. The INVOcell is then given to Provider for placement into the patient for incubation. After the incubation period, the Provider removes the INVOcell from the patient and returns it to the laboratory staff. Embryos are removed from the INVOcell and evaluated. As instructed by Provider, a number of viable embryos are placed into a transfer catheter, which is given to Provider for placement into the patient. Any remaining viable embryos are frozen and placed into cryogenic storage for up to three (3) weeks until pregnancy confirmation. If pregnancy is confirmed, such remaining embryos can be delivered to third-party long term storage facilities as specified by Provider and patient. If pregnancy is not confirmed, such remaining embryos may be thawed and transferred at Provider’s direction.

 

1.2 INVO Embryology with ICSI. This service is performed using the same steps described in Section 1.1 immediately above, except that in lieu of fertilizing the sperm and eggs in a petri dish, fertilization occurs via intracytoplasmic sperm injection (“ICSI”).

 

1.3 Andrology Services. Andrology services will include semen analysis, as well as sperm processing, preparation and cryopreservation. Cryogenically preserved sperm samples will be held for a period of up to three (3) weeks.

 

2. Fees. Provider shall pay Manager the fees described below for Clinical Laboratory Services. Such fees may be changed by Manager from time to time by thirty (30) days written notice to Provider.

 

INVO Embryology		$	1000
INVO Embryology with ICSI		$	1000
Embryo cryopreservation		$	850
Semen analysis / sperm processing and preparation		$	150
Sperm sample cryopreservation		$	500

 

3. Payment Terms. Manager shall invoice Provider on a monthly basis for any Clinical Laboratory Services provided. Provider shall remit payment in full to the address listed on the invoice within fifteen (15) days of the date of the invoice. Any amounts payable by Provider hereunder and that remain unpaid more than fifteen (15) days after the invoice date shall be subject to a late charge equal to one and one-half percent (1.5%) per month, or the maximum amount permitted by law, whichever is less, calculated from the due date of the invoice until the date such amount is paid in full.

 

4. Accreditation. Manager shall employ or secure the services of accredited personnel, including but not limited to a lab director, embryologist and andrologist, to perform the Clinical Laboratory Services and to handle gametes, embryos and storage tanks. As soon as practicable after the Effective Date, Manager shall seek and secure accreditation with the College of American Pathologists or the Joint Commission on Accreditation of Healthcare Organizations to cover the provision Clinical Laboratory Services. Before the provision of any Clinical Laboratory Services, Manager shall apply for and receive a Clinical Laboratory Improvement Amendments license.

 

 

Schedule 2

 

MANAGEMENT FEE

 

1. Management Fee. As compensation for the Management Services, Provider shall pay to Manager the Management Fee on a monthly basis as set forth in this Schedule 2. The Management Fee shall equal the Net Pre-Tax Income of Provider attributable to Provider’s operations in the State of Wisconsin. In the event one of the Parties in good faith believes, based on advice of competent legal counsel, that the Management Fee may potentially violate applicable state or federal law, the Parties may adjust the Management Fee in such manner as to comply with applicable state or federal laws while preserving, as closely as possible, the financial substance of the Management Fee.

 

2. As used in this Schedule 2, the following terms shall have the following meanings:

 

(a) “Cost of Provider’s Services” means Provider’s expenses, and other reasonable and necessary operating expenses incurred by Provider in conducting its business.

 

(b) “Net Pre-Tax Income” means Net Revenues less the total of the Cost of Provider’s Services, but without regard for the provision of income taxes.

 

(c) “Net Revenues” means all Revenues net of refunds, repayments or recoupments.

 

(d) “Revenues” means all reimbursement and cash collections which Provider receives or becomes entitled to receive for any services or sales of products or otherwise, including, without limitation, for the performance of the Professional Services.

 

3. The Parties recognize that, during the Term of this Agreement, the Management Services provided hereunder may change in size, scope and/or cost. In the event of any such change, the Parties agree to adjust the Management Fee to reflect the fair market value of the Management Services. In addition, at least sixty (60) days prior to the one (1) year anniversary of the Effective Date and at least sixty (60) days prior to each one (1) year anniversary thereafter, the Parties will review the Management Fee and make appropriate adjustments as the Parties may mutually agree to ensure that the Management Fee on a go-forward basis comports with the fair market value of the increased or decreased demand or cost for Management Services. In the event that the Parties are unable to agree to any such adjustment in the Management Fee, the existing Management Fee will remain in effect until such time as the Parties agree to an adjusted fee.

 

[Remainder of Page Intentionally Left Blank]

 

 

 

Exhibit 10.3

 

Commercial Lease Agreement

 

This Commercial Lease Agreement (“Lease”) is made and effective July 1, 2023 (the “Effective Date”), by and between Taylyn Holdings, LLC, a Wisconsin limited liability company (“Landlord”) and Wood Violet Fertility LLC, a Delaware limited liability company (“Tenant”).

 

WHEREAS Landlord is the owner of land and improvements commonly known and numbered as 3146 Deming Way, City of Middleton, Wisconsin, including a building and all other improvements located thereon (the “Building”), totaling Nine Thousand Six Hundred Eighty (9,680) rentable square feet (the “Leased Premises”).

 

WHEREAS Landlord is an affiliate of Wisconsin Fertility and Reproductive Associates, S.C., a Wisconsin professional corporation (“Practice”).

 

WHEREAS, pursuant to an Asset Purchase Agreement, anticipated to be effective on or immediately prior to the Effective Date, by and among the Tenant, the Practice, The Elizabeth Pritts Revocable Living Trust (the “Seller”), and Dr. Elizabeth Pritts, an individual and sole trustee of Seller (“Dr. Pritts”), Practice will sell all of its non-clinical assets to Tenant (the “APA”);

 

WHEREAS, pursuant to an Equity Purchase Agreement, anticipated to be effective on or immediately prior to the Effective Date, by and among the Tenant, Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company (“Lab”), IVF Science, LLC, a Wisconsin limited liability company (“IVF Science”) owned by Wael Megid, Ph.D. (“Dr. Megid”), Dr. Pritts and the Seller’s Representative (as defined therein), the Sellers named therein will sell one hundred percent (100%) of its issued and outstanding equity, respectively, to Tenant (the “EPA”);

 

WHEREAS, in connection with the APA and EPA, among other transactions contemplated thereby, Practice shall execute a Management Services Agreement with Tenant, as the same may be amended, restated or otherwise modified from time to time (the “MSA”), pursuant to which Tenant and the Lab will provide certain services to Practice in support of Practice’s performance of medical services through its employed Wisconsin-licensed physicians;

 

WHEREAS Landlord desires to lease the Leased Premises to Tenant, and Tenant desires to lease the Leased Premises from Landlord for the term, at the rental and upon the covenants, conditions and provisions herein set forth.

 

THEREFORE, in consideration of the mutual promises herein, contained and other good and valuable consideration, and incorporating the foregoing recitals, it is agreed:

 

1.

Term; Termination.

 

A.

Landlord hereby leases the Leased Premises to Tenant, and Tenant hereby leases the same from Landlord, for an “Initial Term” beginning on the Effective Date, and ending on the tenth (10th) anniversary thereafter.; provided, however, that notwithstanding the foregoing, the Term shall not commence unless and until (i) the APA, EPA, and MSA have executed, delivered and closed by the parties thereto, (ii) Landlord has delivered evidence to Tenant that the Unlimited Continuing Guaranty, dated October 1, 2020, made in favor of U.S. Bank National Association by the Practice in connection with Landlord’s Term Loan Agreement, dated October 1, 2020, by and between Taylyn Holdings, LLC and U.S. Bank National Association (“Bank”) and each ancillary agreement thereto (collectively, the “Loan Agreement”), has been terminated in all respects, and (iii) Landlord has delivered evidence to Tenant that any liens that may have been filed on Practice or Lab in favor of Bank in connection with the Loan Agreement have been terminated by Bank or its authorized agent.

 

 

B.

This Lease shall automatically renew after the Initial Term in five (5) year terms thereafter (each, a “Renewal Term”), unless either party gives written notice to the other party not less than one (1) year prior to the expiration of the Initial Term, or the Renewal Term, of that party’s election to not renew the Lease. The Renewal Term shall be at the rental set forth below and otherwise upon the same covenants, conditions and provisions as provided in this Lease. The Initial Term and any Renewal Term (as hereinafter defined, if any), shall be deemed the “Term” hereunder.

	C.	This Lease will terminate automatically upon the termination of the MSA for any reason. This Lease may be terminated by mutual written agreement of the Parties, by either Party immediately upon the filing of a petition in bankruptcy or the insolvency of the other Party, or by either Party, upon thirty (30) days advance written notice of a breach of any material provision of this Lease by the other Party which is not cured within thirty (30) days after written notice is given, provided that such breach continues for a period of thirty (30) days after written notice is given by the non-breaching Party to the other Party. In the event of termination or expiration of this Lease, Tenant shall pay all Rent owing to Landlord up through and including the date of termination or expiration of this Lease.

	D.	Landlord may terminate this Lease after the Initial Term by providing written notice (the “Termination Notice”) to the Tenant at least twelve (12) months before the effective termination date (the date of termination in the Termination Notice, the “Termination Date”). If Landlord terminates this Lease under this paragraph, then Tenant shall have the option under Section 25 below.

 

2.

Rental.

 

	A.	Tenant shall pay to Landlord during the Initial Term, base rent (“Base Rent”) of $219,989.16 annually, payable in installments of $18,332.43 per month. Starting January 1, 2025, the Base Rent rate shall be increased by Landlord three percent (3%) annually.

	B.	Each installment payment shall be due in advance on the first day of each calendar month during the Term to Landlord at 9526 Blue Heron Drive, Middleton, Wisconsin, 53562, or at such other place designated by written notice from Landlord to Tenant. The rental payment amount for any partial calendar months included in the lease term shall be prorated on a daily basis. There shall be no security deposit for Tenant on this Lease.

 

 

C.

The Base Rent for any Renewal Term, if created as permitted under this Lease, shall be increased by three percent (3%) per year over the most recent year’s Base Rent, unless otherwise mutually agreed by Landlord and Tenant.

	D.	Any amounts or other charges to be paid by Tenant to Landlord pursuant to the provisions of this Lease, whether such payments are to be periodic and recurring or not, shall be deemed to be “Additional Rent” and otherwise subject to all provisions of this Lease and of law as to the default in the payment of Base Rent.

 

3.

Use.

 

Tenant and its Permitted Occupants (as defined in Section 19 hereof) shall use the Leased Premises for administrative services, medical office space, and clinical laboratory space in the areas of infertility and gynecology, including related medical procedures and high-complexity clinical laboratory services, including but not limited to andrology, embryology, and in vitro fertilization (IVF), and ancillary uses thereto. Tenant will not permit the Premises to be used in any manner which would render the insurance thereon void or the insurance risk more hazardous provided, however, that if Tenant’s use of the Leased Premises does make the insurance risk more hazardous and as a result thereof Landlord’s insurance premiums are increased, Tenant shall reimburse Landlord for such increase promptly upon being billed therefor.

 

4.

Repairs and Maintenance.

 

A.

Landlord shall, (i) at Landlord’s expense (unless otherwise provided for herein), keep the foundations, roof and structural portions of the Building, including, but not limited to, the walls of the Premises, in good condition and repair, and (ii) subject to reimbursement, as set forth below, replace the HVAC (as hereinafter defined) and/or any electrical systems that are in need of replacement (each, a “Landlord Replacement Item”). Notwithstanding the foregoing, any repairs required to the foregoing items by reason of the acts or omissions of Tenant, Tenant’s employees, agents, invitees, licensees or contractors shall be completed by Landlord, at Tenant’s expense. Tenant shall give Landlord written notice of the necessity for repairs coming to the attention of Tenant, following which Landlord shall promptly undertake and complete such repairs. Landlord shall not be liable for any damage occasioned by its failure to keep the Premises in repair unless Landlord is obligated to make such repairs under the terms hereof, notice of the need for such repairs has been given Landlord, a reasonable time has elapsed following such notice, and Landlord has failed to make such repairs. The provisions of this paragraph shall not apply in the case of damage or destruction by fire or other casualty or by eminent domain, in which events the obligations of Landlord shall be controlled by Paragraph 13 or Paragraph 15, as the case may be.

 

In the event that Tenant contracts for or undertakes repairs which are Landlord’s obligations hereunder, without the prior written consent of Landlord, the costs of such repairs shall be paid for by Tenant within ten (10) days of billing therefor.

 

 

In the event a Landlord Replacement Item needs to be replaced (or a major repair in connection with the parking area pursuant to Section 11 hereunder is required), then Landlord shall pay for such replacement (or major repair) and Tenant shall reimburse Landlord the annual cost of such replacement (or major repair) which shall be amortized over its useful life.

 

B.

Except as provided above, Tenant shall keep the Premises and every part thereof, and any fixtures, facilities or equipment contained therein, in good condition and repair, including, but not limited to, the HVAC system (wherever located); the electrical, plumbing and sewer systems; the exterior doors, window frames and all portions of the storefront area, and shall make any replacements thereof and of all broken and cracked glass which may become necessary during the term of this Lease. If mold is found to exist on the Premises, which mold is the result of Tenant’s occupancy of the Premises, Tenant shall remove such mold at Tenant’s sole cost and expense. Tenant shall be responsible for entering into a maintenance contract with a licensed, reputable heating, ventilating and air conditioning (“HVAC”) contractor on an annual basis, for maintenance of HVAC systems servicing the Premises. At Landlord’s election and in addition to any other rights of Landlord under this Lease or at law, if Tenant refuses or neglects to commence or complete repairs promptly and adequately, Landlord may make or complete said repairs, and Tenant shall pay the cost thereof to Landlord upon demand.

 

5.

Alterations and Improvements.

 

Tenant, at Tenant’s expense, shall have the right following Landlord’s consent, such consent not to be unreasonably withheld, conditioned or delayed, to remodel, redecorate, and make additions, improvements and replacements of and to all or any part of the Leased Premises from time to time as Tenant may deem desirable, provided the same are made in a workmanlike manner and utilizing good quality materials. Tenant shall have the right to place and install personal property, trade fixtures, equipment and other temporary installations in and upon the Leased Premises, and fasten the same to the Leased Premises. All personal property, equipment, machinery, trade fixtures and temporary installations, whether acquired by Tenant at the commencement of the Lease term or placed or installed on the Leased Premises by Tenant thereafter, shall remain Tenant’s property free and clear of any claim by Landlord. Tenant shall have the right to remove the same at any time during the term of this Lease provided that all damage to the Leased Premises caused by such removal shall be repaired by Tenant at Tenant’s expense.

 

6.

Property Taxes.

 

A.

During the term of this Lease, Tenant shall pay all real estate taxes and outstanding assessments, both general and special, and all assessments and/or payments in lieu of taxes and all fees incurred by Landlord to reduce assessed valuations that result in a reduction of taxes (hereinafter “Taxes”), levied or assessed by any lawful authority, and/or payable during or with respect to each calendar year during the term hereof against the land, building and all other improvements with regard to the Property or against any land or improvements which may be added to the Property. Copies of tax bills submitted by Landlord to Tenant shall be conclusive evidence of the amount of such Taxes levied or assessed, as well as the item taxed. Notwithstanding anything to the contrary contained in the Lease, the following shall be excluded from Taxes and shall be paid solely by Landlord: inheritance, estate, succession, transfer, gift, franchise, or capital stock tax, or any income taxes arising out of or related to ownership and operation of income-producing real estate, or any excise taxes imposed upon Landlord based upon gross or net rentals or other income received by it; any increase in taxes and assessments resulting from Landlord’s sale of, or other transfer of its interest in, the Building; and assessments, charges, taxes, rents, fees, rates, levies, excises, license fees, permit fees, inspection fees, or other authorization fees or charges to the extent allocable to or caused by the development or installation of on- or off-site improvements or utilities (including without limitation street and intersection improvements, roads, rights of way, lighting, and signalization) necessary for the initial development or construction of the Building, or any past, present or future system development reimbursement schedule or sinking fund related to any of the foregoing.

 

 

Tenant shall pay to Landlord, monthly in advance, an amount equal to one-twelfth (1/12th) of such Taxes for the current year, as reasonably estimated by Landlord. If Tenant’s Taxes with respect to any tax year is less than the total amount theretofore paid by Tenant for such period, the excess shall be credited against the payments with respect to Taxes next becoming due. If Tenant’s Taxes for any tax year exceeds the total amount theretofore paid by Tenant for such period, Tenant shall, upon receipt of invoices from Landlord, pay the difference between the actual amount paid by Tenant and Tenant’s Taxes.

 

B.

Landlord may, at its expense, or Tenant may, at its expense, upon notice to Landlord, have the right to contest any and all such Taxes in the name of and on behalf of Landlord. Landlord shall, on the request of Tenant, cooperate in such contest by Tenant, except for the cost thereof. If the result of any such contest shall be a reduction in the amount of the Taxes so contested, that portion of each refund or recovery from the taxing authorities with respect to such Taxes which is in the same proportion of the total refund or recovery as Tenant’s share of Taxes shall belong to Tenant, and the balance shall belong to Landlord. If Landlord shall contest the amount of any such Taxes without participation by Tenant in the costs and expenses of such proceedings, each refund or recovery from the taxing authorities with respect to such Taxes shall belong to Landlord unless Tenant shall, promptly after receiving notice from Landlord of such refund or recovery, reimburse Landlord for all costs and expenses incurred by Landlord in such proceedings.

 

C.

Tenant shall pay, before delinquency, all municipal, county and state or federal taxes assessed against any leasehold interest of Tenant or any fixtures, furnishings, equipment, stock-in-trade or other of Tenant’s personal property of any kind owned, installed or used in or on the Premises.

 

 

7.

Insurance.

 

Tenant shall, during the Initial Term and any applicable renewal term of this Lease keep in full force and effect a policy of public liability insurance with respect to the property and the business operated by Tenant in the Leased Premises and which the limits of general liability shall be in the amount of at least One Million Dollars ($1,000,000.00) combined single limit, naming Landlord as additional insured. Such coverage shall include a broad form general liability endorsement.

 

Landlord shall during the term hereof, at its sole expense, provide and keep in force insurance on the building against loss or damage by fire and extended coverage, in an amount equal to one hundred percent (100%) of the full insurable value, which insurance shall be placed with an insurance company or companies licensed to do business in the state wherein lay the Leased Premises. The term “full insurable value” shall mean actual replacement value of the building (exclusive of costs of excavation, foundations and footing below ground level). The insurance required under this paragraph shall be carried in the name of Landlord and Tenant and shall provide that any proceeds thereunder shall be paid to Landlord and Tenant and any applicable mortgage holder, according to their respective interests.

 

Duplicate originals or certificates of insurance of the policies provided shall be furnished by Landlord and Tenant to each other upon request by the other party.

 

8.

Utilities.

 

Tenant shall be solely responsible for and promptly pay all charges for water, sewer, gas, electricity, telephone and other services and utilities used by Tenant on the Leased Premises during the term of this Lease unless otherwise expressly agreed in writing by Landlord.

 

9.

Signs.

 

Following Landlord’s consent, such consent not to be unreasonably withheld, conditioned or delayed, Tenant shall have the right to place on the Leased Premises, at locations selected by Tenant, any signs which are permitted by applicable zoning ordinances and private restrictions. Landlord may refuse consent to any proposed signage that is in Landlord’s opinion too large, deceptive, unattractive or otherwise inconsistent with or inappropriate to the Leased Premises. Landlord shall assist and cooperate with Tenant in obtaining any necessary permission from governmental authorities or adjoining owners and occupants for Tenant to place or construct the foregoing signs. Tenant shall repair all damage to the Leased Premises resulting from the removal of signs installed by Tenant.

 

10.

Entry.

 

Following no less than forty eight (48) hours’ notice to Tenant (except in the event of an emergency) and subject to the terms of Section 23 hereof, Landlord shall have the right to enter upon the Leased Premises at reasonable hours to inspect the same, provided Landlord shall not thereby unreasonably interfere with Tenant’s business on the Leased Premises.

 

 

11.

Parking.

 

During the term of this Lease, Tenant and its Permitted Occupants shall have the non-exclusive use in common with Landlord, their guests and invitees, of the non-reserved common automobile parking areas, driveways, and footways, subject to reasonable rules and regulations for the use thereof as prescribed from time to time by Landlord. Tenant shall be responsible for all repairs and maintenance of the parking area, including snow removal, except that any repair other than regular maintenance and minor repairs of the parking area shall be performed by Landlord, at Landlord’s sole cost and expense, and treated as a Landlord Replacement Item hereunder.

 

12.

Building Rules.

 

Tenant will comply with the reasonable rules of the Building adopted and altered by Landlord from time to time and will cause all of its agents, employees, invitees and visitors to do so; all changes to such rules will be sent by Landlord to Tenant in writing.

 

13.

Damage and Destruction.

 

If the Leased Premises or any part thereof or any appurtenance thereto is so damaged by fire, casualty or structural defects that the same cannot be used for Tenant’s purposes, then Tenant shall have the right within ninety (90) days following damage to elect by notice to Landlord to terminate this Lease as of the date of such damage. In the event of minor damage to any part of the Leased Premises, and if such damage does not render the Leased Premises unusable for Tenant’s purposes, Landlord shall promptly repair such damage at the cost of the Landlord, less any applicable insurance proceeds. In no event shall Landlord be required to repair or replace Tenant’s trade fixtures, furniture, furnishings, equipment or personal property. In making the repairs called for in this paragraph, Landlord shall not be liable for any delays resulting from strikes, governmental restrictions, inability to obtain necessary materials or labor or other matters which are beyond the reasonable control of Landlord. If Landlord is required or elects to repair the Premises, Tenant shall repair or replace its stock-in-trade, trade fixtures, furniture, furnishings, equipment and personal property in a manner and to at least a condition equal to that prior to its damage or destruction, and the proceeds of all insurance carried by Tenant shall be held in trust by Tenant for the purpose of such repair and replacement. Tenant shall be relieved from paying rent and other charges during any portion of the Lease term that the Leased Premises are inoperable or unfit for occupancy, or use, in whole or in part, for Tenant’s purposes. Rentals and other charges paid in advance for any such periods shall be credited on the next ensuing payments, if any, but if no further payments are to be made, any such advance payments shall be refunded to Tenant. The provisions of this paragraph extend not only to the matters aforesaid, but also to any occurrence which is beyond Tenant’s reasonable control and which renders the Leased Premises, or any appurtenance thereto, inoperable or unfit for occupancy or use, in whole or in part, for Tenant’s purposes.

 

14.

Default.

 

If default shall at any time be made by Tenant in the payment of rent when due to Landlord as herein provided, and if said default shall continue for fifteen (15) days after written notice thereof shall have been given to Tenant by Landlord, or if default shall be made in any of the other covenants or conditions to be kept, observed and performed by Tenant, and such default shall continue for thirty (30) days after notice thereof in writing to Tenant by Landlord without correction thereof then having been commenced and thereafter diligently prosecuted, Landlord may declare the term of this Lease ended and terminated by giving Tenant written notice of such intention, and if possession of the Leased Premises is not surrendered, Landlord may reenter said Leased Premises. Landlord shall have, in addition to the remedy above provided, any other right or remedy available to Landlord on account of any Tenant default, either in law or equity. Landlord shall use reasonable efforts to mitigate its damages.

 

 

15.

Quiet Possession.

 

Landlord covenants and warrants that upon performance by Tenant of its obligations hereunder, Landlord will keep and maintain Tenant in exclusive, quiet, peaceable and undisturbed and uninterrupted possession of the Leased Premises during the term of this Lease.

 

16.

Subordination.

 

Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust or other lien presently existing or hereafter arising upon the Leased Premises, or upon the Building and to any renewals, refinancing and extensions thereof, but Tenant agrees that any such mortgagee shall have the right at any time to subordinate such mortgage, deed of trust or other lien to this Lease on such terms and subject to such conditions as such mortgagee may deem appropriate in its reasonable discretion. Landlord is hereby irrevocably vested with full power and authority to subordinate this Lease to any mortgage, deed of trust or other lien now existing or hereafter placed upon the Leased Premises of the Building, and Tenant agrees upon demand to execute such further reasonable instruments subordinating this Lease or attorning to the holder of any such liens as Landlord may request. Tenant and each Permitted Occupant agrees that they will from time to time upon request by Landlord execute and deliver to such persons as Landlord shall request a statement in recordable form certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as so modified), stating the dates to which rent and other charges payable under this Lease have been paid, stating that Landlord is not in default hereunder (or if Tenant alleges a default stating the nature of such alleged default) and further stating such other matters as Landlord shall reasonably require. At Tenant’s request, Landlord shall use its best efforts to obtain a non-disturbance agreement for the benefit of Tenant and the Permitted Occupants from any holder of a security instrument encumbering the Leased Premises.

 

17.

Waiver.

 

No waiver of any default of Landlord or Tenant hereunder shall be implied from any omission to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated. One or more waivers by Landlord or Tenant shall not be construed as a waiver of a subsequent breach of the same covenant, term or condition.

 

18.

Successors.

 

The provisions of this Lease shall extend to and be binding upon Landlord and Tenant and their respective legal representatives, successors and assigns.

 

 

19.

Assignment and Subletting.

 

Except as otherwise provided for herein, Tenant shall not sublet or license the Leased Premises or any part thereof nor assign this Lease without, in each case, the prior written consent of Landlord, such consent not to be unreasonably withheld, conditioned or delayed. Any merger, consolidation or liquidation of Tenant, any transfer of any percentage interest in Tenant, or any other transfer of this Lease by operation of law or otherwise shall constitute an assignment of this Lease. Any consent by Landlord to any assignment or subletting, or to the operation by a concessionaire or licensee, shall not constitute a waiver or the necessity for such consent to any subsequent assignment or subletting or operation by a concessionaire or licensee. No consent by Landlord shall operate to relieve Tenant from primary liability for the performance of Tenant’s obligations under this Lease.

 

Notwithstanding anything to the contrary contained herein, including the foregoing restrictions on assignment of this Lease, Tenant may, upon prior notice to Landlord: (i) assign this Lease or sublease or sublicense the Premises, or any portion thereof, to (A) any parent, subsidiary or affiliate of Tenant, or (B) any person, firm, corporation or other entity who is the purchaser of all or substantially all of the ownership interests or assets of Tenant or is the successor to substantially all the assets and business of Tenant by virtue of a merger or consolidation of, with or into Tenant, and (ii) sublease or sublicense the Premises or any part thereof to, or permit the Premises or any part thereof to be occupied by, in whole or in part, the Practice and Laboratory (each, a “Permitted Occupant”).

 

20.

Consent.

 

Landlord shall not unreasonably withhold or delay its consent with respect to any matter for which Landlord’s consent is required or desirable under this Lease.

 

21.

Compliance With Law.

 

Tenant shall comply with all laws, orders, ordinances and other public requirements now or hereafter pertaining to Tenant’s use of the Leased Premises. Landlord shall comply with all laws, orders, ordinances and other public requirements now or hereafter affecting the Leased Premises. Notwithstanding the foregoing or any other provision of this Lease, however, Tenant shall not be responsible for compliance with any such laws, regulations, or the like requiring (i) structural repairs or modifications or (ii) repairs or modifications to the utility or building service equipment or (iii) installation of new building service equipment, such as fire detection or suppression equipment, unless such repairs, modifications, or installations shall (a) be due to Tenant’s particular manner of use of the Premises (as opposed to medical use generally), or (b) be due to the negligence or willful misconduct of Tenant or any agent, employee, or contractor of Tenant.

 

22.

Final Agreement.

 

This Lease terminates and supersedes all prior understandings or agreements on the subject matter hereof. This Lease may be modified only by a further writing that is duly executed by both parties.

 

 

23.

HIPAA; Entry and Inspection.

 

Landlord acknowledges and agrees that each of Tenant’s patient files (the “Files”) are confidential to the patient named therein pursuant to the Health Insurance Portability and Accountability Act of 1996, as now or hereafter amended (“HIPAA”). Landlord further recognizes that access to Tenant’s Leased Premises must be reasonably restricted as there may be maintained on the Tenant’s Leased Premises confidential records, subject to HIPAA, controlled dangerous substances, and the like. Landlord agrees, except in the case of an emergency, to provide Tenant with reasonable notice of its desire to access the Premises. Landlord shall be limited to access during Tenant’s normal business hours, or as otherwise agreed upon between Landlord and Tenant; provided, however, that Tenant or Tenant’s representative shall be present to monitor Landlord’s or Landlord’s agents, employees, licenses and contractors activities on the Premises. In the event of any entry by Landlord into the Premises (for any reason whatsoever), Landlord agrees that it shall not review any of the Files or access any information contained within the Files.

 

24.

Right of First Refusal on Sale.

 

If at any time during the Term of this Lease, including any extensions or renewals thereof, Landlord or an affiliate of Landlord (collectively, the “Landlord Parties” or “Landlord Party”) receives a bona fide offer (a “Third Party Offer”) from a third party (other than a purchaser making a bid at any sale incidental to the exercise of any remedy provided for in any mortgage encumbering the Leased Premises) to purchase the Leased Premises, which Third Party Offer is in all respects acceptable to Landlord, then Landlord shall notify Tenant of such Third Party Offer and for a period of sixty (60) days after such notice is received by Tenant, Tenant shall have the exclusive right to accept Landlord’s offer to purchase the Leased Premises upon the terms and conditions the same as or substantially similar to those set forth in the Third Party Offer. Tenant shall exercise such right of first refusal, if at all, by delivering its written acceptance to Landlord within said sixty (60) days after the date of receipt of Landlord’s notice. The closing of such purchase shall be completed not later than one hundred twenty (120) days following Tenant’s acceptance of Landlord’s offer. On the date of such purchase, Landlord or the applicable Landlord Party shall convey and assign to Tenant, or its designee, the Landlord’s or Landlord Party’s interest in the Leased Premises in consideration of payment of the sale price therefor, in accordance and upon compliance with the terms and conditions of the Third Party Offer, and this Lease shall terminate. If Tenant fails to accept Landlord’s offer within such sixty (60) day period, then Landlord or the Landlord Party shall be free to sell the Leased Premises for a period of twelve (12) months thereafter on the economic terms and conditions not materially more favorable to a potential third party purchaser (or on different terms more favorable to Landlord or Landlord Party, as seller) without offering the Leased Premises to Tenant, it being understood and agreed that Landlord or Landlord Party shall be permitted to reduce the purchase price for the Leased Premises by up to two (2%) percent without having to re-offer the Leased Premises to Tenant. If Landlord or the Landlord Party does not convey its interest in the Leased Premises within such twelve (12) month period, then Tenant’s rights pursuant to this Section 24 shall be reinstated. In no event shall the right of first refusal provided in this Section 24 apply to any foreclosure of the Leased Premises or the delivery of any deed-in-lieu of foreclosure and such right of first refusal shall terminate and be of no further force or effect upon and following a foreclosure or the delivery of a deed-in-lieu of foreclosure.

 

 

25.

Right of First Purchase on Termination of Lease After the Initial Term.

 

If at any time after the Initial Term of this Lease, Landlord terminates this Lease pursuant to Section 1.D above then for a period of ninety (90) days after receipt by Tenant of the Termination Notice, Tenant shall have the exclusive right to purchase the Leased Premises by providing written notice to Landlord. The parties shall, in good faith, attempt for a period up to thirty (30) days after Landlord received notice from Tenant of Tenant’s option to purchase to agree to a purchase price for the Leased Premises, or to agree to a single appraiser to establish the fair market value for the Leased Premises which shall then be the purchase price. If no purchase price has been mutually agreed to within thirty days, then Landlord and Tenant shall each have an additional fifteen (15) days to select an appraiser, and those two selected appraisers shall have fifteen (15) days to mutually select a third appraiser. The three appraisers shall each conduct an appraisal of the fair market value of the Leased Premises within fifteen (15) days and the two appraised fair market values that are closest to one another shall be averaged to calculate the purchase price for the Leased Premises. If the purchase price is determined by an appraiser as opposed to the Landlord and Tenant directly, then Tenant shall have a period of fifteen (15) days to accept or reject such determined purchase price and if Tenant accepts such purchase price, the parties shall move towards closing. The closing of such purchase shall be completed not later than ninety (90) days following the completion of the three appraisals, but in no event later than Termination Date of the Lease, unless otherwise agreed to by the parties. If Tenant fails to timely provide notice of its option to purchase the Leased Premises, rejects the determined purchase price as provided above, or fails to close as required, then Landlord shall have the right to negotiate the sale of the Leased Property and this Lease shall terminate on the Termination Date as noticed by Landlord, except that if Landlord enters into an agreement to sell the property for a purchase price less than the purchase price determined pursuant to this Section 25, then Tenant shall maintain the right of first refusal set forth as set forth in Section 24 hereof. The terms of this Section 25 shall be of no further force or effect upon and following a foreclosure or the delivery of a deed-in-lieu of foreclosure.

 

26.

Governing Law.

 

This Lease shall be governed, construed and interpreted by, through and under the Laws of the State of Wisconsin.

 

 

IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year first above written.

 

Landlord:
Taylyn Holdings, LLC
	/s/ Elizabeth Pritts
By:	Elizabeth Pritts Revocable Living Trust, Member
By:	Dr. Elizabeth Pritts, Trustee
	/s/ Wael Megid
By:	Wael Megid, Member
Tenant:
Wood Violet Fertility LLC
By:	/s/ Steve Shum
Name:	Steve Shum
Title:	President

 

 

 

Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”), effective August 10, 2023 (the “Effective Date”), is between Wood Violet Fertility LLC, a Delaware limited liability company (“Company”) and Wael Megid, Ph.D., an individual (“Employee”). Each of Company and Employee may be referred to herein as a “Party” or collectively as the “Parties”.

 

RECITALS

 

WHEREAS, Employee is qualified by requisite education, certification and experience to provide high-complexity clinical laboratory director (“HCLD”) services, including the operation, administration, and oversight of scientific and technical protocols in clinical laboratories providing andrology, in-vitro fertilization and related assisted reproductive technology services, as well as supervision of embryologists and clinical laboratory technicians;

 

WHEREAS, Company is a Delaware limited liability company that through itself and its subsidiaries and affiliates provides certain administrative and laboratory services to affiliated medical practices, including Wisconsin Fertility and Reproductive Surgery Associates, S.C. d/b/a Wisconsin Fertility Institute (the “Clinic”), including but not limited to the operation of the Clinic’s high-complexity clinical laboratory accredited by the College of American Pathologists and a member of the Society for Assisted Reproductive Technologies (CLIA Certificate #52D1062371 located at 3146 Deming Way, Middleton, WI 53562)

 

WHEREAS, Company employs and/or contracts with one or more individuals (each a “Employee”) to provide services on behalf of the Company at the Clinic, and Company desires to employ Employee, and Employee desires to be employed by Company, to provide HCLD services at the Clinic on the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of, and incorporating the above recitals, the Parties, intending to be legally bound, and in consideration of the mutual promises contained herein, agree as follows:

 

1. Employment. Company employs Employee and Employee accepts employment with Company, each upon all of the terms and conditions described in this Agreement.

 

2. Duties. At all times during the Term of this Agreement:

 

2.1 Full Time. Employee agrees to provide fertility laboratory and other management services as directed by Company and required by the Clinic, as initially set forth on Exhibit A (the “HCLD Services”) provided the same are consistent with CLIA regulations and standards as may be revised or amended by CLIA in the future, and shall devote his best efforts in the performance of the HCLD Services during all reasonable hours as may be required by Company on a 1.0 full-time equivalent basis. Employee acknowledges as an exempt employee, Employee may from time-to-time work more than 1.0 FTE in a given week and is not eligible for or entitled to overtime. Company acknowledges that Employee shall have flexibility to set his 1.0 FTE schedule over a seven (7) day workweek, provided that such schedule is consistent with the Rules set forth in Section 2.3.

 

 

2.2 Permitted Activities. Employee may perform off-site management and professional services as set forth in Exhibit B (the “Permitted Activities”). Employee shall not engage in any other management or professional activities during the term of this Agreement, whether for gain, profit, or other pecuniary advantage unless such activities are off-site and Employee provides at least thirty (30) days’ prior written notice to Company and a representation and warranty that such activities will not materially impair Employee’s ability to perform the service set forth in this Agreement. If approved, these other noticed off-site activities shall also be considered Permitted Activities. For any Permitted Activities, Employee understands and agrees that (i) Company shall have no responsibility or liability for or with respect to such Permitted Activities, (ii) Permitted Activities must be conducted in all instances separate from Employee’s services hereunder and not involve use of any resources of Company (including but not limited to its insurance coverages), and (iii) Employee must ensure that he obtains insurance of such scope of coverage and limits for the performance of such Permitted Activities.

 

2.3 Compliance with Laws and Rules; Employee to Exercise Independent Professional Judgment. Employee shall comply with all: (a) applicable federal, state, and local laws, rules, and regulations, and court and administrative rules, writs, and standards, including, without limitation, those relating to the provision of HCLD Services (collectively, “Law”); (b) policies, practices, standards, rules, and regulations (collectively, “Rules”) established by the Company and its affiliates, and the Clinic, provided that the Rules do not materially alter Employee’s duties, rights, or obligations set forth herein; and (c) agreements to which Clinic or Company or any of their respective affiliates is a party, or may become a party, including, without limitation, agreements with all third party payors. The Parties acknowledge and agree that Employee shall exercise, and shall be solely responsible for, his independent professional judgment regarding the rendering of HCLD Services to the Company and the Client in connection with treatment of any particular patient, subject to the foregoing requirements.

 

2.4 Compliance Warranty. Employee acknowledges that he has reviewed and agrees to comply with the Compliance Warranty attached to this Agreement as Schedule A.

 

2.5 Other Duties. Employee shall perform such administrative and other duties and functions incidental and related to his duties and assist Company, as requested by Company, with administrative duties, which are relevant to the HCLD Services and necessary for the on-going operation of Company, and shall use Company’s and Clinic’s resources only for the professional purposes for which they are intended and not for any personal or private use. Employee must also maintain, at Employee’s sole expense, a telephone number where Employee can be contacted by Company, Clinic staff and patients at all times.

 

2.6 In-Office and On-Call Hours. In general, Employee can set Employee’s working hours throughout a seven (7) day workweek provided that the hours are 1.0 FTE and that Employee fully performs all obligations under this Agreement, and that such scheduled working hours are consistent with the Rules set forth in Section 2.3. However, Company shall have the right from time to time to prescribe reasonable working hours for Employee as necessary, upon prior notice to Employee of such working hours. Employee shall ensure that he is available at all reasonable times when scheduled by Company to provide services.

 

 

2.7 Licensure and Certifications; Representations and Warranties; Incident Reporting. As a continuing condition of employment, Employee agrees to maintain all necessary and applicable state and federal licenses, certifications, and authorizations to perform the HCLD Services as determined by Company. Employee represents and warrants that Employee has never, at any time: (a) had any license or authorization required under Wisconsin law suspended, relinquished, terminated, restricted or revoked, or (b) been reprimanded, sanctioned, disciplined, suspended, debarred or excluded by any licensing board or any federal, state or local society or agency, governmental body, certification body, or specialty board. Employee agrees to immediately notify Company in writing if any of the events enumerated in (a)-(b) of this Section 2.7 should occur during the Term, which notice must describe the allegation or occurrence in reasonable detail and provide Company with sufficient information to evaluate the issue. Employee shall cooperate in good faith with Company to provide any necessary requested follow-up information. Employee further covenants that he has disclosed and will promptly disclose to Company: (x) the existence and basis of any proceeding against Employee instituted in any jurisdiction by any plaintiff, governmental agency, health care facility, peer review organization or professional society which involves any allegation of substandard care, substance abuse, professional misconduct or violation of Law raised against Employee; and (y) any allegation of substandard care, substance abuse, professional misconduct or violation of Law raised against Employee by any person or agency during the Term hereof. Finally, Employee shall immediately notify Company of any incidents, unfavorable occurrences, adverse events, notices or claims arising out of or relating to the HCLD Services (each an “Incident” and collectively, the “Incidents”) as soon as he becomes aware of an Incident. Employee shall cooperate with Company and its representatives in good faith in the investigation and defense of any such Incidents.

 

2.8 Limitation of Authority. Except for necessary purchases made in the ordinary course of business for the HCLD Services accordance with Company’s Rules and annual budget, Employee acknowledges and agrees that he may not enter into any transactions or agreements on Company’s behalf without the express prior written consent of Company, which may be withheld in Company’s sole discretion.

 

2.9 Cooperation in Proceedings. During and after the Term, the Parties shall provide all reasonable assistance to each other in order to (a) assert any rights under any insurance policies that provide liability or other coverage for the HCLD Services or Company, or (b) assist either Party in defense of professional liability or other legal, regulatory, or administrative actions in which it appears that the other Party may be a fact witness, with reimbursement of reasonable expenses.

 

2.10 HIPAA. At all times, Employee shall: (a) comply with the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations (collectively, “HIPAA”), and all other federal and state privacy and security laws, rules and regulations related to the provision of HCLD Services; (b) comply with the privacy and security Rules of Company; and (c) access only those medical records required in connection with the provision of HCLD Services and any other Company-approved purposes.

 

2.11 Medical and Other Records. Employee agrees to timely and accurately complete all time, financial and other records, forms, and other documentation with respect to the HCLD Services in accordance with applicable Law and the Rules. All files and records of every type pertaining to Clinic’s patients for whom Employee renders services under this Agreement shall belong to Clinic, and Employee shall not, during or after the Term, without the express written consent of Clinic and the patient, remove them from Clinic’s premises, copy them, or allow them to be so removed or copied. Upon the expiration or earlier termination of Employee’s employment with Company, Employee shall promptly return to Company all such records in his possession; provided that in such instance, Company shall retain and maintain all such records through any applicable statute of limitations for claims by a patient for professional malfeasance.

 

 

2.12 Access to Records. Upon written request, and in accordance with applicable Law, Employee and Company each agrees, to the extent that the records are within such a Party’s or its agent’s possession, to make available to the appropriate governmental agencies and other applicable, authorized third parties any records and documentation necessary to certify the nature and extent of the HCLD Services provided by Employee under this Agreement.

 

2.13 Duty to Account; Power of Attorney. Employee agrees that all fees, collections, consideration, accounts receivable and monies due for Employee’s professional services and for ancillary services furnished for Company during the Term shall be the exclusive property of Company (the “Company Receivables”). Employee shall not seek additional payments for the HCLD Services performed hereunder and shall accept the payment made from Company as payment in full for the HCLD Services. Employee shall timely complete all appropriate, accurate and complete information and documentation necessary for Company to timely bill for such HCLD Services. Employee irrevocably assigns to Company all Company Receivables and acknowledges that he shall not be entitled to any Company Receivables. Employee agrees to cooperate and assist Company as reasonably necessary with respect to the recovery of Company Receivables.

 

3. Total Compensation; Withholding. For the HCLD Services to be rendered by Employee under this Agreement, Company shall pay to Employee an initial amount of annual compensation with an aggregate value equal to $275,000.00 (“Total Compensation”), based on services performed by Employee as a full-time employee. Employee shall also receive an annual raise equal to three percent (3.0%) of the Total Compensation of the preceding year; provided that Company determines that Employee has met or exceeded Employee’s duties and performance requirements. Company shall withhold and/or deduct from all compensation payable to Employee under this Agreement any and all sums required to be withheld and/or deducted for income taxes, social security, unemployment taxes, and all other taxes, charges and amount required to be withheld and/or deducted under the Internal Revenue Code of 1986, as amended, and any other applicable Law in effect at any time during the Term. The Parties represent and agree that the Total Compensation is consistent with, as of the Effective Date, and during the Term, will be no greater than, the fair market value of the services provided by Employee and is not, and will not be, determined in a manner that takes into account in any manner Employee’s referrals or other business generated for Company.

 

4. Bonuses.

 

4.1 Guaranteed Bonus. On each anniversary of the Effective Date during the first three (3) years of the Initial Term, the Company shall pay to Employee a bonus equal to $100,000, subject to the withholding provisions outlined above and in accordance with the Rules, not to exceed $300,000.

 

4.2 Discretionary Bonus. The Company may pay the Employee an annual discretionary bonus (a “Discretionary Bonus”) upon satisfaction of certain threshold targets and performance goals established by the Company’s executive board (the “Board”) or its designee. At the end of each fiscal year, Company will review the performance of the Employee against the performance goals to determine whether the Employee has earned a Discretionary Bonus. If Company determines that the Employee has satisfied such performance goals, Company shall, no later than thirty (30) days following the release of the Company’s annual earnings report, pay the Discretionary Bonus, subject to the withholding provisions outlined above and in accordance with the Rules.

 

 

5. Benefits, Professional Liability Insurance Premium Reimbursements. In addition to Employee’s compensation, Company shall pay premiums due to maintain Employee’s malpractice insurance coverage for the HCLD Services. Company shall, at is sole discretion, determine the carrier, the amount of coverage, and all other matters related to the malpractice insurance. Employee shall be eligible to participate in all of Company’s health and welfare and retirement benefit plans in accordance with Company’s Rules and the applicable plan documents. Company retains the right to terminate or alter, in its sole and absolute discretion, any benefit plans or applicable Rules at any time. Employee shall also be entitled to five (5) weeks of paid time off per year, provided that such paid time off must be used by Employee in a manner consistent with Company’s applicable Rules (including but not limited to notice of Employee’s desired use of available paid time off and prior approval from Company, use of paid time off in available increments, permitted rollover (if any), limits on accrual or rollover of paid time off, etc.).

 

6. Expenses. Company shall compensate Employee for reasonable expenses associated with required licensure and registration, upon approval of documentation submitted by Employee, the sufficiency of which shall be determined by Company in its sole discretion.

 

7. Term and Termination.

 

7.1 Term. The term of this Agreement shall begin on the Effective Date and continue for a period of seven (7) years, unless earlier terminated as provided herein (the “Initial Term”). Thereafter this Agreement shall automatically renew for successive periods of one (1) year each (each a “Renewal Term” and together with the Initial Term, the “Term”), unless this Agreement is terminated sooner in accordance with the terms and conditions hereof.

 

7.2 Automatic Termination. Notwithstanding anything herein to the contrary, this Agreement shall automatically and immediately terminate in the event of: (a) Employee’s death; (b) Employee is debarred under any Law or is excluded, or otherwise made ineligible, from participating in any federal or state healthcare program; (c) the revocation, loss, limitation, suspension for more than thirty (30) days, or curtailment of Employee’s licenses, certifications, or authorizations required to perform the HCLD Services; (d) Employee’s incapability of being covered by professional liability insurance at rates reasonably equivalent to those available with respect to the other Employee employees of Company; or (e) at the discretion of Company, if Employee suffers a permanent disability and is unable to perform the essential duties of the employment contemplated by this Agreement, and within then applicable laws protecting disabled workers. For purposes of this Agreement, “permanent disability” is defined as the inability by reason of physical or mental illness, accident, or other cause to perform the essential duties for which Employee was hired for a period of six (6) weeks or more. The term “permanent disability” shall not include or mean maternity leave or an injury hindering mobility such as a badly broken leg. As an equal opportunity employer, Company shall comply with all laws protecting Employee’s right to return to work in the event Employee becomes temporarily disabled or suffers an injury or illness that the Company can accommodate.

 

7.3 Termination by Agreement. In the event Company and Employee shall mutually agree in writing, this Agreement may be terminated on the terms agreed by the Parties.

 

 

7.4 Company’s Termination With Cause. Company may terminate this Agreement for cause upon Employee’s breach of any term of this Agreement that remains uncured to Company’s satisfaction within thirty (30) days after written notice from Company, including any failure to comply with the Compliance Warranty terms set forth at Schedule A; provided, that notwithstanding anything herein to the contrary, Company shall have the right, exercisable in its sole and absolute discretion, to terminate this Agreement immediately in the event of any of the circumstances set forth below, which shall not be subject to any advance notice or cure period:

 

7.4.1 Employee’s commission of any felony or crime involving (i) moral turpitude; (ii) dishonesty, or (iii) Employee’s employment hereunder;

 

7.4.2 Subject to Section 2.3, Employee’s (i) refusal or intentional failure to perform the HCLD Services or otherwise comply with her duties hereunder, following a lawful direction from Company or one of its supervisors, managers or delegates to perform an act within the scope of Employee’s employment, or comply with a lawful directive or policy, rule or regulation or procedure of Company, and which refusal or intentional failure is not cured within two (2) business days of written notice thereof, or (ii) negligent failure to comply with any of the foregoing, which negligent failure is not corrected by Employee to Company’s reasonable satisfaction within ten (10) business days of written notice thereof, provided that Company shall not be required to provide Employee with a cure right for any subsequent failure to abide by a duty or violation hereunder for which he was previously given a cure right for the same issue within the past twelve (12) months;

 

7.4.3 Employee’s violation of Company’s substance abuse policy described in Section 8;

 

7.4.4 Employee’s: (a) misappropriation or diversion of assets or business opportunities of Company; (b) commission of fraud, or embezzlement; (c) violation of applicable healthcare Laws, (d) violation of Law or a personal act of dishonesty, either of which affect Company, its business operations, financial conditions, assets, or prospects; or (e) violation of Law that materially affects Employee’s performance or ability to perform any of his duties or responsibilities under this Agreement;

 

7.4.5 Employee’s (i) commission of a material act of professional misconduct; (ii) commission of an act that endangers patient health and safety, or (iii) Employee’s breach of any fiduciary duty to Company;

 

7.4.6 Employee’s commission of acts that in any material way jeopardize or damage the professional integrity or reputation of Company or the relationships of Company; or

 

7.4.7 Employee’s substantial or repeated unprofessional behavior, which continues after written notice thereof to Employee, and which includes without limitation, insubordination; disruptive conduct; disrespect of any Company staff, Clinic staff or Clinic patients; repeated tardiness; failure to come to work or adhere to the published schedule; verbal or physical altercations; harassment or discrimination of any kind, including but not limited to, statements or gestures that are derogatory or of a sexual nature; retaliation; or any other behavior that interferes with the HCLD Services.

 

7.5 Employee’s Termination With Cause. Employee shall have the right to terminate this Agreement in the event of Company’s material breach of any term of this Agreement that is not corrected by Company within thirty (30) days of written notice given to Company of the occurrence of such breach, specifying the material breach with sufficient detail to enable Company to cure.

 

 

7.6 Termination of Relationship; Obligations on Termination. Upon the expiration or termination of Employee’s employment pursuant to this Agreement, Employee shall (i) immediately vacate Company’s premises at the Clinic, (ii) promptly deliver, within five (5) days, to Company all Company property, including without limitation any telephone, pager, keys, electronic or equipment or other item that was supplied to Employee by Company, Confidential Information and other materials (in any form, whether written or otherwise) relating to Company, its business affairs, patients and potential patients, (iii) fully cooperate with respect to any required notifications and communications in connection with the cessation of employment, and (iv) promptly complete all documentation for HCLD Services performed through such date. Neither Party shall have any further obligations hereunder except for: (i) obligations accruing prior to the date of expiration or termination, and (ii) obligations, promises, or covenants contained in this Agreement which are expressly made to extend beyond the Term, including but not limited to Company’s obligation to compensate Employee through the date of the expiration or earlier lawful termination of this Agreement. Employee must, in addition to the duties set forth herein, perform any transition services reasonably necessary or appropriate for Company to transition its clinical management and operations to one (1) or more additional Employees, as mutually agreed to by Employee and the Company (the “Transition HCLD Services”). Employee expressly acknowledges and agrees that he will not be entitled to any additional compensation hereunder in connection with the Transition HCLD Services, and further, that any failure by Employee to comply with the terms of this Section 7.6 will constitute a material breach of this Agreement.

 

8. Non-Competition. Employee agrees that during the Term of this Agreement and for the period of one (1) year following the termination of Employee’s employment, Employee will not directly or indirectly engage in, own, manage, operate, control, be employed by, act as an agent for, receive any monetary benefits from or in connection with, or be connected in any other manner with the ownership, management, operation or control of any individual, association, corporation, partnership or other entity which is engaged in businesses which are or may be competitive to the business of the Company in any geographic area within twenty (20) miles of any location owned or operated by Company at which Employee has performed HCLD services in the one (1) year prior to termination.

 

9. Substance Abuse. Employee shall not at any time during the Term abuse controlled substances, prescription drugs, over-the-counter medications, alcohol or illegal drugs or substances, nor use, be under the influence, or be impaired by any of the foregoing when performing the HCLD Services. Nothing in this Section 9 shall prohibit Employee from taking medications lawfully prescribed by a medical doctor or over-the-counter medications or drinking alcohol socially so long as such activities do not interfere with Employee’s capacity to perform the HCLD Services. Employee shall comply with any additional specialty specific or state-specific drug and alcohol testing policies and other requirements adopted by Company from time to time.

 

 

10. Confidentiality. Employee acknowledges that, in connection with the provision of HCLD Services under this Agreement, Employee will acquire and make use of confidential information and trade secrets of Company and Clinic, including, but not limited to, business plans, methods of operation, pricing policies, marketing strategies, patient records (including but not limited to patient names, addresses, contact information, or medical history), patient lists, financial statements, research, experimental work, contracts, and other materials or records of a proprietary nature (collectively, the “Confidential Information”). Employee agrees that the Confidential Information, even though Employee may have participated in its creation, is exclusive property of Company or Clinic, as applicable. Accordingly, except as required by Law or for the performance of the HCLD Services, Employee shall not, at any time, either during or after termination of this Agreement, use, reveal, report, publish, copy, transcribe, transfer, or otherwise disclose to any person, corporation, or other entity any of the Confidential Information without the prior written consent of Company, which may be withheld in Company’s sole discretion. Employee acknowledges that the information identified above is valuable to Company and that disclosure cannot be fully compensated by monetary damages and will result in irreparable harm to Company. Employee consequently waives the defense of the adequacy of money damages in connection with any effort by Company to obtain equitable enforcement of this Section and agrees that Company shall be entitled to injunctive relief to enforce the terms of this Section without the necessity of posting a bond or undertaking. If Employee is requested, subpoenaed, ordered, or directed by a court or administrative body having jurisdiction over Employee to make such use or divulgence, Employee shall promptly inform Company of such request, subpoena, order, or direction and afford Company the opportunity to seek a protective order or other relief limiting or prohibiting that disclosure. In the event that Employee is required to disclose Confidential Information, he shall do so with the least amount of disclosure possible to comply. Employee shall be permitted to disclose such Confidential Information to Employee’s attorney and/or accountant or other advisors in connection with their provision of professional services to Employee if disclosure of such Confidential Information is required to permit such person to provide professional services to Employee and if such person is informed of the confidential nature of the Confidential Information and the restrictions contained in this Agreement and before that disclosure is made agrees to be bound by the same.

 

11. Miscellaneous.

 

11.1 Entire Agreement; Further Assurances. This Agreement supersedes any prior or contemporaneous agreements between the Parties relating to this Agreement’s subject matter and constitutes the sole and entire agreement of the Parties with respect to the matters contained in this Agreement, and any representation, inducement, promise, or agreement, whether oral or written, which pertains to those matters and is not embodied in this Agreement shall be of no force or effect. Each Party shall execute and deliver such documents and perform such acts that are or may become necessary to effectuate and carry out the purposes of this Agreement.

 

11.2 Governing Law; Jurisdiction, and Venue. This Agreement shall be interpreted, construed and governed according to the laws of the State of Wisconsin, without reference to its choice of law rules. Any suit involving any dispute or matter arising under this Agreement shall be brought in a state or federal court located in the State of Wisconsin having jurisdiction over the subject matter. The Parties hereby irrevocably consent to the exercise of personal jurisdiction and venue by any such court for any such proceeding(s).

 

11.3 Dispute Resolution. If a dispute arises between Company and Employee with regard to this Agreement, either Party may give notice to the other Party invoking the dispute resolution process to discuss the areas of disagreement and to negotiate in good faith regarding possible solutions. Such discussion will take place within seven (7) days. If the informal discussions between the Parties do not result in a resolution of the dispute, then the Parties will name a neutral mediator. However, if the Parties are unable to agree on a single mediator within fourteen (14) days after receipt of notice invoking the dispute resolution process, the mediator will be selected in accordance with the alternative dispute resolution process established by the American Health Lawyers Association. The mediator will have no authority to impose a resolution, but will work with the Parties to reach a mutually acceptable solution. Each Party will give the mediator their full cooperation and will participate in good faith in all sessions convened by the mediator, which must take place within thirty (30) days of selecting the mediator. The costs of engaging such mediator shall be borne by the Company. The Parties each expressly acknowledge and agree that this Section 11.3 is permissive in nature only, and nothing set forth herein will in any way abridge either Party’s rights under this Agreement (including with respect to termination as permitted pursuant to Sections 7.2 , 7.3, 7.4, and 7.5) or provided by applicable law.

 

 

11.4 Counterparts; Electronic Signatures and Transmission. This Agreement may be executed in counterparts, each of which shall be deemed an original and together shall constitute one and the same Agreement. The Parties may deliver executed signature pages to this Agreement by facsimile, electronic mail or other transmission method. No Party may raise as a defense to the formation or enforceability of this Agreement, and each Party forever waives any such defense, to either (a) the use of a facsimile, email, or such other transmission method to deliver a signature or (b) the fact that any signature was signed and transmitted by facsimile, email, or such other transmission method.

 

11.5 Severability. In the event that any of the provisions of this Agreement shall be held to be invalid or unenforceable, the remaining provisions thereof shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable parts had not been included therein. In the event that any provision of Agreement shall be declared by a court of competent jurisdiction to exceed the maximum restrictiveness such court deems reasonable and enforceable, the time period and/or areas of restriction and/or related aspects deemed reasonable and enforceable by the court shall become and thereafter be the maximum restriction in such regard, and the restriction shall remain enforceable to the fullest extent deemed reasonable by such court.

 

11.6 Waiver of Breach. No waiver of any breach of any provision of this Agreement shall constitute a waiver of any prior, concurrent, or subsequent breach of the same or any other provision of this Agreement and no waiver shall be effective unless made in writing. No waiver of any of the provisions of this Agreement shall be deemed a waiver of any other provision, irrespective of similarity, or shall constitute a continuing waiver unless otherwise expressly provided. Except as otherwise provided in this Agreement, no delay or omission in the exercise of any right, power or remedy accruing to any Party as a result of any breach or default by any other Party under this Agreement shall impair any such right, power, or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later.

 

11.7 Notices. Any notice or other communication required or permitted hereunder shall be in writing and furnished either by personal delivery, overnight mail, or by certified mail, return receipt requested. Any such notice or communication shall be deemed received (i) at the time of delivery if sent by personal delivery, or (ii) on the date of delivery in the case of overnight mail, and (iii) three (3) business days following proper mailing thereof with postage prepaid in the case of certified mail.

 

11.8 Review by Counsel; Expenses. Each Party acknowledges that such Party has been given an opportunity to have this Agreement reviewed by the counsel of such Party’s choice, and that this Agreement has either been so reviewed or such Party has determined to waive such review. Each Party shall pay its own expenses incident to the negotiation and preparation of this Agreement.

 

11.9 Paragraph Headings; Terms. The paragraph headings herein are for convenience only and in no manner shall be construed as a part of this Agreement. Terms, nouns, and pronouns shall be deemed to refer to the masculine, feminine, neuter, singular, and plural, as the context may require.

 

11.10 Amendment; Assignment; Mergers and Consolidation; Successors and Assigns. This Agreement may be amended only by a written instrument signed by both Parties. Employee shall not have the right to assign or delegate this personal service agreement or any of his rights or obligations under this Agreement. Company may freely assign and/or delegate any or all of its rights and duties under this Agreement to an affiliate of Company, including as a result of a change of control. The rights and obligations of Company under this Agreement shall inure to the benefit of and be binding upon and enforceable by its respective successors and permitted assigns.

 

 

11.11 Remedies. Employee agrees that the covenants contained in Section 10 of this Agreement as well as the provisions of this Agreement concerning Employee’s duty to account (as set forth in Section 2.13), and Employee’s obligation to provide access to records (as set forth in Section 2.13) are necessary for the protection of Company’s legitimate business and professional duties, and are reasonable in scope and content. These legitimate business interests include, without limitation, Confidential Information; substantial business relationships with existing and prospective customers, clients, and patients; client and patient goodwill associated with Company’s ongoing business and as evidenced by the various trademarks, trade names, service marks, and trade dress used by Company or any of its affiliates in connection with its business; and the extraordinary and specialized training provided by Company. Employee further agrees that, if Employee breaches any of the provisions referenced in Section 2.12, Section 2.13, and Section 10, Company will suffer irreparable harm and monetary damages may not provide Company with an adequate remedy. Accordingly, Employee agrees that Company may, to the extent permitted by applicable Law, seek and obtain injunctive relief (without the posting of a bond or proving any other surety) against the breach or threatened breach of the referenced provisions as well as all other rights and remedies available at Law and equity, including, without limitation, the right to be indemnified by Employee for all claims, damages, actions, and suits whatsoever for a breach of these provisions. Company may, to the extent awardable by a court of competent jurisdiction, also seek compensatory and punitive damages from Employee for any material breach of this Agreement to the extent permitted by applicable Law.

 

11.12 No Third Party Beneficiaries. All obligations of Company under this Agreement are imposed solely and exclusively for Employee’s benefit. No other person shall have standing or any right to enforce Company’s obligations under this Agreement.

 

11.13 WAIVER OF JURY TRIAL. EACH PARTY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ALL LITIGATION RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP OF THE PARTIES. EMPLOYEE ACKNOWLEDGES THAT THIS JURY TRIAL WAIVER APPLIES TO ANY CLAIM THAT IS BROUGHT AGAINST THE COMPANY AND/OR ITS AFFILIATES.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.

 

COMPANY:
Wood Violet Fertility LLC
a Delaware limited liability company
By:	/s/ Steve Shum
Name:	Steve Shum
Its:	President

 

EMPLOYEE:

 

/s/ Wael Megid
Wael Megid, PhD, an individual

 

 

EXHIBIT A

 

Services

 

As part of the Services provided hereunder, Employee shall serve as the Company’s high-complexity clinical laboratory director. Among other duties, Employee shall be responsible for the compliance and oversight of the Company’s laboratory with all applicable laws and regulations and applicable accreditation standards, and ensuring that all duties are properly performed by any delegee of Employee. Not in limitation of the foregoing, Employee shall perform the following services on behalf of Company:

 

1.1 Laboratory Employee Duties. Among other duties, Employee shall:

 

1.1.1 Be responsible for the overall operation and administration of the Company’s high-complexity clinical laboratory (accredited by the College of American Pathologists and a member of the Society for Assisted Reproductive Technologies), including the operation, administration, and oversight of scientific and technical protocols in clinical laboratories providing andrology, in-vitro fertilization and related assisted reproductive technology services, as well as supervision of embryologists and clinical laboratory technicians, including (i) oversight of its technical and scientific operations, (ii) the selection, in connection with Company and Clinic, of competent staff who are qualified to perform the testing, (iii) selection of the testing procedures to be used and the supervision of such procedures, (iv) assuring the proficiency of laboratory personnel to perform test procedures and record and report test results promptly and accurately, and (v) actively participating in operation of the laboratory to assure compliance with the federal and state laws and applicable regulations.

 

1.1.2 Be accessible to the laboratory personnel to provide onsite, telephonic, or electronic consultation as needed.

 

1.1.3 Confer with Company on staffing needs and hours of operation of the laboratory, to ensure that Company employs a sufficient number of qualified laboratory personnel with the appropriate education and either experience or training to provide appropriate consultation, properly supervise and accurately perform tests and report test results in accordance with applicable law and accreditation standards, and in accordance with the written duties and responsibilities specified by in the laboratory procedure manual and other written policies.

 

1.1.4 Ensure that testing systems developed and used for each of the tests performed in the laboratory provide quality laboratory services for all aspects of test performance.

 

1.1.5 Ultimately be responsible for the performance of all laboratory work performed and for the accuracy of the test results reported.

 

1.1.6 Ensure that the physical plant and environmental conditions of the laboratory are appropriate for the testing performed and ensure that Company provides a safe environment for the laboratory personnel in which Company’s employees are protected from physical, chemical and biological hazards.

 

1.1.7 Ensure that the test methodologies selected have the capability of providing the quality of results required for patient care.

 

 

1.1.8 Ensure that result verification procedures used are adequate to determine the accuracy, precision, and other pertinent performance characteristics of the method.

 

1.1.9 Ensure that laboratory personnel are performing the test methods as required for accurate and reliable results.

 

1.1.10 With regard to high complexity lab testing, ensure that a qualified general supervisor provides day-to-day on site supervision of all high complexity tests performed by testing personnel qualified to perform such tests in accordance with applicable law and accreditation standards.

 

1.1.11 With regard to new tests or new testing procedures which the laboratory chooses to offer, (i) ensure that any new testing procedures are reviewed, documented, and confirmed for accuracy and consistency of results; (ii) ensure that the new testing procedures are included in the laboratory procedure manual and are followed by Company’s employees; (iii) ensure that responsibilities of Company’s employees are specified in writing with regard to any such new testing procedures; (iv) ensure that test reports include all pertinent information necessary for test interpretation; and (v) ensure that Company’s employees are available to consult with referring Employees concerning test results and the interpretation of the test results as they relate to specific patient conditions.

 

1.1.12 Ensure that the laboratory is enrolled in a CMS-approved or SART-approved proficiency testing program for the testing performed and that:

 

(a) The proficiency testing samples are tested as required under applicable law and accreditation standards;

 

(b) The proficiency testing results are returned within the timeframes established by the proficiency testing program;

 

(c) All proficiency testing reports received are reviewed by the appropriate staff to evaluate the laboratory’s performance and to identify any problems that require corrective action; and

 

(d) An approved corrective action plan is followed when any proficiency testing result is found to be unacceptable or unsatisfactory.

 

1.1.13 Ensure that the quality control and quality assurance programs are established, maintained and monitored on an ongoing basis to assure the quality of laboratory services provided and to identify failures in quality as they occur.

 

1.1.14 Ensure the establishment and maintenance of acceptable levels of analytical performance for each test system.

 

1.1.15 Ensure that all necessary remedial actions are taken and documented whenever significant deviations from the laboratory’s established performance characteristics are identified, and that patient test results are reported only when the system is functioning properly.

 

1.1.16 Ensure that reports of test results include pertinent information required for interpretation.

 

 

1.1.17 Ensure that prior to testing patients’ specimens, all technical laboratory personnel have the appropriate education and experience, receive the appropriate training for the type and complexity of the services offered, and have demonstrated that they can perform all testing operations competently and reliably to provide and report accurate results.

 

1.1.18 Ensure that policies and procedures are established for monitoring individuals who conduct pre-analytical, analytical, and post analytical phases of testing to assure that they are competent and maintain their competency to process specimens, perform test procedures and report test results promptly and proficiently.

 

1.1.19 Ensure that appropriate education programs are offered or made available commensurate with the needs of the laboratory personnel.

 

1.1.20 Whenever necessary, identify needs for remedial training or continuing education to improve skills of laboratory personnel.

 

1.1.21 Ensure that an approved procedure manual is available to all personnel responsible for any aspect of the testing process.

 

1.1.22 Ensure that the laboratory has a written manual which (i) specifies the responsibilities and duties of each coordinator, supervisor and manager, as well as each person engaged in the performance of the pre-analytic, analytic, and post-analytic phases of testing; and (ii) identifies which examinations and procedures each individual is authorized to perform, whether supervision is required for specimen processing, test performance or result reporting, and whether supervisory or director review is required prior to reporting patient test results.

 

1.1.23 Work with Company management to ensure the laboratory is in compliance with governmental and other regulatory and accreditation standards.

 

1.1.24 Interact with governmental and accreditation agencies as needed with regard to the laboratory.

 

1.1.25 Ensure maintenance of all sperm and embryo storage inventories.

 

1.2 Clinical Consultation Duties. Among other duties, Employee shall be available to provide consultation regarding the appropriateness of the testing ordered and interpretation of test results. In this role, the Employee shall:

 

1.2.1 Be available to provide consultation to the laboratory’s clients;

 

1.2.2 Be available to assist the laboratory’s clients in ensuring that appropriate tests are ordered to meet the clinical expectations;

 

1.2.3 Ensure that reports of test results include pertinent information required for specific patient interpretation; and

 

 

1.2.4 Ensure that consultation is available and communicated to the laboratory’s clients on matters related to the quality of the test results reported and their interpretation concerning specific patient conditions.

 

1.3 Management Duties. Employee shall:

 

1.3.1 Make recommendations to Company concerning repairs, maintenance, upgrades, or replacement of laboratory furniture or equipment.

 

1.3.2 Inspect the laboratory for safety and maintenance needs and request repairs, or replacements to ensure emergency readiness and compliance with access, safety and bio-hazard regulations.

 

1.3.3 Assure that all medical records and lab results pertaining to patients of the laboratory are maintained in strict confidence, in accordance with all federal, state and local regulations, and that test results, interpretations, and reports are associated with the appropriate medical records of the patients to whom they pertain.

 

1.3.4 Be responsible for ongoing review and assessment of the quality of the services provided in the laboratory.

 

1.3.5 Direct, supervise and evaluate work activities of laboratory staff, contract personnel and externs.

 

1.3.6 Oversee the work schedules and assignments for laboratory staff, according to anticipated volume, workload, space and equipment availability.

 

1.3.7 Ensure that appropriate orientation is provided to all new laboratory testing personnel, and participate in annual performance evaluations of laboratory personnel, and coordinate any required discipline with Company with regard to laboratory personnel employed by Company.

 

1.3.8 Perform such other administrative and management duties as would customarily be performed by an Employee serving as the laboratory director of a similar laboratory, and perform such other and related services and duties as may be reasonably assigned to him from time to time by Company.

 

 

EXHIBIT B

 

Permitted Activities

 

1.

 

 

Schedule A

 

COMPLIANCE WARRANTY

 

Company has a mission to provide quality healthcare in compliance with all federal and state laws and applicable healthcare Company standards. Company maintains a compliance program to ensure compliance with federal and state laws and regulations among all employees, including Employees, and the effectiveness of the compliance program depends on the diligence and efforts of every person contributing to Company’s success. Employee understands Company’s commitment to compliance and agrees to abide by this Compliance Warranty, Company’s compliance program, and applicable federal and state laws and regulations. Employee shall report to Company’s compliance officer any known or suspected violations of this compliance program.

 

COMPLIANCE ESSENTIALS

 

1. Patient-Related HCLD Services Documentation

 

	a.	Employee will accurately and completely document HCLD Services rendered by Employee.
	b.	Employee will familiarize himself or herself with the features of the electronic medical record system utilized by Clinic and avoid taking shortcuts that could result in unintended medical record deficiencies.
	c.	Employee will not document HCLD Services not rendered.

 

2. Privacy and Security Information

 

	a.	Company provides privacy and security information tools for the purpose of encrypting sensitive information.
	b.	Employee shall securely handle all PHI and other sensitive information in Employee’s possession.
	c.	Employee will log off of any systems, lock Employee’s access to any systems, and avoid sharing username and passwords.
	d.	When discussing health information with a patient or authorized party, Employee will do so privately or, if in a public space, speak softly. Employee will never divulge sensitive health information (i) in public or (ii) in the presence of family and friends without patient consent.
	e.	Employee will avoid unauthorized photographs, and will refrain from posting any patient’s private information on any social media.
	f.	Employee will immediately notify Company if Employee becomes aware of an unauthorized use, access or disclosure, or if Employee believes he/she has lost any equipment or device containing private information.

 

3. Patient Referral Prohibitions

 

	a.	Employee will refrain from accepting any gifts from or providing any gifts to Facility without the advance written authorization of Company.
	b.	Employee will refrain from referring patients that Employee renders HCLD Services to under contract with Company to any other health organization wherein Employee has a financial interest, unless Employee has a permitted contractual obligation with Company.

 

 

Exhibit 10.5

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Agreement”) is made and entered into effective as of August 10, 2023 (the “Effective Date”), by and between Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin corporation (“Debtor”) and Wood Violet Fertility LLC, a Delaware limited liability company (the “Secured Party”).

 

RECITALS

 

WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of the Effective Date, by and among Debtor, Secured Party, Elizabeth Pritts Living Revocable Trust, and Dr. Elizabeth Pritts, Secured Party will, subject to the terms set forth therein, assist Debtor in managing its medical practice offering fertility, gynecology, and other women’s healthcare services; and

 

WHEREAS, Debtor and Secured Party have entered into that certain Management Services Agreement, dated as of the Effective Date (the “Management Services Agreement”);

 

WHEREAS, pursuant to the Management Services Agreement, Secured Party shall provide Debtor with certain administrative, billing and collection, business, consulting, financial, marketing, staffing, and other support services necessary for Debtor’s operations; and

 

WHEREAS, Debtor and Secured Party desire to enter into this Agreement to grant a security interest to Secured Party in the Collateral to secure the Obligations (as each such term is defined below); and

 

WHEREAS, capitalized terms used but not defined herein which are defined in the Code (as defined below) will have the respective meanings ascribed to such terms in the Code. To the extent the definition of any category or type of collateral is modified by any amendment, modification or revision to the Code, such modified definition will apply automatically as of the date of such amendment, modification or revision;

 

AGREEMENT

 

NOW THEREFORE, in consideration of the mutual promises herein and other good and valuable consideration, and incorporating the foregoing recitals, Debtor and Secured Party agree as follows:

 

1. Grant of Security Interest. For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Debtor hereby grants and assigns to Secured Party a continuing security interest in all of Debtor’s right, title and interest in the collateral described in Section 2 (Description of Collateral) of this Agreement, and the security interest hereby created shall attach immediately on execution of this Agreement by Debtor and shall secure the following obligations: (i) the payment and performance of Debtor’s obligations under the Management Services Agreement, including without limitation, any payment owed to Secured Party pursuant to Article 9 of the Management Services Agreement, (ii) the payment and performance of Debtor’s obligations under this Agreement, (iii) all amounts under any modifications, renewals or extensions of any of the foregoing obligations, and (iv) any of the foregoing that arises after the filing of a petition by or against Debtor under Title 11 of the United States Code (the “Bankruptcy Code”), even if the obligations do not accrue because of the automatic stay under Bankruptcy Code § 362 or otherwise (collectively, the “Obligations”). Debtor shall execute and deliver, in a form acceptable to Secured Party, all documents that are reasonably necessary to perfect and maintain the perfection of the security interest in the Collateral, including, without limitation, any financing statement or other statements or notices. Any such financing statement or other statements or notices shall be on a form or forms approved by the Wisconsin Secretary of State or by the entity to which notice is to be given, and shall be filed or delivered in the manner required by the Wisconsin Code (as adopted and enacted and as in effect from time to time, the “Code”). Debtor also hereby grants and transfers to Secured Party as additional security, a security interest in any and all after acquired Collateral in which Debtor hereafter acquires rights.

 

 

2. Description of Collateral. The collateral covered by this Agreement and in which a security interest is hereby granted and transferred to Secured Party is as follows: all present and future right, title and interest in and to all personal and real property of Debtor of whatever type or description, wherever located, whether now or hereafter existing or acquired by Debtor, including without limitation the following (the “Collateral”): (a) all Goods, including (i) equipment in all of its forms, including all parts thereof and all accessions, additions, attachments, improvements, substitutions and replacements thereto and therefor and (ii) all inventory, (b) all Accounts (including health-care-insurance receivables), contracts, contract rights, chattel paper, documents, instruments, and general intangibles, including, but not limited to, Debtor’s right to receive, directly or indirectly, any rents or other payments due and payable under such agreements, (c) all books and records relating to, used or useful in connection with, any of the foregoing, (d) all General Intangibles, (e) all Investment Property, (f) all intellectual property, and (g) all products, rents, issues, profits, returns, income and proceeds of and from any of the foregoing Collateral. Notwithstanding anything herein to the contrary, Collateral shall not include (I) to the extent prohibited by application of law, any receivables arising from government health programs such as Medicare, Medicaid or TRICARE; and (II) Debtor’s rights under contracts and agreements which by their terms prohibit the granting of a security interest therein or assignment thereof (except to the extent such prohibitions are ineffective under Sections 9-406, 9-407, 9-408 and 9-409 of the Code or other applicable law).

 

3. Security Interest in Proceeds. Debtor also hereby grants and transfers to Secured Party a security interest in any and all proceeds, as defined in Section 9-102(64) of the Code, of the Collateral or any part of the Collateral (hereinafter, the “Proceeds”). Any and all references hereinafter to “Collateral” shall be deemed also to include Proceeds.

 

4. Covenants, Representations and Warranties of Debtor. Debtor hereby covenants, represents and warrants to Secured Party that:

 

a. Debtor is the full legal and equitable owner of the Collateral and no other person or entity has any right, title, interest, or claim in or to the Collateral or any part of the Collateral. Debtor has the right and lawful authority to pledge the Collateral hereunder and the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action of the Debtor. This Agreement is a legally valid and binding obligation of Debtor, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

 

b. Debtor owns the Collateral free and clear of any lien, security interest, charge or encumbrance (“Lien”).

 

c. Without the prior written consent of Secured Party, Debtor will not permit the filing by any person of any financing statement or similar instrument in effect covering all or any part of the Collateral in any recording office (except as such may have been or will be filed in favor of Secured Party relating to this Agreement or in connection with any security interest in the Collateral granted by Secured Party (e.g., to a purchase money lender)).

 

d. The execution, delivery and performance of this Agreement by Debtor does not and will not result in a breach of, or constitute a default under, any agreement, lease or instrument to which Debtor is a party or by which it or its properties may be bound.

 

e. This Agreement creates a valid, perfected (upon the filing of a financing statement with the Office of the Clerk of the Superior Court in any county in the State of Wisconsin) and first priority security interest in the Collateral, securing the payment of the Management Fee (as defined in the Management Services Agreement) pursuant to the Management Services Agreement and any other Obligations hereunder, and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken.

 

f.   Debtor shall not sell, lease, transfer or otherwise dispose of or encumber the Collateral, or any part of the Collateral, without the express prior written consent of Secured Party; provided, however, that in the absence of a Default under this Agreement or a default under the Management Services Agreement, Debtor shall be entitled to utilize the Collateral as provided for in the Management Services Agreement, including, but not limited to, the payment of the debts and obligations of Debtor, but solely for such payments that are made in the ordinary course of business (which shall include tax distributions to the owner of Debtor to pay any federal, state and local income tax liabilities attributable to the taxable income of Debtor that is allocated to such owner in accordance with the terms and conditions set forth under the Management Services Agreement).

 

g. Debtor shall not create, cause to be created, or suffer to exist any lien or security interest in the Collateral, nor permit the Collateral to be levied upon, attached or seized where such levy, attachment or seizure is not cured or dismissed within thirty (30) days. Debtor shall defend the Collateral against the claims and demands of all persons except Secured Party and its agents and assignees.

 

 

h. Debtor shall pay before delinquency all taxes or other governmental charges levied against the Collateral and all assessments or liens in connection with the Collateral or necessary to preserve the Collateral and will pay any tax that may be levied on any Obligation secured hereby.

 

i. Debtor shall promptly notify Secured Party in writing of any event that affects the value of the Collateral, or the rights and remedies of Secured Party in relation thereto, including, but not limited to, the levy of any legal process against the Collateral.

 

j. Debtor shall immediately notify Secured Party of any proposed or actual change of Debtor’s name, identity, form of organization, jurisdiction of organization or the principal place of business of Debtor.

 

k. The records regarding the Collateral shall be located at the principal office of Debtor or, if applicable, the management company managing Debtor’s business, and these records shall not, during the continuance of this Agreement, be removed from those premises without the prior written consent of Secured Party, unless otherwise required by law. Debtor shall maintain all records and evidence of or pertaining to the Collateral (the “Records”) in an updated state at Debtor’s own cost and expense. Debtor shall not, without the prior written consent of Secured Party, sell or otherwise dispose of any portion of the Records until all amounts secured by the security interest created by this Agreement have been fully and finally paid.

 

l. Subject to any restrictions imposed by applicable law, Secured Party and its authorized representatives or agents, upon at least two (2) business days prior written notice, shall have the right at any time during normal business hours and at reasonable intervals to enter the premises where the Collateral is located and inspect said Collateral and to enter the premises where the Records are located and inspect the Records. For purposes of this Agreement, the term “business day” shall mean any day that is not a Saturday, Sunday or United States national holiday.

 

m. When requested by Secured Party, Debtor, at the expense of Debtor, shall execute and deliver any written instruments and documents and do any other acts necessary or reasonably desirable in order to perfect and protect any security interest granted or purported to be granted hereunder or to enable Secured Party to exercise and enforce its rights and remedies hereunder or to in any other way effectuate more fully the purpose and provisions of this Agreement.

 

n. Debtor shall defend, indemnify and hold Secured Party harmless from and against any and all losses, costs, damages, liabilities or expenses, including, but not limited to, reasonable attorneys’ fees that Secured Party may sustain or incur by reason of defending or protecting its security interest or the priority thereof occasioned by Debtor’s breach of any covenant contained in this Section 4 (Covenants, Representations and Warranties of Debtor), or enforcing payment of the Obligations hereby secured, or in the prosecution or defense of any action or proceeding concerning any matter growing out of or connected with this Agreement, the Obligations or the Collateral, except where such losses, costs, damages, liabilities, expenses or fees are caused by the gross negligence or willful misconduct of the Secured Party.

 

 

o. Debtor shall not make or agree to any reduction in the original amount owing on any account receivable of Debtor, nor accept less than the original amount owing in satisfaction of a receivable; provided, however, that prior to the occurrence of a Default or during any cure period for a Default, if applicable (so long as Debtor is taking actions in good faith to cure such Default) under this Agreement or the Management Services Agreement, Debtor may take such actions (i) only if taken in the ordinary course of Debtor’s business and in accordance with its current policies and (ii) so long as such policies of the Debtor are substantially similar to such policies then in effect at other organizations in the same or similar business as Debtor.

 

p. In the event of a Default (as hereinafter defined) hereunder or a default under the Management Services Agreement, Debtor shall pay all expenses incurred by Secured Party in connection with the collection of the Collateral, including expenses of and incidental to accounting, correspondence, collection effort, reporting to account or contract debtors, filing, recording and record keeping.

 

5. Debtor Remains Liable. Anything herein to the contrary notwithstanding, (i) Debtor shall remain liable under any contracts and agreements included in the Collateral, to the extent set forth therein, to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise by Secured Party of any of the rights hereunder shall not release Debtor from any of its duties or obligations under the contracts and agreements included in the Collateral, and (iii) Secured Party shall not have any obligation or liability under any contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Secured Party be obligated to perform any of the obligations or duties of the Debtor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

 

6. Insurance.

 

a. Debtor shall, at its own expense, obtain and maintain insurance with respect to the Collateral and business of Debtor in such amounts, against such risks, in such form and amounts and with such insurers, as shall be satisfactory to Secured Party from time to time, but not in excess of the full insurable value thereof (which insurance shall be arranged for by Secured Party under the Management Services Agreement). Debtor shall provide at least thirty (30) days’ prior written notice to Secured Party of cancellation, material amendment, reduction in scope or limits of coverage or lapse. Debtor shall, if so requested by Secured Party, deliver to Secured Party original or duplicate policies of such insurance and, as often as Secured Party may reasonably request, a report of a reputable insurance broker with respect to such insurance. Further, Debtor shall, at the request of Secured Party, duly execute and deliver instruments of assignment of such insurance policies to comply with the requirements of this Section 6(a) and cause the respective insurers to acknowledge notice of such assignment.

 

 

b. Upon the occurrence and during the continuance of any Default under this Agreement all insurance payments in respect of the Collateral shall be paid to and applied by the Secured Party as specified in Section 10(d) hereof.

 

7. Actions by Secured Party. In the event of Default under the terms of this Agreement or a default under the Management Services Agreement, Secured Party shall also have the right, at its option, to enter the premises where the Records or any part of the Records are located, and cause to be performed as agent and on the account of Debtor any such acts as it may deem necessary for the proper maintenance of the Records or the maintenance and preservation of any part of the Collateral. Any monies expended or expenses incurred by Secured Party under this Section 7 shall also be secured by the security interest created by this Agreement and shall be due and payable by Debtor to Secured Party, together with interest at the highest rate allowed by law, on demand.

 

8. Waiver of Rights and Defenses. Debtor hereby waives any right to require Secured Party to proceed against any account debtor or to proceed against the Collateral, including, but not limited to, any accounts assigned hereunder and Debtor waives the right to require Secured Party to pursue any other remedy for the benefit of Debtor and agrees that Secured Party may proceed against Debtor for the amount of any indebtedness owed by Debtor to Secured Party without taking any action against any account debtor or any other party and without selling or otherwise proceeding against the Collateral or applying any security it may hold.

 

9. Default Defined. The term “Default” shall mean the occurrence of any of the following events:

 

a. Failure to keep or perform and cure within any applicable grace period as provided herein any of the terms or provisions of this Agreement;

 

b. Failure to keep or perform any of the material terms or provisions of the Management Services Agreement, or any ancillary agreements, exhibits or schedules attached thereto;

 

c. The levy of or any attachment, execution or other process against Debtor that is not cured or dismissed within any applicable grace period as provided herein in an amount in excess of Ten Thousand Dollars ($10,000) against the Collateral;

 

d. The insolvency or dissolution of Debtor;

 

e. (i) The application for the appointment of a receiver or custodian for Debtor or the property of Debtor, (ii) the entry of an order for relief or the filing of a petition by or against Debtor under the provisions of the Bankruptcy Code, or any other bankruptcy or insolvency law, or (iii) any assignment for the benefit of creditors by or against Debtor;

 

 

f. Any representation, warranty or certification made by Debtor in connection with this Agreement or the Management Services Agreement shall be false in any material respect on the date as of which made;

 

g. Without the prior written consent of Secured Party, Debtor shall permit the filing by any person of any financing statement or similar instrument in effect covering all or any part of the Collateral in any recording office (unless otherwise permitted by this Agreement); or

 

h. Debtor shall fail, breach or default in the performance of any of the obligations or covenants owing by Debtor to Secured Party pursuant to any agreement.

 

10. Remedies Upon Default. In the event of a Default, subject to any restrictions imposed by applicable law, Secured Party shall have all the rights and remedies afforded a secured party by the Code, as amended from time to time, and may, in connection therewith, subject to any restriction imposed by applicable law, also:

 

a. Enter on Debtor’s premises to assemble and take possession of the Records;

 

b. Require Debtor to assemble the Records and make their possession available to Secured Party at a place designated by Secured Party that is reasonably convenient to both Debtor and Secured Party;

 

c. After giving Debtor written notice, notify the account debtors obligated on any or all of the Collateral to make payment directly to Secured Party, and to take control of all proceeds of any such Collateral, and to compromise said Collateral;

 

d. Apply the proceeds received from the sale or other disposition of the Collateral upon Default, in addition to the items specified in Division 9 of the Code, to the payment of reasonable attorneys’ fees and legal expenses incurred by Secured Party as a result of Debtor’s Default.

 

e. Take immediate possession of the Collateral and use and operate said Collateral. For the purpose of taking immediate possession of the Collateral, Secured Party may enter into any premises upon which the Collateral is located, and search for the same and take possession and keep and store the same on said premises until sold or delivered or, in the alternative, may remove the Collateral or any part thereof to such other place as Secured Party may desire. Secured Party may require Debtor to assemble the Collateral and to make it available to Secured Party at a place to be designated by Secured Party that is reasonably convenient to all parties. Secured Party may, at its option, sell and dispose of all the Collateral at a public auction or private sale for cash or for credit, upon such terms as it may elect, after giving such notice as is required by the Code, and Debtor shall be credited with the amount of any such sale only when the cash proceeds thereof are actually received by Secured Party. Any requirements of notice shall be met if such notice is mailed, postage prepaid, at least ten (10) calendar days before the time of sale or other disposition. None of the Collateral subject to the security interest created hereby need be in view of those attending any such sale or other disposition or be in its physical possession at or as a condition to selling or otherwise disposing thereof. Secured Party is specifically given the right to bid and purchase at any public auction or private sale, if permitted under Division 9 of the Code. Secured Party may sell the Collateral described herein or any other Collateral as Secured Party may have securing the Obligations (including real property Collateral) in such order, priority and lots as Secured Party, in its sole and absolute discretion, may designate and Debtor shall not have the right to direct in what order or priority the Collateral may be sold. All expenses of retaking, holding, preparing for sale, selling or the like shall include, without limitation, Secured Party’s reasonable attorneys’ fees and other legal expenses and disbursements.

 

 

11. Additional Rights of Secured Party and Waiver. Debtor hereby expressly consents to any delay or indulgence by Secured Party in enforcing any of the obligations secured hereby and to any extension of time for payment of any indebtedness due Secured Party. The cessation of the liability of Debtor for repayment of the Obligations for any reason other than full payment, or any extension, renewal, forbearance, change of rate of interest (if applicable), amendment or modification of the Management Services Agreement, or Secured Party’s acceptance, release or substitution of security, or any impairment or suspension of Secured Party’s remedies or rights against Debtor shall not in any manner affect the liability of Debtor hereunder or Secured Party’s security interest in the Collateral. This Agreement in no manner supersedes, alters, restricts or cancels any of the terms and provisions contained in the Management Services Agreement. Nothing contained in this Agreement and no act or omission on the part of Secured Party pursuant to the terms hereof shall be deemed a waiver by Secured Party of any rights or remedies under the Management Services Agreement and this Agreement is made and accepted without prejudice to any such rights or remedies possessed by Secured Party.

 

12. Charges Incurred Under this Agreement. All advances, charges, costs and expenses, including reasonable attorneys’ fees, incurred or paid by Secured Party in exercising any right, power or remedy conferred by this Agreement, or, in the event of enforcement thereof through a proceeding of any sort, awarded by the court or arbitrator hearing or deciding the action or proceeding giving rise to the utilization of such attorney, shall become a part of the Obligations secured hereunder and shall be paid to Secured Party by Debtor immediately and without demand following notification of the occurrence thereof, and to the extent not paid within five (5) calendar days thereafter, shall bear interest at the maximum rate permissible in Delaware.

 

13. Termination. This Agreement and the security interest in the Collateral created hereby shall terminate after payment and performance in full of all Obligations arising under the Management Services Agreement. Upon such payment and performance in full of all Obligations and the termination of this Agreement, the Collateral shall be released from the security interest hereby created and Secured Party will, at Debtor’s expense, execute and deliver to Debtor such documents as Debtor shall reasonably request to evidence such release.

 

 

14. Notices.

 

a. All notices, requests, consents, and other communications provided for by this Agreement shall be in writing, shall be addressed to the receiving Party’s address set forth below or to such other address as a Party may designate by notice hereunder, and shall be either: (i) delivered by hand, (ii) sent by recognized overnight courier, or (iii) sent by certified mail, return receipt requested, postage prepaid to such address as each Party shall provide the other Party from time to time, or (iv) delivered via electronic mail, return receipt requested, provided that any notice sent via electronic mail must also be accompanied by another form of notice set forth in the foregoing sub-sections (i)-(iii). Notice shall be deemed given (A) upon delivery, if hand delivered, (B) on the next business day, if sent next day delivery by a recognized overnight courier, (C) if sent by certified mail, five (5) business days following the day such mailing is made; and (D) if sent via electronic mail, followed by notice consistent with the foregoing sub-sections (i)-(iii), upon delivery (regardless of whether the recipient confirms such receipt as requested).

 

Debtor:

 

Wisconsin Fertility and Reproductive Surgery Associates, S.C.
3146 Deming Way
Middleton, WI 53562
Attention: Elizabeth Pritts, M.D.

Email:

 

Secured Party:

 

Wood Violet Fertility LLC

5582 Broadcast Court

Sarasota, FL 34240

Attention: Andrea Goren

Email: legal@invobio.com

 

with a copy (which shall not constitute notice) to:

 

Sheppard, Mullin, Richter and Hampton LLP

30 Rockefeller Plaza

New York, NY 10112-0015

Attention: Amanda L. Zablocki, Esq.

Email: azablocki@sheppardmullin.com

 

15. Time Is of the Essence. Time is hereby expressly declared to be of the essence of this Agreement.

 

 

16. Assignment. Secured Party may assign its rights under this Agreement and the security interest created by this Agreement. Should Secured Party assign its rights under this Agreement or the security interest created by this Agreement, Secured Party’s assignee shall be entitled to all performance required of Debtor in this Agreement and all payments and monies when due that are secured by this Agreement. This Agreement and each of its provisions shall be binding on the heirs, executors, administrators, successors and assigns of each of the parties hereto. Except as otherwise provided in this Agreement, nothing contained in this Section 16 shall be deemed a consent to the sale, assignment or transfer by Debtor of the Collateral or the obligations of Debtor under this Agreement.

 

17. Entire Agreement. This Agreement, together with the Management Services Agreement, constitute the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the parties in connection therewith.

 

18. Governing Law; Uniform Commercial Code. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. It is the intention of the parties hereto that this Agreement is entered into pursuant to the provisions of Division 9 of the Code and terms defined in such Code not otherwise defined in this Agreement are used in this Agreement as defined in that Code on the date of this Agreement. Any provisions of the Code not specifically included herein shall be deemed a part of this Security Agreement in the same manner as set forth herein in its entirety; and any provisions of this Agreement that might in any manner be in conflict with any of the provisions of the Code shall be deemed superseded by the Code, and to that extent the provisions hereof that are superseded by the Code shall be severable and the invalidity of one shall not invalidate another.

 

19. Secured Party Appointed Attorney-in-Fact. Debtor hereby irrevocably appoints Secured Party to be Debtor’s attorney-in-fact, with full authority in the place and stead of Debtor and in the name of Debtor, Secured Party or otherwise, from time to time in Secured Party’s discretion, when a Default exists and is continuing, to take any action and to execute any instrument that Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:

 

a. To obtain and adjust insurance required to be maintained by Debtor or paid to the Secured Party pursuant to Section 6 (Insurance) hereof;

 

b. To ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for monies due and to become due under or in respect of any of the Collateral;

 

c. To receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with Section 10 (Remedies Upon Default) hereof;

 

d. To file any claims or take any action or institute any proceedings that Secured Party may deem necessary for the collection of any of the Collateral or otherwise to enforce the rights of the Secured Party with respect to any of the Collateral;

 

 

e. To pay or discharge taxes or liens, levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by Secured Party in its sole discretion, and such payments made by Secured Party to become obligations of Debtor to the Secured Party, due and payable immediately without demand;

 

f. To sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with accounts and other documents relating to the Collateral;

 

g. Generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Secured Party were the absolute owner thereof for all purposes, and to do, at Secured Party’s option and Debtor’s expense, at any time, or from time to time, all acts and things that Secured Party deems necessary to protect, preserve or realize upon the Collateral and Secured Party’s security interest therein, in order to effect the intent of this Agreement, all as fully and effectively as Debtor might do; and

 

h. To exercise all of Debtor’s rights, powers and privileges under any of Debtor’s contracts and to require Debtor, as determined in Secured Party’s sole discretion to (i) take such actions as may be necessary to assign such rights to Secured Party, (ii) continue to perform in accordance with the terms of such contracts and (iii) use its best efforts to preserve the value of each contract.

 

Secured Party shall indemnify Debtor from and against all losses occasioned by Secured Party’s gross negligence or willful misconduct in exercising the foregoing powers. As set forth in Section 12 (Charges Incurred Under this Agreement), Debtor shall reimburse Secured Party for any costs incurred by Secured Party in exercising the foregoing powers.

 

20. Secured Party May Perform. If Debtor fails to perform any agreement contained herein, Secured Party may itself perform, or cause performance of, such agreement, and the expenses of Secured Party incurred in connection therewith shall be payable by Debtor.

 

21. Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement or be given any substantive effect.

 

22. Severability. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision of obligation and in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

23. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same Agreement.

 

 

IN WITNESS WHEREOF, Secured Party and Debtor have executed this Security Agreement as of the Effective Date.

 

	DEBTOR:
	Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin corporation
	By:	/s/ Elizabeth Pritts, M.D.
	Name:	Elizabeth Pritts, M.D.
	Title:	President
	SECURED PARTY:
	Wood Violet Fertility LLC,
	a Delaware limited liability company
	By:	/s/ Steve Shum
	Name:	Steve Shum
	Title:	President

 

[Signature Page to Security Agreement]

 

 

Exhibit 10.6

 

PHYSICIAN LIAISON AGREEMENT

 

This PHYSICIAN LIAISON AGREEMENT (this “Agreement”) is made and entered into effective as of August 10, 2023 (the “Effective Date”) by and between Wood Violet Fertility LLC, a Delaware limited liability company (“Manager”), and Elizabeth Pritts, M.D., a Wisconsin licensed physician (“Physician”).

 

RECITALS

 

WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of the Effective Date, by and among Manager, Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin corporation (“Provider”), Elizabeth Pritts Living Revocable Trust, and Dr. Elizabeth Pritts (the “Asset Purchase Agreement”), Manager will, subject to the terms set forth therein, assist Provider in managing its fertility and treatment center (the “Clinic”).

 

WHEREAS, Provider and Manager have entered into that certain Management Services Agreement, dated as of the Effective Date (the “Management Services Agreement”), pursuant to which Manager shall provide Provider with certain administrative, billing and collection, business, consulting, financial, marketing, staffing, and other support services necessary for Provider’s operations.

 

WHEREAS, Manager wishes to have Physician serve, and Physician is willing to serve, as a liaison between Manager and Provider as set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and on the terms and subject to the conditions herein set forth, the parties, intending to be legally bound, hereby agree as follows:

 

Section 1. LIAISON SERVICES

 

During the term of this Agreement, Physician shall provide such liaison services as Manager may reasonably request from time to time with respect to Manager and Provider (the “Liaison”), including but not limited to: (a) assisting Manager in communicating to Provider and its employee and independent contractor physicians, nurse practitioners, physician assistants, and registered nurses, as applicable information regarding Manager’s mission, vision, core values and quality standards; (b) requesting from Provider such information as Manager may reasonably request regarding the activities and practices of Provider so that Manager may determine whether such activities and practices are consistent with Manager’s mission, vision, core values and quality standards and providing such information to Manager upon receipt; and (c) serving as a liaison between Manager and Provider in connection with all other communications between Manager and Provider.

 

 

Section 2. QUALIFICATIONS OF PHYSICIAN

 

During the term of this Agreement, Physician shall at all times remain licensed in all states in which Provider operates and shall not be subject to federal or state sanctions, excluding public reprimands, but including licensure revocation, surrender or suspension, exclusion, Medicare billing revocation, Medicaid termination, or similar actions. During the term of this Agreement, Physician shall not provide any liaison services that are substantially similar to the liaison services that are provided hereunder to any other medical practice or management company and shall remain an owner of Provider.

 

Section 3. DUTIES OF MANAGER

 

3.1 Liaison Fee. As consideration for the services to be performed under this Agreement, Manager shall pay Physician $1,200 annually through a monthly fee of $100, payable in arrears, within five (5) days following the end of each month during the term of this Agreement; provided that payment of such fee by Manager more than five (5) days following the end of each month shall be subject to Manager’s cure rights set forth under Section 4 of this Agreement. The fee payable under this Section 3.1 shall hereinafter be referred to as the “Liaison Fee.”

 

3.2 Independent Contractor Status. Manager and Physician agree that Physician shall perform the services described in Section 1 solely as an independent contractor, retaining control over and responsibility for his or her own conduct. Physician shall not, solely by virtue of this Agreement or the arrangements hereunder, be considered an employee or agent of Manager or any of its affiliates, and Physician shall not have any authority to contract in the name of or bind Manager or any of its affiliates, except as expressly agreed to in writing by Manager. Physician may be engaged during the term of this Agreement in the practice of medicine and other business activities and such other business activities may be pursued for gain, profit or other pecuniary advantage; provided, however, that Physician may not use the facilities, equipment, supplies, personnel or offices of Manager to conduct any such activities unrelated to Physician’s services hereunder on behalf of Manager or unrelated to Physician’s services under the Management Services Agreement, or otherwise violate the provisions of this Agreement or the Management Services Agreement.

 

3.3 Expenses. Manager shall pay directly or reimburse Physician for all properly documented, reasonable and necessary business expenses incurred by Physician and approved by Manager in the discharge of Physician’s duties hereunder. Physician shall not be obligated to provide any services hereunder that would require or cause Physician to incur any expenses without confirmation from Manager that it will pay or reimburse Physician for such expenses.

 

 

3.4 Administrative Support. In support of Physician’s provision of services hereunder, Manager shall provide such administrative support services as may be reasonably required. The cost of such services shall be borne entirely by Manager.

 

Section 4. TERM AND TERMINATION

 

The term of this Agreement shall begin on the Effective Date, and shall remain in effect until terminated in accordance with this Section 4. Manager may terminate this Agreement for any reason upon five (5) days’ prior written notice (the date of such notice, the “Notice Date”) or, sooner, if Physician ceases to provide services to Manager (including but not limited to by reason of Physician’s death or disability, or by mutual agreement), or upon the Physician’s inability to satisfy the qualifications set forth in Section 2. Manager may terminate this Agreement immediately upon Physician’s breach of this Agreement or any other agreement to which Manager (and/or its affiliates) and Physician are parties. In the event this Agreement is so terminated, Physician shall be entitled to receive the Liaison Fee and expenses through such termination, but Physician shall not be required to render any services hereunder after the Notice Date. Physician may terminate this Agreement: (a) upon one hundred twenty (120) days’ prior written notice to Manager without cause; or (b) upon thirty (30) days’ prior written notice for good cause upon Manager’s breach of this Agreement. Notwithstanding the foregoing, Physician may not terminate this Agreement for Manager’s breach if Manager has cured such breach within such thirty (30) day period.

 

Section 5. GENERAL PROVISIONS

 

5.1 Binding Effect; Assignment. This Agreement shall be binding on and inure to the benefit of Manager and its respective successors and permitted assigns. This Agreement shall also be binding on and inure to the benefit of Physician and her or his heirs, executors, administrators and legal representatives; however, Physician shall not assign this Agreement, in whole or in part, without Manager’s prior written consent. This Agreement shall be assignable by Manager, at its sole discretion, following prior written notice to Physician, to any successor to the business of Manager that relates to Provider, without the prior consent of Physician; provided, however, that the assignee or transferee is the successor to all or substantially all of the business or assets of Manager that relates to Provider and such assignee or transferee expressly assumes all the obligations, duties, and liabilities of Manager set forth in this Agreement.

 

5.2  Unauthorized Disclosure. Physician agrees that, during the term of this Agreement and thereafter, she or he shall: (i) use reasonable efforts to protect Confidential Information (as such term is defined under Section 12.2 of the Management Services Agreement); (ii) use reasonable efforts to protect Provider Work Product (as such term is defined under Section 12.4 of the Management Services Agreement); and (iii) not use Manager’s or Provider’s Confidential Information or Provider Work Product in any manner that would be inconsistent with the requirements set forth under Article 12 of the Management Services Agreement.

 

 

5.3 Return of Documents. Upon the termination of this Agreement, Physician shall deliver to Manager: (i) all property of Manager and any of its affiliates then in her or his possession and (ii) all documents and data of any nature and in whatever medium of Manager and any of its affiliates, and Physician shall not take any such property, documents or data or any reproduction thereof, or any documents containing or pertaining to any Confidential Information.

 

5.4 Records. All records and files and other documents which are generated in connection with the Liaison Services rendered hereunder will belong to and remain the property of Manager and Provider, respectively, in accordance with the terms set forth under the Management Services Agreement. All books, files and records relating to Physician’s Liaison serves provided under this Agreement shall be maintained at Provider, subject to the terms of the Management Services Agreement.

 

5.5 Confidentiality of Agreement. The parties to this Agreement agree not to disclose its terms to any person, other than their attorneys, accountants, financial advisors or, in Physician’s case, members of her or his immediate family or, in Manager’s case, for any reasonable purpose that is reasonably related to its business operations or, in either party’s case, to Provider and the respective owners thereof; provided, that this Section 5.5 shall not be construed to prohibit any disclosure required by law or in any proceeding to enforce the terms and conditions of this Agreement or by any party in defense of any such proceeding.

 

5.6 Indemnification; Limitation on Liability. Manager hereby agrees that it shall indemnify and hold harmless Physician to the fullest extent permitted by law from and against any and all liabilities, costs, claims and expenses, including all costs and expenses incurred in defense of litigation (including reasonable attorneys’ fees and expenses), arising out of the engagement of Physician under this Agreement, within the scope of Physician’s engagement, so long as Physician acted in good faith and in a manner that she or he reasonably believed to be in, and not opposed to, the best interests of Manager and Provider, and with respect to any criminal action or proceeding, had no reasonable cause to believe that her or his actions were unlawful. Reasonable costs and expenses incurred by Physician in defense of such litigation (including reasonable attorneys’ fees) shall be paid by Manager in advance of the final disposition of such litigation upon receipt by Manager of: (a) a written request for payment, (b) appropriate documentation evidencing the incurrence, amount and nature of the costs and expenses for which payment is being sought, and (c) an undertaking adequate under applicable law made by or on behalf of Physician to repay the amounts so paid if it shall ultimately be determined that Physician is not entitled to be indemnified by Manager under this Agreement. Manager and Physician will consult in good faith with respect to the conduct of any such litigation, and Physician’s counsel shall be selected with the consent of Manager, such consent not to be unreasonably withheld. Notwithstanding anything contained in this Agreement to the contrary, the maximum liability of Physician under this Agreement shall not exceed the Liaison Fees paid to her or him during the term of this Agreement.

 

 

5.7 Entire Agreement. This Agreement constitutes the entire agreement between Manager and Physician with respect to the provision of Liaison Services, and supersedes all undertakings and agreements, whether oral or in writing, previously entered into by Manager and Physician with respect thereto. All prior correspondence and proposals (including, but not limited to, summaries of proposed terms) and all prior offer letters, promises, representations, understandings, arrangements and agreements relating to such subject matter (including, but not limited to, those made to or with Physician by any other person) are merged herein and superseded hereby.

 

5.8 Governing Law; Arbitration.

 

(a) This Agreement shall be governed in all respects, including as to interpretation, substantive effect and enforceability, by the internal laws of the State of Delaware, without regard to conflicts of laws provisions thereof that would require application to the laws of another jurisdiction other than those that mandatorily apply.

 

(b) Any controversy, dispute, or claim of whatever nature arising out of, in connection with, or in relation to the interpretation, performance or breach of this Agreement, including any claim based on contract, tort, or statute, shall be settled, at the request of any party to this Agreement pursuant to the procedures set forth in the dispute resolution provisions outlined in Section 16.17 of the Management Services Agreement.

 

(c) Judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. Each of Physician and Manager consents to the personal and exclusive jurisdiction of the courts of the State of Delaware in any proceedings hereunder, including, but not limited to, any proceeding for equitable relief. Each of Physician and Manager further agrees not to interpose any objection for improper venue in any such proceeding.

 

5.9 Amendments; Waiver. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is approved by a person authorized by Manager and is agreed to in writing by Physician and, in the case of any such modification, waiver or discharge affecting the rights or obligations of Manager, is approved by a person authorized thereby. No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No waiver of any provision of this Agreement shall be implied from any course of dealing between or among the parties hereto or from any failure by any party hereto to assert its rights hereunder on any occasion or series of occasions.

 

5.10 Severability; Blue Pencil. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. The parties agree that the covenants contained in Sections 5.2 through 5.5 hereof are reasonable covenants under the circumstances, and further agree that if, in the opinion of any court of competent jurisdiction such covenants are not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of these covenants as to the court shall appear not reasonable and to enforce the remainder of these covenants as so amended.

 

 

5.11 Notices. All notices, requests, consents, and other communications provided for by this Agreement shall be in writing, shall be addressed to the receiving Party’s address set forth below or to such other address as a Party may designate by notice hereunder, and shall be either: (i) delivered by hand, (ii) sent by recognized overnight courier, or (iii) sent by certified mail, return receipt requested, postage prepaid to such address as each Party shall provide the other Party from time to time, or (iv) delivered via electronic mail, return receipt requested, provided that any notice sent via electronic mail must also be accompanied by another form of notice set forth in the foregoing sub-sections (i)-(iii). Notice shall be deemed given (A) upon delivery, if hand delivered, (B) on the next business day, if sent next day delivery by a recognized overnight courier, (C) if sent by certified mail, five (5) business days following the day such mailing is made; and (D) if sent via electronic mail, followed by notice consistent with the foregoing sub-sections (i)-(iii), upon delivery (regardless of whether the recipient confirms such receipt as requested).

 

If to Manager, addressed to:

 

Wood Violet Fertility LLC

5582 Broadcast Court

Sarasota, FL 34240

Attention: Andrea Goren

Email: legal@invobio.com

 

with a copy (which shall not constitute notice) to:

 

Sheppard, Mullin Richter & Hampton LLP

30 Rockefeller Plaza, 2th Floor

New York, NY 10112-0015

Attention: Amanda Zablocki

Email: azablocki@sheppardmullin.com

 

If to Physician, addressed to:

 

Elizabeth Pritts, M.D.

3146 Deming Way
Middleton, WI 53562

Email:

 

5.11 Survival. The parties hereby agree that the provisions of this Agreement that are intended to survive the termination of this Agreement shall survive such termination in accordance with their terms.

 

5.12 Condition Precedent. The effectiveness of this Agreement is contingent on the consummation of the transactions contemplated by the Asset Purchase Agreement.

 

5.13 Further Assurances. Each party hereto agrees with the other party hereto that it will cooperate with such other party and will execute and deliver, or cause to be executed and delivered, all such other instruments and documents, and will take such other actions, as such other parties may reasonably request from time to time to effectuate the provisions and purpose of this Agreement.

 

5.14 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. The parties hereto agree to accept a signed facsimile copy or portable document format of this Agreement as a fully binding original.

 

5.15 Headings. The section and other headings contained in this Agreement are for the convenience of the parties only and are not intended to be a part hereof or to affect the meaning or interpretation hereof.

 

[Remainder of the page intentionally left blank]

 

 

IN WITNESS WHEREOF, the parties have executed this Physician Liaison Agreement as of the Effective Date.

 

	MANAGER:
	Wood Violet Fertility LLC, a Delaware limited liability company
	By:	/s/ Steve Shum
	Name:	Steve Shum
	Title:	President
	PHYSICIAN:
	/s/ Elizabeth Pritts, M.D.
	Elizabeth Pritts, M.D.

 

[Signature Page to Physician Liaison Agreement]

 

 

 

Exhibit 10.7

 

DIRECTED EQUITY TRANSFER AGREEMENT

 

THIS DIRECTED EQUITY TRANSFER AGREEMENT (the “Agreement”) is made and entered into effect as of August 10, 2023 (the “Effective Date”), by and among Wood Violet Fertility LLC, a Delaware limited liability company (“Manager”), Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin corporation (“Provider”), and Elizabeth Pritts Living Revocable Trust (“Member”). Manager, Provider and Member may be referred to individually as a “Party” and together as the “Parties.”

 

RECITALS

 

WHEREAS, Member is an owner and holder of record of the issued and outstanding membership interests, distribution rights, voting interests, and percentage interests of Provider (the “Membership Interests”); and

 

WHEREAS, Elizabeth Pritts is the sole trustee of the Member, with all the power and fiduciary responsibility for managing, administering, and carrying out the purposes of the trust (the “Trustee”);

 

WHEREAS, Member believes that it is in its best interest and the best interests of Provider to restrict the transferability of the Membership Interests to promote the ongoing continuity of the enterprise for the benefit of the patients of Provider; and

 

WHEREAS, Trustee has entered into that certain Physician Liaison Agreement with Manager, dated as of the Effective Date (the “Liaison Agreement”); and

 

WHEREAS, Provider is a party to that certain Management Services Agreement with Manager, dated as of the Effective Date (the “Management Services Agreement”), pursuant to which Manager has an interest in assuring continuity in the management of Provider for the benefit of the patients of Provider.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and on the terms and subject to the conditions herein set forth, the parties, intending to be legally bound, hereby agree as follows:

 

1.

Restrictions on Membership Interests. Except in accordance with the terms of this Agreement, Member shall not sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose of, whether by operation of law or otherwise, the Membership Interests or any other equity of Provider that Member may hereafter acquire. Any attempted transfer of Membership Interests by Member in violation of this Agreement shall be null and void ab initio.

 

 

	2.	Membership Interest Transfer. Upon the occurrence of a “Membership Interest Transfer Event” (as defined in Section 3), Member (and for this purpose, Member hereby intends to bind any heir, executor, administrator, personal representative, estate, testamentary beneficiary, donee, trustee in bankruptcy, successor or assign, all of which shall be included in the term “Member”) shall transfer the Membership Interests (“Transferring Member”), including all legal and beneficial rights connected with the Membership Interests, to one or more persons or entities designated by the Manager in its sole discretion (each, a “Designated Transferee”), who shall be an individual or entity permitted to hold the Membership Interests under the laws, rules and regulations of the State of Wisconsin in effect at the time of such transfer (a “Membership Interest Transfer”) and who has entered into a liaison agreement and a directed equity transfer agreement in forms acceptable to the Manager in its sole discretion. Further, upon any Membership Interest Transfer, the Liaison Agreement shall automatically terminate, and Member shall resign as an officer, director, or manager of Provider, or in the absence of a written resignation by Member, be deemed to have resigned such positions, in each case, without any liability of Manager or Provider to the Transferring Member, and no action taken by the Transferring Member following a Membership Interest Transfer shall be valid or binding on Provider.
	3.	Transfer Process.

 

3.1.

Membership Interest Transfer Events. The occurrence of any of the following events shall cause a Membership Interest Transfer in accordance with Section 2 (each a “Membership Interest Transfer Event”):

 

	(a)	the death of Trustee;
	(b)	the retirement of Trustee;
	(c)	a determination by a court of competent jurisdiction or a physician selected by Manager, that Trustee is incompetent or disabled so as to be unable to render any professional services;
	(d)	the suspension, revocation, voluntary surrender, lapse, or any other restriction of Trustee’s license which lawfully prohibits Trustee from rendering professional services;
	(e)	the disqualification of Member under applicable law to hold the Membership Interests in Provider;
	(f)	the breach by Member of the Liaison Agreement;
	(g)	the termination of Member’s Liaison Agreement;
	(h)	the breach by Elizabeth Pritts, M.D. (“Dr. Pritts”) of her employment agreement with Provider, dated as of the date hereof (the “Employment Agreement”), if not cured within the applicable cure period provided thereunder;

 

 

	(i)	the termination of Dr. Pritts’ Employment Agreement;
	(j)	the breach or violation by Member of Provider’s organizational or formation documents or company or operating agreement of Provider;
	(k)	the purported transfer by Member of the Membership Interests in Provider, except in accordance with this Agreement or the Manager’s Limited Liability Company Agreement;
	(l)	a breach of any provision of the Management Services Agreement by Provider, due solely to an act or omission by Member or Trustee, subject to the applicable cure provisions set forth thereunder;
	(m)	any attempt to terminate the Management Services Agreement by Provider, other than in accordance with the terms of the Management Services Agreement;
	(n)	termination of the Management Services Agreement by either party;
	(o)	the voluntary or involuntary filing for bankruptcy by Provider;
	(p)	the violation or breach by Member or Provider (at the sole direction of Member) of this Agreement;
	(q)	the exclusion or debarment or other discipline of Dr. Pritts from participation in a federal and/or state health care program or the conviction or plea of guilty or no contest to a criminal charge under federal or state laws relating to Dr. Pritts’ practice of medicine or participation in any governmental health program; or
	(r)	receipt by Member of a written notice from Manager requesting Member to transfer all or a part of the Membership Interests held by Member to one or more persons designated by Manager.

 

3.2.

Declaration of Membership Interest Transfer Event. Upon the occurrence of a Membership Interest Transfer Event (or at such later time as the Manager may discover the occurrence of a Membership Interest Transfer Event), the Membership Interest Transfer shall be effected at such date as Manager shall determine unless Manager, in its sole discretion and judgment, waives such Membership Interest Transfer Event; provided that no such waiver by Manager shall be deemed to extend to any prior or subsequent Membership Interest Transfer Event; provided further that Manager shall not be permitted to waive any Membership Interest Transfer Event that relates to the Member’s ability to own equity of the Provider in any Provider State (each, an “Automatic Membership Interest Transfer Event”). Within ninety (90) days following any Automatic Membership Interest Transfer Event (or such longer period, as may be agreed to by Manager and Member, to the extent reasonably required to obtain regulatory approvals or licenses necessary to complete the Membership Interest Transfer (e.g., the licensure of the Designated Transferee), or at such date as the Manager shall determine within such period, Manager shall cause a Membership Interest Transfer to each Designated Transferee, as applicable, to be consummated.

 

 

	3.3.	Purchase Price. The aggregate purchase price for all of a Transferring Member’s total units transferred to one or more Designated Transferees pursuant to Section 2 shall be One Hundred Dollars ($100) (the “Purchase Price”), payable in cash or by check by the Designated Transferee as soon as reasonably practicable after the occurrence of a Membership Interest Transfer Event; provided, however, that a delay in the payment of the Purchase Price shall in no way negate or impact the effectiveness of the transfer described in Section 2 above.
	3.4.	Power of Attorney. Member irrevocably constitutes and appoints Manager, and any assignee of Manager as the true and lawful attorney-in-fact of Member for the sole purpose of consummating any Membership Interest Transfer contemplated hereby and to execute, acknowledge, swear to, and file any certificate, instrument or other documentation that Manager shall deem advisable to consummate the Membership Interest Transfer; provided, however, that the power of attorney granted in this Section 3.4 may be exercised only in the event that Member fails to comply with the terms of this Agreement with respect to a Membership Interest Transfer. This power of attorney is coupled with an interest and shall survive legal incapacity of Member and, for purposes of executing documents evidencing such transfer, the transfer of the Membership Interests by Member.
	3.5.	No Ownership Interest. Nothing contained herein shall be deemed to grant or entitle Manager to any present or future ownership interest in the Membership Interests.

 

4.

Covenants Concerning Provider. Member covenants, in her capacity as member, manager, director, or officer of Provider, to cause Provider to comply with the following:

 

4.1.

Maintenance of Existence. Member shall maintain Provider at all times as a limited liability company in good standing in Wisconsin. Member shall cause Provider, subject to the terms and conditions of the Management Services Agreement, to maintain all necessary licenses, permits, regulatory approvals and provider numbers necessary for Provider to own its property and conduct its business in accordance with law.

 

 

	4.2.	Certain Transactions. Member shall not cause or permit to occur any of the following legal actions by Provider or transactions involving Provider, unless such actions are taken by Manager on behalf of Provider as the case may be: (a) the amendment of the organizational or formation documents or company or operating agreement of Provider; (b) the issuance to any person of, or any transfer or encumbrance (other than a transfer with respect to securities of Provider made in compliance with the express provisions hereof) of, membership interests, options, warrants, other rights to acquire, or other securities exercisable or convertible into an equity interest in Provider; (c) the declaration or payment of any distribution or dividend (whether in cash, property or equity) in respect to the Membership Interests; (d) the merger of Provider into any other entity, (e) the sale of all or substantially all of the assets of Provider to any other person, (f) the entry by Provider into a reorganization or similar transaction; (g) the transfer or assignment of any contract or agreement with any governmental agency, health plan, insurance company, hospital or other third party responsible for the arrangement of, or payment for, health care services, under which Provider provides professional services to patients of Provider; or (h) the voluntary liquidation, winding up, or dissolution of Provider. Notwithstanding the foregoing subsection (c), Member may authorize and cause the payment of a cash distribution by Provider in respect of the Membership Interests in an amount necessary for Member to pay any federal, state and local income tax liabilities attributable to taxable income of Provider that is properly allocated to Member.
	4.3.	Notifications.

 

(a)

Unless taken at the request or direction of Manager, Member shall provide Manager no less than sixty (60) days advance written notice to Manager and obtain Manager’s written consent prior to taking or approving, or causing Provider to take or approve, any of the following actions involving Provider: (i) mortgage, pledge, or grant a security interest in any property owned by Provider; (ii) incur or refinance any indebtedness for money borrowed by Provider whether secured or unsecured and including any indebtedness for money borrowed by a member of Provider; (iii) lend money to or guaranty or become surety for the obligations of any person; (iv) compromise or settle any claim against or inuring to the benefit of Provider; (v) incur any liability or make any single expenditure or series of related expenditures on behalf of Provider; (vi) construct any capital improvements, repairs, alterations or changes or enter into any capital transaction or capital lease on behalf of Provider; (vii) elect, appoint, remove or terminate any manager, officer or director of Provider (but not with respect to any re-election or reappointment of an existing manager, officer or director as of the date of this Agreement); (viii) cause Provider to terminate any agreement or arrangement with any insurance carrier, HMO or PPO, or with any other third party payor; (ix) approve salaries and bonuses of any existing employee or other staff of Provider; (x) cause Provider to commence a voluntary case as debtor under the United States Bankruptcy Code; (xi) cease or suspend any payments under the Management Services Agreement; (xii) commence on behalf of Provider any litigation, arbitration or mediation, other than against Manager as a result of Manager’s breach of this Agreement; or (xiii) commence any new service or terminate any type of service furnished through Provider.

 

 

	(b)	Member shall provide Manager no less than thirty (30) days advance written notice and obtain Manager’s written consent prior to taking or approving, or causing Provider, to take or approve any of the following actions involving Provider, unless such actions are taken by Manager on behalf of Provider: (i) hire or fire any employee or staff member of Provider, (except as otherwise permitted pursuant to Management Services Agreement); (ii) approve salaries and bonuses of any new employee or staff of Provider; (iii) approve severance pay; or (iv) cause Provider to enter any new relationship with any insurance carrier, any HMO or PPO, or with any other third party payor.
	(c)	Member shall, or shall cause Provider, as the case may be to, give Manager prompt notice of any subpoena, government investigation, litigation, or claim against: (i) Provider; (ii) Member with regard to her position as a manager, member, director, or officer of Provider, or with respect to this Agreement; or (iii) any manager, employee, director, officer, or other member of Provider.

 

4.4.

Name Change. Member hereby consents to change the name of Provider if requested by Manager for purposes of marketing the services of Provider; provided, however, that Member may reasonably withhold such consent and retain the name of the Provider, as applicable, if qualified legal counsel, engaged by Member at Member’s expense, determines that any name change requested by the Manager would violate any prohibitions or restrictions of applicable law or regulation.

 

	5.	Construction. The parties have participated jointly in the negotiation of this Agreement. In the event of any ambiguity, question of intent or interpretation, or conflict may arise with respect to the provisions of the organizational or formation documents or company or operating agreement of Provider and the provisions of this Agreement, a court shall construe any such ambiguity, question of intent or interpretation, or conflict in favor of this Agreement.
	6.	Remedies. Member and Provider recognize that Manager, Provider, or both will be irreparably damaged in amounts difficult to ascertain if Member or Provider breach or threaten to breach any of the terms and provisions of this Agreement which are to be observed or performed by Member or Provider hereunder. Accordingly, in the event of any threatened breach or default or actual breach or default by Member or Provider of the terms and provisions of this Agreement which are to be observed or performed by Member and Provider hereunder, Manager or Provider, as the case may be, shall be entitled to immediate temporary injunctive and other equitable relief, without the necessity of showing actual monetary damages. Such remedies shall, however, be cumulative and not exclusive, and nothing contained herein shall be construed as prohibiting Manager from pursuing any other remedies available to it at law or equity, including, but not limited to, enforcing its rights to specific performance hereunder. Provider recognizes that Member will be irreparably damaged in amounts difficult to ascertain if Provider breaches or threatens to breach any of the terms and provisions of this Agreement which are to be observed or performed by Provider hereunder. Accordingly, in the event of any threatened breach or default or actual breach or default by Provider of the terms and provisions of this Agreement which are to be observed or performed by Provider hereunder, Member shall be entitled to immediate temporary injunctive and other equitable relief, without the necessity of showing actual monetary damages. Such remedies shall, however, be cumulative and not exclusive. Furthermore, nothing contained herein shall be construed as prohibiting Member from pursuing any other remedies available to it at law or in equity, including, but not limited to, enforcing its rights to specific performance hereunder.

 

 

7.

Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be addressed to the receiving party’s address set forth below or to such other address as a party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii) sent by overnight courier, or (iii) sent by certified or registered mail, return receipt requested, postage prepaid.

 

If to Provider or Member:

 

Wisconsin Fertility and Reproductive Surgery Associates, S.C.

3146 Deming Way

Middleton, WI 53562

Attention: Elizabeth Pritts, M.D.

Email:

 

If to Manager:

 

Wood Violet Fertility LLC

5582 Broadcast Court

Sarasota, Florida 342240

Attention: Andrea Goren

Email: legal@invobio.com

 

with a copy (which shall not constitute notice) to:

 

Sheppard, Mullin, Richter and Hampton LLP

30 Rockefeller Plaza

New York, NY 10112-0015

Attention: Amanda L. Zablocki, Esq.

Email: azablocki@sheppardmullin.com

 

All notices, requests, consents, and other communications provided for by this Agreement shall be in writing, shall be addressed to the receiving Party’s address set forth below or to such other address as a Party may designate by notice hereunder, and shall be either: (i) delivered by hand, (ii) sent by recognized overnight courier, or (iii) sent by certified mail, return receipt requested, postage prepaid to such address as each Party shall provide the other Party from time to time, or (iv) delivered via electronic mail, return receipt requested, provided that any notice sent via electronic mail must also be accompanied by another form of notice set forth in the foregoing sub-sections (i)-(iii). Notice shall be deemed given (A) upon delivery, if hand delivered, (B) on the next business day, if sent next day delivery by a recognized overnight courier, (C) if sent by certified mail, five (5) business days following the day such mailing is made; and (D) if sent via electronic mail, followed by notice consistent with the foregoing sub-sections (i)-(iii), upon delivery (regardless of whether the recipient confirms such receipt as requested).

 

 

	8.	Successors. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, and their authorized successors or assigns. The rights of any party hereunder may not be assigned without the consent of the remaining parties hereto, provided, however, that the Manager may assign its rights and obligations under this Agreement: (i) to a bank or any other financial institution or any person or entity from which Manager thereof has obtained, or will obtain, financing, and Manager may grant a security interest in its right, title and interest hereunder; and (ii) following prior written notice to Member, to any successor to the business of the Manager related to Provider, without the prior consent of the other parties hereto, provided that the assignee or transferee is the successor to all or substantially all of the business or assets of the Manager related to Provider and such assignee or transferee expressly assumes all the obligations, duties, and liabilities of the Manager set forth in this Agreement.
	9.	Third Party Beneficiary. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person other than the Manager, Provider, Member, or a Designated Transferee, any rights or remedies under or by reason of this Agreement. Each Designated Transferee, if and when he, she, or it becomes a Designated Transferee, is an intended beneficiary of this Agreement and shall have standing to enforce the provisions of this Agreement.
	10.	Governing Law; Venue. Except as expressly provided for herein, this Agreement, the rights and obligations hereunder, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the state of Delaware. The parties hereby submit to the exclusive jurisdiction and venue of the federal and state courts located in the state of Delaware for the purposes of any action between the parties arising out of this Agreement.
	11.	Entire Agreement. All understandings and agreements heretofore had between the parties hereto with respect to the transactions contemplated hereby are merged into this Agreement, and this Agreement and all other documents specifically referenced herein reflect all the understandings of the parties with respect to such transactions.
	12.	Captions. The section titles or captions in this Agreement are for convenience of reference only. They shall not be considered to be a part of this Agreement, and they in no way define, limit, extend or describe the scope or intent of any provision hereof.
	13.	Modification. This Agreement cannot be modified, extended or amended except by written agreement signed by all of the parties hereto.

 

 

	14.	Arbitration. Any controversy, dispute, or claim of whatever nature arising out of, in connection with, or in relation to the interpretation, performance or breach of this Agreement, including any claim based on contract, tort, or statute, shall be settled exclusively through arbitration to be conducted by the American Health Law Association in the state of Delaware. The determination of the arbitrator or arbitrators shall be final, binding, and conclusive on the Parties, and an application may be made to any court of competent jurisdiction for an order enforcing such determination. Each party shall pay an equal portion of the fees and expenses of the arbitrators, but all other fees and expenses, including legal fees and expenses, shall be paid by the party incurring them.
	15.	Further Assurances. Each party shall perform such acts, execute such further instruments, documents or certificates, and provide such cooperation in proceedings and actions as may be reasonably requested by the other parties in order to carry out the intent and purposes of this Agreement. Except as otherwise provided in this Agreement, the actions, executions, deliveries and cooperation of each party under this Section 15 shall be without further consideration and at such party’s expense.
	16.	Confidentiality. The existence and the terms and conditions of this Agreement are confidential and shall not be disclosed to any third party by any party to this Agreement without the prior written consent of all other parties to this Agreement, provided, however, each party may disclose the existence and the terms and conditions of this Agreement as required by law after notice of the same to the non-disclosing party or to appropriate employees, independent contractors, and agents who are bound by separate ethical or contractual obligations of confidentiality to the disclosing party.
	17.	Severability. If any provision of this Agreement shall be held to be illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable provision were not contained herein.
	18.	Counterparts. This Agreement may be executed in one (1) or more counterparts and each counterpart, whether original executions or facsimile executions or a combination, when so executed and delivered shall constitute a complete and original instrument, and it shall not be necessary when making proof of this Agreement or any counterpart thereto to produce or account for any other counterparts.
	19.	Advice of Counsel. Member acknowledges that she has been advised to seek independent legal counsel for advice regarding the effect of the terms and provisions hereof, and has either obtained such advice of independent legal counsel, or has voluntarily and without compulsion elected to enter into and be bound by the terms of this Agreement without such advice of independent legal counsel.

 

[Remainder of the page intentionally left blank]

 

 

IN WITNESS WHEREOF, the parties have executed this Directed Equity Transfer Agreement as of the Effective Date.

 

	MANAGER:
	Wood Violet Fertility LLC,
	a Delaware limited liability company
	By:	/s/ Steve Shum
	Name:	Steve Shum
	Title:	President
	PROVIDER:
	Wisconsin Fertility and Reproductive Surgery Associates, S.C.,
	a Wisconsin corporation
	By:	/s/ Elizabeth Pritts
	Name:	Elizabeth Pritts, M.D.
	Title:	President
	MEMBER:
	/s/ Elizabeth Pritts
	Elizabeth Pritts Revocable Living Trust
	Elizabeth Pritts, Trustee

 

[Signature Page to Directed Equity Transfer Agreement]

 

 

 

 

Exhibit 99.1

 

INVO Closes Acquisition of Wisconsin Fertility Institute

 

Transformational and accretive acquisition adds significant scale to INVO’s current operations

 

Contributes over $5 million in incremental annual revenue as well as positive net income and cash flows

 

First significant transaction establishing acquisitions as key aspect of INVO’s commercial strategy, in addition to building new INVO Centers

 

SARASOTA, Fla. and MADISON, Wis., August 11, 2023 — INVO Bioscience, Inc. (Nasdaq: INVO) (“INVO” or the “Company”), a healthcare services fertility company focused on expanding access to advanced treatment worldwide with its INVOcell® medical device and the intravaginal culture (“IVC”) procedure it enables, today announced it has closed the previously announced acquisition of Wisconsin Fertility Institute. The acquisition provides operational scale, positive cash flow and complements the Company’s new-build INVO Center strategy.

 

The Madison-based fertility center primarily offers conventional IVF procedures having generated approximately $5.1 million in revenue and net income of $1.6 million for the trailing 12-month period ended March 31, 2023. INVO will look to further expand the center through the introduction of the IVC procedure as an added service offering to patients.

 

Wisconsin Fertility Institute, led by internationally renowned and well-respected fertility expert, Dr. Elizabeth Pritts, is one of the state’s preeminent fertility centers, having helped to welcome over 5,000 babies since opening its doors in 2007 with approximately 550 conventional IVF procedures completed in 2022.

 

“The acquisition of Wisconsin Fertility Institute accelerates the transformation of INVO to a healthcare services company, with an ability to leverage our unique and innovative INVOcell device to help democratize the fertility industry,” commented Steve Shum, CEO of INVO. “The acquisition immediately adds scale and positive cash flow to our operations, with incremental growth expected to be driven at the clinic through the synergistic introduction of our INVOcell solution. We are extremely excited to have now closed this important acquisition and look forward to incorporating the clinic within our operations moving forward.”

 

INVO’s innovative device, the INVOcell, allows fertilization and early embryo development to occur in vivo within the woman’s body. Wisconsin Fertility Institute joins INVO’s expanding list of fertility clinics, including operating clinics in Atlanta (Bloom Fertility), Birmingham (Innovative Fertility Specialists) and Monterrey, Mexico (Positib Fertility), as well as future clinics under development.

 

Financial Terms of Acquisition

 

The purchase price of the acquisition is $10 million payable over a three-year period. There is an initial $2.15 million due in cash at closing (net of a $350,000 holdback), with subsequent $2.5 million payments due annually for the following three years. At the discretion of the sellers, subsequent payments may be paid in cash or in shares of INVO common stock. Wisconsin Fertility Institute becomes a wholly owned subsidiary, and its financial statements will be consolidated with those of INVO.

 

 

About INVO Bioscience

 

We are a healthcare services fertility company dedicated to expanding the assisted reproductive technology (“ART”) marketplace by making fertility care accessible and inclusive to people around the world. Our commercialization strategy is focused on the opening of dedicated “INVO Centers” offering the INVOcell® and IVC procedure (with three centers in North America now operational), the acquisition of US-based, profitable in vitro fertilization (“IVF”) clinics and the sale and distribution of our technology solution into existing fertility clinics. Our proprietary technology, INVOcell®, is a revolutionary medical device that allows fertilization and early embryo development to take place in vivo within the woman’s body. This treatment solution is the world’s first intravaginal culture technique for the incubation of oocytes and sperm during fertilization and early embryo development. This technique, designated as “IVC”, provides patients a more natural, intimate, and more affordable experience in comparison to other ART treatments. We believe the IVC procedure can deliver comparable results at a fraction of the cost of traditional IVF and is a significantly more effective treatment than intrauterine insemination (“IUI”). For more information, please visit www.invobio.com.

 

Safe Harbor Statement

 

This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company invokes the protections of the Private Securities Litigation Reform Act of 1995. All statements regarding our expected future financial position, results of operations, cash flows, financing plans, business strategies, products and services, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will,” and other similar expressions are forward-looking statements. All forward-looking statements involve risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. Factors that may cause actual results to differ materially from those in the forward-looking statements include those set forth in our filings at www.sec.gov. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.

 

CONTACT: CONTACT:

 

INVO Bioscience: Steve Shum, CEO, 978-878-9505, sshum@invobio.com;

 

Investor Contact: Lytham Partners, LLC, Robert Blum, 602-889-9700, INVO@lythampartners.com

 

 

 

Exhibit 99.4

 

INVO BIOSCIENCE, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

On March 16, 2023, INVO Bioscience Inc., a Nevada corporation (“INVO”), through Wood Violet Fertility LLC, a Delaware limited liability company (“Buyer”) and wholly owned subsidiary of INVO Centers LLC, a Delaware company wholly owned by INVO, entered into binding purchase agreements to acquire Wisconsin Fertility Institute (the “Clinic”) for a combined purchase price of $10 million (the “WFI Acquisition”).

 

The purchase price is payable in four installments of $2.5 million each, payable at closing and on each of the subsequent three anniversaries of closing. The sellers have the option to take all or a portion of the final three installments in shares of INVO common stock valued at $125.00, $181.80, and $285.80, for the second, third, and final installments, respectively.

 

The Clinic is comprised of (a) a medical practice, Wisconsin Fertility and Reproductive Surgery Associates, S.C., a Wisconsin professional service corporation d/b/a Wisconsin Fertility Institute (“WFRSA”), and (b) a laboratory services company, Fertility Labs of Wisconsin, LLC, a Wisconsin limited liability company (“FLOW”). WFRSA owns, operates and manages the Clinic’s fertility practice that provides direct treatment to patients focused on fertility, gynecology and obstetrics care and surgical procedures, and employs physicians and other healthcare providers to deliver such services and procedures. FLOW provides WFRSA with related laboratory services.

 

As described in greater detail in the Current Report on Form 8-K (the “Report”) to which these pro forma condensed combined financial statements are an exhibit, INVO is purchasing the non-medical assets of WFRSA and one hundred percent of FLOW’s membership interests.

 

On March 16, 2023, Buyer entered into an Asset Purchase Agreement (the “APA”) with WFRSA and The Elizabeth Pritts Revocable Living Trust (the “Seller,” together with the WFRSA, the “Seller Parties”) pursuant to which Buyer agreed to acquire the Purchased Assets (as defined in the APA) related to WFRSA’s business. Buyer also agreed to assume certain liabilities of WFRSA as set forth in the APA. Certain non-clinical assets, properties and rights of WFRSA shall be excluded from the Purchased Assets including patient lists, charts, records and ledgers, all contracts with Payors (as defined in the APA); all Health Care Permits (as defined in the APA).

 

The Buyer will deliver to WFRSA an amount equal to (all capitalized terms as defined in the APA) the Closing Payment at closing consisting of $500,000 less Target Closing Date Debt less the Holdback Amount of $280,000. Buyer has agreed to make the following Post-Closing Additional Payments of $500,000 on each of the first three anniversaries of closing provided that Seller may elect to receive shares of INVO common stock in lieu of such cash payments as follows: (i) 4,000 shares of INVO common stock on the first additional payment date; (ii) 2,750 shares of INVO common stock on the second additional payment date and (iii) 1,750 shares of INVO common stock on the third additional payment date. The Additional Payments are secured by Seller having a subordinated lien on the Purchased Assets.

 

On March 16, 2023, Buyer entered into a Membership Interest Purchase Agreement (the “MIPA”) with FLOW, IVF Science, LLC, a Wisconsin limited liability company, owned by Wael Megid, Ph.D., and Dr. Elizabeth Pritts as trustee for the Elizabeth Pritts Revocable List Trust, a Trust created under the laws of the State of Wisconsin (each, a “Selling Member” and collectively, the “Selling Members”). Under the MIPA, the Selling Members agreed to sell to Buyer 100% of the Membership Interests of FLOW for a purchase price equal to (all capitalized terms as defined in the MIPA) the Initial Purchase Price, which is equal to (i) two million dollars ($2,000,000) minus (ii) the Closing Indebtedness minus (iii) any Transaction Expenses minus (iv) the Holdback Amount of $70,000. In addition to the Initial Closing Payment, Purchaser has agreed to pay to the Selling Members additional payments of $2,000,000 within 90-days of each of the first three anniversaries of closing provided that Selling Members may elect to receive shares of INVO common stock in lieu of such cash payments as follows: (i) 16,000 shares of INVO common stock on the first additional payment date; (ii) 11,000 shares of INVO common stock on the second additional payment date and (iii) 7,000 shares of INVO common stock on the third additional payment date. These additional payments are secured by the Selling Members having a lien on the assets of FLOW.

 

The following unaudited pro forma condensed combined financial statements are based on the INVO’s historical consolidated financial statements and the historical combined financial statements of WFRSA and FLOW (the “Companies”) as adjusted to give effect to the WFI Acquisition and related financing transactions. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2023 and the year ended December 31, 2022 give effect to these transactions as if they had occurred on January 1, 2022. The unaudited pro forma condensed combined balance sheet as of March 31, 2023 gives effect to these transactions as if they had occurred on March 31, 2023.

 

The unaudited pro forma combined balance sheet and unaudited combined statement of operations are presented for informational purposes only and do not purport to be indicative of the combined financial condition that would have resulted if the acquisition would have occurred on January 1, 2022.

 

The unaudited pro forma condensed combined financial statements should be read together with INVO’s historical financial statements, which are included in INVO’s latest Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, and the Companies’ historical financial statements, which are included in the Report.

 

 

INVO BIOSCIENCE, INC.

PRO FORMA COMBINED BALANCE SHEET

(UNAUDITED)

AS OF MARCH 31, 2023

 

		INVO				WFI				Pro Forma				Pro Forma
		March 31, 2023				March 31, 2023				Adjustments				Balances
ASSETS
Current assets
Cash		$	2,188,245			$	169,361			$	-			$	2,357,606
Accounts receivable, net			99,720				119,559				-				219,279
Inventory			270,919				-				-				270,919
Prepaid expenses and other current assets			250,878				526				-				251,404
Total current assets			2,809,762				289,446				-				3,099,208
Property and equipment, net			417,642				71,763				-				489,405
Goodwill			-				-				10,055,110	(a)			10,055,110
Investment in joint ventures			1,173,577				-				-				1,173,577
Lease right of use			1,750,175				911,201				-				2,661,376
Total assets		$	6,151,156			$	1,272,410			$	10,055,110			$	17,478,676
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities		$	1,847,208			$	96,949			$	-				1,944,157
Accrued compensation			1,220,682				-				-				1,220,682
Notes payable			331,321				-				-				331,321
Notes payable, related party			770,000				-				-				770,000
Deferred revenue, current portion			46,746				132,703				-				179,449
Distributions payable			-				171,981				-				171,981
Lease liability, current portion			234,050				217,958				-				452,008
Total current liabilities			4,450,007				619,591				-				5,069,598
Deferred tax liability			1,949				-				-				1,949
Long-term liability			-				-				7,500,000	(b)			7,500,000
Lease liability, net of current portion			1,610,734				707,929				-				2,318,663
Total liabilities			6,062,690				1,327,520				7,500,000				14,890,210
Stockholders’ equity
Common stock			70				-				94	(c)			164
Additional paid-in capital			52,422,808				-				2,499,906	(c)			54,922,714
Accumulated deficit			(52,334,412	)			-				-				(52,334,412	)
Members’ capital - beginning			-				(246,479	)			246,479				-
Members’ capital - current year			-				191,369				(191,369	)			-
Total stockholders’ equity			88,466				(55,110	)			2,555,110				2,588,466
Total liabilities and stockholders’ equity		$	6,151,156			$	1,272,410			$	10,055,110				17,478,676

 

 

INVO BIOSCIENCE, INC.

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

(UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2023

 

														Pro Forma
		INVO March 31, 2023				WFI March 31, 2023				Pro Forma Adjustments				Combined March 31, 2023
Revenue:
Product revenue		$	50,644			$	-			$	-			$	50,644
Clinic revenue			297,381				1,339,967				-				1,637,348
Total revenue			348,025				1,339,967				-				1,687,992
Cost of revenue			72,554				509,725				-				582,279
Gross profit			275,471				830,242				-				1,105,713
Operating expenses:
Selling, general and administrative			2,508,371			$	367,791				-				2,876,162
Research and development			73,520				-				-				73,520
Total operating expenses			2,581,891				367,791				-				2,949,682
Income (loss) from operations			(2,306,420	)			462,451				-				(1,843,969	)
Other income (expense):
Loss from equity method investment			(27,735	)			-				-				(27,735	)
Other income			-				-				-				-
Interest income			-				-				-				-
Interest expense			(216,589	)			-				-				(216,589	)
Foreign currency exchange loss			(135	)			-				-				(135	)
Total other expense, net			(244,459	)			-				-				(244,459	)
Income (loss) before income taxes			(2,550,879	)			462,451				-				(2,088,428	)
Provision for income taxes			-				-				-	(d)			-
Net income (loss)		$	(2,550,879	)		$	462,451			$	-			$	(2,088,428	)
Net profit (loss) per common share
Basic		$	(4.10	)		$	-			$	-			$	(3.35	)
Diluted		$	(4.10	)		$	-			$	-			$	(3.35	)
Weighted average number of common shares outstanding:
Basic			622,504				-				-				622,504
Diluted			622,504				-				-				622,504

 

 

INVO BIOSCIENCE, INC.

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

(UNAUDITED)

FOR THE YEAR ENDED DECEMBER 31, 2022

 

														Pro Forma
		INVO December 31, 2022				WFI December 31, 2022				Pro Forma Adjustments				Combined December 31, 2022
Revenue:
Product Revenue		$	207,342			$	-			$	-			$	207,342
Clinic Revenue			614,854				5,379,675				-				5,994,529
Total revenue			822,196				5,379,675				-				6,201,871
Cost of revenue			331,523				2,284,922				-				2,616,445
Gross profit			490,673				3,094,753				-				3,585,426
Operating expenses:
Selling, general and administrative			10,573,111				1,411,012				-				11,984,123
Research and development			544,043				-				-				544,043
Total operating expenses			11,117,154				1,411,012				-				12,528,166
Income (loss) from operations			(10,626,481	)			1,683,741				-				(8,942,740	)
Other income (expense):
Loss from equity method investment			(200,558	)			-				-				(200,558	)
Other income			-				904				-				904
Interest income			308				-				-				308
Interest expense			(59,445	)			(238	)			-				(59,683	)
Foreign currency exchange loss			(3,463	)			-				-				(3,463	)
Total other expense, net			(263,158	)			666				-				(262,492	)
Income (loss) before income taxes			(10,889,639	)			1,684,407				-				(9,205,232	)
Provision for income taxes			2,872				-				-	(d)			2,872
Net income (loss)		$	(10,892,511	)		$	1,684,407			$	-			$	(9,208,104	)
Net profit (loss) per common share
Basic		$	(17.97	)		$	-			$	-			$	(15.19	)
Diluted		$	(17.97	)		$	-			$	-			$	(15.19	)
Weighted average number of common shares outstanding:
Basic			606,131				-				-				606,131
Diluted			606,131				-				-				606,131

 

 

INVO BIOSCIENCE, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

 

Note 1 – Basis of presentation

 

The WFI Acquisition will be accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. As the acquirer for accounting purposes, the Company has estimated the fair value of WFI’s assets acquired and liabilities assumed and conformed the accounting policies of WFI to its own policies.

 

Note 2 – Calculation of purchase consideration and preliminary purchase price allocation

 

The following table summarizes the fair value of purchase consideration that will be transferred on the Closing Date:

 

Proceeds from the sale of INVO common stock		$	2,500,000
Total upfront cash consideration			2,500,000
Future cash or equity consideration (1)			7,500,000
Total purchase consideration		$	10,000,000

 

(1)

Sellers may elect to receive shares of INVO common stock in lieu of cash payments. See Note 3.

 

The Company has performed a preliminary valuation analysis of the fair market value of the Companies’ assets and liabilities. The following table summarizes the preliminary allocation of the purchase price as of March 31, 2023:

 

Cash		$	169,361
Accounts receivable			119,559
Prepaid expenses and other current assets			526
Property and equipment, net			71,763
Lease right of use asset			911,201
Goodwill			10,055,110
Accounts payable and accrued expenses			(96,949	)
Distributions payable			(171,981	)
Deferred revenue			(132,703	)
Lease liability			(925,887	)
Total consideration		$	10,000,000

 

This preliminary purchase price allocation has been used to prepare pro forma adjustments in the unaudited pro forma condensed combined balance sheet and income statements. The final purchase price allocation will be determined when INVO has completed all detailed valuations and necessary calculations, which are expected to be finalized within the next twelve months. The final allocation could differ materially from the preliminary allocation used in the pro forma adjustments. The final allocation may include (i) changes in identifiable net assets, (ii) changes in fair values of property, plant and equipment, and (iii) other changes to assets and liabilities.

 

Note 3 – Pro forma adjustments

 

The pro forma adjustments are based on the INVO’s preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial statements:

 

(a) Represents the preliminary goodwill associated with the WFI Acquisition as presented in Note 2. Goodwill represents the estimate of the excess of the purchase price over the fair value of the assets acquired and liabilities assumed.

 

(b) Represents the future cash payments owed for the WFI acquisition. INVO has agreed to make additional payments of $2,500,000 within 90-days of each of the first three anniversaries of closing. The sellers may elect to receive shares of INVO common stock in lieu of cash payments as follows: (i) 20,000 shares of INVO common stock on the first additional payment date; (ii) 13,750 shares of INVO common stock on the second additional payment date and (iii) 8,750 shares of INVO common stock on the third additional payment date.

 

(c) Represents the proceeds from common stock sold by INVO to meet the initial $2.5 million due upon closing of the WFI acquisition.

 

(d) WFRSA and FLOW are taxed at the partnership level and as such no provision for income taxes has been recorded for the WFI Acquisition. Beginning in 2022 the members elected to have state income taxes paid by the Companies on the members’ behalf. This expense is included in the Companies operating expenses.

 

 

v3.23.2

Cover	Aug. 10, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 10, 2023
Entity File Number	001-39701
Entity Registrant Name	INVO BIOSCIENCE, INC.
Entity Central Index Key	0001417926
Entity Tax Identification Number	20-4036208
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	5582 Broadcast Court
Entity Address, City or Town	Sarasota
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	34240
City Area Code	(978)
Local Phone Number	878-9505
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	INVO
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

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