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Settlement Agreement - Termination of Joint Medical Practice or Partnership by William M. Keever

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Settlement Agreement - Termination of Joint Medical Practice or Partnership by William M. Keever Powered By Docstoc
					                                SETTLEMENT AGREEMENT

        Agreement made __________ [date] between __________ [A.B.], M.D., of __________
[address], __________ [city], __________ County, __________ [state], referred to as first party,
__________ [C.D.], M.D., of __________ [address], __________ [city], __________ County,
__________ [state], referred to as second party, and __________, a corporation organized and
existing under the laws of __________ [state], with its principal office located at __________
[address], __________ [city], __________ County, __________ [state], referred to as the
corporation.

                                            RECITALS

       A. First party is a physician licensed to practice medicine in __________ [state].

       B. Second party is a physician licensed to practice medicine in __________ [state].

       C. The corporation is a medical corporation that has previously been engaged in rendering
medical services to various patients.

       D. First party is currently the owner of __________ [fifty] percent (50%) of the issued and
outstanding stock of the corporation.

       E. Second party is currently the owner of __________ [fifty] percent (50%) of the issued
and outstanding stock of the corporation.

        F. First party and second party have agreed between themselves to terminate their joint
practice and, commencing on __________ [date], practice individually.

        G. First party and second party have entered into this agreement for the purpose of setting
forth the method by which the joint practice shall be divided into component separate practices as
of the above-mentioned __________ [date].

         In consideration of the matters described above, and of the mutual benefits and obligations
set forth in this agreement, the parties agree as follows:

                                          SECTION ONE

                                     STOCK REDEMPTION

         1.1. Net worth of corporation. The parties have jointly instructed __________ [E.F.], a
certified public accountant licensed to practice in __________ [state], to determine the net worth of
the corporation as of the close of the business on __________ [date]. The determination of the net
worth of the corporation shall be in accordance with the standard accounting practices and the
consistent application of methods previously used in the preparation of financial statements and tax
returns for the corporation.
Prepared by William M. Keever
        Since the corporation has adopted a __________ [cash] basis for reporting income, the
report shall be prepared on a __________ [cash] basis. Nevertheless, __________ [E.F.] shall
accrue the amount of all professional fees incurred in connection with the separation as a charge
against the net worth of the corporation, so that the fees may be paid at the closing from the assets
of the corporation.

        1.2. Tangible assets. First party and second party have jointly inspected the tangible physical
assets of the corporation and have determined that the assets have a net value in excess of the value
shown on the financial statements of the corporation in the sum of __________ Dollars
($__________).

        1.3. Personal assets of either physician. Second party has designated certain physical assets
of the corporation, previously used personally by __________ [him or her], the ownership of which
shall be transferred to __________ [him or her] as a part of these transactions. A list and
description of these physical assets is attached as Exhibit __________ and incorporated by
reference. First party and second party have agreed that the value of the assets described in that
exhibit is the sum of __________ Dollars ($__________).

        1.4. Purchase of shares. In accordance with the provisions set forth above, second party
agrees to transfer and deliver to the corporation all of __________ [his or her] shares in the
corporation and the corporation agrees to purchase and redeem all of the shares of second party in
the corporation for a sum equal to the aggregate of the following:

       (a) __________ [Fifty] percent (50%) of the net worth of the corporation, determined in
accordance with Paragraph 1.2 of this section, plus

        (b) The sum of __________ Dollars ($__________), which is __________ [fifty] percent
(50%) of the value of the non-balance sheet assets described in Paragraph 1.2 of this section, less
the value of the assets set forth in Exhibit __________, plus

       (c) Transfer to second party of the assets described in Exhibit __________.

         1.5. Transfer of assets to physician. Within __________ [seven] days of the receipt by the
parties to this agreement of the accountant's statement described in Paragraph 1.1 of this section, the
corporation shall transfer and convey to second party the assets shown in Exhibit __________ and
pay to second party __________ [fifty] percent (50%) of the aggregate cash payments due second
party in accordance with the provisions of the preceding paragraph.

        The balance of the purchase price shall be paid, in cash or equivalent, __________ [sixty]
days following the first payment under this agreement. Any deferred balance under this agreement
shall be secured by the promissory note of the corporation, personally guaranteed by first party.

                                          SECTION TWO

Prepared by William M. Keever
                          VALUE OF UNCOLLECTED RECEIVABLES

        The parties recognize that the uncollected receivables of the corporation represent, in part,
the past work efforts of second party for which __________ [he or she] is yet to be compensated.
The parties have jointly instructed __________ [E.F] to establish the real value of the uncollected
receivables of the corporation. For that purpose, the parties have agreed that the evaluation shall be
made in accordance with the following table: __________ [set out the days that the accounts
receivable have been owing and the presumed real value based on the age].

         As soon as the evaluation shall have been completed, a copy shall be supplied to all of the
parties to this agreement.

                                         SECTION THREE

                                 CONTINUATION OF SALARY

        In recognition of __________ [his or her] past services to the corporation, the corporation
will pay to second party in each of the __________ [twelve] months following the effective date of
this agreement, that is, the months of __________ [July through December of __________ (year)],
and __________ [January through June of __________ (year)], a sum equal to __________
[fraction] of the real value of the uncollected receivables of the corporation as determined in
accordance with Section Two of this agreement.

                                         SECTION FOUR

                                   ANCILLARY PERSONNEL

        4.1 Employment of personnel. Second party has indicated to the corporation __________
[his or her] desire to employ __________ [G.H.] as a __________ [nurse] for the separate
practice subsequently to be conducted by second party __________ [G.H.] has indicated
__________ [his or her] willingness to become an employee of second party. Accordingly, the
corporation waives any objections it might legally have, and consents and agrees that __________
[G.H.] shall become an employee of second party from and after the effective date of this
agreement.

        4.2. Taxes and other benefits owing physician and other employees. The parties to this
agreement have jointly instructed __________ [E.F] to compute the amount of accrued taxes and
benefits attributable to second party and __________ [G.H.]. __________ [E.F.] has also been
jointly instructed to compute the amount of accrued vacation time and accrued current pension
funding liability for __________ [G.H.], but not for second party

        The report of __________ [E.F.] shall reflect net debits and credits to the corporation and
to second party for the various items mentioned in this section. The net balance reflected as due and
owing one party or the other shall be paid by the other party, in cash, at the closing described in
Section Thirteen below.
Prepared by William M. Keever
                                         SECTION FIVE

                                         PENSION PLAN

       5.1. Generally. On __________ [date] the corporation established a pension plan to provide
retirement benefits for its employees.

        5.2. New pension plan by physician. Second party has advised the other parties to this
agreement that second party has or will shortly establish a new medical corporation to be known as
__________ [name], and that the new corporation will have a substantially comparable pension
plan for the benefit of its employees.

        5.3. Amendment to existing pension plan. The corporation agrees to adopt an amendment to
its existing pension plan providing for full portability, so that the value of the funded benefits
pertaining to second party and __________ [G.H.] may be transferred to the new pension plan
adopted or to be adopted by __________ [name of new medical corporation].

        It is presumed that the transfer described in the preceding sentence may be accomplished
without distribution to or taxability to second party The provisions of this section are to be
construed as an offer to cooperate fully in the transfer of the above-mentioned funded benefits, but
do not constitute any guarantee that the transfer may be made without taxability.

        The parties acknowledge that the effect of the portability amendment and the transfer to a
new pension plan are subject to review and determination by the federal Internal Revenue Service,
and are beyond the control of the parties to this agreement.

       5.4. Liability of funding new pension plan. Second party agrees to assume the full liability
of funding benefits under the new pension plan for __________ [himself or herself] and
__________ [G.H.], for the __________ [current fiscal year] of the plan.

                                          SECTION SIX

                            SALE OF LIFE INSURANCE POLICIES

          The corporation shall sell to second party and second party shall buy from the corporation
all life insurance policies owned by the corporation insuring the life of second party. The purchase
price for those policies shall be the cash value of the policies as of the date of the closing.

        Any premiums becoming due subsequent to the date of closing, but before the actual
transfer, shall be the responsibility of second party.

      The parties agree to cooperate fully in the execution of any forms required by any insurance
company to accomplish the transfer contemplated by this section.

Prepared by William M. Keever
                                         SECTION SEVEN

                         COOPERATION BY DEPARTING PHYSICIAN

       From and after the date of closing, second party agrees to cooperate with first party and the
corporation in the defense of any claims that may be brought against either first party or the
corporation of which second party has knowledge, regardless of whether or not second party shall
have been involved in the transaction under which such claim arises.

       From and after the date of the closing, first party agrees to cooperate with second party and
the corporation in the defense of any claims that may be brought against second party or the
corporation of which first party has knowledge, regardless of whether or not first party shall have
been involved in the transaction under which such claim arises.

                                         SECTION EIGHT

                                  INCOME TAX DEFICIENCIES

        In the event that an income tax deficiency shall be asserted against the corporation for any
previous period of time during which second party was a shareholder, second party shall reimburse
the corporation __________ [fifty] percent (50%) of the amount of such deficiency, on demand by
the corporation; provided, however, no reimbursement shall be required with respect to those
portions of the deficiency relating exclusively to personal expenditures of first party disallowed by
the federal Internal Revenue Service.

        The reimbursement shall be to the extent of __________ [one hundred percent (100%)] of
that portion of the deficiency relating to personal expenditures of second party disallowed by the
federal Internal Revenue Service.

        The corporation shall promptly advise second party of any pending audits. Second party
shall be entitled to be represented in all such proceedings by a representative of __________ [his or
her] own choosing and at __________ [his or her] own expense.

       If additional claims are asserted against the corporation for those periods of time during
which second party was a shareholder, second party shall reimburse the corporation to the extent of
__________ [fifty] percent (50%) of the amount of such liability.

        If any such liability shall be established prior to __________ [date], the liability of second
party to the corporation under this paragraph shall be deducted from the salary continuation
provisions of Section Three. If the reimbursement shall be required after __________ [date], then
the reimbursement shall be treated as a partial refund of the redemption price paid by the
corporation to second party.

       A reimbursement by second party to the corporation after __________ [date], with respect
to any item which shall be fully tax deductible by the corporation shall be subject to the tax
Prepared by William M. Keever
adjustment provisions of Section Nine of this agreement.

                                            SECTION NINE

                                 ADJUSTMENTS FOR TAXATION

        All payments made after the closing date of this agreement shall be subject to equitable
adjustment to avoid an unfair tax benefit or tax detriment from being imposed by either party to this
agreement. Any payment that is fully deductible by the payor and treated as ordinary income in the
hands of the recipient shall not be subject to adjustment. Any adjustment that merely results in the
shifting of one item of income or deduction from one open year to another shall be disregarded for
the purposes of this section. Any payment that produces a substantially disproportionate tax result
shall be adjusted so as to create an after-tax parity between the parties to this agreement.

                                            SECTION TEN

                                      PATIENT ALLOCATIONS

       10.1. Choice of patient. Each party to this agreement agrees to fully respect the free and
independent choice of each patient as to the physician to whom the patient's file shall be assigned.

        10.2. Letters to patients. Within __________ [seven] days following the execution of this
agreement, a letter and return postcard shall be sent to every patient of the corporation, signed by
both parties to this agreement. The text of the letter shall be as set forth in the document attached as
Exhibit __________ and incorporated by reference. The text of the return postcard shall be as set
forth in the document attached as Exhibit __________ and incorporated by reference.

         10.3. Segregation of patient files. Within __________ [seven] days prior to the closing, the
parties to this agreement shall cause the various patient files of the corporation to be segregated. All
files that are to be allocated to second party under this agreement shall be placed in file cabinets to
be removed from the premises of the corporation by second party at the time of closing. These files
shall be allocated in accordance with the selection of patients as indicated by their response cards.
Where a response card has not been received from a patient, the file shall be allocated to either first
party or second party on the basis of which physician last treated the patient.

         10.4. Special request by patient. Notwithstanding anything contained in this agreement,
should any patient request a reallocation of the patient's file, either before or after the closing date of
this agreement, that patient's file shall be transferred to the doctor requested by the patient. Both
parties to this agreement agree to cooperate fully and promptly in the carrying out of the provisions
of this paragraph of this section.

        10.5. Cooperation in collections. Second party agrees to cooperate fully with the corporation
in the collection of any accounts due from any files allocated to second party. Second party also
agrees to notify the corporation promptly of any collections by second party with respect to
accounts receivable included in the evaluation described in Section Two of this agreement.
Prepared by William M. Keever
        The corporation shall receive credit against payment due second party under the provisions
of Section Three of this agreement for all such collections made by second party.

        10.6. Telephone number and procedure. Both the parties to this agreement agree that it is in
the mutual interest of all concerned that the corporation retain its existing telephone number. In
order to prevent any detriment occurring to either of the parties by virtue of such fact, the
corporation agrees that for a period of __________ [one year] following the closing, the telephone
procedure set forth in the document, attached as Exhibit __________ and incorporated by reference,
will be followed on all calls to the corporation.

        10.7. Mail and other communications. The corporation shall promptly forward any mail or
other communications received by it pertaining to second party or second party's patients.

                                       SECTION ELEVEN

                                       GOVERNING LAW

      This agreement shall be construed and interpreted in accordance with the laws of
__________ [state].

                                       SECTION TWELVE

                                       BINDING EFFECT

       This agreement shall be binding on the successors, assigns, executors, administrators,
personal representatives and heirs of the respective parties to this agreement.

                                      SECTION THIRTEEN

                                            CLOSING

       The closing of the transactions contemplated in this agreement shall take place at the office
of the corporation located at __________ [address], __________ [city], __________ County,
__________ [state], on __________ [date].

       IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
day and year first set forth above.

[FIRST PARTY:]

                              IF BUSINESS ENTITY:

                              [Name of Company                                                     ]


Prepared by William M. Keever
                           By: ___________________________________

                           Name: _________________________________

                           Title: __________________________________


                           IF INDIVIDUAL:


                           Sign: __________________________________

                           Print Name: _____________________________


[SECOND PARTY:]


                           IF BUSINESS ENTITY:

                           [Name of Company                            ]



                           By: ___________________________________

                           Name: _________________________________

                           Title: __________________________________


                           IF INDIVIDUAL:


                           Sign: __________________________________

                           Print Name: _____________________________




Prepared by William M. Keever
                                   [Notary Seals, if needed]

[IF BUSINESS ENTITY]

STATE OF _____________ )

______________ COUNTY )

               I, the undersigned, a Notary Public in and for said County, in said State, hereby
certify that ______________________ [Name], whose name as ________________ [Title] of
_____________________ [Name of Company], a _____________ [Entity Type] formed and
existing under the laws of the State of ___________ [State in which entity was formed], is signed
to the foregoing Agreement, and who is known to me, acknowledged before me on this day that,
being informed of the contents of said Agreement, ______ [he, she or it], as such officer or
director and with full authority, executed the same voluntarily for and as the act of said
corporation on the day the same bears date.

              Subscribed and sworn to before me on this ____ day of _____________, 20__.


                                            _________________________________________
                                            Notary Public
                                            My Commission Expires: ____________________
[IF INDIVIDUAL]

STATE OF _____________ )

______________ COUNTY )

                I, the undersigned, a Notary Public in and for said County, in said State, hereby
certify that ____________________________ is signed to the foregoing Agreement, and who is
known to me, acknowledged before me on this day that, being informed of the contents of said
Agreement, ____ [he or she] executed the same voluntarily on the day the same bears date.


              Subscribed and sworn to before me on this ____ day of _____________, 20__.


                                            _________________________________________
                                            Notary Public
                                            My Commission Expires: ____________________




Prepared by William M. Keever

				
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Description: Legal Documents by William M. Keever