Exhibit 10.2

 

NOTE: StarMed Group, Inc. has requested confidentiality treatment for the
portions of this Agreement marked with “****”. An unredacted agreement has been
filed with the Securities and Exchange Commission.

 

SERVICES AGREEMENT

 

THIS SERVICES AGREEMENT (the “Agreement”) is made and entered into effective as
of May 1, 2006, by and between StarMed Group, Inc., a Nevada corporation
(“Company”) and Management Services Unlimited (“MSU”).

 

RECITALS

 

A.           Company intends to own and operate a wellness center at 8615 Knott
Avenue, Suite #9, Buena Park, California 90620 (the “Wellness Center”).

 

B.           MSU has special expertise and experience in providing various
services to centers such as the Wellness Center.

 

C.           MSU desires to provide Company with the necessary support to manage
certain aspects of the Wellness Center, including billing and collection
services and marketing and promotion services.

 

D.           Company desires to obtain from MSU, and MSU desires to provide to
Company, certain services, as set forth herein, subject to the terms and
conditions of this Agreement.

 

NOW, THEREFORE, the parties to this Agreement do hereby agree as follows:

 

1.            MSU’s Services. MSU shall provide the following services
(collectively, “Services”) with respect to the Wellness Center:

 

 

a.

Billing and Collection.

 

i.             MSU shall provide, or arrange for the provision of, all billing
and collection services that Company reasonably determines are necessary or
appropriate in connection with the charges resulting from services performed and
products sold at the Wellness Center. In connection with the billing and
collection services to be provided hereunder, MSU, or the third party engaged to
provide such services, shall prepare invoices; input billing information;
prepare computerized billing statements; submit claims to third party payors and
patients; and respond to telephone inquiries from patients and payors concerning
patient bills. MSU shall have discretion to compromise, settle, write off or
determine not to appeal a denial of any claim for payment for any particular
professional service rendered on behalf of the Wellness Center. MSU shall
deposit all payments into a bank account designated by Company (the “Bank
Account”). MSU shall provide monthly and year-to-date reports showing all
billings, collections, and accounts receivable and the aging of same.

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ii.            Company hereby appoints MSU for the term of this Agreement as its
true and lawful attorney-in-fact for the following purposes:

 

1.            To bill in Company’s name and on its behalf or, at Company’s
direction, in the name of a physician or physician group rendering services at
the Wellness Center and on their behalf, (a) patients, (b) third party payors,
and (c) any other persons or entities who are obligated to pay for Wellness
Center services and products.

 

2.            To collect in the name of Company or the physician or physician
group rendering services at the Wellness Center all charges, fees or other
amounts resulting from or related to services performed and products sold at the
Wellness Center, excluding, however, cash, check or credit card payments made
directly to Company on the date that the services were performed or goods were
sold at the Wellness Center (such excluded amounts being hereinafter referred to
as the “Excluded Amounts”).

 

3.            To receive payments (other than the Excluded Amounts) arising from
services performed and products sold at the Wellness Center; take possession of
and endorse in the name of Company or physician or physician group all cash,
notes, checks, money orders, insurance payments and any other instruments
received as payments of accounts receivable of Company or physician or physician
group in connection with services performed or products sold at the Wellness
Center, however arising, and deposit all such payments in the Bank Account.
Company shall immediately forward to MSU any such payments from invoices billed
by MSU that may come into its or their possession.

 

4.            To deposit all payments received directly into the Bank Account.

 

b.            Advertising and Marketing. MSU shall assist Company in advertising
and marketing the services and products offered at the Wellness Center. In
assisting Company, MSU shall provide, at Company’s cost and expense, general
advertising and marketing services, which may include the preparation of, or
contracting with third parties for the preparation of, signs, brochures,
letterhead, ads, direct mailers, radio program content, press releases,
promotional contests, website content, and other marketing materials for
Company, subject to Company’s prior approval (all such advertising and marketing
services shall be referred to collectively herein as the “Advertising
Services”). At no time shall MSU hold itself out as providing, or actually
provide, wellness services on behalf of Company. Company shall be the owner and
holder of all right, title, and interest in and to all marketing, advertising
and public relations materials created or implemented on behalf of Company in
connection with the Wellness Center services and products.

 

c.            Additional Services. If Company desires that MSU provide services
in addition to those listed in this Section 1, and MSU desires to provide such
additional services, the parties may negotiate for MSU to provide such
additional services on such terms and for such additional compensation as the
parties may agree upon in writing.

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2.

Compensation for Services.

 

a.            Services Fee. Company and MSU acknowledge and agree that MSU shall
incur substantial time, cost and expense in performing the Services on behalf of
Company, and that such costs and expenses will vary over the term of this
Agreement. Additionally, the parties acknowledge and agree that the level and
intensity of the Services will increase as the number of Wellness Center
customers increases. Company and MSU acknowledge that the Services Fee, as such
term is defined below, has resulted from arm’s length negotiations between the
parties and does not take into account the volume or value of referrals or
business otherwise generated between the parties, and is consistent with fair
market value for the Services. Accordingly, as compensation in full for the
performance of the Services hereunder, Company shall pay MSU a fee equal to (a)
**** percent (****%) of all amounts billed and collected by MSU for billing and
collection services, plus (b) **** percent (****%) of Services Revenues (as
defined below) and **** percent (****%) of Products Revenues (as defined below)
for advertising and marketing services during the term of this Agreement
(collectively, the “Services Fee”). With respect to the fee for billing and
collection services, both parties agree that such percentage applies only to
amounts actually billed and collected by MSU and does not apply to the Excluded
Amounts. As used herein, the term “Services Revenues” shall be defined to mean
all amounts received by Company relating to any and all services performed at
the Wellness Center, and the term “Products Revenues” shall be defined to mean
all amounts received by Company relating to any and all products sold at the
Wellness Center, whether such revenues are received in cash from patients,
private or prepaid insurance, other third party payors or from any other source.

 

b.            Payment Date. The Services Fee shall be due and payable on a
monthly basis throughout the term of this Agreement.

 

 

3.

Term and Termination.

 

a.            Term. The initial term of this Agreement shall be for five (5)
years commencing as of the date first written above; thereafter, except as
provided in Section 3.b. of this Agreement, this Agreement shall renew
automatically for successive terms of one (1) year each, unless either party
notifies the other party in writing not less than ninety (90) days’ prior to the
end of the then current term, of its intention to not renew this Agreement.

 

 

b.

Termination.

 

i.             Either party may terminate this Agreement for cause upon the
material breach of this Agreement by the other party, if such breach is not
cured within thirty (30) days following written notice of such breach. If the
nature of the breach is such that it cannot reasonably be completed within
thirty (30) days, no termination shall occur if such cure is commenced within
such thirty (30) day period and diligently prosecuted to completion.

 

ii.            Either party may terminate this Agreement upon the filing, with
respect to the other party, of a voluntary or involuntary petition in bankruptcy
if such petition is not dismissed within thirty (30) days of such filing; or
upon the appointment of a receiver or trustee to take possession of all, or
substantially all, of the assets of a party, if such appointment is not
terminated within thirty (30) days.

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iii.          Either party may terminate this Agreement immediately upon the
sale or transfer of substantially all of the Wellness Center’s, the Company’s or
MSU’s assets, or the merger, reorganization, liquidation or dissolution for any
reason of the Wellness Center, the Company or MSU.

 

iv.           Company may terminate upon ninety (90) days’ written notice to MSU
the portion of the Services involving billing and collection in the event that
Company is not reasonably satisfied with the billing and collection services
provided by MSU, and the reasons for such dissatisfaction are not remedied by
MSU within thirty (30) days after written notice thereof is provided to MSU.
Such a right to terminate the billing and collection services shall be available
to Company even though the reasons for such dissatisfaction may not rise to a
material breach of this Agreement. Any such termination of the billing and
collection services shall have no effect on the other Services provided by MSU
under this Agreement.

 

c.            Effect of Termination.              Upon termination or expiration
of this Agreement, each party’s respective obligations hereunder shall terminate
in full, except for those obligations which either explicitly, as set forth in
this Agreement, or by their nature survive the termination or expiration of this
Agreement including but not limited to MSU’s continued right to receive the
Services Fee after the termination or expiration of this Agreement, to the
extent such Services Fee was earned from services performed and products sold at
the Wellness Center prior to the termination or expiration of this Agreement. In
addition, MSU shall return all documents, data and other materials or
information that constitute “Confidential Information” as defined in Section
7.a. below.

 

 

4.

Records.

 

a.            Medical Records. Each of the parties hereto shall maintain and
safeguard the confidentiality of all patient records, charts and other
information generated in connection with the services provided hereunder in
accordance with federal and state confidentiality laws and regulations,
including without limitation, the California Confidentiality of Medical
Information Act, Civil Code Section 56 et seq. and the Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”) and the regulations
thereunder. The parties shall execute the “Business Associate Agreement,”
attached hereto as Exhibit “A” and incorporated herein by this reference,
concurrently with the execution of this Agreement.

 

b.            Business Records. All business and administrative records
maintained by MSU in connection with the Services shall be MSU’s property.
Notwithstanding the foregoing, Company shall have a continuing right to inspect
and copy (at Company’s expense) all such business records for any reasonable
purpose, provided Company gives MSU at least five (5) days’ prior written
notice.

 

c.            Right to Inspect Records. The right to inspect records set forth
above in Sections 4.a. and 4.b. above shall survive the expiration or
termination of this Agreement.

 

 

5.

Indemnification.

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a.            Company agrees to defend, indemnify and hold harmless MSU, its
officers, directors, shareholders, managers, representatives, employees and
agents, from and against any and all losses, liabilities, damages, claims,
judgments, costs or expenses, including attorneys’ fees, that MSU may suffer,
incur or become liable for, as a result of any act or omission by Company, or
Company’s breach of this Agreement.

 

b.            MSU agrees to defend, indemnify and hold harmless Company, its
officers, directors, shareholders, representatives, employees and agents, from
and against any and all losses, liabilities, damages, claims, judgments, costs
or expenses, including attorneys’ fees, that Company may suffer, incur or become
liable for, as a result of any act or omission by MSU or MSU’s breach of this
Agreement.

 

6.            Compliance with Laws. The obligations of MSU and Company pursuant
to this Agreement shall be subject to any limitations or restrictions which may
be imposed by law or regulation, and Company and MSU, as the case may be, may
suspend any or all obligations hereunder, or, at its option, terminate this
Agreement, if it determines, upon advice of counsel, that the performance of any
obligation pursuant to this Agreement may contravene applicable law or
regulation.

 

7.            Non-Disclosure of Company’s Professional and Business Practices,
Trade Secrets, or Privileged Information; Non-Solicitation and Non-Interference.

 

a.            MSU agrees to keep confidential and to not use or disclose the
professional and business practices, trade secrets or privileged information of
Company and to keep such knowledge confidential in MSU’s dealings with any
medical group, clinic or practice, hospital, health care facility, health care
company, independent practice association (IPA) or other person or entity.
Further, MSU agrees that it shall not disclose to any person or use (except for
the benefit of Company) information obtained by MSU during the period of MSU’s
relationship with Company as to customer lists, names of customers or customers
addresses or telephone numbers, fee schedules or rates, business plans, business
methods, marketing or strategic plans, financial statements, financial
information, any and all computer programs (whether or not completed or in use),
any and all operating manuals or similar materials that constitute the systems,
policies and procedures of Company, or any other trade secrets, confidential or
proprietary information respecting Company (collectively, “Confidential
Information”). Except to the extent necessary for MSU to carry out its duties
and obligations under this Agreement, MSU acknowledges and agrees that it is
expressly prohibited from creating, making, duplicating, copying, retaining,
taking, maintaining or possessing, by any means or method, any of Company’s
Confidential Information either during or after the term of this Agreement. In
furtherance of this Section 7, MSU agrees to execute an additional nondisclosure
agreement at any time, if requested by Company.

 

b.            During the term of this Agreement and for a period of two (2)
years thereafter, MSU agrees that at no time will MSU, directly or indirectly,
or in action or in concert with others, solicit or attempt to solicit, call on,
employ, contract with or take away, either for MSU or any other person, firm or
entity, Company’s customers or referral sources, including, but not limited to,
medical groups, clinics, hospitals, IPAs, individual physicians, third party
payors, self-insured employers, and preferred provider organizations.

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c.            During the term of this Agreement and for a period of two (2)
years thereafter, MSU agrees not to disrupt, damage, impair or interfere with
the business of Company, whether by way of interfering with, raiding or
soliciting Company’s employees, disrupting its relationship with or soliciting
its agents, representatives, customers, vendors or otherwise, nor shall MSU
undertake planning for or organization of any competitive organization or other
business activity materially competitive with Company’s business, or combine
with others for the purpose of organizing any such competitive organization.

 

d.            The obligations of this Section 7 shall be in full force and
effect during the term of this Agreement and shall survive and continue
indefinitely after the termination or expiration of this Agreement, except as
otherwise limited by this Agreement. If the scope of any restriction contained
above is too broad to permit enforcement of any such restriction to its full
extent, then such restriction shall be enforced to the maximum extent permitted
by law, and MSU hereby consents and agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce any such restriction.

 

e.            MSU hereby acknowledges and confirms that its violation of Section
7 would cause irreparable injury to Company, and that Company’s remedies at law
for breach of MSU’s obligations under this Section 7 would be inadequate;
therefore, MSU consents to and agrees that temporary and permanent injunctive
relief may be granted in any proceeding which may be brought to enforce any
provision hereof. In addition to specific performance, Company shall have the
right and remedy to require MSU to account for and pay over to Company all
compensation, profits, monies, accruals or other benefits derived or received by
MSU as a result of any transactions constituting a breach of any of the
provisions of Section 7, and all expenses (including reasonable attorneys’ fees)
of Company in any action, suit or proceeding for breach of such provisions. Each
of the rights and remedies enumerated herein shall be severally enforceable, and
all of such rights and remedies shall be in addition to, and not in lieu of, any
other rights and remedies available to Company.

 

 

8.

Independent Contractor.

 

a.            In the performance of the duties and obligations under this
Agreement, it is mutually understood and agreed that MSU is at all times acting
and performing as an independent contractor. None of the provisions of this
Agreement is intended to create nor shall be construed to create any
relationship between the parties other than that of independent entities
contracting with each other solely for the purpose of effecting the provisions
of this Agreement. Company shall neither have nor exercise any control or
direction over the methods by which MSU performs the Services required of MSU
hereunder, or over MSU’s best business judgment. The sole interest and
responsibility of MSU is to assure that the Services covered by this Agreement
shall be performed in a competent, efficient and satisfactory manner.

 

b.            MSU is solely responsible for and shall pay all required taxes in
connection with the compensation paid to MSU pursuant to this Agreement and
shall provide Company with proof of such payment upon demand. Company will not
withhold income taxes, or withhold or pay social security taxes (FICA) with
respect to any such amount. MSU shall have no claim against Company for vacation
pay, sick pay, retirement benefits, social security, workers’ compensation,
disability, unemployment insurance or other employee benefits of any kind.

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9.

General Provisions.

 

a.            No Assignment. MSU shall not assign any of its rights, nor
delegate any of its duties under this Agreement. Subject to the foregoing
restriction, this Agreement shall be binding on the parties hereto and their
successors and permitted assigns.

 

b.            Severability. If any provision of this Agreement as applied to any
party or to any circumstance shall be found by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of any such provision in any other circumstance, or
the validity or enforceability of this Agreement, unless such invalidity or
unenforceability would defeat an essential business purpose hereof, or except as
otherwise provided herein.

 

c.            Notices. All notices or demands shall be in writing and shall be
given personally, by electronic facsimile, or by certified mail. Notice shall be
deemed conclusively made at the time of notice if given personally or by
electronic facsimile or, if by certified mail, three (3) days after deposit
thereof in the United States mail, properly addressed and postage pre-paid to
the following addresses:

 

MSU:

 

Management Services Unlimited

8615 Knott Avenue, Suite 4

Buena Park, California 90620

Attention: Mr. Claro Samson, Jr., President

 

Company:

 

StarMed Group, Inc.

2029 Century Park East, Suite 1112

Los Angeles, California 90067

Attention: Herman H. Rappaport, President

 

d.            Waiver. A waiver by either party of any of the terms and
conditions of this Agreement in any instance shall not be deemed or construed to
be a waiver of such term or condition for the future, or of any subsequent
breach thereof, nor shall it be deemed a waiver of performance of any other
obligation hereunder.

 

e.            Entire Understanding. This Agreement and any exhibits attached
hereto contain the entire understanding of the parties hereto relating to the
subject matter contained herein, and supersede all prior and collateral
agreements, understanding, statements and negotiations of the parties. This
Agreement can only be changed, modified, amended, rescinded or supplemented by a
written agreement executed by both parties.

 

f.             California Law. This Agreement shall be construed and enforced in
all respects according to the laws of the State of California.

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g.            Attorney’s Fees. Should either party institute any action or
proceeding, including without limitation arbitration, in connection with,
relating to or arising out of this Agreement, the prevailing party in any such
action or proceeding shall be entitled to receive from the other party all costs
and expenses, including reasonable attorney’s fees, incurred in connection with
such action or proceeding.

 

h.              Disputes. For all disputes, claims or controversies arising in
connection with, relating to, or arising out of this Agreement, the parties
agree to first attempt to resolve such dispute, claim or controversy by
non-binding mediation. The mediation shall be conducted by a mediator agreed
upon by the parties. If the parties are unable to resolve their dispute, claim
or controversy within thirty (30) days after a party’s request for mediation,
then except as otherwise provided in Section 7 of this Agreement, all disputes,
claims or controversies arising in connection with, relating to, or arising out
of this Agreement, shall be settled by arbitration in accordance with the
arbitration rules and procedures of JAMS, to the extent such rules and
procedures are not inconsistent with the provisions set forth in this Agreement,
and judgment on the award rendered may be entered in any court having
jurisdiction thereof. Such arbitration shall be held in Los Angeles County,
California. The arbitrator shall make written findings of fact and conclusions
of law. The arbitrator shall have no authority to make conclusions of law or an
award that could not have been made by a court of law, and shall have no right
to make any award of punitive damages. All costs relating to the arbitration
shall be borne equally by the parties, other than their own attorney’s and
experts’ fees. The arbitrator shall award to the prevailing party all costs and
expenses, including reasonable attorney’s fees, as provided above in Section
9.g. If either party to this Agreement initiates legal proceedings against the
other party, other than arbitration in accordance with the rules of the American
Arbitration Association as described above, the prevailing party shall be
allowed such costs and reasonable attorneys’ fees as the court may allow.

 

i.             Interpretation of Agreement. The parties acknowledge and agree
that because all parties and their attorneys participated in negotiating and
drafting this Agreement, no rule of construction shall apply to this Agreement
that construes any language, whether ambiguous, unclear or otherwise, in favor
of, or against any party by reason of that party’s role in drafting this
Agreement.

 

j.             Additional Acts. The parties hereto agree to perform such other
acts, and to execute and file such additional documents, as may be required from
time to time to carry out the provisions of this Agreement or the intentions of
the parties.

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IN WITNESS WHEREOF, this Agreement is executed effective as of the date and year
first set forth above.

 

“COMPANY”

“MSU”

 

STARMED GROUP, INC.,

MANAGEMENT SERVICES UNLIMITED,

a Nevada corporation

 

 

By:

/s/ Herman Rappaport

By:

/s/ Claro Samson, Jr.

 

 

Herman H. Rappaport, President

Claro Samson, Jr., President

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Exhibit A

 

Business Associate Agreement

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