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EXHIBIT 10(ggg)
* THIS INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
ADMINISTRATIVE SERVICES AGREEMENT
This ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement"),
effective the 22nd day of October, 1997, by and between VFD of Pennsylvania,
Inc., a Delaware corporation ("VFD of PA"), and Poller Dental Centers, P.A., a
New Jersey professional corporation (the "P.C.").
W I T N E S S E T H:
WHEREAS, the P.C. is engaged in the business of providing,
among other things, dental services and related activities in the State of New
Jersey (the "Practice");
WHEREAS, the P.C. desires to obtain the benefit of VFD of PA's
expertise in the administration of practices similar to the Practice;
WHEREAS, the P.C. desires to obtain from VFD of PA, and VFD of
PA desires to provide to the P.C., certain premises and certain physical assets,
furniture and equipment needed to operate the Practice; and
WHEREAS, VFD of PA and the P.C. wish to enter into this
Administrative Services Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein set forth, the parties hereto, intending
to be legally bound, hereby agree as follows:
ARTICLE 1
RELATIONSHIP OF PARTIES
1.1 Responsibilities of Parties. The parties agree that the
P.C. will provide, and shall be solely responsible for providing, all
professional services for the Practice and VFD of PA will be responsible only
for business, administrative and non-professional services (as further described
in this Agreement). Nothing contained in
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this Agreement shall be construed as permitting or providing for the provision
by VFD of PA of the professional services of the Practice, which services shall
at all times be the sole responsibility of the P.C. or permitting VFD of PA to
exercise control over the Practice in violation of New Jersey Statute 45:6-19;
provided, however, that pursuant to its engagement hereunder, VFD of PA shall be
the exclusive provider of all administrative services and shall control all
aspects of the P.C.'s business other than those aspects which relate directly to
the provision of dental services. Without limiting the generality of the
foregoing, the P.C. shall be solely responsible for all activities described in
Section 2.4 of this Agreement.
1.2 Relationship of Parties. The P.C. and VFD of PA are not
joint venturers, partners, employees or agents of each other and, except as
provided herein, neither party shall have any authority to bind the other.
1.3 Practice. The P.C. agrees to conduct the Practice in
compliance with all applicable laws, rules and ordinances, including with
respect to the licensing and certification of its providers.
ARTICLE 2
SERVICES OF VFD of PA
2.1 Covered Services. VFD of PA, unless otherwise prohibited
by law, shall control all aspects of, and provide to the P.C., the following
services (such services are hereinafter referred to collectively as the "Covered
Services"):
a. General. Supervision, conduct and administration of the
general business administrative services required by the P.C. in connection with
the P.C.'s operation of its Practice.
b. Personnel. VFD of PA will employ the personnel (other
than dentists, dental hygienists and dental auxiliaries, collectively, the
"Professional Personnel") needed to operate and support the business aspects of
Practice, such as receptionists and secretarial, clerical, purchasing and
marketing personnel (collectively, the "Administrative Personnel"). VFD of PA
shall have the sole and exclusive responsibility for determining the salaries
and fringe benefits of all Administrative Personnel provided hereunder, and for
paying such salaries and providing such fringe benefits. In recognition of the
fact that the
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Administrative Personnel provided to the P.C. under this Agreement may from time
to time perform services for others, this Agreement shall not prevent VFD of PA
from performing such services for others or restrict VFD of PA from so using the
Administrative Personnel provided to the P.C. under this Agreement. VFD of PA
will make every effort consistent with sound business practices to honor the
specific requests of the P.C. with regard to the assignment of VFD of PA's
employees to the performance of services for the P.C. Further, VFD of PA, in its
sole discretion, may require each of its employees assigned to the P.C. to
perform several of the aforedescribed functions and duties simultaneously. VFD
of PA will advise the P.C. on the establishment of, and participation in,
incentive and profit sharing plans for the P.C.'s staff to reward them for
increased productivity in the Practice.
c. Professional Personnel. Establish guidelines for the
selection, hiring and firing of the Professional Personnel by the P.C. and
recruit and evaluate prospective Professional Personnel; provided, however, that
all of the Professional Personnel shall be employees of or independent
contractors to the P.C.
d. Training. Training of all Administrative Personnel and
arranging for training and continuing education for Professional Personnel.
e. Administrative and Fiscal Services. Provision of
general administrative, business and fiscal services to the P.C. in connection
with the operation of the Practice, including patient xxxxxxxx, collecting
xxxxxxxx, accounting, auditing (by a certified public accountant selected by VFD
of PA with the approval of the P.C., which approval shall not be unreasonably
withheld or delayed), bookkeeping, budgeting, record keeping, accounts
receivable and accounts payable processing, electronic data processing and such
other services as the P.C. may from time to time require.
f. Annual Budget. Prepare, in reasonable detail, annual
operating and capital budgets for the P.C. which shall be delivered to the P.C.
within thirty (30) days after the end of each fiscal year, with VFD of PA
retaining final authority with respect to budget items including, without
limitation, with respect to compensation and payments to the Professional
Personnel and Administrative Personnel.
g. Patient Records. Maintenance of patient records (which
shall at all times remain the property and
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under the control of the P.C.) and provision of record retrieval and monitoring
services to assist the P.C. in utilization and quality assurance reviews in
accordance with instructions and guidelines issued by the P.C.
h. Quality Control. Development of appropriate quality
control programs, including performance standards, sampling techniques for case
review, and preparation of appropriately documented studies.
i. Marketing, Development and Program Negotiation.
Marketing of the professional services provided by the P.C. to potential
patients, facilities, health maintenance organizations, insurance companies,
self-insured employer health plans and other various third-party payors (the
"Marketing Services"). The Marketing Services to be provided by VFD of PA may
include, but are not necessarily limited to, (i) preparation of marketing
material and brochures and responses to requests for proposals, (ii) the placing
of advertisements or articles in magazines, newspapers, other publications and
any and all media determined by VFD of PA to be beneficial to the P.C., (iii)
undertaking telemarketing campaigns and (iv) the holding of seminars. VFD of PA
acknowledges that the P.C. is also a party, by assignment, to that certain
Public Relations Agreement dated August 1, 1997 with Union Marketing Associates,
Inc. ("Union"), pursuant to which Union provides certain active public relations
and consulting services, as more fully described therein. VFD of PA shall also
negotiate and secure contracts with self-insured employer health plans,
third-party payors, health maintenance organizations, managed care companies and
any other institution, facility or organization that may use the services that
the P.C. is qualified to provide and may seek the input of the P.C. in such
negotiations as needed or appropriate.
j. Supplies, Inventory and Equipment. Provision of
purchasing services on behalf of the Practice for inventory and supplies
reasonably necessary for the efficient operation of the Practice. VFD of PA
shall be responsible for maintaining the P.C.'s inventory on behalf of the P.C.;
provided, however, that title to and control over all dental inventory,
equipment and supplies shall be in the name of the P.C. All equipment or
furnishings not used in the provision of professional services (the "Leased
Assets") required by the Practice shall be made available by VFD of PA to the
P.C. VFD of PA shall secure maintenance and repair services for the dental
equipment.
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k. Janitorial and Maintenance Service. Arrangement of
janitorial, grounds and maintenance and repair services for the P.C. and its
equipment and furnishings.
l. Malpractice Insurance. Assistance to the P.C. in
obtaining malpractice coverage for the P.C.
m. Contracts with Facilities/Programs. Contracts with
facilities and programs serviced by the Practice shall be in the name of the
P.C. VFD of PA shall serve as contracting agent for the P.C. in connection with
such facility or program contracts.
n. Protecting Goodwill. Take all necessary steps to
preserve and protect the reputation and goodwill associated with the P.C.,
including assistance, if requested, in the monitoring of utilization and quality
of services provided by the P.C., and shall assist the P.C. to take all steps
necessary to remedy any and all deficiencies in the efficiency or the quality of
the services provided. This section shall not be construed as permitting VFD of
PA to influence or control the professional aspects of the Practice or the
Professional Personnel.
o. Operations and Regulatory Reports. Deliver to the P.C.
operations reports containing such information as the P.C. may reasonably
request. VFD of PA shall prepare all written reports and information that shall
be lawfully required by any government body or agency having jurisdiction over
the Practice or the P.C. The P.C. shall review and approve all such required
reports and/or information before any dissemination of the same.
p. Processing Disputes. Administer and process all
disputes, grievances and complaints between the P.C. and all third parties,
subject at all times to the review and final approval of the P.C.
q. Government Regulations; Licenses. To the extent known
and material to the operation of the P.C. and the Practice, VFD of PA shall
promptly notify the P.C. of any changes which may occur in relevant laws or
regulations of any government, governmental body or agency having jurisdiction
over the Practice or the P.C. The foregoing shall not in any way limit the
P.C.'s continuing professional and legal responsibility to comply with, and be
aware of, all licensing, regulatory, professional or other requirements
applicable to individuals licensed to provide dental services.
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r. Advances to the P.C. VFD of PA shall make advances to
the P.C. as provided by Section 5.3 herein. Such advances shall bear a
reasonable rate of interest taking into account VFD of PA's cost of money, as
mutually agreed to by VFD of PA and the P.C., payable monthly.
The Covered Services shall include assumption of all
obligations of the P.C. to provide administrative services to Professional
Personnel who are not employed by the P.C. VFD of PA may perform the Covered
Services directly or by reimbursing the P.C. for the cost of any Covered
Services.
2.2 Performance of Services. VFD of PA is hereby expressly
authorized to perform the Covered Services hereunder in whatever reasonable
manner it deems appropriate to meet the day-to-day business administrative needs
of the Practice. It is understood and agreed that VFD of PA will perform some of
the Covered Services for the P.C. at a centralized location.
2.3 Events Excusing Performance. VFD of PA will not be liable
to the P.C. for failure to perform any of the services required herein in the
event of strikes, lockouts, calamities, acts of God, unavailability of supplies
or other events over which VFD of PA has no control for so long as such event
continues and for a reasonable period of time thereafter.
2.4 Excluded Services. The parties hereto expressly
acknowledge that the provision of all professional services, including but not
limited to, dental services by the P.C., shall be separate and independent from
the provision of administrative, fiscal and support services by VFD of PA, and
the P.C. shall be solely and exclusively responsible for all professional
services rendered to patients of the Practice. Without limiting the generality
of the foregoing, the parties acknowledge that the P.C. shall be responsible for
setting professional standards of the Practice and shall be responsible for the
employment and discharge of all Professional Personnel.
2.5 Use of Name. VFD of PA hereby grants to the P.C. a
nontransferable, nonexclusive license to use the proprietary name "Valley Forge
Dental Associates" and any other proprietary names used by VFD of PA and used by
the P.C. in connection with the Practice along with any and all trademarked
symbols for the term of this Agreement (the "License"). All applicable common
law and statutory rights in the proprietary name "Valley Forge Dental
Associates" and any other proprietary names owned by VFD of PA and used by
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the Practice and their accompanying symbols, including, but not limited to,
rights relating to trademarks, service marks, patents and copyrights shall be
and remain the sole property of VFD of PA. The P.C. shall have no right, title
or interest in any such proprietary rights.
ARTICLE 3
PROPRIETARY INTEREST AND RIGHTS OF VFD of PA
3.1 Competition. During the term of this Agreement, neither
the P.C. nor any shareholder of the P.C. shall, directly or indirectly, own an
interest in, administer, manage, advise, assist, operate, join, control,
participate in, or be connected in any manner with any corporation, partnership,
proprietorship, firm, association, person or entity providing dental services or
administrative services in competition with the P.C. or VFD of PA.
3.2 Confidentiality. The P.C. acknowledges and agrees that VFD
of PA is entitled to prevent its competitors from obtaining and utilizing its
trade secrets. The P.C. agrees to hold VFD of PA's trade secrets in strictest
confidence and not to disclose them or allow them to be disclosed directly or
indirectly to any person or entity other than persons engaged by the P.C. or VFD
of PA. The P.C. acknowledges its fiduciary obligations to VFD of PA and the
confidentiality of its relationship with VFD of PA and of any information
relating to the services and business methods of VFD of PA which it may obtain
during the term of this Agreement. The P.C. shall not, either during the term of
this Agreement or at any time after the expiration or sooner termination of this
Agreement, disclose to anyone other than employees or independent contractors of
the P.C. or VFD of PA any confidential or proprietary information or trade
secret obtained by the P.C. from VFD of PA. The P.C. also agrees to place any
persons to whom said information is disclosed for the purpose of performance
under legal obligation to treat such information as strictly confidential.
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ARTICLE 4
BILLING AGENT AGREEMENT
4.1 Professional and Other Fees. The P.C. shall, in
consultation with VFD of PA but in the ultimate discretion of the P.C.,
establish a schedule of fees and charges for the Practice's professional
services or shall comply with the schedule of fees and charges set forth in the
health care contracts pursuant to which the P.C. provides services through its
Professional Personnel.
4.2 Xxxxxxxx. Xxxxxxxx of the Practice for all services
rendered by the P.C. shall be by and in the name of the P.C.
4.3 Billing and Collection Agent. VFD of PA shall serve as
billing and collection agent for the P.C. VFD of PA shall establish a depository
bank account on behalf of the Practice and will deposit into such account
collected fees generated from the Practice. As provided for in standing
instructions issued by the P.C. to the bank where such depository account is
located, VFD of PA may withdraw all monies daily from said bank account for
processing at a central location to be used for payment of the P.C.'s expenses,
including the amounts payable to VFD of PA pursuant to Section 5.1 hereof and
any amounts advanced to the P.C. pursuant to Section 5.3 hereof. Said processing
will consist of establishing and maintaining a book account for the P.C. showing
all fee collections and expense disbursements made by VFD of PA at the P.C.'s
request. VFD of PA will provide the P.C. with periodic financial statements for
the Practice reflecting such processing.
4.4 Reports. VFD of PA shall provide the P.C. with financial
statements for the Practice, stating gross revenues and amounts to be paid to
VFD of PA pursuant to Section 5.1 hereof.
4.5 Security for VFD of PA's Compensation. To secure the
prompt and orderly payment of any amounts owing by the P.C. to VFD of PA
pursuant to this Agreement, the P.C. hereby agrees to grant, at the request of
VFD of PA, a security interest to VFD of PA or to a third-party designated by
VFD of PA, in all its existing and hereafter created accounts receivable, all
cash or non-cash proceeds therefrom, all insurance policies and proceeds
relating thereto, and all of the P.C.'s rights as an unpaid provider of
services, whether now existing or hereafter created or acquired (collectively,
the "Collateral"). The P.C. agrees to execute any and all documents necessary to
perfect such
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security interest, including but not limited to, UCC financing statements.
ARTICLE 5
FEES
5.1 Fees Payable to VFD of PA. The P.C. agrees to pay VFD of
PA for the provision of the Covered Services and the License and all other
services provided hereunder as follows:
a. A monthly license fee for the License in the amount of
$* per clinic location;
b. Monthly reimbursement of all of VFD of PA's direct
costs (i.e. payroll, supplies, travel, etc.) allocated to the P.C., in
VFD of PA's discretion;
c. Monthly reimbursement of all of VFD of PA's direct
costs of acquiring and/or leasing and maintaining the Leased Assets
provided to the Practice;
d. Monthly reimbursement of all of VFD of PA's direct
costs incurred in the provision of purchasing services and maintaining
furniture, fixtures and equipment provided to the Practice;
e. Monthly reimbursement of all of VFD of PA's direct
costs incurred in the provision of the Marketing Services, with a ten
percent (10%) markup for overhead and administration and a fifteen
percent (15%) markup for profit on such costs; and
f. A per clinic location administrative fee (the
"Administration Fee") of $* per year payable in equal monthly
installments of $* per month on the first day of each month of this
Agreement and subject to renegotiation by either party hereto on each
anniversary of this Agreement. The Administration Fee is intended to
compensate VFD of PA for its unallocated overhead and a reasonable
profit.
5.2 Fair and Reasonable Compensation of the P.C. for Services
of Professional Personnel. The parties hereto agree that the P.C. shall have the
right to fairly and
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*This information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Securities and
Exchange Commission.
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reasonably compensate its Professional Personnel for their professional
services. Compensation for the Professional Personnel shall be determined in
accordance with employment agreements and other employment arrangements entered
into between the P.C., in consultation with VFD of PA, and the Professional
Personnel.
5.3 Remittances. To the extent the P.C. shall not generate
adequate revenues to meet the P.C.'s ongoing operating expenses, including the
compensation for professional services pursuant to Section 5.2 of this
Agreement, VFD of PA shall advance to the P.C. or arrange for such amounts as
may be required. To the extent that VFD of PA advances any funds to the P.C.
pursuant to this Section 5.3, such advances shall be evidenced by
interest-bearing demand note(s) from the P.C. in favor of VFD of PA and shall be
secured by the Collateral as provided in Section 4.5 hereof.
5.4 Periodic Adjustment of Compensation. The parties hereto
recognize that the Practice may change in size and scope over the term of this
Agreement which may necessitate adjusting the fees provided for herein.
Therefore, the parties shall review the compensation to VFD of PA no less
frequently than annually and more frequently at the request of VFD of PA or the
P.C., if changes in the business of the P.C. or services by VFD of PA warrant
such more frequent review, and may agree in writing to modification of the
compensation. Such review shall consider the scope of operations pursuant to
this Agreement at the time of review, the financial success of VFD of PA and the
P.C., changes in the purchasing power of money, the size and number of
facilities being supplied by VFD of PA, the scope of the Marketing Services, the
size of the Administrative Personnel workforce and the expenses and risks to the
respective parties of performing this Agreement.
ARTICLE 6
TERM AND TERMINATION
6.1 Term. Unless sooner terminated in accordance with Section
6.2 hereof, the term of this Agreement shall be for a period of forty (40) years
and thereafter this Agreement shall continue indefinitely until terminated in
accordance with Section 6.2(e) hereof.
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6.2 Termination. Notwithstanding any provision of this
Agreement to the contrary, this Agreement may be terminated as set forth below:
a. In the event of a material breach of this Agreement by
either party as a result of such party's gross negligence or fraud, the
other party may, at any time commencing sixty (60) days after written
notice of the breach has been given to the breaching party, terminate
this Agreement by delivery to the breaching party of a further written
notice of termination; provided, however, that if the breaching party,
prior to receiving such notice of termination, has begun and is
diligently continuing good faith efforts to cure such breach, this
Agreement shall remain in full force and effect;
b. If either party is determined by a court,
administrative body or peer review organization having jurisdiction, to
have engaged in conduct that results in material harm to the P.C. and
constitutes (i) a felony or other crime involving moral turpitude,
including fraud, theft, or embezzlement or (ii) a failure to act in an
ethical or professional manner, in keeping with accepted dental care
standards, then immediately upon notice by the other party;
c. If either party has engaged in any practice that
results in material harm to the P.C. and violates in any material
respect any federal, state or local law or regulation that is aimed at
protecting the public from coercion into treatment and preventing fraud
upon or abuse of public funding of health services, then immediately
upon notice by the other party;
d. If either party commences a voluntary case under
bankruptcy, insolvency or similar law, or any involuntary case is
commenced against either party under any bankruptcy, insolvency or
similar law and such involuntary case is not dismissed within thirty
(30) days after filing, then immediately upon notice from the other
party; or
e. After the initial forty (40) year term of this
Agreement, either party may also terminate this Agreement, with or
without cause, by giving the other written notice of termination not
less than one (1) year prior to the effective date of termination.
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6.3 Rights Upon Termination. The termination of this Agreement
shall not release or discharge either party from any obligation, debt or
liability which shall have previously accrued and remains to be performed upon
the date of termination.
ARTICLE 7
GENERAL PROVISIONS
7.1 Indemnification. Each party shall indemnify, hold harmless
and defend the other party from and against any liability, loss, claims,
lawsuits, damages, injury, cost, expense or other detriment arising out of or
incident to the performance or nonperformance under this Agreement by such
indemnifying party, its employees, Professional Personnel (in the case of the
P.C.), Administrative Personnel (in the case of VFD of PA) and agents,
including, without limitation, all consequential damages and attorneys' fees,
provided, however, neither party shall be liable to the other under this Section
7.1 for any claim covered by insurance, except to the extent liability of the
party exceeds the amount of the coverage.
7.2 Assignment. The rights conferred upon the P.C. hereunder
may not be transferred or assigned without the prior written consent of VFD of
PA and any assignment in violation of this Section 7.2 shall be void. This
Agreement shall be assignable by VFD of PA.
7.3 Notices. All notices, requests or instructions hereunder
shall be in writing and delivered personally or sent by registered or certified
mail, postage prepaid, as follows:
(1) If to the P.C.:
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
(2) If to VFD of PA:
c/o Valley Forge Dental Associates, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No: (000) 000-0000
Either of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any
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such notice of change of address shall be effective only upon receipt. All
notices, requests or instructions given in accordance herewith shall be deemed
received on the date of delivery, if hand delivered, and five (5) business days
after the date of mailing, if mailed.
7.4 Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement between the parties hereto with
respect to the transactions contemplated hereby, and no modification hereof
shall be effective unless in writing and signed by the party against which it is
sought to be enforced.
7.5 Further Assurances. Each of the parties hereto shall use
such party's best efforts to take such actions as may be necessary or reasonably
requested by the other party hereto to carry out and consummate the transactions
contemplated by this Agreement.
7.6 Attorneys Fees. Each of the parties hereto shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
7.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey applicable to
agreements made and to be performed entirely within such State, without regard
to any conflict of laws principles which would apply the laws of any other
jurisdiction.
7.8 Article and Section Headings. The article and section
headings in this Agreement are inserted solely for convenience of reference and
are not a part of and are not intended to govern, limit or aid in the
construction of any term or provision hereof.
7.9 Waiver. The waiver of any covenant, condition or duty
hereunder by either party shall not prevent that party from later insisting upon
full performance of the same.
7.10 Amendment. No amendment in the terms of this Agreement
shall be binding on either party unless in writing and executed by the duly
authorized representatives of each party.
7.11 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and both of which taken
together shall constitute one and the same instrument.
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7.12 Severability. In the event that any provision of this
Agreement shall be held to be void or unenforceable for any reason, the parties
shall negotiate in good faith for a period of up to one hundred eighty (180)
days in order to arrive at a mutually acceptable substitute provision.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the date
first above written.
POLLER DENTAL CENTERS, P.A.
By: /s/Xxxxx Xxxxxxxxxx, D.D.S.
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Name: Xxxxx Xxxxxxxxxx, D.D.S.
Title: President
VFD OF PENNSYLVANIA, INC.
By: /s/W. Xxxx Xxxxxxx
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Name: W. Xxxx Xxxxxxx
Title: Vice President
