Exhibit 10.2
Dental Cooperative
Management Services Agreement
This Management Services Agreement (the "Agreement") is effective on
the date specified in Section 7.12, by and among DENTAL COOPERATIVE, INC., a
Utah corporation ("Dental Cooperative" or "Cooperative"); the Provider; and
those natural persons, if any, who own Provider ("Dentist(s)"), all as specified
on the signature page. THIS AGREEMENT SUPERCEDES ANY AND ALL PRE-EXISTING
AGREEMENTS OR UNDERSTANDINGS AMONG THE PARTIES, WHETHER IN WRITING OR OTHERWISE.
ANY SEPARATE WRITING PURPORTING TO ALTER THE UNDERSTANDINGS SET FORTH BELOW OR
EXEMPT A PROVIDER FROM ANY OF THE UNDERSTANDINGS BELOW MUST BE IN WRITING AND
REFERENCE EXPLICITLY THE INTENT TO MODIFY THIS AGREEMENT.
RECITALS
WHEREAS, Dental Cooperative has contemporaneously entered into an
Affiliate Member Practice Purchase Agreement (the "Member Agreement") whereby
Dental Cooperative is acquiring the Dental Practice.
WHEREAS, payment for the Dental Practice will occur over a five (5)
year period.
WHEREAS, during this five (5) year period, Xx. Xxxxx will be the
Provider to independently manage and maintain the Dental Practice, for which a
percent of the Margin relating to the operating of the Dental Practice will be
paid to Dentist(s) and a percent of the Margin will be retained by Dental
Cooperative, all as further described below.
NOW, THEREFORE, in consideration of the mutual conditions,
representations and covenants contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement and each of the
Operative Documents (unless otherwise defined herein or therein), the following
terms shall have the following meanings:
"Base Collections" means an amount selected by Provider that is not
greater than the actual Collections of the Dental Practice for a particular
consecutive twelve (12) month period within the last twenty-four (24) months
that is agreed with Dental Cooperative and is set forth on the Signature Page
hereof (the "Base Collections Period"). Notwithstanding this definition appears
in this Agreement as of this date and applies to Provider, Dental Cooperative
reserves the right to amend this definition in connection with any Agreement
with any other Provider, including a successor to the Provider covered by this
Agreement.
"Closing" and "Closing Date" have the respective meanings set forth in
the Member Agreement.
"Collections" means the gross revenues of the Dental Practice arising
from the sale of any and all services and/or products in a given period
accounted for on a cash basis, representing amounts paid by patients or by
insurers or their representatives for services or products and any other revenue
of the Dental Practice. Collections includes, but is not limited to, funds
received from the collection of accounts receivable after the effective date of
this Agreement, but which accounts receivable existed prior to the effective
date hereof.
"Confidential Information" has the meaning set forth in Section 7.1.
"Dental Cooperative Margin Allocation" means an amount, calculated each
calendar month, that is equal to fifteen percent (15%) of the Margin less two
thousand two hundred sixty-three dollars ($2,263) per month; provided, however,
that in no event will this be an amount that is less than six percent (6%) of
Base Collections less two thousand two hundred sixty-three dollars ($2,263) per
month.
"Dental Office" means the location or facility specified on the
Signature Page (or in an attachment thereto) from which the Provider provides
Dental Services. This term will include, if applicable, mobile facilities.
"DPCA" means Dental Patient Care America, Inc., a Utah corporation,
which currently owns all of the issued and outstanding stock of Dental
Cooperative.
"Dental Practice" means the business of providing Dental Services at
the Dental Office and all tangible and intangible assets of that business,
including but not limited to cash on hand and accounts receivable, and all
licenses and leaseholds needed for the conduct of such business.
"Dental Professional" means any licensed dental professional working at
a Dental Practice, whether an independent contractor or employee, including any
dentist, dental hygienist, anesthetist and other such position for which
licensure is required by law, who is employed or otherwise retained by the
Provider to provide Dental Services to patients.
"Dental Services" means all dental and related health care services,
and the sale of related dental products, including without limitation,
examination, diagnosis, preventive care, restoration, surgery and other therapy.
"Dentist(s)" has the meaning noted in the introduction to this
Agreement.
"Dentist's Margin Allocation" shall mean an amount calculated each
calendar month that is equal to the monthly Margin less the amount of the Dental
Cooperative Margin Allocation for the calendar month in question.
"Historic Collections" means an amount selected by Provider that is
equal to actual highest level of Collections of the Dental Practice for a
particular consecutive twelve (12) month period within the last twenty-four (24)
months that is agreed with Dental Cooperative and is set forth on the Signature
Page hereof.
"Indemnified Party" and "Indemnifying Party" have the meanings set
forth in Section 7.2(c).
"Loan" means the loan that was arranged for by Dental Cooperative and
the proceeds of which were used as payment towards the purchase price of the
Dental Practice. .
"Margin" means the provider's cash Collections less operating expenses
(excluding compensation to Provider or other Dentist(s)) using Dental
Cooperative's method of accounting (which must be in accordance with GAAP for
cash accounting) that is consistently applied.
"Market Price" means, as of a specific date, the average of the last
reported sale prices for the last fifteen trading days as officially reported by
the principal securities exchange on which DPCA's common stock is listed or
admitted to trading during said period, or, if DPCA's common stock is not listed
or admitted to trading on any national securities exchange during said period,
the average closing bid price of the common stock on the Nasdaq Stock Market
System or reported on the NASD's OTC Bulletin Board or the Pink Sheets or, if
DPCA's common stock is not quoted on Nasdaq, the OTC Bulletin Board or the Pink
Sheets, as determined in good faith by resolution of the board of directors of
the DPCA, based on the best information available to it.
"Material Adverse Change" means any effect or change that would be (or
could reasonably be expected to be) materially adverse to the business, assets,
condition (financial or otherwise), operating results, operations, or business
prospects of the Dental Practice (regardless of whether or not such adverse
effect or changes can be or has been cured at any time or whether Dental
Cooperative has knowledge of such effect or changes on the date hereof or at any
time hereafter), including any adverse changes, event, development, or effect
arising from or relating to the taking of any action contemplated by this
Agreement and the other agreements contemplated hereby.
"Member Agreement" Is defined in the recitals.
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"Minimum Margin" means a Margin not less than forty percent of
Collections during monthly and annual accounting periods.
"Operative Document" means each of this Agreement, and every other
document or certificate to be executed and delivered between or among the
parties in connection with the transactions described herein and in the Member
Agreement.
"Professional Standards Committee" is an advisory committee that is
appointed by Dental Cooperative's board of directors.
"Provider" has the meaning noted in the introduction to this Agreement.
"State" means the jurisdiction(s) in which Dentist(s) is licensed to
provide Dental Services.
Except as otherwise explicitly stated, all financial information
referenced in the above definitions shall be provided or determined, as
applicable, using a cash basis of accounting.
ARTICLE 2
MEMBER SERVICES; MARGIN ALLOCATION
Section 2.1 As a member of the Cooperative, Provider is entitled to
participate, at Provider's sole discretion, in all member services offered by
the Cooperative to members in good standing. Member services may include:
(a) group marketing services such as, but not limited to:
group contracts, dental plans, direct marketing, referral, media and
credit services;
(b) opportunities to participate in centralized dental
supplies and equipment, lab services and other purchasing programs;
(c) quality assurance and continuing education programs;
(d) opportunities to participate in group insurance pools for
health, disability, death and other applicable insurance; and
(e) opportunities to participate in group incentive and bonus
programs.
Dental Cooperative reserves the right to change, modify or terminate
any or all of the member services at any time upon 30 days prior written notice
to Dentist.
Section 2.2 Margin Allocation. In consideration for Provider's services
in managing the Dental Practice and the provision of dental services to the
practice's customers, Provider will retain the Dentist's Margin Allocation each
calendar month during the term of this Agreement which amount shall be paid to
Dentist(s). The remaining portion of the monthly Margin shall be transferred to
Dental Cooperative as payment of the Dental Cooperative Margin Allocation in the
manner agreed under Section 2.3. Notwithstanding the foregoing, under no
circumstances shall the monthly amount transferred by Provider to Dental
Cooperative pursuant to this Section 2.2 be calculated at a Margin amount that
is less than the Minimum Margin.
At the end of each calendar quarter, Dental Cooperative will compare
actual Collections during the just concluded three (3) month period compared to
actual Dental Cooperative Margin Allocation and other amounts transferred. If
the total amount of Dental Cooperative Margin Allocation and other amounts
transferred to Dental Cooperative in the just concluded quarter is less than the
Dental Cooperative Margin Allocations, as may be adjusted as per the prior
paragraph, an adjustment payment from Provider will be due by the 15th of the
month following the end of the quarter in question. If the total of Dental
Cooperative Margin Allocation, as may be adjusted as per the prior paragraph,
transferred to Dental Cooperative in the just concluded calendar quarter is more
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than as agreed for the same quarter, Dental Cooperative shall account for the
adjustment by applying a credit to the next quarter's Dental Cooperative Margin
Allocation, as may be adjusted as per the prior paragraph.
A 5% late fee shall be assessed for any Dental Cooperative Margin
Allocation, as may be adjusted as per the first paragraph of this Section 2.2,
that is not transferred within twenty (20) days of the due date. In addition,
any Dental Cooperative Margin Allocation, as may be adjusted as per the first
paragraph of this Section 2.2, amount that is unpaid for more than thirty (30)
days after its due date shall bear interest at the rate of 15% per annum.
Section 2.3 Transfer of Retained Dental Cooperative Margin Allocation.
Provider shall make necessary arrangements with Dental Cooperative and that are
reasonably acceptable to Dental Cooperative to institute an automatic transfer
mechanism to transfer the monthly Dental Cooperative Margin Allocation and other
amounts payable by Provider to Dental Cooperative, if any, for the immediately
prior month from Provider's bank account to Dental Cooperative on or before the
twentieth (20th) day of each month unless otherwise expressly agreed with Dental
Cooperative.
Section 2.4 The Operative Documents. Concurrently with the execution of
this Agreement, the Provider, Dental Cooperative and the Dentist(s) agree to and
will execute the Operative Documents. Each of the Operative Documents is an
integral part of the agreement described herein, and the effectiveness of each
Operative Document is a condition to the effectiveness of this Agreement and the
other Operative Documents.
ARTICLE 3
PROFIT-SHARING OPPORTUNITIES
Dental Cooperative may create one or more incentive profit sharing
programs from time to time, which will provide for profit sharing payments to
its members and bonus payments for significant contributions to the success of
the cooperative venture. These plans will be designed, implemented, administered
and terminated in the sole discretion of Dental Cooperative.
ARTICLE 4
GENERAL DUTIES AND COVENANTS OF PROVIDER
AND DENTIST(S)
Section 4.1 Dental Services. The Provider shall maintain at all times
an adequate staff with such Dental Professionals as may be necessary to carry
out the practice of dentistry efficiently on behalf of the Provider and shall
provide professional Dental Services to patients in compliance at all times with
the ethical standards, laws and regulations applicable to the dental profession.
Section 4.2 Licensure. The Provider shall ensure that Dentist(s) and
each Dental Professional associated with the Dental Practice are duly licensed
by the State and in compliance with all applicable federal and local laws.
Provider shall promptly provide copies of current licenses of all Dental
Professionals at the Pre-Closing and thereafter on an annual basis.
Section 4.3 Notice of Actions. Provider shall comply with and maintain
its good standing under the laws of the State and all applicable federal laws
and regulations. Provider shall immediately inform Dental Cooperative in the
event that any disciplinary or professional malpractice action is initiated
against Provider, Dentist(s) or any Dental Professional associated with the
Dental Practice.
Section 4.4 Active Practice; Exclusive Use of Dental Offices. The
Provider shall engage in the practice of dentistry at the Dental Office, whether
through the efforts of Dentist(s) or other Dental Professionals, and the Dental
Office shall be used exclusively for the practice of dentistry. The Dental
Practice conducted at the Dental Office shall be conducted solely by Dentist(s)
and other Dental Professionals associated with Provider, and Provider shall not
permit any other Dentist(s) or dental professional to use or occupy the Dental
Office without the prior written consent of Dental Cooperative.
Section 4.5 Employment of Dental Professionals. The Provider shall only
employ and contract with licensed Dental Professionals who meet applicable State
regulatory and licensing guidelines. Prior to Closing, the Provider shall enter
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into an agreement with each Dental Professional consistent with the terms of
Article 4 of this Agreement, and in particular that binds each Dental
Professional to covenants not to compete and not to solicit identical to the
covenants contained in Article 4 hereof, to become effective upon termination of
such Dental Professional's relationship with Provider. Evidence of such
agreements shall be provided to Dental Cooperative at or prior to Closing.
Provider shall continue to require that such provisions be agreed to in a
written agreement with any Dental Professional who is hired by Provider.
Section 4.6 Insurance.
(a) Provider shall maintain comprehensive professional
liability insurance on its own behalf and covering all Dentist(s) and Dental
Professionals associated with the Dental Office as insureds, with limits of not
less than $100,000.00 per claim and $300,000.00 per Dental Professional, and a
separate limit for Provider. Provider's written agreement with each Dental
Professional (see Section 4.5 above) shall require the Dental Professional to
obtain continuing insurance coverage after termination of the Dental
Professional's relationship with Provider, if such insurance is on a claims made
basis, through the applicable statute of limitations for dental malpractice
actions.
(b) Provider shall maintain usual and reasonable general
commercial liability and property insurance on the assets of the Dental Practice
with reputable carriers. Dental Cooperative shall be named as an additional
insured or first loss payee on such insurance policies.
(c) Provider agrees to cooperate with Dental Cooperative in
Dental Cooperative's efforts to obtain and maintain keyman life insurance and
disability insurance on Dentist(s) during the term of this Agreement in the
amounts that Dental Cooperative deems appropriate. Dental Cooperative shall be
named as primary beneficiary of such insurance and Dental Cooperative shall pay
the costs of such insurance.
(d) Each insurance policy required by this Section shall be
with a carrier and in a form reasonably acceptable to Dental Cooperative,
including a waiver of subrogation clause in favor of Dental Cooperative. At the
Pre-Closing, Provider shall provide Dental Cooperative with certificates
evidencing such insurance coverage, and such insurance policies shall prohibit
any cancellation, termination or modification of such policies without giving
thirty (30) days' prior written notice to Dental Cooperative. Thereafter,
Provider shall provide annual updates of such certificates to Dental
Cooperative.
Section 4.7 Medicare/Medicaid Patients. Provider shall not submit a
claim to Medicare or Medicaid for any Dental Services provided to a patient who
is a Medicare or Medicaid beneficiary without the prior written consent of
Dental Cooperative, which consent shall not unreasonably be withheld.
Section 4.8 Financial Information and Payroll taxes. Provider shall
provide the following financial information to Dental Cooperative:
(a) On a calendar monthly basis, within fifteen (15) business
days after the end of such month, Provider shall provide a report to Dental
Cooperative in the form attached hereto in Appendix 1, as may be modified by
Dental Cooperative from time to time, setting forth total patient xxxxxxxx,
Collection, Margin and other information described in that form.
(b) Within twenty (20) days after the end of each calendar
quarter and calendar year during the term of this Agreement, Provider will
provide financial statements for the immediately prior calendar quarter and
year. These financial statements shall consist of a balance sheet, statement of
operations, and statement of cash flows. The financial statements shall be
prepared according to generally accepted accounting principles (GAAP) utilizing
the accrual method of accounting and shall be auditable. Provider will work with
Dental Cooperative so that the financial information, together with source
documentation, will be available to Dental Cooperative on a timely basis and in
an acceptable format for an audit.
(c) Provider shall pay all payroll and other employment taxes
to the applicable taxing authorities in connection with people working at the
Dental Practice and file all payroll related returns on a timely basis. Provider
shall maintain payroll related reports detailing all payrolls processed.
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Section 4.9 Right to Audit; Referral to Professional Standards Board.
Provider hereby grants Dental Cooperative the right to audit or have an
authorized representative audit all books and records of Provider, pertaining to
Collections, Margins and all other financial and Dental Practice information
during normal business hours of the Dental Practice, provided that Dental
Cooperative shall not unreasonably interfere with the Dental Practice. Moreover,
in the event of a malpractice claim or felony indictment against Dentist(s) or
the Provider, Dental Cooperative shall have the right to summon representatives
of the Professional Standards Board to audit the professional practices and
records of the Provider.
Section 4.10 Declining Collections.
(a) If for any reason Provider's monthly Collections decline
below the average monthly Base Collections, Dental Cooperative shall, upon
Provider's request, make available consulting services through the Professional
Standards Committee (or their designees) to review practice operations and to
recommend remedial actions to restore profitability. Provider shall pay the
actual cost of such consulting services.
(b) Outside professional review of the Dental Practice, at
Provider's expense, may be required by Dental Cooperative under either of the
following conditions:
(i) The amount of Provider's monthly Collections for
any month is less than sixty percent (60%) of the average monthly
Historic Collections.
(ii) The amount of Collections during any consecutive
three (3)-month period shall not be less than eighty percent (80%) of
three times the average monthly Historic Collections.
(c) If, as a result of the outside review provided under (a)
or (b), the Professional Standards Committee determines, in its sole discretion,
that the declines in Provider's Collections cannot be reasonably remediated,
Dental Cooperative may notify Provider that it is in breach of this Agreement,
which breach will constitute an event of default under this Agreement and will
result in termination of this Agreement and will discharge any future obligation
of Dental Cooperative to make payments to Provider hereunder or under the Member
Agreement.
Section 4.11 Declining Margins.
(a) If for any reason Provider's monthly Margins decline below
the Minimum Margin during any monthly period, then Dental Cooperative shall,
upon Provider's request, make available consulting services through the
Professional Standards Committee (or their designees) to review practice
operations and to recommend remedial actions to increase the Margin. Provider
shall pay the actual cost of such consulting services.
(b) Outside professional review of the Dental Practice, at
Provider's expense, may be required by Dental Cooperative under either of the
following conditions:
(i) The amount of Provider's monthly Margins declines
below thirty percent (30%) of Collections during any monthly period.
(ii) The amount of Provider's quarterly Margins
declines below forty percent (40%) of Collections during any quarterly
period.
(c) If, as a result of the outside review provided under (a)
or (b), the Professional Standards Committee determines, in its sole discretion,
that the declines in Provider's Margins cannot be reasonably remediated, Dental
Cooperative may notify Provider that it is in breach of this Agreement, which
breach will constitute an event of default under this Agreement and will
discharge any future obligation of Dental Cooperative to make payments to
Provider hereunder or under the Member Agreement.
Section 4.12 Further Assurances. To give further effect to the
transactions described herein, Provider and Dentist(s) shall execute and deliver
to Dental Cooperative such additional instruments as may be necessary or
advisable.
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Section 4.13 No Patient Referral Payments; Change in Laws. Nothing in
this Agreement or in the Operative Documents shall be construed as a requirement
of patient referrals from Provider to any other Dentist, or as compensation for
patient referrals from one Dentist to another. If any governmental agency or
court shall issue a ruling or decision that significantly affects the rights or
obligations of the parties under this Agreement, either party may give the other
party written notice of intent to amend this Agreement to address such change in
law. If this Agreement is not so amended within thirty (30) days after such
notice, either party may terminate this Agreement by written notice to the other
party.
Section 4.14 Practice of Dentistry. Provider and Dentist(s) will be in
control of all aspects of the actual practice of dentistry at the Dental Office
and shall be responsible for all patient diagnosis, treatment, therapy,
prescription of drugs, and for the creation and maintenance of all dental
patient reports and records. If any act or service herein required by the
Operative Documents to be performed by Dental Cooperative is construed by a
court of competent jurisdiction or by a State licensing authority to constitute
the unlawful practice of dentistry, the requirement to perform that act or
service by Dental Cooperative shall be deemed waived and unenforceable and shall
not constitute a breach or default by Dental Cooperative under any Operative
Document.
Section 4.15 Files and Records.
(a) Provider and Dentist(s) shall maintain control over all
patient dental records of the Dental Practice in accordance with established
professional guidelines and practices. In the event that title to the Dental
Practice has passed to Dental Cooperative and Dentist(s) are no longer running
the Dental Practice, then Dentist(s) and Provider agree to assign all patient
dental records, patient names and addresses and all other files and records
relating to the Dental Practice to such Dental Professionals as Dental
Cooperative may retain to operate the Dental Practice.
(b) Dental Cooperative shall have access to, and the right to
create lists of, patients names and addresses (as provided in the last sentence
of this Section 4.15), and the right to review and copy all accounting, billing,
patient medical records and collection records on the premises of the Dental
Office, either physically or through computer access to records that may be
maintained at a remote location.
(c) Provider shall provide Dental Cooperative with an updated
list of the names and addresses of the patients of the Dental Practice within 30
days of a request by Dental Cooperative.
(d) Dental Cooperative will be bound by confidentiality
agreements concerning patient dental records.
(e) Dental Cooperative desires access to patient billing
records for quality review purposes and to provide patients with access to other
valuable services and products available through Dental Cooperative. Dental
Cooperative may use patient names and addresses under three circumstances: (a)
as permitted by Provider; (b) if Provider is in default under or breach of this
Agreement, and (c) as described in Section 4.15(a).
(f) Notwithstanding any other provisions of this Agreement,
Dentist(s) and/or Provider shall not disclose to Dental Cooperative any HIPPA
protected health information where such disclosure would result in a violation
of the HIPPA privacy rules.
Section 4.16 Capital Expenditures.
(a) During the term of this Agreement, Provider shall not
enter into any lease, acquire new equipment or make any capital expenditure
without the advance written consent of Dental Cooperative, which consent shall
not be unreasonably withheld.
(b) Provider shall obtain non-disturbance/non-attornment
agreements in a form provided by Dental Cooperative from any lessor of equipment
or real property.
Section 4.17 Notice by Dentist(s) of Adverse Financial Condition.
Dentist(s) shall promptly provide to Dental Cooperative written notice of any
Material Adverse Change in Dentist(s)' financial condition measured against
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Dentist(s)' financial condition as set forth in the most recent financial
statements delivered to Dental Cooperative by Provider and/or Dentist(s)
pursuant to the terms of this Agreement.
Section 4.18 Payment of Current Liabilities. Provider shall pay all
bills and invoices within 30 days of receipt of the vendor invoice.
Notwithstanding the foregoing, Provider may withhold payment of any xxxx or
invoice that Provider believes is in error or otherwise has a bona fide reason
to dispute.
Section 4.19 Additional Liabilities. Provider shall not during the term
of this Agreement (i) incur any liabilities that encumber the Dental Practice
assets or (ii) incur any liabilities outside the ordinary and normal course of
business, without first obtaining the consent of Dental Cooperative, which
consent may be withheld in the sole discretion of Dental Cooperative.
Section 4.20 Illness. Dentist(s) will notify Dental Cooperative
immediately if a Dentist learns that a Dentist is suffering from a debilitating
or degenerative disease, which illness or condition would, based on known
medical probabilities, make performance of Dentist(s)'s obligations under this
Agreement difficult or impossible.
Section 4.21 Catastrophic Occurrences. In the event of an economic or
natural condition of such magnitude as to affect all businesses in the
geographic area of a Dental Practice, the parties will implement appropriate
steps to mitigate the impact of such occurrence on the obligations of both
parties under this Agreement.
ARTICLE 5
TERMINATION
Section 5.1 Term. The term of this Agreement will run until the earlier
of (i) the five (5) year anniversary of the effective date, (ii) the date the
Member Agreement is terminated if such agreement is terminated prior to the five
year anniversary of the effective date of this Agreement, (iii) the date of
Dentist's death, or (iv) the date this Agreement is otherwise terminate pursuant
to its terms.
Section 5.2 Effects of Termination.
(a) Payment of Amounts Earned. Upon termination of this
Agreement, any and all amounts earned by Dental Cooperative to the date of
termination will be the property of Dental Cooperative.
(b) Advances or Expenses. To the extent Dental Cooperative has
advanced any funds or paid any expenses of the Dental Practice as of the date of
termination of this Agreement, such amounts will be repaid by Provider, and
Dental Cooperative will have a lien on the Dental Practice for the payment of
such amounts.
ARTICLE 6
PURCHASE OPTION
Section 6.1 Purchase Option. At any time during the Term, Provider has
the option to purchase the Dental Practice as constituted on the date hereof,
but subject to the addition and removal of assets that may occur in the ordinary
course of business from and after the date of Closing.
Section 6.2 Method of Exercise. To exercise the purchase option,
Provider shall pay Dental Cooperative a purchase price equal to (i) a number of
shares of DPCA common stock equal to the number of shares of DPCA stock that
DPCA has previously issued or is obligated to issue in connection with the
acquisition of the Dental Practice and (ii) a cash amount equal to one percent
of the Collections during the period in which Provider managed the Dental
Practice under this Agreement. .
Section 6.3 Method of Exercise. The Option may be exercised, in whole
or in part, by written notice delivered by Provider to Dental Cooperative
accompanied by payment to Dental Cooperative of the full purchase price.
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Section 6.4 Transfer of Dental Practice. Upon proper exercise of the
option, Dental Cooperative shall execute a xxxx of sale and such other documents
and agreements as Provider shall reasonably request to memorialize the sale of
the Dental Practice to Provider.
ARTICLE 7
GENERAL PROVISIONS
Section 7.1 Confidentiality.
(a) Provider Confidential Information. Dental Cooperative
shall protect all Confidential Information of the Provider and Dentist(s) that
it learns or receives, directly or indirectly, in connection with the
transactions or relationships contemplated herein, and shall not use the same
for its own benefit or the benefit of others except as contemplated in this
Agreement. Dental Cooperative shall not disclose any Confidential Information to
anyone other than Provider and Dentist(s) except with the express written
consent of Provider and Dentist(s). Notwithstanding the foregoing restrictions,
Dental Cooperative may use and disclose any information to the extent required
by applicable law or by an order of any court or other governmental authority,
but only after Provider and Dentist(s) have been so notified and have had the
opportunity, if possible, to obtain reasonable protection for such information
in connection with such disclosure. Dental Cooperative may also, under agreement
of confidentiality, disclose Confidential Information to its counsel,
accountants, potential financing sources and others assisting them, to the
extent necessary to obtain such assistance.
(b) Dental Cooperative Confidential Information. Each of
Provider and Dentist(s) shall, and shall cause their respective consultants,
advisors, representatives and every entity controlled by them to, keep and
maintain in strictest confidence, and shall not use for their benefit or the
benefit of others except in connection with the business and affairs of Dental
Cooperative, all Confidential Information (as defined below) of Dental
Cooperative that Provider and Dentist(s) learn or receive, directly or
indirectly, in connection with the transactions or relationships contemplated
herein. Each of Provider and Dentist(s) shall not disclose any Confidential
Information to anyone outside of Dental Cooperative except with Dental
Cooperative's express written consent. Notwithstanding the foregoing
restrictions, Provider and Dentist(s) may use and disclose any information to
the extent required by applicable law or an order of any court or other
governmental authority, but only after Dental Cooperative has been so notified
and have had the opportunity, if possible, to obtain reasonable protection for
such information in connection with such disclosure. Provider and Dentist(s) may
also, under agreement of confidentiality, disclose Confidential Information to
their respective counsel, accountants, potential financing sources and others
assisting them with respect to the transactions contemplated hereby, to the
extent necessary to obtain such assistance.
(c) Confidential Information Defined. The term "Confidential
Information" means (i) all information with respect to (w) Collections, (x)
profit or loss figures, (y) customers, clients, suppliers, sources of supply and
customer lists, and (z) trade secrets of Dental Cooperative or Provider; (ii)
any information relating to the contracts, agreements, business plans, budgets
or results of operations, or any other financial information of a party, to the
extent such information has not been made available to the public by that party;
and (iii) any other information marked or noted to be confidential by the party
at the time of disclosure; provided, however, that the term "Confidential
Information" shall not include any information (v) that was known to the other
party prior to the date hereof; (w) that is or becomes generally known to the
public through sources independent of the other party and through no fault of
the other party, (x) that is available or becomes available to the other party
from a third party who has a right to disclose it to the other party, (y) that
is independently developed or acquired by the other party without reliance in
any way upon the disclosing party's Confidential Information, or (z) any
information that is required to be disclosed by Dental Cooperative or its
affiliates through filings or other disclosures pursuant to applicable statutes
or regulations or by interpretations of such promulgated by the Securities and
Exchange Commission.
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Section 7.2 Indemnification.
(a) By Provider and Dentist(s). Provider and Dentist(s),
jointly and severally and in solido, shall indemnify, defend and hold Dental
Cooperative, its directors, officers, employees and representatives harmless
from and against any losses, liabilities, damages, costs (including without
limitation, court costs) and expenses (including without limitation, reasonably
attorneys' fees) that Dental Cooperative incurs as a result of, or with respect
to (i) any misrepresentation or breach of warranty by Provider or Dentist under
this Agreement, and (ii) any breach by Provider or Dentist(s) of, or any failure
by Provider or Dentist(s) to perform, any covenant or agreement required to be
performed by Provider or Dentist(s) under this Agreement.
(b) By Dental Cooperative. Dental Cooperative shall indemnify,
defend and hold Provider, its directors, officers, employees and
representatives, including Dentist(s), harmless from and against any losses,
liabilities, damages, costs (including without limitation, court costs) and
expenses (including without limitation, reasonably attorneys' fees) that
Provider or Dentist(s) incur as a result of, or with respect to (i) any
misrepresentation or breach of warranty by Dental Cooperative under this
Agreement, and (ii) any breach by Dental Cooperative of, or any failure by
Dental Cooperative to perform, any covenant or agreement required to be
performed by Dental Cooperative under this Agreement.
(c) Notice and Control of Litigation. If any claim or
liability is asserted in writing by a third party against a party entitled to
indemnification under this Section (the "Indemnified Party") that would give
rise to a claim under this Section, the Indemnified Party shall notify the
person giving the indemnity ("Indemnifying Party") in writing of the same within
fifteen (15) days of receipt of such written assertion of a claim or liability.
The Indemnifying party shall have the right to defend a claim and control the
defense, settlement and prosecution of any litigation. If the Indemnifying
Party, within ten (10) days after notice of such claim, fails to defend such
claim, the Indemnifying Party will (upon further notice to the Indemnifying
Party) have the right to undertake the defense, comprise or settlement of such
claim on behalf of and for the account and at the risk of the Indemnifying
Party.
Section 7.3 General Construction Principles. Words in any gender are
deemed to include the other genders. The singular is deemed to include the
plural and vice versa. The headings and underlined paragraph titles are for
guidance only and have no significance in the interpretation of this Agreement.
Section 7.4 Binding Effect. This Agreement is binding on and will inure
to the benefit of the parties and their respective successors and assigns.
Section 7.5 Notices. Any notices, payment, demand or communication
required or permitted to be given to any party by any provision of this
Agreement shall be in writing and sent by hand delivery or overnight courier to
the following addresses or to replacement addresses provided by notice under
this Section 7.5. Any such notice shall be deemed to be delivered, given and
received as of the date it is delivered into the hands of the agent who will
effect delivery.
(a) Notices to Dental Cooperative: Attention
President 2150 South 0000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
(b) Notices to Provider
[address provided on Signature Page]
(c) Notices to Dentist(s)
[address provided on Signature Page]
Section 7.6 Further Assurances. Each party hereto agrees to perform
such further acts, and to execute, acknowledge and deliver such documents, as
may be reasonably necessary, appropriate or desirable to carry out the
provisions and intent of this Agreement and the other Operative Documents.
Section 7.7 Governing Law. The internal laws of Utah (without reference
to the conflict of law principles thereof) shall govern the validity of this
Agreement and the construction of its terms.
10
Section 7.8 Dispute Resolution. Any dispute arising under this
Agreement that cannot be resolved between the parties shall be submitted to
binding under the auspices of the American Arbitration Association with venue of
the arbitration in Salt Lake City, Utah. A single independent arbitrator shall
be appointed through the AAA's normal selection procedures. The costs of the
arbitration assessed by AAA shall be split evenly among the parties to the
dispute regardless of the outcome of the arbitration. The AAA's Commercial
Arbitration Rules will govern the proceeding. No attorneys fees or costs of any
party may be awarded in the arbitration of any dispute. It is the intent of the
parties to resolve disputes without incentive to any party.
Section 7.9 Counterpart Execution. This Agreement may be executed in
any number of counterparts with the same effect as if all of the Parties hereto
had signed the same document. All counterparts shall be construed together and
shall constitute one agreement.
Section 7.10 Entire Agreement. This Agreement and the other Operative
Documents contain the entire agreement among the parties and there can be no
modification or variance other than in a separate agreement in writing signed by
all parties.
Section 7.11 Cross Default. A breach or default of this Agreement by
either Provider or by Dentist(s) will be deemed a breach or default by both
Provider and Dentist(s). A breach or default of this Agreement by either
Provider or by Dentist(s) shall be considered a breach or default of the other
Operative Documents.
Section 7.12 Effective Date of Agreement. This Agreement shall become
effective on the closing date of the Member Agreement.
11
SIGNATURE PAGE TO Management Services Agreement
Xxxxxxx X. Xxxxx DDS PC Dr. Xxxxxxx Xxxxx
----------------------- --------------------
Name of Provider Name of Dentist(s)
Professional Corporation, Utah
Type of legal entity and state of organization
(Any additional notice addresses are on an attached sheet)
--------------------------------------
--------------------------------------
--------------------------------------
Address of Dental Office
(Any additional locations are specified on an attached sheet)
Base Collections (12-Months): $________________ (1-Month): $_______________
Historic Collections (12-Months): $____________
Generalist? [X] Specialist? [ ]
Check one
Effective Date __________________________
Term of Agreement: 5 years Termination Date:______________
IN WITNESS WHEREOF, the parties have executed this Agreement as of
November 17, 2006.
(date)
DENTAL COOPERATIVE, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title : President
"PROVIDER" Xxxxxxx X. Xxxxx DDS PC
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
"DENTIST(S)" X Xxxxxxx X. Xxxxx
------------------------------------
Dr. Xxxxxxx Xxxxx
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APPENDIX 1
FORM OF PROVIDER'S MONTHLY FINANCIAL REPORT
------------------------------------
(month/year)
Gross Patient Billing:
-------------------------
Collections:
-------------------------
Operating Expenses:
Rent
Payroll (non-Dentist)
Supplies
Lab Fees
Equipment Leases
Other
--------------------------
Total Operating Expenses:
-------------------------
Net Collections Before Allocations (Margin):
Provider Margin Allocation:
-------------------------
Dental Cooperative Margin Allocation:
=========================
