EXHIBIT 10.42
DENTAL GROUP MANAGEMENT AGREEMENT
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THIS DENTAL GROUP MANAGEMENT AGREEMENT (this "Agreement") is dated as
of January 1, 1997 and is effective as of the date set forth in Section 6.1
("Effective Date") by and between GMS DENTAL GROUP MANAGEMENT, INC., a Delaware
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corporation ("Manager") and wholly-owned subsidiary of GMS Dental Group, Inc., a
Delaware corporation (the "Company") and IDAHO DENTAL GROUP, P.A., an Idaho
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professional corporation ("Group").
RECITALS
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A. Group engages in the practice of dentistry by providing dental
services to patients of Group ("Group Patients") and to enrollees
("Beneficiaries") of dental plans ("Plans") under contracts ("Payor Contracts")
between Group and Plans or between Beneficiaries and Plans.
B. Group provides dental services to Beneficiaries and to Group
Patients through arrangements with licensed individuals ("Providers"). Such
arrangements may include contracts ("Employment Agreements") with dentist
employees (collectively "Employee Providers") and agreements ("Provider
Subcontracts") with independent contractor dentists and non-dentist providers of
various dental care services (collectively "Subcontract Providers").
C. All activities of Group subject to this Agreement are referenced as
the "Practice." All references to "dental" care and services include general and
specialist dental services. All references to "dentists" include generalists and
specialists.
D. Manager is a management services company that has been organized to
provide certain support services for the Practice and for other dental groups.
Manager is in the business of providing or arranging for management services,
facilities, equipment and certain personnel necessary for the operation of the
Practice.
E. Group desires to retain manager on an independent contractor basis
to provide management services that are more particularly described below, and
Manager desires to provide such management services under the terms and
conditions set forth in this Agreement.
AGREEMENTS
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NOW, THEREFORE, in consideration of the covenants and conditions
contained herein, Manager and Group agrees as follows:
ARTICLE I
DEFINITIONS
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Terms that are capitalized within this Agreement and its addenda and
exhibits are defined in Addendum 1.
ARTICLE II
SCOPE OF AGREEMENT
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2.1 General Scope of Agreement. This Agreement shall apply to the
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Practice, including, without limitation, all professional, administrative and
technical services, marketing, contracting, case management, ancillary dental
services, outpatient services and dental care facilities, equipment, supplies
and items, except as otherwise specifically provided in this Agreement. Group's
Employment Agreements shall encompass substantially all such activities of
Employee Providers and shall provide that all revenues derived from such
activities (and not excluded below) are Revenues. Nothing in this Agreement
shall be construed to alter or in any way affect the legal, ethical and
professional relationship between and among Provider and Provider's patients,
nor shall anything contained in this Agreement abrogate any right or obligation
arising out of or applicable to the dentist-patient relationship.
2.2 License. Except as prohibited by contract or by applicable laws
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and requirements governing the practice of dentistry, Group grants Manager an
exclusive license to use any and all of Group's assets, whether tangible or
intangible, in carrying out Manager's duties and responsibilities under the
provisions of this Agreement.
2.3 Intellectual Property. Group hereby grants to manager a non-
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exclusive, perpetual, royalty-free, worldwide license to use and sublicense the
use of any intellectual property owned by Group. This license shall cover, but
not be limited to, use of the following:
a. Service Xxxx. Group hereby grants Manager the right to use all
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service marks and trademarks of Group (the "Marks") for marketing and
promotional materials in connection with Group's offering of dental services.
Manager agrees to use the Marks solely in the design format used by Group as of
the date of this Agreement or another design format approved in advance in
writing by Group. Group shall have the opportunity to
2.
review any marketing or other materials using the Marks in advance of any public
distribution. Manager agrees that it will include these restrictions on use in
any sublicense of the Marks.
b. Copyrighted Materials. Group hereby grants Manager the right
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to use any and all copyrighted materials authored or owned by Group including,
specifically, the Group dental management system software programs (the
"Programs"). This license includes the right to sublicense the Programs and the
right to prepare and own derivative works based on the Programs, all without a
duty of accounting to Group. Group shall execute all documents required to
enable Manager to own, use and exploit all such rights.
2.4 Revenues. "Revenues" shall mean all of Group's accounts
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receivable (net of contractual adjustments and bad debt), and cash collections.
Revenues shall include all funds collected by, or legally due to, Group or any
Affiliate of Group, including, without limitation, the following: (a) all fee-
for-service payments for services to Group Patients or Beneficiaries; (b) all
payments established under Payor Contracts; (c) all coordination of benefits or
deductibles and third-party liability recoveries related to the Group's
services; (d) all payments, dues, fees or other compensation to Group; (e) any
income, profits, dividends, distributions or other payments from Group's
investments; and (f) any interest or other non-operating income of Group.
2.5 Deposit Accounts. All cash received by Group from whatever
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source shall be deposited into an account or accounts ("Accounts") in the name
of Group at a banking institution selected by Group and approved by Manager.
Group authorizes Manager to xxxx and collect, in Group's name, all charges and
reimbursements for Group's dental related activities and to deposit such
collections in the Accounts. Group agrees to assist and cooperate with Manager
in the billing and collection process and to immediately deliver to Manager for
deposit any monies Group may receive. Manager shall manage the cash and cash
equivalents of the Group and Manager shall be entitled (and is hereby
authorized) to transfer such cash to the account of Manager and to use such cash
for purposes as Administrator deems appropriate, subject to and consistent with
the terms and provisions of this Agreement. Nothing in this Section 2.5 shall
be construed to limit or otherwise modify the requirement that manager disburse
funds in fulfillment of the obligations of the Group and Manager under this
Agreement.
ARTICLE III
OPERATION OF PRACTICES
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3.1 Appointment. Subject to applicable laws and requirements
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governing the practice of dentistry, Group hereby appoints Manager as its sole
and exclusive Manager for the operation of the Practice and covenants not to
enter into an agreement with any Person other than Manager to perform or assume
any of Manager's rights, duties or
3.
responsibilities as provided herein. Manager hereby accepts full responsibility
for such management as more fully set forth herein.
3.2 Professional Matters. Pursuant to applicable laws and
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requirements governing the practice of dentistry, Group shall retain ultimate
responsibility for all activities of Group that are within the scope of a
dentist's licensure and cannot be performed by Manager due to Manager's non-
licensed status.
3.3 Relationship of Parties. In the performance of its duties and
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obligations under this Agreement, it is understood and agreed that Manager
shall, at all times, be acting and performing as an independent contractor and
not as an employee of Group. Except as provided in this Agreement or as
required by laws, Group shall neither have nor exercise any control or direction
over the methods by which Manager shall perform its obligation thereunder; nor
shall Manager have or exercise any control or direction over the methods by
which Group shall practice dentistry. It is expressly agreed by the parties
that no work, act, commission or omission of manager pursuant to the terms and
conditions of this Agreement shall be construed to make or render Manager or
Manager's employees or agents, the employees of Group. Manager and Group are
not partners or joint venturers with each other and nothing herein shall be
construed so as to make them partners or joint venturers or impose upon either
of them any liability as partners or joint venturers. Group's responsibility is
to assure that the services covered by this Agreement shall be performed and
rendered in a competent, efficient and satisfactory manner.
3.4 Authority and Control. Strategic planning, overall direction and
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control of the business and affairs of Group, and authority over the day-to-day
activities of Group shall be accomplished as follows:
a. Exclusive Authority:
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(1) Group. Notwithstanding anything else to the contrary
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contained herein, Group shall have the sole responsibility and authority for all
aspects of the practice of dentistry and delivery of dental services by
Providers. Providers shall use and occupy at the practice sites ("Practice
Sites") the facilities provided by Manager hereunder exclusively for the
practice of dentistry ("Practice Site Facilities"). Group expressly acknowledges
that the Practice or Practices conducted at these Practice Site Facilities shall
be conducted solely by dentists and dental hygienists associated with Group as
Employee Providers or Subcontract Providers. Group shall consult with Manager or
the Joint Operations Committee to the extent reasonable and not inconsistent
with the laws governing the practice of dentistry.
b. Joint Authority. All other decision-making authority related
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to the business and affairs of Group shall be vested in a joint operations
committee (the "Joint Operations Committee"). Nothing herein shall be construed
as preventing the Joint Operations Committee from appointing representatives and
delegating authority to such representatives so long as the Joint Operations
Committee may revoke such appointment and
4.
delegation at any time and so long as the Joint Operations Committee retains
ultimate responsibility for the decisions of such representatives.
3.5 Joint Operations Committee. Subject to applicable laws and
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requirements governing the practice of dentistry, the Joint Operations Committee
shall have authority and responsibility to provide strategic planning, overall
direction and authority over the day-to-day management and administrative
activities of the Group and shall manage the business operations of the Group as
follows:
a. Joint Operations Committee Membership. The Joint Operations
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Committee shall consist initially of five (5) individuals (the "Committee
Members"). Group shall designate two (2) Committee Members who shall be
licensed dentists (the "Group Members") and the remaining three (3) Committee
Members (the "Manager Members") shall be appointed by Manager. The number of
Committee Members may be increased by agreement of the parties. Each party
shall continue to direct the appointment of the same percentage of Committee
Members as described above. Each Committee Member shall serve at the pleasure
of the party designating such Committee Member and may be replaced, with or
without cause, at any time by such party upon the delivery of written notice
thereof to the other Committee Members. Manager, Group and their respective
Committee Members shall diligently pursue any preliminary activities that are
necessary to allow the Joint Operations Committee to take an action. Where
Committee Members are required to consult with the organization appointing such
Committee Members, the Committee shall establish and agree on a deadline for
accomplishing such consultation.
b. Joint Operations Committee Action.
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(1) Joint Action. Except as otherwise expressly set forth
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above, the Joint Operations Committee shall take all other actions that have
been approved by a majority of the Committee Members.
(2) Consultation Forum. Consultation between Group and
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Manager, if any, shall take place at a meeting of the Joint Operations
Committee, and Group and Manager hereby agree to be bound by the decision of
their Group Members or Manager Members, as the case may be.
c. Joint Operations Committee Meetings. Meetings of the Joint
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Operations Committee may be held by telephone or similar communications
equipment so long as all Committee Members participating in a meeting can hear
and speak to each other. The Joint Operations Committee shall prepare and
maintain written minutes of all meetings and shall provide a copy of the minutes
to the parties within fifteen (15) business days following each meeting.
(1) Regular Meetings. The Joint Operations Committee shall
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hold not less than four (4) regular meetings each year, at such specific times
and places as the Committee Members may determine.
5.
(2) Special Meetings. A special meeting of the Joint
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Operations Committee may be called by a majority of the Committee Members.
(3) Notice Requirement. A Committee Member calling a special
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meeting must provide all other Committee Members with ten (10) days' advance
written or telephonic notice. Notice must be given or sent to the Committee
Member's address or telephone number as shown on the records of the Joint
Operations Committee. Notice may be delivered directly to each Committee Member
or to a person at the Committee Member's principal place of business who
reasonably would be expected to communicate that notice promptly to the
Committee Member.
(4) Waiver of Notice Requirement.
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(a) Written Waiver, Consent or Approval. Notice of a
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special meeting need not be given to any Committee Member who, either before or
after the meeting, signs a waiver of notice or a written consent of the holding
of the special meeting, or an approval of the minutes of the special meeting.
Such waiver, consent or approval need not specify the purpose of the special
meeting. All such waivers, consents and approvals shall be filed with the Joint
Operations Committee records or made a part of the minutes of the special
meetings.
(b) Failure to Object. Notice of a special meeting need
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not be given to any Committee Member who attends the special meeting and does
not protest before or at the commencement of the special meeting such lack of
notice.
(5) Quorum. The smallest number of Committee Members that
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exceed fifty percent (50%) of all Committee Members shall constitute a quorum of
the Joint Operations Committee, provided, however, that such quorum shall
include at least one Group member and one Manager member.
(6) Proxies. The Joint Operations Committee shall provide
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for the use of proxies, telephonic conference calls, written consents or other
appropriate methods by which the full participation of the Group Members and
Manager Members can be assured.
d. Limitation of Responsibility. Notwithstanding any other
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provisions hereof, Committee Members shall be liable to the parties only for
actions constituting bad faith, gross negligence or breach of an express
provision of this Agreement (so long as such breach remains uncured after ten
(10) days of receiving notice of the nature of such breach). In all other
respects, Committee Members shall not be liable for negligence or mistakes of
judgment.
3.6 Budgets. A capital and operating budget ("Annual Budget") shall
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be established regarding all financial aspects of the Practice. The Annual
Budget shall include the following elements and other items, as appropriate:
6.
a. A capital expenditure budget outlining a program of capital
expenditures, if any, that are required for the next succeeding fiscal year;
b. An operating budget setting forth an estimate of Net Revenues
and expenses for the next succeeding fiscal year, together with an explanation
of anticipated changes or modifications, if any, in the Practice's utilization,
rates, charges to patients or third party payors, salaries, costs of Provider,
non-wage cost increases, and all other similar factors expected to differ
significantly from those prevailing during the current fiscal year;
c. Other expenses of operation;
d. The amount of a reasonable reserve to satisfy possible
shortfalls from operations. The allocation of such reserve shall be made by the
Joint Operations Committee as and when necessary; and
e. The Management Fee, as defined below, for the next succeeding
fiscal year.
3.7 Budget Process.
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a. Initial Annual Budget. Not later than 45 days after the
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Effective Date, the Joint Operations Committee will have prepared the initial
Annual Budget for the first fiscal year (which shall initially be the calendar
year) during the term of this Agreement. If the Effective Date is other than the
first day of a fiscal year, then such initial Annual Budget shall encompass only
such portion of the then current fiscal year as remains, or, at the option of
the parties, such portion of the then current fiscal year plus the immediately
subsequent fiscal year.
b. Preliminary Budget. Not later than forty-five (45) days prior
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to the end of each fiscal year during the term of this Agreement, the Manager
shall prepare and deliver to the Joint Operations Committee a preliminary Annual
Budget for the next succeeding fiscal year ("Preliminary Budget").
c. Joint Operations Committee Approval. The Joint Operations
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Committee shall review and suggest modifications to the Preliminary Budget
within ten (10) days of receipt. Manager shall prepare a revised budget based
upon the Joint Operations Committee's recommendations and the Preliminary Budget
as revised shall become the Annual Budget.
d. Adjustments. In the event of a material deviation between
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financial forecasts and financial performance during a fiscal year, Manager or
Group may propose adjustments to the Annual budget which adjustments shall be
approved or disapproved pursuant to the procedures set forth above.
7.
3.8 Personnel.
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a. Providers. Except in unusual circumstances approved by the
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Joint Operations Committee, and as permitted by law, Manager shall not employ or
contract with any Provider for the provision of dental services. All Providers
who provide dental services to Group Patients or to Beneficiaries shall be
either (1) Employee Providers, (2) Subcontract Providers, or (3) employees of
Subcontract Providers. Group shall have complete control of and responsibility
for the hiring, engagement, compensation, training, scheduling, supervision,
evaluation, and termination of all Employee Providers and Subcontract Providers,
although at the request of Group, Manager shall consult with Group respecting
such matters and shall coordinate the advertising of positions available,
interviewing of candidates, and scheduling of clinical staff meetings and
training sessions.
b. Non-Providers. With the exception of employees of Subcontract
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Providers, Manager shall employ all non-Provider personnel necessary for the
operation of the Practice.
c. Salary and Benefits. Subject to Manager's responsibilities
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under Article VII, each party to this Agreement shall remain liable for the
salary and benefits paid to such party's own employees and shall be ultimately
responsible for compliance with state and federal laws pertaining to employment
taxes, workers' compensation, unemployment compensation and other employment-
related statutes pertaining to the party's own employees.
d. Payments to Subcontract Providers. Subject to Manager's
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responsibilities under Article VII, Group shall be liable for any payments due
Subcontract Providers under Provider Subcontracts.
ARTICLE IV
MANAGEMENT SERVICES
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4.1 General Description of Services. Except as prohibited by law and
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within the limitations set out elsewhere in this Agreement, Manager shall
provide or arrange for the provision to Group of all support services reasonably
necessary and appropriate for the efficient operation of the Practice. Such
services include all administrative services necessary to Group's performance of
its obligations under Payor Contracts, contracting, marketing, capital formation
and assistance with long term strategic planning. Manager shall exercise its
best efforts to fulfill the administrative functions of a well managed dental
group and to maintain the Practice's status as the preeminent group practice in
Pocatello and the surrounding area.
4.2 Practice Site Facilities. When appropriate, Manager shall secure
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and maintain Practice Site Facilities, including, without limitation, office
space, improvements, furnishings, equipment, supplies, and personal property, of
a nature and in a condition
8.
necessary and appropriate for the efficient and effective operations of the
Practice subject to the general approval of the Joint Operations Committee.
Manager shall secure and maintain said Practice Site Facilities in the name of
Group. Group hereby accepts and approves of the Practice Site Facilities
initially provided by Manager. However, Manager from time to time shall make
such Practice Site Facilities changes, including but not limited to dental
equipment purchases, as reasonably may be requested by Group so that Group may
conduct its Practice according to the level required to maintain the Practice's
status as the preeminent group practice in Pocatello and the surrounding area.
4.3 Purchased Items and Services. Manager shall serve as the
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purchasing agent for Group and shall arrange for personnel benefits, insurance,
and any other items and services required for the proper operation of the
Practice.
4.4 Manager Personnel.
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a. Management Team. Subject to any approval or consulting rights
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of the Joint Operations Committee, Manager shall engage or designate one or more
individuals experienced in dental group management and direction, including, but
not limited to, an administrator, who will be responsible for the overall
administration of the Practice including day-to-day operations and strategic
development activities.
b. Other Manager Personnel. Manager shall select, hire, train,
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supervise, monitor and terminate all non-Provider personnel necessary for the
operation and management of the Practice; provided, however, with respect to the
selection, hiring and termination of non-Provider clinical staff, Manager shall
obtain the consent of the Group, which consent will not be unreasonably
withheld.
4.5 Day-to-Day Management and Supervision. Subject to any approval
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or consulting rights of the Joint Operations Committee, Manager shall provide
general management including, but not limited to, day-to-day supervision of:
a. manager personnel;
b. equipment and supply acquisition;
c. office space and facility maintenance;
d. patient records organization and retention;
e. third party payor contracting;
f. case management;
g. billing, collections and accounting activities as set forth
below;
9.
h. all operating aspects and policies of the Practice including,
but not limited to, hours of operation, work schedules, standard duties and job
descriptions, for all non-Group personnel; and
i. other related and incidental matters.
4.6 Billing and Collection Payment of Expenses. In addition to the
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responsibilities of Manager under Article VII, Manager shall be responsible for
all billing and collecting activities required by Group. Manager shall also be
responsible for reviewing and paying accounts payable of Group. Group hereby
appoints the Manager its true and lawful attorney-in-fact to take the following
actions for and on behalf of and in the name of Group:
a. xxxx and collect in Group's name or the name of the individual
practicing dentist, all charges and reimbursements for Group. Group shall give
Manager all necessary access to Patient records to accomplish all billing and
collection. In so doing, Manager will use its best efforts but does not
guarantee any specific level of collections, and Manager will comply with
Group's reasonable and lawful policies regarding courtesy discounts;
b. take possession of and endorse in the name of the Group any
and all instruments received as payment of accounts receivable;
c. deposit all such collections directly into Accounts and make
withdrawals from such Accounts in accordance with this Agreement; and
d. place accounts for collection, settle and compromise claims,
and institute legal action for the recovery of accounts.
4.7 Bookkeeping and Accounting. Manager shall provide bookkeeping
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services, financial reports, and shall implement and manage a computerized
management information system appropriate for the Practice.
a. Financial Reporting. manager shall prepare, analyze and
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deliver to the Joint Operations Committee financial reports to the extent
necessary or appropriate for the operation of the Practice, including the
following:
(1) financial statements, including balance sheets and
statements of cash flow and income;
(2) accounts payable and accounts receivable analysis;
(3) billing status including any medicaid remittances; and
(4) reconciliation of assets, liabilities and major
expenses.
10.
b. Audits. Group shall have the right to review and, at its sole
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cost and expense, obtain an audit (separate from any annual audit or review of
Group's financial statements performed at the direction of the Manager) of
Group's financial books and records maintained by the Manager. Upon five (5)
days' prior written notice, Manager shall allow Group access during reasonable
business hours to all information and documents reasonably required for such
review or audit. Upon Group's request and at Group's expense, Manager shall also
provide copies of such documents.
4.8 Marketing and Public Relations Services. Subject to Group's
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consent, which consent shall not be unreasonably withheld, Manager shall provide
such marketing and public relations services as Manager determines reasonably
necessary to promote, market and develop the dental services of Group. Manager
shall provide Group with marketing materials and activities. Nothing in this
Agreement shall be construed to affect or limit in any way the professional
discretion of Group to select patients that may be effectively treated in the
Practice in accordance with professional standards of patient selection.
4.9 Group Agreements. Subject to Group's consent, which consent
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shall not be unreasonably withheld, on behalf of Group, Manager shall review,
evaluate and negotiate Payor Contracts and Provider Subcontracts and any other
contracts or agreements regarding the provision of dental related items or
services by Group or Providers.
4.10 Utilization Review Quality Improvement and Outcomes Monitoring.
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Manager shall be responsible for providing administrative support for Group's
utilization review, quality improvement and outcomes monitoring activities,
including, without limitation, data collection, analysis and reporting for Group
Patients and Beneficiaries. Manager shall also support the development and
implementation of relevant policies, procedures, protocols, practice guidelines
and other interventions based on such activities.
4.11 Patient Referrals. The parties agree that the benefits to Group
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hereunder do not require, are not payment for, and are not in any way contingent
upon the admission, referral or any other arrangements for the provision of any
item or service offered by Manager or any affiliate of Manager to any of Group's
Patients in any facility or laboratory controlled, managed or operated by
Manager or any affiliate of Manager.
4.12 Applicable Law. Manager and Group shall comply with all
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applicable federal and state laws, statutes, rules and regulations, including
without limitation, those relating to Medicaid reimbursement and any other
applicable governmental rules or the guidelines governing the standards for
administering a professional dental practice.
11.
ARTICLE V
GROUP RESPONSIBILITIES
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5.1 Diagnosis, Treatment Planning, Specific Patient Education and
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Consultation. Group shall have sole responsibility for all professional dental
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services provided to Patients with regard to the diagnosis of the patient's
condition and the development of treatment plan alternatives, including, without
limitation, the following:
a. Diagnosis. Group shall have sole responsibility for all
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medical and dental history evaluation, examination, obtaining clinical records,
and diagnostic procedures appropriate for complete diagnosis.
b. Treatment Planning. Group shall have sole responsibility
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for all determination of treatment alternatives that may be professionally
acceptable for the treatment of the patient's condition.
c. Specific Patient Education. Group shall have sole
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responsibility for all discussion, recommendation, demonstration, and other
educational modalities intended to address the patient's specific condition, as
differentiated from general patient education intended to address the common
concerns of all patients presenting with similar conditions.
d. Consultation. Group shall have sole responsibility for all
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discussion of clinical advantages, disadvantages, complications, and risks of
each alternative treatment plan, and including the likely results of no
treatment.
e. Manager to Assist with Record Procurement. Notwithstanding
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the above, Manager shall be responsible for exercising reasonable efforts to
procure, at its own expense, medical and dental history information, previous
clinical records, and X-ray records prior to presentation of the patient for
treatment by Group, in accordance with protocols developed by Group in
consultation with Manager.
5.2 Dental Services. Group shall have sole responsibility for all
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professional dental services provided to Patients with regard to the treatment
of the patient's condition, including, without limitation, the following:
a. Preventive Care. Group shall have sole responsibility for
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all preventive care intended to delay, or intercept the development of
pathologic conditions.
b. Therapeutic Care. Group shall have sole responsibility for
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all therapeutic care intended to ameliorate, or improve existing pathologic
conditions.
c. Referral to Specialists. Group shall have sole
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responsibility for all referral to appropriate dental specialists and other
allied health care professionals in accordance with professional dental
standards of care.
12.
d. Continuing Care. Group shall have sole responsibility for
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all development and execution of continuing care protocols intended to maintain
the patient's condition over the course of time.
e. Manager to Assist with Patient Compliance Tracking.
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Notwithstanding the above, Manager shall be responsible for exercising
reasonable efforts to facilitate, coordinate, and document the scheduling,
tracking, and confirmation of Group's recommendations for dental diagnostic and
therapeutic services, treatments, referrals, and continuing care in accordance
with protocols developed by Group in consultation with Manager.
5.3 Provision of Dental Services by Group. Group shall operate the
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Practice during the Term as a dental practice in accordance with the terms of
this Agreement and the Annual Budget. However, nothing in this Agreement shall
be construed to affect or limit in any way the professional discretion or duty
of Group, insofar as such constitutes the practice of dentistry.
5.4 Providers.
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a. Professional Dental Services. Group shall employ or
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contract with the number of Providers Group deems necessary for the efficient
and effective operation of the Practice and in accordance with the Annual Budget
and quality assurance, credentialing and utilization management protocols
approved by the Joint Operations Committee. Group shall provide full and prompt
dental coverage for the Practice, including emergency service twenty-four hours
per day, seven days per week, including holidays, according to policies and
schedules approved by the Joint Operations Committee.
b. Provider Subcontracts and Employment Agreements. Group
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shall not negotiate or execute any Provider Subcontract, Employment Agreement,
or any amendment thereto, or terminate any Provider Subcontract or Employment
Agreement without first consulting with the Joint Operations Committee. Subject
to Manager's responsibilities under Article VII, Group shall be responsible for
the payment, in accordance with the Annual Budget, of all Employee and
Subcontract Providers.
5.5 Peer Review. Group, after consultation with the Joint Operations
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Committee, shall implement, regularly review, modify as necessary or appropriate
and obtain the commitment of Providers to actively participate in peer review
procedures for Providers. Group shall assist Manager in the production of
periodic reports describing the results of such procedures. Group shall provide
Manager with prompt notice of any information that raises a reasonable risk to
the health and safety of Group Patients or Beneficiaries. In any event, after
consultation with the Joint Operations Committee, Group shall take such action
as may be reasonably warranted under the facts and circumstances.
5.6 Fees, Charges and Payor Agreements. Group shall, after
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consultation with Manager, determine the fees, charges, premiums, or other
amounts due in connection
13.
with delivery of dental services to Patients. Such fees, charges, premiums, or
other amounts (regardless of whether determined on a fee-for-service, capitated,
prepaid, or other basis) shall be reasonable and consistent with the fees,
charges, premiums, and other amounts due to dental care providers for similar
services within the community under similar types of reimbursement programs
involved if such programs are currently offered within the community.
5.7 Hours of Clinical Operation. After consultation with the Joint
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Operations Committee, Group shall establish hours of operation that are
consistent with good dental practice, and are appropriate to the need to timely
deliver professional dental care services to Group Patients.
5.8 Billing Information and Assignments. Group shall promptly
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provide Manager with all billing and patient encounter information reasonably
requested by Manager for purposes of billing and collecting for Group's
services. Group shall use reasonable efforts to procure consents to assignments
and other approvals and documents necessary to enable Manager to obtain payment
or reimbursement from third party payors and patients. With the assistance of
Manager, Group shall obtain all provider numbers necessary to obtain payment or
reimbursement for its services.
5.9 Third Party Contracts. Group shall be in compliance with all
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contracts, agreements and arrangements, including any contracts that exist on
the Effective Date, between Group and third parties.
5.10 Use of Manager's Goods and Services. Group shall not use any
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goods or services provided by Manager pursuant to this Agreement for any purpose
other than the provision of and management of dental services as contemplated by
this Agreement and purposes incidental thereto.
5.11 Negative Covenants. During the Term, Group shall not, without
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the prior approval of the Joint Operations Committee, (a) assign, pledge,
mortgage or otherwise encumber any of its property, (b) transfer substantially
all of its assets, including its goodwill, (c) merge or consolidate with any
other entity, (d) allow the transfer or issuance of any of its stock (other than
in accordance with the terms and provisions of those certain Share Acquisition
Agreements dated October __, 1996 between manager and each of the persons set
forth on Schedule A hereto), or (e) take or allow any act that would materially
impair the ability of Group to carry on the business of the Practice or to
fulfill its obligations under this Agreement.
5.12 Group Maintains Full Professional Authority. Notwithstanding
-------------------------------------------
Manager's general and specific rights and responsibilities set forth in this
Agreement, Group shall have full authority and control with respect to all
dental, professional and ethical determinations over Group's Practice to the
extent required by federal, state and local laws, rules and regulation. Manager
shall not engage in activities which constitute the practice of dentistry under
applicable law. Manager shall neither exercise control over nor interfere
14.
with the dentist-patient relationship, which shall be maintained strictly
between Group's Providers and their Patients.
ARTICLE VI
TERM
----
6.1 Term. This Agreement shall be effective as of January 1, 1997
----
(the "Effective Date"), and shall remain in effect for an initial term of forty
(40) years from the Effective Date, expiring on the fortieth (40th) anniversary
of the Effective Date, unless earlier terminated pursuant to the terms of this
Agreement. The word "Term" shall include such initial term and, where
applicable, any extension of such initial term (whether extended pursuant to
Section 6.2a or otherwise), subject to earlier termination pursuant to the
provisions of this Agreement.
6.2 Termination and Extension.
-------------------------
a. Automatic Extension. At the end of the initial term and any
-------------------
subsequent term, this Agreement shall automatically renew for a five (5) year
term unless one of the parties provides the other party with written notice of
intent not to renew, not less than one hundred eighty (180) days prior to the
expiration of the then current term.
b. Early Termination. This Agreement may be terminated
-----------------
according to the provisions of this Section.
(1) Material Breach. In the event either party materially
---------------
breaches this Agreement and such breach is not cured to the reasonable
satisfaction of the non-breaching party within thirty (30) days after the non-
breaching party serves written notice of the default upon the defaulting party
(the "Default Notice"), the Agreement shall automatically terminate at the
election of the non-breaching party upon the giving of a written notice of
termination to the defaulting party not later than fifteen (15) days after
termination of the 30-day cure period; provided that if such uncured breach is
only capable of being cured within a reasonable period of time in excess of
thirty (30) days, the non-breaching party shall not be entitled to terminate
this Agreement so long as the defaulting party has commenced such cure and
thereafter diligently pursues such cure to completion.
(2) Refusal to Comply. In the event that Group or Manager
-----------------
refuses or fails to comply with a decision of the Joint Operations Committee,
the aggrieved party shall have the option to require the non-complying party to
participate in good faith mediation under the auspices of the American Mediation
Association, and if such dispute between Group and Manager continues for sixty
(60) days after the date the aggrieved party exercises its option regarding
mediation, the non-complying party shall have thirty (30) days in which to
comply with the decision of the Joint Operations Committee. If the non-complying
party has not complied by the end of such thirty (30) day period, the aggrieved
15.
party shall have the option to terminate this Agreement upon fifteen (15) days'
prior written notice. During such mediation, Manager and Group shall continue
to operate and manage the practice in good faith.
(3) Bankruptcy. A party may, upon three (3) days' prior
----------
written notice, terminate this Agreement if the other party:
(a) Applies for or consents to the appointment of a
receiver, trustee or liquidator of all or a substantial part of its assets,
files a voluntary petition in bankruptcy or consents to an involuntary petition,
makes a general assignment for the benefit of its creditors, files a petition or
answer seeking reorganization or arrangement with its creditors, or admits in
writing its inability to pay its debts when due, or
(b) Suffers any order, judgment or decree to be entered
by any court of competent jurisdiction, adjudicating such party bankrupt or
approving a petition seeking its reorganization or the appointment of a
receiver, trustee or liquidator of such party or of all or a substantial part of
its assets, and such order, judgment or decree continues unstayed and in effect
for ninety (90) days after its entry.
(4) Nonperformance. Manager may terminate this Agreement in
--------------
the event that in any two consecutive fiscal quarters the Manager has not been
paid the Management Fee and, in the sole discretion of the Manager, it is not
reasonably likely that the Management Fee will be paid in the next fiscal
quarter. Any such termination shall be effective as of the last day of such
third fiscal quarter provided at least 60 days notice shall have been given;
otherwise, such termination shall be effective on the sixtieth day after notice
is given.
(5) Change in Law. In the event of any material change in
-------------
federal or state law that has a significant adverse impact on either party
hereto in connection with their performance under this Agreement, or if
performance by a party of any duties under this Agreement be deemed illegal by
any administrative agency or in a formal opinion rendered to manager by legal
counsel knowledgeable in health law matter retained by the Manager, the affected
party shall have the right to require that the other party renegotiate the terms
of this Agreement. Unless the parties otherwise mutually agree in writing, such
renegotiated terms shall be effective not later than twenty (20) days after
receipt of written notice of such request for renegotiation. Solely in the event
of illegality, if the parties fail to reach an agreement within thirty (30) days
of the request for renegotiation, either party may (subject to the severability
provision of this Agreement) terminate this Agreement upon thirty (30) days'
prior written notice to the other party.
c. Effect of Termination. Upon termination of this Agreement:
---------------------
(1) Group shall surrender to Manager all of Manager's
property used primarily in the operation of the Practice in the same condition
as received, reasonable wear and tear excepted.
16.
(2) Manager shall deliver to Group all records related to
the business of and provision of dental care through the Practice including,
without limitation, patient records and any corporate, personnel and financial
records maintained for the Practice and Providers, provided, that except as
limited by law, including, but not limited to laws governing the confidentiality
of patient records, Manager shall have the option to copy (or otherwise
duplicate) at its sole cost and expense such records of Group and to retain and
utilize such records for its own use;
(3) Manager shall deliver to Group any other property of
Group in Manager's possession'
(4) Both parties shall cooperate to ensure the provision of
appropriate dental care to Group Patients and Beneficiaries;
(5) Group shall promptly deliver to Manager any Revenues
that it may receive in payment for dental services rendered by Group prior to
termination; and
(6) Both parties shall cooperate to ensure the appropriate
billing and collections for dental services rendered by Group prior to the
effective date of termination, and any such cash collected shall be retained by
Group and/or paid to Manager pursuant to Article VII.
ARTICLE VII
FINANCIAL AND SECURITY ARRANGEMENTS
-----------------------------------
7.1 Management Fee. Group and Manager agree that the compensation
--------------
set forth in this Article VII is being paid to Manager in consideration of the
services provided and the substantial commitment and effort made by Manager
hereunder and that such fees have been negotiated at arms' length and are fair,
reasonable and consistent with fair market value. Manager shall be paid the
management fee (the "Management Fee") as set forth on Exhibit 7.1 hereto.
-----------
Payment of the Management Fee is not intended to and shall not be interpreted or
implied as permitting Manager to share in Group's fees for medical services but
is acknowledged as the negotiated fair market value compensation to Manager
considering the scope of services and the business risks assumed by Manager.
7.2 Payments. Except as otherwise set forth on Exhibit 7.1 hereto,
-------- -----------
the amounts to be paid to Manager under this Article VII shall be calculated by
Manager on the accrual basis of accounting and shall be payable monthly.
Payments due for any Management Fee shall be made by Group each calendar month
as provided herein and shall be paid on the 15th day following the end of such
month (or the first preceding day that is a business day if the 15th day is not
a business day) (a "Payment Date"). Such amounts paid shall be estimates based
upon available information for such month, and adjustments to the
17.
estimated payments shall be made to reconcile final amounts due under Section
7.1 on the next Payment Date.
7.3 Advances.
--------
a. Group shall be entitled to an advance from Manager of such
additional sums, over and above Group's right to the amounts otherwise set forth
in this Article VII, as shall be required by Group to pay Practice Expenses
consistent with the Annual Budget of the Practice (prepared as provided in
Section 3.6 hereof), the Management Fee as provided in Exhibit 7.1 hereto and
-----------
Group Expenses at the discretion of Manager. Any amounts advanced to Group
pursuant to this Section 7.3 shall be repaid by Group in such priority as set
forth in Section 7.5 below and shall bear interest at a rate equal to one
percent (1%) above the prime rate reported by the Wall Street Journal as
adjusted on a quarterly basis, compounded monthly until all such amounts of
principal and interest are repaid to Manager as provided herein.
7.4 Security Agreement. In order to enforce its rights granted
------------------
hereunder and subject to applicable law, Group shall execute a Security
Agreement in substantially the form attached hereto as Exhibit 7.4 (the
-----------
"Security Agreement"), which Security Agreement grants a security interest in
all of Group's accounts receivable (as more fully described in the Security
Agreement) to Manager. In addition, Group shall cooperate with Manager and
execute all necessary documents in connection with the pledge of such accounts
receivable to Manager or at Manager's option, its lenders.
7.5 Priority of Payments. Manager shall administer and make
--------------------
disbursements from amounts deposited into the Accounts or transferred from the
Accounts to pay (including, without limitation the making of advances as
provided in Section 7.3) the Practice Expenses and Group Expenses as the same
become due and payable, and for which Group shall remain responsible. In
performing its obligations pursuant to Article IV, Manager shall apply funds of
Group in the following order of priority:
a. payment of all Group Expenses;
b. payment of all Practice Expenses;
c. payment of the Management Fee; and
d. payment of amounts advanced to Group, and applicable
interest thereon (as contemplated in Section 7.3).
If there are not sufficient funds to pay all amounts provided for
above, all unpaid amounts shall accumulate and carry over until paid or until
the termination of this Agreement, in which case such unpaid amounts shall be
immediately due and payable as of the date of termination. Any amounts which
remain following the payment of the expenses and fees set forth in subparagraphs
(a) through (d) above shall be retained in the Accounts.
18.
7.6 Accounts Receivable. At the option of Manager, on the first
-------------------
business day of each month, Manager may purchase all or any portion the accounts
receivable of Group relating to Revenues arising during the previous month, by
payment of cash or other readily available funds into an account for Group or by
offset of amounts owed by Group to Manager. The consideration for the purchase
shall be an amount equal to all fees recorded each month (net of adjustments for
uncollectible accounts, professional courtesies and other such activities that
do not generate a collectible fee) less Management Fees due to Manager under
this Article VII. Manager's purchase shall be effective upon full payment of
the purchase price. In the event that such purchase shall be ineffective for
any reason, Group is concurrently herewith entering into the Security Agreement
to grant a security interest in the accounts receivable to Manager. In
addition, Group shall cooperate with Manager and execute all necessary documents
in connection with the pledge of such accounts receivable to Manager or at
Manager's option, its lenders. All collections in respect of such accounts
receivable shall be deposited in a bank account at a bank selected by mutual
agreement of Group and Manager. To the extent Group comes into possession of
any payments in respect of such accounts receivable, Group shall direct such
payments to Manager for deposit.
ARTICLE VIII
INDEMNITY AND INSURANCE
-----------------------
8.1 Indemnity.
---------
a. Indemnification. Each party shall indemnify, defend and
---------------
hold harmless the other party from any and all liability, loss, claim, lawsuit,
injury, cost, damage or expense whatsoever (including reasonable attorneys' fees
and court costs) arising out of, incident to or in any manner occasioned by the
performance or nonperformance of any duty or responsibility under this Agreement
by such indemnifying party, or any of their employees, agents, contractors or
subcontractors; provided, however, that neither party shall be liable to the
other party hereunder for any claim covered by insurance, except to the extent
that the liability of such party exceeds the amount of such insurance coverage.
Specifically, and without limiting the generality of the foregoing, Group agrees
to indemnify, defend and hold harmless Manager for all liability, loss, claim,
lawsuit, injury, cost, damage or expense whatsoever (including reasonably
attorneys' fees and court costs) arising out of the professional negligence of
Group, its employees, agents, contractors or subcontractors, including any
amounts in excess of the professional liability insurance coverage of Group or
its employees, agents, contractors or subcontractors.
b. Mutual Indemnity. Subject to Manager's responsibilities
----------------
under Article VII, each party to this Agreement shall be indemnified by the
other party for any claim under this Agreement or otherwise against the
indemnified party for vacation pay, sick leave, retirement benefits, Social
Security benefits, workers' compensation benefits, disability or unemployment,
insurance benefits, or other employee benefits of any kind accrued during the
term of this Agreement by an employee of the indemnifying party.
19.
8.2 Manager's Insurance. Manager shall, on its own behalf and at its
-------------------
sole cost and expense, procure and maintain in force during the term of this
Agreement policies in the following categories in the amount indicated:
a. Comprehensive general liability insurance covering the risks
of Manager, in an amount determined by the Joint Operations Committee;
b. Workers' Compensation insurance covering the employees of
Manager, in such amounts as is usual and customary under the circumstances;
c. Property insurance covering the facilities, equipment and
supplies owned or leased by Manager or Group for use in the operation of the
Practice.
8.3 Group's Insurance. At Group's sole cost and expense, Manager
-----------------
shall obtain, and maintain on behalf of Group in full force and effect during
the Term, policies in the following categories in the amount indicated:
a. Comprehensive professional liability insurance coverage for
Group and Group's Employee Providers, in such amounts as Group shall reasonably
deem necessary; provided, however, such coverage shall be no greater than that
set forth on Schedule B hereto without the prior consent of the Joint Operations
Committee, which consent shall not be unreasonably withheld;
b. Workers' Compensation insurance covering the employees of
Group, in such amounts as is usual and customary under the circumstances;
c. Comprehensive general liability insurance covering the risks
of Group, in an amount determined by the Joint Operations Committee.
ARTICLE IX
BOOKS AND RECORDS
-----------------
9.1 Ownership of Records. All business records and information
--------------------
relating exclusively to the business and activities of either party shall be the
property of that party, irrespective of identity of the party responsible for
producing or maintaining such records and information. Without limiting the
foregoing, all patient charts and records maintained by Manager relating to the
dental services of Group shall be the property of Group. Group also shall be
entitled to a copy at Group's sole cost of all business records pertaining to
Group. Except as limited by law, including, but not limited to laws governing
the confidentiality of patient records, Manager shall be entitled to a copy at
Manager's sole cost of all records of Group.
20.
ARTICLE X
RESTRICTIVE COVENANTS
---------------------
10.1 Covenant Regarding Proprietary Information. In the course of the
------------------------------------------
relationship created pursuant to this Agreement, Group will have access to
certain methods, trade secrets, processes, ideas, systems, procedures,
inventions, discoveries, concepts, software in various stages of development,
designs, drawings, specifications, models, data, documents, diagrams, flow
charts, research, economic and financial analysis, developments, procedures,
know-how, policy manuals, form contracts, marketing and other techniques, plans,
materials, forms, copyrightable materials and trade information (all of which is
referred to in this Agreement as "Proprietary Information") regarding the
operations of Manager and/or of its Affiliates (collectively, the "Protected
Parties"). Group shall maintain all such Proprietary Information in strict
secrecy and shall not divulge such information to any third parties, except as
may be necessary for the discharge of their obligations under this Agreement.
Group shall take all necessary and proper precautions against disclosure of any
Proprietary Information to unauthorized persons by any of its employees or
agents. Group and all employees, and agents of Group who will have access to
all or any part of the Proprietary Information may be required to execute an
agreement, at the request of Manager, valid under the law of the jurisdiction in
which such agreement is executed, and in a form acceptable to Manager and its
counsel, committing themselves to maintain the Proprietary Information in strict
confidence and not to disclose it to any unauthorized person or entity. The
Protected Parties not party to this Agreement are hereby specifically made third
party beneficiaries of this Section, with the power to enforce the provisions
hereof. Upon termination of this Agreement for any reason, Group and each of
its Employee Providers and Subcontract Providers shall cease all use of any of
the Proprietary Information and, at the request of Manager, shall execute such
documents as may be necessary to evidence Group's abandonment of any claim
thereto. The parties recognize that a breach of this Section cannot be
adequately compensated in money damages and therefore agree that injunctive
relief shall be available to the Protected Parties as their respective interests
may appear.
The obligations of Group under this Section 10.1 shall not apply to
information: (i) which is a matter of public knowledge on or becomes a matter
of public knowledge after the Effective Date of this Agreement, other than as a
breach of the confidentiality terms of this Agreement or as a breach of the
confidentiality terms of any other agreement between Group and Manager or its
Affiliates; or (ii) which was lawfully obtained by Group on a nonconfidential
basis other than in the course of performance under this Agreement and from some
entity other than Manager or its Affiliates or from some person other than one
employed or engaged by Manager or its Affiliates, which entity or person has no
obligation of confidentiality to Manager or its Affiliates.
10.2 Covenants Not to Compete During the Term. The parties recognize
----------------------------------------
that the services to be provided by Manager shall be feasible only if Group
operates an active dental practice to which Group and Clinical Staff devote full
time and attention. To that end:
21.
a. Restrictive Covenants by Group. During the term of this
------------------------------
Agreement, Group shall not (i) establish, operate or provide dental care
services at any dental office, clinic or other facility providing services
substantially similar to those provided by Group pursuant to this Agreement
anywhere other than at the Practice Sites and as may be approved in writing by
Manager; (ii) enter into any management or administrative services agreement or
other similar arrangement with any person or entity other than Manager without
Manager's prior written approval and (iii) operate or, directly or indirectly,
hold or own any type of ownership or other form of equity interest in, or serve
as a consultant to or otherwise perform services for any person or entity
engaged in the business of providing management and administrative services to
dental practices.
b. Restrictive Covenants by Providers. Unless otherwise agreed
----------------------------------
to in writing by Manager, Group shall use its best efforts to obtain and enforce
formal agreements with its Employee Providers and Subcontract Providers who are
dentists not to establish, operate or provide dental care services, during the
term of this Agreement and for a period of two (2) years after any termination
of employment with Group, at any dental office, clinic or facility located
within 20 miles of any Practice Site at which the Employee Provider or
Subcontract Provider has practiced. Any variation of such restrictive covenants
shall be approved in advance in writing by Manager.
10.3 Covenant Not to Solicit. For two (2) years following the
-----------------------
termination of this Agreement, Group shall not:
a. directly or indirectly solicit, recruit or hire, or induce
any party to solicit, recruit or hire any person who is an employee of, or who
has entered into an independent contractor arrangement with, Manager or any
Affiliate of Manager;
b. directly or indirectly, whether for himself or for any other
person or entity, call upon, solicit, divert or take away, or attempt to
solicit, call upon, divert or take away any of Manager's customers, business, or
clients; or
c. directly or indirectly solicit, or induce any party to
solicit, any of Manager's contractors or the contractors of any Affiliate of
Manager, to enter into the same or a similar type of contract with any other
party.
10.4 Enforcement. Manager and Group acknowledge and agree that since
-----------
a remedy at law for any breach or attempted breach of the provisions of this
Article X shall be inadequate, either party shall be entitled to specific
performance and injunctive or other equitable relief in case of any such breach
or attempted breach, in addition to whatever other remedies may exist by law.
All parties hereto also waive any requirement for the securing or posting of any
bond in connection with the obtaining of any such injunctive or other equitable
relief.
22.
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
11.1 Assignment. Neither party shall assign this Agreement to any
----------
other party or parties without the prior written consent of the other party,
which consent may be withheld arbitrarily or capriciously, for any reason or for
no reason whatsoever and any attempted assignment in violation of this Agreement
shall be null and void. Notwithstanding the preceding, Manager may assign this
Agreement to any direct or indirect wholly-owned subsidiary of either Manager or
Parent or to a financial institution as collateral for the indebtedness of
Manager, Parent or any of their respective Affiliates.
11.2 Headings. The article and section headings used in this
--------
Agreement are for purposes of convenience only. They shall not be construed to
limit or to extend the meaning of any part of this Agreement.
11.3 Waiver. Waiver by either Group or Manager of any breach of any
------
provision of this Agreement shall not be deemed to be a waiver of such provision
or of any subsequent breach of the same or of any other provision of this
Agreement.
11.4 Notices. Any notice, demand, approval, consent or other
-------
communication required or desired to be given under this Agreement in writing
shall be personally served or given by overnight express carrier or by mail, and
if mailed, shall be shall be deemed to have been given when five (5) business
days have elapsed from the date of deposit in the United States mails, certified
and postage prepaid, addressed to the party to be served at the following
address or such other address as may be given in writing to the parties.
Group: Idaho Dental Group, P.A.
Pine Ridge Mall
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxx
Manager: GMS Dental Group, Inc.
00000 Xxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
11.5 Attorneys' Fees. If any legal action or arbitration or other
---------------
proceeding is commenced, whether by Manager or Group concerning this Agreement,
the prevailing party shall recover form the losing party reasonable attorneys'
fees and costs and expenses, including those of appeal and not limited to
taxable costs, incurred by the prevailing party, in addition to all other
remedies to which the prevailing party may be entitled. If a claim or
23.
claims asserted by a third party against Manager or Group or any of them arise
from an action or omission by the other, the party responsible for the action or
omission shall be the losing party, and the other party shall be the prevailing
party, for purposes of the foregoing sentence.
11.6 Successors. Without limiting or otherwise affecting any
----------
restrictions on assignments of this Agreement or rights or duties under this
Agreement, this Agreement shall be binding upon and inure to the benefit of the
successor and assigns of Group and Manager.
11.7 Entire Agreement. This Agreement sets forth the entire agreement
----------------
between Group and Manager and supersedes all prior negotiation and agreements,
written or oral, concerning or relating to the subject matter of this Agreement
(including, without limitation, that certain Dental Group Management Agreement
by and between the parties dated October 11, 1996), and this Agreement may not
be modified except by a writing executed by all parties and subject to the
provisions thereof.
11.8 Governing Law. This Agreement and the rights and obligations of
-------------
the parties hereto shall be governed by, and construed according to, the laws of
the State of California.
11.9 Severability, Contract Modifications for Prospective Legal
----------------------------------------------------------
Events. Nothing contained in this Agreement shall be construed to require the
------
commission of an act contrary to law, and whenever there is any conflict between
any provision of this Agreement and any statute, law, ordinance or regulation,
the latter shall prevail. In such event, and in any case in which any provision
of this Agreement is determined to be in violation of a statute, law, ordinance
or regulation, the affected provision(s) shall be limited only to the extent
necessary to bring it within the requirements of the law and, insofar as
possible under the circumstances, to carry out the purposes of this Agreement.
The other provisions of this Agreement shall remain in full force and effect,
and the invalidity or unenforceability of any provision hereof shall not affect
the validity and enforceability of the other provisions of this Agreement, nor
the availability of all remedies in law or equity to the parties with respect to
such other provisions.
In the event any state or federal laws or regulations, now existing or
enacted or promulgated after the effective date of this Agreement, are
interpreted by judicial decision, a regulatory agency or legal counsel of both
parties in such a manner as to indicate that the structure of this Agreement may
be in violation of such laws or regulations, Group and Manager shall amend this
Agreement, to the maximum extent possible, to preserve the underlying economic
and financial arrangements between Group and Manager. The parties agree that
such amendment may require reorganization of Group or Manager, or both, and may
require either or both parties to obtain appropriate regulatory licenses and
approvals. If an amendment is not possible, either party shall have the right to
terminate this Agreement upon thirty (30) days notice to the other party.
24.
11.10 Time Is of the Essence. Time is of the essence in this
----------------------
Agreement.
11.11 Authority. Any Person signing this Agreement on behalf of any
---------
entity hereby represents and warrants in its individual capacity that it has
full authority to do so on behalf of such entity.
11.12 Counterparts. This Agreement may be executed in two (2) or
------------
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
[Signature Page to Follow]
25.
IN WITNESS WHEREOF, Group and Manager have caused their authorized
representatives to execute this Agreement on the date first above written.
"Group"
IDAHO DENTAL GROUP, P.A., an Idaho
professional corporation
By: /s/ Xxxxx Xxxxxx Xxxxxx
-------------------------
Xxxxx Xxxxxx Xxxxxx
President
"Manager"
GMS DENTAL GROUP MANAGEMENT, INC., a
Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx
_________________________
Xxxxxxx X. Xxxxx
President
26.
ADDENDUM 1.
----------
For purposes of this Agreement, the following terms shall have the
meaning indicated below or defined at the indicated section:
(1) Accounts. See Section 2.5.
--------
(2) Affiliate. "Affiliate" shall mean, with respect to any Person,
---------
(i) any individual or entity directly or indirectly owned or controlled by such
Person, (ii) any individual or entity directly or indirectly owning or
controlling such Person or (iii) any individual or entity directly or indirectly
owned or controlled by the same family member, individual or entity as owns or
controls such Person. For purposes of this Agreement, neither Group nor Manager
shall be deemed an Affiliate of the Other.
(3) Agreement. "Agreement" means this Group Management Agreement.
---------
(4) Annual Budget. See Section 3.6.
-------------
(5) Beneficiaries. See Recital A.
-------------
(6) Books and Records. "Books and Records" means Group's books of
-----------------
account, accounting and financial records and all other records relating to and
used in the conduct of Manager's duties hereunder and also used in the
preparation of reports and financial statements. The books and records at all
times shall be correct and complete and contain correct and timely entries made
with respect to transactions entered into pursuant hereto in accordance with
GAAP.
(7) Capital Costs. "Capital Costs" shall mean any and all investments
-------------
that are or would be capitalized pursuant to GAAP.
(8) Committee Members. See Section 3.5a.
-----------------
(9) Default Notice. See Section 6.2b(1).
--------------
(10) Effective Date. See preamble paragraph.
--------------
(11) Employee Providers. See Recital B.
------------------
(12) Employment Agreements. See Recital B.
---------------------
(13) GAAP. "GAAP" means at any particular time generally accepted
----
accounting principles as in effect at such time. Any accounting term used in
this Agreement shall have, unless otherwise specifically provided herein, the
meaning customarily given in accordance with GAAP, and all financial
computations hereunder shall be computed unless
1.
otherwise specifically provided herein, in accordance with GAAP as consistently
applied and using the same method of valuation as used in the preparation of
Manager's financial statement.
(14) Group. See first paragraph of this Agreement.
-----
(15) Group Expenses. "Group Expenses" means salaries and wages,
--------------
compensation, payroll taxes, and employee benefits of Employee Providers and
Subcontract Providers, all as set forth in, and subject to and limited by, the
Annual Budget. Notwithstanding the preceding, 34.211% of salaries and wages,
compensation and payroll taxes of Group's shareholder employees, who were both
shareholders and employees of Group as of January 1, 1997, and for so long as
such shareholders remain Employee Providers pursuant to their respective Dental
Employment Agreements as in existence on January 1, 1997, shall be specifically
excluded from Group Expenses and payment of such amounts shall be the sole
obligation of the Group.
(16) Group Members. See Section 3.5a.
-------------
(17) Group Patients. See Recital A.
--------------
(18) Joint Operations Committee. See Section 3.4b.
--------------------------
(19) Management Fee. See Section 7.1.
--------------
(20) Manager. See first paragraph of this Agreement.
-------
(21) Manager Members. See Section 3.5a.
---------------
(22) Marks. See Section 2.3a.
-----
(23) Offer. See Section 5.1.
-----
(24) Parent. "Parent" shall mean GMS Dental Group, Inc. or any
------
successor thereto.
(25) Payment Date. See Section 7.2.
------------
(26) Payor Contracts. See Recital A.
---------------
(27) Person. "Person" shall mean any natural person, corporation,
------
partnership or other business structure recognized as a separate legal entity.
(28) Plans. See Recital A.
-----
(29) Practice. See Recital C.
--------
2.
(30) Practice Expenses. "Practice Expenses" means all costs incurred
-----------------
by Manager including amortization associated with costs of acquiring assets of
the Group or covering operations and Capital Costs, direct labor costs,
supplies, direct overhead and indirect overhead expense attributable to the
management and operation of the Practice and direct and indirect corporate
overhead of Manager including all interest expense and other expenses which are
attributable to Manager's business operations in accordance with Manager's
corporate allocation policies.
(31) Practice Sites. See Section 3.4a.
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(32) Practice Site Facilities. See Section 3.4a.
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(33) Preliminary Budget. See Section 3.7b.
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(34) Programs. See Section 2.3b.
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(35) Proprietary Information. See Section 10.1.
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(36) Protected Parties. See Section 10.1.
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(37) Providers. See Recital B. The term "Providers" shall include
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individuals or organizations licensed to practice dentistry (including
specialists) as well as other licensed dental professionals who provide
ancillary reimbursable dental services.
(38) Provider Subcontracts. See Recital A.
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(39) Revenues. See Section 2.4.
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(40) Security Agreement. See Section 7.5.
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(41) Subcontract Providers. See Recital B.
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(42) Term. See Section 6.1.
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3.
