MANAGEMENT AGREEMENT
This Management Agreement is entered into as of this 1st day of May, 1998 by
and between Xxxx X. Xxxx, D.D.S. Inc., ("Xx. Xxxx") who is duly licensed to
practice orthodontics in the state of Texas (the "State") through a professional
corporation and Omega Orthodontics Incorporated, ("OMEGA") and Omega
Orthodontics of Austin, Inc., a Delaware corporation ("MSO").
RECITALS
A. OMEGA, through its operating subsidiaries such as the MSO, provides
professional management and marketing services to orthodontic and other
specialty practices in the United States, which services include providing
practice management systems, office space, equipment, furnishings and active
administrative personnel necessary for the operation of such practices, and
which services are provided directly or indirectly through management service
organizations.
B. Xx. Xxxx owns and operates an orthodontic practice (the "Orthodontic
Practice") with offices located at 0000 Xxxxxxxx Xxxx., Xxxxxx, Xxxxx 00000 (the
"Orthodontic Offices") and furnishes orthodontic care to the general public.
C. OMEGA's services are designed to improve the efficiency and
profitability of the Xx. Xxxx'x practice while enhancing the ability of Xx. Xxxx
to render quality orthodontic care to his patients.
D. Xx. Xxxx wishes to retain OMEGA to perform the functions and to
provide the services described in this Agreement to assist him to achieve the
above goals.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged to the full
satisfaction of the parties hereto, the parties hereto agree as follows:
1.0 Term of the Agreement
1.1 Appointment as Business Manager. Effective as of May 1, 1998 (the
"Commencement Date"), Xx. Xxxx hereby appoints OMEGA as the sole and exclusive
business manager of the Orthodontic Practice and agrees that OMEGA shall have
all power and authority reasonably necessary to manage the non-orthodontic
business affairs of the Orthodontic Practice, subject to the requirements of the
applicable provisions of State law relating to the practice of orthodontics.
1.2 Term. This Agreement shall take effect on the Commencement Date and shall
remain in full force and effect for a period of two (2) years, unless such term
is extended in accordance with Clause 6.2 hereof.
2.0 Duties and Compensation
2.1 Duties of OMEGA. The duties of OMEGA and the MSO under this Agreement are
set forth in Schedule 1 attached hereto and incorporated herein by this
reference.
2.2 Duties of Xx. Xxxx. The duties of Xx. Xxxx under this Agreement are set
forth in Schedule 2 attached hereto and incorporated herein by this reference.
2.3 Compensation. The terms of the compensation to be paid under this Agreement
are set forth in Schedule 3 attached hereto and incorporated herein by this
reference.
3.0 Limitations on Scope of Services
3.1 Professional Services. A fundamental understanding between the parties
hereto is that the rendering of orthodontic services shall be separate and
independent from the provision of administrative, management and support
services by OMEGA. Thus, Xx. Xxxx shall have sole and absolute control of the
delivery of all professional services and treatment rendered to patients at the
Orthodontic Offices.
3.2 Solicitation. No employee or other representative of OMEGA or the MSO shall
be engaged in, or allowed to solicit patients on behalf of, Xx. Xxxx, nor shall
OMEGA have any control over Xx. Xxxx'x patients.
3.3 Advertising. No advertising or promotional materials, or other materials of
any nature, including billing and collection forms, reports, agreements,
correspondence, or similar materials, used in connection with the Orthodontic
Practice shall be used or distributed without having first been approved by Xx.
Xxxx.
3.4 Reciprocation. The parties hereby acknowledge and agree that the benefits
conferred upon each of them hereunder neither require nor are in any way
contingent upon the admission, recommendation, referral, or any other
arrangement for the provision of any item or service offered by OMEGA to any
patients of Xx. Xxxx or his employees, contractors or agents, nor are such
benefits in any way contingent upon the recommendation, referral or any other
arrangement for the provision of any item or service offered by Xx. Xxxx or any
of his employees, contractors or agents.
4.0 Independent Contractor Relationship Neither Xx. Xxxx nor his employees shall
have any claim under this Agreement or otherwise against OMEGA or the MSO for
worker's compensation, unemployment compensation, sick leave, vacation pay,
retirement benefits, Social Security benefits, or any other employee benefits,
all of which shall be the sole responsibility of Xx. Xxxx.
5.0 Insurance and Indemnity
5.1 Insurance to Be Maintained by Xx. Xxxx. Throughout the term of this
Agreement, Xx. Xxxx shall maintain in full force and effect comprehensive
professional liability insurance with limits of not less than $500,000 per
occurrence and $1,000,000 annual aggregate for Xx. Xxxx and each of the
orthodontists providing services for the Orthodontic Practice. Xx. Xxxx shall be
responsible for all liabilities within deductibles and for all liabilities in
excess of the limits of such policies. OMEGA agrees to negotiate for and cause
premiums to be paid on behalf of Xx. Xxxx with respect to such insurance.
Premiums and deductibles with respect to such policies shall not be OMEGA
Expenses (as defined in Schedule 1). Xx. Xxxx also agrees to name OMEGA as an
additional insured and provide for appropriate waivers of insurers rights of
subrogation. Xx. Xxxx agrees to deliver to OMEGA a certificate of insurance
indicating such coverage. Xx. Xxxx will furnish the other certificates from
their insurance carriers, evidencing the insurance coverages required in this
Article.
5.2 Insurance to Be Maintained by Omega. Throughout the term of this Agreement,
OMEGA will pay as an OMEGA Expense (a) comprehensive professional liability
insurance for all professional employees of OMEGA with limits as determined
reasonable by OMEGA; and (b) comprehensive general liability and property
insurance covering the Orthodontic Office premises and operations.
5.3 Tail Insurance Coverage. Xx. Xxxx and each orthodontist (if any) providing
services through the Orthodontic Practice that upon termination of Xx. Xxxx'x or
such endodontist's relationship with the Orthodontic Practice, for any reason,
tail insurance coverage will be purchased by Xx. Xxxx or such orthodontist. Such
provisions may be contained in an employment agreement, restrictive covenant
agreement or other agreement entered into by Xx. Xxxx or the orthodontist, and
Xx. Xxxx hereby covenants with OMEGA to enforce such provisions relating to the
tail insurance coverage or to provide such coverage at the expense of Xx. Xxxx
or each such orthodontist.
5.4 Additional Insureds. Xx. Xxxx and OMEGA agree to have each other named as an
additional insured on the other's respective liability insurance policies and
such policies shall also contained appropriate waiver of insurers rights of
subrogation in favor of the named insureds.
5.5 Indemnification. Xx. Xxxx shall indemnify, hold harmless and defend OMEGA
and the MSO, its affiliates and its and their respective officers, directors,
shareholders, employees and representatives, from and against any and all
liabilities, losses, damages, claims, causes of action, expenses, judgments,
settlements, lawsuits and obligations (including reasonable attorneys' fees),
whether or not covered by insurance, caused or asserted to have been caused,
directly or indirectly, by or as a result of the performance of orthodontic
services or the performance of any intentional acts, negligent acts or omissions
by Xx. Xxxx and/or the other orthodontic and dental professionals employed by
him and his employees and/or his subcontractors (other than OMEGA) during the
term hereof. OMEGA and the MSO shall indemnify, hold harmless and defend Xx.
Xxxx, the other orthodontic and dental professionals employed by him and his
employees and/or his subcontractors up to the proceeds recovered from applicable
insurance policies provided pursuant to 5.2 hereof, from and against such
liability, loss, damage, claim, causes of action, and expenses (including
reasonable attorneys' fees), to the extent caused directly by or as a result of
the performance of any intentional acts, negligent acts or omissions by OMEGA,
the MSO and/or their affiliates and its and their respective shareholders,
agents, employees and/or subcontractors during the term hereof.
5.6 Notwithstanding anything to the contrary contained in this Agreement, or any
Schedule or Exhibit hereto, in no event shall the OMEGA or the MSO, their
officers, directors or employees be liable for any form of indirect, special,
incidental or consequential damages, including but not limited to loss of profit
or loss of business reputation, whether such damages arise in contract or tort,
irrespective of fault, negligence or strict liability.
6.0 General Provisions
6.1 Notices. Any notice to be given pursuant to this Agreement shall be deemed
effective if given personally, or by telephone, telegram, telecopy, facsimile or
other electronic transmission, or by letter to an officer or administrator of
OMEGA or to Xx. Xxxx, as the case may be. Notice in person, or by telephone,
telegram or electronic transmission shall be deemed effective when given. Notice
by mail shall be deemed effective seventy-two (72) hours after deposit in the
United States mails, and properly addressed with postage prepaid.
Notices to Xx. Xxxx shall be given as follows:
Xxxx X. Xxxx, D.D.S.
Xxxx X. Xxxx D.D.S. Inc.
0000 Xxxxxxxx Xxxx.
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxx, D.D.S.
or such other address as may be furnished by Xx. Xxxx to OMEGA from time to time
in writing.
Notices to OMEGA shall be given as follows:
Omega Orthodontics, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
or other such addresses as may be furnished by OMEGA or the MSO to Xx. Xxxx from
time to time in writing.
6.2 Contract Modifications for Prospective Legal Events. In the event any
Federal, state or local laws, rules, regulations or interpretations governing or
applicable to Xx. Xxxx or the Orthodontic Practice (collectively, "Laws"), now
existing or enacted or promulgated after the Commencement Date, are interpreted
by judicial decision, a regulatory agency or legal counsel for both parties in
such a manner as to indicate that the structure of this Agreement may be in
violation of such Laws, Xx. Xxxx and OMEGA and the MSO shall amend this
Agreement as necessary. To the maximum extent possible, any such amendment shall
preserve the underlying economic and financial arrangements between Xx. Xxxx and
OMEGA and the MSO.
6.3 Remedies. The remedies specified in this Agreement are the exclusive
remedies for any liabilities arising under this Agreement. The limitations on
liability, releases from liability, and waiver and indemnity provisions
expressed in this Agreement shall apply to the full extent permitted by law,
even in the event of the fault, negligence (in whole or in part), strict
liability, or other basis of liability, and whether liability is founded in
contract, tort, or otherwise.
6.4 No Obligation to Third Parties. None of the obligations and duties of OMEGA
or Xx. Xxxx under this Agreement shall in any way or in any manner be deemed to
create any obligation of OMEGA or of Xx. Xxxx to, or any rights in, any person
or entity not a party to this Agreement.
6.5 Entire Agreement. This Agreement, including the Schedules hereto, and the
Agreement in Principle constitutes the entire agreement between the parties
concerning this subject matter, and supersede all prior and contemporaneous
agreements, representations and understandings of the parties concerning the
contents hereof and thereof. No supplement, modification, or amendment to this
Agreement shall be binding unless executed in writing by all of the parties
hereto, except as otherwise provided herein. No waiver of any of the provisions
of this Agreement shall be deemed to constitute a waiver of any other provision,
whether similar or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver.
6.6 Assignment The rights and the duties of the parties under this Agreement may
not be assigned or transferred without the prior written consent of the
non-assigning party, which consent shall not be unreasonably withheld; provided,
however, that OMEGA shall be permitted to assign its rights and obligations
hereunder without the consent of Xx. Xxxx to any person, firm or corporation
controlled by OMEGA, controlling OMEGA or under common control with OMEGA.
6.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, excluding its conflict of laws
rules. The parties acknowledge that OMEGA is not authorized or qualified to
engage in any activity which may be construed or deemed to constitute the
practice of dentistry or orthodontics. To the extent any act or service required
of OMEGA in this Agreement should be construed or deemed, by any governmental
authority, agency or court to constitute the practice of dentistry or
orthodontics, the performance of said act or service by OMEGA shall be deemed
waived and forever unenforceable and the provisions of Section 6.11 shall be
applicable.
6.8 Force Majeure. Neither party shall be liable to the other party for failure
to perform any of the services required herein in the event of strikes,
lock-outs, calamities, acts of God, unavailability of supplies or other events
over which that party has no reasonable control for so long as such events
continue, and for a reasonable period of time thereafter. The party claiming the
benefit of any such event of force majeure shall give the other party prompt
written notice of the occurrence thereof and shall use its best efforts to
terminate, or overcome the effects of, such force majeure at the earliest
possible date.
6.9 Compliance with Applicable Laws. Both parties shall comply with all
applicable Laws and restrictions imposed thereunder in the conduct of their
obligations under this Agreement.
6.10 Language Construction. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
6.11 Severability In the event any provision of this Agreement is held by a
court of competent jurisdiction to be illegal or unenforceable, (i) the parties
shall amend this Agreement in order to carry out the intent and essential
business purposes of this Agreement as closely possible within the requirements
of applicable provisions of Law as determined by such a court, and (ii) the
remaining provisions of this Agreement shall continue in full force and effect.
6.12 Captions. Captions to sections in this Agreement are for ease of reference,
and shall not be considered an interpretation of the section.
6.13 Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the
day and year first above written.
Xxxx X. Xxxx, D.D.S.
-------------------------------
Xxxx X. Xxxx D.D.S.
OMEGA ORTHODONTICS, INC.
By:________________________
Name: Xxxxxx Xxxxxxxx
Title: Chief Financial Officer
SCHEDULE 1
DUTIES OF OMEGA
1.1 General. OMEGA, through its operating subsidiary the MSO, shall provide the
Orthodontic Practice with comprehensive practice management, financial and
marketing services and manage such facilities, equipment, and support personnel
as are currently available to the Orthodontic Practice and reasonably required
to operate the Orthodontic Practice at the Orthodontic Offices, as determined by
OMEGA in consultation with Xx. Xxxx. OMEGA may perform some or all of its
services at a location other than at the Orthodontic Offices.
1.2 Orthodontic Office Services. OMEGA, through the MSO, shall manage the office
space and related leasehold improvements to constitute the Orthodontic Offices
and related fixtures, furniture, furnishings, equipment and related services.
OMEGA shall be responsible for repairs, maintenance and replacement of the
Orthodontic Offices, except for repairs, maintenance and replacement to the
extent necessitated by the negligence of Xx. Xxxx, his employees and agents.
OMEGA shall provide telephone, facsimile transmission, printing, duplicating and
transcribing services as needed, as well as all laundry, linen and uniforms.
1.3 Administrative Services. OMEGA shall manage secretarial, reception,
maintenance, front office, skilled assistants and other personnel, except duly
licensed orthodontic and dental professionals, during normal office hours as
reasonably requested by Xx. Xxxx, to enable Xx. Xxxx to perform effectively
orthodontic and treatment services. OMEGA shall be responsible for staff
scheduling, provided, however, that all orthodontic and dental professionals,
including orthodontic assistants and hygienists, shall be under the direct
supervision of Xx. Xxxx and Xx. Xxxx shall have sole authority to employ and
terminate the employment of all orthodontic and dental professionals. All
personnel placed in the Orthodontic Offices by OMEGA shall be subject to the
approval of Xx. Xxxx, which approval shall not be unreasonably withheld, and Xx.
Xxxx shall have the authority to instruct OMEGA to terminate the employment of
such personnel for any lawful reason. OMEGA shall be responsible for all
personnel wages, withholding, fringe benefits, bonuses and workers' compensation
insurance in connection with its employees; provided, however, that Xx. Xxxx is
in full compliance with the compensation provisions of this Agreement.
1.4 Business Systems, Procedures and Forms. In consultation with Xx. Xxxx, OMEGA
shall establish standardized business systems and procedures for the Orthodontic
Practice, including, but not limited to, patient scheduling systems, treatment
records system, financial reporting and process control systems and patient
communication management systems (the "OMEGA Patient Scheduling System") that
are designed to improve the Orthodontic Practice operating efficiency. OMEGA
shall additionally provide the Orthodontic Practice with and train the
Orthodontic Practice's staff in the use of standardized clinical forms,
including, without limitation, forms for patient evaluations and treatment
plans. Xx. Xxxx expressly acknowledges and agrees that he shall have no property
rights in the OMEGA Patient Scheduling System and the other foregoing systems,
procedures and clinical forms, and further agrees that such systems, procedures,
and forms shall be deemed to constitute Confidential Information within the
meaning of Section 2.7 of Schedule 2 and be subject to the restrictions on the
use, appropriation, and reproduction of such Confidential Information provided
for in such Section 2.7.
1.5 Purchasing, Accounts Payable, Supplies and Inventory. OMEGA shall be
responsible for and shall establish and maintain systems for the handling and
processing of all purchasing and payment activities and for the performance of
all payroll and payroll accounting functions of the Orthodontic Practice. OMEGA
shall order and purchase and maintain all inventory and orthodontic supplies as
reasonably required by the Orthodontic Practice to enable Xx. Xxxx to render
orthodontic care to his patients including, without limitation, all orthodontic
appliances and other supplies, laboratory supplies and sanitation supplies
1.6 Billing, Collection. OMEGA shall supervise the: (i) billing and collecting
payments for all orthodontic and other professional services rendered by Xx.
Xxxx and the other orthodontic and dental professionals employed by Xx. Xxxx,
with all such billing and collecting to be done in the name of Xx. Xxxx; (ii)
receiving payments from patients, insurance companies and all other third party
payors; (iii) taking possession of and endorsing in the name of Xx. Xxxx any
notes, checks, money orders, insurance payments and other instruments received
in payment for services or of accounts receivable; and (iv) settling and
compromising claims and, where deemed appropriate by OMEGA and consented to
(which consent shall not be unreasonably withheld or delayed) by Xx. Xxxx,
assigning such accounts receivable to a collection agency or the bringing of a
legal action against a patient or a payor on Xx. Xxxx 's behalf. In supervising
the seeking of payments on behalf of Xx. Xxxx hereunder, OMEGA shall act as Xx.
Xxxx 's agent in billing and collecting professional fees, charges and other
accounts owed to Xx. Xxxx and shall only xxxx under Xx. Xxxx 's provider number.
OMEGA does not guarantee collection and is not responsible for any loss to Xx.
Xxxx as a result of any inability to collect fees and charges.
1.7 Disbursement of Funds. Xx. Xxxx shall create and maintain an accurate, up to
date, log of all monies collected by Xx. Xxxx commencing on the Commencement
Date. All such monies shall be deposited into an account (the "Orthodontic
Practice Account") with a bank whose deposits are insured with the Federal
Deposit Insurance Corporation and which bank is acceptable to OMEGA and Xx. Xxxx
(the "Bank"). The Orthodontic Practice Account shall contain the name of the Xx.
Xxxx, however, the account shall explicitly specify that only Omega shall be
entitled to make all disbursements therefrom. Omega shall account for all monies
so disbursed from the Orthodontic Practice Account.
From the funds collected and deposited by Xx. Xxxx in the Orthodontic Practice
Account, Omega shall make for and on behalf of Xx. Xxxx the following
disbursements promptly, when payable:
(1) Compensation and other direct costs payable to Xx. Xxxx pursuant to Schedule
3 of this Agreement; and
(2) All compensation payable to Omega pursuant to Schedule 3 of this Agreement.
1.8 OMEGA Expenses. OMEGA shall be responsible for the payment of all OMEGA
Expenses, as defined below, during the term of this Agreement.
(a) "OMEGA Expenses" shall mean all operating and non-operating
expenses incurred in the operation of the Orthodontic Practice, including,
without limitation: (1) Salaries, benefits and other direct costs of all
employees of OMEGA providing services to the Orthodontic Practice hereunder; (2)
Salaries, benefits and other direct costs of all employees of Xx. Xxxx at the
Orthodontic Practice (other than Xx. Xxxx and the other orthodontic and dental
professionals employed by Xx. Xxxx), provided, however, that any and all
payments to such employees of Xx. Xxxx after the Commencement Date but which are
compensation for services rendered by such employees prior to the Commencement
Date shall not be OMEGA Expenses and, to the extent they are paid by OMEGA,
OMEGA shall be entitled to offset such amounts against any amounts to be paid by
OMEGA to Xx. Xxxx pursuant to Schedule 3 of this Agreement; (3) Direct costs of
all employees or consultants of OMEGA who provide services at the Orthodontic
Offices or in connection with the Orthodontic Practice required for improved
clinic performance, such as work management, materials management, purchasing,
charge and coding analysis, and business office consultation; (4) Accounts
payable of the Orthodontic Practice (not including payroll, "Accounts Payable")
which have accrued not more than 30 days prior to the Commencement Date and
which remain unpaid as of such time, but only to the extent that such Accounts
Payable do not exceed one-quarter (1/4) of one "Average" month of cash receipts
of the Orthodontic Practice (the term "Average" shall mean an average of the
cash receipts of the Orthodontic Practice using the last 12 months prior to the
end of the month immediately preceding the Commencement Date); (5) All direct
costs associated with operating the Orthodontic Offices, including without
limitation, utilities, cleaning and maintenance; (6) Obligations of OMEGA under
leases or subleases entered into in connection with the operation of the
Orthodontic Offices as well as utility expenses relating to the Orthodontic
Offices; (7) Personal property and intangible taxes assessed against OMEGA's
assets used in connection with the operation of the Orthodontic Offices,
commencing on the Commitment Date; (8) In the event an opportunity arises for
additional orthodontists to become employed by Xx. Xxxx at the Orthodontic
Practice or other orthodontic practices to merge with the Orthodontic Practice,
actual out-of-pocket expenses of OMEGA personnel working on a specified
employment arrangement or merger, whether or not such employment arrangement or
merger is consummated; (9) All other expenses incurred by OMEGA in carrying out
its obligations under this Agreement, but excluding any corporate overhead costs
of OMEGA or any corporation affiliated with OMEGA not specifically listed above.
(b) "OMEGA Expenses" shall not include: (1) Any Federal, state or local
income taxes of Xx. Xxxx and the other orthodontic and dental professionals
employed by Xx. Xxxx, or the costs of preparing Federal, state or local tax
returns thereof; (2) Salaries, benefits and other direct costs of employing Xx.
Xxxx and the other orthodontic and dental professionals employed by Xx. Xxxx;
(3) Physician licensure fees, board certification fees and costs of membership
in professional associations and societies for Xx. Xxxx and the other
orthodontic and dental professionals employed by Xx. Xxxx; (4) Professional
liability insurance for Xx. Xxxx and the other orthodontic and dental
professionals employed by Xx. Xxxx as provided for under Section 2.6 of Schedule
2 to this Agreement; (5) Costs of continuing professional education for Xx. Xxxx
and the other orthodontic and dental professionals employed by Xx. Xxxx
including travel and related expenses; (6) Costs associated with legal,
accounting and professional services incurred by or on behalf of Xx. Xxxx; (7)
Liability judgments assessed against Xx. Xxxx or the other orthodontic and
dental professionals employed by Xx. Xxxx in excess of policy limits or within
the deductible limits of any policy; (8) Direct personal expenses of Xx. Xxxx
and the other orthodontic and dental professionals employed by Xx. Xxxx of a
kind which Xx. Xxxx may have historically provided or charged to such
professionals (including, but not limited to, car allowances and other expenses
which are personal in nature); (9) Charitable contributions by Xx. Xxxx; and
(10) Any other expenses which are expressly designated herein as expenses or
responsibilities of Xx. Xxxx.
1.9 Accounting; Bookkeeping and Reports. OMEGA shall provide for or arrange for
all accounting and bookkeeping services related to the Orthodontic Practice's
operations, provided that such services are incurred in the ordinary course of
business. In addition, OMEGA shall provide Xx. Xxxx with an unaudited internal
monthly statement within twenty (20) days after the end of each month and a
quarterly review within thirty (30) days after the end of each quarter,
respectively, of OMEGA's internal statements. Xx. Xxxx shall be responsible for
preparing and filing his own Federal, state and local tax returns. At Xx. Xxxx
's request, OMEGA shall prepare reports indicating the gross revenues, number of
patients, type of patients, and the activity and the productivity of the
Orthodontic Practice. OMEGA shall assist and advise Xx. Xxxx in the financial
management of the Orthodontic Practice.
1.10 Maintenance and Cleaning Services. OMEGA shall arrange for security,
maintenance and cleaning of the Orthodontic Offices, including the furniture,
fixtures and equipment therein.
SCHEDULE 2
DUTIES OF XX. XXXX
2.1 General. Xx. Xxxx shall be responsible for the management of his practice
and the Orthodontic Office, in accordance with the requirements of the Laws of
the State.
2.2 Employment of the orthodontists and Rendering of Patient Care. Xx. Xxxx
shall be responsible for the employment and professional supervision of Xx. Xxxx
and all other orthodontic and dental professionals employed by him and all
orthodontic care rendered to patients shall be rendered by Xx. Xxxx and such
professionals.
2.3 Professional Services. Xx. Xxxx shall comply with all applicable Laws and
all standards of orthodontic care. Xx. Xxxx shall provide professional services
to patients hereunder in compliance at all times with ethical standards and Laws
applying to the orthodontic profession. Xx. Xxxx shall ensure that he and each
orthodontist who provides orthodontic services to patients is licensed by the
State. In the event that any disciplinary, medical malpractice or other actions
are initiated against Xx. Xxxx or any orthodontic or dental professional
employed by Xx. Xxxx. Xx. Xxxx shall immediately inform OMEGA of such action and
the underlying facts and circumstances subject to such confidentiality agreement
or arrangements as Xx. Xxxx and OMEGA shall mutually determine at or prior to
the time of such disclosure. Xx. Xxxx agrees to cooperate with and participate
in quality assurance/utilization review programs established by OMEGA or
mandated by accreditation and licensure standards applicable to the practice of
orthodontics. Deficiencies discovered in the performance of any personnel or in
the quality of professional services shall be reported immediately to OMEGA, and
appropriate steps shall be taken by Xx. Xxxx at once to remedy such
deficiencies.
2.4 Records. Xx. Xxxx will keep or cause to be kept accurate, complete and
timely dental and other records of all patients. The management of all dental
and patient files and records shall comply with all applicable Laws regarding
their confidentiality and retention and all files and records shall be located
so that they are readily accessible for patient care, consistent with ordinary
records management practices. Such records shall be sufficient to enable OMEGA,
on behalf of Xx. Xxxx to obtain payments for services and related charges and to
facilitate the delivery of quality patient care by Xx. Xxxx. Notwithstanding the
foregoing, patient dental records shall be and remain the property of Xx. Xxxx
and the contents thereof shall be solely the responsibility of Xx. Xxxx.
2.5 Professional Expenses. Xx. Xxxx shall be solely responsible for the cost of
professional licensure fees and board certification fees, membership in
professional associations and continuing professional education incurred by Xx.
Xxxx and the other orthodontic and dental professionals employed by him. Xx.
Xxxx shall ensure that he and the other orthodontic and dental professionals
employed by him participate in such continuing education as is necessary for Xx.
Xxxx and such professionals to remain current.
2.6 Professional Liability Insurance. Xx. Xxxx shall provide, or arrange for the
provision of, and maintain throughout the term of this Agreement, professional
liability insurance coverage in accordance with the provisions of Section 6 of
this Agreement. Xx. Xxxx shall also cooperate in any programs recommended by
OMEGA to assure that each of the orthodontic and dental professionals employed
by him is insurable, and that Xx. Xxxx and each such professional participates
in an on-going risk management program.
2.7 Confidentiality. Xx. Xxxx agrees and acknowledges that all materials
provided by OMEGA to Xx. Xxxx or the Orthodontic Practice constitute
"Confidential Information" and are disclosed in confidence and with the
understanding that it constitutes valuable business information developed by
OMEGA with the assistance of OMEGA at great expenditures of time, effort and
money. Xx. Xxxx further agrees that he shall not, directly or indirectly,
without the express prior written consent of OMEGA, use or disclose such
Confidential Information for any purpose other than in connection with the
services to be rendered hereunder. Xx. Xxxx further agrees: (i) to keep strictly
confidential and hold in trust all Confidential Information and not disclose
such Confidential Information to any third party, including his affiliates,
partners, employees and independent contractors without the express prior
written consent of OMEGA; and (ii) to impose this obligation of confidentiality
on his partners, employees and independent contractors. Xx. Xxxx acknowledges
that the disclosure of Confidential Information to him by OMEGA is done in
reliance upon his representations and covenants in this Agreement. Upon
expiration or termination of this Agreement by either party for any reason
whatsoever, Xx. Xxxx shall immediately return and shall cause his partners,
shareholders and independent contractors to immediately return to OMEGA all
Confidential Information, and Xx. Xxxx will not, and will cause his partners,
employees and independent contractors not to, thereafter use, appropriate, or
reproduce such Confidential Information. Xx. Xxxx further expressly acknowledges
and agrees that any such use, appropriation or reproduction of any such
Confidential Information by any of the foregoing after the expiration or
termination of this Agreement will result in irreparable injury to OMEGA, that
the remedy at law for the foregoing would be inadequate, and that in the event
of any such use, appropriation, or reproduction of any such Confidential
Information after the termination or expiration of this Agreement, OMEGA, in
addition to any other remedies or damages available to OMEGA, shall be entitled
to injunctive or other equitable relief without the necessity of proving actual
damages but such rights to relief shall not preclude OMEGA from other remedies
which may be available to it hereunder.
SCHEDULE 3
COMPENSATION - MANAGEMENT FEES
OMEGA shall receive, as compensation for the performance of all of its
obligations and duties contained in the Agreement, monthly management fees in an
amount equal to seventy-five Percent (75%) of the Practice Revenues, and Xx.
Xxxx shall be entitled to twenty-five Percent (25%) of the Practice Revenues,
except as the parties may otherwise agree from time to time in writing.
Notwithstanding the foregoing, in no event shall OMEGA receive less than fifteen
(15%) percent calendar quarter as compensation for its management services
("Minimum Management Services Fee"). At the end of each calendar quarter during
the term of this Agreement, OMEGA shall provide Xx. Xxxx with an unaudited
internal accounting of OMEGA Expenses, prepared in accordance with the accrual
method of accounting. In addition, if OMEGA Expenses as reflected in such
accounting as having been paid by OMEGA are less than sixty (60%) percent of the
Practice Revenues for such calendar quarter, sixty five (65%) percent of such
difference shall be returned by OMEGA to Hill as a profit incentive rebate (the
"Rebate"). If such OMEGA Expenses are more than sixty (60%) percent of the
Practice Revenues for such calendar quarter, sixty-five (65%) percent of such
excess will be charged to Xx. Xxxx and recorded as a liability to be set off
against future Rebates or utilized as payment of OMEGA's Minimum Management
Services Fee if Practice Revenues are insufficient provided, however, that the
full amount of such liability shall be paid to OMEGA within 15 days following
the termination of this Agreement. If the Agreement to which this Schedule 3 is
attached is terminated or expires, the foregoing management fees shall be
payable to OMEGA based on all Practice Revenue collected as of the date of
termination or expiration.
Payment to OMEGA shall be made in monthly installments based on the
Practice Revenues realized by OMEGA for services rendered hereunder. OMEGA shall
distribute the proceeds received from the Orthodontic Practice's Account and
allocate the proceeds between OMEGA and Xx. Xxxx as described above, on or
before the 15th day of the succeeding month. In the event the 15th day falls on
a weekend or holiday then said distribution shall be made on the next business
day. The parties hereto may agree to handle such matters in a different manner.
For purposes of this Agreement, "Practice Revenues" shall mean gross
collections of all revenues generated by or on behalf of the Orthodontic
Practice (whether through subsidiaries or affiliates), including, but not
limited to, all fees and charges collected as a result of professional
orthodontic services furnished to patients by Xx. Xxxx and for any other goods
or services sold or provided to such patients.
