EXHIBIT 10.17
BUSINESS SERVICES AGREEMENT
THIS BUSINESS SERVICES AGREEMENT, as amended and restated ("Agreement"), dated
October 14, 1994, is by and among ORTHODONTIC CENTERS OF FLORIDA, INC., a
Delaware corporation ("OCS"), XXXXXX X. XXXXXXX, D.M.D., P.A., a Florida
professional corporation (the "PC"), and XXXXXX X. XXXXXXX, D.M.D., an
individual residing in the State of Florida ("Xx. Xxxxxxx", and, collectively
with the PC, the "Orthodontist").
(Please refer to Exhibit E for definitions of all capitalized terms
that are not defined in the text.)
RECITALS:
A. The Orthodontist owns and operates a professional orthodontic
practice with Offices in the locations listed in Exhibit A as it may be amended
from time to time (the "Practice").
B. OCS is a wholly owned subsidiary of Orthodontic Centers of America,
Inc. ("OCA"). OCS and OCA have expertise in providing non-clinical,
non-professional business services to Orthodontists.
C. The Orthodontist wants OCS to provide it with all of the
non-clinical, non-professional business services required by the Orthodontist
for the operation of the Practice, in order to help the Orthodontist achieve the
Orthodontist's goals of increasing the business efficiency of and patient
satisfaction with the Practice, and enhancing the growth and development of the
Practice.
D. At all times, the Orthodontist shall exercise independent clinical
judgment and shall retain sole authority and responsibility for all Professional
Dental Acts in connection with the operation of Practice.
NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and agreements herein contained, the Parties agree as follows:
I. DUTIES OF OCS
1.1 NO ACTIONS CONSTITUTING THE PRACTICE OF DENTISTRY. The Parties
expressly agree that OCS is not authorized or qualified to engage in the
Practice of Dentistry. If a court or other governmental authority of competent
jurisdiction makes a final decision that any term of this Agreement causes OCS
to engage in the Practice of Dentistry or otherwise violate the Dental Practice
Laws or if legal counsel to OCS and the Orthodontist mutually agree to the same,
then such term shall be deemed waived and unenforceable and its nonperformance
shall not constitute a breach or default of this Agreement. Additionally, the
Parties shall reform the Agreement as provided for in Section 8.11.
1.2 OCS TO PROVIDE BUSINESS SERVICES. OCS shall provide the
Orthodontist with, or arrange for the provision to the Orthodontist of, all
business services reasonably required for the day-to-day operations of the
Practice, as discussed hereinafter in this Article I. (These services are
collectively defined as the "Business Services".) The Orthodontist hereby
engages OCS to be its sole and exclusive agent and provider of the Business
Services during the term of the Agreement.
1.3 OFFICES
(a) Lease/Sublease of Office(s). OCS, or an entity retained by OCS,
shall lease or otherwise arrange for the Practice's Offices, subject to the
approval of the Orthodontist (which will not be unreasonably withheld or
delayed). OSC shall and hereby does sublease each Office to the Orthodontist in
accordance with the terms of this Agreement. The Orthodontist shall hereby and
does sublease each Office from OCS subject to terms, covenants and conditions of
the Primary Lease for that Office, except the terms of this Agreement are hereby
expressly incorporated into and shall control any inconsistency with such
Primary Lease(s).
(b) Office Upkeep. OCS shall be responsible for maintaining the Offices
in good working order, condition and repair. OCS shall pay rental and other
payments due under each Primary Lease to the applicable
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Landlord. Rental, other payments due under each Primary Lease, and any
maintenance costs and expenses shall be deemed a Center Expense and included in
the Service Fees.
(c) Use of Office(s). The Orthodontist shall use the Offices
exclusively for the operation of the Practice, except as expressly agreed to by
OCS in writing in advance.
(d) Term of Sublease. The term of the sublease for a particular Office
shall be the lesser of the term of the Agreement or the term of the Primary
Lease for the Office, unless terminated earlier as provided herein.
(e) Offices Included in Agreement. Unless and until the Parties
mutually agree otherwise, this Agreement shall include the Original Offices
currently listed in Exhibit A, and any New Offices that are added to the
Agreement in accordance with Subsection 1.3(f) immediately below. Exhibit A
shall be amended from time to time so that it accurately reflects all Offices
included in the Agreement, and the address of each such Office. The terms and
conditions for each Office's inclusion in the Agreement shall be set forth in an
Exhibit for such Office which shall be mutually agreed to by the Parties and
attached to this Agreement.
(f) Addition and Removal of Offices from Agreement. New Offices may be
added to the Agreement only with the mutual, written consent of the Parties.
Existing Offices (including any Original Offices) may be removed from the
Agreement only with the mutual, written consent of the Parties. If the Parties
mutually agree in writing to add a New Office or remove an existing Office from
the Agreement, the Agreement shall be automatically amended to include the New
Office or remove the existing Office, as appropriate. Whenever a Primary Lease
for an Office is entered into or terminated, Exhibit A shall be automatically
amended to include or delete the address for that Office, as appropriate.
1.4 EQUIPMENT, FURNITURE AND IMPROVEMENTS.
(a) OCS shall provide the Orthodontist with all of the furniture,
fixtures, other leasehold improvements and equipment reasonably required by the
Orthodontist for the operation of the Practice during the term of the Agreement.
(The furniture, fixtures, other leasehold improvements and equipment provided by
OCS to the Orthodontist are collectively referred to as the "Furniture, Fixtures
and Equipment".) OCS shall hold title to and be the owner of the Furniture,
Fixtures and Equipment, and shall and hereby does lease to the Orthodontist all
of the Furniture, Fixtures and Equipment during the term hereof. The
Orthodontist shall and hereby does lease and thereby obtain exclusive custody of
and control over the Furniture, Fixtures and Equipment during the term hereof,
subject to the terms of the Agreement; however, the Orthodontist agrees not to
remove the Furniture, Fixtures and Equipment from the Offices.
(b) OCS shall be responsible for:
o acquiring new Furniture, Fixtures and Equipment in consultation
with and subject to the approval of the Orthodontist (which will
not be unreasonably withheld or delayed);
o maintaining the Furniture, Fixtures and Equipment in good
working order, condition and repair; o paying all license fees,
assessments, charges and taxes imposed upon the ownership,
leasing, sale, possession or use of the Furniture, Fixtures and
Equipment; and
o insuring the Furniture, Fixtures and Equipment against risks of
loss or damage.
(c) The expenses for the maintenance and repair of Furniture, Fixtures
and Equipment and all fees, assessments, charges, expenses and taxes and all
insurance premiums paid by OCS on the Furniture, Fixtures and Equipment, whether
or not the Furniture, Fixtures and Equipment is acquired during the term of this
Agreement, are and shall be a Center Expense and shall be included in the
Service Fees. The acquisition costs of Furniture, Fixtures, and Equipment are
discussed in Sections 3.4(a) through (c) and subparts (d) and (e) of Exhibit C.
All additions or deletions made to the Furniture, Fixtures and Equipment shall
be deemed automatically added or removed, as applicable, from the scope of this
Section.
1.5 BILLING AND COLLECTION SERVICES. Throughout the term of this
Agreement, the Orthodontist grants to OCS an exclusive special power of attorney
and the Orthodontist appoints OCS as its exclusive true and lawful agent and
attorney-in-fact for the performance of billing and collection services,
including the following (collectively referred to as "Billing and Collections
Services"):
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o preparation of bills and statements for and billing of all patients
of the Practice;
o collection, receipt and administration of accounts receivable
generated by the Orthodontist's xxxxxxxx; and
o preparation and submission of monthly financial reports to the
Orthodontist detailing Billing and Collection activities and
results.
OCS hereby accepts such exclusive special power of attorney and appointment as
agent and attorney-in-fact. OCS shall provide all Billing and Collection
Services on the Orthodontist's behalf and in the Orthodontist's name, and in
accordance with the terms of this Agreement. OCS shall perform Billing and
Collection for all orthodontic and dental treatment and for goods and services
provided to the patients of the Practice. OCS shall exercise reasonable efforts
to xxxx and collect the fees and charges generated by the Practice in a timely
fashion.
1.6 HANDLING OF COLLECTIONS AND PRACTICE FUNDS.
(a) The Orthodontist shall present all of the Practice's Collections to
OCS, and OCS shall promptly deposit all of the Practice's Collections into the
Depository Account. (The funds deposited into the Depository Account, after
their deposit, are defined as the "Practice Funds".) From time to time, the
Practice Funds may be transferred by OCS from the Depository Account to central
bank accounts of OCS and OCA and aggregated with other funds maintained in such
account(s).
(b) The Practice Funds will be applied for the following purposes and
in the following order of priority:
o payment of the Orthodontist's Center Expenses and Service Fees as
provided for in Sections 3.1 and 3.2 and Exhibits B and C;
o payment of any loan repayment obligations or other liabilities of
the Orthodontist under the Business Services Agreement, and
o payment of PC Employer Expenses, and any remainder to the
Orthodontist.
(These above payments are collectively defined as the "Authorized Payments".)
OCS shall be responsible for making the Authorized Payments (to the extent
Practice Funds are available for these payments). OCS covenants and agrees that
it will make the Authorized Payments in accordance with the terms of this
Subsection 1.6(b) and the other sections of this Agreement cross-referenced
herein.
(c) During the term of this Agreement, OCS shall have signatory
authority over the Depository Account. The Orthodontist covenants and agrees
that until OCS completes a final audit and accounting upon termination of this
Agreement, the Orthodontist shall not make any withdrawals from the Practice
Funds, make any modification to the Depository Account or close the Depository
Account without the prior express written consent of OCS. The Orthodontist
acknowledges and agrees that these controls are necessary in order for OCS to
perform the Financial Management Services that the Orthodontist has contracted
for pursuant to Section 1.7 of this Agreement, and to assure that the Authorized
Payments will be applied as provided for in Subsection 1.6(b) and the other
sections of this Agreement cross-referenced in Subsection 1.6(b).
1.7 FINANCIAL MANAGEMENT SERVICES. OCS shall provide the Orthodontist
with all bookkeeping and accounting and related financial services reasonably
required for the day-to day operations of the Practice, including the following
(these services are collectively defined as "Financial Management Services"):
o bookkeeping and accounting services;
o administration and payment of accounts and trade payables;
o payroll administration services;
o preparation of monthly, quarterly and annual financial statements
and related reports, which shall reasonably summarize the Practice's
financial operations;
o audits;
o bank statement reconciliations;
o financial statement reconciliations; and
o all other related bookkeeping, accounting and financial management
services as may reasonably be required for the day-to-day operations
of the Practice from time to time.
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1.8 PURCHASING AND INVENTORY MANAGEMENT SERVICES. OCS shall provide the
Orthodontist with purchasing and related services for the Practice, including
the following (these services are collectively defined as "Purchasing and
Inventory Management Services"):
o purchasing services for all inventory and supplies required by the
Orthodontist for the Practice;
o negotiations with vendors to obtain discounts on supplies and
inventory (all discounts will be passed through to the
Orthodontist);
o inventory management services for all inventory and supplies
maintained by the Orthodontist for the Practice;
o all other related purchasing and inventory management services
reasonably required for the day-to-day operations of the Practice
from time to time.
However, notwithstanding anything to the contrary, and, consistent with the
provisions of Section 2.1, the Orthodontist will have sole authority over and
responsibility for all decisions concerning the inventory and supplies to be
utilized by the Practice (i.e., the Orthodontist will not be required by OCS to
utilize any particular type of inventory or supply, or order any specific
quantity of any inventory or supply). Additionally, the Orthodontist shall be
responsible for oversight and supervision with respect to all clinical supplies,
as required under applicable law.
1.9 COMPUTER TECHNOLOGY SERVICES. OCS will provide the Orthodontist
with computer software and systems and computer-related services including the
following (these services are collectively defined as "Computer Technology
Services"):
o use during the term of the Agreement of the OCA Software and
Documentation, pursuant to the grant of license set forth in the
"OCA Software License Addendum" attached as Exhibit D;
o Error corrections, bug fixes, patches and other updates to the OCA
Software;
o provision of the computer-related Documentation;
o support and assistance in installing and running the OCA Software;
o programming changes;
o advice and assistance in procuring any new or additional computer
hardware required for the Practice; and
o all other computer-related services reasonably required for the
day-to-day operations of the Practice from time to time.
1.10 ADVERTISING AND MARKETING SERVICES. OCS shall provide the
Orthodontist with assistance in developing and implementing advertising and
marketing programs to enhance the Practice's growth and promote its business
(these services are collectively referred to as "Advertising and Marketing
Services"). All Advertising and Marketing Services shall be undertaken in a
professional manner and shall be in compliance with applicable laws and
regulations regulating advertising by the dental profession. Notwithstanding
anything to the contrary, all Advertising and Marketing Services provided by OCS
under this Agreement shall be subject to the Orthodontist's approval, consistent
with the requirements of Section 2.2.
1.11 PERSONNEL SERVICES. OCS shall provide the Orthodontist with
personnel and human resources services, including the following (these services
are collectively defined as "Personnel Services"):
o recruitment and employment of Office Staff;
o training of Office Staff;
o scheduling of Office Staff;
o advice to the Orthodontist on compensation and benefits for Office
Staff;
o administration of benefit plans for Office Staff;
o recruitment assistance to the Orthodontist for Professional Staff;
and
o all other personnel and human resource services reasonably required
by the Orthodontist in respect of the Office Staff.
However, notwithstanding anything to the contrary, the hiring, termination and
compensation of both the Office Staff and Professional Staff and the
compensation and benefits paid to Office Staff and Professional Staff shall be
at the Orthodontist's discretion, consistent with the provisions of Section 2.2.
Additionally, the Orthodontist shall employ all Professional Staff.
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1.12 LEGAL SERVICES. OCS shall provide the Orthodontist with legal
services for the Practice's routine operations (but not including professional
liability or malpractice defense).
1.13 CONSULTING SERVICES. OCS shall provide the Orthodontist with
consulting advice on Practice efficiency and productivity, forms, scheduling,
marketing, Office locations and layouts, and staff salaries, benefits and
performance and incentive plans, as requested by the Orthodontist.
1.14. OTHER SERVICES. OCS shall provide the Orthodontist with all other
office management, business and similar services reasonably required for the
Practice's routine business operations, as determined by the Orthodontist in
consultation with OCS.
II. DUTIES OF THE ORTHODONTIST
2.1 THE ORTHODONTIST'S CONTROL OVER PRACTICE OF DENTISTRY. The
Orthodontist shall have complete and sole responsibility, authority and control
of the Practice of Dentistry in connection with the Practice's operations,
including without limitation:
o employment, hiring, termination and compensation of all Professional
Staff; o rendering of all professional dental services to patients;
o professional supervision of all Professional Staff and Office Staff;
o examination, diagnosis and treatment of all patients;
o decisions concerning types of dental services to be provided to
patients
o selection of the drugs, supplies and equipment to be used in the
rendering of dental services to patients;
o decisions concerning amount of fees to be charged for dental goods
and services, refunds and credit terms;
o preparation and maintenance of all the Patient Records (discussed
further in Section 2.3;
o exercise of independent judgment regarding patient diagnosis and
treatment; and
o ownership and proprietorship of the Practice.
2.2 PRACTICE MANAGEMENT AND APPROVAL OF CERTAIN BUSINESS OPERATIONS.
Notwithstanding the authority granted to OCS pursuant to Article I of this
Agreement, it is expressly acknowledged and agreed by the Parties that the
Orthodontist shall be solely responsible for the management of the Practice,
including approval over the following matters (in addition to the Practice of
Dentistry, as discussed in Section 2.1), provided that such approval shall not
be unreasonably withheld by the Orthodontist:
o hiring, termination and compensation of all of the Professional
Staff and Office Staff;
o the entering into and termination of Primary Leases;
o decisions concerning Office layouts;
o the acquisition of Furniture, Fixtures and Equipment; and
o advertising content.
2.3 PATIENT RECORDS AND PROFESSIONAL ASSETS. The Orthodontist shall
have sole and exclusive responsibility to assure that the Patient Records are
prepared and maintained in compliance with all applicable federal, state and
local laws and regulations. The Patient Records and other Professional Assets
shall be the property and remain under the control and custody of the
Orthodontist at the Offices at all times during the term of this Agreement.
OCS's access to the Patient Records shall be subject to all applicable laws and
regulations governing the confidentiality of such records.
2.4 COMPLIANCE WITH APPLICABLE LAWS AND STANDARDS. The Orthodontist
shall be responsible for assuring that at all times during the term of the
Agreement:
o the Professional Staff shall be in compliance and good standing
under all applicable Dental Laws, dental professional and ethical
standards and any other state or federal laws or regulations;
o the Professional Staff shall attend continuing professional
education courses and participate in quality assurance/utilization
review programs as required under applicable professional licensing
and accreditation laws and programs; and
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o the Orthodontist shall comply with any other federal, state and
local laws and regulations applicable to the operations of the
Practice, including without limitation all applicable federal, state
and local laws and regulations respecting employment, employment
practices, discrimination, reimbursement, and sexual harassment.
The Orthodontist shall immediately inform OCS of any Legal Action, and the
Orthodontist shall immediately disclose all underlying facts, documents and
circumstances related to or associated with the Legal Action. The Orthodontist
shall immediately report to OCS deficiencies discovered in the performance of
any of the Professional Staff and shall take appropriate action to immediately
remedy such deficiencies.
2.5 OPERATING SCHEDULE. The Orthodontist covenants and agrees that:
o it will operate the Practice as a full-time business; and
o the Offices will be open to the public at hours reasonably
convenient to the public and sufficient to meet patient needs.
2.6 BUSINESS AND MANAGEMENT SYSTEMS. The Orthodontist acknowledges that
OCS's successful performance of this Agreement is dependent on, among other
factors, the Orthodontist's operation of the Practice with the OCA Software. The
Orthodontist represents that it is generally familiar with the OCA Software, and
believes the OCA Software to be satisfactory for the operation of the Practice.
Accordingly, the Orthodontist covenants and agrees that it has or will promptly
procure necessary computer hardware (with OCS's reasonable assistance, if
requested), that it shall permit OCS to install the OCA Software in the computer
hardware located in the Offices as soon as reasonably practicable following the
Effective Date, and that it will operate the Practice only with the OCA Software
during the term of this Agreement. The Orthodontist also understands,
acknowledges and agrees that its use of the OCA Software is subject to the terms
of the OCA Software Licensing Addendum attached as Exhibit D to this Agreement,
and that it will comply with and abide by the terms of the OCA Software
Licensing Addendum.
III. FINANCIAL ARRANGEMENTS
3.1 SERVICE FEES. Each month during the term hereof, the PC will pay
Service Fees to OCS for each Office included within the scope of this Agreement,
calculated in accordance with the formula set forth in Exhibit B to this
Agreement with respect to such Office. The Orthodontist hereby authorizes OCS to
deduct the Service Fees from the Practice Funds as the payments thereof become
due and payable.
3.2 CENTER EXPENSES. OCS will advance the Center Expenses, which
include the costs and expenses incurred by OCS in providing the Business
Services to the Orthodontist. (Please see Exhibit C for a detailed discussion of
the "Center Expenses".) The PC will reimburse OCS for the Center Expenses for
each Office through charges built into the Service Fees for each such Office.
3.3 PC'S EMPLOYER EXPENSES. The PC will bear 100% of the following
costs and expenses:
o compensation of all Professional Staff, and all employer taxes due
thereon;
o benefits for all Professional Staff;
o professional licensure fees, board certification fees, professional
association dues and continuing professional education expenses for
all Professional Staff;
o malpractice and professional liability insurance coverage for all
Professional Staff;
o all costs and expenses incurred for items or services that are
primarily for any Professional Staff"s personal use and benefit,
such as an automobile or social club dues; and
o any other costs and expenses incurred by any Professional Staff that
are not defined as a Center Expense; and
(The above costs and expenses are collectively referred to as the "PC Employer
Expenses" or simply the "Employer Expenses".)
3.4 FUNDING FOR NEW OFFICES. The Parties' responsibilities for the
development costs for any New Offices added to the Agreement shall be as
mutually agreed to by the Parties, and will be addressed in the Exhibit added to
this Agreement in respect of such New Office.
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3.5 NO DIVIDING OF FEES. The Parties mutually acknowledge and agree
that that the Orthodontist's payment of Service Fees to OCS in no way represents
the division, splitting or other allocation of professional fees between the
Orthodontist and OCS. The Service Fees do not in any way relate to patient
referrals. The Service Fees represent fair value for the services provided by
OCS under the Agreement, and have been negotiated between the Parties in arm's
length negotiations.
3.6 ADDITIONAL OFFICES. In the event that any New Offices are added to
this Agreement, the Service Fees payable to OCS shall be determined by
aggregating the results of the operations of each additional Office with the
results of the operations of the existing Office(s).
3.7 ACCOUNTS RECEIVABLE. To secure the timely and complete payment,
repayment or reimbursement, as applicable, of the Service Fees, Center Expenses
and loans, advances or other amounts owing or payable to OCS under this
Agreement, throughout the term of this Agreement the Orthodontist hereby assigns
and grants to OCS a first-priority security interest in all of the present and
future fees receivable, accounts receivable and other accounts (as such term is
defined in the Uniform Commercial Code), including without limitation
health-care insurance receivables (as defined in the Uniform Commercial Code)
and any proceeds, substitutes or replacements for any of the foregoing, that
arise or have arisen from the provision of orthodontic and dental goods,
treatment and services at or through the Practice, and in all of the
Orthodontist's rights, title and interest therein. The Orthodontist represents
and warrants that all such fees receivable, accounts receivable and other
accounts are and will be free and clear of all liens, security interests and
other encumbrances and adverse claims (except for the interest granted to OCS
herein). In the event any of such monetary obligations are not paid to OCS in
full when due, OCS may, with or without terminating this Agreement, exercise all
rights and remedies afforded a secured party. The Orthodontist agrees to
cooperate with OCS, and, upon request, to promptly execute, complete and deliver
to OCS all security agreements, financing statements or other documents which
may be necessary or desirable to protect, perfect or maintain OCS's interest in
such fees receivable and accounts receivable. OCS shall be entitled at any time
to file any financing statement in any jurisdiction to perfect such interest.
IV. TERM AND TERMINATION
4.1 TERM OF AGREEMENT. This Agreement shall become effective on October
18, 1994 (the "Effective Date"). The Agreement shall continue for a term of 25
years from the Effective Date, unless it is terminated earlier in accordance
with the provisions of this Article IV.
4.2 TERMINATION FOR CAUSE OR WITHOUT CAUSE.
(a) Grounds for Termination for Cause. If either Party is in material
breach of this Agreement, the other Party shall give written notice by certified
mail of the specific basis for the alleged breach and shall provide 60 days to
cure or remedy the breach (the "Curative Period"). If, by the end of the
Curative Period, the breaching Party fails to cure and/or remedy the breach, the
terms of Section 4.2(b) shall apply.
(b) Required Actions. If, by the end of the Curative Period, the
breaching Party fails to cure and/or remedy the breach, the Parties will enter
into a Practice Transfer or a Practice Assumption, as elected by OCS. Upon such
election being made, the Parties shall cooperate to promptly complete the
actions required for a Practice Assumption or Practice Transfer, as applicable,
and upon completion of such required actions, this Agreement shall terminate.
This Agreement shall remain in force, and the rights, obligations and
liabilities of the Parties as provided for in this Agreement shall continue
through the date of termination.
4.3 TERMINATION WITHOUT CAUSE. Either Party may terminate this
Agreement without cause, upon a minimum of 180 days' prior written notice to the
other Party. In the event that either Party notifies the other of its intention
to terminate the Agreement without cause pursuant to this paragraph, the Parties
shall enter into a Practice Assumption or Practice Transfer, as elected by OCS,
and shall cooperate to promptly complete the actions required for a Practice
Assumption or Practice Transfer, as applicable. Upon completion of such required
actions, this Agreement shall terminate. This Agreement shall remain in force,
and the rights, obligations and liabilities of the Parties as provided for in
this Agreement shall continue through the date of termination.
4.4 TERMINATION BY REASON OF THE DOCTOR'S DEATH OR DISABILITY. In the
event of Xx. Xxxxxxx'x death or Permanent Disability, Dr. Bushcman (or his
heirs, assigns or legal representatives) and OCS shall enter into a Practice
Transfer. Upon completion of such required actions, this Agreement shall
terminate.
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4.5 ADDITIONAL EVENTS TO OCCUR UPON TERMINATION. If this Agreement
expires or terminates for any reason, the following shall apply, in addition to
the applicable provisions of Sections 4.2 through 4.4:
(a) The Orthodontist shall promptly return to OCS and/or allow OCS to
retrieve all Proprietary Information of OCS then in its possession;
(b) OCS shall promptly return to the Orthodontist all Proprietary
Information of the Orthodontist then in its possession;
(c) OCS shall render a final accounting of monies deposited into the
Depository Accounts, the Practice Funds, and the Authorized Payments;
(d) The PC shall promptly repay OCS all outstanding Line of Credit
balances, Excess Development Cost Loans and other advances loans or liabilities
owed to OCS, with applicable interest, except to the extent that such
obligations have been assumed by an Approved Successor Orthodontist or expressly
forgiven by OCS; and
(e) It is mutually understood, acknowledged and agreed that nothing in
this Agreement is intended in any way to interfere with or abrogate the duty of
the Orthodontist of continued care to his/her patients or any other professional
duties under any applicable professional dental standards, laws or regulations
(collectively, "Professional Duties"). The Parties shall reasonably cooperate
with each other to enable the Orthodontist to fulfill his/her Professional
Duties in the event of termination of this Agreement.
4.6 APPOINTMENT OF RECEIVER. In the event of a dispute as to the
lawfulness of a termination under Section 4.2(a), to maintain the status quo
until a court of competent jurisdiction issues a final ruling on whether the
termination is lawful, OCS has the right, subject to applicable law, to: (i)
appoint any person or persons to be a receiver ("Receiver") of the
Orthodontist's business at the Practice or any parts thereof; (ii) remove any
such Receiver and to appoint another or others in his or their stead; and (iii)
do all acts and things as may be reasonably required from time to time to ensure
the Orthodontist's continued compliance with this Agreement. The Orthodontist
waives any requirement that OCS and/or Receiver secure or post any bond. The
Receiver (i) may take any action lawfully allowed at any time, day or night, to
take possession of all or any part of the Offices and the contents thereof (the
"Assets") (and for the purpose of taking possession of such may forcibly obtain
access to any buildings or enclosures); and (ii) may seize, collect, demand
payment for, enforce, recover and receive all or any part of the accounts
receivable by the Orthodontist or any other amounts owing to the either of them,
and will apply any money obtained as a result of the foregoing to satisfy
amounts owing by the Orthodontist to OCS pursuant to this Agreement. The Party
determined by a court of competent jurisdiction to have breached the Agreement
will be responsible for all costs and expenses incurred relative to the
Receiver.
4.7 COOPERATION. The Parties will cooperate with each other and use all
reasonable efforts to cause the fulfillment of the conditions to the Parties
obligations under this Article IV, and to obtain as promptly as possible all
consents, authorizations, orders or approvals from each and every third party,
whether private or governmental, required in connection with the transactions
contemplated by Article IV, as applicable. Each Party agrees that it will
execute, acknowledge and deliver all instruments of further assurance and do all
such acts and things as may reasonably be required more effectively to convey,
transfer to and vest in the other Party and its assignees, the assets to be
conveyed under Article IV, as applicable. In the case of contracts and rights,
if any, which cannot be transferred effectively without consent of third parties
which is unobtainable, each Party will use its commercially reasonable best
efforts to secure for the other Party and its assignees the benefits thereof.
4.8 SURVIVAL OF OBLIGATIONS. The Parties expressly agree that the
obligations of this Article IV shall survive the termination or expiration of
this Agreement.
V. MUTUAL AGREEMENTS
5.1 OCS COVENANT NOT TO COMPETE. The Orthodontist acknowledges and
agrees that OCS' general intent is to develop affiliations with dental practices
at generally the same level of density as the development of retail shopping
malls and "Home Depot," "Toys `R Us" and other retail enterprises with a similar
development philosophy. Therefore, OCS agrees that, during the term of this
Agreement, it will not affiliate with more Advertising Practices within the DMA
than the higher of the total number of "Toys `R Us" or "Home Depot" stores or
regional shopping malls located within the DMA, or, if these entities do not
exist in the DMA or if their development in the DMA does not follow standard
national development patterns, such other retail enterprise as
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OCS may reasonably designate that does have a presence and does develop stores
in the DMA with the same level of geographic density as generally followed by
"Toys `R Us" and "Home Depot" stores and regional shopping malls, nationally.
For the purpose of this Agreement, the "DMA" means the Designated Market Area(s)
in which the Offices included in this Agreement is/are encompassed, as defined
in the most current publications of Xxxxxxx Media Research or its successor, and
represents the primary broadcast area for television broadcasting in such
locale(s)' market(s).
5.2 ORTHODONTIST'S COVENANT NOT TO COMPETE.
(a) Acknowledgments. The Orthodontist acknowledges and agrees that: (i)
pursuant to Section 5.1 of this Agreement, OCS has agreed to restrict the number
of other Orthodontists with whom OCS may associate within the DMA during the
term of this Agreement, in the event of termination of this Agreement, the
development by OCS of such business relationships is likely to require a minimum
of two years, and certain business practices engaged in by the Orthodontist
during such period of time would seriously impede OCS' ability to develop
business relationships with other Orthodontists in the DMA; (ii) the covenants
and agreements set forth in this Section are an essential inducement and
consideration for OCS to have entered into this Agreement; (iii) the
restrictions imposed herein are not greater than are fair and reasonable and
necessary for the protection of OCS in light of the substantial harm that OCS
will suffer should the Orthodontist breach any of the provisions of said
covenants or agreements; and (iv) by reason of the abilities and experience of
the Orthodontist, the enforcement of the covenants and agreements set forth in
this Section will not prevent him/her from obtaining other suitable employment
or earning a livelihood.
(b) Non-Compete Agreements during Term of Agreement. The Orthodontist
covenants and agrees that, during the term of this Agreement, the Orthodontist
will not, directly or indirectly, in any capacity, except pursuant to the
affiliation with OCS contemplated in this Agreement, do any of the following:
(i) Own any interest in, manage, be employed or contracted by,
participate in, operate, control or provide any services to, any dental
or orthodontic practice other than the Practice, or practice
orthodontic dentistry other than in the Offices or otherwise compete
with the Practice in the operation or development of any orthodontic
practice;
(ii) Solicit any patients, staff or referral sources of the
Practice (other than solicitations for the Practice itself); or
(iii) Own any interest in, manage, be employed or contracted
by, participate in, operate, control or provide any services to any
enterprise engaged in the provision of management or business services
to orthodontic practices similar to those set forth in this Agreement,
other than OCS, OCA and their affiliates and subsidiaries.
(c) Non-Compete Agreements Following Termination of Agreement. The
Orthodontist additionally covenants and agrees that for a period of two years
following the expiration or termination of this Agreement for any reason, except
under the circumstances discussed in Subsection 5.2(d) below, the Orthodontist
shall not directly or indirectly in any capacity do any of the following:
(i) Solicit any patients, staff or referral sources of the
Practice; or
(ii) Own any interest in, manage, be employed or contracted
by, participate in, operate, control or provide any services to any
Advertising Practice anywhere, and/or to any dental or orthodontic
practice operating within a radius extending 15 miles in all directions
from any Office and/or to any enterprise engaged in the provision of
management or business services to dental or orthodontic practices
similar to those set forth in this Agreement.
(d) Exceptions to Non-Compete Agreements Following Termination.
Notwithstanding anything in the Agreement to the contrary, the Orthodontist's
covenants and agreements not to compete provided for in Section 5.2(c) will not
apply in the event of termination of the Agreement pursuant to a Practice
Assumption by the Orthodontist.
5.3 REMEDIES; SEVERABILITY. In the event the Orthodontist violates any
of the covenants and agreements set forth in Section 5.2 above, the Orthodontist
agrees and stipulates that OCS shall be entitled to its actual damages, plus an
additional amount of $250,000, and reimbursement of its attorney fees and legal
expenses
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and shall be entitled to any other legal, injunctive or equitable relief or
remedies to which it may be entitled. Regarding any act or lawsuit by OCS to
obtain injunctive or other equitable relief, the Orthodontist hereby waives any
requirement on the part of OCS of proving actual damages and waives any
requirement for securing or posting any bond. If any provisions of Sections 5.2
and 5.3 shall be determined to be invalid or unenforceable, either in whole or
in part, such Section shall be deemed amended to delete or modify, as necessary,
the offending provisions and such Section shall be reformed to alter the balance
of the Section to render the same valid and enforceable to the fullest extent
permissible, as aforesaid. Additionally, the provisions of Sections 5.2 and 5.3
shall be deemed to be valid to the extent of any lesser area or for any lesser
duration permitted by law if the area and duration set forth herein is deemed to
be too broad by a court of competent jurisdiction. The provisions of Section 5.2
and 5.3 shall be construed as an agreement independent of the other provisions
of this Agreement. The existence of any claim or cause of action by the
Orthodontist against OCS shall not constitute a defense to the enforcement by
OCS of the provisions of Sections 5.2 or 5.3.
5.4 PROPRIETARY INFORMATION OF OCS. The Orthodontist acknowledges and
agrees that all Proprietary Information of OCS provided to the Orthodontist
pursuant to this Agreement shall be considered the property of OCS. The
Orthodontist further agrees that it shall not, directly or indirectly, disclose,
exploit, rent, sell or utilize any Proprietary Information of OCS other than as
required to fulfill its obligations under this Agreement, unless otherwise
required by law, regulation, valid court order or unless expressly authorized in
advance by OCS in writing.
5.5 PROPRIETARY INFORMATION OF THE ORTHODONTIST. OCS acknowledges and
agrees that all Proprietary Information of the Orthodontist provided to OCS by
the Orthodontist pursuant to this Agreement shall be considered the property of
the Orthodontist. OCS further agrees that it shall not, directly or indirectly,
disclose, exploit, rent, sell or utilize the Proprietary Information of the
Orthodontist other than as required to fulfill its obligations under this
Agreement, unless otherwise required by law, regulation, valid court order or
unless expressly authorized in advance by the Orthodontist in writing.
Notwithstanding the foregoing, it is expressly acknowledged and agreed by the
Orthodontist that, in the event of termination of this Agreement by OCS for
cause or termination of this Agreement by the Orthodontist without cause, OCS,
or orthodontists affiliated with OCS may use patient lists and related
information of the Orthodontist to solicit patients of the Practice, or, subject
to all applicable dental practice laws or laws governing the confidentiality of
patient records and the consent of the patients in question, arrange for the
transfer of patient records to such Orthodontists.
5.6 INDEPENDENT CONTRACTORS. In performing its duties OCS and the
Orthodontist shall act and perform as an independent contractors, and the
provisions hereof are not intended to create any partnership, joint venture,
agency or employment relationship between the Parties. The Orthodontist will not
have any claim under this Agreement or otherwise against OCS for vacation pay,
sick leave, unemployment insurance, worker's compensation, disability benefits,
retirement or employee benefits of any kind.
VI. INSURANCE AND INDEMNITY
6.1 INSURANCE TO BE MAINTAINED BY THE ORTHODONTIST.
(a) During Term of Agreement. At all times during the term of this
Agreement, the PC shall maintain comprehensive professional liability insurance
with annual policy limits of not less than $1,000,000 per claim and $3,000,000
in aggregate for the PC and for each orthodontist or dentist employed or
contracted by the PC. The PC shall be responsible for all such liabilities in
excess of the limits of such policies. Premiums and deductibles with respect to
such policies shall be borne by the Orthodontist. The Orthodontist shall have
OCS named as an additional insured on professional liability insurance policies.
(b) Tail Insurance Coverage. The PC shall require that any other
orthodontists or dentists who it employs or with whom it contracts, upon the
termination of their affiliation with the PC shall purchase tail insurance
coverage, or have in place other insurance arrangements reasonably acceptable to
OCS and the PC, providing professional liability coverage for the entire period
of time of their affiliation with the PC.
6.2 INSURANCE TO BE MAINTAINED BY OCS. Throughout the term of this
Agreement, OCS will provide and maintain as a Center Expense, under OCS's name,
with the Orthodontist as an additional named insured, (i) comprehensive
professional liability insurance for any professional employees of OCS with
limits as determined reasonable by OCS; and (ii) comprehensive general liability
and property insurance covering the Center premises, equipment, supplies and
operations. (The Orthodontist expressly understands, acknowledges and agrees
that
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the coverages to be provided by OCS under this Section will be new coverages
procured by OCS, under OCS's name with the Orthodontist as an additional named
insured, rather than the continuation of the Orthodontist's existing coverages,
with OCS as an additional named insured.)
6.3 INDEMNIFICATION.
(a) The PC shall indemnify, hold harmless and defend OCS and its
officers, directors, shareholders and employees from and against any and all
liability, loss, damage, claim, causes of action and expenses (including
reasonable attorneys' fees), to the extent not covered by insurance, caused or
asserted to have been caused, directly or indirectly, by or as a result of a
breach of this Agreement by the Orthodontist, the performance of medical or
dental services or the performance of any intentional acts, negligent acts or
omissions by the Orthodontist or its agents, employees and/or subcontractors
(other than OCS) during the term of this Agreement.
(b) OCS shall indemnify, hold harmless and defend the Orthodontist and
its employees from and against any and all liability, loss, damage, claim,
causes of action and expenses (including reasonable attorneys' fees), to the
extent not covered by insurance, caused or asserted to have been caused,
directly or indirectly, by or as a result of a breach of this Agreement by OCS
or the performance of any intentional acts, negligent acts or omissions by OCS
and/or its agents, employees and/or subcontractors (other than the Orthodontist
or any orthodontists or dentists in its employ) during the term of this
Agreement.
(c) This Section 6.3 shall survive the termination or expiration of
this Agreement until the end of all applicable statute of limitation periods.
VII. REPRESENTATIONS AND WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES OF THE ORTHODONTIST. The
Orthodontist makes the following representations and warranties to OCS:
(a) Xx. Xxxxxxx is, and shall remain throughout the term hereof,
licensed to practice dentistry in the State of Florida without restriction and
is not subject to any disciplinary or corrective action.
(b) The PC is a professional corporation, duly organized and validly
existing and in good standing under the applicable laws of the State of Florida.
(c) Xx. Xxxxxxx is, and shall remain throughout the term hereof, the
sole record and beneficial owner of all of the capital stock of the PC.
(d) Each of Xx. Xxxxxxx and the PC has all necessary capacity, power
and authority to enter into this Agreement and perform its obligations under
this Agreement.
(e) The execution, delivery and performance of this Agreement by each
of Xx. Xxxxxxx and the PC have been duly authorized by all necessary laws,
resolutions and corporate action, and will not materially breach, conflict with
or violate any contract, obligation, covenant not to compete, restrictive
covenant or other agreement to which Xx. Xxxxxxx or the PC is a party. This
Agreement constitutes the valid and enforceable obligations of each of Xx.
Xxxxxxx and the PC in accordance with its terms.
7.2 REPRESENTATIONS AND WARRANTIES OF OCS. OCS makes the following
representations and warranties to the Orthodontist:
(a) OCS is a corporation, duly organized and operating under the
applicable laws of the State of Delaware and qualified to do business in the
State of Florida. OCS has all necessary corporate power and authority to enter
into this Agreement and perform its obligations under this Agreement.
(b) The execution and performance of this Agreement by OCS have been
duly authorized by all necessary laws, resolutions and corporate action, and
will not materially breach, conflict with or violate any contract, obligation,
covenant not to compete, restrictive covenant or other agreement to which OCS is
a party. This Agreement constitutes the valid and enforceable obligations of OCS
in accordance with its terms.
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VIII. MISCELLANEOUS
8.1 ASSIGNMENT. OCS shall have the right to assign its rights under
this Agreement to OCA, any other of OCA's wholly owned subsidiaries or any other
person, corporation or other entity under common control with OCS. Except as set
forth above, neither OCS nor the Orthodontist shall have the right to assign
their respective rights and obligations under this Agreement without the prior
written consent of the other Parties. Subject to this provision, this Agreement
shall be binding upon the Parties and their successors and permitted assigns.
8.2 WHOLE AGREEMENT; MODIFICATION. The Parties hereby agree to amend
and restate the terms of the Agreement as set forth herein. This Agreement as
set forth herein supercedes and replaces in its entirety any prior agreements
between the Parties relating to the subject matter hereof. There are no other
agreements or understandings, written or oral, between the Parties regarding
this Agreement, the Exhibits and the Schedules, other than as set forth herein.
As between the Parties, no oral statements or prior written material not
specifically incorporated herein shall be of any force and effect. This
Agreement and its Exhibits and Schedules shall not be modified or amended except
by a written document executed by all Parties to this Agreement, and any such
written modification(s) shall be attached hereto. The Exhibits and Schedules
attached hereto are hereby incorporated into this Agreement wherever reference
is made to them to the same extent as if they were set out in full at the point
at which such reference is made.
8.3 NOTICES. All notices, consents, waivers and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (i) delivered by hand, (ii) the first to occur of actual receipt by
the addressee or 72 hours after being placed in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, or (iii) when
received by the addressee, if sent by a nationally recognized overnight delivery
service, prepaid, in each case to the appropriate addresses set forth below (or
to such other addresses as a Party may designate by written notice to the other
Parties): (A) if to the Orthodontist: Xx. Xxxxxx Xxxxxxx, ___________________;
and (B) if to OCS: Orthodontic Centers of Florida, Inc., 0000 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxxxxxxxxx X.
Xxxxxxxxx, Xx., with a copy to Xxxxxx Xxxxxxx Xxxxxx & Xxxxx, PLLC, 000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Xxxx X. Xxxxxxx,
Esq.
8.4 WAIVER OF PROVISIONS; REMEDIES CUMULATIVE. Any waiver of any terms
and conditions hereof must be in writing, and signed by the Parties. The waiver
of any of the terms and conditions of this Agreement shall not be construed as a
waiver of any other terms and conditions hereof. No remedy set forth in this
Agreement or otherwise conferred upon or reserved to a Party shall be considered
exclusive of any other remedy available to the Party, but the same shall be
distinct, separate and cumulative and may be exercised from time to time as
often as occasion may arise or as may be deemed expedient.
8.5 GOVERNING LAW AND CHOICE OF VENUE. The validity, interpretation and
performance of this Agreement shall be governed by and construed in accordance
with the laws of the State of Florida, without regard to the principles of
conflicts of law thereof. Any action or proceedings brought by a Party seeking
to enforce any provisions of, or based upon any right arising out of, this
Agreement may be brought against any of the Parties in the courts of the State
of Florida or, if it has or can acquire jurisdiction, in a United States
District Court for the State of Florida, and each of the Parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
8.6 EVENTS EXCUSING PERFORMANCE. 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 control for so long as such events
continue and for a reasonable period of time thereafter.
8.7 COMPLIANCE WITH APPLICABLE LAWS. The Parties shall comply with all
applicable federal, state and local laws and regulations in the conduct of their
obligations under this Agreement.
8.8 SEVERABILITY. The provisions of this Agreement shall be deemed
severable, and, if any portion shall be held invalid, illegal or unenforceable
for any reason, either the provision shall be lawfully reformed to comply with
the Parties' intent or the provision shall be severed. Regardless whether the
provision is reformed or severed, the remainder of this Agreement shall be
effective and binding upon the Parties.
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8.9 ADDITIONAL DOCUMENTS. The Parties agree to execute any document or
documents that may be reasonably requested from time to time by another Party to
implement or complete such party's obligations pursuant to this Agreement.
8.10 ATTORNEYS' FEES. If legal action is commenced by either Party to
enforce or defend its rights under this Agreement, the prevailing Party in such
action shall be entitled to recover its costs and reasonable attorneys' fees in
addition to any other relief granted.
8.11 CONTRACT MODIFICATIONS FOR PROSPECTIVE LEGAL EVENTS. In the event
any state or federal laws or regulations, now existing or enacted or promulgated
after the Effective Date, are interpreted by judicial decision, a regulatory
agency or legal counsel for both OCS and the Orthodontist in such a manner as to
indicate that the structure of this Agreement may be in violation of such laws
or regulations, the Parties shall amend this Agreement as necessary. To the
maximum extent possible, any such amendment shall preserve the underlying
economic and financial arrangements between the Parties.
8.12 LANGUAGE CONSTRUCTION; HEADINGS. The language in all parts of this
Agreement shall be construed, in all cases, according to its plain meaning,
except where the context of this Agreement expressly indicates otherwise, and
the Parties acknowledge that each Party and its counsel have reviewed 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. The Article and Section headings used
herein are for reference only and shall not limit or control the meaning or
interpretation of any provision hereof.
8.13 NO OBLIGATION TO THIRD PARTIES. None of the obligations and duties
of any Party under this Agreement shall in any way or in any manner be deemed to
create any obligation to, or any rights in, any person or entity not a party to
this Agreement.
8.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each and all of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
XXXXXX X. XXXXXXX, D.M.D.
/s/ Xxxxxx X. Xxxxxxx, D.M.D.
-----------------------------
(Signature)
XXXXXX X. XXXXXXX, D.M.D., P.A.
By: /s/ Xxxxxx X. Xxxxxxx, D.M.D.
-----------------------------
Xxxxxx X. Xxxxxxx, D.M.D.
President
ORTHODONTIC CENTERS OF FLORIDA, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxxx, Xx.
Name: Xxxxxxxxxxx X. Xxxxxxxxx, Xx.
Title: President
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