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EXHIBIT 10(ww)
MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT, effective the 19th day of September, 1995,
by and between VFD of Pennsylvania, Inc., a Delaware corporation ("VFD"), and
Xxxxx X. Xxxxx, D.M.D. and Associates, P.C., a Virginia professional services
corporation (the "P.C.") formerly known as Hong Cao, D.M.D., P.C.
W I T N E S S E T H:
WHEREAS, the P.C. is engaged in the business of providing, among other
things, dental services and related activities in the Commonwealth of Virginia
(the "Practice");
WHEREAS, the P.C. desires to obtain the benefit of VFD's expertise in
operating, directing, managing and supervising the nonprofessional aspects of
the operations of the Practice;
WHEREAS, the P.C. desires to obtain from VFD, and VFD desires to
provide to the P.C., certain premises and certain physical assets, furniture and
equipment needed to operate the Practice;
WHEREAS, VFD and the P.C. are parties to that certain Management
Agreement dated as of September 19, 1995; and
WHEREAS, VFD and the P.C. wish to amend and restate the Management
Agreement in its entirety on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE 1
RELATIONSHIP OF PARTIES
1.1 Responsibilities of Parties. The parties agree that the P.C. will
provide, and shall be solely responsible for providing, all professional
services for the Practice and VFD will be responsible only for administrative
services (as further described in this Agreement). Nothing contained in this
Agreement shall be construed as permitting or providing for the ownership,
establishment, operation or management by VFD of the professional services of
the
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Practice, which services shall at all times be the sole responsibility of the
P.C. or permitting VFD to exercise control over the Practice in violation of
Virginia Statute 541.2717; provided, however, that pursuant to its engagement
hereunder, VFD shall be the exclusive provider of all administrative services
and shall control all aspects of the P.C.'s business other than those aspects
which relate directly to the provision of dental services. Without limiting the
generality of the foregoing, the P.C. shall be solely responsible for all
activities described in Section 2.4 of this Agreement.
1.2 Relationship of Parties. The P.C. and VFD are not joint
venturers, partners, employees or agents of each other and, except as provided
herein, neither party shall have any authority to bind the other.
1.3 Practice. The P.C. agrees to conduct the Practice in
compliance with all applicable laws, rules and ordinances.
ARTICLE 2
SERVICES OF VFD
2.1 Covered Services. VFD, unless otherwise prohibited by law,
shall control all aspects of, and provide to the P.C. the following services,
premises and assets (such services, premises and assets are hereinafter referred
to collectively as the "Covered Services"):
a. General Administrative Services. Overall day-to-day
supervision, conduct and management of the general administrative services
required in connection with the Practice, including supervision of the
non-professional services and personnel described below.
b. Personnel. Provision of all personnel (other than licensed
or certified professionals, technicians or hygienists, collectively, the
"Professional Personnel") needed to operate and support the Practice, such as
receptionists and secretarial, clerical, purchasing and marketing personnel
(collectively, the "Administrative Personnel"). VFD shall have the sole and
exclusive responsibility for determining the salaries and fringe benefits of all
Administrative Personnel provided hereunder, and for paying such salaries and
providing such fringe benefits. In recognition of the fact that VFD's personnel
provided to the P.C. under this Agreement may from time to time perform services
for others, this Agreement shall not
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prevent VFD from performing such services for others or restrict VFD from so
using the Administrative Personnel provided to the P.C. under this Agreement.
VFD will make every effort consistent with sound business practices to honor the
specific requests of the P.C. with regard to the assignment of its employees to
the P.C.; however, VFD reserves the sole right to determine the assignment of
its employees. Further, VFD, in its sole discretion, may require each of its
employees assigned to the P.C. to perform several of the aforedescribed
functions and duties simultaneously.
c. Professional Personnel. Establish guidelines for the selection,
hiring and firing of the Professional Personnel by the P.C. and recruit and
evaluate prospective Professional Personnel; provided, however, that all of the
Professional Personnel shall be employees of, or independent contractors to, the
P.C.
d. Training. Training of all Administrative Personnel and assistance to
the P.C. in arranging for training and continuing education for Professional
Personnel.
e. Administrative and Fiscal Services. Provision of general
administrative, business and fiscal services to the P.C. in connection with the
operation of the Practice, including patient xxxxxxxx, collecting xxxxxxxx,
accounting, auditing (by a certified public accountant selected by VFD with the
approval of the P.C., which approval shall not be unreasonably withheld or
delayed), bookkeeping, budgeting, record keeping, accounts receivable and
accounts payable processing, electronic data processing and such other services
as the P.C. may from time to time require.
f. Annual Budget. Prepare, in reasonable detail, annual operating and
capital budgets for the P.C. which shall be delivered to the P.C. within thirty
(30) days after the end of each fiscal year, with VFD retaining final authority
with respect to budget items including, without limitation, with respect to
compensation and payments to the Professional Personnel and the Administrative
Personnel.
g. Patient Records. Maintenance of patient records (which shall at all
times remain the property and under the control of the P.C.) and provision of
record retrieval and monitoring services to assist the P.C. in utilization and
quality assurance reviews in accordance with instructions and guidelines issued
by the P.C.
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h. Quality Control. Development of appropriate quality control
programs, including development of performance standards, sampling techniques
for case review, and preparation of appropriately documented studies.
i. Marketing, Development and Program Negotiation. Marketing of the
professional services provided by the P.C. to potential patients, facilities,
health maintenance organizations, self-insured employer health plans and various
third-party payors (the "Marketing Services"). The Marketing Services to be
provided by VFD may include, but are not necessarily limited to, (i) assistance
and support in the preparation of marketing material and brochures and responses
to requests for proposals, (ii) the placing of advertisements or articles in
magazines, newspapers, other publications and any and all media determined by
VFD to be beneficial to the P.C., (iii) undertaking telemarketing campaigns and
(iv) the holding of seminars. VFD shall also assist the P.C. in negotiating and
securing contracts with self-insured employer health plans, third-party payors,
health maintenance organizations, managed care companies and any other
institution, facility or organization that may be in need of services that the
P.C. is qualified to provide.
j. Equipment and Supplies. Provision of all inventory, equipment,
furnishings and supplies reasonably necessary for the efficient operation of the
Practice. Title to such inventory, equipment, furnishings and supplies shall at
all times remain in VFD. At the end of the term of this Agreement, VFD shall
retain such inventory, equipment, furnishings and supplies as shall not have
been consumed in the day-to-day operations of the Practice.
k. Janitorial and Maintenance Service. Arranging for janitorial,
grounds and maintenance and repair services for the P.C. and its equipment and
furnishings.
l. Malpractice Insurance. Assistance to the P.C. in obtaining
malpractice coverage for the P.C., its employees and agents in an amount not
less than One Million Dollars ($1,000,000). VFD shall also assist the P.C. in
obtaining general liability and property insurance in usual and customary
amounts for the P.C. VFD shall, on behalf and in the name of the P.C., pay the
premiums for all such insurance and shall provide the P.C. with evidence of
payment on a periodic basis or as requested.
m. Contracts with Facilities/Programs. Contracts with facilities and
programs serviced by the
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Practice shall be by and in the name of the P.C. VFD shall serve as contracting
agent for the P.C. in connection with such facilities or programs contracts.
n. Protecting Goodwill. Take all necessary steps to preserve and
protect the reputation and goodwill associated with the P.C., including
assistance in the monitoring of utilization and quality of services provided by
the P.C., and shall assist the P.C. to take all steps necessary to remedy any
and all deficiencies in the efficiency or the quality of the services provided.
This section shall not be construed as permitting VFD to influence or control
Professional Personnel.
o. Facilities. Facilities occupied by the P.C. for the Practice shall
be made available to the P.C. by VFD.
p. Operations and Regulatory Reports. Deliver to the P.C. operations
reports containing such information as the P.C. may reasonably request. VFD
shall prepare all written reports and information that shall be lawfully
required by any government body or agency having jurisdiction over the P.C. or
the Practice. The P.C. shall review and approve all such required reports and/or
information before any dissemination of the same.
q. Processing Disputes. Administer and process all disputes, grievances
and complaints between the P.C. and all third parties, subject at all times to
the review and final approval of the P.C.
r. Government Regulations; Licenses. To the extent known and material
to the operation of the P.C. and the Practice, VFD shall promptly notify the
P.C. of any changes which may occur in relevant laws or regulations of any
government, governmental body or agency having jurisdiction over the P.C. or the
Practice. The foregoing shall not in any way limit the P.C.'s continuing
professional and legal responsibility to comply with, and be aware of, all
licensing, regulatory, professional or other requirements applicable to
individuals licensed to provide dental services.
s. Advances to VFD. VFD shall make advances to the P.C. as required by
Section 5.6 herein. Such advances shall bear a reasonable rate of interest, as
mutually agreed to by VFD and the P.C.
The Covered Services shall include assumption of all obligations of the
P.C. to provide administrative
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services to professional personnel who are not employed by the P.C. VFD may
perform the Covered Services directly or by reimbursing the P.C. for the cost of
any Covered Services.
2.2 Performance of Services. VFD is hereby expressly authorized to
perform the Covered Services hereunder in whatever reasonable manner it deems
appropriate to meet the day-to-day administrative needs of the Practice. It is
understood and agreed that VFD will perform some of the Covered Services for the
P.C. at a centralized location.
2.3 Events Excusing Performance. VFD will not be liable to the P.C. for
failure to perform any of the services required herein in the event of strikes,
lockouts, calamities, acts of God, unavailability of supplies or other events
over which VFD has no control for so long as such event continues and for a
reasonable period of time thereafter.
2.4 Excluded Services. The parties hereto expressly acknowledge that
the provision of all professional services, including but not limited to, dental
services by the P.C., shall be separate and independent from the provision of
administrative, fiscal and support services by VFD, and the P.C. shall be solely
and exclusively responsible for all professional dental services rendered to
patients of the Practice. Without limiting the generality of the foregoing, the
parties acknowledge that the P.C. shall be solely responsible for setting all
professional standards of the Practice and shall be responsible for the
employment and discharge of all Professional Personnel.
2.5 Use of Name. VFD hereby grants to the P.C. a nontransferable,
nonexclusive license to use the proprietary name "Valley Forge Dental" and any
other proprietary names owned by VFD and used by the P.C. in connection with the
Practice along with any and all trademarked symbols for the term of this
Agreement (the "License"). All applicable common law and statutory rights in the
proprietary name "Valley Forge Dental" and any other proprietary names owned by
VFD and used by the Practice and their accompanying symbols, including, but not
limited to, rights relating to trademark, service xxxx, patent and copyright
shall be and remain the sole property of VFD. The P.C. shall have no right,
title or interest in any such proprietary rights.
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ARTICLE 3
PROPRIETARY INTEREST AND RIGHTS OF VFD
3.1 Competition. During the term of this Agreement, neither the P.C.
nor any shareholder of the P.C. shall, directly or indirectly, own an interest
in, administer, manage, advise, assist, operate, join, control, participate in,
or be connected in any manner with any corporation, partnership, proprietorship,
firm, association, person or entity providing dental services or administrative
services in competition with the P.C. or VFD.
3.2 Confidentiality. The P.C. acknowledges and agrees that VFD is
entitled to prevent its competitors from obtaining and utilizing its trade
secrets. The P.C. agrees to hold VFD's trade secrets in strictest confidence and
not to disclose them or allow them to be disclosed directly or indirectly to any
person or entity other than persons engaged by the P.C. or VFD. The P.C.
acknowledges its fiduciary obligations to VFD and the confidentiality of its
relationship with VFD and of any information relating to the services and
business methods of VFD which it may obtain during the term of this Agreement.
The P.C. shall not, either during the term of this Agreement or at any time
after the expiration or sooner termination of this Agreement, disclose to anyone
other than employees or independent contractors of the P.C. or VFD any
confidential or proprietary information or trade secret obtained by the P.C.
from VFD. The P.C. also agrees to place any persons to whom said information is
disclosed for the purpose of performance under legal obligation to treat such
information as strictly confidential.
ARTICLE 4
BILLING AGENT AGREEMENT
4.1 Professional and Other Fees. The P.C. shall, in consultation with
VFD, establish a schedule of fees and charges for the Practice's professional
services or shall comply with the schedule of fees and charges set forth in the
health care contracts pursuant to which the P.C. provides services through its
Professional Personnel.
4.2 Xxxxxxxx. Xxxxxxxx of the Practice for all services rendered by the
P.C. shall be by and in the name of the P.C.
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4.3 Billing and Collection Agent. VFD shall serve as billing and
collection agent for the P.C. in connection with the Practice. VFD shall
establish a depository bank account on behalf of the Practice and will deposit
into such account collected fees generated from the Practice. As provided for in
standing instructions issued by the P.C. to the bank where such depository
account is located, VFD may withdraw all monies daily from said bank account for
processing at a central location to be used for payment of the P.C.'s expenses,
including the administrative services fee set forth in Section 5.4 hereof and
any amounts advanced to the P.C. pursuant to Section 5.6 hereof. Said processing
will consist of establishing and maintaining a book account for the P.C. showing
all fee collections and expense disbursements made by VFD at the P.C.'s request.
VFD will provide the P.C. with periodic financial statements for the Practice
reflecting such processing.
4.4 Reports. VFD shall provide the P.C. with financial statements for
the Practice, stating Gross Xxxxxxxx (as hereafter defined) and VFD's
Administrative Fees (as hereafter defined).
4.5 Security for VFD's Compensation. To secure the prompt and orderly
payment of any amounts owing by the P.C. to VFD pursuant to this Agreement, the
P.C. hereby agrees to grant, at the request of VFD, a security interest to VFD
or to a third party designated by VFD, in all its existing and hereafter created
accounts receivable, all cash or non-cash proceeds therefrom, all insurance
policies and proceeds relating thereto, and all of the P.C.'s rights as an
unpaid provider of services, whether now existing or hereafter created or
acquired (collectively, the "Collateral"). The P.C. agrees to execute any and
all documents necessary to perfect such security interest, including but not
limited to, UCC financing statements.
ARTICLE 5
COMPENSATION
5.1 Gross Xxxxxxxx. The term "Gross Xxxxxxxx" as used in this Agreement
shall mean all xxxxxxxx by the P.C. in connection with the Practice for dental
services, including any other income or receivables relating thereto, less
contractual allowances, if any, and an allowance for bad debts, to be determined
from time to time by VFD, in its discretion, based upon the actual experience of
the P.C., plus all other cash payments and miscellaneous revenues received by
the P.C. in connection with the Practice.
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5.2 Intention of the Parties. It is the intention of the parties hereto
that from the Gross Xxxxxxxx of the P.C. in connection with the Practice, the
P.C. shall be entitled to fairly and reasonably compensate its Professional
Personnel, and VFD shall be entitled to receive from the P.C. fair and
reasonable compensation for (i) the provision of the Covered Services pursuant
to this Agreement, (ii) the License provided for in Section 2.5 hereof, and
(iii) the expenses, obligations, and risks assumed by VFD in connection
therewith.
5.3 Fair and Reasonable Compensation of the P.C. for Services of
Professional Personnel. The parties hereto agree that the P.C. shall have the
right to fairly and reasonably compensate its Professional Personnel for their
professional services. Compensation for the Professional Personnel shall be
determined in accordance with employment agreements and other employment
arrangements entered into by the P.C., in consultation with VFD, and the
Professional Personnel.
5.4 Fair and Reasonable Compensation to VFD.
a. VFD's Administrative Fees. The term "VFD's Administrative
Fees" as used in this article shall mean Gross Xxxxxxxx less compensation
payable by the P.C. as set forth in Section 5.3.
b. For Services of VFD. The parties hereto agree that VFD shall
be fairly and reasonably compensated for its administrative services. VFD's
Administrative Fees shall be paid to VFD as compensation for (i) the provision
of the Covered Services under this Agreement, (ii) the License and (iii) its
expenses, obligations, and risks in connection therewith. VFD shall pay all
expenses of the Practice, except for compensation to the Professional Personnel,
(including interest expenses payable with respect to any indebtedness of the
P.C. to which VFD shall have consented in writing) out of VFD's Administrative
Fees or out of funds advanced to the P.C. by VFD.
5.5 Periodic Adjustment of Compensation. The parties hereto recognize
that the Practice may change in size and scope over the term of this Agreement
which may necessitate adjusting the fees provided for herein. Therefore, the
parties shall review the compensation to VFD no less frequently than annually
and more frequently at the request of VFD or the P.C., if changes in the
business of the P.C. or services by VFD warrant such more frequent review, and
may agree in writing to modification of the compensation. Such review shall
consider the scope of
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operations pursuant to this Agreement at the time of review, the financial
success of VFD and the P.C. in connection with the Practice, changes in the
purchasing power of money, the size and number of facilities being supplied by
VFD, the scope of the Marketing Services, the size of the Administrative
Personnel workforce and the expenses and risks to the respective parties of
performing this Agreement.
5.6 Remittances. To the extent the P.C. shall not generate adequate
revenues to meet the P.C.'s ongoing operating expenses, including the
compensation for professional services pursuant to Section 5.3 of this
Agreement, VFD shall advance to the P.C. or arrange for such amounts as may be
required. To the extent that VFD advances any funds to the P.C. pursuant to this
Section 5.6, such advances shall be evidenced by interest-bearing demand note(s)
from the P.C. in favor of VFD and shall be secured by the Collateral as provided
in Section 4.5 hereof.
ARTICLE 6
TERM AND TERMINATION
6.1 Term. The term of this Agreement shall be for a period of forty
(40) years and thereafter this Agreement shall continue indefinitely until
terminated in accordance with Section 6.2 hereof.
6.2 Termination. Notwithstanding any provision of this Agreement to the
contrary, this Agreement may be terminated as set forth below:
a. In the event of a material breach of this Agreement by either
party as a result of such party's gross negligence or fraud, the other party
may, at any time commencing sixty (60) days after written notice of the breach
has been given to the breaching party, terminate this Agreement by delivery to
the breaching party of a further written notice of termination; provided,
however, that if the breaching party, prior to receiving such notice of
termination, has begun and is diligently continuing good faith efforts to cure
such breach, this Agreement shall remain in full force and effect;
b. If either party is determined by a court, administrative body
or peer review organization having jurisdiction, to have engaged in conduct that
results in material harm to the P.C. and constitutes (i) a felony or other crime
involving moral turpitude, including fraud,
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theft, or embezzlement or (ii) a failure to act in an ethical or professional
manner, in keeping with accepted dental care standards, then immediately upon
notice by the other party;
c. If either party has engaged in any practice that results in
material harm to the P.C. and violates in any material respect any federal,
state or local law or regulation that is aimed at protecting the public from
coercion into treatment and preventing fraud upon or abuse of public funding of
health services, then immediately upon notice by the other party;
d. If either party commences a voluntary case under bankruptcy,
insolvency or similar law, or any involuntary case is commenced against either
party under any bankruptcy, insolvency or similar law and such involuntary case
is not dismissed within thirty (30) days after filing, then immediately upon
notice from the other party; or
e. After the initial forty (40) year term of this Agreement,
either party may also terminate this Agreement, with or without cause, by giving
the other written notice of termination not less than one (1) year prior to the
effective date of termination.
6.3 Rights Upon Termination. The termination of this Agreement shall
not release or discharge either party from any obligation, debt or liability
which shall have previously accrued and remain to be performed upon the date of
termination.
ARTICLE 7
GENERAL PROVISIONS
7.1 Indemnification. Each party shall indemnify, hold harmless and
defend the other party from and against any liability, loss, claims, lawsuits,
damages, injury, cost, expense or other detriment arising out of or incident to
the performance or nonperformance under this Agreement by such indemnifying
party, its employees, Professional Personnel, and agents, including, without
limitation, all consequential damages and attorneys' fees, provided, however,
neither party shall be liable to the other under this Section 7.1 for any claim
covered by insurance, except to the extent liability of the party exceeds the
amount of the coverage.
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7.2 Assignment. The rights conferred upon the P.C. hereunder may not be
transferred or assigned without the prior written consent of VFD and any
assignment in violation of this Section 7.2 shall be void. This Agreement shall
be assignable by VFD.
7.3 Notices. All notices, requests or instructions hereunder shall be
in writing and delivered personally or sent by registered or certified mail,
postage prepaid, as follows:
(1) If to the P.C.:
00000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(2) If to VFD:
c/o Valley Forge Dental Associates, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, and two business days after the date of mailing, if mailed.
7.4 Entire Agreement. This Agreement and the documents referred to
herein contain the entire agreement between the parties hereto with respect to
the transactions contemplated hereby, and no modification hereof shall be
effective unless in writing and signed by the party against which it is sought
to be enforced.
7.5 Further Assurances. Each of the parties hereto shall use such
party's best efforts to take such actions as may be necessary or reasonably
requested by the other party hereto to carry out and consummate the transactions
contemplated by this Agreement.
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7.6 Attorneys Fees. Each of the parties hereto shall bear such party's
own expenses in connection with this Agreement and the transactions contemplated
hereby.
7.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia applicable to
agreements made and to be performed entirely within such State.
7.8 Article and Section Headings. The article and section headings in
this Agreement are inserted solely for convenience of reference and are not a
part of and are not intended to govern, limit or aid in the construction of any
term or provision hereof.
7.9 Waiver. The waiver of any covenant, condition or duty hereunder by
either party shall not prevent that party from later insisting upon full
performance of the same.
7.10 Amendment. No amendment in the terms of this Agreement shall be
binding on either party unless in writing and executed by the duly authorized
representatives of each party.
7.11 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and both of which taken together shall
constitute one and the same instrument.
7.12 Severability. In the event that any provision of this Agreement
shall be held to be void or unenforceable for any reason, the parties shall
negotiate in good faith for a period of up to one hundred eighty (180) days in
order to arrive at a mutually acceptable substitute provision.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
XXXXX X. XXXXX, D.M.D. AND
ASSOCIATES, P.C.
By: /s/ Xxxxx X. Xxxxx, D.M.D.
----------------------------
Name: Xxxxx X. Xxxxx, D.M.D.
Title: President
VFD OF PENNSYLVANIA, INC.
By: /s/ W. Xxxx Xxxxxxx
--------------------------
Name: W. Xxxx Xxxxxxx
Title: Vice President
