EXHIBIT 10.5
ADMINISTRATIVE SERVICE SUBCONTRACT AGREEMENT
THIS ADMINISTRATIVE SERVICE SUBCONTRACT AGREEMENT (hereinafter
"Subcontract Agreement") effective this 1st day of May, 1997, ("Effective Date")
between and among DENTAL CARE ALLIANCE, INC., a Delaware corporation
(hereinafter "DCA") and XXXXXXX DENTAL DEVELOPMENT CORPORATION, a Michigan
corporation (hereinafter "JDDC").
I. RECITALS
WHEREAS, DCA and Eight Mile Dental, P.C., Gratiot Avenue Dental, P.C.,
Xxxxx Road Dental, P.C. and Washington Boulevard Dental, P.C. (collective, the
"P.C.s) are parties to an Administrative Services Agreement dated as of May 1,
1997 (the "Agreement");
WHEREAS, because DCA has limited current operations in the State of
Michigan DCA is desirous of subcontracting out its rights, duties and
obligations pursuant to the Agreement;
WHEREAS, JDDC is desirous of managing through subcontract with DCA the
four dental practices set forth above.
NOW, THEREFORE, in consideration of the foregoing mutual covenants and
agreements herein contained, the parties hereto agree as follows:
II DUTIES AND OBLIGATIONS OF THE JDDC
2.1 DCA hereby appoints JDDC to act and serve as the sole and exclusive
subcontractor for DCA in connection with the Agreement and irrevocably assigns
to JDDC, and JDDC hereby fully assumes, all of DCA's rights, powers, duties,
responsibilities and obligations pursuant to and in connection with the
Agreement, including specifically, without limitation, all rights, powers,
duties, responsibilities and obligations of DCA under Article II and Sections
4.1, 4.3 and 5.2 of the Agreement, with the same force and effect as if JDDC
were substituted for DCA thereunder.
2.2 JDDC shall report to DCA on a monthly basis with a complete
accounting of all matters in furtherance of this Subcontract Agreement.
2.3 JDDC shall maintain an appropriate account in the name of JDDC for
the benefit of DCA in the State of Michigan for the deposit of revenues and
payment of expenses for the P.C's. JDDC shall maintain a cash reserve balance in
the account, after payment of all expenses to be paid therefrom and prior to
payment of any service fees or disbursements to DCA pursuant to Section
3.2 below, as shall be sufficient, in its reasonable discretion, to fund working
capital and other funding requirements of the P.C's and their respective
businesses.
2.4 JDDC shall maintain appropriate books and records which shall be
available to DCA within a reasonable time after request and DCA shall have the
right to audit the records of JDDC at any time with twenty four (24) hours'
advance notice.
2.5 JDDC shall use its best efforts to perform all the duties and
obligations of DCA under its the Agreement and shall be responsible for all
expenses and the performance of its subcontracted obligations.
III FINANCIAL ARRANGEMENTS
3.1 JDDC shall be responsible to pay the practices operating expenses
from the account pursuant to Section 2.3 above, which shall include the expenses
incurred by JDDC in connection with the performance of those services as set
forth in Article II of the Agreement dated May 1, 1997.
3.2 In consideration of its duties, responsibilities and obligations
assumed and performed hereunder, JDDC shall be paid a service fee as set forth
in the attached Exhibit A. JDDC shall have the right to withdraw from the
account maintained pursuant to Section 2.3 above the full amount of its service
fees and pay all disbursements to DCA as and when JDDC shall reasonably
determine appropriate, subject to compliance with the provisions of Section 2.3
above. Provided that such services fees and disbursements to DCA shall be made
at the same time and in the same manner.
IV. INSURANCE AND INDEMNITY
4.1 JDDC shall be added as an additional insured on the P.C's
policy. JDDC shall hold harmless and defend DCA, 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), 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 JDDC's
intentional or negligent acts or omissions or that of its agents, officers,
directors, shareholders or employees during the term hereof.
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V. TERM AND TERMINATION
5.1 This Agreement shall be effective for the same term as the
Agreement.
5.2 TERMINATION OF AGREEMENT. This Agreement will automatically
terminate and cease if the Agreement is properly terminated.
This Agreement may be terminated by DCA solely in the event JDDC fails
to pay DCA any amount due and payable to DCA pursuant to the terms of Exhibit A
hereof and such payment default shall continue for a thirty (30) day period
after written notice thereof has been given by DCA to JDDC. DCA acknowledges
that this Agreement is non-cancelable and non-terminable.
This Agreement may also be terminated by DCA if a payment default
occurs under the Promissory Note dated September 1, 1993 issued by Xxxxx Xxxx
Xxxxxxx to Profit Dental Management, Inc. or the Consulting Agreement dated
September 1, 1993 between JDDC and Xxxxxx Xxxxxxx and any such default continues
after the expiration of all applicable cure periods.
5.3 ACTIONS UPON TERMINATION OF THIS AGREEMENT.
(a) Upon termination or expiration of this Agreement for any
reason:
(i) JDDC shall promptly return all DCA Proprietary
Information to DCA and otherwise comply with this
Agreement;
(ii) JDDC shall promptly pay DCA all advances, loans and
other amounts due hereunder and any interest due
thereon; and
(iii) JDDC shall render a final accounting for all monies
deposited in, and disbursed from account ~ established
pursuant to this Agreement.
VI. CONFIDENTIALITY AGREEMENTS
JDDC shall have all the same confidentiality agreements as set forth in
paragraph 7.1 through 7.4 of Administrative Services Agreement dated May 1,
1997.
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VII. INDEPENDENT CONTRACTORS
JDDC intends to perform and act as an independent subcontractor for
DCA.
VIII. GENERAL PROVISIONS
8.1 WHOLE AGREEMENT; MODIFICATION. There are no other agreements or
understandings, written or oral, between the parties regarding this Agreement
and the Exhibits, other than as set forth herein. This Agreement shall not be
modified or amended except by a written document executed by all parties to this
Agreement.
8.2 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 (a) delivered by hand (with written confirmation of receipt), (b)
sent by facsimile transmission (with written confirmation of receipt), provided
that a copy is mailed by certified mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by written notice to the other parties with
such written notice to be given as set forth in this section).
TO JDDC: Xxxxxxx Dental Development Corporation
0000 Xxxxx Xxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000
TO DCA: Dental Care Alliance, Inc.
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Facsimile No: (000) 000-0000
Attention: Xx. Xxxxxx Xxxxxxx
With a copy to: Xxxx, Band, Russell, Collier, Xxxxxxxxx and
Xxxxxx, Chartered
X.X. Xxx 00000
Xxxxxxxx, Xxxxxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
8.3 WAIVER OF PROVISIONS. Any waiver of any terms and conditions
hereof must be in writing, and signed by the parties hereto. The Waiver of any
of the terms and conditions of this
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Agreement shall not be construed as a waiver of any other terms and conditions
hereof.
8.4 GOVERNING LAW. The validity, interpretation and performance of
this Agreement shall be governed by and construed in accordance with the laws of
the State of Florida.
8.5 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, 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.
8.6 COMPLIANCE WITH APPLICABLE LAWS. All parties shall comply with all
applicable federal, state and local laws, regulations and restrictions in the
conduct of their obligations under this Agreement.
8.7 SEVERABILITY. The provisions of this Agreement shall be deemed
severally and if any portion shall be held invalid, illegal or unenforceable for
any reason, the remainder of this Agreement shall be effective and binding upon
the parties.
8.8 ADDITIONAL DOCUMENTS. Each of the parties hereto agrees to execute
any document or documents that may be requested from time to time by any other
party to implement or complete such party's obligations pursuant to this
Agreement.
8.9 ATTORNEYS' FEES. If legal action is commenced by any 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.
8.10 CONTRACT MODIFICATIONS FOR PROSPECTIVE LEGAL EVENTS. JDDC and DCA
shall amend the Agreement as necessary to comply changes in laws apply to this
Agreement. To the maximum extent possible, any such amended shall preserve the
underlying economic and financial arrangements between the DCA and JDDC.
8.11 REMEDIES CUMULATIVE. No remedy set forth in this Agreement or
otherwise conferred upon or reserved to any party by law shall be considered
exclusive of any other remedy available to any 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.
8.12 LANGUAGE CONSTRUCTION. The language in all parties of this
Agreement shall be construed, in all cases, according to parties acknowledgment
that each party and its counsel have
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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.
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 ENTIRE AGREEMENT/AMENDMENTS. This Agreement supersedes all
previous contracts and agreements between the parties respecting the subject
matter of this Agreement. As between or among the parties, no oral statement or
prior written material not specifically incorporated herein shall be of any
force and effect. This Agreement may be executed in two or more counterparts,
each and all of which shall be deemed to be an original and all of which
together shall constitute but one and the same instrument and shall not be
amended, altered or changed except by a written amendment signed by the parties
hereto.
8.15 Assignment. DCA and the PCs shall not have the right to assign,
subcontract or sell their representative rights and obligations hereunder to any
person, corporation, partnership or other legal entity without prior written
consent of the other, which consent shall not unreasonably be withheld. Subject
to this provision, this Agreement shall be binding upon the parties hereto, and
their successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
DCA:
DENTAL CARE ALLIANCE, INC., a
Delaware corporation
BY:
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Signature
XXXXXX XXXXXXX
----------------------------------
Printed Name
PRESIDENT
----------------------------------
Title
JDDC:
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XXXXXXX DENTAL DEVELOPMENT
CORPORATION, a Michigan
corporation
BY:
-----------------------------
Signature
---------------------------------
Printed Name
PRESIDENT
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Title
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EXHIBIT A
SERVICE FEE
As a fee for services performed pursuant to the Subcontract Agreement,
Xxxxxxx Dental Development Corporation shall be entitled to retain 80% of the
"net profits" (as described below) on a monthly basis. "Net profits" are defined
as 74% of all revenues received from the operation of the PCs, pursuant to DCA's
Administrative Services Agreement with the PCs, less the following amounts: 1)
all normal operating expenses of the PCs including, without limitation, the
Practice expenses (as defined in the Agreement); 2) all licensing fees owed by
the PCs to DCA; 3) all Note payments due under the Promissory Note and the Asset
Purchase Agreement between DCA and Xxxx Management Company each dated May 1,
1997; 4) all Note payments due under the Note and Stock Purchase Agreement dated
September 1, 1993 between Xxxxx Xxxxxxx, D.D.S. and Xxxxx Xxxx Xxxxxxx, D.D.S.;
4) the payment of Consulting Fees by JDDC to Profit Dental Management Company
under the Consulting Agreement dated May 1, 1997; 5) Xxxx Management loans
relating to practice expenses and acquisition costs; and 6) this Service Fee
(80% of net profits after payment of practice expenses itemized above), shall be
adjusted by $96,000 a year of additional compensation paid to Xxxxx Xxxx Xxxxxxx
for Dental Services and the $96,000 a year Note payment from DCA to Xxxx
Management. The remaining 20% shall be paid to DCA on a monthly basis.
[example of adjustments]
Net profit $1,000,000.00 after all practice expenses itemized above.
Adjustments = $1,000,000.00
+ 96,000.00 Additional Compensation
-------------
1,096,000.00
+96,000.00 Note Payments
Adjusted Net Profits $1,192,000.00
JDDC receives 80%
of $1,192,000 = $953,600.00
- 96,000.00 (Additional Compensation)
857,600.00
- 96,000.00 (Note payments)
JDDC Revenues $761,600.00 (as service fee)
DCA receives 20%
of $1,192,000 = $238,400
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EXHIBIT B
[Insert Administrative Services Agreement dated May 1, 1997]
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