SERVICES AGREEMENT
BETWEEN
SMILEAGE DENTAL CARE, INC.
and
WISCONSIN DENTAL GROUP, S.C.
December 23, 1996
* This information has been omitted pursuant to a request for confidential
treatment and has been filed separately with the Securities and Exchange
Commission.
TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS....................................................... 1
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ARTICLE II. APPOINTMENT AND AUTHORITY OF SERVICE COMPANY...................... 1
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(S)2.1 Appointment....................................................... 1
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(S)2.2 Authority......................................................... 2
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(S)2.3 Patient Referrals................................................. 2
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(S)2.4 Internal Management of Provider................................... 2
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(S)2.5 Practice of Dentistry............................................. 2
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ARTICLE III. POLICY BOARD..................................................... 3
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(S)3.1 Formation and Operation of Policy Board........................... 3
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(S)3.2 Responsibilities of the Policy Board.............................. 3
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(a) Capital Improvements and Expansion........................... 3
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(b) Annual Budgets............................................... 4
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(c) Marketing and Advertising.................................... 4
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(d) Patient Fees; Collection Policies............................ 4
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(e) Provider and Payor Relationships............................. 4
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(f) Strategic and Operational Planning........................... 4
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(g) Capital Expenditures......................................... 4
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(h) Personnel Planning........................................... 4
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(i) Grievance Referrals.......................................... 4
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(j) Patient Concerns and Claims.................................. 5
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(k) Environmental Health and Safety.............................. 5
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(l) Emergency Care Services...................................... 5
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(m) Financial Review............................................. 5
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(n) Other........................................................ 5
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(S)3.3 Dental Decisions.................................................. 5
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ARTICLE IV. RESPONSIBILITIES OF SERVICE COMPANY............................... 5
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(S)4.1 Clinics........................................................... 6
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(S)4.2 Equipment......................................................... 6
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(S)4.4 Supplies.......................................................... 7
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(S)4.5 Capital Investment................................................ 7
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(S)4.6 Support Services.................................................. 7
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(S)4.7 Quality Assurance, Risk Management, and Utilization Review........ 7
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(S)4.8 Licenses and Permits.............................................. 7
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(S)4.9 Personnel......................................................... 8
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(S)4.10 Contract Negotiations............................................. 8
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(S)4.11 Billing and Collection............................................ 8
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i
(S)4.12 Provider Account............................................... 9
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(a) Power of Attorney......................................... 9
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(b) Priority of Payments...................................... 10
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(c) Further Assurances........................................ 10
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(S)4.13 Financial Matters.............................................. 10
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(a) Annual Budget............................................. 10
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(b) Accounting and Financial Records.......................... 11
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(c) Review of Expenditures.................................... 11
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(d) Tax Matters............................................... 11
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(i) General.............................................. 11
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(ii) Sales and Use Taxes.................................. 11
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(S)4.14 Reports and Records............................................ 11
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(a) Dental Records............................................ 11
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(b) Other Reports and Records................................. 12
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(S)4.15 Recruitment of Provider Dentists............................... 12
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(S)4.16 Service Company's Insurance.................................... 12
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(S)4.17 License of Name and Marks...................................... 12
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(S)4.18 No Warranty.................................................... 12
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ARTICLE V. RESPONSIBILITIES OF PROVIDER................................... 13
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(S)5.1 Organization and Operations.................................... 13
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(S)5.2 Provider Personnel............................................. 13
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(a) Dentist Personnel......................................... 13
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(b) Provider and Patient Scheduling........................... 14
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(c) Paid Hours Reporting...................................... 14
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(d) Non-Dentist Dental Care Personnel......................... 14
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(S)5.3 Professional Standards......................................... 14
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(S)5.4 Dental Care.................................................... 14
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(S)5.5 Peer Review and Quality Assurance.............................. 15
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(S)5.6 Provider's Insurance........................................... 15
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(S)5.7 Noncompetition................................................. 16
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(S)5.8 Use of Name.................................................... 17
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ARTICLE VI. CONFIDENTIALITY................................................ 17
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(S)6.1 Confidential and Proprietary Information....................... 17
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(S)6.2 Use of Practice Statistics..................................... 17
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ARTICLE VII. FINANCIAL ARRANGEMENTS......................................... 18
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(S)7.1 Clinic Expense Reimbursement................................... 18
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(S)7.2 Repayment of Advances.......................................... 18
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(S)7.3 Fees........................................................... 18
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(a) Service Fee............................................... 18
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(b) Performance Fee........................................... 18
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(S)7.4 Adjustments to Fees............................................ 18
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ii
(S)7.5 Reasonable Value............................................... 19
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(S)7.6 Payment........................................................ 19
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(S)7.7 Accounts Receivable............................................ 19
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ARTICLE VIII. TERM AND TERMINATION........................................... 20
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(S)8.1 Initial and Renewal Term....................................... 20
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(S)8.2 Termination.................................................... 20
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(a) Termination By Service Company............................ 20
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(b) Termination By Provider................................... 21
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(c) Termination by Agreement.................................. 21
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(d) Legislative, Regulatory or Administrative Change.......... 21
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(S)8.3 Effects of Termination......................................... 22
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(S)8.4 Purchase Obligation............................................ 23
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(S)8.5 Closing of Purchase............................................ 24
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ARTICLE IX. GENERAL........................................................ 25
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(S)9.1 Administrative Services Only................................... 25
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(S)9.2 Relationship of Parties........................................ 25
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(S)9.3 Notices........................................................ 25
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(S)9.4 Execution of Documents......................................... 26
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(S)9.5 Governing Law.................................................. 26
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(S)9.6 Severability................................................... 27
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(S)9.7 Setoff......................................................... 27
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(S)9.8 Remedies....................................................... 27
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(S)9.9 Non-waiver..................................................... 27
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(S)9.10 Indemnification................................................ 27
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(S)9.11 No Third Party Benefit......................................... 28
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(S)9.12 Captions....................................................... 28
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(S)9.13 Genders and Numbers............................................ 28
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(S)9.14 Complete Agreement............................................. 28
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(S)9.15 Counterparts................................................... 28
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(S)9.16 Assignment..................................................... 28
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(S)9.17 Successors..................................................... 29
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(S)9.18 Force Majeure.................................................. 29
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INDEX TO EXHIBITS............................................................ 30
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DEFINITIONS.................................................................. i
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iii
SERVICES AGREEMENT
This agreement is made effective December 23, 1996, between Smileage Dental
Care, Inc., a Wisconsin corporation ("Service Company"), and Wisconsin Dental
Group, S.C., a Wisconsin corporation ("Provider").
Background Information
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A. Provider operates as a dental practice providing dental services to the
general public in and around the Greater Milwaukee, Wisconsin area through
individual dentists who are licensed to practice dentistry in the state of
Wisconsin and who are employed or otherwise retained by Provider.
B. Service Company is engaged in the business of providing assets,
personnel, and services to dental practices other than such services as are
directly related to the provision of dental care or the practice of dentistry.
Service Company's services are intended to improve the efficiency and
profitability of dental practices and permit the dentists in such practices to
focus their efforts solely on rendering quality dental care.
C. Provider desires to focus its energies, expertise and time on the
practice of dentistry and on the delivery of dental services to patients. To
accomplish this goal, Provider desires to engage Service Company to provide such
services as are necessary and appropriate for the day-to-day administration of
the non-dental aspects of Provider's dental practice, and Service Company
desires to provide such services to Provider, all upon the terms and subject to
the conditions set forth in this agreement.
Statement of Agreement
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Service Company and Provider (the "Parties") hereby acknowledge the
accuracy of the foregoing Background Information and agree as follows:
ARTICLE I. DEFINITIONS
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Capitalized terms used in this agreement but not otherwise defined herein
shall have the respective meanings given those terms in the attached Exhibit A.
ARTICLE II. APPOINTMENT AND AUTHORITY OF SERVICE COMPANY
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(S)2.1 Appointment. Provider hereby appoints Service Company as its sole
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and exclusive agent for the performance of the Services, and Service Company
hereby accepts such appointment, subject at all times to the provisions of this
agreement.
(S)2.2 Authority. Service Company shall have all power, authority, and
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responsibility reasonably necessary to provide the Services and carry out
Service Company's other obligations under this agreement. Without limiting the
foregoing, Service Company shall have the authority to provide the Services in
any reasonable manner Service Company deems appropriate to meet the day-to-day
requirements of the business functions of Provider. Subject to Article III of
this agreement, Service Company is also expressly authorized to negotiate and
execute on behalf of Provider contracts that do not relate to the provision of
Dental Care. Provider shall give Service Company 30 days prior written notice
of Provider's intent to execute any agreement obligating Provider to perform
Dental Care or otherwise creating a binding legal obligation on Provider.
Unless an expense is expressly designated as a Service Company Expense in this
agreement, all expenses incurred by Service Company in providing services
pursuant to this agreement shall be Clinic Expenses.
(S)2.3 Patient Referrals. The Parties agree that the benefits to Provider
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hereunder do not require, are not payment for, and are not in any way contingent
upon the referral, admission, treatment, or any other arrangement for the
provision of any item or service offered by Service Company to patients of
Provider in any facility, laboratory, or dental care operation controlled,
managed, or operated by Service Company.
(S)2.4 Internal Management of Provider. Matters involving the tax
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planning, investment planning, and internal management, control, or finances of
Provider, including without limitation the compensation of dentist employees of
Provider, shall remain the sole and exclusive responsibility of Provider and its
shareholders.
(S)2.5 Practice of Dentistry. The Parties acknowledge and agree that: (a)
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Service Company is not authorized or qualified to engage in any activity that
may be construed or deemed to constitute the practice of dentistry; and (b)
notwithstanding anything in this agreement to the contrary (i) Provider, through
its dentists, shall be solely responsible for and shall have complete authority,
responsibility, supervision, and control over the provision of all Dental Care
and that all Dental Care shall be provided and performed exclusively by or under
the supervision of dentists as such dentists, in their sole discretion, deem
appropriate, (ii) Service Company shall not have or exercise any control or
supervision over the provision of Dental Care, and (iii) to the extent any act
or service required of Service Company under this agreement is reasonably likely
to be construed by a court of competent jurisdiction or by any applicable
governmental agency to constitute the practice of dentistry, the requirement to
perform that act or service by Service Company shall be deemed waived and
unenforceable. For purposes of this agreement and as the context permits, the
term "dentist" shall be deemed to include those individuals licensed by the
State of Wisconsin to practice general dentistry or a dental care specialty such
as orthodontics, endodontics, periodontics, prosthodontics, pediatric dentistry,
oral surgery, and oral medicine.
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ARTICLE III. POLICY BOARD
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(S)3.1 Formation and Operation of Policy Board. The Parties hereby
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establish an advisory policy board (the "Policy Board") which shall provide
consultation and advice to Service Company in support of Service Company
discharging its responsibility for developing and implementing management and
administrative policies for the overall operation of Clinics. The Policy Board
shall consist of six members, of which three members shall be designated by
Service Company, in its sole discretion, and three members shall be designated
by Provider; provided that, unless otherwise agreed by the Parties, the Policy
Board members designated by Provider shall be licensed dentists employed by
Provider. Each Party shall have the right to designate, remove, and replace its
Policy Board designees at any time and from time to time upon notice to the
other Party.
Except as may otherwise be expressly provided in this agreement or
any rules, bylaws, or regulations adopted by the Policy Board, the act of a
majority of the members of the Policy Board shall be the act of the Policy
Board. The Policy Board's decisions may be evidenced by either minutes of a
Policy Board meeting or written action taken by the Policy Board members making
the decision; provided that no written action signed by less than all of the
Policy Board members shall be effective unless notice of such action is given to
the Policy Board member who is not signing such action at least two business
days prior to the effective date of such action. The decisions, resolutions, or
recommendations of the Policy Board shall be reviewed by Service Company and, if
deemed necessary or appropriate by Service Company, in its sole discretion,
shall be implemented by Service Company or Provider, as appropriate.
The Policy Board shall hold regular meetings at such places and at
such times (not less often than quarterly) as the Policy Board may determine
from time to time. Special Policy Board meetings may be called by either Party
or any two Policy Board members; provided that notice of any meeting which is
not a regularly scheduled meeting shall be given to all Policy Board members at
least five business days prior to the meeting, unless such notice is waived by
the Policy Board members. Policy Board meetings may be held through the use of
telecommunications equipment so long as all members can hear each other clearly.
(S)3.2 Responsibilities of the Policy Board. The Policy Board shall
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have the following duties and responsibilities in its advisory capacity to the
Parties, provided, however, that no decision, resolution or recommendation of
the Policy Board shall be binding on either of the Parties unless specifically
agreed to by the Parties either pursuant to the express terms of this agreement
or in writing signed by the Party to be bound:
(a) Capital Improvements and Expansion. Any renovation and expansion
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plans and capital equipment expenditures with respect to Clinics shall be the
responsibility of Service Company, shall be reviewed by the Policy Board, and
shall be based upon economic feasibility, dentist support, productivity, and
then-current market conditions.
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(b) Annual Budgets. All annual capital and operating budgets prepared
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in accordance with (S)4.13(a) by Service Company (in consultation with Provider)
shall be subject to the review and comment of the Policy Board. Notwithstanding
the foregoing sentence, such budgets shall be subject to the review, comment,
and approval of Parent. Service Company shall deliver a copy of such approved
budget to the Chief Financial Officer of Parent for Parent's approval.
(c) Marketing and Advertising. The Policy Board shall review and make
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recommendations regarding advertising and other marketing of the dental services
performed at any Clinic.
(d) Patient Fees; Collection Policies. Subject to (S)3.3, as a part
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of the annual operating budget, in consultation with Provider and Service
Company, the Policy Board shall review and make recommendations concerning the
fee schedules and collection policies for all dental and ancillary services
rendered by Provider. Approval of the fee schedules shall be a Dental Decision.
(e) Provider and Payor Relationships. Subject to (S)3.3, decisions
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regarding the establishment or maintenance of contractual relationships between
Provider and outside or institutional dental care providers and third-party
payors shall be subject to the review and recommendations of the Policy Board.
Subject to (S)3.3, all discounted fee practices and schedules, including
individual provider or specialty discount arrangements, preferred provider
organization discounts and capitated fee arrangements, shall be subject to the
review and recommendations of the Policy Board. Where there is no clear
methodology for the allocation of capitated fees among Provider's Dental Care
Professionals, the Policy Board shall recommend the methodology intended to
result in the equitable and appropriate allocation of all related fees
consistent with the type and utilization of Dental Care covered under the
capitation arrangement.
(f) Strategic and Operational Planning. The Policy Board shall review
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and make recommendations regarding the long-term strategic and short-term
operational goals, objectives and plans developed by Service Company.
(g) Capital Expenditures. The Policy Board shall review and make
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recommendations regarding the priority of major capital expenditures.
(h) Personnel Planning. The Policy Board shall review and make
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recommendations regarding Provider and support personnel manpower plans
developed by Service Company. The Policy Board shall review and make
recommendations regarding any variations to the restrictive covenants in the
dentists' employment or other agreements.
(i) Grievance Referrals. The Policy Board shall consider and make
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recommendations to the Parties regarding grievances pertaining to matters not
specifically addressed in this agreement as referred to it by key Provider or
Service Company management and supervisory personnel.
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(j) Patient Concerns and Claims. The Policy Board shall review and
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monitor a patient claims tracking, monitoring and recovery procedure which shall
provide, without limitation, for (i) the timely and appropriate resolution of
all claims and related patient and Provider reimbursement decisions, and (ii)
the distribution of a summary report setting forth the status and proposed
actions with respect to each such claim to Provider and Service Company on a
regular basis. All Dental Care related patient concerns and claims
reimbursement decisions shall be a Provider Expense.
(k) Environmental Health and Safety. The Policy Board shall review
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and monitor environmental and workplace health and safety guidelines, the goal
of which is to achieve compliance with current national, state and local laws
and regulations regarding environmental and workplace health and safety.
(l) Emergency Care Services. The Policy Board shall review and
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periodically make suggestions for improving (i) the organization and delivery of
emergency Dental Care by Provider, and (ii) the process and guidelines for
ensuring an appropriate response by Provider to dental and in-Clinic medical
emergencies as they may occur from time to time.
(m) Financial Review. The Policy Board shall review and monitor the
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financial performance of Provider with respect to the attainment of its budgeted
goals.
(n) Other. The Policy Board shall have such other duties,
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responsibilities, and authority as may be set forth in this agreement or agreed
upon by the Parties from time to time.
(S)3.3 Dental Decisions. Notwithstanding the preceding section or any
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other provisions of this agreement to the contrary, all Dental Decisions
(defined below) will be made solely by Provider and shall be binding on the
Parties; provided that the Policy Board may participate in the analysis and
discussion process. For purposes of this agreement, "Dental Decisions" shall
mean decisions relating directly to: (a) types and levels of Dental Care to be
provided; (b) recruitment of dentists for Provider, including the evaluation of
the background, experience, qualifications, specialties, and other credentials
of recruited dentists; (c) fee schedules for Provider's services, including
without limitation Provider's usual and customary fee schedule; and (d) any
other Dental Care related functions or decisions agreed upon by the Parties.
ARTICLE IV. RESPONSIBILITIES OF SERVICE COMPANY
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During the Term, Service Company shall provide all such Services as are
necessary and appropriate for the day-to-day administration of the business
aspects of Provider's operations, including without limitation those services
set forth in this Article, provided that all such services shall be subject to
the applicable Budget.
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(S)4.1 Clinics
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(a) Service Company shall locate, lease, acquire or otherwise procure
a Clinic, taking into consideration the professional concerns of Provider. The
expenses associated with any such leasing, acquisition, or procurement shall be
Clinic Expenses. Any Clinic procured by Service Company for use by Provider
shall be procured at commercially reasonable rates.
(b) In the event Provider is the lessee of a Clinic under a lease with
an unrelated and nonaffiliated lessor, Service Company may require Provider to
assign such lease to Service Company upon receipt of consent from the lessor.
Provider shall exercise all reasonable efforts to assist in obtaining the
lessor's consent to the assignment. Any expenses incurred in the assignment
shall be Clinic Expenses.
(c) Service Company shall be responsible for the repair and
maintenance of each Clinic, in a manner consistent with Service Company's
responsibilities under the terms of any lease or other use arrangement relating
to that Clinic, the costs and expenses of which shall be a Clinic Expense;
provided that the costs and expenses of any repairs or maintenance necessitated
by the negligence or willful misconduct of Provider or its dentists, other
personnel, agents, or invitees shall be a Provider Expense.
(S)4.2 Equipment.
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(a) Service Company shall provide all non-dental equipment, fixtures,
office supplies, furniture and furnishings deemed reasonably necessary by
Service Company for the operation of each Clinic and reasonably necessary for
the provision of Dental Care.
(b) Service Company shall provide, finance, or cause to be provided or
financed such dental related equipment as is reasonably required by Provider.
Subject to economic feasibility as set forth in the budgets approved pursuant to
this agreement, Provider shall advise Service Company in all dental equipment
selections. Except for Special Dental Supplies (defined in (S) 4.3, below), all
dental and non-dental equipment acquired for the use of Provider shall be owned
by Service Company.
(c) Service Company shall be responsible for repairing, maintaining,
and keeping in reasonably good condition (ordinary wear and tear excepted), and
replacing (as necessary) all equipment provided by Service Company under this
agreement, the cost and expense of which shall be a Clinic Expense; and provided
that the cost and expense for any repairs, maintenance and replacement
necessitated by the negligence or willful misconduct of Provider or its
dentists, other personnel, agents, or invitees shall be a Provider Expense.
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(S)4.3 Laboratory Services. Service Company shall arrange for laboratory
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services, including without limitation dental appliance laboratory service,
pathology laboratory service, medical laboratory service, and such other
laboratory services as are reasonably necessary and appropriate for the
operation of each Clinic and the provision of Dental Care therein.
(S)4.4 Supplies. Service Company shall order, procure, purchase, own, and
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provide to Provider a reasonable inventory of Ordinary Dental Supplies and
office supplies as are reasonably necessary and appropriate for the operation of
each Clinic and the provision of Dental Care therein. Unless otherwise
prohibited by federal and/or state law, Service Company shall also order,
procure, purchase and provide on behalf of and as agent for Provider all
reasonable Special Dental Supplies required by Provider to provide Dental Care,
the cost of which shall be a Clinic Expense. Service Company shall ensure that
each Clinic is at all times adequately stocked with all such supplies. The
ultimate oversight, supervision and ownership of (a) all office and Ordinary
Dental Supplies is and shall remain the sole responsibility of Service Company,
and (b) all Special Dental Supplies is and shall remain the sole responsibility
of Provider.
(S)4.5 Capital Investment. Access to all needed working capital and
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capital expenditures in accordance with the budget as approved in accordance
with (S)4.13(a) will be provided by Service Company. Service Company shall
determine the source of capital to be invested, which may include (a)
intracompany borrowings from Parent (at the rate set forth in clause (j) in the
definition of "Clinic Expenses"), and (b) borrowings, leases, or other financing
methods through independent third-party financial institutions.
(S)4.6 Support Services. Service Company shall provide or arrange for all
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printing, stationery, forms, postage, duplication, facsimile, photocopying, and
data transmission and processing services, information services (including
providing a computer system for clinic functions, billing, communications, and
management), and other support services as are reasonably necessary and
appropriate for the operation of each Clinic and the provision of Dental Care
therein.
(S)4.7 Quality Assurance, Risk Management, and Utilization Review. Service
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Company shall assist Provider in Provider's establishment and implementation of
procedures to ensure the consistency, quality, appropriateness, and necessity of
Dental Care provided by Provider, and shall provide administrative support for
Provider's overall quality assurance, risk management, and utilization review
programs. Service Company shall have the authority to monitor Provider's level
of conformance with such procedures and to report its findings to Provider.
(S)4.8 Licenses and Permits. Although Provider shall be solely responsible
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for obtaining and maintaining all federal, state, and local licenses and
regulatory permits required for or in connection with the operation of Provider
and in connection with the operation of all dental equipment located in each
Clinic, Service Company shall assist Provider with the implementation of a plan
designed to ensure that all such licenses and permits are obtained and shall
provide
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reasonable assistance to Provider in obtaining the same. Service Company also
shall maintain all licenses and permits required for all equipment (existing and
future) located at each Clinic.
(S)4.9 Personnel. Except as provided in (S)5.2(d) of this agreement and
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subject to (S)3.3, Service Company shall employ or otherwise retain and shall be
responsible for recruiting, hiring, and terminating all management,
administrative, supervisory, clerical, secretarial, bookkeeping, accounting,
payroll, dental assistants, hygienists, laboratory technicians and personnel,
and other non-dentist personnel as Service Company deems necessary and
appropriate for Service Company's performance of its duties and obligations
under this agreement. The selection, training, and supervision of: (a) dental
assistants, hygienists, and other clinical personnel to be employed by Service
Company shall be the responsibility of Provider; and (b) all other personnel to
be employed by Service Company shall be the responsibility of Service Company.
Consistent with reasonably prudent personnel management policies, Service
Company shall seek and consider the advice, input, and requests of Provider in
regard to personnel matters. Service Company shall have sole responsibility for
determining the salaries and fringe benefits of such non-professional personnel,
and for withholding all appropriate amounts for income taxes, unemployment
insurance, social security, workers' compensation, and any other withholding
required by applicable law.
(S)4.10 Contract Negotiations. Service Company shall advise Provider with
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respect to and negotiate, either directly or on Provider's behalf, as
appropriate, such contractual arrangements with third parties as are reasonably
necessary and appropriate for Provider's provision of Dental Care, including
without limitation negotiated price agreements with third party payors,
alternative delivery systems, or other purchasers of group dental care services;
provided that no contract or arrangement regarding the provision of Dental Care
shall be entered into without Provider Consent.
(S)4.11 Billing and Collection. On behalf of and for the account of
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Provider, Service Company shall establish and maintain credit and billing and
collection policies and procedures, and shall exercise reasonable efforts to
xxxx and collect in a timely manner all professional and other fees for all
billable Dental Care provided by Dental Care Professionals, including any such
fees paid directly to Provider by Service Company pursuant to the then-current
Membership Agreement (or similar agreement for providing professional services
to dental plans) between Service Company and Provider. Service Company shall
advise and consult with Provider regarding the fees for Dental Care provided by
Provider (including any related discounting policy); it being understood,
however, that Provider's consent shall be necessary to establish the fees
(subject to (S)3.2(d), above) to be charged for Dental Care. In connection with
the billing and collection services to be provided hereunder, Provider hereby
grants to Service Company, throughout the Term (and thereafter as provided in
(S)8.3), an exclusive special power of attorney and appoints Service Company as
Provider's exclusive true and lawful agent and attorney-in-fact, and Service
Company hereby accepts such special power of attorney and appointment, for the
following purposes:
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(a) To xxxx Provider's patients, in either Provider's or Service
Company's name (as Service Company deems appropriate) and on Provider's behalf,
for all billable Dental Care provided by or on behalf of Provider to patients.
(b) To xxxx, in either Provider's or Service Company's name (as Service
Company deems appropriate) and on Provider's behalf, all claims for
reimbursement or indemnification from insurance companies and plans, all state
or federally funded dental benefit plans, and all other third party payors or
fiscal intermediaries for all covered billable Dental Care provided by or on
behalf of Provider to patients.
(c) To collect and receive, in either Provider's or Service Company's
name (as Service Company deems appropriate) and on Provider's behalf, all
accounts receivable generated by such xxxxxxxx and claims for reimbursement, to
administer such accounts including, but not limited to, extending the time of
payment of any such accounts for cash, credit or otherwise; discharging or
releasing the obligors of any such accounts; suing, assigning or selling at a
discount such accounts to collection agencies; or taking other measures to
require the payment of any such accounts; provided, however, that extraordinary
collection measures, such as filing lawsuits, discharging or releasing obligors
shall not be undertaken without Provider Consent.
(d) To deposit all amounts collected into the Provider Account.
Provider shall transfer and deliver to Service Company all funds received by
Provider from patients or third party payors for Dental Care. Upon receipt by
Service Company of any funds from patients or third party payors or from
Provider for Dental Care pursuant to this agreement, Service Company shall
promptly deposit the same into the Provider Account.
(e) To take possession of, endorse in the name of Provider, and deposit
into the Provider Account any notes, checks, money orders, insurance payments,
and any other instruments received in payment of accounts receivable for Dental
Care.
(f) To sign checks, drafts, bank notes or other instruments on behalf
of Provider, and to make withdrawals from the Provider Account for payments
specified in this agreement and otherwise as agreed upon from time to time by
the Parties.
Upon request of Service Company, Provider shall execute and deliver to the
financial institution at which the Provider Account is maintained such
additional documents or instruments as Service Company may reasonably request to
evidence or effect the special power of attorney granted to Service Company by
Provider pursuant to this section and (S)4.12. The special power of attorney
granted herein is coupled with an interest and shall be irrevocable except with
Service Company's written consent. The irrevocable power of attorney shall
expire when this agreement has been terminated, all accounts receivable
purchased by Service Company pursuant to (S)7.7, if any, have been collected,
and all amounts due to Service Company as described in Article VII have been
paid.
(S)4.12 Provider Account.
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(a) Power of Attorney. Service Company shall have access to the
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Provider Account solely for the purposes stated herein and shall use all funds
on deposit therein to pay all Clinic Expenses in accordance with the terms of
this agreement. Provider hereby grants to Service Company an exclusive special
power of attorney and appoints Service Company as Provider's true and lawful
agent and attorney-in-fact, throughout the Term (and thereafter as provided in
(S)8.3), and Service Company hereby accepts such special power of attorney and
appointment, to make withdrawals from Provider Account for payments specified in
this agreement and as requested from time-to-time by Provider. Notwithstanding
this exclusive special power of attorney, Provider may, upon reasonable advance
notice to Service Company and subject to (S)4.12(b) of this agreement, request
that Service Company draw checks on the Provider Account for Provider Expenses
and such other amounts as may be due to Provider under this agreement.
Disbursements shall be related to and in such amount so as to ensure that
disbursements made without prior Provider Consent are consistent with the
expenditures authorized by the Budget.
(b) [*]
(c) Further Assurances. Promptly upon request by Service Company from
------------------
time to time, Provider shall execute a separate power of attorney in form
reasonably satisfactory to Service Company for the purpose of further confirming
or evidencing the rights granted to Service Company under (S)(S)4.11 and 4.12.
(S)4.13 Financial Matters.
-----------------
(a) Annual Budget. At least 30 days prior to the commencement of each
-------------
calendar year, Service Company, in consultation with Provider, shall prepare and
deliver to the Policy Board for its review a proposed Budget, setting forth an
estimate of Provider's revenue and expenses for the upcoming calendar year
(including without limitation the Service and Performance Fees associated with
the services provided by Service Company hereunder). However, the initial
Budget has been prepared by Service Company in consultation with Provider before
the execution of this agreement. [*]
In the event a proposed Budget is disapproved by Parent (pursuant to
(S)3.2(b)), Service Company, in consultation with Provider, shall promptly
revise such Budget, taking into
* This information has been omitted pursuant to a request for confidential
treatment and has been filed separately with the Securities and Exchange
Commission.
10
consideration the comments of Parent, and shall deliver such revised Budget to
the Policy Board for review and to Parent for approval. In the event that a
proposed Budget has not been approved by Parent by the beginning of the calendar
year, the Budget for the prior year shall be deemed to be adopted as the Budget
for the current year until a new Budget as been approved by Parent.
(b) Accounting and Financial Records. Service Company shall establish
--------------------------------
and administer accounting policies and procedures, internal controls, and
systems for the development, preparation, and safekeeping of administrative or
financial records and books of account relating to the business and financial
affairs of Provider, all of which shall be prepared and maintained in accordance
with GAAP. Service Company shall prepare and deliver to Provider, within 90 days
of the end of each calendar year, a balance sheet and an income statement
reflecting the financial status of Provider in regard to the provision of Dental
Care as of the end of such calendar year, all of which shall be prepared in
accordance with GAAP. In addition, Service Company shall prepare or assist in
the preparation of any other financial statements or records as Provider may
reasonably request.
(c) Review of Expenditures. Provider's chief executive officer shall
----------------------
review from time to time all expenditures related to the operation of Provider,
but such officer shall not have the power to prohibit or invalidate any
expenditure.
(d) Tax Matters.
-----------
(i) General. Service Company shall prepare or arrange for the
-------
preparation of all tax returns and reports of Provider required by applicable
law, which returns and reports shall be prepared by an accountant reasonably
acceptable to Provider.
(ii) Sales and Use Taxes. Service Company and Provider
-------------------
acknowledge and agree that to the extent that any of the services to be provided
by Service Company hereunder may be subject to any state sales and use taxes,
Service Company may have a legal obligation to collect such taxes from Provider
and to remit the same to the appropriate tax collection authorities. Provider
agrees to pay any and all applicable state sales, use, gross receipts, and other
similar taxes and charges (other than taxes on Service Company's net income)
with respect to any amount paid to Service Company hereunder and that such
amounts shall be a Provider Expense.
(S)4.14 Reports and Records.
-------------------
(a) Dental Records. Service Company shall establish, monitor, and
--------------
maintain procedures and policies for the timely creation, preparation, filing
and retrieval of all dental records generated by Provider in connection with
Provider's provision of Dental Care; and, subject to applicable law, shall
ensure that dental records are promptly available to dentists and any other
appropriate persons. All such dental records shall be retained and maintained in
11
accordance with all applicable state and federal laws relating to the
confidentiality and retention thereof. All dental records shall be and remain
the property of Provider.
(b) Other Reports and Records. Service Company shall timely create,
-------------------------
prepare, and file such additional reports and records as are reasonably
necessary and appropriate for Provider's provision of Dental Care, and shall be
prepared to analyze and interpret such reports and records upon the request of
Provider.
(S)4.15 Recruitment of Provider Dentists. Upon Provider's request,
--------------------------------
Service Company shall perform all services reasonably necessary and appropriate
in connection with the recruitment of professional dental personnel. Service
Company shall provide Provider with model agreements to document Provider's
employment, retention or other service arrangements with such individuals.
However, it shall be and remain the sole and complete responsibility of Provider
to interview, select, contract with (subject to (S)5.2, below), supervise,
control and terminate all dentists performing Dental Care or other professional
services, and Service Company shall have no authority whatsoever with respect to
such activities.
(S)4.16 Service Company's Insurance. Throughout the Term, Service
---------------------------
Company shall, as a Clinic Expense, obtain and maintain with commercial
carriers, or through self-insurance, or some combination thereof: (a)
appropriate worker's compensation coverage for the employees of Service Company
provided pursuant to this agreement; and (b) professional and comprehensive
general liability insurance covering Service Company, Service Company's
personnel, and all of Service Company's equipment in such amounts and on such
terms and conditions as Service Company deems appropriate. Service Company
shall cause Provider to be named as an additional insured on Service Company's
property and casualty insurance policies. Upon the request of Provider, Service
Company shall provide Provider with a certificate evidencing such insurance
coverage. Service Company may also carry, at Service Company's option and as a
Clinic Expense, key person life and disability insurance on any shareholder or
dentist employee of Provider in amounts determined as reasonable and sufficient
by Service Company. Service Company shall be the owner and beneficiary of any
such insurance.
(S)4.17 License of Name and Marks. Service Company hereby grants the
-------------------------
Provider, for the Term, a non-exclusive royalty-free license to use the name
"Smileage" and "Smileage Dental Care" and all related marks and logos owned by
Service Company for the purpose of fulfilling its obligations hereunder,
including without limitation providing Dental Care to its patients.
(S)4.18 No Warranty. Provider acknowledges that Service Company has not
-----------
made and will not make any representations or warranties, express or implied,
regarding Service Company's services under this agreement or the results of
those services, including without limitation any representations or warranties
that the services provided by Service Company will result in any particular
amount or level of dental practice or income to Provider.
12
ARTICLE V. RESPONSIBILITIES OF PROVIDER
----------------------------
(S)5.1 Organization and Operations. As a continuing condition of Service
---------------------------
Company's obligations under this agreement, Provider shall at all times during
the Term: (a) be and remain legally organized and operated to provide Dental
Care in a manner consistent with all state and federal laws; (b) operate and
maintain within the Practice Territory a full time practice of dentistry
providing Dental Care in compliance with all applicable federal, state, and
local laws, rules, regulations, ordinances, and orders; (c) maintain and use its
best efforts to enforce its articles or certificate of incorporation (or other
instrument of organization), bylaws, shareholder agreements, and other
organizational documents (hereafter in this (S)5.1 simply "organizational
documents") in the respective forms provided to Service Company prior to
execution of this agreement; (d) have at least three executive officers at the
level of vice president or above who are also dentist employees of Provider; (e)
maintain and use its best efforts to enforce the written employment agreements
and independent contractor agreements described in (S)5.2(a), below; and (f)
not, without Service Company Consent, (i) amend any of its employment agreements
or organizational documents in any material respect or waive any material rights
thereunder, or (ii) engage in any transaction constituting a merger,
consolidation, reorganization, sale or purchase of assets outside of the
ordinary course of business, liquidation, or dissolution. Provider hereby
acknowledges that Service Company would not have entered into this agreement but
for Provider's covenant to maintain such organizational documents and employment
agreements, and Provider shall pay to Service Company, in addition to the
amounts set forth in Article VII, any damages, compensation, payment, or
settlement amounts received by Provider from a dentist who terminates his
employment agreement without cause or whose employment agreement is terminated
by Provider for cause.
(S)5.2 Provider Personnel.
------------------
(a) Dentist Personnel. Provider shall retain, as a Provider Expense
-----------------
and not as a Clinic Expense, that number of dentists during the Term which are
necessary and appropriate, in Provider's sole discretion after consultation with
Service Company, to provide Dental Care to reasonably meet the demand therefor.
Provider shall cause each dentist retained by Provider to hold and maintain a
valid and unrestricted license to practice dentistry in the State of Wisconsin,
including without limitation any licenses required for the provision of any
specialty dental services, together with all necessary or appropriate board or
other certifications. Throughout the Term, Provider shall enter into and
maintain a written employment agreement substantially in the form of Exhibit D
for all dentists now and hereafter employed by Provider; provided that Provider
shall, throughout the Term, enter into and maintain a written employment
agreement substantially in the form of Exhibit C with each dentist of Provider
who now or hereafter is either an executive officer (at a level of vice
president or above) of or Policy Board member designated by Provider; and
provided further that Provider shall, immediately upon execution of this
agreement, enter into and maintain a written employment agreement substantially
in the form of Exhibit C with each of the dentists set forth on Exhibit E.
Throughout the Term, Provider shall enter into and maintain a written agreement
with each independent contractor retained by Provider, which agreements shall
contain confidentiality
13
provisions substantially similar to those contained in the employment agreement
in the form of Exhibit D. Provider shall be responsible for paying the
compensation and benefits as applicable, for all dentists and any other dentist
personnel or other contracted or affiliated dentists, and for withholding all
sums for income tax, unemployment insurance, social security, or any other
withholding required by applicable law. Service Company may, on behalf of
Provider, administer the compensation and benefits with respect to such
individuals in accordance with the written agreement between Provider and each
dentist. Service Company shall neither control nor direct any dentist in the
performance of Dental Care for patients. Provider shall provide to Service
Company evidence of such licensing, certifications, and other credentials of the
dentists retained by Provider as Service Company may request from time to time.
(b) Provider and Patient Scheduling. Provider shall, with the
-------------------------------
reasonable assistance of Service Company, (i) develop a set of Provider and
patient scheduling guidelines and a corresponding scheduling system, and (ii)
support Service Company in the implementation of such guidelines and effective
operation of such system.
(c) Paid Hours Reporting. Provider shall support the development and
--------------------
effective operation by Service Company of a dentist paid hours reporting and
monitoring system.
(d) Non-Dentist Dental Care Personnel. All non-dentist personnel who
---------------------------------
provide Dental Care, including without limitation dental hygienists, denturists,
dental assistants, and other licensed or certified personnel shall be under such
control, supervision and direction of Provider and the dentists retained by
Provider in the performance of or in connection with Dental Care for patients as
is required under applicable state law and regulations.
(S)5.3 Professional Standards. As a continuing condition of Service
----------------------
Company's obligations hereunder, each dentist retained by Provider to provide
Dental Care must: (i) have and maintain a valid and unrestricted license to
practice dentistry in the state; and (ii) comply with, be controlled and
governed by, and otherwise provide Dental Care in accordance with applicable
federal, state and municipal laws, rules, regulations, ordinances and orders,
and the ethics and standard of care of the dental profession. All specialty
Dental Care shall be provided by a dentist who is either board certified or
board eligible in the related specialty or by another dentist licensed to
provide such specialty Dental Care operating under the general supervision of a
dentist who is either board certified or board eligible in that specialty.
(S)5.4 Dental Care. Provider shall ensure that dentists and non-dentist
-----------
dental care personnel are available in sufficient numbers as are necessary or
appropriate to provide Dental Care to reasonably meet the demand for such Dental
Care. In the event that dentists employed by, or shareholders of, Provider are
not available to provide Dental Care coverage, Provider shall engage and retain
dentists on a temporary coverage basis, which dentists shall meet or exceed the
qualifications required for Provider's Dental Care Professionals under this
agreement. All costs and expenses associated with the retention of such
temporary coverage shall be Provider Expenses. With the assistance of the
Service Company, Provider and the dentists shall be responsible for scheduling
dentist and non-dentist dental care personnel coverage of all dental
14
procedures. Provider shall cause all dentists to exert their best efforts to
develop and promote Provider in such a manner as to ensure Provider is able to
serve the diverse needs of the community. Provider shall organize and maintain
a high quality, cost-effective process for ensuring that patients will have
timely access to emergency Dental Care on a 24-hour, seven day per week basis.
(S)5.5 Peer Review and Quality Assurance. Provider shall conduct its peer
---------------------------------
review and quality assurance activities in a manner that is consistent with
maintaining the confidentiality of the related processes, actions, and
documentation.
(a) Provider shall designate a committee of dentists to function as a
dental peer review committee to review credentials of potential dentist
recruits, periodically review the credentials of Provider's existing dentists,
determine the practice privileges of the dentists retained by Provider, perform
quality assurance, utilization review, and Provider profiling functions, and
otherwise resolve dental competency issues. The dental peer review committee
shall function pursuant to formal written policies and procedures established by
Provider upon consultation with and the assistance of Service Company.
(b) Provider also shall adopt a quality assurance program to monitor
and evaluate the quality and cost-effectiveness of the Dental Care provided by
the dentist personnel of Provider and other non-dentist personnel providing
Dental Care under the supervision of Provider's dentists. Upon request of
Provider, Service Company shall provide administrative assistance to Provider in
performing its quality assurance activities.
(c) Provider shall cooperate fully with Service Company in an effort to
achieve and maintain full accreditation status for Provider. For purposes of
facilitating accreditation and other related processes and without limiting
Provider's responsibilities under the preceding sentence, Provider shall develop
and maintain a philosophy of practice and a set of practice guidelines which are
acceptable to the Policy Board. Provider shall cause all personnel retained by
it to abide by such philosophy and guidelines at all times.
(d) Provider shall, after consultation with Service Company and
consideration of the recommendations of the Policy Board, support the
development, maintenance, and operation of a patient concerns and claims
recording, reporting, review, resolution, and tracking process which meets the
quality standards of Service Company. Provider shall cause all personnel
retained by it to comply fully with such process at all times.
(e) Provider shall, with the assistance of Service Company, develop a
set of quality standards and utilization, process monitoring, and reporting
guidelines. Provider shall cause all personnel retained by it to comply with
such standards and guidelines.
(S)5.6 Provider's Insurance. Provider shall, obtain and maintain with
--------------------
commercial carriers reasonably acceptable to Service Company or through self
insurance or some combination thereof (reasonably acceptable to Service Company)
appropriate workers'
15
compensation coverage for Provider's employed personnel (which shall be a
Provider Expense) and professional and comprehensive general liability insurance
covering Provider and each of the dentists Provider retains to provide Dental
Care (which shall be a Clinic Expense). All costs, expenses, and liabilities
incurred by Provider or Service Company in excess of the limits of such policies
shall be a Provider Expense. Provider shall actively support the participation
of all dentists retained by Provider in training and continuing education
programs in order to reduce the risk of exposure to and the related cost of
obtaining and maintaining such coverage. The comprehensive general liability
coverage and professional liability coverage shall be in such minimum amounts as
Service Company may establish from time to time. In addition, Provider shall
cause each dentist retained by Provider as an independent contractor to obtain
comparable professional and comprehensive general liability insurance coverage.
All such insurance policies shall name Service Company as an additional insured
and provide for at least 30 days advance written notice to Provider and Service
Company from the insurer with respect to any alteration of coverage,
cancellation, or proposed cancellation for any reason. Provider shall cause to
be issued to Service Company by such insurer or insurers a certificate
reflecting such coverage. Upon the termination of this agreement for any
reason, Provider shall continue to carry professional liability insurance in the
amounts specified in this section for 10 years after termination, or if Provider
dissolves or ceases to practice dentistry, Provider shall obtain and maintain as
a Provider Expense "tail" professional liability coverage, in the amounts
specified in this section for an extended reporting period of 10 years.
Provider shall be responsible for paying all premiums for "tail" insurance
coverage. In no event shall the professional liability insurance carrier be
replaced or changed without Service Company Consent. Service Company shall
provide reasonable assistance to Provider to obtain such coverage.
(S)5.7 Noncompetition. Provider acknowledges that Service Company will
--------------
incur substantial costs in providing the equipment, support services, personnel,
and other items and services that are the subject matter of this agreement and
that in the process of providing services under this agreement, Provider will
learn or have access to financial and other Confidential Information of Service
Company to which Provider would not otherwise be exposed. Provider also
recognizes that the services to be provided by Service Company will be feasible
only if Provider operates an active practice to which the dentists associated
with Provider devote their full time and attention. Accordingly, Provider
further agrees as follows:
(a) During the Term, except for its obligations under this agreement,
Provider shall not establish, operate, or provide Dental Care at any dental
office, clinic or other dental care facility anywhere within the Practice
Territory nor have an ownership interest, direct or indirect, in any entity, or
participate in any joint venture, which operates any such office, clinic, or
facility; and
(b) Except as specifically approved by Service Company in writing,
during the Term and for a period of five years immediately following the date
this agreement is terminated for any reason, Provider shall not directly or
indirectly own (excluding ownership of less than five percent (5%) of the equity
of any publicly traded entity), manage, operate, control, lend funds to, lend
its name to, or maintain any interest in any entity, business, or enterprise
which (i)
16
provides, distributes, or promotes any type of management or administrative
services or products to third parties in competition with Service Company in the
Practice Territory or (ii) offers any type of service or product to third
parties substantially similar to those offered by Service Company to Provider in
the Practice Territory. Notwithstanding the above restriction, nothing herein
shall prohibit Provider or any of its shareholders from providing management and
administrative services to its or their own dental practices after the
termination of this agreement, and nothing herein shall prohibit Provider or its
shareholders from contracting with a third party manager to provide
administrative or management services for its or their dental practices after
termination of this agreement as long as such relationship complies with the
provisions of this section.
(S)5.8 Use of Name. At all times during the Term, Provider shall, unless
-----------
otherwise directed by the Policy Board pursuant to (S)3.2(c), operate its dental
practice under the name "Wisconsin Dental Group", including without limitation
using all related marks and logos as are licensed to Provider pursuant to
(S)4.17, above, and filing an assumed or fictitious name application with the
Wisconsin Secretary of State or other appropriate governmental agency; provided
that Provider shall, immediately upon the expiration of the Term, abstain from
using such name, marks, and logos and shall take such steps as are necessary to
terminate such applications and Provider's rights thereunder.
ARTICLE VI. CONFIDENTIALITY
---------------
(S)6.1 Confidential and Proprietary Information. Neither Party shall, in
----------------------------------------
any manner or at any time, directly or indirectly, disclose any of the
Confidential Information of the other Party to any person, firm, association,
organization, or entity, or use, or permit or assist any person, firm,
association, organization, or entity to use any such Confidential Information,
excepting only: (a) disclosures (i) required by law, as reasonably determined by
the disclosing Party or its legal counsel, or (ii) made on a confidential basis
to the disclosing Party's shareholders, directors, officers, employees (limited
to those who need to know such Confidential Information), and legal, accounting,
and other professional advisors (collectively, the "Permitted Recipients"); or
(b) use of such Confidential Information by Permitted Recipients in connection
with this agreement; provided that each Party shall (i) make its Permitted
Recipients aware of the requirements of this agreement, (ii) take reasonable
steps to prohibit disclosure of such Confidential Information by any Permitted
Recipient to any other person or entity except another Permitted Recipient,
including without limitation taking such steps as that Party customarily takes
to protect its own Confidential Information, and (iii) be responsible and liable
for any disclosure or use of such Confidential Information by any of its
Permitted Recipients, except disclosures or uses permitted by this agreement.
(S)6.2 Use of Practice Statistics. Notwithstanding (S)6.1, above, but
--------------------------
subject to the restrictions of this section and applicable law, Service Company
may: (a) share with other professional corporations, associations, dental
practices, or dental care delivery entities the practice statistics of Provider,
including utilization review data, quality assurance data, cost data,
17
outcomes data, or other practice data, provided that such information shall only
be disclosed to (i) affiliates of Service Company, (ii) other dental groups with
whom Service Company has a management relationship, (iii) managed care dental
benefit providers and other third party payors for the purpose of obtaining or
maintaining third party payor contracts, (iv) financial analysts and
underwriters, (v) employers and employee benefit associations, (vi) quality
assurance and accrediting organizations, or (vii) financial institutions; and
(b) disclose all practice-related information necessary or desirable in
connection with any public or private offering of any security of Service
Company. In addition, Service Company may disclose practice-related information
and data in connection with any survey, presentation, published material, study,
or research project which Service Company deems appropriate for the purpose of
gaining insight into existing and changing patterns in the organization and
delivery of Dental Care and related issues. In no event will any such data
disclose or divulge the identity of any patient or, to the extent reasonably
practicable, any dentist.
ARTICLE VII. FINANCIAL ARRANGEMENTS
----------------------
(S)7.1 [*]
(S)7.2 [*]
(S)7.3 [*]
(a) [*]
(b) [*]
(S)7.4 [*]
* This information has been omitted pursuant to a request for confidential
treatment and has been filed separately with the Securities and Exchange
Commission.
18
(S)7.5 Reasonable Value. Payment of the Service Fee or Performance Fee is
----------------
not intended to be and shall not be interpreted or applied as permitting Service
Company to share in Provider's fee for Dental Care or any other services, but is
acknowledged as the Parties' negotiated agreement as to the reasonable fair
market value of the equipment, contract analysis and support, other support
services, purchasing, personnel, office space, management, administration,
strategic management, and other items and services furnished by Service Company
pursuant to this agreement, considering the nature and volume of the services
required and the risks assumed by Service Company. Provider and Service Company
acknowledge that: (a) Service Company's administrative expertise will
contribute great value to Provider's performance; (b) Service Company will incur
substantial costs and business risks in arranging for Provider's use of each
Clinic and in providing the equipment, support services, personnel, marketing,
office space, management, administration, and other items and services that are
the subject matter of this agreement; and (c) certain of such costs and expenses
can vary to a considerable degree according to the extent of Provider's business
and services. It is the intent of the Parties that the Service Fee and
Performance Fee reasonably compensate Service Company for the value to Provider
of Service Company's administrative expertise, given the considerable business
risk to Service Company in providing the items and services that are the subject
of this agreement.
(S)7.6 Payment. The amounts to be paid to Service Company under this
-------
Article shall be calculated by Service Company on the accrual basis of
accounting and paid monthly. To facilitate the payments due to Service Company
under this Article, Provider hereby expressly authorizes Service Company to
make withdrawals of such amounts from the Provider Account during the Term in
accordance with (S)4.12(b), and after termination as provided in (S)8.3.
(S)7.7 Accounts Receivable. To assure that Provider receives the entire
-------------------
amount of professional fees for its services and to assist Provider in
maintaining reasonable cash flow for the payment of Clinic Expenses, Service
Company may, during the Term, purchase, with recourse to Provider for the amount
of the purchase, the accounts receivable of Provider arising during the previous
month by transferring the amount set forth below into the Provider Account. The
consideration for the purchase shall be an amount equal to the Adjusted Gross
Revenue recorded each month. Service Company shall be entitled to offset Clinic
Expense reimbursement plus all fees and advances due to Service Company under
this Article against the amount payable
19
for the accounts receivable. Although it is the intention of the Parties that
Service Company purchase and thereby become the owner of the accounts receivable
of Provider, in the event such purchase shall be ineffective for any reason,
Provider hereby grants to Service Company a security interest in the accounts
receivable, and Provider shall cooperate with Service Company and execute all
documents which may be reasonably requested by Service Company in connection
with such security interest. All collections in respect of such accounts
receivable purchased by Service Company shall be received by Provider as the
agent of Service Company and shall be endorsed to Service Company and deposited
in a bank account at a bank designated by Service Company. To the extent
Provider comes into possession of any payments in respect of such accounts
receivable, Provider shall direct such payments to Service Company for deposit
in bank accounts designated by Service Company.
ARTICLE VIII. TERM AND TERMINATION
--------------------
(S)8.1 Initial and Renewal Term. The Term of this agreement shall be for
------------------------
an initial period of 40 years beginning on the date of this agreement, and shall
renew automatically for successive five-year periods thereafter unless and until
either Party gives notice to the other Party at least 120 days prior to the
expiration of the then-current term of its intent to terminate this agreement at
the end of the then-current term or unless otherwise terminated as provided in
(S)8.2 of this agreement.
(S)8.2 Termination.
-----------
(a) Termination By Service Company. Service Company may terminate this
------------------------------
agreement immediately upon notice to Provider upon the occurrence of any one of
the following events:
(i) The dissolution of Provider;
(ii) Provider admits in writing its inability to pay generally
its debts as they become due or makes an assignment for the benefit of
creditors;
(iii) A receiver, trustee, liquidator, or conservator is appointed
for Provider or to take possession of all or substantially all of Provider's
property or a petition for insolvency, dissolution, liquidation, or
reorganization, or order for relief in which Provider is named as debtor, is
filed by, against, or with respect to Provider pursuant to any federal or state
statute, regulation, or law for the protection of debtors, and, with respect to
any such appointment or filing, Provider fails to secure a stay or discharge
thereof within 45 days after such appointment or filing;
(iv) Provider fails to pay when due any payment to be made by
Provider under this agreement, which failure continues for 10 days after notice
is given by Service Company
20
to Provider thereof, provided that such failure is not directly attributable to
Service Company's failure to apply available funds in the Provider Account
according to (S)4.12(b); or
(v) Provider fails to comply with or perform any of its other
material duties or obligations under this agreement, which failure continues for
30 days after notice is given by Service Company to Provider thereof, or if
because of the nature of such failure it cannot reasonably be corrected within
such 30 day period, failure by Provider to commence such correction promptly
following its receipt of notice from Service Company and thereafter to
expeditiously and continuously prosecute the correction to completion.
(b) Termination By Provider. Provider may terminate this agreement
-----------------------
immediately upon notice to Service Company upon the occurrence of any of the
following events:
(i) A receiver, trustee, liquidator, or conservator is appointed
for Service Company or to take possession of all or substantially all of Service
Company's property or a petition for insolvency, dissolution, liquidation, or
reorganization, or order for relief in which Service Company is named as debtor,
is filed by, against, or with respect to Service Company pursuant to any federal
or state statute, regulation, or law for the protection of debtors, and, with
respect to any such appointment or filing, Service Company fails to secure a
stay or discharge thereof within 45 days after such appointment or filing;
(ii) Service Company fails to comply with or perform any of its
material duties or obligations under this agreement, which failure continues for
30 days after notice is given by Provider to Service Company thereof, or if
because of the nature of such failure it cannot reasonably be corrected within
such 30 day period, failure by Service Company to commence such correction
promptly following its receipt of notice from Provider and thereafter to
expeditiously and continuously prosecute the correction to completion; or
(iii) A court of competent jurisdiction makes a final
determination that Service Company has materially breached a fiduciary duty owed
to Provider.
Notwithstanding the foregoing, any termination by Provider under this
section shall require the affirmative vote of three-fourths of the then-
outstanding shares of Provider entitled to vote on such a matter.
(c) Termination by Agreement. Provider and Service Company may
------------------------
mutually agree to terminate this agreement at any time, such agreement to be in
writing and signed by both Parties.
(d) Legislative, Regulatory or Administrative Change. In the event
------------------------------------------------
there is a change in any federal, state, or local statute, law, regulation,
legislation, rule, policy, or general instruction, or a change in any third
party reimbursement system, or a ruling, judgment, or decree by any court,
agency, or other governing body having jurisdiction over either Party (hereafter
in this clause (d), a "ruling") which materially and adversely affects, or is
reasonably
21
likely to affect, the manner in which either Party is to perform or be
compensated for its services under this agreement or which shall make this
agreement unlawful, the Parties shall immediately use their best efforts to
enter into a new service arrangement or basis for compensation for the services
furnished pursuant to this agreement that complies with that change and
approximates as closely as possible the economic position of the Parties prior
to such change or ruling.
If the Parties are unable to reach a new agreement within a
reasonable period of time following the date upon which it becomes reasonably
certain that such change will arise or ruling will be given, then either Party
may submit the issue to arbitration which shall be binding on the parties and
subject to the then-applicable Commercial Arbitration Rules of the American
Arbitration Association. In any such arbitration, the arbitrators shall be
consist of a panel of three arbitrators, which shall act by majority vote and
which shall consist of one arbitrator selected by the Party on one side of the
issue subject to the arbitration, one arbitrator selected by the Party on the
other side of the issue, and a third arbitrator selected by the two arbitrators
so selected, who shall be either a certified public accountant or an attorney at
law licensed to practice in the State of Wisconsin and who shall act as chairman
of the arbitration panel; provided that if the Party on one side of the issue
selects its arbitrator for the panel and the other Party fails to so select its
arbitrator within 10 business days after being requested by the first Party to
do so, then the sole arbitrator shall be the arbitrator selected by the first
Party.
All costs and expenses of arbitration shall be borne by the Parties
as determined by the arbitrator or arbitration panel, except that the fees of
any arbitrator on an arbitration panel who is selected individually by a Party
shall be borne separately by the Party appointing him; provided that if one
Party fails to select an arbitrator for a panel, and the sole arbitrator is the
arbitrator selected by the other Party, then the fees of that arbitrator shall
be borne by the Parties as determined by that arbitrator.
(S)8.3 Effects of Termination. Upon termination of this agreement as
----------------------
herein provided, neither Party shall have any further obligations under this
agreement, except for: (a) obligations accruing prior to the date of
termination, including without limitation payment of the amounts set forth in
Article VII relating to services provided prior to the termination of this
agreement; (b) obligations set forth in this agreement that expressly extend
beyond the Term, including without limitation indemnities and noncompetition
provisions, which provisions shall survive the expiration or termination of this
agreement; (c) the obligations of each party set forth in Article VI; and (d)
the obligation of Provider described in (S)8.4. Provider specifically
acknowledges and agrees that Service Company shall continue to collect and
receive on behalf of Provider all cash collections from accounts receivable in
existence at the time this agreement is terminated (which have not otherwise
been purchased by Service Company pursuant to (S)7.7), it being understood that
such cash collections will represent, in part, compensation to Service Company
for Services already rendered and compensation on accounts receivable purchased
by Service Company, if any. Upon the expiration or termination of this
agreement for any reason or cause whatsoever, Service Company shall surrender to
Provider all books and records pertaining to Provider's dental practice;
provided that Service Company may retain copies of such documents
22
to the extent reasonably necessary for Service Company to complete its post-
termination obligations and activities under this agreement.
(S)8.4 Purchase Obligation. Upon termination of this agreement for any
-------------------
reason, Provider shall, at Service Company's option:
(a) Purchase from Service Company at book value the intangible assets,
deferred charges, goodwill, and all other amounts on the books of the Service
Company relating to this agreement or the items or services provided by Service
Company pursuant to this agreement, including without limitation the amount, if
any, for the covenants described in (S)5.7, above, as adjusted through the last
day of the month most recently ended prior to the date of such termination in
accordance with GAAP to reflect amortization or depreciation of all such
amounts;
(b) Purchase from Service Company any real estate owned by Service
Company and used as a Clinic at the greater of the appraised fair market value
thereof or the then book value thereof;
(c) Purchase, at the greater of the appraised fair market value or the
then book value, all improvements, additions, or leasehold improvements that
have been made by Service Company at any Clinic and that relate to the
performance of Service Company's obligations under this agreement;
(d) Assume all debt, and all contracts, payables, and leases that are
obligations of Service Company and that relate to the performance of Service
Company's obligations under this agreement or the properties leased or subleased
by Service Company in connection with its obligations under this agreement; and
(e) Purchase from Service Company, at the greater of the appraised fair
market value or the then book value, all of the equipment then being supplied by
Service Company pursuant to Service Company's obligations under this agreement,
and all other assets, including inventory and supplies, tangibles and
intangibles, set forth on the books of Service Company as adjusted through the
last day of the month most recently ended prior to the date of such termination
in accordance with GAAP to reflect operations of each Clinic, depreciation,
amortization, and other adjustments of assets shown on the books of the Service
Company.
For purposes of subsection (b), above, the appraised value shall be
determined by an appraiser mutually agreed upon by the Parties. In the event
the Parties are unable to agree upon an appraiser within 10 days following the
date upon which either Party requests the other Party to agree to an appraiser,
then each Party shall appoint an appraiser, who shall in turn select a third
appraiser who shall serve as the appraiser hereunder. In the event either Party
fails to select an appraiser within 15 days of the selection of an appraiser by
the other Party, the appraiser selected by the other Party shall serve as the
appraiser hereunder. The determination
23
of the appraised value of the assets identified in subsection (b), above, by the
appraiser selected hereunder shall be binding on both Parties.
(S)8.5 Closing of Purchase. If Provider purchases assets pursuant to
-------------------
(S)8.4, Provider shall pay cash for the purchased assets; provided that the
amount of the purchase price allocable to an asset shall be reduced by the
amount of debt and liabilities of Service Company, if any, relating directly to
that asset which are assumed by Provider in connection with such purchase.
Provider and any dentist associated with Provider shall execute such documents
as may be required to assume the liabilities set forth in (S)8.4(d) and to
remove Service Company from any liability with respect to such purchased asset
and with respect to any property leased or subleased by Service Company. The
closing date for the purchase shall be determined by the Parties, but shall in
no event occur later than 180 days from the date of the notice of termination.
Provider shall be released from the covenants described in (S)5.7, above, upon
the successful consummation of such closing.
Notwithstanding the foregoing, Provider may, at its option, pay all or a
portion of the purchase price at the closing in shares of common stock of Parent
("Shares") for which Provider shall receive, as a credit to the purchase price,
an amount equal to the number of Shares transferred to Service Company by
Provider at the closing multiplied by the per Share fair market value (defined
below); provided that each Share transferred to Service Company is free and
clear of all liens, security interests, encumbrances, pledges, charges, claims,
voting trusts and restrictions on transfer of any nature whatsoever, except
restrictions on transfer imposed by or pursuant to federal and state securities
laws and such other restrictions as were expressly required by Parent in
connection with the acquisition of Service Company by Parent concurrently with
the execution of this agreement. For purposes of this section, the "per Share
fair market value" shall mean, as of any given date, the (i) last reported sale
price on the New York Stock Exchange on the most recent previous trading day,
(ii) last reported sale price on the NASDAQ National Market System on the most
recent previous trading day, (iii) mean between the high and low bid and ask
prices, as reported by the National Association of Securities Dealers, Inc. on
the most recent previous trading day, (iv) last reported sale price on any other
stock exchange on which the Shares are listed on the most recent previous
trading day, whichever is applicable, or (v) if none of the foregoing is
applicable, then the per Share fair market value of the Shares shall be the
value determined by the Board of Directors of Parent, in its discretion, based
upon the then-current Share value assigned by the Board of Directors of Parent
in connection with Parent's other activities; provided that, if Provider
disagrees with the determination of Parent's Board of Directors as to such
value, the per Share fair market value shall be determined by:
(A) Agreement between Service Company and Provider, if they are
able to agree upon a value within ten business days after being requested
to so agree; or, if not,
(B) An appraiser selected by agreement between Service Company
and Provider, if they are able to agree upon an appraiser within ten
business days after requested to so agree; or, if not,
24
(C) The majority vote by an appraisal board consisting of three
appraisers, one member appointed by each of Service Company and Provider
and the third member appointed by the first two members so appointed who
shall act as chairman of the appraisal board, provided that in the event
either Party fails to so appoint its appointee to the appraisal board
within ten business days after being requested to do so by the other Party,
then the appraiser appointed by the requesting Party shall be the sole
appraiser.
ARTICLE IX. GENERAL
-------
(S)9.1 Administrative Services Only. Nothing in this agreement is
----------------------------
intended or shall be construed to allow Service Company to exercise control or
direction over the manner or method by which Provider and its dentists perform
Dental Care or other professional dental care services. The rendition of all
Dental Care shall be the sole responsibility of Provider and its dentists, and
Service Company shall not interfere in any manner or to any extent therewith.
Nothing contained in this agreement shall be construed to permit Service Company
to engage in the practice of dentistry, it being the sole intention of the
Parties hereto that the services to be rendered to Provider by Service Company
are solely for the purpose of providing non-dental administrative services to
Provider so as to enable Provider to devote its full time and energies to the
professional conduct of its dental practice and provision of Dental Care to its
patients and not to administration, or practice management.
(S)9.2 Relationship of Parties. The relationship of the Parties is and
-----------------------
shall be that of independent contractors, and nothing in this agreement is
intended, and nothing shall be construed to create an employer/employee,
partnership, or joint venture relationship between the Parties, or to allow
either to exercise control or direction over the manner or method by which the
other performs the services that are the subject matter of this agreement;
provided always that the services to be provided hereunder shall be furnished in
a manner consistent with the standards governing such services and the
provisions of this agreement.
(S)9.3 Notices. Any notice or other communication required or desired to
-------
be given to either Party shall be in writing and shall be deemed given when
deposited in the United States mail, first-class postage prepaid, addressed:
(a) If to Service Company
Smileage Dental Care, Inc.
0000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: President
25
With a copies to:
American Dental Partners, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, President
and Chief Executive Officer
and
Xxxxx & Xxxxxxxxx
00 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
(b) If to Provider
Wisconsin Dental Group, S.C.
0000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: President
With a copy to:
Xxxxxxx & Xxxxx, S.C.
X.X. Xxxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Xx., Esq.
Any Party may change the address to which notices and other
communications are to be given by giving the other Parties notice of such
change.
(S)9.4 Execution of Documents. Each Party shall execute, acknowledge or
----------------------
verify, and deliver any and all documents, and take any and all other actions,
which from time to time may be reasonably requested by any other Party to carry
out the purposes and intent of this agreement.
(S)9.5 Governing Law. All questions concerning the validity, intention,
-------------
or meaning of this agreement or relating to the rights and obligations of the
Parties with respect to performance under this agreement shall be construed and
resolved under the laws of Wisconsin, without reference to conflict of law
principles.
26
(S)9.6 Severability. The intention of the Parties is to comply fully
------------
with all applicable laws and public policies, and this agreement shall be
construed consistently with all laws and public policies to the extent possible.
If and to the extent that any court of competent jurisdiction determines that it
is impossible to construe any provision of this agreement consistently with any
law or public policy and consequently holds that provision is invalid, such
holding shall in no way affect the validity of the other provisions of this
agreement, which shall remain in full force and effect. With respect to any
provision in this agreement finally determined by such a court to be invalid or
unenforceable, such court shall have jurisdiction to reform this agreement
(consistent with the intent of the Parties) to the extent necessary to make such
provision valid and enforceable, and, as reformed, such provision shall be
binding on the Parties.
(S)9.7 Setoff. Notwithstanding any provision of this agreement to the
------
contrary, Service Company shall have the right from time to time to setoff any
amounts owed by Service Company to Provider under this agreement against any
amounts owed by Provider to Service Company, whether pursuant to this agreement
or otherwise.
(S)9.8 Remedies. All rights and remedies of each Party under this
--------
agreement are cumulative and in addition to all other rights and remedies which
may be available to that Party from time to time, whether under any other
agreement, at law, or in equity.
Each Party hereby acknowledges that: (a) the provisions of (S)(S)5.7 and
6.1 of this agreement are fundamental for the protection of the other Party's
legitimate business interests; (b) such provisions are reasonable and
appropriate in all respects; and (c) in the event it violates any such
provisions, the other Party would suffer irreparable harm and its remedies at
law would be inadequate. Accordingly, in the event either Party violates or
attempts to violate any such provisions, the other Party shall be entitled to a
temporary restraining order, temporary and permanent injunctions, specific
performance, and other equitable relief without any showing of irreparable harm
or damage or the posting of any bond, in addition to any other rights or
remedies which may then be available to the other Party.
(S)9.9 Non-waiver. No failure by any Party to insist upon strict
----------
compliance with any term of this agreement, to exercise any option, enforce any
right, or seek any remedy upon any default of any other Party shall affect, or
constitute a waiver of, the first Party's right to insist upon such strict
compliance, exercise that option, enforce that right, or seek that remedy with
respect to that default or any prior, contemporaneous, or subsequent default;
nor shall any custom or practice of the Parties at variance with any provision
of this agreement affect or constitute a waiver of, any Party's right to demand
strict compliance with all provisions of this agreement.
(S)9.10 Indemnification. Each Party (the "Indemnifying Party") shall
---------------
indemnify and hold harmless the other Party and its shareholders, directors,
officers, employees, agents, representatives, and affiliates (the "Indemnified
Parties") from and against any and all losses, liabilities, damages, demands,
claims, suits, actions, judgments, assessments, costs and
27
expenses, including without limitation interest, penalties, attorneys' fees, any
and all expenses incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation (collectively, "Damages"),
asserted against, imposed upon, or incurred or suffered by the Indemnified
Parties, directly or indirectly, as a result of or arising from: (i) any failure
of any representation or warranty of the Indemnifying Party in this agreement to
be accurate and complete in all material respects when made; or (ii) any failure
by the Indemnifying Party to perform and observe fully all obligations and
conditions to be performed or observed by the Indemnifying Party under this
agreement. In addition, Provider shall indemnify Service Company and its
shareholders, directors, officers, employees, agents, representatives, and
affiliates from and against any and all Damages asserted against, imposed upon,
or incurred or suffered by any of them, directly or indirectly, as a result of
or arising from the acts or omissions of Provider or its employees, contractors,
or other agents or representatives.
(S)9.11 No Third Party Benefit. This agreement is intended for the
----------------------
exclusive benefit of the Parties and their respective successors and assigns,
and nothing contained in this agreement shall be construed as creating any
rights or benefits in or to any third party.
(S)9.12 Captions. The captions of the various sections of this agreement
--------
are not part of the context of this agreement, are only labels to assist in
locating and reading those sections, and shall be ignored in construing this
agreement.
(S)9.13 Genders and Numbers. When permitted by the context, each pronoun
-------------------
used in this agreement includes the same pronoun in other genders or numbers and
each noun used in this agreement includes the same noun in other numbers.
(S)9.14 Complete Agreement. This document (including its exhibits and
------------------
all other documents referred to herein, all of which are hereby incorporated
herein by reference) contains the entire agreement among the Parties and
supersedes all prior or contemporaneous discussions, negotiations,
representations, or agreements relating to the subject matter of this agreement.
No changes to this agreement shall be made or be binding upon any Party unless
made in writing and signed by each Party to this agreement.
(S)9.15 Counterparts. This agreement may be executed in multiple
------------
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
(S)9.16 Assignment. Provider may not assign this agreement without the
----------
prior written consent of Service Company, which consent may be withheld for any
reason. The sale, transfer, pledge, or assignment of any of the shares of
Provider held by any shareholder of Provider, the issuance by Provider of voting
shares to any other person, or any combination of such transactions within a
period of two years, such that the existing shareholders in Provider fail to
maintain a majority of the voting interest in Provider shall be deemed an
attempted assignment by Provider, and shall be null and void unless consented to
in writing by Service Company prior to any such transfer or issuance. Any
breach of this provision, whether or not void or voidable, shall constitute a
material breach of this agreement, and in the event of such breach, Service
Company may terminate this agreement upon 24 hours notice to Provider. Service
Company
28
shall have the right to (i) assign its rights and obligations hereunder to any
third party and (ii) collaterally assign its interest in this agreement and its
right to collect the amounts set forth in Article VII hereunder to any financial
institution or other third party without the consent of Provider.
(S)9.17 Successors. Subject to (S)9.16, above, this agreement shall be
----------
binding upon, inure to the benefit of, and be enforceable by and against the
successors and assigns of each Party.
(S)9.18 Force Majeure. Neither Party shall be liable or deemed to be in
-------------
default for any delay or failure in performance under this agreement or other
interruption of service deemed to result, directly or indirectly, from acts of
God, civil or military authority, acts of public enemy, war, accidents, fires,
explosions, earthquakes, floods, failure of transportation, strikes or other
work interruptions by either Party's employees, or any other similar cause
beyond the reasonable control of either Party unless such delay or failure in
performance is expressly addressed elsewhere in this agreement.
WISCONSIN DENTAL GROUP, S.C.
By /s/ Xxxxxx X. Xxxx
-------------------------------
Xxxxxx X. Xxxx, President
SMILEAGE DENTAL CARE, INC.
By /s/ Xxx X. Xxxxx
-------------------------------
Xxx X. Xxxxx, President
29
INDEX TO EXHIBITS
-----------------
Exhibit A Definitions
Exhibit B [Intentionally Left Blank]
Exhibit C Five-Year Employment Agreement
Exhibit D Standard Employment Agreement
Exhibit E List of Dentists with Five-Year Employment Agreements
EXHIBIT A
---------
DEFINITIONS
-----------
[*]
* This information has been omitted pursuant to a request for confidential
treatment and has been filed separately with the Securities and Exchange
Commission.
i
ii
iii
iv
v
vi
FIRST AMENDMENT TO SERVICE AGREEMENT
------------------------------------
This amendment is made effective January 1, 1997, between Smileage
Dental Care, Inc., a Wisconsin corporation ("Service Company"), and Wisconsin
Dental Group, S.C., a Wisconsin service corporation ("Provider").
Background Information
----------------------
A. Service Company and Provider are all of the parties (the
"Parties") to a Service Agreement dated December 23, 1996 (the "Agreement").
B. The Parties have prepared a revised Budget (as defined in the
Agreement) for 1997 and desire to amend the Agreement so that the Agreement will
be consistent with such Budget.
Agreement
---------
The Parties hereby acknowledge the accuracy of the foregoing
Background Information and agree as follows:
(S)1. Definitions. All capitalized terms used in this amendment which
-----------
are not otherwise defined herein shall have the respective meanings given those
terms in the Agreement.
(S)2. [*]
(S)3. [*]
(S)4. [*]
* This information has been omitted pursuant to a request for confidential
treatment and has been filed separately with the Securities and Exchange
Commission.
(S)5. [*]
(S)6. Construction. The modifications to the Agreement contained in this
------------
amendment shall apply prospectively only. In the event of any inconsistency
between the provisions of this amendment and the provisions of the Agreement,
the provisions of this amendment shall control; provided that this amendment
shall not be construed to limit the Parties' right to adjusted amounts or
percentages pursuant to future Budgets as permitted by the Agreement. Except as
modified in this amendment, the Agreement shall continue in full force and
effect without change. This amendment shall be binding upon, inure to the
benefit of, and be enforceable by and against the respective successors and
assigns of each Party.
(S)7. Counterparts. This amendment may be executed in multiple
------------
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same amendment.
WISCONSIN DENTAL GROUP, S.C. SMILEAGE DENTAL CARE, INC.
By /s/ Xxxxxx X. Xxxx By /s/ Xxx X. Xxxxx
-------------------------- --------------------------
Xxxxxx X. Xxxx, President Xxx X. Xxxxx, President
* This information has been omitted pursuant to a request for confidential
treatment and has been filed separate with the Securities and Exchange
Commission.
