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EXHIBIT 10(aaa)
ADMINISTRATIVE SERVICES AGREEMENT
This ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement"), effective
the 19th day of February, 1997, by and between VFD of Georgia, Inc., a Delaware
corporation (the "Manager"), and Xxxxxx Dentistry, P.C., a Georgia professional
corporation (the "P.C.").
W I T N E S S E T H:
WHEREAS, the P.C. is engaged in the business of providing, among
other things, dental services and related activities in the State of Georgia
(the "Practice");
WHEREAS, the P.C. desires to obtain from the Manager and the Manager
desires to provide the P.C., the benefit of the Manager's expertise in
operating, directing, managing and supervising the nonprofessional aspects of
the operations of the Practice;
WHEREAS, the P.C. desires to obtain a license from the Manager to
use the proprietary names "Valley Forge Dental Associates" and "Dental Care
Center" and any other proprietary names owned by the Manager and used by the
P.C. in connection with the Practice, and the Manager desires to provide the
P.C. with such a license;
WHEREAS, the P.C. desires to obtain from the Manager, and the
Manager desires to provide to the P.C., certain premises and certain physical
assets, furniture and equipment needed to operate the Practice;
WHEREAS, the Manager and the P.C. are parties to that certain
Administrative Services Agreement dated as of February 19, 1997; and
WHEREAS, the P.C. and the Manager wish to amend and restate the
Administrative Services Agreement in its entirety on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto, intending to be
legally bound, hereby agree as follows:
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ARTICLE 1
RELATIONSHIP OF PARTIES
1.1 Responsibilities of Parties. The parties agree that the P.C.
will provide, and shall be solely responsible for providing, all professional
services for the Practice and the Manager will be responsible only for
administrative services (as further described in this Agreement). Nothing
contained in this Agreement shall be construed as permitting or providing for
the ownership, establishment, operation or management by the Manager of the
professional services of the Practice, which services shall at all times be the
sole responsibility of the P.C.; provided, however, that pursuant to its
engagement hereunder, the Manager shall be the exclusive provider of all
administrative services and shall control all aspects of the P.C.'s business
other than those aspects which relate directly to the provision of dental
services. Without limiting the generality of the foregoing, the P.C. shall be
solely responsible for all activities described in Section 2.4 of this
Agreement.
1.2 Relationship of Parties. The P.C. and the Manager are not joint
venturers, partners, employees or agents of each other and, except as provided
herein, neither party shall have any authority to bind the other.
1.3 Practice. The P.C. agrees to conduct the Practice in compliance
with all applicable laws, rules and ordinances, including with respect to the
licensing and certification of it providers.
ARTICLE 2
SERVICES OF THE MANAGER
2.1 Covered Services. The Manager, unless otherwise prohibited by
law, shall control all aspects of, and provide to the P.C. the following
services, premises and assets (such services, premises and assets are
hereinafter referred to collectively as the "Covered Services"):
a. General Administrative Services. Overall day-to-day
supervision, conduct and management of the general administrative services
required in connection with the Practice, including supervision of the
non-professional services and personnel described below.
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b. Personnel. Provision of all personnel (other than licensed or
certified professionals, including but not limited all dentists, dental
hygienists and dental assistants, collectively, the "Professional Personnel")
needed to operate and support the Practice, such as receptionists and
secretarial, clerical, purchasing and marketing personnel (collectively, the
"Administrative Personnel"). The Manager shall have the sole and exclusive
responsibility for determining the salaries and fringe benefits of all
Administrative Personnel provided hereunder, and for paying such salaries and
providing such fringe benefits. In recognition of the fact that the
Administrative Personnel provided to the P.C. under this Agreement may from time
to time perform services for others, this Agreement shall not prevent the
Manager from performing such services for others or restrict the Manager from so
using the Administrative Personnel provided to the P.C. under this Agreement.
The Manager will make every effort consistent with sound business practices to
honor the specific requests of the P.C. with regard to the assignment of the
Manger's employees to the P.C.; however, the Manager reserves the sole right to
determine the assignment of its employees. Further, the Manager, in its sole
discretion, may require each of its employees assigned to the P.C. to perform
several of the aforedescribed functions and duties simultaneously.
c. Professional Personnel. Establish guidelines for the
selection, hiring and firing of the Professional Personnel by the P.C. and
recruit and evaluate prospective Professional Personnel; provided, however, that
all of the Professional Personnel shall be employees of, or independent
contractors to, the P.C.
d. Training. Training of all Administrative Personnel and
assistance to the P.C. in arranging for training and continuing education for
Professional Personnel.
e. Administrative and Fiscal Services. Provision of general
administrative, business and fiscal services to the P.C. in connection with the
operation of the Practice, including patient xxxxxxxx, collecting xxxxxxxx,
accounting, auditing (by a certified public accountant selected by the Manager
with the approval of the P.C., which approval shall not be unreasonably withheld
or delayed), bookkeeping, budgeting, record keeping, accounts receivable and
accounts payable processing, electronic data processing and such other services
as the P.C. may from time to time require.
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f. Annual Budget. Prepare, in reasonable detail, annual
operating and capital budgets for the P.C. which shall be delivered to the P.C.
within thirty (30) days after the end of each fiscal year, with the Manager
retaining final authority with respect to budget items including, without
limitation, with respect to compensation and payments to the Professional and
the Administrative Personnel.
g. Patient Records. Maintenance of patient records (which shall
at all times remain the property and under the control of the P.C.) and
provision of record retrieval and monitoring services to assist the P.C. in
utilization and quality assurance reviews in accordance with instructions and
guidelines issued by the P.C.
h. Quality Control. Development of appropriate quality control
programs, including development of performance standards, sampling techniques
for case review, and preparation of appropriately documented studies.
i. Marketing, Development and Program Negotiation. Marketing of
the professional services provided by the P.C. to potential patients,
facilities, health maintenance organizations, insurance companies, self-insured
employer health plans and other various third-party payors (the "Marketing
Services"). The Marketing Services to be provided by the Manager may include,
but are not necessarily limited to, (i) assistance and support in the
preparation of marketing material and brochures and responses to requests for
proposals, (ii) the placing of advertisements or articles in magazines,
newspapers, other publications and any and all media determined by the Manager
to be beneficial to the P.C., (iii) undertaking telemarketing campaigns and (iv)
the holding of seminars. The Manager shall also assist the P.C., when
appropriate, in negotiating and securing contracts with self-insured employer
health plans, third-party payors, health maintenance organizations, managed care
companies and any other institution, facility or organization that may use the
services that the P.C. is qualified to provide.
j. Equipment and Supplies. Provision of all inventory,
equipment, furnishings and supplies reasonably necessary for the efficient
operation of the Practice. Title to such inventory, equipment, furnishings and
supplies shall at all times remain in the Manager. At the end of the term of
this Agreement, the Manager shall retain and the P.C. shall have no further
right to use or possess, such inventory, equipment, furnishings and supplies
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as shall not have been consumed in the day-to-day operations of the Practice.
k. Janitorial and Maintenance Service. Arranging for janitorial,
grounds and maintenance and repair services for the P.C. and its equipment and
furnishings.
l. Malpractice Insurance. Assistance to the P.C. in obtaining
malpractice coverage for the P.C., its employees and agents in an amount not
less than One Million Dollars ($1,000,000). The Manager shall also assist the
P.C. in obtaining general liability and property insurance in usual and
customary amounts for the P.C. The Manager shall, on behalf and in the name of
the P.C., pay the premiums for all such insurance and shall provide the P.C.
with evidence of payment on a periodic basis or as reasonably requested.
m. Contracts with Facilities/Programs. Contracts with facilities
and programs serviced by the Practice shall be by and in the name of the P.C.
The Manager shall serve as contracting agent for the P.C. in connection with
such facility or program contracts.
n. Protecting Goodwill. Take all necessary steps to preserve and
protect the reputation and goodwill associated with the P.C., including
assistance in the monitoring of utilization and quality of services provided by
the P.C., and shall assist the P.C. to take all steps necessary to remedy any
and all deficiencies in the efficiency or the quality of the services provided.
This section shall not be construed as permitting the Manager to influence or
control the professional aspects of the Practice or the Professional Personnel.
o. Facilities. Facilities occupied by the P.C. for the Practice
shall be made available to the P.C. by the Manager.
p. Operations and Regulatory Reports. Delivery to the P.C. of
operations reports containing such information as the P.C. may reasonably
request. The Manager shall timely assist the P.C. in the preparation of all
written reports and information that shall be lawfully required by any
government body or agency having jurisdiction over the Practice or the P.C. The
P.C. shall review and approve all such required reports and/or information
before any dissemination of the same.
q. Processing Disputes. Administer and process all disputes,
grievances and complaints between the
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P.C. and all third parties, subject at all times to the review and final
approval of the P.C.
r. Government Regulations; Licenses. To the extent known and
material to the operation of the P.C. and the Practice, the Manager shall
promptly notify the P.C. of any changes which may occur in relevant laws or
regulations of any government, governmental body or agency having jurisdiction
over the Practice or the P.C. The foregoing shall not in any way limit the
P.C.'s continuing professional and legal responsibility to comply with, and be
aware of, all licensing, regulatory, professional or other requirements
applicable to individuals licensed to provide dental services.
s. Advances to the P.C. The Manager shall make advances to the
P.C. as provided by Section 5.6 herein. Such advances shall bear a reasonable
rate of interest, as mutually agreed to by the Manager and the P.C., payable
monthly.
The Covered Services shall include assumption of all obligations of
the P.C. to provide administrative services to Professional Personnel who are
not employed by the P.C. The Manager may perform the Covered Services directly
or by reimbursing the P.C. for the cost of any Covered Services.
2.2 Performance of Services. The Manager is hereby expressly
authorized to perform the Covered Services hereunder in whatever reasonable
manner it deems appropriate to meet the day-to-day administrative needs of the
Practice. It is understood and agreed that the Manager will perform some of the
Covered Services for the P.C. at a centralized location.
2.3 Events Excusing Performance. The Manager will not be liable to
the P.C. for failure to perform any of the services required herein in the event
of strikes, lockouts, calamities, acts of God, unavailability of supplies or
other events over which the Manager has no control for so long as such event
continues and for a reasonable period of time thereafter.
2.4 Excluded Services. The parties hereto expressly acknowledge that
the provision of all professional services, including but not limited to, dental
services by the P.C., shall be separate and independent from the provision of
administrative, fiscal and support services by the Manager, and the P.C. shall
be solely and exclusively responsible for all professional services rendered to
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patients of the Practice. Without limiting the generality of the foregoing, the
parties acknowledge that the P.C. shall be solely responsible for setting all
professional standards of the Practice and shall be responsible for the
employment and discharge of all Professional Personnel.
2.5 Use of Name. The Manager hereby grants to the P.C. a
nontransferable, nonexclusive license to use the proprietary names "Valley Forge
Dental Associates" and "Dental Care Center" and any other proprietary names
owned by the Manager and used by the P.C. in connection with the Practice along
with any and all trademarked symbols for the term of this Agreement (the
"License"). All applicable common law and statutory rights in the proprietary
names "Valley Forge Dental Associates" and "Dental Care Center" and any other
proprietary names owned by the Manager and used by the Practice and their
accompanying symbols, including, but not limited to, rights relating to
trademark, service xxxx, patent and copyright shall be and remain the sole
property of the Manager. The P.C. shall have no right, title or interest in any
such proprietary rights.
ARTICLE 3
PROPRIETARY INTEREST AND RIGHTS OF THE MANAGER
3.1 Competition. During the term of this Agreement, neither the P.C.
nor any shareholder of the P.C. shall, directly or indirectly, own an interest
in, administer, manage, advise, assist, operate, join, control, participate in,
or be connected in any manner with any corporation, partnership, proprietorship,
firm, association, person or entity providing dental services or administrative
services in competition with the P.C. or the Manager (other than Xxxxxx Xxxxxx'x
ownership interest in the Manager).
3.2 Confidentiality. The P.C. acknowledges and agrees that the
Manager is entitled to prevent its competitors from obtaining and utilizing its
trade secrets. The P.C. agrees to hold the Manager's trade secrets in strictest
confidence and not to disclose them or allow them to be disclosed directly or
indirectly to any person or entity other than persons engaged by the P.C. or the
Manager. The P.C. acknowledges its fiduciary obligations to the Manager and the
confidentiality of its relationship with the Manager and of any information
relating to the services and business methods of the Manager which it may obtain
during the term of this Agreement. The P.C. shall not, either during the term of
this Agreement or at any time after the expiration or sooner termination of this
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Agreement, disclose to anyone other than employees or independent contractors of
the P.C. or the Manager any confidential or proprietary information or trade
secret obtained by the P.C. from the Manager. The P.C. also agrees to place any
persons to whom said information is disclosed for the purpose of performance
under legal obligation to treat such information as strictly confidential.
ARTICLE 4
BILLING AGENT AGREEMENT
4.1 Professional and Other Fees. The P.C. shall, in consultation
with the Manager, establish a schedule of fees and charges for the Practice's
professional services or shall comply with the schedule of fees and charges set
forth in the health care contracts pursuant to which the P.C. provides services
through its Professional Personnel.
4.2 Xxxxxxxx. Xxxxxxxx of the Practice for all services rendered by
the P.C. shall be by and in the name of the P.C.
4.3 Billing and Collection Agent. The Manager shall serve as billing
and collection agent for the P.C. in connection with the Practice. The Manager
shall establish a depository bank account on behalf of the Practice and will
deposit into such account collected fees generated from the Practice. As
provided for in standing instructions issued by the P.C. to the bank where such
depository account is located, the Manager may withdraw all monies daily from
said bank account for processing at a central location to be used for payment of
the P.C.'s expenses, including the administrative services fee set forth in
Section 5.4 hereof and any amounts advanced to the P.C. pursuant to Section 5.6
hereof. Said processing will consist of establishing and maintaining a book
account for the P.C. showing all fee collections and expense disbursements made
by the Manager at the P.C.'s request. The Manager will provide the P.C. with
periodic financial statements for the Practice reflecting such processing.
4.4 Reports. The Manager shall provide the P.C. with financial
statements for the Practice, stating Gross Xxxxxxxx (as hereafter defined) and
the Manager's Administrative Fees (as hereafter defined).
4.5 Security for the Manager's Compensation. To secure the prompt
and orderly payment of any amounts owing by the P.C. to the Manager pursuant to
this Agreement, the
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P.C. hereby agrees to grant, at the request of the Manager, a security interest
to the Manager or to a third party designated by the Manager, in all its
existing and hereafter created accounts receivable, all cash or non-cash
proceeds therefrom, all insurance policies and proceeds relating thereto, all of
the P.C.'s rights as an unpaid provider of services, and all of the P.C.'s
rights to receive any and all capitated payments whether now existing or
hereafter created or acquired (collectively, the "Collateral"). The P.C. agrees
to execute any and all documents necessary to perfect such security interest,
including but not limited to, UCC financing statements.
ARTICLE 5
COMPENSATION
5.1 Gross Xxxxxxxx. The term "Gross Xxxxxxxx" as used in this
Agreement shall mean all xxxxxxxx by the P.C. in connection with the Practice
for dental services, including any other income or receivables relating thereto
including but not limited to all capitated payments, less contractual
allowances, if any, and an allowance for bad debts, to be determined from time
to time by the Manager, in its discretion, based upon the actual experience of
the P.C., plus all other cash payments and miscellaneous revenues received by
the P.C. in connection with the Practice.
5.2 Intention of the Parties. It is the intention of the parties
hereto that from the Gross Xxxxxxxx of the P.C. in connection with the Practice,
the P.C. shall be entitled to fairly and reasonably compensate its Professional
Personnel, and the Manager shall be entitled to receive from the P.C. fair and
reasonable compensation for (i) the provision of the Covered Services pursuant
to this Agreement, (ii) the License provided for in Section 2.5 hereof, and
(iii) the expenses, obligations, and risks assumed by the Manager in connection
therewith.
5.3 Fair and Reasonable Compensation of the P.C. for Services of
Professional Personnel. The parties hereto agree that the P.C. shall have the
right to fairly and reasonably compensate its Professional Personnel for their
professional services. Compensation for the Professional Personnel shall be
determined in accordance with employment agreements and other employment
arrangements entered into by the P.C., in consultation with the Manager, and the
Professional Personnel.
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5.4 Fair and Reasonable Compensation to the Manager.
a. Manager's Administrative Fees. The term "Manager's
Administrative Fees" as used in this article shall mean Gross Xxxxxxxx less
compensation payable by the P.C. as set forth in Section 5.3.
b. For Services of the Manager. The parties hereto agree that
the Manager shall be fairly and reasonably compensated for its administrative
services. The Manager's Administrative Fees shall be paid to the Manager as
compensation for (i) the provision of the Covered Services under this Agreement,
(ii) the License and (iii) its expenses, obligations, and risks in connection
therewith. The Manager shall pay all expenses of the Practice, except for
compensation to the Professional Personnel, (including interest expenses payable
with respect to any indebtedness of the P.C. to which the Manager shall have
consented in writing) out of the Manager's Administrative Fees or out of funds
advanced to the P.C. by the Manager.
5.5 Periodic Adjustment of Compensation. The parties hereto
recognize that the Practice may change in size and scope over the term of this
Agreement which may necessitate adjusting the fees provided for herein.
Therefore, the parties shall review the compensation to the Manager no less
frequently than annually and more frequently at the request of the Manager or
the P.C., if changes in the business of the P.C. or services by the Manager
warrant such more frequent review, and may agree in writing to modification of
the compensation. Such review shall consider the scope of operations pursuant to
this Agreement at the time of review, the financial success of the Manager and
the P.C. in connection with the Practice, changes in the purchasing power of
money, the size and number of facilities being supplied by the Manager, the
scope of the Marketing Services, the size of the Administrative Personnel
workforce and the expenses and risks to the respective parties of performing
this Agreement.
5.6 Remittances. To the extent the P.C. shall not generate adequate
revenues to meet the P.C.'s ongoing operating expenses, including the
compensation for professional services pursuant to Section 5.3 of this
Agreement, the Manager shall advance to the P.C. or arrange for such amounts as
may be required. To the extent that the Manager advances any funds to the P.C.
pursuant to this Section 5.6, such advances shall be evidenced by interest-
bearing demand note(s) from the P.C. in favor of the Manager
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and shall be secured by the Collateral as provided in Section 4.5 hereof.
ARTICLE 6
TERM AND TERMINATION
6.1 Term. Unless sooner terminated in accordance with Section 6.2
hereof, the term of this Agreement shall be for a period of forty (40) years and
thereafter this Agreement shall continue indefinitely until terminated in
accordance with Section 6.2(e) hereof.
6.2 Termination. Notwithstanding any provision of this Agreement to
the contrary, this Agreement may be terminated as set forth below:
a. In the event of a material breach of this Agreement by either
party as a result of such party's gross negligence or fraud, the other
party may, at any time commencing sixty (60) days after written notice of
the breach has been given to the breaching party, terminate this Agreement
by delivery to the breaching party of a further written notice of
termination; provided, however, that if the breaching party, prior to
receiving such notice of termination, has begun and is diligently
continuing good faith efforts to cure such breach, this Agreement shall
remain in full force and effect;
b. If either party is determined by a court, administrative body
or peer review organization having jurisdiction, to have engaged in conduct
that results in material harm to the P.C. and constitutes (i) a felony or
other crime involving moral turpitude, including fraud, theft, or
embezzlement or (ii) a failure to act in an ethical or professional manner,
in keeping with accepted medical and dental care standards, then
immediately upon notice by the other party;
c. If either party has engaged in any practice that results in
material harm to the P.C. and violates in any material respect any federal,
state or local law or regulation that is aimed at protecting the public
from coercion into treatment and preventing fraud upon or abuse of public
funding of health services, then immediately upon notice by the other
party;
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d. If either party commences a voluntary case under bankruptcy,
insolvency or similar law, or any involuntary case is commenced against
either party under any bankruptcy, insolvency or similar law and such
involuntary case is not dismissed within thirty (30) days after filing,
then immediately upon notice from the other party; or
e. After the initial forty (40) year term of this Agreement,
either party may also terminate this Agreement, with or without cause, by
giving the other written notice of termination not less than one (1) year
prior to the effective date of termination.
6.3 Rights Upon Termination. The termination of this Agreement shall
not release or discharge either party from any obligation, debt or liability
which shall have previously accrued and remains to be performed upon the date of
termination.
ARTICLE 7
GENERAL PROVISIONS
7.1 Indemnification. Each party shall indemnify, hold harmless and
defend the other party from and against any liability, loss, claims, lawsuits,
damages, injury, cost, expense or other detriment arising out of or incident to
the performance or nonperformance under this Agreement by such indemnifying
party, its employees, Professional Personnel (in the case of the P.C.),
Administrative Personnel (in the case of the Manager) and agents, including,
without limitation, all consequential damages and attorneys' fees, provided,
however, neither party shall be liable to the other under this Section 7.1 for
any claim covered by insurance, except to the extent liability of the party
exceeds the amount of the coverage.
7.2 Assignment. The rights conferred upon the P.C. hereunder may not
be transferred or assigned without the prior written consent of the Manager and
any assignment in violation of this Section 7.2 shall be void. This Agreement
shall be assignable by the Manager.
7.3 Notices. All notices, requests or instructions hereunder shall
be in writing and delivered personally or sent by registered or certified mail,
postage prepaid, as follows:
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(1) If to the P.C.:
0000 Xxxxx Xxxxxx Xxx
Xxxxxxxx, Xxxxxxx 00000
Telephone No.: (000) 000-0000
(2) If to Manager:
VFD of Georgia, Inc.
c/o Valley Forge Associates, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
Either of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, and five (5) business days after the date of mailing, if
mailed.
7.4 Entire Agreement. This Agreement and the documents referred to
herein contain the entire agreement between the parties hereto with respect to
the transactions contemplated hereby, and no modification hereof shall be
effective unless in writing and signed by the party against which it is sought
to be enforced.
7.5 Further Assurances. Each of the parties hereto shall use such
party's best efforts to take such actions as may be necessary or reasonably
requested by the other party hereto to carry out and consummate the transactions
contemplated by this Agreement.
7.6 Attorneys Fees. Each of the parties hereto shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
7.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia applicable to agreements
made and to be performed entirely within such State, without regard to any
conflict of laws principles which would apply the laws of any other
jurisdiction.
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7.8 Article and Section Headings. The article and section headings
in this Agreement are inserted solely for convenience of reference and are not a
part of and are not intended to govern, limit or aid in the construction of any
term or provision hereof.
7.9 Waiver. The waiver of any covenant, condition or duty hereunder
by either party shall not prevent that party from later insisting upon full
performance of the same.
7.10 Amendment. No amendment in the terms of this Agreement shall be
binding on either party unless in writing and executed by the duly authorized
representatives of each party.
7.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and both of which taken together
shall constitute one and the same instrument.
7.12 Severability. In the event that any provision of this Agreement
shall be held to be void or unenforceable for any reason, the parties shall
negotiate in good faith for a period of up to one hundred eighty (180) days in
order to arrive at a mutually acceptable substitute provision.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first above
written.
XXXXXX DENTISTRY, P.C.
By: /s/ Xxxxxx X. Xxxxxx
_____________________________
Name: Xxxxxx X. Xxxxxx, D.D.S.
Title: President
VFD OF GEORGIA, INC.
By: /s/ W. Xxxx Xxxxxxx
__________________________
Name: W. Xxxx Xxxxxxx
Title: Vice President
