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EXHIBIT 10.14
SERVICES AND SUPPORT AGREEMENT
THIS SERVICES AND SUPPORT AGREEMENT, dated as of September 29, 1997, by
and between COAST DENTAL SERVICES, INC., a Delaware corporation ("CDS"), and
COAST DENTAL SOUTHEAST, P.A., a Georgia professional association (the "Dental
Practice Entity").
RECITALS:
WHEREAS, CDS is a company which provides facilities, equipment,
administrative and business advice, services and support to entities engaged in
the practice of dentistry;
WHEREAS, the Dental Practice Entity desires to engage CDS to provide
facilities equipment, administrative and business advice, and services and
support so that the Dental Practice Entity can focus on furnishing high quality
dental care to the general public through the services of the dentists(s)
employed by the Dental Practice Entity (the "Dentists") at each separate
location where the Dental Practice Entity operates ("Dental Centers");
WHEREAS, the Dental Practice Entity and CDS mutually desire to enter
into a relationship under the terms of this Agreement to assist the Dental
Practice Entity as set forth herein;
WHEREAS, the parties agree to any and all provisions of Georgia
Statutes and regulations relating to the practice of Dentistry; and
WHEREAS, the parties agree that the Dentists shall maintain complete
care, custody and control over the practice of dentistry and all dental
equipment being used for the provision of dental services;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
I. RESPONSIBILITIES AND OBLIGATIONS OF CDS
1.1. General. CDS shall provide the Dental Practice Entity with
comprehensive administrative and business services and support as set forth
herein. The Dental Practice Entity hereby contracts with CDS and agrees that CDS
shall have all power and authority reasonably necessary to carry out CDS's
duties under this Agreement, subject to the requirements of the laws and
regulations in the state of Georgia relating to the retention of control by
dentists over the practice of dentistry and the equipment they use in their
practice.
1.2 Facilities and Equipment. The parties expressly agree that all
equipment, office space, facilities, and materials provided by CDS to the Dental
Practice Entity hereunder shall be provided to the Dental Practice Entity by CDS
under an arrangement pursuant to which the Dental Practice Entity shall maintain
complete care, custody, and control of the foregoing. Subject to the foregoing,
CDS agrees to provide or arrange for on behalf of the Dental Practice Entity the
offices, facilities, furnishings, equipment, and related services and, on an
ongoing basis, shall provide for the maintenance and upkeep of the foregoing.
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1.3 Personnel and Payroll. The parties expressly acknowledge and
agree that the Dental Practice Entity shall exercise control over all decisions
relating to office personnel and hours of practice. Subject to the foregoing,
CDS will consult with and advise the Dental Practice Entity on the Dental
Centers' staffing needs and on the hiring and employment of the Dental Centers'
staff. CDS will employ all of the Dental Centers' staff, except for the Dentists
and dental hygienists, if any, as required by the Dental Practice Entity.
Additionally, CDS will be responsible for staff scheduling and for the
performance of all payroll and payroll accounting functions in accordance with
Dental Practice Entity's instructions. CDS will advise the Dental Practice
Entity on the establishment of incentive and profit sharing plans for the Dental
Centers' staff to reward individuals for contributing to increased productivity
in the Dental Center.
1.4 Business Systems, Procedures and Forms. In consultation with
the Dental Practice Entity, CDS will recommend and implement where approved by
the Dental Practice Entity standard business systems and procedures for the
Center developed by CDS. CDS will provide training to the Centers' staff in the
implementation of such systems and business procedures. CDS shall additionally
provide the Dental Practice Entity with and train the Centers' staff in the use
of standardized business forms. The Dental Practice Entity expressly
acknowledges and agrees that it will have no property rights in the foregoing
systems, procedures and forms, and further agrees that such systems, procedures,
and forms will be deemed to constitute Confidential Information within the
meaning of Section 2.7 hereof and subject to the restrictions on the use,
appropriation, and reproduction of such Confidential Information provided for in
Section 2.7. Notwithstanding anything contained herein, it is understood that
the Dentists are to make all judgments and have complete control regarding the
care of patients, patient's records and the patient care procedures utilized
therefor.
1.5 Purchasing, Accounts Payable and Inventory Control. CDS will
order all general business inventory and supplies required by each Dental
Center. The inventory and supplies related to the actual practice of dentistry
will also be ordered by CDS, but the actual type of inventory and supplies are
to be approved by the Dental Practice Entity. CDS will be solely responsible for
the Dental Practice Entity's accounts payable function.
1.6 Information Systems and Accounting. In consultation with the
Dental Practice Entity, CDS will establish, maintain, and train the Dental
Centers' staff in the use of information to produce financial and operational
information concerning the Dental Centers' business operations. CDS will analyze
such information on an ongoing basis and consult with the Dental Practice Entity
on enhancing the Dental Centers' productivity. CDS will provide or arrange for
all accounting and bookkeeping services related to the Dental Centers'
operations, provided that such services are incurred in the ordinary course of
business.
1.7 Legal Compliance and Services. CDS will be responsible for
monitoring compliance with all rules, regulations and ordinances applicable to
the Centers' business operations, and shall arrange for all legal services
reasonably required by the Center, but excluding those necessitated by
allegations related to the actual practice of dentistry or professional
malpractice. The Dental Practice entity shall be fully responsible for ensuring
compliance with all safe and reasonable dental practices and shall indemnify and
hold harmless CDS for any and all liability, damages and claims associated with
any incorrect or negligent dental practice or any violations of the Georgia
Dentists and Dental Hygienists Statutes and Regulations.
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1.8 Marketing. The parties expressly acknowledge and agree that
the Dental Practice Entity shall exercise control over all policies and
decisions relating to pricing, credit, refunds, warranties and advertising.
Subject to the foregoing, and in accordance with applicable laws, regulations
and ethical standards, in consultation with the Dental Practice Entity, CDS will
assist in developing a marketing plan to promote the Dentist's professional
services and, upon approval of the Dental Practice Entity, shall provide
marketing support services to implement the same. Such marketing plan may
include newspaper yellow pages, radio and television advertising, and direct
marketing to employers, insurance companies, and other payors. Marketing support
services include training the Dental Practice Entity's personnel concerning
marketing techniques, providing written materials that may be used in marketing,
and providing technical assistance to the Dental Practice Entity's personnel
engaged in direct marketing efforts such as administrative support and
assistance in contract negotiation and implementation. CDS shall not perform
direct marketing to potential sources of business, but shall provide assistance
to the Dental Practice Entity's personnel who perform any such direct marketing
as set forth above. All marketing activities hereunder shall be conducted in
compliance with all applicable laws and regulations governing advertising by the
dental profession.
1.9 Planning. CDS will provide advisory services to the Dental
Practice Entity regarding the establishment of dental offices in new locations.
1.10 Financial Services. CDS will be responsible for (i) assistance
in billing and collection of Payments for all professional services rendered by
the Dentist(s) or clinical staff to patients, with all such billing and
collecting to be done for the Dental Practice Entity; (ii) receiving payments
from patients, insurance companies and all other third party payors; (iii)
taking possession of and endorsing in the name of the Dental Practice Entity any
notes, checks, money orders, insurance payments and other instruments received
in payment for professional services rendered; (iv) performance of all payroll
functions; (v) preparing and submitting to the Dentist monthly operating data
and quarterly financial reports with respect to the operations of each Dental
Center; and (vi) paying all Dental Center Expenses, as set forth in Section 3.1.
CDS and the Dental Practice Entity agree that the Dental Practice Entity shall
be responsible for any accounts receivables for professional services rendered
by the Dental Practice Entity.
1.11 Operational Matters. To the extent not prohibited by
applicable law and except as otherwise provided in this Agreement, CDS shall
have discretion on all operational matters of the Dental Center.
1.12 Disbursement of Funds.
(i) All monies collected for the Dental Practice Entity
by CDS pursuant to Section 1.10 above shall be
deposited into an account (the "Dental Practice
Entity Account") with a bank whose deposits are
insured with the Federal Deposit Corporation. The
Dental Practice Entity Account shall contain the name
of the "Dental Practice Entity," but CDS shall make
all disbursements therefrom. In connection with the
billing, collection and disbursement services to be
provided by CDS under this Agreement, Dental Practice
Entity hereby grants to CDS an exclusive irrevocable
special power of attorney coupled with an interest
and appoints CDS as Dental Practice Entity's
exclusive true and lawful agent and attorney-in-fact.
Upon the request of CDS, Dental Practice Entity shall
execute
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any additional documents or instruments as may be
necessary to evidence or effect the special power of
attorney granted to CDS by Dental Practice Entity.
CDS shall account for all monies so disbursed from
the Dental Practice Entity Account. From the funds
collected and deposited by CDS in the Dental Practice
Entity Account, CDS shall make the following
disbursements promptly when payable in the order set
forth below:
(a) All sums due and payable by CDS, as Center
Expenses, as defined in Article III hereof,
as well as fees payable to CDS pursuant to
Article III hereof.
(b) All remaining sums owed to CDS from Dental
Practice Entity.
(c) The remainder shall be paid to the Dental
Practice Entity.
(ii) In the event the funds in the Dental Practice Entity
Account will, at any time, be insufficient to cover
current expenses, the Dental Practice Entity shall
immediately, upon notification, provide sufficient
funds to CDS to cover the same. CDS shall notify the
Dental Practice Entity and CDS may advance to the
Dental Practice Entity the necessary funds to pay
current expenses for the benefit of the Dental
Practice Entity, which advances will be deemed to be
loans to the Dental Practice Entity to be repaid upon
such terms and at such rate of interest as agreed to
by the Dental Practice Entity and CDS, which
indebtedness shall be deemed a Dental Center Expense
for purposes of Article III hereof.
1.13 Records. CDS will maintain on behalf of the Dental Practice
Entity all files and records relating to the business operations of the Dental
Center, including but not limited to accounting, billing, and collection
records. However, the parties expressly acknowledge and agree that patient
records shall at all times be and remain the property of and under the control
of the Dentists and shall be stored at the Dental Practice Entity's facilities
so that they are readily accessible for patient care. The management of all
files and records shall comply with applicable state and federal statutes. CDS
shall use its reasonable efforts to preserve the confidentiality of patient
medical records and use information contained in such records only for the
limited purpose necessary to perform the services set forth herein.
1.14 Covenant Not to Compete. CDS agrees that during the term of
this Agreement, CDS will not provide services and support for any other dental
practice market area where the Dental Centers covered by this Agreement are
located (the "Area of Dominant Influence") without the express written consent
of the Dental Practice Entity.
1.15 Non-Interference. CDS shall not influence or otherwise
interfere with the exercise of a Dentists independent professional judgment and
shall not exercise any control over any of the prohibited activities
specifically set forth in the Georgia Statutes and Regulations relating to the
practice of Dentistry.
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II. OBLIGATIONS OF THE DENTAL PRACTICE ENTITY
2.1 Employment of Dentists and Rendering of Patient Care. Dental
Practice Entity shall be solely responsible for the employment and professional
supervision of all Dentist(s) affiliated with the Dental Practice Entity and all
dental care rendered to patients shall be rendered by such Dentist(s).
Additionally, the Dental Practice Entity shall be solely responsible for the
employment of dental hygienists, if any, and for the professional supervision of
such hygienists in their rendering of patient care.
2.2 Professional Services. The Dental Practice Entity shall use
and occupy the offices and facilities exclusively for the practice of dental
services, and shall comply with all applicable local rules, ordinances and all
standards of dental and dental care. It is expressly acknowledged by the parties
that the dental practice conducted at each Dental Center shall be conducted
solely by the Dentists associated with the Dental Practice Entity, and no other
dentist shall be permitted to use or occupy the Dental Center. The Dental
Practice Entity shall ensure that each dentist to provide dental services to
patients is licensed by the state in which each Dental Center is located. In the
event that any disciplinary, medical malpractice or other actions are initiated
against any such dentist, the Dental Practice Entity shall immediately inform
CDS of such action and the underlying facts and circumstances to the degree such
information is not confidential by law. The Dental Practice Entity agrees to
cooperate with and participate in quality assurance/utilization review programs
established by licensed dental professional retained by CDS or mandated by
accreditation and/or standards applicable to the practice of dentistry.
Deficiencies discovered in the performance of any personnel or in the quality of
professional services shall be reported immediately to CDS, and appropriate
steps shall be taken by the Dental Practice Entity at once to remedy such
deficiencies.
2.3 Records. The Dental Practice Entity will keep or cause to be
kept accurate, complete and timely medical and other records of all patients.
Such records shall be sufficient to enable CDS, on behalf of the Dental Practice
Entity, to obtain payment for the services provided by the Dentist.
2.4 Certain Expenses and Reimbursements. The Dental Practice
Entity shall be solely responsible for the cost of professional licensure fees
and board certification fees, membership and professional associations, and
continuing professional education incurred by the Dentist. The Dental Practice
Entity agrees to reimburse CDS for the value of any grants or awards by CDS to
any professional employee of Dental Practice Entity under CDS's Affiliated
Professional Stock Option Plan, which must be approved in advance by the Dental
Practice Entity, as calculated under the Black-Scholes Models or a similar model
selected by CDS. In addition, the Dental Practice Entity shall be responsible
for any other expenses and reimbursements set forth in this Agreement as the
responsibility of the Dental Practice Entity.
2.5 Professional Insurance Eligibility. Throughout this agreement,
the Dental Practice Entity shall maintain professional liability insurance
insuring each of its Dentists in amounts and through companies reasonably
acceptable to CDS. Dental Practice Entity agrees to provide copies to CDS of
insurance policies immediately upon request.
2.6 [RESERVED]
2.7 Confidentiality. The Dental Practice Entity agrees and
acknowledges that all materials provided by CDS to the Dental Practice Entity
constitute "Confidential Information" and disclosed in confidence and with the
understanding that it constitutes valuable business information developed by CDS
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at great expenditures of time, effort, and money. The Dental Practice Entity
further agrees that it shall not, directly or indirectly, without the express
written consent of CDS, use or disclose such Confidential Information for any
purpose than in connection with the services to be rendered hereunder. The
Dental Practice Entity further agrees: (i) to keep strictly confidential and
hold in trust all Confidential Information and not disclose such Confidential
Information to any third party, including its affiliates without the express
prior written consent of CDS; and (ii) to impose this obligation of
Confidentiality on its affiliates, partners, employees and independent
contractors. The Dental Practice Entity acknowledges that the disclosure of
Confidential Information to it by CDS is done in reliance upon its
representations and covenants in this Agreement. Upon expiration or termination
of this Agreement by either party for any reason whatsoever, the Dental Practice
Entity shall immediately return and shall cause its affiliates, partners,
shareholders and independent contractors to immediately return to CDS all
Confidential Information, and the Dental Practice Entity will not, and will
cause its affiliates, partners, employees and independent contractors not to,
thereafter use, appropriate or reproduce such Confidential Information. The
Dental Practice Entity further expressly acknowledges and agrees that any such
use, appropriation, or reproduction of any such Confidential Information by any
of the foregoing after the expiration or termination of this Agreement will
result in the injury to CDS, that the remedy at law for the foregoing would be
inadequate, and that in the event of any such use, appropriation, or
reproduction of any such Confidential Information after the termination or
expiration of this Agreement, CDS, in addition to any other remedies or damages
available to it, shall be entitled to injunctive or other equitable relief
without the necessity of proving actual damages but such rights to relief shall
not preclude CDS from other remedies which may be available to it hereunder.
2.8 Employment Agreement. The parties recognize that the services
to be provided by CDS are feasible only if the Dental Practice Entity operates
an active dental practice to which it and each dentist associated with the
Dental Practice Entity devote their full time and attention. The Dental Practice
Entity will use its best efforts to cause each individual Dentist who is or
becomes employed at each Dental Center after the date hereof to enter into an
employment agreement, which will provide, among other things, that in the event
of a breach of a Dentist's agreement that the Dentist shall not compete with the
Dental Practice Entity, for a period of two years after termination of
employment, and in the event of a breach, the Dental Practice Entity will be
entitled to receive liquidated damages equaling the greater of (a) such
Dentist's income, as shown on the W-2 form prepared by the Dentist, for the most
recent year; or (b) $300,000. The Dental Practice Entity shall use its best
efforts to enforce the agreement not-to-compete and collect the amount of
liquidated damages from the breaching Dentist. Any liquidated damages collected
by the Dental Practice Entity shall be considered Gross Revenue (as hereinafter
defined). CDS shall be a third party beneficiary of each employment agreement
entered into between the Dental Practice Entity and an individual Dentist.
2.9 Exclusivity. Dental Practice Entity agrees that during the
term of this Agreement that CDS shall have the exclusive right to provide
services and support to any other dental practice opened by Dental Practice
Entity after the date of this Agreement under mutually agreeable terms similar
to the terms of this Agreement and that no other entity or person may provide
services and support similar to CDS's to Dental Practice Entity unless CDS, in
its sole discretion, consents in writing to the same.
2.10 Operations. The Dental Practice Entity agrees not to cease
operations, change its form of entity or change its ownership during the term of
this Agreement.
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III. FINANCIAL ARRANGEMENTS
3.1 Service and Support Fee: CDS shall receive fees as follows,
subject to the provisions of Section 3.4 below:
(i) a Service and Support fee (the "S&S Fee") equal to
the sum of that percentage of the Centers' monthly
Gross Revenue set forth in Exhibit "A";
(ii) except as otherwise provided, the amounts to be paid
to CDS under this Section 3.1 shall be payable
monthly. The amounts shall be estimated based upon
the previous month's operating results of the Dental
Center. Adjustments to the estimated payments shall
be made to reconcile actual amounts due under this
Section 3.1, by the end of the following month. Upon
preparation of quarterly financial statements, final
adjustments to the service fee for the quarter shall
be made and any additional payments owing to CDS or
the Dental Practice Entity shall then be made. Any
audit adjustments shall be reflected in the
calculations for the fourth quarter.
3.2 Dental Center Expenses. So long as the Dentist Practice Entity
is in full compliance with the terms hereof, CDS shall be
responsible for the payment of all Dental Center Expenses, as
defined below, during the term of this Agreement by the Dental
Practice Entity, unless otherwise agreed to by the parties
hereto.
3.3 Definitions. For the purposes of this Agreement, the following
definitions shall apply:
(i) "Dental Center Expenses" shall mean all operating and
non-operating expenses incurred in the operation of
the Dental Center, including, without limitation:
(a) Salaries, benefits, and other direct costs
of all employees of CDS at the Dental
Center, including dental assistants (but
excluding all Dentists and Dental
Hygienists);
(b) Direct costs of all employees or consultants
of CDS who provide services at or in
connection with the Dental Center required
for improved clinic performance, such as
work management, materials management,
purchasing, charge and coding analysis, and
business office consultation;
(c) Corporate overhead charges or any other
expenses of CDS or any corporation
affiliated with CDS other than the kind of
items listed above;
(d) Personal property and intangible taxes
assessed against CDS's assets used in
connection with the operation of the Dental
Center, commencing on the date of this
Agreement;
(e) Interest expense on indebtedness incurred by
CDS to finance any of its obligations
hereunder or services provided hereunder;
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(f) Malpractice insurance expenses and dentist
recruitment expenses;
(g) Other expenses incurred by CDS in carrying
out its obligations under this Agreement.
"Dental Center Expenses" shall not include:
(h) Any federal or state income taxes;
(i) Any bad debt and related expense; and
(j) Any expenses which are expressly designated
herein as expenses or responsibilities of
the Dental Practice Entity.
(ii) "Gross Revenue" shall mean all fees and charges
recorded or booked each month (net of adjustments) by
or on behalf of the Dental Practice Entity as a
result of professional dental services personally
furnished to patients by the Dentist or Hygienists
and other fees or income generated in their capacity
as a professional prior to any adjustments.
3.4 Internally Developed Dental Centers. As an inducement to the
Dental Practice Entity to extend this Services and Support Agreement to each
separate dental office location ("Dental Center") internally developed by the
Dental Practice Entity during the pendency of this Agreement, CDS shall pay to
the Dental Practice Entity the sum of $50,000.00, or such other sum as
negotiated in good faith between the parties, within thirty (30) days of
commitment to the opening of such new internally developed Dental Center.
IV. INSURANCE AND INDEMNITY
4.1 Insurance to be Maintained by the Dental Practice Entity.
Throughout the term of this Agreement, the Dental Practice Entity shall maintain
comprehensive professional liability insurance with limits of not less than
$1,000,000 per claim and with aggregate policy limits of not less than
$3,000,000 per dentist providing services at the Center and a separate limit for
the Dental Practice Entity. The Dental Practice Entity shall be responsible for
all such liabilities in excess of the limits of such policies. CDS agrees to
negotiate for and cause premiums to be paid with respect to such insurance.
Premiums and deductibles with respect to such policies shall be a Dental Center
Expense.
4.2 Insurance to be Maintained by CDS. Throughout the term of this
Agreement, CDS will use reasonable efforts to provide and maintain, as a Dental
Center Expense, (a) comprehensive professional liability insurance for any
professional employees of CDS, except for Dentists and Hygienists, with limits
as determined reasonable by CDS; and (b) comprehensive general liability and
property insurance covering the Dental Center premises and operations.
4.3 Tail Insurance Coverage. The Dental Practice Entity will cause
each individual Dentist
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providing services at the Dental Center to enter into an agreement with the
dental Entity that upon termination of such Dental Practice Entity's
relationship with the Dentist, for any reason, tail insurance coverage will be
purchased by each Dentist. Such provisions may be contained in employment
agreements, restrictive covenant agreements or other agreements entered into by
the Dental Practice Entity and the individual Dentists, and the Dental Practice
Entity hereby covenants with CDS to enforce such provisions relating to the tail
insurance coverage or to provide such coverage at the expense of the Dental
Practice Entity.
4.4 Additional Insureds. The Dental Practice Entity and CDS agree
to use their reasonable efforts to have each other named as an additional
insured on the others respective professional liability insurance programs.
4.5 Indemnification. The Dental Practice Entity shall indemnify,
hold harmless and defend CDS, its officers, directors, shareholders and
employees, from and against any and all liability, loss, damage, claim, causes
of action, and expenses (including reasonable attorneys' fees), whether or not
covered by insurance, caused or asserted to have been caused, directly or
indirectly, by or as a result of the performance of medical or dental services
or the performance of any intentional acts, negligent acts or omissions by the
Dental Practice Entity and/or its affiliates, its shareholders, agents,
employees and/or subcontractors (other than CDS) during the term of this
Agreement. CDS shall indemnify, hold harmless and defend the Dental Practice
Entity, directors, shareholders and employees, from and against any and all
liability, loss, damage, claim, causes of action, and expenses (including
reasonable attorneys' fees), caused or asserted to have been caused, directly or
indirectly, by or as a result of the performance of any intentional acts,,
negligent acts or omissions by CDS and/or its shareholders, agents, employees
and/or subcontractors (other than the Dental Practice Entity) during the term of
this Agreement.
V. TERM AND TERMINATION
5.1 Term of Agreement. This Agreement shall be for a forty (40)
year term commencing on the date hereof which term shall automatically renew
annually unless earlier terminated pursuant to the terms hereof.
5.2 Termination by the Dental Practice Entity. The Dental Practice
Entity may terminate this Agreement as follows:
(i) In the event of the filing of a petition in voluntary
bankruptcy or an assignment for the benefit of
creditors by CDS, or upon other action taken or
suffered, voluntarily or involuntarily, under any
federal or state law for the benefit of debtors by
CDS, except for the filing of a petition in
involuntary bankruptcy against CDS which is dismissed
within thirty (30) days thereafter, the Dental
Practice Entity may give written notice of the
immediate termination of this Agreement.
(ii) In the event CDS shall materially default in the
performance of any duty or obligation imposed upon it
by this Agreement and such default shall continue for
a period of ninety (90) days after written notice
thereof has been given to CDS by the Dental Practice
Entity, the Dental Practice Entity may terminate this
Agreement.
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5.3 Termination by CDS. CDS may immediately terminate this
Agreement at its discretion, upon written notice, as follows:
(i) If the Dental Practice Entity becomes insolvent by
reason of its inability to pay its debts as they
mature; is adjudicated bankrupt or insolvent; files a
petition in bankruptcy, reorganization or similar
proceeding under the bankruptcy laws of the United
States or shall have such a petition filed against it
which is not discharged within thirty (30) days; has
a receiver or other custodian, permanent or
temporary, appointed for its business, assets or
property; makes a general assignment for the benefit
of creditors; has its bank accounts, property or
accounts attached; has execution levied against its
business or property; or voluntarily dissolves or
liquidates or has a petition filed for corporate
dissolution and such petition is not discussed with
thirty (30) days;
(ii) If the Dental Practice Entity fails to comply with
any provision of this Agreement, or any other
agreement with CDS, and does not correct such failure
within 30 days after written notice of such failure
to comply is delivered by CDS; or
(iii) If CDS determines that any applicable state or
federal legislation, regulation or rule may have an
adverse effect on CDS's rights, remedies or
discretion under this Agreement.
5.4 Rights and Obligations After Termination. The parties agree
that it may be difficult, if not impossible, to determine the amount of monetary
damages that CDS would incur in the event of termination of this Agreement
pursuant to Section 5.3, or termination by Dental Practice Entity, prior to the
expiration of the term of this Agreement. However, the parties do agree that the
monetary loss to CDS would be substantial. Accordingly, in the event of
termination of this Agreement pursuant to Section 5.3 or by Dental Practice
Entity, Dental Practice Entity agrees to pay to CDS liquidated damages in
accordance with Exhibit "B" of this Agreement. If upon termination of this
Agreement CDS consents in writing within ten (10) days to the Dental Practice
Entity retaining possession of the Dental Centers and/or equipment, the amount
of liquidated damages payable to CDS set forth in Exhibit "B" shall be decreased
by 20% and Dental Practice Entity shall also assume all debts, obligations,
contracts, and payables of CDS which relate solely to the performance of CDS's
obligations under this Agreement. The Dental Practice Entity shall pay the
liquidated damages amounts owed to CDS within thirty (30) days of written notice
from CDS as to the amounts owed.
5.5 Limitation of Liability. In no event shall CDS be liable to
the Dental Practice Entity for any indirect, special or consequential damages or
lost profits, arising out of or related to this Agreement or the performance or
breach thereof, even if CDS has been advised of the possibility thereof.
5.6 Patient Records. Upon termination of this Agreement, the
Dental Practice Entity shall retain all patient dental records. During the term
of this Agreement, and thereafter, the Dental Practice Entity or its designee
shall have reasonable access during normal business hours to the Dental Practice
Entity's and CDS's records, including, but not limited to, records of
collections, expenses and disbursements as kept by CDS in performing CDS's
obligations under this Agreement, and the Dental Practice Entity may
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copy any or all such records.
VI. ADVISORY BOARD
6.1 Formation and Operation of the Advisory Board. The parties
hereby establish a Advisory Board which shall be responsible for providing
dispute resolution on certain matters and for developing and implementing
management and administrative policies for the overall operation of the Dental
Centers. The Advisory Board shall consist of two (2) members. CDS shall
designate, in its sole discretion, one (1) member of the Advisory Board. Dental
Practice Entity shall designate, in its sole discretion, one (1) member of the
Advisory Board. The Advisory Board members selected by the Dental Practice
Entity shall be full-time employees of the Dental Practice Entity engaged in the
practice of dentistry. Each party's representatives to the Advisory Board shall
have the authority to make decisions on behalf of the respective party. Except
as may otherwise be provided, the act of a majority of the members of the
Advisory Board shall be the act of the Advisory Board. In the event of a voting
deadlock, a person mutually agreed upon by CDS and Dental Practice Entity shall
be temporarily appointed to the Advisory Board within five (5) days for the sole
purpose of casting a deciding vote. The decisions, resolutions, actions, or
recommendations of the Advisory Board shall be implemented by CDS or Dental
Practice Entity as appropriate.
6.2 Duties and Responsibilities of the Advisory Board. The
Advisory Board shall review, evaluate and make recommendations concerning the
following matters:
(a) Capital Improvements and Expansion. Any renovation
and expansion plans and capital equipment expenditures with respect to each
Dental Center shall be reviewed by the Advisory Board which shall make
recommendations to CDS with respect to proposed changes therein. Such renovation
and expansion plans and capital equipment expenditures shall be based upon
economic feasibility, dental support, productivity and then current market
conditions.
(b) Ancillary Services. The Advisory Board shall advise
CDS and Dental Practice Entity with respect to Dental Practice Entity provided
ancillary services concerning the pricing, access to and quality of such
services.
(c) Provider and Payor Relationships. The Advisory Board
shall review and make recommendations to CDS and Dental Practice Entity
regarding the establishment or maintenance of relationships with institutional
health care providers and third-party payors. The Advisory Board shall also
advise CDS and Dental Practice Entity concerning discounted fee schedules,
including capitated fee arrangements, and shall allocate revenue generated from
capitation contracts.
(d) Strategic Planning. The Advisory Board shall advise
CDS concerning development of long-term strategic planning objectives for the
Centers.
(e) Capital Expenditures. The Advisory Board shall advise
CDS concerning the priority of major capital expenditures.
(f) Fee Dispute Resolution. At the request of CDS, the
Advisory Board shall advise CDS with respect to any dispute concerning a set-off
or reduction in Service and Support Fees.
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(g) Grievance Referrals. The Advisory Board shall
consider and make recommendations to CDS and Dental Practice Entity regarding
grievances pertaining to matters not specifically addressed in this Services and
Support Agreement as referred to it by CDS or Dental Practice Entity's Board of
Directors.
Notwithstanding any contrary provision of this Agreement, it is
acknowledged and agreed that recommendations of the Advisory Board are intended
for the advice and guidance of CDS and Dental Practice Entity and that the
Advisory Board does not have the power to bind CDS and Dental Practice Entity.
Where discretion with respect to any matter is vested in CDS or Dental Practice
Entity under the terms of this Agreement, CDS or Dental Practice Entity as the
case may be, shall have ultimate responsibility for the exercise of such
discretion, notwithstanding any recommendations of the Advisory Board. CDS and
Dental Practice Entity shall, however, take such recommendations of the Advisory
Board into account in good faith in the exercise of such discretion.
6.3 Dental Decisions. Despite the above listing of activities and
areas of interest, all dental decisions and related decisions required by
applicable law to be made solely by dentists will be made solely by the
Dentists, but non-dental members of the Advisory Board may participate in the
discussion process. The dental members of the Advisory Board shall have
exclusive authority to review and resolve issues related to:
(a) Types and levels of dental services to be provided;
(b) Recruitment of dentists and dental hygienists to the
Dental Practice Entity, including the specific qualifications and specialties of
recruited dentists and dental hygienists;
(c) Fee schedules;
(d) Any dental related functions; and
(e) Any other decisions required by applicable law to be
made solely by dentists and not by non-dentists.
6.4 Meetings of the Advisory Board. The Advisory Board shall meet
on a regular basis as mutually agreed by the parties. A special meeting of the
Advisory Board may be called by either the Dental Practice Entity or CDS upon
five (5) business days notice.
VII. INDEPENDENT CONTRACTOR
7.1 Dental Practice Entity's Control Over Professional Services.
Notwithstanding the duties and responsibilities granted to CDS herein, CDS and
the Dental Practice Entity agrees that the affiliated Dentist, personally or
through any of his professional employees or agents, shall have complete control
or supervision over the provision of all professional services, with the sole
authority to direct the professional, and ethical aspects of his dental practice
and to select the course of treatment for a patient or the manner in which such
treatment is carried out. CDS will have no authority, directly or indirectly, to
perform, and will not perform, any dental function, nor shall CDS have any care,
custody or control over the use of any dental equipment being used for the
provision of dental services or the practice of dentistry.
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7.2 Independent Relationship. The Dental Practice Entity and CDS
intend to act and perform as independent contractors, and the provisions hereof
are not intended to create any partnership, joint venture, agency or employment
relationship between the parties. The Dental Practice Entity will not have any
claim under this Agreement, or otherwise, against CDS for vacation pay, sick
leave, unemployment insurance, worker's compensation, disability benefits or
employee benefits of any kind.
7.3 Other Professionals. No provision of this Agreement is
intended to limit CDS's right, authority, or ability under applicable law to
contract with other physicians, or to employ, contract with, or enter into any
partnership or joint venture with any health care professional.
VIII. GENERAL PROVISIONS
8.1 Assignment. CDS shall have the right to assign its rights
hereunder to any person, firm or corporation under common control with CDS.
Except as set forth above, neither CDS nor the Dental Practice Entity shall have
the right to assign their respective rights and obligations hereunder without
the written consent of the other party. Subject to this provision, this
Agreement shall be binding upon the parties hereto, and their successors and
assigns.
8.2 Whole Agreement; Modification. There are no other agreements
or understandings, written or oral, between the parties regarding this
Agreement, the Exhibits and the Schedules, other than as set forth herein. The
Agreement shall not be modified or amended except by a written document executed
by both parties to this Agreement, and such written modification(s) shall be
attached hereto.
8.3 Notices. All notices required or permitted by this Agreement
shall be in writing and shall be addressed as follows:
To CDS: Coast Dental Services, Inc.
0000 Xxxxxxxx Xxxxxxxx Xxxxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxx
With a copy to: Xxxxxxx X. Xxxxx, Esquire
c/o Shumaker, Loop & Xxxxxxxx
000 X. Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
To the Coast Dental Southeast, P.A.
Dental Practice Entity: 0000 Xxxxxxxx Xxxxxxxx Xxxxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
or to such other address as either party shall notify the other.
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8.4 Waiver of Provisions. Any waiver of any terms and conditions
hereof must be in writing, and signed by the parties hereto. The waiver of any
of the terms and conditions of this Agreement shall not be construed as a waiver
of any other terms and conditions hereof.
8.5 Governing Law. The validity, interpretation and performance of
this Agreement shall be governed by and construed in accordance with the laws of
the state of Georgia. The parties acknowledge that CDS is not authorized or
qualified to engage in any activity which may be construed or deemed to
constitute the practice of dentistry. To the extent any act or service required
of CDS in this Agreement should be construed or deemed, by any governmental
authority, agency or court to constitute the practice of dentistry, the
performance of said act or service by CDS shall be deemed waived and forever
unenforceable and the provisions of Section 8.12 shall be applicable.
8.6 Events Excusing Performance. Neither party shall be liable to
the other party for failure to perform any of the services required herein in
the event of strikes, lock-outs, calamities, acts of God, unavailability of
supplies or other events over which that party has no control for so long as
such events continue, and for a reasonable period of time thereafter.
8.7 Compliance with Applicable Laws. Both parties shall comply
with all applicable federal, state and local laws, regulations and restrictions
in the conduct of their obligations under this Agreement.
8.8 Severability. The provisions of this Agreement shall be deemed
severable and if any portion shall be held invalid, illegal or unenforceable for
any reason, the remainder of this Agreement shall be effective and binding upon
the parties.
8.9 Additional Documents. Each of the parties hereto agrees to
execute any document or documents that may be requested from time to time by the
other party to implement or complete such party's obligations pursuant to this
Agreement.
8.10 Attorneys' Fees. If legal action is commenced by either party
to enforce or defend its rights under this Agreement, the prevailing party in
such action shall be entitled to recover its costs and reasonable attorneys'
fees in addition to any other relief granted.
8.11 Confidentiality. Neither party hereto shall disseminate or
release to any third party any information regarding any provision of this
Agreement, or any financial information regarding the other (past, present or
future) that was obtained by the other in the course of the negotiation of this
Agreement or in the course of the performance of this Agreement, without the
other party's written approval; provided, however, the foregoing shall not apply
to information which is required to be disclosed by law including securities
laws, or pursuant to court order.
8.12 Contract Modifications For Legal Events. In the event any
state or federal laws or regulations, now existing or enacted or promulgated
after the effective date of this Agreement, are interpreted by judicial
decision, a regulatory agency or legal counsel for both parties in such a manner
as to indicate that the structure of this Agreement may be in violation of such
laws or regulations, the Dental Practice Entity and CDS shall amend this
Agreement as necessary to comply with the same. To the maximum extent possible,
any such amendment shall preserve the underlying economic and financial
arrangements between the Dental Practice Entity and CDS, or CDS shall have the
right to terminate this
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agreement immediately upon written notice to Dental Practice Entity.
8.13 Remedies Cumulative. Except as set forth in Section 5.4, no
remedy set forth in this Agreement or otherwise conferred upon or reserved to
any party shall be considered exclusive of any other remedy available to any
party, but the same shall be distinct, separate and cumulative and may be
exercised from time to time as often as occasion may arise or as may be deemed
expedient.
8.14 Language Construction. The language in all parts of this
Agreement be construed, in all cases, according to parties acknowledge that each
party and its counsel have reviewed and revised this Agreement and that the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement.
8.15 No Obligation to Third Parties. None of the obligations and
duties of CDS or the Dental Practice Entity under this Agreement shall in any
way or in any manner be deemed to create any obligation of CDS or of the Dental
Practice Entity to, or any rights in, any person or entity not a party to this
Agreement.
8.16 Legal Representation. The law firm of Xxxxxxxx, Loop &
Xxxxxxxx represents CDS in this matter and not the Dental Practice Entity.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
WITNESSES AS TO BOTH PARTIES THE DENTAL PRACTICE ENTITY:
COAST DENTAL SOUTHEAST, P.A.
/s/ Xxxx Xxxxxx
----------------------------------------
By: Xxxx Xxxxxx
---------------------------- Title: President
----------------------------
CDS:
COAST DENTAL SERVICES, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx, Chief Executive Officer
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EXHIBIT "A"
MONTHLY SERVICES AND
SUPPORT FEE PERCENTAGE
Seventy-four percent (74%)
of Center Monthly Xxxxx Xxxxxxxx
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00
XXXXXXX "X"
LIQUIDATED DAMAGES
The liquidated damages payable by the Dental Practice Entity to the
Company shall be that sum which is equal to $2,000,000.00 per Dentist employed
by the Dental Practice Entity at the time of termination of the Agreement.
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