MANAGEMENT SERVICES AGREEMENT
BETWEEN
----------------------------
(the "New PC")
AND
Omega Orthodontics of Reno, Inc.
(the "MSO")
AND
Omega Orthodontics, Inc.
("OMEGA")
MANAGEMENT SERVICES AGREEMENT
TABLE OF CONTENTS
ARTICLE 1 TERM.........................................................2
ARTICLE 2 DUTIES OF THE MSO............................................2
2.1 General............................................................2
2.2 Endodontic Office Services.........................................2
2.3 Administrative Services............................................2
2.4 Business Systems, Procedures and Forms.............................3
2.5 Purchasing, Accounts Payable, Supplies and Inventory Control.......3
2.6 Regulatory Compliance Services.....................................3
2.7 Billing, Collection................................................4
2.8 Disbursement of Funds..............................................4
2.9 MSO Expenses.......................................................5
2.10 Credit Reports....................................................6
2.11 Accounting; Bookkeeping and Reports...............................6
2.12 Marketing.........................................................7
2.13 Complaints........................................................7
2.14 Practice Laws.....................................................7
2.15 Monthly Meetings..................................................7
2.16 Maintenance and Cleaning Services.................................7
2.17 Licenses and Permits..............................................7
2.18 Insurance.........................................................7
2.19 Practice Transition and Associate Selection.......................8
ARTICLE 3 DUTIES OF THE NEW PC.........................................8
3.1 General............................................................8
3.2 Employment of the Endodontists and Rendering of Patient Care.......8
3.3 Professional Services..............................................8
3.4 Records............................................................9
3.5 Professional Expenses..............................................9
3.6 Professional Liability Insurance...................................9
3.7 Employment Agreement...............................................9
3.8 Confidentiality...................................................10
ARTICLE 4 PROFESSIONAL SERVICES, CONTROL OF SOLICITATION, APPROVAL OF
ADVERTISING MATERIAL AND NO RECIPROCATION.............................11
ARTICLE 5 LEASE OF OFFICE FACILITIES AND EQUIPMENT...................11
5.3. No Warranty.....................................................13
ARTICLE 6 COMPENSATION...............................................13
ARTICLE 7 SECURITY INTEREST..........................................14
ARTICLE 8 COVENANTS..................................................14
8.1 New PC's Covenants................................................14
8.2 MSO's Covenants...................................................15
ARTICLE 9 INSURANCE AND INDEMNITY.....................................16
9.1 Insurance to be Maintained by the New PC..........................16
9.2 Insurance to be Maintained by the MSO.............................16
9.3 Tail Insurance Coverage...........................................16
9.4 Additional Insureds...............................................16
9.5 Indemnification...................................................16
ARTICLE 10 TERMINATION...............................................17
10.1 Termination by the New PC........................................17
10.2 Termination by MSO...............................................17
ARTICLE 11 AUTHORIZED AGENT AND POWERS OF ATTORNEY...................18
ARTICLE 12 INDEPENDENT CONTRACTOR RELATIONSHIP.......................19
ARTICLE 13 MISCELLANEOUS.............................................19
13.1 Access to Records................................................19
13.2 Patient Records..................................................19
13.3 The New PC's Control Over the Endodontic Practice................19
ARTICLE 14 ALTERNATIVE DISPUTE RESOLUTION.............................20
14.1 Alternative Dispute Resolution...................................20
14.2 Waiver of Jury...................................................20
ARTICLE 15 GENERAL PROVISIONS........................................21
15.1 Notices..........................................................21
15.2 Confidentiality..................................................21
15.3 Contract Modifications for Prospective Legal Events..............21
15.4 Remedies Cumulative..............................................22
15.5 No Obligation to Third Parties...................................22
15.6 Entire Agreement.................................................22
15.7 Assignment.......................................................22
15.8 Attorneys' Fees..................................................22
15.9 Governing Law....................................................22
15.10 Events Excusing Performance.....................................23
15.11 Compliance with Applicable Laws.................................23
15.12 Language Construction...........................................23
15.13 Amendments......................................................23
15.14 Severability....................................................23
15.15 No Waiver.......................................................23
15.16 Captions........................................................23
15.17 Counterparts....................................................23
SCHEDULE 1 THE ENDODONTISTS
SCHEDULE 2 ENDODONTIC OFFICES AND SERVICES
SCHEDULE 3 COMPENSATION - MANAGEMENT FEES
EXHIBIT A ENDODONTIC OFFICES - MASTER LEASE
EXHIBIT B PRACTICE PROVIDERS
EXHIBIT C NEW PC'S AFFIDAVIT
EXHIBIT D SECURITY AGREEMENTS
EXHIBIT E ALTERNATIVE DISPUTE RESOLUTION PROCEDURES
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT is made effective as of this _____ day of
___________, 1997, by and between ____________________, Inc., a professional
corporation (the "New PC") incorporated under the laws of the State of Nevada
(the "State"), and Omega Orthodontics of Reno, Inc., a Delaware corporation (the
"MSO"), and Omega Orthodontics, Inc., a Delaware corporation ("OMEGA").
WHEREAS, OMEGA provides professional management and marketing
services to endodontic and other dental specialty practices in the United
States, which services include providing practice management systems, office
space, equipment, furnishings and active administrative personnel necessary for
the operation of such practices and are provided directly or indirectly through
management service organizations such as the MSO;
WHEREAS, OMEGA and Xxxxxx X. Xxxx, D.D.S. ("Xx. Xxxx") who is duly
licensed to practice endodontics in the State have entered into that certain
Affiliation Agreement and Asset Purchase Agreement (the "Affiliation Agreement")
dated as of _______________, 1997, pursuant to which OMEGA acquired certain
assets of Xx. Xxxx;
WHEREAS, the New PC owns and operates an endodontic practice with
offices located in the facilities identified in Exhibit A (the "Endodontic
Offices") and furnishes endodontic care to the general public through the
services of Xx. Xxxx and any and all other Endodontists who are or become
affiliated with the New PC as of or following the date hereof and who are or
become subsequently named on Schedule 1 hereto (individually, an "Endodontist"
and collectively, the "Endodontists");
WHEREAS, the MSO was formed and acquired to provide equipment,
facilities and personnel to, and to manage the non-endodontic business affairs
of, the New PC;
WHEREAS, the MSO's services are designed to improve the efficiency
and profitability of the New PC while enhancing the ability of Xx. Xxxx and the
Endodontists (if any) to render quality endodontic care to the patients of the
New PC;
WHEREAS, the New PC wishes to retain the MSO to perform the
functions and to provide the services described in this Agreement to assist the
New PC to achieve the above goals.
NOW, THEREFORE, IT IS AGREED that the MSO shall perform managerial
and administrative services for the New PC and provide office space and
endodontic facilities appropriate for rendering general endodontic treatment at
the Endodontic Offices upon the following terms and conditions:
ARTICLE 1
TERM
1.1 The initial term of this Agreement shall commence on the date
first above written and continue for a period of twenty (20) years (the "Initial
Term"), subject, however, to earlier termination in accordance with Article 10
hereof. This Agreement shall continue for two separate and successive ten year
periods (each a "Renewal Term" and collectively with the Initial Term, the
"Term") unless the MSO otherwise elects upon six months written notice to the
New PC prior to expiration of the Initial Term or any then effective Renewal
Term.
ARTICLE 2
DUTIES OF THE MSO
2.1 General. The MSO shall provide the New PC with comprehensive
practice management, financial and marketing services, and such facilities,
equipment, and support personnel as are reasonably required by the New PC to
operate its endodontic practice at the Endodontic Offices, as determined by the
MSO in consultation with the New PC. The New PC hereby appoints the MSO as the
sole and exclusive business manager of the New PC and agrees that the MSO shall
have all power and authority reasonably necessary to manage the non-endodontic
business affairs of the New PC and carry out the MSO's endodontic duties under
this Agreement, subject to the requirements of the applicable provisions of
State law relating to the practice of endodontics. The MSO may perform some or
all of its services at a location other than at the Endodontic Offices.
2.2 Endodontic Office Services. The MSO shall provide or arrange for
the provision of the office space and related leasehold improvements to
constitute the Endodontic Offices and related fixtures, furniture, furnishings,
equipment and related services (collectively, the "Endodontic Office Services")
described in Schedule 2 hereto, as such Schedule may be amended by the New PC
and the MSO from time to time. The MSO shall be responsible for all repairs,
maintenance and replacement of the Endodontic Offices including such leasehold
improvements, fixtures, furniture, furnishings and equipment, except for
repairs, maintenance and replacement necessitated by the negligence of the New
PC, its employees and agents (not including the MSO or its employees or agents).
The MSO shall, on an ongoing basis, evaluate and consult with the New PC on the
equipment needs of and the efficiency and adequacy of the Endodontic Offices.
The MSO shall provide telephone, facsimile transmission, printing, duplicating
and transcribing services as needed, as well as all laundry, linen and uniforms.
2.3 Administrative Services.
(a) The MSO shall supply secretarial, reception, maintenance, front
office, skilled assistants and other personnel, except duly licensed "Practice
Providers," during normal office hours as reasonably requested by the New PC, to
enable the New PC to perform effectively endodontic and treatment services. The
MSO shall be responsible for staff scheduling, provided, however, that all
Practice Providers including endodontic assistants and hygienists shall be under
the direct supervision of the New PC. The New PC shall have sole authority to
employ and terminate the employment of all Practice Providers. All personnel
placed in the Endodontic Offices by the MSO shall be subject to the approval of
the New PC, which approval shall not be unreasonably withheld, and the New PC
shall have the authority to instruct the MSO to terminate the employment of such
personnel for any lawful reason. The MSO shall be responsible for all personnel
wages, withholding, fringe benefits, bonuses and workers' compensation insurance
in connection with its employees; provided, however, that the New PC is in full
compliance with the compensation provisions of this Agreement.
(b) "Practice Providers" shall mean the individuals who are duly
licensed to practice dentistry and/or endodontics in the State including Xx.
Xxxx and the Endodontists (if any) and other individuals who are employees of
the New PC or otherwise under contract with the New PC to provide dental or
endodontic, hygienic or other assistance or services to patients of the New PC
or otherwise required by applicable "Laws" (as defined in Section 2.6 below) to
be employees of the New PC to provide services to patients of the Practice. A
list of all Practice Providers and their relationship to the New PC is set forth
as Exhibit B attached hereto and incorporated herein by reference. Prior to
making any changes in the list of Practice Providers, the New PC shall use its
best efforts to consult with the MSO. The New PC also shall use its best efforts
to consult with the MSO with regard to the terms of contracts entered into
between the New PC and the Practice Providers and the terms and conditions of
their employment or engagement as independent contractors.
2.4 Business Systems, Procedures and Forms. In consultation with the
New PC, the MSO shall establish standardized business systems and procedures for
the New PC, including, but not limited to, patient scheduling systems, treatment
records system, financial reporting and process control systems and patient
communication management systems (the "OMEGA Patient Scheduling System") that
are designed to improve the New PC operating efficiency. The MSO shall analyze
such information on an ongoing basis in order to advise the New PC on ways of
improving operating efficiencies. The MSO shall provide training to the staff of
the New PC in the implementation and operation of such standardized business
systems and procedures. The MSO shall additionally provide the New PC with and
train the New PC's staff in the use of standardized clinical forms, including,
without limitation, forms for patient evaluations and treatment plans. The New
PC expressly acknowledges and agrees that it shall have no property rights in
the OMEGA Patient Scheduling System and the other foregoing systems, procedures
and clinical forms, and further agrees that such systems, procedures, and forms
shall be deemed to constitute Confidential Information within the meaning of
Section 3.8 hereof and be subject to the restrictions on the use, appropriation,
and reproduction of such Confidential Information provided for in Section 3.8.
2.5 Purchasing, Accounts Payable, Supplies and Inventory Control.
The MSO shall be responsible for and shall establish and maintain systems for
the handling and processing of all purchasing and payment activities and for the
performance of all payroll and payroll accounting functions of the New PC. The
MSO shall order and purchase and maintain all inventory and endodontic supplies
as reasonably required by the New PC to enable the New PC to render endodontic
care to its patients including, without limitation, all endodontic appliances
and other supplies, laboratory supplies and sanitation supplies.
2.6 Regulatory Compliance Services. The MSO shall arrange for or
cause to be rendered to the New PC such business, legal and regulatory
management consultation and advice as may be reasonably required or requested by
the New PC and directly related to the operations of the New PC or its
compliance with Federal, state or local laws, rules, regulations or
interpretations governing or applicable to the New PC (collectively, "Laws");
provided, however, that the MSO shall not be responsible for any services
related to malpractice or other professional service claims or matters not
directly related to the operation of the New PC or its compliance with Laws, or
for any legal or tax advice or services or personal financial services to Xx.
Xxxx and the Endodontists (if any) or any employee or agent of the New PC.
2.7 Billing, Collection. The MSO shall be responsible for: (i)
billing and collecting payments for all endodontic and other professional
services rendered by the New PC and the Practice Providers, with all such
billing and collecting to be done in the name of the New PC; (ii) receiving
payments from patients, insurance companies and all other third party payors;
(iii) taking possession of and endorsing in the name of the New PC any notes,
checks, money orders, insurance payments and other instruments received in
payment for services or of accounts receivable; and (iv) settling and
compromising claims and, where deemed appropriate by the MSO and consented to
(which consent shall not be unreasonably withheld or delayed) by the Practice
Provider rendering the professional services which resulted in the applicable
accounts receivable, assigning such accounts receivable to a collection agency
or the bringing of a legal action against a patient or a payor on the New PC's
behalf. In seeking payments on behalf of the New PC hereunder, the MSO shall act
as the New PC's agent in billing and collecting professional fees, charges and
other accounts owed to the New PC and shall only xxxx under the New PC's
provider number. In this regard, the New PC appoints the MSO for the Term of
this Agreement in accordance with the provisions of Article 11 hereof as its
true and lawful attorney-in-fact for the purposes set forth above in this
Section 2.7 and in Section 2.8 below. The MSO does not guarantee collection and
is not responsible for any loss to the New PC as a result of any inability to
collect fees and charges.
2.8 Disbursement of Funds.
(a) All monies collected for the New PC by the MSO pursuant to
Section 2.7 above shall be deposited into an account (the "the New PC Account")
with a bank whose deposits are insured with the Federal Deposit Insurance
Corporation and which bank is acceptable to the MSO and the New PC (the "Bank").
The New PC Account shall contain the name of the New PC, but the MSO shall make
all disbursements therefrom. The MSO shall account for all monies so disbursed
from the New PC Account.
(b) From the funds collected and deposited by the MSO in the New PC
Account, the MSO shall make for and on behalf of the New PC the following
disbursements promptly, when payable:
(1) Compensation, including salaries, benefits and other
direct costs payable to Xx. Xxxx and the Endodontists (if any) and the other
Practice Providers of the New PC, and all withholding taxes and assessments
payable to Federal, state and local governments in connection with the
employment of such personnel; and
(2) All compensation payable to the MSO pursuant to Article 6
hereof.
(c) In the event the funds in the New PC Account will, at any time
be insufficient to cover the current portion of the foregoing expenses when
payable, the MSO may advance to the New PC the necessary funds to pay the
current portion of such expenses for the benefit of the New PC, which advances
will be deemed to be loans to the New PC to be repaid without interest from the
New PC Account at such times as there are adequate funds therein or upon such
other terms and at such times as agreed to by the New PC and the MSO, which
indebtedness shall not be deemed an MSO Expense for purposes of Section 2.9.
2.9 MSO Expenses. The MSO shall be responsible for the payment of
all MSO Expenses, as defined below, during the term of this Agreement without
reimbursement by the New PC, unless otherwise agreed to by the parties hereto.
(a) "MSO Expenses" shall mean all operating and non-operating
expenses incurred in the operation of the New PC, including, without limitation:
(1) Salaries, benefits and other direct costs of all employees
of the MSO providing services to the New PC hereunder (but excluding Xx. Xxxx
and all the Endodontists (if any) and other Practice Providers);
(2) Direct costs of all employees or consultants of the MSO
who provide services at the Endodontic Offices or in connection with the New PC
required for improved clinic performance, such as work management, materials
management, purchasing, charge and coding analysis, and business office
consultation;
(3) Direct costs associated with operating the Endodontic
Offices, including without limitation, utilities, cleaning and maintenance;
(4) Obligations of the MSO under leases or subleases entered
into in connection with the operation of the Endodontic Offices as well as
utility expenses relating to the Endodontic Offices;
(5) Personal property and intangible taxes assessed against
the MSO's assets used in connection with the operation of the Endodontic
Offices, commencing on the date of this Agreement;
(6) In the event an opportunity arises for additional
Endodontists to become employed by the New PC or other endodontic entities to
merge with the New PC, actual out-of-pocket expenses of the MSO personnel
working on a specified employment arrangement or merger, whether or not such
employment arrangement or merger is consummated;
(7) Other expenses incurred by the MSO in carrying out its
obligations under this Agreement, but excluding any corporate overhead costs of
the MSO or any corporation affiliated with the MSO not specifically listed
above.
"MSO Expenses" shall not include:
(1) Any Federal, state or local income taxes of the New PC,
Xx. Xxxx and the Endodontists (if any) and the other Practice Providers, or the
costs of preparing Federal, state or local tax returns thereof;
(2) Salaries, benefits and other direct costs of employing Xx.
Xxxx and the Endodontists (if any) and the other Practice Providers;
(3) Physician licensure fees, board certification fees and
costs of membership in professional associations and societies for Practice
Providers;
(4) Professional liability insurance for the Practice
Providers as provided for under Section 3.6 hereof;
(5) Costs of continuing professional education for Practice
Providers, including travel and related expenses;
(6) Costs associated with legal, accounting and professional
services incurred by or on behalf of the New PC other than as otherwise
expressly provided for in Section 2.6 hereof;
(7) Liability judgments assessed against the New PC or the
Practice Providers in excess of policy limits or within the deductible limits of
any policy;
(8) Direct personal expenses of the Practice Providers of a
kind which the New PC may have historically provided or charged to its Practice
Providers (including, but not limited to, car allowances and other expenses
which are personal in nature);
(9) Charitable contributions by the New PC; and
(10) Any other expenses which are expressly designated herein
as expenses or responsibilities of the New PC.
2.10 Credit Reports. When requested by the New PC, or its authorized
representative, the MSO shall obtain on behalf of the New PC information with
regard to the ability of patients to pay for the services to be rendered by the
New PC. The MSO shall collect all information and determine, to the best of its
ability, whether or not patients can pay for services rendered by the New PC,
either in cash or by insurance. Such determination shall be subject to the
reasonable approval by the New PC, and as between the New PC and the MSO, the
New PC shall bear the risk of claims by potential patients who may be denied
credit.
2.11 Accounting; Bookkeeping and Reports. The MSO shall provide for
or arrange for all accounting and bookkeeping services related to the New PC's
operations, provided that such services are incurred in the ordinary course of
business. In addition, the MSO shall provide the New PC with an unaudited
internal monthly statement within twenty (20) days after the end of each month
and a quarterly review within thirty (30) days after the end of each quarter,
respectively, of the MSO's internal statements, as well as the books and records
of the New PC, all prepared by or with the assistance of an accountant chosen by
the MSO. At the end of each fiscal year of the New PC, the MSO shall arrange for
a financial statement with respect to the New PC to be prepared by the MSO's
accountant. At the New PC's request, the MSO shall prepare reports indicating
the gross revenues, number of patients, type of patients, and the activity and
the productivity of the New PC. The MSO shall assist and advise the New PC in
the financial management of the New PC.
2.12 Marketing. The MSO shall design and execute a marketing plan to
promote the New PC's professional services. The MSO shall also make available to
the New PC all brochures, contracts, and other materials reasonably related to
the carrying out of the business purposes of the New PC, including all
stationery, printing and postage costs in connection therewith. In connection
with such marketing plan, the MSO shall advise Xx. Xxxx and the Endodontists (if
any) on establishing and maintaining a plan for patients' payments for
endodontic services on an installment plan basis. All marketing activities
hereunder shall be conducted in compliance with all applicable Laws governing
advertising by the endodontic profession.
2.13 Complaints. The MSO shall assist the New PC in handling all
complaints, grievances and disputes involving the New PC and the Practice
Providers and any patients or third parties. However, the MSO shall have no
control over the New PC's patients. All decisions concerning the New PC's
patients shall be made by the New PC and the Practice Providers.
2.14 Practice Laws. Notwithstanding any provision in this Agreement,
the MSO shall not take any action in connection with the services to be rendered
hereunder that violates any Law, including, without limitation, the performance
of any task or the taking of any action which violates the Business and
Professions Code of the State as it relates to professional endodontic
practices.
2.15 Monthly Meetings. The MSO shall initiate monthly or more
frequent meetings with the New PC regarding the policies and procedures for the
operation of the New PC.
2.16 Maintenance and Cleaning Services. The MSO shall arrange for
security, maintenance and cleaning of the Endodontic Offices, including the
furniture, fixtures and equipment therein.
2.17 Licenses and Permits. The MSO shall provide and pay for all
business and other licenses and permits as necessary to operate the New PC
except those related to licensure and certifications of the Practice Providers.
The MSO shall prepare and file all reports, forms and returns required by Law in
connection with workers' compensation, unemployment insurance, social security
and other similar Laws with respect to the MSO's employees.
2.18 Insurance. The MSO shall provide and pay for customary office
property damage and liability, including business interruption insurance, not
including professional liability insurance (which shall be and remain the
responsibility of the New PC).
2.19 Practice Transition and Associate Selection. Xx. Xxxx and the
Endodontists (if any) shall keep the MSO informed of retirement goals on an
ongoing basis; provided, however, that Xx. Xxxx shall continue as a full time
employee of the New PC, actively engaged in the practice of endodontics, for a
period of not less than five (5) years following the date of this Agreement.
Upon request of the New PC, the MSO will conduct a search for an appropriate
endodontist and other professionals (collectively, "Practice Associates") for
the purposes of accommodating practice growth, reducing doctor work schedule, or
planned retirement. Such search shall include use by the MSO of a national
journal advertising program and networking in the profession to locate
appropriate Practice Associates. The MSO estimates that it could take
approximately two years for such a search.
The MSO will provide screening of all applicants and will then present
appropriate applicants for final selection by the New PC. The New PC shall be
responsible for interviewing and selecting each Practice Associate.
After the Practice Associate(s) is (are) selected by the New PC, the MSO will
assist the New PC with a trial plan of approximately six months for the new
Practice Associate(s). It is understood that at the end of this period either
the New PC or the new Practice Associate may terminate the relationship. All
such Practice Associates recruited by the MSO as may be accepted by the New PC
shall be employees of the Practice (if so employed) and not of the MSO. The MSO
will confer with the New PC on an appropriate salary/work-in arrangement for the
new Practice Associate and the final arrangements shall be determined by the New
PC.
ARTICLE 3
DUTIES OF THE NEW PC
3.1 General. The New PC shall be responsible for the management of
its practice and the Endodontic Office, in accordance with the requirements of
the Laws of the State.
3.2 Employment of the Endodontists and Rendering of Patient Care.
The New PC shall be responsible for the employment and professional supervision
of Xx. Xxxx and all Endodontists and the other Practice Providers and all
endodontic care rendered to patients shall be rendered by Xx. Xxxx and such
Endodontists. Additionally, the New PC shall be responsible for the professional
supervision of all other Practice Providers in their rendering of patient care.
3.3 Professional Services. The New PC shall use and occupy the
Endodontic Offices designated on Schedule 2 hereof exclusively for the practice
and rendering of endodontic services, and shall comply with all applicable Laws
and all standards of endodontic care. It is expressly acknowledged by the
parties that the endodontic practice conducted at the Endodontic Offices shall
be conducted solely by Xx. Xxxx and the Endodontists and the other Practice
Providers acting under the supervision and control of Xx. Xxxx and the
Endodontists (if any), and no other endodontist shall be permitted to use or
occupy the Endodontic Offices. The New PC shall provide professional services to
patients hereunder in compliance at all times with ethical standards and Laws
applying to the endodontic profession. The New PC shall ensure that Xx. Xxxx and
each Endodontist who provides endodontic services to patients is licensed by the
State. In the event that any disciplinary, medical malpractice or other actions
are initiated against Xx. Xxxx or any Endodontist or other Practice Provider,
the New PC shall immediately inform the MSO of such action and the underlying
facts and circumstances subject to such confidentiality agreement or
arrangements as the New PC and the MSO shall mutually determine at or prior to
the time of such disclosure. The New PC agrees to cooperate with and participate
in quality assurance/utilization review programs established by the MSO or
mandated by accreditation and licensure standards applicable to the practice of
endodontics. Deficiencies discovered in the performance of any personnel or in
the quality of professional services shall be reported immediately to the MSO,
and appropriate steps shall be taken by the New PC at once to remedy such
deficiencies.
3.4 Records. The New PC will keep or cause to be kept accurate,
complete and timely dental and other records of all patients. The management of
all dental and patient files and records shall comply with all applicable Laws
regarding their confidentiality and retention and all files and records shall be
located so that they are readily accessible for patient care, consistent with
ordinary records management practices. Such records shall be sufficient to
enable the MSO, on behalf of the New PC, to obtain payments for services and
related charges and to facilitate the delivery of quality patient care by the
New PC. Notwithstanding the foregoing, patient dental records shall be and
remain the property of the New PC and the contents thereof shall be solely the
responsibility of the New PC.
3.5 Professional Expenses. The New PC shall be solely responsible
for the cost of professional licensure fees and board certification fees,
membership in professional associations and continuing professional education
incurred by each Endodontist and other Practice Provider employed by the New PC.
The New PC shall ensure that Xx. Xxxx and all the Endodontists employed by the
New PC participate in such continuing education as is necessary for Xx. Xxxx and
such the Endodontist to remain current.
3.6 Professional Liability Insurance. The New PC shall provide, or
arrange for the provision of, and maintain throughout the Term of this
Agreement, professional liability insurance coverage in accordance with the
provisions of Article 9 hereof. The New PC shall also cooperate in any programs
recommended by the MSO to assure that each of its Endodontists is insurable, and
that Xx. Xxxx and each Endodontist participates in an on-going risk management
program.
3.7 Employment Agreement. The parties recognize that the services to
be provided by the MSO are feasible only if the New PC operates an active
endodontic practice to which it, Xx. Xxxx and each Endodontist associated with
the New PC devote their full time and attention, unless other specific
provisions are made in writing and mutually agreed upon by the MSO and New PC.
The New PC will cause Xx. Xxxx and each individual Endodontist who now is or
hereafter becomes affiliated with the New PC to enter into a written employment
agreement (the "Employment Agreement") satisfactory in form and substance to the
MSO, pursuant to which Xx. Xxxx or the Endodontist shall agree not to establish,
operate or provide endodontic or dental services, without the prior written
consent of both the New PC and the MSO, at any office or facility other than the
Endodontic Office. In addition, such Employment Agreement shall provide by its
own terms or by a separate agreement that if Xx. Xxxx'x or such Endodontist's
employment shall terminate for any reason during the Term of this Agreement, for
a period of 24 months after the termination of Xx. Xxxx'x or such Endodontist's
Employment Agreement with the New PC, Xx. Xxxx or such Endodontist shall agree
not to establish, operate or provide endodontic or dental services, without the
prior written consent of both the New PC and the MSO, at any office practice or
facility whatsoever providing services similar to those provided by the New PC
at any endodontic office within a fifteen (15) mile radius. Such Employment
Agreement (or separate agreement) shall also provide, among other things, that
in the event of a breach of Xx. Xxxx'x or the Endodontist's agreement not to
compete with the New PC provided for in such Employment Agreement (or separate
agreement), the MSO shall be entitled to receive, in addition to other remedies
and not by way of an election of remedies, liquidated damages equaling the
greater of: (a) Xx. Xxxx'x or such Endodontist's income, as shown on the W-2
form prepared by the New PC, for the most recent calendar year; or (b) $300,000.
Such payment shall be made to the MSO by the New PC immediately following
receipt of the payment from Xx. Xxxx or the breaching Endodontist by the New PC.
Each of the MSO and OMEGA shall be expressly named as a third-party beneficiary
to such agreements between the New PC and Xx. Xxxx and each Endodontist and the
rights and remedies of the MSO and OMEGA thereunder or otherwise in respect of
the restrictive covenants set forth in such agreements shall survive termination
of this Agreement.
3.8 Confidentiality. The New PC agrees and acknowledges that all
materials provided by the MSO to the New PC constitute "Confidential
Information" and are disclosed in confidence and with the understanding that it
constitutes valuable business information developed by the MSO with the
assistance of OMEGA at great expenditures of time, effort and money. The New PC
further agrees that it shall not, directly or indirectly, without the express
prior written consent of the MSO, use or disclose such Confidential Information
for any purpose other than in connection with the services to be rendered
hereunder. The New PC 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 shareholders, directors, officers,
affiliates, partners, employees and independent contractors without the express
prior written consent of the MSO; and (ii) to impose this obligation of
confidentiality on its shareholders, directors, officers, affiliates, partners,
employees and independent contractors. The New PC acknowledges that the
disclosure of Confidential Information to it by the MSO 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 New
PC shall immediately return and shall cause its shareholders, directors,
officers, affiliates, partners, shareholders and independent contractors to
immediately return to the MSO all Confidential Information, and the New PC will
not, and will cause its affiliates, partners, employees and independent
contractors not to, thereafter use, appropriate, or reproduce such Confidential
Information. The New PC 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 irreparable injury to the MSO and OMEGA, 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, the MSO and OMEGA, in addition to
any other remedies or damages available to either or both of them, shall be
entitled to injunctive or other equitable relief without the necessity of
proving actual damages but such rights to relief shall not preclude the MSO and
OMEGA from other remedies which may be available to either or both of them
hereunder.
ARTICLE 4
PROFESSIONAL SERVICES, CONTROL OF SOLICITATION,
APPROVAL OF ADVERTISING MATERIAL AND NO RECIPROCATION
4.1 A fundamental understanding between the parties hereto is that
the rendering of endodontic services shall be separate and independent from the
provision of administrative, management and support services by the MSO. Thus,
the New PC shall have sole and absolute control of the delivery of all
professional services and treatment rendered to patients at the Endodontic
Offices.
4.2 No employee or other representative of the MSO shall be engaged
in, or allowed to solicit patients on behalf of, the New PC, nor shall the MSO
have any control over the New PC's patients.
4.3 No advertising or promotional materials, or other materials of
any nature, including billing and collection forms, reports, agreements,
correspondence, or similar materials, used in connection with the New PC shall
be used or distributed without having first been approved by the New PC.
4.4 The parties hereby acknowledge and agree that the benefits
conferred upon each of them hereunder neither require nor are in any way
contingent upon the admission, recommendation, referral, or any other
arrangement for the provision of any item or service offered by the MSO to any
patients of the New PC or its shareholders, officers, directors, employees,
contractors or agents, nor are such benefits in any way contingent upon the
recommendation, referral or any other arrangement for the provision of any item
or service offered by the New PC or any of its Practice Providers, employees,
contractors or agents.
ARTICLE 5
LEASE OF OFFICE FACILITIES AND EQUIPMENT
5.1 In consideration of the sums to be paid to the MSO under the
terms of this Agreement, the MSO hereby leases or sub-leases, as applicable, to
the New PC during the Term of this Agreement the Endodontic Offices, and the
leasehold improvements and fixtures, furniture and equipment at the Endodontic
Offices as listed from time to time on Schedule 2 attached hereto and
incorporated herein by this reference, under the following terms and conditions:
(a) The MSO is the lessee by assignment under lease for the premises
occupied by the New PC (collectively, the "Master Lease") a copy of which is
attached hereto as Exhibit A and incorporated herein by this reference. The New
PC hereby acknowledges that the premises described under the Master Lease are
suitable for the New PC's endodontic practice. Based and contingent upon the New
PC's promise to timely pay all amounts due under this Agreement, the MSO hereby
agrees to sublease the leased premises to the New PC upon the following terms
and conditions:
(i) This sublease between the MSO and the New PC of the
premises shall be subject to all of the terms and conditions of the Master
Lease. In the event of the termination of the MSO's interest as lessee under the
Master Lease for any reason, then the sublease created hereby shall
simultaneously terminate, unless the New PC assumes the obligations under the
Master Lease in question and the Lessor consents thereto.
(ii) All of the terms and conditions contained in the Master
Lease are incorporated herein as terms and conditions of the sublease (with each
reference therein to "Lessor" and "Lessee," to be deemed to refer to the MSO and
the New PC, respectively) and, along with the provisions of this Section 5.1(b)
and Exhibit "A," shall be the complete terms and conditions of the sublease
created hereby.
(iii) Notwithstanding the foregoing, as between the MSO and
the New PC, the MSO shall remain responsible for meeting the obligations of
"Lessee" under the sections entitled Rent, Additional Rent Adjustment, Insurance
on Fixtures, Liability Insurance, Repairs, and Taxes of the Master Lease, all of
which obligations shall be considered MSO Expenses hereunder and the New PC
shall have no monetary obligation in that regard. In addition, as between the
MSO and the New PC, the MSO shall retain the right to exercise any options to
purchase the premises, or other similar rights of ownership or possession, which
may be granted under the Master Lease, and the New PC shall have no rights in
that regard.
(iv) In the event this Agreement is terminated according to
its terms, this sublease shall also terminate automatically.
(v) If the Master Lease contains an option to Renew the terms
thereof, the MSO shall notify the New PC, at least 30 days prior to the
expiration of the time for exercising such option, of the MSO's intention to
Renew or not to Renew such term. If the MSO determines not to Renew such term,
the MSO shall provide or arrange for the provision of comparable office space
(the "Substitute Endodontic Office") within a radius of 15 miles of the
Endodontic Office, which Substitute Endodontic Office shall be subject to the
approval of the New PC (which approval shall not be unreasonably withheld or
delayed). The lease or sublease for such Substitute Endodontic Office, as
applicable, shall be substituted for the lease described on Exhibit A hereto and
all references to the "Master Lease" shall thereafter be applicable to the lease
or sublease for the Substitute Endodontic Office for purposes of this Agreement,
ab initio.
(vi) The Alternative Dispute Resolution provisions set forth
in Article 14 of this Agreement shall not apply to any issues concerning the
Sub-Lease, the New PC's tenancy or the MSO's rights and remedies as Sub-Lessor.
5.2 The MSO shall provide the New PC at the Endodontic Offices such
additional leasehold improvements, fixtures, furniture, furnishings and
equipment as may be mutually agreed to with the New PC and reflected from time
to time on a supplement to Schedule 2 hereto. The use by the New PC of all
leasehold improvements, fixtures, furniture, furnishings and equipment provided
hereunder shall be subject to the following conditions:
(a) Title to all such leasehold improvements, fixtures, furnishings,
furniture and equipment shall remain in the MSO and upon termination of this
Agreement, the New PC shall immediately return and surrender all such leasehold
improvements, fixtures, furniture, furnishings and equipment to the MSO in as
good condition as when received, normal wear and tear excepted.
(b) The MSO shall be fully and entirely responsible for all repairs
and maintenance of all such leasehold improvements, fixtures, furniture,
furnishings and equipment; provided, however, that the New PC agrees that it
will use its best efforts to prevent damage, excessive wear, and breakdown of
all such leasehold improvements, fixtures, furniture, furnishings and equipment,
and shall advise the MSO of any and all needed repairs and equipment failures.
(c) The obligation of the MSO to provide the leasehold improvements,
fixtures, furniture, furnishings and equipment stated herein shall be concurrent
and co-extensive with the Term of this Agreement.
5.3. No Warranty.
(a) THE NEW PC ACKNOWLEDGES THAT THE MSO MAKES NO WARRANTIES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, AS TO THE SUITABILITY OR ADEQUACY OF ANY
LEASEHOLD IMPROVEMENTS, FIXTURES, FURNITURE, FURNISHINGS, EQUIPMENT, INVENTORY
OR SUPPLIES PROVIDED OR LEASED OR SUBLEASED PURSUANT TO THIS AGREEMENT FOR THE
CONDUCT OF AN ENDODONTICS PRACTICE OR FOR ANY OTHER PARTICULAR PURPOSE.
(b) Nothing in this Agreement shall be construed to affect or limit
in any way the professional discretion of the Practice Providers to select and
use fixtures, furniture, furnishings and equipment, inventory and supplies
purchased or provided by the MSO in accordance with the provisions of this
Agreement insofar as such selection or use constitutes or might constitute the
practice of dentistry or endodontics.
ARTICLE 6
COMPENSATION
As consideration for the performance of all of its duties and obligations
as provided in this Agreement, including but not limited to, the costs and
expenses associated with furnishing the services, personnel, facilities,
leasehold improvements, fixtures, furniture, furnishings, equipment, inventories
and supplies provided for herein, the MSO shall receive compensation in the form
of monthly management fees (the "Management Fees") based upon a predetermined
percentage of the "Practice Revenues", as defined and determined in accordance
with the provisions set forth in Schedule 3 attached hereto and incorporated
herein by this reference, as such Schedule may be amended by the New PC and the
MSO from time to time. It is acknowledged by and between the parties hereto that
the MSO and/or its affiliates has (have) incurred substantial expenses and
future obligations in acquiring the capital stock of the MSO, acquiring or
otherwise establishing the Endodontic Offices, establishing its systems,
including fees for consultants and other professionals, interest expense, lease
obligations, and costs of furnishing or refurbishing the premises at which the
Endodontic Offices are located. The MSO has also assumed substantial obligations
associated with the continuing operation of the Endodontic Offices, including
those of lessee, obligor and guarantor and obligor on loans to establish and
operate the Endodontic Offices. The parties, therefore, having considered
various compensation formulae, acknowledge and agree that in order for the MSO
to receive a fair and reasonable return for its expenses and obligations, and a
fair return for the lease of the premises and equipment and for providing the
services contemplated hereunder, that the agreed compensation is not excessive.
The New PC acknowledges that the compensation arrangement is reasonable under
the circumstances noted herein and has executed an Affidavit attesting to this
fact which is attached hereto and incorporated herein as Exhibit C. In
consideration of the foregoing, the parties agree that the monthly Management
Fees payable to the MSO by the New PC for services rendered pursuant to this
Agreement shall be reviewed and subject to adjustment at the close of each year
of the Term of this Agreement based upon industry standards of practice and the
MSO's costs in performing the required services. If the parties cannot agree
within thirty (30) days prior to the close of any such year on the terms of any
adjustment to the Management Fees for the following year, then the then existing
Management Fees shall remain in effect. The New PC specifically agrees that the
MSO may defer actual receipt of its Management Fees and/or advance monies for
purposes of managing the New PC's cash flow, and the MSO may repay itself such
advances or pay said deferred Management Fees when it deems appropriate.
ARTICLE 7
SECURITY INTEREST
As assurance and collateral security for the payment of the monthly
Management Fees owed to the MSO pursuant to this Agreement and any funds
advanced by the MSO to or on behalf of the New PC pursuant to this Agreement and
for the faithful and timely performance of all the covenants and conditions to
be performed by the New PC under this Agreement, the New PC hereby pledges,
grants, bargains, assigns and transfers to the MSO a security interest, pursuant
to the Uniform Commercial Code of the State, in and to all Practice Revenue and
accounts receivable of patients of the New PC, together with all proceeds
thereof (collectively, the "Collateral"), and further agrees not to pledge,
assign, transfer or convey any of the Collateral or any proceeds therefrom,
without the prior written consent of the MSO, except to affiliates of the MSO.
Concurrent with the execution of this Agreement, the New PC shall execute a
Security Agreement, similar in form and content as that attached hereto as
Exhibit D and incorporated herein by this reference in order that the MSO may
perfect its interest in the Collateral. The New PC expressly agrees to execute
any appropriate UCC-1 Financing Statement and UCC-1 Fixture filings, if so
requested in writing by the MSO.
ARTICLE 8
COVENANTS
8.1 New PC's Covenants. As further consideration for the MSO's
performance of the terms and conditions of this Agreement, the New PC covenants,
represents and warrants as follows (which covenants, representations and
warranties shall survive the execution of this Agreement):
(a) The New PC shall comply with all Laws and ethical and
professional standards applicable to the practice of endodontics and to cause
all of its employees to do the same.
(b) The New PC shall provide quality services and shall cause Xx.
Xxxx and the Endodontists (if any) to serve the endodontic needs of the patients
of the New PC. The New PC covenants to monitor rigorously utilization and
quality of services provided at the Endodontic Offices and shall take all steps
necessary to remedy any and all deficiencies in the efficiency or the quality of
endodontic care provided.
(c) During the Term of this Agreement, the New PC shall not,
directly or indirectly, own an interest in, operate, join, control, participate
in or be connected in any manner with any corporation, partnership,
proprietorship, firm, association, person or entity providing endodontic care in
competition with the practice at the Endodontic Offices, or any other endodontic
practice managed by the MSO, within a radius of 15 miles of the Endodontic
Office or of such other endodontic practice, without the MSO's prior written
consent.
(d) The New PC recognizes the proprietary interest of OMEGA in and
to its OMEGA Patient Scheduling System and the MSO in its systems for managing
the delivery of endodontic care and all policies, procedures, operating manuals,
forms, contracts and other information (collectively, the "MSO Information")
regarding such system. The New PC acknowledges and agrees that all information
relating to the OMEGA Patient Scheduling System and the MSO Information
constitutes trade secrets of OMEGA and/or the MSO. The New PC hereby waives any
and all right, title and interest in and to such trade secrets and agrees to
return all copies of such trade secrets and information relating thereto, at its
expense, upon termination of this Agreement.
(e) The New PC acknowledges and agrees that OMEGA and the MSO are
entitled to prevent their respective competitors from obtaining and utilizing
their respective trade secrets. The New PC agrees to hold OMEGA'S and the MSO'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
who are engaged by the New PC to perform duties in connection with the New PC
and who have a need to know such trade secrets in the performance of their
duties for the New PC, without OMEGA's or the MSO's prior written consent, as
the case may be. The New PC acknowledges its fiduciary obligations to OMEGA and
the MSO and the confidentiality of its relationships with OMEGA and the MSO and
of any information relating to the services and business methods of OMEGA and
the MSO which it may obtain during the term of this Agreement. The New PC shall
not, either during the term of this Agreement or at any time after the
expiration or sooner termination hereof, disclose to anyone, other than
employees or independent contractors of OMEGA and the MSO who use OMEGA's and
the MSO's system in the course of the performance of their duties, any
confidential or proprietary information or trade secrets obtained by the New PC.
The New PC 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.
8.2 MSO's Covenants. As further consideration for the New PC's
performance of the terms and conditions of this Agreement, the MSO covenants,
represents and warrants (which covenants, representations and warranties shall
survive the execution of this Agreement) that during the Term of this Agreement,
the MSO agrees not to establish, develop or open any offices in affiliation with
an endodontist for the provision of endodontic services within a 15 mile radius
of the Endodontic Offices, without the express written consent of the New PC.
ARTICLE 9
INSURANCE AND INDEMNITY
9.1 Insurance to be Maintained by the New PC. Throughout the Term of
this Agreement, the New PC shall maintain in full force and effect comprehensive
professional liability insurance with limits of not less than $500,000 per
occurrence and $1,000,000 annual aggregate per Xx. Xxxx and each of the
Endodontists providing services for the New PC and a separate limit for the New
PC. The New PC shall be responsible for all liabilities within deductibles and
for all liabilities in excess of the limits of such policies. The MSO agrees to
negotiate for and cause premiums to be paid on behalf of the New PC with respect
to such insurance. Premiums and deductibles with respect to such policies shall
not be MSO Expenses. The New PC also agrees to name the MSO and OMEGA as
co-insureds. The New PC agrees to deliver to the MSO and OMEGA a certificate of
insurance indicating such coverage.
9.2 Insurance to be Maintained by the MSO. Throughout the Term of
this Agreement, the MSO will use reasonable efforts to provide and maintain, as
a MSO Expense, (a) comprehensive professional liability insurance for all
professional employees of the MSO with limits as determined reasonable by the
MSO; and (b) comprehensive general liability and property insurance covering the
Endodontic Office premises and operations.
9.3 Tail Insurance Coverage. The New PC will cause Xx. Xxxx and each
Endodontist (if any) providing services to enter into an agreement with the New
PC that upon termination of Xx. Xxxx'x or such Endodontist's relationship with
the New PC, for any reason, tail insurance coverage will be purchased by Xx.
Xxxx or such Endodontist. Such provisions may be contained in an employment
agreement, restrictive covenant agreement or other agreement entered into by the
New PC and Xx. Xxxx or the Endodontist, and the New PC hereby covenants with the
MSO to enforce such provisions relating to the tail insurance coverage or to
provide such coverage at the expense of the New PC or Xx. Xxxx or each such
Endodontist.
9.4 Additional Insureds. The New PC and the MSO agree to use their
reasonable efforts to have each other named as an additional insured on the
other's respective liability insurance policies.
9.5 Indemnification. The New PC shall indemnify, hold harmless and
defend the MSO and OMEGA and their respective officers, directors, shareholders,
employees and representatives, from and against any and all liability, losses,
damages, claims, causes of action, expenses judgments, settlements, lawsuits and
obligations (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 endodontic services or the performance of any
intentional acts, negligent acts or omissions by the New PC and/or its
affiliates, its shareholders, agents, the Practice Providers, its other
employees and/or its subcontractors (other than the MSO) during the Term hereof.
The MSO shall indemnify, hold harmless and defend the New PC, 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), 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 the MSO and/or its shareholders, agents,
employees and/or subcontractors (other than the New PC) during the Term hereof.
ARTICLE 10
TERMINATION
10.1 Termination by the New PC.
(a) Termination by the New PC. The New PC may terminate this
Agreement as follows:
(1) In the event of the filing of a petition in voluntary
bankruptcy or an assignment for the benefit of creditors by the MSO, or upon
other action taken or suffered, voluntarily or involuntarily, under any federal
or state law for the benefit of debtors by the MSO, except for the filing of a
petition in involuntary bankruptcy against the MSO which is dismissed within
sixty (60) days thereafter, the New PC may give written notice of the immediate
termination of this Agreement.
(2) In the event the MSO 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 sixty (60) days after written notice
thereof has been given to the MSO by the New PC, the New PC may terminate this
Agreement.
Upon termination of this Agreement by the Endodontic Practice under
this Section 10.1, the New PC shall be entitled to exercise the "Call Option,"
as defined in and on the terms and conditions set forth in Section 3 of that
certain Stock Put/Call Option and Successor Designation Agreement (the "Stock
Put/Call Option and Successor Designation Agreement") dated as of even date
herewith, by and among the New PC, Xx. Xxxx and the Endodontists (if any), OMEGA
and the MSO.
10.2 Termination by MSO. MSO may terminate this Agreement as
follows:
(a) In the event of the filing of a petition in voluntary bankruptcy
or an assignment for the benefit of creditors by the New PC or any shareholders
thereof, or upon other action taken or suffered, voluntarily or involuntarily,
under any federal or state law for the benefit of debtors by the New PC or any
shareholders thereof, except for the filing of a petition in involuntary
bankruptcy against the New PC or any shareholder thereof which is dismissed
within sixty (60) days thereafter, MSO may give written notice of the immediate
termination of this Agreement.
(b) In the event the New PC fails to perform endodontic services on
a full-time basis consistent with its pattern of practice in the immediately
preceding calendar year and such default shall continue for a period of ten (10)
days after written notice thereof has been given to the New PC by the MSO, the
MSO may terminate this Agreement.
(c) In the event the New PC shall materially default in the
performance of any other duty or obligation imposed upon it by this Agreement,
and such default shall continue for a period of sixty (60) days after written
notice thereof has been given to the New PC by the MSO, the MSO may terminate
this Agreement.
(d) In the event Xx. Xxxx or any Endodontist breaches or defaults
under his or her Employment Agreement and the New PC does not cause Xx. Xxxx or
such Endodontist to cure such breach or default within any applicable grace
period therefor, the MSO may give written notice of the immediate termination of
this Agreement.
Upon termination of this Agreement by the MSO under this Section
10.2 or upon expiration of the Term of this Agreement, the MSO and OMEGA shall
be entitled to exercise the "Put Option" and/or the "Successor Designation
Option," as defined in and on the terms and subject to the conditions set forth
in Sections 2 and 5, respectively, of the Stock Put/Call Option and Designation
Agreement. In addition, upon any termination of this Agreement or upon
expiration of the Term of this Agreement, the MSO shall be entitled to receive
the Management Fees collected to the effective date of such termination or
expiration, the amounts of any loans or advances (including any accrued but
unpaid interest thereon) and all other sums accrued or related to occurrences
arising at or prior to the date of termination.
ARTICLE 11
AUTHORIZED AGENT AND POWERS OF ATTORNEY
The New PC hereby designates the MSO (and its designees) its
authorized agent and lawful attorney-in-fact for purposes of depositing
payments, paying accounts payables, signing checks, negotiating and signing
contracts for services or goods, securing loans or incurring obligations on
behalf of the New PC; provided, however, that all contracts or fees set for
services on behalf of the New PC will be subject to final approval and
acceptance by the New PC. Additionally, the New PC hereby irrevocably appoints
the MSO (and its designees) its authorized agent and lawful attorney-in-fact to
collect all bills and accounts receivable for professional fees, charges and
other amounts and authorizes the MSO through its designees to take possession of
all checks, money orders and similar instruments received as payment of
receivables to be deposited into the New PC Account. The New PC hereby
irrevocably appoints the MSO as the New PC's attorney-in-fact, with full power
and authority in the place and stead of the New PC, in the MSO's discretion, to
endorse in the name of the New PC any checks, payments, notes, insurance
payments and money orders, to withdraw funds for payments of expenses, including
Management Fees and other sums payable to the MSO, to open and close the New PC
Account and other bank accounts, to take any action and to execute any other
instrument which the MSO may deem necessary or advisable to accomplish the
purposes hereof. The powers of attorney granted herein are coupled with an
interest and are irrevocable. Third parties and entities and persons not a party
to this Agreement are entitled to rely on the foregoing attorneys-in-fact and an
affidavit of the MSO attesting thereto. The acceptance of this appointment by
the MSO shall not obligate it to perform any duty or covenant required to be
performed by the New PC under or by virtue of this Agreement. Notwithstanding
the foregoing powers of attorney, the New PC shall at any time, on the request
of the MSO, sign financing statements, security agreements or other agreements
necessary or advisable to accomplish the purpose of this Agreement. Upon the New
PC's failure to sign said financing statements, security agreements or other
agreements, the MSO is authorized as the agent of the New PC to sign any such
instruments. The New PC may review all deposits and expenses upon request.
ARTICLE 12
INDEPENDENT CONTRACTOR RELATIONSHIP
Neither the New PC nor its employees shall have any claim under this
Agreement or otherwise against the MSO for worker's compensation, unemployment
compensation, sick leave, vacation pay, retirement benefits, Social Security
benefits, or any other employee benefits, all of which shall be the sole
responsibility of the New PC. Since neither the New PC nor its employees are
employees of the MSO, the MSO shall not withhold on behalf of the New PC
unemployment insurance, Social Security, or otherwise pursuant to any law or
requirement of any governmental agency, and all such withholding, if any is
required, shall be the sole responsibility of the New PC.
ARTICLE 13
MISCELLANEOUS
13.1 Access to Records. From and after any termination, each party
shall provide the other party with reasonable access to books and records then
owned by it to permit such requesting party to satisfy reporting and contractual
obligations which may be required of it.
13.2 Patient Records. Upon termination of this Agreement, the New PC
shall retain all patient dental records maintained by the New PC or the MSO in
the name of the New PC. During the term of this Agreement, and thereafter, the
New PC or its designee shall have reasonable access during normal business hours
to the New PC's and the MSO's records, including, but not limited to, records of
collections, expenses and disbursements as kept by the MSO in performing the
MSO's obligations under this Agreement, and the New PC may copy any or all such
records.
13.3 The New PC's Control Over the Endodontic Practice.
Notwithstanding the authority granted to the MSO herein, the MSO and the New PC
agree that the New PC, personally or through Xx. Xxxx or any of its Endodontists
(if any) and other Practice Providers, shall have complete control and
supervision over the professional aspects of the New PC's practice, as well as
the provision of all professional services, including, without limitation, the
selection of a course of treatment for a patient, the procedures or materials to
be used as a part of such course of treatment, and the manner in which such
course of treatment is carried out by the New PC. The New PC shall have sole
authority to direct the business, professional, and ethical aspects of the New
PC. The MSO shall have no authority, directly or indirectly, to perform, and
shall not perform, any endodontic function, or to influence or otherwise
interfere with the exercise of the New PC's professional judgment. The MSO may,
however, advise the New PC as to the relationship between its performance of
endodontic functions and the overall administrative and business functioning of
the New PC.
ARTICLE 14
ALTERNATIVE DISPUTE RESOLUTION
14.1 Alternative Dispute Resolution.
(a) If a dispute arises under this Agreement which cannot be
resolved informally by the parties, any party may invoke the procedures set
forth in Exhibit E hereto and the parties agree to use these procedures, except
paragraph (b) of this Section 14.1, prior to any party pursuing other available
remedies. The parties will meet and attempt in good faith to resolve any
controversy or claim arising out of or relating to this Agreement.
(b) Notwithstanding anything in this Section 14.1 to the contrary:
(i) Nothing in this Section 14.1 shall preclude any party from
seeking a preliminary injunction or other provisional relief, either prior to or
during the proceeding provided for in this section, if in its judgment such
action is necessary to avoid irreparable damage or to preserve the status quo.
(ii) The parties shall accept as correct, final, binding and
conclusive the determination by the outside accountants then employed by the MSO
as to the calculation of any and all Management Fees owed by the New PC to the
MSO hereunder, and such determination shall not be subject to the provisions of
this Section 14.1. Disputes as to the proper interpretation of the provisions of
this Agreement which describe how those amounts are to be calculated, however,
shall be subject to the provisions of this Section 14.1.
(iii) Any determination by either party not to Renew this Agreement
in accordance with the terms and provisions of this Agreement shall not be
subject to the provisions for dispute resolution in this Section 14.1.
14.2 Waiver of Jury. With respect to any dispute arising under or in
connection with this Agreement or any related agreement, as to which legal
action nevertheless occurs, each party hereby irrevocably waives all rights it
may have to demand a jury trial. This waiver is knowingly, intentionally and
voluntarily made by the parties and each party acknowledges that no person
acting on behalf of the other party has made any representation of fact to
induce this waiver of trial by jury or in any way modified or nullified its
effect. The parties each further acknowledge that it has been represented (or
has had the opportunity to be represented) in the signing of this Agreement and
in the making of this waiver by independent legal counsel, selected of its own
free will, and that it has had the opportunity to discuss this waiver with
counsel. Each party further acknowledges that it has read and understands the
meaning and ramifications of this waiver provision.
ARTICLE 15
GENERAL PROVISIONS
15.1 Notices. Any notice to be given pursuant to this Agreement
shall be deemed effective if given personally, or by telephone, telegram,
telecopy, facsimile or other electronic transmission, or by letter to an officer
or administrator of OMEGA, the MSO or the New PC, as the case may be. Notice in
person, or by telephone, telegram or electronic transmission shall be deemed
effective when given. Notice by mail shall be deemed effective seventy-two (72)
hours after deposit in the United States mails, and properly addressed with
postage prepaid.
Notices to the New PC shall be given as follows:
0000 Xxxxxxxx Xxxxxx - Xxxxx 0
Xxxx, Xxxxxx 00000
Attn: Xxxxxx X. Xxxx, D.D.S.
or such other address as may be furnished by the New PC to the MSO from time to
time in writing.
Notices to OMEGA and/or the MSO shall be given as follows:
Omega Orthodontics, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
or other such addresses as may be furnished by the MSO to the New PC from time
to time in writing.
15.2 Confidentiality. No 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 parties (past, present or future)
that was obtained in the course of the negotiation of this Agreement or in the
course of the performance of this Agreement, without the other party's or
parties' (as the case may be) written approval; provided, however, the foregoing
shall not apply to information which is required to be disclosed by Law,
including federal or state securities laws, or pursuant to court order.
15.3 Contract Modifications for Prospective Legal Events. In the
event any state or federal Laws, 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,
the New PC and the MSO shall amend this Agreement as necessary. To the maximum
extent possible, any such amendment shall preserve the underlying economic and
financial arrangements between the New PC and the MSO.
15.4 Remedies Cumulative. 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.
15.5 No Obligation to Third Parties. None of the obligations and
duties of the MSO or the New PC under this Agreement shall in any way or in any
manner be deemed to create any obligation of the MSO or of the New PC to, or any
rights in, any person or entity not a party to this Agreement other than OMEGA
which shall be deemed a party for limited purposes as set forth in this
Agreement.
15.6 Entire Agreement. This Agreement including the Schedules and
Exhibits hereto, together with the Stock Put/Call Option and Successor
Designation Agreement of even date herewith and the Employment Agreement(s)
(including the related non-competition agreements or covenants), constitutes the
entire agreement between the parties concerning this subject matter, and
supersedes all prior and contemporaneous agreements, representations and
understandings of the parties concerning the contents hereof. No supplement,
modification, or amendment to this Agreement shall be binding unless executed in
writing by all of the parties hereto, except as otherwise provided herein. No
waiver of any of the provisions of this Agreement shall be deemed to constitute
a waiver of any other provision, whether similar or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
15.7 Assignment. The rights and the duties of the parties under this
Agreement may not be assigned or transferred without the prior written consent
of the non-assigning party, which consent shall not be unreasonably withheld;
provided, however, that the MSO shall be permitted to assign its rights and
obligations hereunder without the consent of the New PC to any person, firm or
corporation controlled by the MSO, controlling the MSO or under common control
with the MSO.
15.8 Attorneys' Fees. If any mediation or arbitration or other legal
action or proceeding is brought to enforce this Agreement, because of any
alleged breach hereof, or for a declaration of any rights and obligations
hereunder, the prevailing party in such mediation or arbitration, action or
proceeding shall be entitled to recover its costs incurred therein, including
reasonable attorneys' fees, in addition to any other relief to which it may be
entitled, all as determined and awarded by the parties in such mediation or by
the arbitrator or court as part of its judgment or decision therein, as the case
may be.
15.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State. The parties acknowledge that
the MSO is not authorized or qualified to engage in any activity which may be
construed or deemed to constitute the practice of dentistry or endodontics. To
the extent any act or service required of the MSO in this Agreement should be
construed or deemed, by any governmental authority, agency or court to
constitute the practice of dentistry or endodontics, the performance of said act
or service by the MSO shall be deemed waived and forever unenforceable and the
provisions of Section 15.14 shall be applicable.
15.10 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.
15.11 Compliance with Applicable Laws. Both parties shall comply
with all applicable Laws and restrictions imposed thereunder in the conduct of
their obligations under this Agreement.
15.12 Language Construction. The 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.
15.13 Amendments. This Agreement may be amended only by the written
consent of both parties.
15.14 Severability. In the event any provision of this Agreement is
held by a court of competent jurisdiction to be illegal or unenforceable, (i)
the parties shall amend this Agreement in order to carry out the intent and
essential business purposes of this Agreement as closely possible within the
requirements of applicable provisions of Law as determined by such a court, and
(ii) the remaining provisions of this Agreement shall continue in full force and
effect.
15.15 No Waiver. The waiver by either party to this Agreement of any
one or more defaults, if any, on the part of the other party, shall not be
construed to operate as a waiver of the other or future defaults under this
Agreement.
15.16 Captions. Captions to paragraphs in this Agreement are for
ease of reference, and shall not be considered an interpretation of the
paragraph.
15.17 Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the day and year first above written.
NEW PC:
By:_______________________________
Name: Xxxxxx X. Xxxx
Title: President
MSO:
OMEGA ORTHODONTICS OF RENO, INC.
By:_______________________________
Name: Xxxxxx X. Xxxxxxxx
Title: President
OMEGA:
OMEGA ORTHODONTICS, INC.
By:_______________________________
Name: Xxxxxx X. Xxxxxxxx
Title: President
SCHEDULE 1
THE ENDODONTISTS
Name and Address
Xxxxxx X. Xxxx, D.D.S.
0000 Xxxxxxxx Xxxxxx - Xxxxx 0
Xxxx, Xxxxxx 00000
SCHEDULE 2
ENDODONTIC OFFICES AND SERVICES
[Xx. Xxxx Attach]
SCHEDULE 3
COMPENSATION - MANAGEMENT FEES
The MSO shall receive, as compensation for the performance of all of its
obligations and duties contained in the Agreement, monthly Management Fees in an
amount equal to Seventy-Five Percent (75%) of the Practice Revenues, and the New
PC shall be entitled to Twenty-Five Percent (25%) of such Practice Revenues,
except as the parties may otherwise agree from time to time in writing;
provided, however, that in no event shall the MSO receive less than $200,000 in
Management Fees annually. At the end of each twelve (12) month period during the
Term, the MSO shall provide the New PC with an unaudited internal accounting of
the MSO Expenses, prepared in accordance with the accrual method of accounting.
If the MSO Expenses as reflected in such accounting as having been paid by the
MSO are less than sixty (60%) percent of the Practice Revenues for such twelve
month period, fifty (50%) percent of such difference shall be returned by the
MSO to the New PC as a profit incentive rebate (the "Rebate"). If such MSO
Expenses are more than sixty (60%) percent of the Practice Revenues for such
twelve month period, fifty (50%) percent of such excess will be charged to the
New PC and set off against payments due to the New PC hereunder. If the
Agreement to which this Schedule 3 is attached is terminated or expires, the
foregoing Management Fees shall be payable to the MSO based on all Practice
Revenue collected as of the date of termination or expiration.
Payment to the MSO shall be made in monthly installments based on the
Practice Revenues realized by the MSO for services rendered hereunder. The MSO
shall distribute the proceeds from the New PC Account and allocate the proceeds
between the MSO and the New PC as described above, on or before the 15th day of
the succeeding month. In the event the 15th day falls on a weekend or holiday,
then said distribution shall be made on the next business day. The parties
hereto may agree to handle such matters in a different manner.
For purposes of this Agreement, "Practice Revenues" shall mean gross
collections of all revenues generated by or on behalf of the New PC (whether
through subsidiaries or affiliates), including, but not limited to, all fees and
charges collected as a result of professional endodontic services furnished to
patients by the New PC and for any other goods or services sold or provided to
such patients.
EXHIBIT A
ENDODONTIC OFFICES - MASTER LEASE
[Xx. Xxxx Attach]
EXHIBIT B
PRACTICE PROVIDERS
[Xx. Xxxx Attach]
EXHIBIT C
New PC'S AFFIDAVIT
AFFIDAVIT
I, Xxxxxx X. Xxxx, D.D.S., declare:
I am an endodontist, duly licensed in the State of Nevada and I practice
through a professional corporation under the name ______________ (the "New PC").
I have had substantial experience in the practice of endodontics and in
managing and operating an endodontic office.
In the course of operating endodontic offices, I have acquired significant
knowledge as to the overhead costs incurred and gross receipts generated by
similar types of endodontic offices. Further, I am fully aware of the
non-endodontic, operational, accounting, billing, financing, management and
personnel requirements of an endodontic office and the cost factors involved in
providing such management, personnel, accounting, billing, financing and
operation.
I have thoroughly reviewed the Management Services Agreement (the
"Agreement"), which is effective as of ________________, 1997, between the New
PC and Omega Orthodontics of Reno, Inc. (the "MSO") concerning the duties,
responsibilities and obligations undertaken by the MSO in managing and operating
all non-endodontic aspects of the Endodontic Office as contemplated by the
Agreement.
I have reviewed the prior operating financial statements of the endodontic
office located at 0000 Xxxxxxxx Xxxxxx - Xxxxx 0, Xxxx, Xxxxxx 00000 and an
operating budget and estimated income of the endodontic office, which, in my
opinion, can reasonably be expected from the operation of said office.
In my opinion, based upon my experience, the Management Fees of
Seventy-Five Percent (75%) of "Practice Revenues" to be charged by the MSO as
contemplated by the Agreement, will afford it a reasonable but not excessive
return for its services rendered and obligations incurred. In addition, the
Twenty-Five Percent (25%) of "Practice Revenues" retained by the New PC will
provide reasonable earnings for the performance of endodontic services.
I declare under penalty of perjury that the foregoing statement is true
and correct to the best of my knowledge and belief.
Executed at _________________ this ____ day of _____________, 1997.
_______________________________
Xxxxxx X. Xxxx, D.D.S.
STATE OF NEVADA
___________________, ss. ________________, 1997
Then personally appeared the above-named Xxxxxx X. Xxxx, D.D.S. and
acknowledged the foregoing Affidavit to be his free act and deed.
[SEAL] ____________________________
Notary Public
My Commission Expires:
EXHIBIT D
SECURITY AGREEMENT
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is effective as of the ______ day of _________
1997, by _____________________, PC, a Nevada corporation (the "New PC"), and
Xxxxxx X. Xxxx, D.D.S. ("Xx. Xxxx") who is duly licensed to practice endodontics
in the State and Omega Orthodontics of Reno, Inc., a Delaware corporation (the
"MSO") with reference to the following facts:
WHEREAS, pursuant to a Management Services Agreement (the "Agreement"),
dated as of the date hereof, between the New PC and the MSO, as assurance and
collateral security for the payment of the monthly Management Fees owed to the
MSO pursuant to the Agreement and any funds advanced by the MSO to or on behalf
of the New PC pursuant to the Agreement and for the faithful and timely
performance of all the covenants and conditions to be performed by the New PC
under the Agreement (collectively, the "Obligations") the New PC agreed to
pledge, grant, bargain, assign and transfer to the MSO a security interest,
pursuant to the Uniform Commercial Code of the State, in and to all Practice
Revenue and the accounts receivable of patients of the New PC, together with all
proceeds thereof (collectively, the "Collateral");
WHEREAS, the New PC is obligated as a condition to the MSO's performance
under the Agreement to execute and deliver this Security Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. Grant of Security Interest. As and for collateral security for payment
by the New PC of the Obligations and any and all amounts payable under this
Security Agreement (collectively, the "Secured Obligations"), the New PC hereby
pledges, grants, bargains, assigns and transfers to the MSO, and grants to the
MSO a security interest in, the Collateral. Xx. Xxxx shall cause the New PC to
perform fully and on a timely basis all of the New PC's obligations under this
Security Agreement. The MSO may at its option file a financing statement (Form
UCC-1) in order to perfect its security interest hereunder.
2. Representations and Warranties. The New PC represents and warrants all
of the accounts receivable constituting a portion of the Collateral of the New
PC pledged to the MSO are and will be validly created obligations of each of the
obligors who incurred same for services actually rendered in the ordinary course
of business of the New PC. Further, the New PC represents and warrants that the
Collateral is not subject to any lien, pledge, charge, encumbrance or security
interest or right or option on the part of any third person.
3. Release of Security Interest. Upon the termination of the Agreement and
payment in full of the accrued Management Fees thereunder and any and all other
Secured Obligations, the MSO shall release its security interest hereunder, and
will deliver to the New PC any property forming part of the Collateral delivered
to the MSO and then held by the MSO hereunder.
4. Realization of Collateral. The MSO shall have, with respect to the
Collateral, the rights and obligations of a secured party under the Uniform
Commercial Code as adopted in the state of Nevada (the "State"). Such rights
shall include, without limitation, the following:
A. The right, upon default, to have the Collateral, or any part
thereof, transferred to its own name or to the name of its nominee;
B. The right, upon default, to sell, assign or deliver as much of
the Collateral as is reasonably necessary to repay the defaulted indebtedness
(together with expenses attendant upon such sale and repayment), at public or
private sale, as the MSO may elect, either for cash or on credit, without
assumption of any credit risk and without demand or advertisement (unless
otherwise required by law).
C. The New PC hereby irrevocably authorizes the MSO to sign and file
financing statements naming the New PC as the debtor and the MSO as the secured
party, at any time with respect to any Collateral, without the signature of the
New PC. The New PC hereby irrevocably appoints the MSO as the New PC's
attorney-in-fact, with full authority in the place and stead of the New PC and
in the name of the New PC, from time to time in the MSO's discretion, to take
any action and to execute any instrument which the MSO may deem necessary or
advisable to accomplish the purposes hereof. The attorney-in-fact granted herein
is coupled with an interest and is irrevocable. Third parties and entities and
persons not a party to this Security Agreement are entitled to rely on this
attorney-in-fact and an affidavit of the MSO attesting thereto. The acceptance
of this appointment by the MSO shall not obligate it to perform any duty or
covenant required to be performed by the New PC under or by virtue of the
Collateral. Notwithstanding the foregoing power of attorney, the New PC shall at
any time on the request of the MSO, sign Financing Statements, security
agreements or other agreements with respect to any Collateral. Upon the New PC's
failure to sign said Financing Statements, security agreements or other
agreements, the MSO is authorized as the agent of the New PC to sign any such
instruments. Upon the request of the MSO, the New PC agrees to pay all filing
fees and to reimburse the MSO on demand for all costs and expenses of any kind
(including, without limitation, legal fees) incurred in any way in connection
with the Collateral.
5. Purchase of Collateral. At any such private or public sale of the
Collateral or part thereof, the MSO may purchase and pay for the same by
cancellation of such portion of the Obligations, equal to the purchase price and
free of any right of redemption on the part of the New PC. The MSO agrees,
however, that the New PC shall have all rights, including rights of notice,
provided by the Uniform Commercial Code as adopted in the State. In any case
where notice is required, five days' notice shall be deemed reasonable notice.
In the event of any sale hereunder, the MSO shall apply the proceeds in the
order set forth below in Paragraph 6 hereof. The MSO may have resort to the
Collateral or any portion thereof with no requirements on the part of the MSO to
proceed first against any other person or property.
6. Application of Collateral. Proceeds from the sale of the Collateral or
any part thereof shall be applied by the MSO in the following order:
A. To the payment of the costs and expenses of collection incurred
by the MSO, including, without limitation, attorneys' fees and all other
reasonable expenses, liabilities and costs incurred by the MSO in connection
therewith;
B. To the payment of the whole amount then owing and unpaid for
advances and/or Management Fees;
C. To the payment in full of all other Obligations of the New PC
under the Agreement; and
D. To the payment to the New PC of any surplus then remaining from
such proceeds.
7. Extension of Agreement. No Renewal or extension of the Agreement, no
release or surrender of any Collateral given as security in connection
therewith, and no delay in enforcement thereof or in exercising any right or
power with respect thereto or hereunder shall affect the rights of the MSO with
respect to the Collateral or any part thereof.
8. Notices. Any notice to be given pursuant to this Agreement shall be
deemed effective the same day when such notice is given personally, or by
telegram, or electronic transmission to the President of the party to whom
notice is being given. Notice by mail shall be deemed effective three days after
deposit in the United States mail, and properly addressed with postage prepaid.
Notices to the MSO shall be given at:
Omega Orthodontics of Reno, Inc.
c/o Omega Orthodontics, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
or other such addresses as may be delivered by the MSO to the New PC from time
to time in writing.
Notices to the New PC shall be given at:
0000 Xxxxxxxx Xxxxxx - Xxxxx 0
Xxxx, Xxxxxx 00000
Attn: Xxxxxx X. Xxxx, D.D.S.
or other such addresses as may be delivered by the New PC to the MSO from time
to time in writing.
9. Waiver. The waiver by either party to this Security Agreement of any
one or more defaults, if any, on the part of the other party, shall not be
construed to operate as a waiver of the other or future defaults under this
Agreement. This Security Agreement may be amended or modified only by the
written consent of both parties.
10. Additional Documents. The New PC agrees that it will duly execute and
deliver to the MSO any additional documents which may be reasonably necessary to
give effect fully to the security interest granted to the MSO hereunder,
including, without limitation, a financing statement on Form UCC-1.
11. Benefit. This Security Agreement shall inure to the benefit of and
shall be binding upon the respective heirs, successors and assigns of the
parties hereto.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State.
13. Defined Terms. Capitalized terms used in this Security Agreement which
are not defined herein but which are defined in the Agreement, shall have the
respective meanings ascribed therein.
14. Counterparts. This Security Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first hereinabove written.
NEW PC: MSO:
OMEGA ORTHODONTICS OF
RENO, INC.
By:____________________________ By:__________________________
Name: Xxxxxx X. Xxxx Name: Xxxxxx X. Xxxxxxxx
Title: President Title: President
XX. XXXX
_______________________________
Xxxxxx X. Xxxx, D.D.S.
EXHIBIT E
ALTERNATIVE DISPUTE RESOLUTION PROCEDURES
A. Method of Invoking ADR Procedures
1. These procedures may be invoked by any party to an agreement which
incorporates these procedures by giving written notice to the other of the
dispute and designating a person with decision-making authority (the
"representative") to act on behalf of the disputing party regarding the dispute.
The other party shall be required to respond to the disputing party's notice
within five (5) business days by designating in writing its own representative.
A party may choose more than one person to represent it. If a party appoints
only one representative, one or more of its officers may nonetheless attend such
meetings.
2. The parties, each acting through its representative, shall meet at a
mutually acceptable time and place within five business days after the
non-disputing party designates its representative to the other. At that meeting,
the parties shall attempt in good faith to negotiate a resolution of the
dispute, or failing that, to agree on a method for resolving the claim or
dispute.
3. If, within ten (10) business days after the first meeting or within
such longer period of time as the parties may mutually agree, the parties have
not succeeded in negotiating a resolution of the claim or dispute or agreeing on
a dispute resolution mechanism, they shall submit the dispute to mediation in
accordance with the procedures set forth herein.
4. The parties will jointly appoint a mutually acceptable mediator to
mediate the dispute. If the parties are unable to agree on a mutually acceptable
mediator within five (5) days after the conclusion of the negotiations described
in paragraph 3 above, then the parties shall select a neutral third party from
the Center for Public Resources, New York, New York ("CPR") Panels of Neutrals
or the American Arbitration Association ("AAA"), with the assistance of CPR or
AAA, unless the parties agree otherwise in finding a mutually acceptable
mediator.
5. The New PC and the MSO shall each bear 50% of the fees and costs of the
mediator and any fees and costs of CPR or AAA.
6. The parties agree to participate in good faith in the mediation and
negotiations related thereto for a period of thirty (30) days from appointment
of a mediator by any of the parties or the CPR or AAA.
B. Mediation procedures
1. The mediator shall be neutral and impartial.
2. The mediator shall control the procedural aspects of the mediation. The
parties will cooperate fully with the mediator.
(a) The mediator is free to meet and communicate separately with each
party.
(b) The mediator will decide when to hold joint meetings with the
parties and when to hold separate meetings. There shall be no
stenographic record of any meeting. Formal rules of evidence will not
apply.
(c) The mediator may request that there be no direct communication
between the parties or between their attorneys without the concurrence
of the mediator.
3. Each party may be represented by more than one person, e.g., one or
more of its officers and an attorney. Each party will have a representative
fully authorized to negotiate a settlement of the dispute present.
4. The process will be conducted expeditiously.
5. The mediator will not transmit information received from any party to
another party or any third person unless authorized to do so by the party
transmitting the information.
6. The entire process is confidential. The parties and the mediator will
not disclose information regarding the process, including settlement terms, to
third persons, unless the parties otherwise agree. The process shall be treated
as a compromise negotiation for purposes of the Federal Rules of Evidence and
state rules of evidence.
7. The parties will refrain from pursuing administrative and/or judicial
remedies during the mediation process, except as otherwise expressly provided in
the agreement which incorporates these procedures.
8. Unless all parties and the mediator otherwise agree in writing,
(a) The mediator will be disqualified as a witness, consultant or expert
in any pending or future investigation, action or proceeding relating to
the subject matter of the mediation (including any investigation, action
or proceeding which involves persons not party to this mediation); and
(b) The mediator and any documents and information in the mediator's
possession will not be subpoenaed in any such investigation, action or
proceeding, and all parties will oppose any effort to have the mediator
and documents subpoenaed.
9. If the dispute goes into arbitration, the mediator shall not serve as
an arbitrator, unless the parties and the mediator otherwise agree in writing.
10. The mediator, if a lawyer, may freely express views to the parties on
the legal issues of the dispute.
11. The mediator shall not be liable for any act or omission in connection
with the mediation.
12. The mediator may withdraw at any time by written notice to the parties
(i) for overriding personal reasons, (ii) if the mediator believes that a party
is not acting in good faith, or (iii) if the mediator concludes that further
mediation efforts would not be useful.
C. Binding Arbitration
If the parties do not resolve the dispute through mediation within the
period provided in Part A above, the parties shall submit the matter to binding
arbitration in Boston, Massachusetts before a qualified sole arbitrator in
accordance with the then current CPR Rules for Non-Administered Arbitration of
Business Disputes or comparable AAA rules. The sole arbitrator shall be agreed
upon by the parties within twenty (20) days after either party elects to submit
any issue to arbitration or, failing that, shall be selected by CPR or AAA. A
qualified arbitrator is one who is familiar with the principal subject matter of
the issues to be arbitrated such as by way of example, healthcare services
industry matters, management consulting services generally or business
law/corporate matters generally. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. The arbitrator shall
not have the authority to award multiple, punitive or consequential damages
under any circumstances.