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EXHIBIT 10.25
MANAGEMENT SERVICES AGREEMENT
BY AND BETWEEN
ORACARE CONSULTANTS, INC.,
A NEW JERSEY CORPORATION
AND
ORACARE DENTAL ASSOCIATES, P.A.,
A NEW JERSEY PROFESSIONAL ASSOCIATION
------------
EFFECTIVE AS OF NOVEMBER 14, 1996
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TABLE OF CONTENTS
PAGE NO.
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Adjusted Gross Revenue. . . . . . . . . . . . . . . . 2
1.2 Adjustments. . . . . . . . . . . . . . . . . . . . . 2
1.3 Agreement. . . . . . . . . . . . . . . . . . . . . . 2
1.4 Ancillary Revenue. . . . . . . . . . . . . . . . . . 2
1.5 Association. . . . . . . . . . . . . . . . . . . . . 2
1.6 Association Account. . . . . . . . . . . . . . . . . 2
1.7 Association Expense. . . . . . . . . . . . . . . . . 2
1.8 Budget. . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Capitation Revenues. . . . . . . . . . . . . . . . . 2
1.10 Confidential Information. . . . . . . . . . . . . . . 3
1.11 Dental Director . . . . . . . . . . . . . . . . . . . 3
1.12 Dental Services. . . . . . . . . . . . . . . . . . . 3
1.13 Dentist. . . . . . . . . . . . . . . . . . . . . . . 3
1.14 GAAP. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 Management Fee. . . . . . . . . . . . . . . . . . . . 4
1.16 Manager. . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Manager Expense. . . . . . . . . . . . . . . . . . . 4
1.18 Office. . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 Office Expense. . . . . . . . . . . . . . . . . . . . 4
1.20 Professional Services Revenues. . . . . . . . . . . . 5
1.21 Representatives. . . . . . . . . . . . . . . . . . . 5
1.22 State. . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 Term. . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2 APPOINTMENT AND AUTHORITY OF MANAGER . . . . . . . . . . . . 5
2.1 Appointment. . . . . . . . . . . . . . . . . . . . . 5
2.2 Authority. . . . . . . . . . . . . . . . . . . . . . 5
2.3 Patient Referrals. . . . . . . . . . . . . . . . . . 6
2.4 Internal Management of the Association. . . . . . . . 6
2.5 Practice of Dentistry. . . . . . . . . . . . . . . . 6
ARTICLE 3 COVENANTS AND RESPONSIBILITIES OF MANAGER . . . . . . . . . 6
3.1 Office and Equipment. . . . . . . . . . . . . . . . . 6
3.2 Dental Supplies. . . . . . . . . . . . . . . . . . . 7
3.3 Support Services. . . . . . . . . . . . . . . . . . . 7
3.4 Quality Assessment, Risk Management, and Utilization
Management. . . . . . . . . . . . . . . . . . . . . . 7
3.5 Licenses and Permits. . . . . . . . . . . . . . . . . 7
(i)
3
3.6 Personnel. . . . . . . . . . . . . . . . . . . . . . 7
3.7 Contract Negotiations. . . . . . . . . . . . . . . . 8
3.8 Billing and Collection. . . . . . . . . . . . . . . . 8
3.9 The Association Account. . . . . . . . . . . . . . . 9
3.10 Fiscal Matters. . . . . . . . . . . . . . . . . . . . 10
(a) Annual Budget . . . . . . . . . . . . . . . . 10
(b) Accounting and Financial Records . . . . . . . 10
(c) Review of Expenditures . . . . . . . . . . . . 10
(d) Tax Matters . . . . . . . . . . . . . . . . . 11
(i) In General . . . . . . . . . . . . . . 11
(ii) Sales and Use Taxes . . . . . . . . . . 11
3.11 Reports and Records. . . . . . . . . . . . . . . . . 11
(a) Dental Records . . . . . . . . . . . . . . . . 11
(b) Other Reports and Records . . . . . . . . . . 11
3.12 Recruitment of the Association Personnel and Dentists. 11
3.13 Healthcare Reimbursement and Systems Programs. . . . 12
3.14 Corporate Dental Patient Accounts. . . . . . . . . . 12
3.15 Advertising. . . . . . . . . . . . . . . . . . . . . 12
3.16 Association Board of Directors Meetings. . . . . . . 12
3.17 Legal Matters. . . . . . . . . . . . . . . . . . . . 12
3.18 Credentialing. . . . . . . . . . . . . . . . . . . . 12
3.19 Confidential and Proprietary Information. . . . . . . 12
3.20 Manager's Insurance. . . . . . . . . . . . . . . . . 13
3.21 Reserved Duties of Manager. . . . . . . . . . . . . . 13
3.22 No Warranty. . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 4 COVENANTS AND RESPONSIBILITIES OF THE ASSOCIATION . . . . . 14
4.1 Organization and Operation. . . . . . . . . . . . . . 14
4.2 Association Personnel. . . . . . . . . . . . . . . . 14
(a) Dentist Personnel . . . . . . . . . . . . . . 14
(b) Non-Dentist Health Care Personnel . . . . . . 15
(c) Dentist Compensation . . . . . . . . . . . . . 15
4.3 Professional Standards. . . . . . . . . . . . . . . . 15
4.4 Dental Services. . . . . . . . . . . . . . . . . . . 15
4.5 Peer Review/Quality Assessment. . . . . . . . . . . . 16
4.6 Association's Insurance. . . . . . . . . . . . . . . 16
4.7 Indemnification. . . . . . . . . . . . . . . . . . . 17
4.8 Confidential and Proprietary Information. . . . . . . 17
4.9 Cost Effectiveness. . . . . . . . . . . . . . . . . . 17
4.10 Name, Trademark. . . . . . . . . . . . . . . . . . . 18
4.11 Availability. . . . . . . . . . . . . . . . . . . . . 18
4.12 Covenant Not to Solicit. . . . . . . . . . . . . . . 18
ARTICLE 5 FINANCIAL ARRANGEMENT . . . . . . . . . . . . . . . . . . . 18
5.1 Management Fee. . . . . . . . . . . . . . . . . . . . 18
(ii)
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5.2 Reasonable Value. . . . . . . . . . . . . . . . . . . 19
5.3 Payment of Management Fee. . . . . . . . . . . . . . 19
5.4 Disputes Regarding Fees. . . . . . . . . . . . . . . 19
5.5 Accounts Receivable. . . . . . . . . . . . . . . . . 19
ARTICLE 6 TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . 20
6.1 Initial and Renewal Term. . . . . . . . . . . . . . . 20
6.2 Termination. . . . . . . . . . . . . . . . . . . . . 20
(a) Termination By Manager . . . . . . . . . . . . 20
(b) Termination By the Association . . . . . . . . 21
(c) Termination by Agreement . . . . . . . . . . . 21
(d) Legislative, Regulatory or Administrative Change 21
6.3 Effects of Termination. . . . . . . . . . . . . . . . 21
ARTICLE 7 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 22
7.1 Administrative Services Only. . . . . . . . . . . . . 22
7.2 Status of Contractor. . . . . . . . . . . . . . . . . 22
7.3 Notices. . . . . . . . . . . . . . . . . . . . . . . 22
7.4 Governing Law. . . . . . . . . . . . . . . . . . . . 23
7.5 Assignment. . . . . . . . . . . . . . . . . . . . . . 23
7.6 Dispute Resolution. . . . . . . . . . . . . . . . . . 23
7.7 Divisions and Headings. . . . . . . . . . . . . . . . 24
7.8 Amendments and Agreement Execution. . . . . . . . . . 24
7.9 Entire Agreement. . . . . . . . . . . . . . . . . . . 24
7.10 Severability. . . . . . . . . . . . . . . . . . . . . 24
(iii)
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MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT ("Agreement") is made and entered
into effective as of this 14th day of November, 1996, by and between OraCare
Consultants, Inc., a New Jersey corporation ("Manager"), and OraCare Dental
Associates, P.A., a New Jersey professional association ("Association").
RECITALS
WHEREAS, the Association is a duly organized and validly existing New
Jersey professional association, formed for and engaged in the conduct of a
dental practice and the provision of dental services to the general public in
New Jersey through individual dentists who are licensed to practice medicine in
the State of New Jersey and who are employed or otherwise retained by the
Association;
WHEREAS, Manager is a duly formed and validly existing New Jersey
corporation, which is in the business of managing the non-medical aspects of
dental practices;
WHEREAS, the Association desires to focus its energies, expertise and
time on the practice of dentistry and on the delivery of dental services to
patients, and to accomplish this goal it desires to delegate the increasingly
more complex business functions of its dental practice to persons with business
expertise;
WHEREAS, the Association also is desirous of increasing the cost-
effectiveness of the dental care it provides and desires to enlist the
assistance of Manager in this regard;
WHEREAS, the Association desires to engage Manager to provide such
management, administrative and business services as are necessary and
appropriate for the day-to-day administration of the non-medical aspects of the
Association's dental practice, and Manager desires to provide such services all
upon the terms and conditions hereinafter set forth;
WHEREAS, the Association and Manager have determined a fair market value
for the services to be rendered by Manager, and based on this fair market
value, have developed a formula for compensation for Manager that will allow
the parties to establish a relationship permitting each party to devote its
skills and expertise to the appropriate responsibilities and functions; and
WHEREAS, Manager is willing to commit significant resources to the
Association based upon the representations and warranties of the Association
that the current employee dentists of the Association will continue to practice
medicine for the Association;
NOW, THEREFORE, for and in consideration of the mutual terms, covenants
and conditions hereinabove and hereinafter set forth, the parties agree as
follows:
MANAGEMENT SERVICES AGREEMENT - Page 1
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ARTICLE 1
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
following meanings ascribed thereto unless otherwise clearly required by the
context in which such term is used.
1.1 Adjusted Gross Revenue. The term "Adjusted Gross Revenue" shall
mean the sum of all Professional Services Revenue and Ancillary Revenue.
1.2 Adjustments. The term "Adjustments" shall mean any adjustments
on an accrual basis for uncollectible accounts, Medicare, Medicaid and other
payor contractual adjustments, discounts, workers' compensation adjustments,
professional courtesies, and other reductions in collectible revenue that
result from activities that do not result in collectible charges.
1.3 Agreement. The term "Agreement" shall mean this Agreement by and
between the Association and Manager and any amendments hereto as may be adopted
as provided in this Agreement.
1.4 Ancillary Revenue. The term "Ancillary Revenue" shall mean all
fees actually recorded each month by the Association (net of Adjustments) which
are not Professional Services Revenues.
1.5 Association. The term "Association" shall mean OraCare Dental
Associates, P.A., a New Jersey professional association.
1.6 Association Account. The term "Association Account" shall mean
the bank account of the Association established as described in Sections 4.8
and 4.9.
1.7 Association Expense. The term "Association Expense" shall mean
an expense incurred by the Manager or the Association and for which the
Association and not the Manager, is financially liable. The Association
Expense shall include such items as Dentist salaries and benefits (including
professional dues, subscriptions, charitable donations, and continuing dental
education expenses) and professional liability insurance for the Association,
the Dentists and the Manager's employees rendering services pursuant to this
Agreement.
1.8 Budget. The term "Budget" shall mean an operating budget and
capital expenditure budget for each fiscal year as prepared by Manager and
adopted by the Association.
1.9 Capitation Revenues. The term "Capitation Revenues" shall mean
all collections from managed care organizations or third party payors where
such payment is made periodically on a per member basis for the partial or
total dental needs of a subscribing patient. Capitation Revenues shall include
any co-payments and incentive bonuses or profits in shared risk pools
MANAGEMENT SERVICES AGREEMENT - Page 2
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received as a result of a capitation plan. Capitation Revenues shall be
allocated between Professional Services Revenue and Ancillary Revenue by the
Manager.
1.10 Confidential Information. The term "Confidential Information"
shall mean any information of Manager or the Association, as appropriate
(whether written or oral), including all notes, studies, patient lists,
information, business or management methods, marketing data, fee schedules, or
trade secrets of the Manager or of the Association, as applicable, whether or
not such Confidential Information is disclosed or otherwise made available to
one party by the other party pursuant to this Agreement. Confidential
Information shall also include the terms and provisions of this Agreement and
any transaction or document executed by the parties pursuant to this Agreement.
Confidential Information does not include any information that the receiving
party can establish (i) is or becomes generally available to and known by the
public (other than as a result of an unpermitted disclosure directly or
indirectly by the receiving party or its affiliates, advisors, or
Representatives), (ii) is or becomes available to the receiving party on a
non-confidential basis from a source other than the furnishing party or its
affiliates, advisors, or Representatives, provided that such source is not and
was not bound by a confidentiality agreement with or other obligation of
secrecy to the furnishing party of which the receiving party has knowledge, or
(iii) has already been or is hereafter independently acquired or developed by
the receiving party without violating any confidentiality agreement with or
other obligation of secrecy to the furnishing party.
1.11 Dental Director. The term "Dental Director" shall mean that
director of the Association designated by the Association as the director
responsible for the overall management of the Association, who shall be a
dentist duly licensed and in good standing in the State of New Jersey.
1.12 Dental Services. The term "Dental Services" shall mean general
and specialty dental care and services, and all related health care services
provided by the Association through the Association's Dentists and other health
care providers that are retained by or professionally affiliated with the
Association.
1.13 Dentist. The term "Dentist" shall mean each individually
licensed professional who is employed or otherwise retained by or associated
with the Association, each of whom shall meet at all times the qualifications
described in Section 4.2 and Section 4.3.
1.14 GAAP. The term "GAAP" shall mean generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity or other practices and procedures as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of the determination. For
purposes of this Agreement, GAAP shall be applied on an accrual basis in a
manner consistent with the historic practices of the person to which the term
applies.
MANAGEMENT SERVICES AGREEMENT - Page 3
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1.15 Management Fee. The term "Management Fee" shall mean Manager's
compensation established as described in Article 6 hereof.
1.16 Manager. The term "Manager" shall mean OraCare Consultants,
Inc., a New Jersey corporation, or any entity that succeeds to the interests of
OraCare Consultants, Inc. and to whom the obligations of Manager are assigned
and transferred as permitted by this Agreement.
1.17 Manager Expense. The term "Manager Expense" shall mean an
expense or cost incurred by the Manager and for which the Manager, and not the
Association is financially liable.
1.18 Office. The term "Office" shall mean any office space, clinic,
facility, including satellite facilities, that Manager shall own or lease or
otherwise procure for the use of the Association.
1.19 Office Expense. The term "Office Expense" shall mean all
operating and non-operating expenses incurred by the Manager or the Association
in the provision of services to the Association, including, but not limited to,
the following expenses:
(a) Salaries and benefits and other direct costs of all
employees of Manager at the Office and the salaries and benefits of the
non-dentist employees of the Association but shall not include the
salaries or benefits of the Dentists;
(b) The direct cost of any employee or consultant that
provides services at or in connection with the Office for improved
clinic performance, such as management, billing and collections, and
business office consultation;
(c) In the event Manager assists the Association in the
recruitment of additional dentist employees, Office Expense shall
include reasonable recruitment costs and out-of-pocket expenses of
Manager;
(d) Comprehensive and general liability insurance covering the
Office and employees of the Association and Manager at the Office;
(e) The expense of using, leasing, purchasing or otherwise
procuring the Office and related equipment, including depreciation but
not including monies paid by third parties;
(f) The cost of capital (whether as actual interest on
indebtedness incurred on behalf of the Association or as reasonable
imputed interest on capital advanced by Manager) to finance or refinance
obligations of the Association, purchase medical or nonmedical
equipment, or finance new ventures of the Association;
(g) The reasonable travel expenses of Manager's New Jersey
employees, or of the Dentists, associated with attending meetings,
conferences, or seminars to benefit the Association;
MANAGEMENT SERVICES AGREEMENT - Page 4
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(h) The cost of supplies, inventory, and utilities; and
(i) Office Expenses shall not include any State or federal
income tax on income of Manger, or any other expense reasonably
designated by Manager as a Manager Expense.
1.20 Professional Services Revenues. The term "Professional Services
Revenues" shall mean the sum of (i) all professional fees actually recorded
each month on an accrual basis under GAAP (net of Adjustments) as a result of
professional dental services rendered by the Dentists, (ii) Capitation Revenues
allocated by Manager to Professional Services Revenues, (iii) income produced
from the services of physician assistants or extenders, and (iv) all revenue or
contributions relating to research activities by dentists of the Association as
part of their employment with Association.
1.21 Representatives. The term "Representatives" shall mean a party's
officers, directors, employees, or other agents or representatives.
1.22 State. The term "State" shall mean the State of New Jersey.
1.23 Term. The term "Term" shall mean the initial and any renewal
periods of duration of this Agreement as described in Section 5.1.
ARTICLE 2
APPOINTMENT AND AUTHORITY OF MANAGER
2.1 Appointment. The Association hereby appoints Manager as its sole
and exclusive agent for the management and administration of the business
functions and business affairs of the Association, and Manager hereby accepts
such appointment, subject at all times to the provisions of this Agreement.
2.2 Authority. Consistent with the provisions of this Agreement,
Manager shall have the responsibility and commensurate authority to provide
business, administrative and full management services for the Association,
including, without limitation, provision of equipment, supplies, support
services, non-dental personnel, office space, management, administration,
financial record keeping and reporting and other business office services.
Manager is hereby expressly authorized to provide such services in any
reasonable manner Manager deems appropriate to meet the day-to-day requirements
of the business functions of the Association. Manager is also expressly
authorized to negotiate and execute on behalf of the Association contracts that
do not relate to the provision of Dental Services. The Association shall give
Manager thirty (30) days prior notice of the Association's intent to execute
any agreement obligating the Association to perform Dental Services or
otherwise creating a binding legal obligation on the Association. Unless an
expense is expressly designated as a Manager Expense in this Agreement, all
expenses incurred by Manager in providing services pursuant to this Agreement
shall be Office Expenses. The parties acknowledge and agree that the
Association,
MANAGEMENT SERVICES AGREEMENT - Page 5
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through its Dentists, shall be responsible for and shall have complete
authority, responsibility, supervision, and control over the provision of all
Dental Services and other professional health care services performed for
patients, and that all diagnoses, treatments, procedures, and other
professional health care services shall be provided and performed exclusively
by or under the supervision of Dentists as such Dentists, in their sole
discretion, deem appropriate. Manager shall have and exercise absolutely no
control or supervision over the provision of Dental Services.
2.3 Patient Referrals. Manager and the Association agree that the
benefits to the Association hereunder do not require, are not payment for, and
are not in any way contingent upon the referral, admission, or any other
arrangement for the provision of any item or service offered by Manager to
patients of the Association in any facility or health care operation
controlled, managed, or operated by Manager.
2.4 Internal Management of the Association. Matters involving the
internal management, control, or finances of the Association, including
specifically the allocation of professional income among the shareholder(s) and
Dentist employees of the Association, tax planning, and investment planning,
shall remain the responsibility of the Association and the shareholder(s) of
the Association.
2.5 Practice of Dentistry. The parties acknowledge that Manager is
not authorized or qualified to engage in any activity that may be construed or
deemed to constitute the practice of dentistry. To the extent any act or
service herein required by Manager should be construed by a court of competent
jurisdiction to constitute the practice of dentistry, the requirement to
perform that act or service by Manager shall be deemed waived and
unenforceable.
ARTICLE 3
COVENANTS AND RESPONSIBILITIES OF MANAGER
During the Term of the Agreement, Manager shall provide all such
management, administrative and business services as are necessary and
appropriate for the day-to-day administration of the business aspects of the
Association's operations, including without limitation those set forth in this
Article 4 in accordance with the law and all rules, regulations and guidelines
of applicable governmental agencies.
3.1 Office and Equipment. As necessary and appropriate, taking into
consideration the professional concerns of the Association, Manager shall
lease, acquire, or otherwise procure an Office in a location or locations
reasonably acceptable to the Association, and shall permit the Association to
use the Office and shall provide all non-dental equipment, fixtures, office
supplies, furniture and furnishings deemed reasonably necessary by Manager for
the operation of the Office and reasonably necessary for the provision of
Dental Services. Manager shall also provide, finance, or cause to be provided
or financed equipment related to the provision of Dental Services as required
by the Association. Subject to economic feasibility, the Association shall
have final authority in all dental equipment decisions, and Manager shall have
no authority in regard to dental equipment issues. Manager may, however,
advise the Association on the relationship
MANAGEMENT SERVICES AGREEMENT - Page 6
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between its dental equipment decisions and the overall administrative and
financial operations of the practice. All dental and non-dental equipment
acquired for the use of the Association shall be owned by Manager. Manager
shall be responsible for the repair and maintenance of the Office, consistent
with Manager's responsibilities under the terms of any lease or other use
arrangement, and for the repair, maintenance, and replacement of all equipment
other than such repairs, maintenance and replacement necessitated by the
negligence or willful misconduct of the Association, its Dentists or other
personnel employed by the Association, the repair or replacement of which shall
be an Association Expense and not an Office Expense.
3.2 Dental Supplies. Manager shall order, procure, purchase and
provide on behalf of and as agent for the Association all reasonable dental
supplies unless otherwise prohibited by federal and/or State law. Furthermore,
Manager shall ensure that the Office is at all times adequately stocked with
the dental supplies that are necessary and appropriate for the operation of the
Association and required for the provision of Dental Services. The ultimate
oversight, supervision and ownership for all dental supplies is and shall
remain the sole responsibility of the Association. As used in this provision
the term "dental supplies" shall mean all drugs, pharmaceuticals, products,
substances, items or devices whose purchase, possession, maintenance,
administration, prescription or security requires the authorization or order of
a licensed health care provider or requires a permit, registration,
certification or other governmental authorization held by a licensed health
care provider as specified under any federal and/or State law.
3.3 Support Services. Manager shall provide or arrange for all
printing, stationery, forms, postage, duplication or photocopying services, and
other support services as are reasonably necessary and appropriate for the
operation of the Office and the provision of Dental Services therein.
3.4 Quality Assessment, Risk Management, and Utilization Management.
Manager shall assist the Association in the establishment and implementation of
procedures to ensure the consistency, quality, appropriateness and dental
necessity of Dental Services provided by the Association, and shall provide
administrative support for the Association's overall quality assessment, risk
management, and utilization management programs.
3.5 Licenses and Permits. Manager shall, on behalf of and in the
name of the Association, coordinate all development and planning processes, and
apply for and use Manager's reasonable best efforts to obtain and maintain all
federal, state, and local licenses and regulatory permits required for or in
connection with the operation of the Association and equipment (existing and
future) located at the Office, other than those relating to the practice of
dentistry or the administration of drugs by Dentists employed by or associated
with the Association.
3.6 Personnel. Except as specifically provided in Section 4.2 of
this Agreement, Manager shall employ or otherwise retain and shall be
responsible for selecting, training, supervising, and terminating, all
management, administrative, clerical, secretarial, bookkeeping, accounting,
payroll, billing and collection and other nonprofessional personnel as Manager
deems reasonably necessary and appropriate for Manager's performance of its
duties and obligations under this Agreement. Manager shall have sole
responsibility for determining the salaries and
MANAGEMENT SERVICES AGREEMENT - Page 7
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providing such fringe benefits, and for withholding, as required by law, any
sums for income tax, unemployment insurance, social security, or any other
withholding required by applicable law or governmental requirement for any
personnel described in the previous sentence. Manager shall not discriminate
in its employment practices on the basis of race, religion, gender, sexual
orientation, disability status, or any other factor not related to job
performance.
3.7 Contract Negotiations. Manager shall advise the Association with
respect to and shall negotiate on an exclusive basis, either directly or on the
Association's behalf, as appropriate, all contractual arrangements with third
parties as are reasonably necessary and appropriate for the Association's
provision of Dental Services, including, without limitation, negotiated price
agreements with third party payors, managed care organizations, or other
purchasers of group health care services. No contract or arrangement regarding
the provision of Dental Services shall be entered without the Association's
consent.
3.8 Billing and Collection. On behalf of and for the account of the
Association, Manager shall establish and maintain credit and billing and
collection policies, procedures, and forms, and shall use Manager's reasonable
best efforts to timely ▇▇▇▇ and collect all professional and other fees for all
billable Dental Services provided by the Association, or Dentists employed by
or otherwise associated with the Association. Manager shall advise and consult
with the Association regarding the fees for Dental Services provided by the
Association; it being understood, however, that the Association shall establish
the fees to be charged for Dental Services and that Manager shall have no
authority whatsoever with respect to the establishment of such fees. In
connection with the billing and collection services to be provided hereunder,
and throughout the Term and thereafter as provided in this Agreement, the
Association hereby grants to Manager an exclusive special power of attorney and
appoints Manager as the Association's exclusive true and lawful agent and
attorney-in-fact, and Manager hereby accepts such special power of attorney and
appointment, for the following purposes:
(a) To ▇▇▇▇ the Association's patients, in the Association's
name and on the Association's behalf, for all billable Dental Services
provided by the Association to patients.
(b) To ▇▇▇▇, in the Association's name and on the
Association's behalf, all claims for reimbursement or indemnification
from Blue Cross/Blue Shield, insurance companies, Medicare, Medicaid,
and all other third party payors or fiscal intermediaries for all
covered billable Dental Services provided by the Association to
patients.
(c) To collect and receive, in the Association's name and on
the Association's behalf, all accounts receivable generated by such
▇▇▇▇▇▇▇▇ and claims for reimbursement, to administer such accounts
including, but not limited to, extending the time of payment of any such
accounts for cash, credit or otherwise; discharging or releasing the
obligors of any such accounts; suing, assigning or selling at a discount
such accounts to collection agencies; or taking other measures deemed
necessary by the Manager in its sole discretion to require the payment
of any such accounts; provided, however, that extraordinary collection
measures, such as discharging or releasing obligors or assigning or
selling
MANAGEMENT SERVICES AGREEMENT - Page 8
13
accounts at a discount to collection agencies shall not be undertaken
without the approval of the Association.
(d) To deposit all amounts collected into the Association
Account which shall be and at all times remain in the Association's
name. The Association covenants to transfer and deliver to Manager all
funds received directly by the Association from patients or third party
payors for Dental Services. Upon receipt by Manager of any funds from
patients or third party payors, or from the Association pursuant hereto,
for Dental Services, Manager shall immediately deposit same into the
Association Account. Manager shall disburse such deposited funds to
creditors and other persons on behalf of the Association, maintaining
records of such receipt and disbursement of funds as directed by the
Association.
(e) To take possession of, endorse in the name of the
Association, and deposit into the Association Account any notes, checks,
money orders, insurance payments, and any other instruments received in
payment of accounts receivable for Dental Services.
Upon request of Manager, the Association shall execute and deliver to
the financial institution wherein the Association Account is maintained, such
additional documents or instruments as may be necessary to evidence or effect
the special power of attorney granted to Manager by the Association pursuant to
this Section 3.8 or pursuant to Section 3.9 of this Agreement. The special
power of attorney granted herein shall be coupled with an interest and except
as hereinafter provided shall be irrevocable. The special power of attorney
shall be revocable if: (i) Manager consents in writing, (ii) the Association
terminates this Agreement for cause under Section 6.2 and Manager has not
purchased any of the accounts receivable of the Association, (iii) the
Association terminates this Agreement for cause under Section 6.2 and Manager
has collected all of the outstanding accounts receivable it has purchased, or
(iv) this Agreement terminates at the end of the initial term. Revocation of
the special power of attorney shall not affect the Manager's right to receive
the Management Fee.
3.9 The Association Account. Manager shall have access to the
Association Account solely for the purposes stated herein. In connection
herewith and throughout the Term (and thereafter as provided in Section 6.2),
the Association hereby grants to Manager an exclusive special power of attorney
and appoints Manager as the Association's exclusive true and lawful agent and
attorney-in-fact, and Manager hereby accepts such special power of attorney and
appointment, to deposit into the Association Account all funds, fees, and
revenues generated from the Association's provision of Dental Services and
collected by Manager, and to make withdrawals from the Association Account for
payments specified in this Agreement and as requested from time-to-time by the
Association. Notwithstanding the exclusive special power of attorney granted
to Manager hereunder, the Association, upon reasonable advance notice to
Manager, may draw checks on the Association Account; provided, however, that
the Association shall neither draw checks on the Association Account nor
request Manager to do so if the balance remaining in the Association Account
after such withdrawal would be insufficient to enable Manager to pay on behalf
of the Association any Office Expense attributable to the operations of the
Association or to the provision of Dental Services, the estimated Management
Fee for the
MANAGEMENT SERVICES AGREEMENT - Page 9
14
applicable month (based on the Management Fee for the previous month), any over
due Management Fees, and/or any other obligations of the Association. Without
the prior written consent of the Association, disbursements shall be related
to, and in such amount as to be consistent with, the expenditures authorized by
the Budget. Limits on authority to sign checks and purchase orders shall be
mutually agreed upon by the Association and Manager.
3.10 Fiscal Matters.
(a) Annual Budget. Annually and at least thirty (30) days
prior to the commencement of each fiscal year of the Association,
Manager, in consultation with the Dental Director, shall prepare and
deliver to the Association a Budget, setting forth an estimate of the
Association's revenues and expenses for the upcoming fiscal year
including, without limitation, the Management Fee associated with the
services provided by Manager hereunder, and the minimum salary of the
Dentist employees of the Association as set forth in their respective
employment agreements. The Budget shall be adopted by the Association
after reasonable review and comment, and may be revised or modified by
the Dental Director only in consultation with the Manager. In the event
the parties are unable to agree on a Budget by the beginning of the
fiscal year, until an agreement is reached, the Budget for the prior
year shall be deemed to be adopted as the Budget for the current year,
with each line item in the Budget increased or decreased by (i) the
percentage by which the Adjusted Gross Revenue in the current year has
increased or decreased compared to the corresponding period of the prior
year, (ii) the increase or decrease from the prior year in the Consumer
Price Index - Health/Dental Services, and (iii) the proportionate
increase or decrease in mutually agreed upon personnel costs as measured
by the increase or decrease in full-time equivalent personnel. Manager
shall endeavor to manage and administer the operations of the
Association as herein provided so that the actual revenues, costs and
expenses of the operation and maintenance of the Association during any
applicable period of the Association's fiscal year shall be consistent
with the Budget.
(b) Accounting and Financial Records. Manager shall establish
and administer accounting procedures, controls, forms, and systems for
the development, preparation, and safekeeping of administrative or
financial records and books of account relating to the business and
financial affairs of the Association and the provision of Dental
Services. Manager shall prepare and deliver to the Association, within
ninety (90) days of the end of each calendar year, a balance sheet and a
profit and loss statement reflecting the financial status of the
Association in regard to the provision of Dental Services as of the end
of such calendar year. In addition, Manager shall prepare or assist in
the preparation of any other financial statements or records as the
Association may reasonably request.
(c) Review of Expenditures. The Dental Director shall review
all expenditures related to the operation of the Association, but shall
not have the power to prohibit or invalidate any expenditure consistent
with the Budget.
MANAGEMENT SERVICES AGREEMENT - Page 10
15
(d) Tax Matters.
(i) In General. Manager shall prepare or arrange for
the preparation by an accountant approved in advance by the
Association (which approval shall not be unreasonably withheld)
of all appropriate tax returns and reports required of the
Association.
(ii) Sales and Use Taxes. Manager and the Association
acknowledge and agree that to the extent that any of the services
to be provided by Manager hereunder may be subject to any State
sales and use taxes, Manager may have a legal obligation to
collect such taxes from the Association and to remit same to the
appropriate tax collection authorities. The Association agrees
to pay, in addition to the payment of the Management Fee, any
applicable State sales and use taxes in respect of the portion of
the Management Fees attributable to such services.
3.11 Reports and Records.
(a) Dental Records. Manager shall provide the personnel
support to establish, monitor, and maintain procedures and policies for
the timely creation, preparation, filing and retrieval of all dental
records generated by the Association in connection with the
Association's provision of Dental Services, and, subject to applicable
law, shall ensure that dental records are available promptly to Dentists
and any other appropriate persons. The Association shall ensure that
all such dental records shall be retained and maintained in accordance
with all applicable State and federal laws relating to the
confidentiality and retention thereof. All dental records shall be and
remain the property of the Association.
(b) Other Reports and Records. Manager shall timely create,
prepare, and file such additional reports and records as are reasonably
necessary and appropriate for the Association's provision of Dental
Services, and shall be prepared to analyze and interpret such reports
and records upon the request of the Association.
3.12 Recruitment of the Association Personnel and Dentists. Upon the
Association's request, Manager shall perform all administrative services
reasonably necessary and appropriate to recruit potential dentist personnel to
become employees of the Association. Manager shall provide the Association
with model agreements to document the Association's employment, retention or
other service arrangements with such individuals. It will be and remain the
sole and complete responsibility of the Association to interview, select,
contract with, supervise, control and terminate all Dentists performing Dental
Services or other professional services, and Manager shall have no authority
whatsoever with respect to such activities. In performing its duties for the
Association hereunder. Manager shall not discriminate in its employment
practices on the basis of race, religion, gender, sexual orientation,
disability status, or any other factor not related to job performance.
MANAGEMENT SERVICES AGREEMENT - Page 11
16
3.13 Healthcare Reimbursement and Systems Programs. Manager shall
assist the Association in qualifying for and enrolling in healthcare
reimbursement or assistance programs including, but not limited to, Medicare
and Medicaid. Any expense incurred in qualifying for or enrolling in
healthcare reimbursement or assistance programs is an Office Expense.
3.14 Corporate Dental Patient Accounts. Manager shall assist the
Association in procuring large corporate dental patient accounts by making
presentations to appropriate personnel at such businesses and by soliciting
such businesses where Manager, at its sole discretion, determines that such
solicitation would be of benefit. Any expense incurred by manager in procuring
such corporate dental patient accounts shall be an Office Expense.
3.15 Advertising. Manager will coordinate all advertising efforts of
the Association, and will place all advertisements for the Association. Any
expense incurred for such advertising shall be an Office Expense.
3.16 Association Board of Directors Meetings. A Representative of
Manager shall attend all meetings of the Board of Directors of Association, on
a non-voting basis.
3.17 Legal Matters. Manager shall be the liaison between Association
and counsel regarding any legal matters other than disputes arising from this
Agreement. Any legal expenses incurred regarding such matters shall be an
Office Expense.
3.18 Credentialing. Manager will assist the Association with a
credentialing policy for its employee dentists, including, but not limited to,
providing the following services: advising the Association regarding the
professional qualifications and credentials of Dentists; and assisting the
Association in the development of credentialing criteria and protocols. The
Association will give reasonable consideration to include as a Dentist any
dentist identified by Manager; however, the Association will have the authority
to make the final determination as to whether any particular Dentist will be
employed by the Association.
3.19 Confidential and Proprietary Information. All Confidential
Information furnished to Manager will not be discussed with other persons
without the Association's express written authorization, will not be used in
any way directly or indirectly detrimental to the Association, and will be kept
confidential by Manager and its affiliates and advisors; provided, however,
that Manager may disclose Confidential Information to those of its
Representatives who need to know Confidential Information for the purposes of
this Agreement, it being understood and agreed to by Manager that such
Representatives will be informed of the confidential nature of the Confidential
Information, will agree to be bound by this Section, and will be directed by
Manager not to disclose to any other person any Confidential Information.
Manager agrees to be responsible for any breach of this Section by its
affiliates, advisors, or Representatives. If Manager is requested or required
(by oral questions, interrogatories, requests for information or documents,
subpoenas, civil investigative demands, or similar processes) to disclose or
produce any Confidential Information furnished in the course of its dealings
with the Association or its affiliates, advisors, or Representatives, Manager
will (i) provide the Association with prompt notice thereof and copies, if
possible, and, if not, a description, of the Confidential Information
MANAGEMENT SERVICES AGREEMENT - Page 12
17
requested or required to be produced so that the Association may seek an
appropriate protective order or waive compliance with the provisions of this
Section and (ii) consult with the Association as to the advisability of the
Association's taking of legally available steps to resist or narrow such
request. Manager further agrees that, if in the absence of a protective order
or the receipt of a waiver hereunder Manager is nonetheless, in the written
opinion of its legal counsel, compelled to disclose or produce Confidential
Information concerning the Association to any tribunal or to stand liable for
contempt or suffer other censure or penalty, Manager may disclose or produce
such Confidential Information to such tribunal without liability hereunder;
provided, however, that Manager shall give the Association written notice of
the Confidential Information to be so disclosed or produced as far in advance
of its disclosure or production as is practicable and shall use its best
efforts to obtain, to the greatest extent practicable, an order or other
reliable assurance that confidential treatment will be accorded to such
Confidential Information so required to be disclosed or produced.
3.20 Manager's Insurance. Throughout the Term, Manager, as an Office
Expense, shall obtain and maintain with commercial carriers, through self
insurance or some combination thereof, appropriate worker's compensation
coverage for Manager's employed personnel provided pursuant to this Agreement,
and professional, casualty and comprehensive general liability insurance
covering Manager, Manager's personnel, and all of Manager's equipment in such
amounts, on such basis and upon such terms and conditions as Manager deems
appropriate. Upon the request of the Association, Manager shall provide the
Association with a certificate evidencing such insurance coverage. Manager may
also carry, as an Office Expense, key man life and disability insurance on any
shareholder(s) of the Association, or on any Dentist employee of the
Association in amounts determined reasonable and sufficient by Manager in its
sole discretion. Manager shall be the owner of any such insurance. During the
first five (5) years of the term of this Agreement, the proceeds of any such
disability or key man life insurance shall be used to offset the Management Fee
due to the Manager. The Management Fee shall be offset dollar for dollar by
the amount of the insurance proceeds. Insurance proceeds in excess of the
unpaid total Management Fees due over the first five (5) years shall belong to
Manager. Beginning in year six (6) of this Agreement, the proceeds of any
disability or key man life insurance shall be used for recruitment of
additional or replacement dentists.
3.21 Reserved Duties of Manager. Notwithstanding anything to the
contrary herein, the Association shall not execute any managed care contract
without the prior consent of Manager, and the Manager shall have the sole
responsibility to approve the following:
(a) The renovation or expansion or capital expenditures of the
Association;
(b) The priority of capital expenditures of the Association;
(c) The relocation or addition of the Association's
facilities;
(d) All Human Resources matters relating to the Manager's
employees.
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3.22 No Warranty. The Association acknowledges that Manager has not
made and will not make any express or implied warranties or representations
that the services provided by Manager will result in any particular amount or
level of dental practice or income to the Association.
ARTICLE 4
COVENANTS AND RESPONSIBILITIES OF THE ASSOCIATION
4.1 Organization and Operation. The Association, as a continuing
condition of Manager's obligations under this Agreement, shall at all times
during the Term be and remain legally organized and operated to provide Dental
Services in a manner consistent with all State and federal laws. The
Association shall operate and maintain a full time practice of dentistry with a
sufficient complement of full time dentists to meet the needs of its patients,
and the Association shall maintain and enforce employment agreements with all
Dentists employed by the Association. The Association shall not amend the
employment agreements or waive any rights thereunder without the prior approval
of Manager. Recognizing that Manager would not have entered into this Agreement
but for the Association's covenant to maintain employment agreements with the
Dentists of the Association, the Association shall pay to Manager, in addition
to the Management Fee, any liquidated damages received by the Association from
a Dentist that terminates his or her employment agreement without cause. Such
payment shall constitute liquidated damages of Manager for the Association's
breach of the covenant contained in this Section 4.1.
4.2 Association Personnel.
(a) Dentist Personnel. The Association shall retain, as an
Association Expense and not as an Office Expense, a sufficient number of
Dentists, as are necessary and appropriate for the provision of Dental
Services, each of whom shall be bound by and subject to the applicable
provisions of this Agreement. The Association hereby agrees that in the
event it desires to retain additional dentists, notice of the same shall
be tendered to the Manager. Based upon a review of the circumstances
the Manager shall make its recommendation as to the necessity of adding
additional dentists. The Association, after considering Manager's
recommendation, shall then decide, in its discretion, the number of
dentists to add, if any, based upon its review of the circumstances.
Each Dentist retained by the Association shall hold and maintain a valid
and unrestricted license to practice dentistry in the State of New
Jersey. In its engagement or employment of Dentists the Association
shall not discriminate on the basis of race, religion, gender, sexual
orientation, disability status, or any other factor not related to
professional performance. The Association shall enter into and maintain
with each such retained Dentist a written employment agreement. The
Association shall be responsible for paying the compensation and
benefits as applicable, for all Dentists and for withholding, as
required by law, any sums for income tax, unemployment insurance, social
security, or any other withholding required by applicable law. Manager,
on behalf
MANAGEMENT SERVICES AGREEMENT - Page 14
19
of the Association, may establish and administer the compensation with
respect to such individuals in accordance with the written agreement
between the Association and each Dentist. Manager shall neither control
nor direct any Dentist in the performance of Dental Services for
patients.
(b) Non-Dentist Health Care Personnel. All non-dentist health
care personnel who provide patient care services shall be employed by or
retained by the Association as an Office Expense and shall be under the
Association's control, supervision and direction in the performance of
or in connection with the rendering of Dental Services for patients.
The Association shall not discriminate in its employment practices on
the basis of race, religion, gender, sexual orientation, disability
status, or any other factor not related to job performance.
(c) Dentist Compensation. The Association retains the
exclusive right to establish and adjust dentist compensation and/or the
methodology to determine dentist compensation. However, the parties
acknowledge that dentist compensation methodologies are extremely
complex. Accordingly, the Association shall provide a written
description of any revisions to its Dentist's compensation methodologies
to the Manager. The Manager shall have ninety (90) days to review the
proposed revisions and provide comments to the Association regarding the
economic impact of such revisions on the strategic plans and goals of
the Association. Before finalizing any revision to the compensation
methodology the Association's shall consider the Manager's comments.
4.3 Professional Standards. As a continuing condition of Manager's
obligations hereunder, each Dentist must (i) have and maintain a valid and
unrestricted license to practice dentistry in the State and (ii) comply with,
be controlled and governed by and otherwise provide Dental Services in
accordance with applicable federal, State and municipal laws, rules,
regulations, ordinances and orders, and the ethics and standard of care of the
community wherein the principal office of the Association is located.
Procurement of temporary staff privileges pending the completion of the dental
staff approval process shall satisfy this provision, provided the Dentist
actively pursues full appointment and actually receives full appointment within
a reasonable time.
4.4 Dental Services. The Association shall ensure that Dentists and
non-dentist health care personnel are available as necessary to provide Dental
Services to patients. In the event that Dentists employed by, or partners of,
the Association are not available to provide Dental Services coverage, the
Association shall engage and retain locum tenens coverage. Dentists retained
on a locum tenens basis shall meet all of the requirements of Section 4.3, and
the cost of providing locum tenens coverage shall be an Association Expense.
With the assistance of the Manager, the Association and the Dentists shall be
responsible for scheduling Dental and non-dentist health care personnel
coverage of all dental procedures. The Association shall cause all Dentists to
exert their best efforts to develop and promote the Association in such manner
as to ensure the Association is able to serve the diverse needs of the
community.
MANAGEMENT SERVICES AGREEMENT - Page 15
20
4.5 Peer Review/Quality Assessment. The Association shall adopt
credentialing, peer review/quality assessment and utilization programs to
monitor and evaluate the quality and cost-effectiveness of Dental Services
provided by dental personnel of the Association. Upon request of the
Association, Manager shall provide administrative assistance to the Association
in performing these activities. The Association shall designate a committee of
Dentists to function as a dental peer review committee to review credentials of
potential recruits, perform quality assurance functions, and otherwise resolve
dental competence issues. The dental peer review committee shall function
pursuant to formal written polices and procedures. The Association shall
require each of its dentist employees to be subject to and comply with
reasonable credentialing, quality and efficiency criteria as it may adopt from
time to time. All such policies shall assume effective mechanisms are in place
and utilized to monitor and evaluate the delivery of cost effective quality
health care, shall assume effective remedial measures are in place and taken to
correct any quality or utilization problems and shall assume effective
proactive measures to continuously assess and improve the quality of
utilization of the Association's health care services. Additionally, these
policies shall include at least the following:
(a) All peer review, quality improvement and utilization
management activities shall be structured so as to maximize available
immunities.
(b) The Association shall report regularly to Manager as to
the performance of these activities. The purpose of this reporting is
to help assure that the peer review, quality improvement and utilization
management activities are effectively developed and implemented. This
is not intended, however, to alter the basic fact that these functions
are the Association's responsibilities, and that the proceedings and
records are and shall continue to be protected proceedings and records
of a peer review body. Reports to the Manager shall be confidential and
shall not be deemed to waive any immunities or protections conferred
upon such proceedings and records under New Jersey law.
(c) The Manager, at its sole cost and expense, shall have the
right to arrange an outside performance evaluation of the quality
improvement and utilization management functions of the Association,
including, to the extent deemed necessary by the Manager, the
performance of such functions as they relate to individual Dentists.
The results of any such evaluation shall be provided to the Dental
Director, and the parties shall use good faith and best efforts to
implement the reasonable recommendations of such performance evaluation.
4.6 Association's Insurance. The Association shall, as an Office
Expense, obtain and maintain with commercial carriers acceptable to Manager
appropriate worker's compensation coverage for the Association's employed
personnel, if any, and professional and comprehensive general liability
insurance covering the Association and each of the Dentists the Association
retains to provide Dental Services. The insurance policy or policies shall
provide for at least thirty (30) days advance written notice to the Association
from the insurer as to any alteration of coverage, cancellation, or proposed
cancellation for any cause. Upon the termination of this Agreement for any
reason, the Association shall obtain and maintain as an Association Expense
"extended reporting" coverage, in such amount and upon such conditions as
determined by
MANAGEMENT SERVICES AGREEMENT - Page 16
21
Manager for three (3) years following the effective date of the termination.
The Association shall be responsible for paying all premiums for "tail"
insurance coverage.
4.7 Indemnification. In addition to the insurance required in
Section 4.6 above, the Association shall defend, protect, indemnify and hold
harmless Manager from liability for any costs, fees, damages or other financial
obligations associated with Manager being named as a defendant in a
professional liability action against the Association or any of its employees.
4.8 Confidential and Proprietary Information. All Confidential
Information furnished to the Association will not be discussed with other
persons without Manager's express written authorization, will not be used in
any way directly or indirectly detrimental to Manager, and will be kept
confidential by the Association and its affiliates and advisors; provided,
however, that the Association may disclose Confidential Information to those of
its Representatives who need to know Confidential Information for the purposes
of this Agreement, it being understood and agreed to by the Association that
such Representatives will be informed of the confidential nature of the
Confidential Information, will agree to be bound by this Section, and will be
directed by the Association not to disclose to any other person any
Confidential Information. The Association agrees to be responsible for any
breach of this Section by its affiliates, advisors, or Representatives. If the
Association is requested or required (by oral questions, interrogatories,
requests for information or documents, subpoenas, civil investigative demands,
or similar processes) to disclose or produce any Confidential Information
furnished in the course of its dealings with Manager or its affiliates,
advisors, or Representatives, the Association will (i) provide Manager with
prompt notice thereof and copies, if possible, and, if not, a description, of
the Confidential Information requested or required to be produced so that
Manager may seek an appropriate protective order or waive compliance with the
provisions of this Section and (ii) consult with Manager as to the advisability
of Manager's taking of legally available steps to resist or narrow such
request. The Association further agrees that, if in the absence of a
protective order or the receipt of a waiver hereunder the Association is
nonetheless compelled to disclose or produce Confidential Information
concerning Manager to any tribunal or to stand liable for contempt or suffer
other censure or penalty, the Association may disclose or produce such
Confidential Information to such tribunal without liability hereunder;
provided, however, that the Association shall give Manager written notice of
the Confidential Information to be so disclosed or produced as far in advance
of its disclosure or production as is practicable and shall use its best
efforts to obtain, to the greatest extent practicable, an order or other
reliable assurance that confidential treatment will be accorded to such
Confidential Information so required to be disclosed or produced.
4.9 Cost Effectiveness. The Association understands and agrees that
it has, in part, enlisted the services of Manager in increasing the cost-
effectiveness of the dental services its dentists provide. The Association
therefore covenants and agrees to assist Manager in all ways possible to
increase the cost-effectiveness of the care delivered pursuant to recognized
national standards, providing nothing Manager proposes which may adversely
affect the quality of care delivered need to be considered by the Association
or its dentists.
MANAGEMENT SERVICES AGREEMENT - Page 17
22
4.10 Name, Trademark. The Association represents that it conducts its
professional practice under the name of, and only under the name of "OraCare
Dental Associates, P.A." and that the Association is the sole and absolute
owner of the name. The Association covenants and promises that, without the
prior written consent of the Manager, the Association will not:
(a) take any action or omit to take any action that is
reasonably likely to result in the change or loss of the name;
(b) license, sell, give, or otherwise transfer the name or the
right to use the name to any dental practice, dentist, professional
corporation, or any other entity; or
(c) cease conducting the professional practice of the
Association under the name.
4.11 Availability. The Association shall provide appropriate Dentist
and dentist extender staffing as necessary to assure that services are timely
available for all patients. This availability shall include effective staffing
of offices during normal hours of operation, as well as on-site or on-call
availability on a prompt, continuing basis, 24 hours per day, seven days per
week, including holidays, in accordance with generally accepted standards in
the community.
4.12 Covenant Not to Solicit. For two (2) years following the
termination of this Agreement, the Association shall not:
(a) Directly or indirectly recruit or hire, or induce any
party to recruit or hire any person who is an employee of, or who has
entered into an independent contractor arrangement with the Manager or
any Affiliate of the Manager;
(b) Directly or indirectly, whether for itself or for any
other person or entity, call upon, solicit, divert or take away, or
attempt to solicit, call upon, divert or take away any customers,
business, or clients of Manager;
(c) Disrupt, damage, impair or interfere with the business of
the Manager; or
(d) Enter into any contract or arrangement for the provision
of dental services with any managed care services contracted by the
Manager on behalf of the Association during the term of this Agreement.
ARTICLE 5
FINANCIAL ARRANGEMENT
5.1 Management Fee. The Association and Manager agree to the
compensation set forth herein as being paid to Manager in consideration of a
substantial commitment made by Manager hereunder and that such fees are fair
and reasonable. Each month Manager shall be paid a Management Fee in the amount
equal to all Office Expenses incurred by the Manager plus an
MANAGEMENT SERVICES AGREEMENT - Page 18
23
amount equal to fifteen percent (15%) of the Association's Adjusted Gross
Revenue. Additionally, to the extent the Office Expenses are less than twenty-
eight percent (28%) of the Association's Adjusted Gross Revenue, the Manager
shall be paid a bonus in an amount equal to sixty percent (60%) of the
difference between the actual Office Expenses and twenty-eight percent (28%) of
the Association's Adjusted Gross Revenue.
The amounts to be paid the Manager under this Section 5.1 shall be
payable monthly. The amounts shall be estimated based upon the previous
month's operating results of the Association. Adjustments to the estimated
payments shall be made to reconcile actual amounts due under this Section 5.1,
and by the end of the month during each calendar year. Upon preparation of
quarterly financial statements, final adjustments to the Management Fee for the
quarter shall be made and any additional payments owing to the Manager or the
Association shall then be made.
5.2 Reasonable Value. Payment of the Management Fee is not intended
to be and shall not be interpreted or implied as permitting Manager to share in
the Association's fees for Dental Services or any other services, but is
acknowledged as the parties' negotiated agreement as to the reasonable fair
market value of the equipment, support services, personnel, office space,
management, administration and other items and services furnished by Manager
pursuant to this Agreement, considering the nature and volume of the services
required and the risks assumed by Manager.
5.3 Payment of Management Fee. To facilitate the payment of the
Management Fee as provided in Section 5.1 hereof, the Association hereby
expressly authorizes Manager to make withdrawals of the Management Fee from the
Association Account as such fees become due and payable during the Term and
thereafter as provided in Section 6.3.
5.4 Disputes Regarding Fees.
(a) It is the parties' intent that any disputes regarding
performance standards of the Manager be resolved to the extent possible
by good faith negotiation. To that end, the parties agree that if the
Association in good faith believes that Manager has failed to perform
its obligations, and that as a result of such failure, the Association
is entitled to a set-off or reduction in its Management Fees, the
Association shall give Manager notice of the perceived failure and
request in the notice a set-off or reduction in Management Fees. Manager
and the Association shall then negotiate the dispute in good faith, and
if an agreement is reached, the parties shall implement the resolution
without further action.
(b) If an agreement cannot be reached to resolve the dispute,
the Association may submit the dispute to mediation pursuant to Section
7.6 hereof.
5.5 Accounts Receivable. To assure that the Association receives the
entire amount of professional fees for its Dental Services and to assist the
Association in maintaining reasonable cash flow for the payment of Office
Expenses, Manager, during the Term, shall have the option to purchase, with
recourse to the Association for the amount of the purchase, the accounts
MANAGEMENT SERVICES AGREEMENT - Page 19
24
receivable of the Association arising during the previous month by transferring
the amount set forth below into the Association Account. The consideration for
the purchase shall be an amount equal to the average Adjusted Gross Revenue
recorded each month (according to GAAP on an accrual basis net of Adjustments)
for the six months prior to the purchase of the accounts receivable of
Association less the average Office Expenses due to Manager under this
Agreement for the six months prior to the purchase of the accounts receivable
of Association. The Association is concurrently herewith granting to Manager a
security interest in the accounts receivable, and the Association shall
cooperate with Manager and execute all documents in connection with the pledge
of accounts receivable to Manager. All collections in respect of such accounts
receivable purchased by Manager shall be received by Manager as the agent of
the Association and shall be endorsed to Manager and deposited in a bank
account at a bank designated by Manager. To the extent the Association comes
into possession of any payments in respect of such accounts receivable, the
Association shall direct such payments to Manager for deposit in bank accounts
designated by Manager.
ARTICLE 6
TERM AND TERMINATION
6.1 Initial and Renewal Term. The Term of this Agreement will be for
an initial period of ten (10) years after the effective date, and shall be
automatically renewed for successive ten (10) year periods thereafter, provided
that neither Manager nor the Association shall have given notice of termination
of this Agreement at least three hundred sixty five (365) days before the end
of the initial term or any renewal term, or unless otherwise terminated as
provided in Section 6.2 of this Agreement.
6.2 Termination.
(a) Termination By Manager. Manager may terminate this
Agreement with sixty (60) days notice upon the occurrence of any one of
the following events:
(i) The revocation, suspension, cancellation or
restriction of any Dentist's license to practice dentistry in the
State if, in the discretion of the Manager, the Association will
not be financially viable after such revocation, suspension,
cancellation, or restriction;
(ii) The Association's loss or suspension of its
Medicare or Medicaid provider number, and/or the Association's
restriction from treating beneficiaries of the Medicare or
Medicaid programs if, in the discretion of the Manager, the
Association will not be financially viable after such loss,
suspension, or restriction;
(iii) The dissolution of the Association or the filing of
a petition in voluntary bankruptcy, an assignment for the benefit
of creditors, or other action taken voluntarily or involuntarily
under any state or federal statute for the protection of debtors;
MANAGEMENT SERVICES AGREEMENT - Page 20
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(iv) The Association materially defaults in the
performance of its duties or obligations hereunder and such
default continues for sixty (60) days after notice is given by
Manager of the default; or
(v) The parties are unable to reach an agreement on a
new service agreement or basis for compensation after the
occurrence of an event described in Section 6.2(d).
(b) Termination By the Association. The Association may
terminate this Agreement with ninety (90) days notice in the event that
Manager materially defaults in the performance of its obligations
hereunder such that the Association is unable to conduct its business
and such default continues for ninety (90) days after Manager receives
notice of the default. Termination by the Association hereunder shall
require the affirmative vote of seventy-five percent (75%) or more of
the shareholder(s) of the Association entitled to vote, each
shareholder(s) voting their ownership interest in the Association.
(c) Termination by Agreement. In the event the Association
and Manager shall mutually agree in writing, this Agreement may be
terminated on the date specified in such written agreement.
(d) Legislative, Regulatory or Administrative Change. In the
event of a change in the Medicare or Medicaid statutes, case law,
regulations or general instructions or the adoption of new legislation
any of which materially and adversely affects the manner in which either
party may perform services under this Agreement, the parties shall
immediately amend this Agreement to comply with the law, regulation, or
policy and approximate as closely as possible the Management Fee
arrangement set forth in this Agreement as it existed immediately prior
to the change in law, regulation or policy.
6.3 Effects of Termination. Upon termination of this Agreement,
neither party shall have any further obligations hereunder except for (i)
obligations accruing prior to the date of termination, including, without
limitation, payment of the Management Fees relating to services provided prior
to the effective date of termination of this Agreement, and (ii) obligations,
promises, or covenants set forth herein that are expressly made to extend
beyond the Term, including, without limitation, indemnity provisions, which
provisions shall survive the expiration or termination of this Agreement. In
effectuating the provisions of this Section 6.3, the Association specifically
acknowledges and agrees that Manager shall continue to collect and receive on
behalf of the Association all cash collections from accounts receivable in
existence at the time this Agreement is terminated to the extent that Manager
has purchased accounts receivable and that Association shall direct any
payments which it receives in respect of such accounts receivable to Manager
for deposit in bank accounts designated by Manager. It is understood that such
cash collections will represent, in part, compensation to Manager for
management services already rendered and compensation on accounts receivable
purchased by Manager. Unless this Agreement is terminated by the Association
for cause, as defined in Section 6.2(b), Manager shall be entitled to continue
to collect, on behalf of and in the name of the Association, all accounts
receivable representing Dental Services provided prior to termination.
MANAGEMENT SERVICES AGREEMENT - Page 21
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Upon the expiration or termination of this Agreement for any reason or cause
whatsoever, Manager shall surrender to the Association all books and records
pertaining to the Association's dental practice.
ARTICLE 7
MISCELLANEOUS
7.1 Administrative Services Only. Nothing in this Agreement is
intended or shall be construed to allow Manager to exercise control or
direction over the manner or method by which the Association and its Dentists
perform Dental Services or other professional health care services. The
rendition of all Dental Services and the prescription or administration of
medicine and drugs shall be the sole responsibility of the Association and its
Dentists, and Manager shall not interfere in any manner or to any extent
therewith. Nothing contained in this Agreement shall be construed to permit
Manager to engage in the practice of dentistry, it being the sole intention of
the parties hereto that the services to be rendered to the Association by
Manager are solely for the purpose of providing non-dental management and
administrative services to the Association so as to enable the Association to
devote its full time and energies to the professional conduct of its dental
practice and provision of Dental Services to its patients and not to
administration, or practice management.
7.2 Status of Contractor. It is expressly acknowledged that the
parties hereto are "independent contractors," and nothing in this Agreement is
intended and nothing shall be construed to create an employer/employee,
partnership, joint venture or other type of relationship, or to allow either to
exercise control or direction over the manner or method by which the other
performs the services that are the subject matter of this Agreement; provided
always that the services to be provided hereunder shall be furnished in a
manner consistent with the standards governing such services and the provisions
of this Agreement. Each party understands and agrees that (i) the other will
not be treated as an employee for federal tax purposes, (ii) neither will
withhold on behalf of the other any sums for income tax, unemployment
insurance, social security, or any other withholding pursuant to any law or
requirement of any governmental body or make available any of the benefits
afforded to its employees, (iii) all of such payments, withholdings, and
benefits, if any, are the sole responsibility of the party incurring the
liability, and (iv) each will indemnify and hold the other harmless from any
and all loss or liability arising with respect to such payments, withholdings,
and benefits, if any.
7.3 Notices. All notices, reports, records, or other communications
that are required or permitted to be given to the parties under this Agreement
shall be sufficient in all respects if given in writing and delivered in
person, by telecopy, by overnight courier, or by registered or certified mail,
postage prepaid, return receipt requested, to the receiving party at the
following address:
MANAGEMENT SERVICES AGREEMENT - Page 22
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Association: OraCare Dental Associates, P.A.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.M.D.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Manager: OraCare Consultants, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇. & ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as such party may have given to the other by notice
pursuant to this Section. Notice shall be deemed given on the date of delivery,
in the case of personal delivery or telecopy, or on the delivery or refusal
date, as specified on the return receipt, in the case of overnight courier or
registered or certified mail.
7.4 Governing Law. This Agreement shall be governed by the laws of
the State of New Jersey applicable to agreements to be performed wholly within
the state. The federal and state courts of New Jersey shall be the exclusive
courts of jurisdiction and venue for any litigation, special proceeding or
other proceeding as between the parties that may be brought, or arise out of,
in connection with or by reason of this Agreement.
7.5 Assignment. Except as may be herein specifically provided to the
contrary, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective legal representatives, successors, and
assigns; provided, however, that the Association may not assign this Agreement
without the prior written consent of Manager, which consent may be withheld.
The sale, transfer, pledge, or assignment of any voting shares held by any
shareholder of the Association such that the effective voting control of the
Association is altered, shall be deemed an attempted assignment by the
Association, and shall be null and void unless consented to in writing by
Manager prior to any such transfer, pledge, assignment, or issuance. Any breach
of this provision, whether or not void or voidable, shall constitute a material
breach of this Agreement, and in the event of such breach, Manager may
terminate this Agreement upon twenty-four (24) hours notice to the Association.
In addition, Manager or the transferee shall have the right to collaterally
assign its interest in this Agreement and its right to collect Management Fees
hereunder to any financial institution or other third party without the consent
of the Association.
7.6 Dispute Resolution. The parties shall use good faith negotiation
to resolve any controversy, dispute or disagreement arising out of or relating
to this Agreement or the breach of this Agreement. Any matter not resolved by
negotiation shall be submitted to nonbinding mediation. If complete agreement
cannot be reached within thirty (30) days of submission to mediation, any
remaining issues will be resolved by binding arbitration in accordance with the
MANAGEMENT SERVICES AGREEMENT - Page 23
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following provisions of this Section. A single arbitrator mutually acceptable
to the Manager and the Association who is knowledgeable in the managed care
practice or in commercial matters will conduct the arbitration. The
arbitrator's decision and award will be final and binding and may be entered in
any court with jurisdiction. The arbitrator will not have authority to limit,
expand or otherwise modify the terms of this Agreement. If the parties cannot
agree on an arbitrator, each party will appoint one arbitrator and these
arbitrators shall choose a single arbitrator to conduct the arbitration.
The mediation and, if necessary, the arbitration will be conducted under
the then current rules of the alternate dispute resolution (ADR) firm selected
by the parties, or if the parties are unable to agree on an ADR firm, the
parties will conduct the mediation and, if necessary, the arbitration under the
then current rules and supervision of the American Arbitration Association
(AAA). Manager and the Association will each bear its own attorneys' fees
associated with the mediation and, if necessary, the arbitration. Manager and
the Association will pay all other costs and expenses of the
mediation/arbitration as the rules of the selected ADR firm provide. The
parties and their representatives shall hold the existence, content and result
of the mediation and arbitration in confidence. The mediator shall not
consider and the arbitrator shall not be empowered to award punitive damages.
There shall be no discovery during the mediation process. If an arbitration is
necessary, no discovery shall be conducted except by agreement of the parties
or after approval by the arbitrator, who shall attempt to minimize the burden
of discovery.
7.7 Divisions and Headings. The divisions of this Agreement into
articles, sections, and subsections and the use of captions and headings in
connection therewith is solely for convenience and shall not affect in any way
the meaning or interpretation of this Agreement.
7.8 Amendments and Agreement Execution. This Agreement and
amendments hereto shall be in writing and executed in multiple copies on behalf
of the Association by its Managing Director, and on behalf of Manager by its
President or by an authorized officer of any successor to Manager. Each
multiple copy shall be deemed an original, but all multiple copies together
shall constitute one and the same instrument.
7.9 Entire Agreement. With respect to the subject matter of this
Agreement, this Agreement supersedes all previous contracts and constitutes the
entire agreement between the parties. Neither party shall be entitled to
benefits other than those specified herein. No prior oral statements or
contemporaneous negotiations or understandings or prior written material not
specifically incorporated herein shall be of any force and effect, and no
changes in or additions to this Agreement shall be recognized unless
incorporated herein by amendment as provided herein, such amendment(s) to
become effective on the date stipulated in such amendment(s). The parties
specifically acknowledge that, in entering into and executing this Agreement,
the parties rely solely upon the representations and agreements contained in
this Agreement and no others.
7.10 Severability. The parties hereto have negotiated and prepared
the terms of this Agreement in good faith with the intent that each every one
of the terms, covenants and conditions herein be binding upon and inure to the
benefit of the respective parties. Accordingly,
MANAGEMENT SERVICES AGREEMENT - Page 24
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if any one or more of the terms, provisions, promises, covenants or conditions
of this Agreement or the application thereof to any person or circumstances
shall be adjudged to any extent invalid, unenforceable, void or voidable for
any reason whatsoever by a court of competent jurisdiction or an arbitration
tribunal, such provision shall be as narrowly construed as possible, and each
and all of the remaining terms, provisions, promises, covenants and conditions
of this Agreement or their application to other persons or circumstances shall
not be affected thereby and shall be valid and enforceable to the fullest
extent permitted by law. To the extent this Agreement is in violation of
applicable law, then the parties agree to negotiate in good faith to amend the
Agreement, to the extent possible consistent with its purposes, to conform to
law.
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IN WITNESS WHEREOF, the Association and Manager have caused this
Agreement to be executed by their duly authorized representatives, all as of
the day and year first above written.
ASSOCIATION:
ORACARE DENTAL ASSOCIATES, P.A.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
MANAGER:
ORACARE CONSULTANTS, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇, Senior Vice President
MANAGEMENT SERVICES AGREEMENT - Page 26