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EXHIBIT 10(bbb)
*THIS INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
ADMINISTRATIVE SERVICES AGREEMENT
This ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement"),
effective the 1st day of October, 1997, by and between ProDent, Inc., a
Pennsylvania corporation ("ProDent"), and Xxxxxx Xxxxxxxx, D.D.S. & Associates,
P.A., a New Jersey professional corporation (the "P.C.").
W I T N E S S E T H:
WHEREAS, the P.C. is engaged in the business of providing,
among other things, dental services and related activities in the State of New
Jersey (the "Practice");
WHEREAS, the P.C. desires to obtain the benefit of ProDent's
expertise in the administration of practices similar to the Practice;
WHEREAS, the P.C. desires to obtain from ProDent, and ProDent
desires to provide to the P.C., certain premises and certain physical assets,
furniture and equipment needed to operate the Practice;
WHEREAS, ProDent and the P.C. are parties to that certain
Management Services Agreement dated November 29, 1983 pursuant to which the P.C.
obtains from ProDent and ProDent provides to the P.C., ProDent's expertise in
operating, directing, managing and supervising the nonprofessional aspects of
the operations of the Practice; and
WHEREAS, ProDent and the P.C. wish to enter into this
Administrative Services Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein set forth, the parties hereto, intending
to be legally bound, hereby agree as follows:
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ARTICLE 1
RELATIONSHIP OF PARTIES
1.1 Responsibilities of Parties. The parties agree that the
P.C. will provide, and shall be solely responsible for providing, all
professional services for the Practice and ProDent will be responsible only for
business, administrative and non-professional services (as further described in
this Agreement). Nothing contained in this Agreement shall be construed as
permitting or providing for the provision by ProDent of the professional
services of the Practice, which services shall at all times be the sole
responsibility of the P.C. or permitting ProDent to exercise control over the
Practice in violation of New Jersey Statute 45:6-19; provided, however, that
pursuant to its engagement hereunder, ProDent shall be the exclusive provider of
all administrative services and shall control all aspects of the P.C.'s business
other than those aspects which relate directly to the provision of dental
services. Without limiting the generality of the foregoing, the P.C. shall be
solely responsible for all activities described in Section 2.4 of this
Agreement.
1.2 Relationship of Parties. The P.C. and ProDent are not
joint venturers, partners, employees or agents of each other and, except as
provided herein, neither party shall have any authority to bind the other.
1.3 Practice. The P.C. agrees to conduct the Practice in
compliance with all applicable laws, rules and ordinances, including with
respect to the licensing and certification of its providers.
ARTICLE 2
SERVICES OF PRODENT
2.1 Covered Services. ProDent, unless otherwise prohibited by
law, shall control all aspects of, and provide to the P.C., the following
services (such services are hereinafter referred to collectively as the "Covered
Services"):
a. General. Supervision, conduct and
administration of the general business administrative services required by the
P.C. in connection with the P.C.'s operation of its Practice.
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b. Personnel. ProDent will employ the
personnel (other than dentists, dental hygienists and dental auxiliaries,
collectively, the "Professional Personnel") needed to operate and support the
business aspects of Practice, such as receptionists and secretarial, clerical,
purchasing and marketing personnel (collectively, the "Administrative
Personnel"). ProDent shall have the sole and exclusive responsibility for
determining the salaries and fringe benefits of all Administrative Personnel
provided hereunder, and for paying such salaries and providing such fringe
benefits. In recognition of the fact that the Administrative Personnel provided
to the P.C. under this Agreement may from time to time perform services for
others, this Agreement shall not prevent ProDent from performing such services
for others or restrict ProDent from so using the Administrative Personnel
provided to the P.C. under this Agreement. ProDent will make every effort
consistent with sound business practices to honor the specific requests of the
P.C. with regard to the assignment of ProDent's employees to the performance of
services for the P.C. Further, ProDent, in its sole discretion, may require each
of its employees assigned to the P.C. to perform several of the aforedescribed
functions and duties simultaneously. ProDent will advise the P.C. on the
establishment of, and participation in, incentive and profit sharing plans for
the P.C.'s staff to reward them for increased productivity in the Practice.
c. Professional Personnel. Establish
guidelines for the selection, hiring and firing of the Professional Personnel by
the P.C. and recruit and evaluate prospective Professional Personnel; provided,
however, that all of the Professional Personnel shall be employees of or
independent contractors to the P.C.
d. Training. Training of all Administrative
Personnel and arranging for training and continuing education for Professional
Personnel.
e. Administrative and Fiscal Services.
Provision of general administrative, business and fiscal services to the P.C. in
connection with the operation of the Practice, including patient xxxxxxxx,
collecting xxxxxxxx, accounting, auditing (by a certified public accountant
selected by ProDent with the approval of the P.C., which approval shall not be
unreasonably withheld or delayed), bookkeeping, budgeting, record keeping,
accounts receivable and accounts payable processing, electronic data processing
and such other services as the P.C. may from time to time require.
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f. Annual Budget. Prepare, in reasonable
detail, annual operating and capital budgets for the P.C. which shall be
delivered to the P.C. within thirty (30) days after the end of each fiscal year,
with ProDent retaining final authority with respect to budget items including,
without limitation, with respect to compensation and payments to the
Professional Personnel and Administrative Personnel.
g. Patient Records. Maintenance of patient
records (which shall at all times remain the property and under the control of
the P.C.) and provision of record retrieval and monitoring services to assist
the P.C. in utilization and quality assurance reviews in accordance with
instructions and guidelines issued by the P.C.
h. Quality Control. Development of appropriate
quality control programs, including performance standards, sampling techniques
for case review, and preparation of appropriately documented studies.
i. Marketing, Development and Program
Negotiation. Marketing of the professional services provided by the P.C. to
potential patients, facilities, health maintenance organizations, insurance
companies, self-insured employer health plans and other various third-party
payors (the "Marketing Services"). The Marketing Services to be provided by
ProDent may include, but are not necessarily limited to, (i) preparation of
marketing material and brochures and responses to requests for proposals, (ii)
the placing of advertisements or articles in magazines, newspapers, other
publications and any and all media determined by ProDent to be beneficial to the
P.C., (iii) undertaking telemarketing campaigns and (iv) the holding of
seminars. ProDent shall also negotiate and secure contracts with self-insured
employer health plans, third-party payors, health maintenance organizations,
managed care companies and any other institution, facility or organization that
may use the services that the P.C. is qualified to provide and may seek the
input of the P.C. in such negotiations as needed or appropriate.
j. Supplies, Inventory and Equipment.
Provision of purchasing services on behalf of the Practice for inventory and
supplies reasonably necessary for the efficient operation of the Practice.
ProDent shall be responsible for maintaining the P.C.'s inventory on behalf of
the P.C.; provided, however, that title to and control over all dental
inventory, equipment and supplies shall be in the name of the P.C. All equipment
or furnishings not used in the provision of professional services (the "Leased
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Assets") required by the Practice shall be made available by ProDent to the P.C.
ProDent shall secure maintenance and repair services for the dental equipment.
k. Janitorial and Maintenance Service.
Arrangement of janitorial, grounds and maintenance and repair services for the
P.C. and its equipment and furnishings.
l. Malpractice Insurance. Assistance to the
P.C. in obtaining malpractice coverage for the P.C.
m. Contracts with Facilities/Programs.
Contracts with facilities and programs serviced by the Practice shall be in the
name of the P.C. ProDent shall serve as contracting agent for the P.C. in
connection with such facility or program contracts.
n. Protecting Goodwill. Take all necessary
steps to preserve and protect the reputation and goodwill associated with the
P.C., including assistance, if requested, in the monitoring of utilization and
quality of services provided by the P.C., and shall assist the P.C. to take all
steps necessary to remedy any and all deficiencies in the efficiency or the
quality of the services provided. This section shall not be construed as
permitting ProDent to influence or control the professional aspects of the
Practice or the Professional Personnel.
o. Operations and Regulatory Reports. Deliver
to the P.C. operations reports containing such information as the P.C. may
reasonably request. ProDent shall prepare all written reports and information
that shall be lawfully required by any government body or agency having
jurisdiction over the Practice or the P.C. The P.C. shall review and approve all
such required reports and/or information before any dissemination of the same.
p. Processing Disputes. Administer and
process all disputes, grievances and complaints between the P.C. and all third
parties, subject at all times to the review and final approval of the P.C.
q. Government Regulations; Licenses. To the
extent known and material to the operation of the P.C. and the Practice, ProDent
shall promptly notify the P.C. of any changes which may occur in relevant laws
or regulations of any government, governmental body or agency having
jurisdiction over the Practice or the P.C. The foregoing shall not in any way
limit the P.C.'s continuing professional and legal responsibility to comply
with, and be
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aware of, all licensing, regulatory, professional or other requirements
applicable to individuals licensed to provide dental services.
r. Advances to the P.C. ProDent shall make
advances to the P.C. as provided by Section 5.6 herein. Such advances shall bear
a reasonable rate of interest, as mutually agreed to by ProDent and the P.C.,
payable monthly.
The Covered Services shall include assumption of all
obligations of the P.C. to provide administrative services to Professional
Personnel who are not employed by the P.C. ProDent may perform the Covered
Services directly or by reimbursing the P.C. for the cost of any Covered
Services.
2.2 Performance of Services. ProDent is hereby expressly
authorized to perform the Covered Services hereunder in whatever reasonable
manner it deems appropriate to meet the day-to-day business administrative needs
of the Practice. It is understood and agreed that ProDent will perform some of
the Covered Services for the P.C. at a centralized location.
2.3 Events Excusing Performance. ProDent will not be liable to
the P.C. for failure to perform any of the services required herein in the event
of strikes, lockouts, calamities, acts of God, unavailability of supplies or
other events over which ProDent has no control for so long as such event
continues and for a reasonable period of time thereafter.
2.4 Excluded Services. The parties hereto expressly
acknowledge that the provision of all professional services, including but not
limited to, dental services by the P.C., shall be separate and independent from
the provision of administrative, fiscal and support services by ProDent, and the
P.C. shall be solely and exclusively responsible for all professional services
rendered to patients of the Practice. Without limiting the generality of the
foregoing, the parties acknowledge that the P.C. shall be responsible for
setting professional standards of the Practice and shall be responsible for the
employment and discharge of all Professional Personnel.
2.5 Use of Name. ProDent hereby grants to the P.C. a
nontransferable, nonexclusive license to use the proprietary name "ProDent" and
any other proprietary names owned by ProDent and used by the P.C. in connection
with the Practice along with any and all trademarked symbols for the term of
this Agreement (the "License"). All applicable
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common law and statutory rights in the proprietary names "ProDent" and any other
proprietary names owned by ProDent and used by the Practice and their
accompanying symbols, including, but not limited to, rights relating to
trademarks, service marks, patents and copyrights shall be and remain the sole
property of ProDent. The P.C. shall have no right, title or interest in any such
proprietary rights.
ARTICLE 3
PROPRIETARY INTEREST AND RIGHTS OF PRODENT
3.1 Competition. During the term of this Agreement, neither
the P.C. nor any shareholder of the P.C. shall, directly or indirectly, own an
interest in, administer, manage, advise, assist, operate, join, control,
participate in, or be connected in any manner with any corporation, partnership,
proprietorship, firm, association, person or entity providing dental services or
administrative services in competition with the P.C. or ProDent.
3.2 Confidentiality. The P.C. acknowledges and agrees that
ProDent is entitled to prevent its competitors from obtaining and utilizing its
trade secrets. The P.C. agrees to hold ProDent's trade secrets in strictest
confidence and not to disclose them or allow them to be disclosed directly or
indirectly to any person or entity other than persons engaged by the P.C. or
ProDent. The P.C. acknowledges its fiduciary obligations to ProDent and the
confidentiality of its relationship with ProDent and of any information relating
to the services and business methods of ProDent which it may obtain during the
term of this Agreement. The P.C. shall not, either during the term of this
Agreement or at any time after the expiration or sooner termination of this
Agreement, disclose to anyone other than employees or independent contractors of
the P.C. or ProDent any confidential or proprietary information or trade secret
obtained by the P.C. from ProDent. The P.C. also agrees to place any persons to
whom said information is disclosed for the purpose of performance under legal
obligation to treat such information as strictly confidential.
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ARTICLE 4
BILLING AGENT AGREEMENT
4.1 Professional and Other Fees. The P.C. shall, in
consultation with ProDent, establish a schedule of fees and charges for the
Practice's professional services or shall comply with the schedule of fees and
charges set forth in the health care contracts pursuant to which the P.C.
provides services through its Professional Personnel.
4.2 Xxxxxxxx. Xxxxxxxx of the Practice for all services
rendered by the P.C. shall be by and in the name of the P.C.
4.3 Billing and Collection Agent. ProDent shall serve as
billing and collection agent for the P.C. ProDent shall establish a depository
bank account on behalf of the Practice and will deposit into such account
collected fees generated from the Practice. As provided for in standing
instructions issued by the P.C. to the bank where such depository account is
located, ProDent may withdraw all monies daily from said bank account for
processing at a central location to be used for payment of the P.C.'s expenses,
including the amounts payable to ProDent pursuant to Section 5.1 hereof and any
amounts advanced to the P.C. pursuant to Section 5.3 hereof. Said processing
will consist of establishing and maintaining a book account for the P.C. showing
all fee collections and expense disbursements made by ProDent at the P.C.'s
request. ProDent will provide the P.C. with periodic financial statements for
the Practice reflecting such processing.
4.4 Reports. ProDent shall provide the P.C. with financial
statements for the Practice, stating gross revenues and amounts to be paid to
ProDent pursuant to Section 5.1 hereof.
4.5 Security for ProDent's Compensation. To secure the prompt
and orderly payment of any amounts owing by the P.C. to ProDent pursuant to this
Agreement, the P.C. hereby agrees to grant, at the request of ProDent, a
security interest to ProDent or to a third-party designated by ProDent, in all
its existing and hereafter created accounts receivable, all cash or non-cash
proceeds therefrom, all insurance policies and proceeds relating thereto, and
all of the P.C.'s rights as an unpaid provider of services, whether now existing
or hereafter created or acquired (collectively, the "Collateral"). The P.C.
agrees to execute any and all documents necessary to perfect such
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security interest, including but not limited to, UCC financing statements.
ARTICLE 5
FEES
5.1 Fees Payable to ProDent. The P.C. agrees to pay ProDent
for the provision of the Covered Services and the License and all other services
provided hereunder as follows:
a. A monthly license fee for the License in the amount
of $* per clinic location;
b. Monthly reimbursement of all of ProDent's direct
costs (i.e. payroll, supplies, travel, etc.) allocated to the P.C., in
ProDent's discretion;
c. Monthly reimbursement of all of ProDent's direct
costs of acquiring and/or leasing and maintaining the Leased Assets
provided to the Practice;
d. Monthly reimbursement of all of ProDent's direct
costs incurred in the provision of purchasing services and maintaining
furniture, fixtures and equipment provided to the Practice;
e. Monthly reimbursement of all of ProDent's direct
costs incurred in the provision of the Marketing Services, with a ten
percent (10%) markup for overhead and administration and a fifteen
percent (15%) markup for profit on such costs; and
f. A per clinic location administrative fee (the
"Administration Fee") of $* per year payable in equal monthly
installments of $* per month on the first day of each month of this
Agreement and subject to renegotiation by either party hereto on each
anniversary of this Agreement. The Administration Fee is intended to
compensate ProDent for its unallocated overhead and a reasonable
profit.
5.2 Fair and Reasonable Compensation of the P.C. for Services
of Professional Personnel. The parties hereto agree that the P.C. shall have the
right to fairly and
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*THIS INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
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reasonably compensate its Professional Personnel for their professional
services. Compensation for the Professional Personnel shall be determined in
accordance with employment agreements and other employment arrangements entered
into between the P.C., in consultation with ProDent, and the Professional
Personnel.
5.3 Remittances. To the extent the P.C. shall not generate
adequate revenues to meet the P.C.'s ongoing operating expenses, including the
compensation for professional services pursuant to Section 5.2 of this
Agreement, ProDent shall advance to the P.C. or arrange for such amounts as may
be required. To the extent that ProDent advances any funds to the P.C. pursuant
to this Section 5.3, such advances shall be evidenced by interest-bearing demand
note(s) from the P.C. in favor of ProDent and shall be secured by the Collateral
as provided in Section 4.5 hereof.
5.4 Periodic Adjustment of Compensation. The parties hereto
recognize that the Practice may change in size and scope over the term of this
Agreement which may necessitate adjusting the fees provided for herein.
Therefore, the parties shall review the compensation to ProDent no less
frequently than annually and more frequently at the request of ProDent or the
P.C., if changes in the business of the P.C. or services by ProDent warrant such
more frequent review, and may agree in writing to modification of the
compensation. Such review shall consider the scope of operations pursuant to
this Agreement at the time of review, the financial success of ProDent and the
P.C., changes in the purchasing power of money, the size and number of
facilities being supplied by ProDent, the scope of the Marketing Services, the
size of the Administrative Personnel workforce and the expenses and risks to the
respective parties of performing this Agreement.
ARTICLE 6
TERM AND TERMINATION
6.1 Term. Unless sooner terminated in accordance with Section
6.2 hereof, the term of this Agreement shall be for a period of forty (40) years
and thereafter this Agreement shall continue indefinitely until terminated in
accordance with Section 6.2(e) hereof.
6.2 Termination. Notwithstanding any provision
of this Agreement to the contrary, this Agreement may be
terminated as set forth below:
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a. In the event of a material breach of this
Agreement by either party as a result of such party's gross negligence
or fraud, the other party may, at any time commencing sixty (60) days
after written notice of the breach has been given to the breaching
party, terminate this Agreement by delivery to the breaching party of a
further written notice of termination; provided, however, that if the
breaching party, prior to receiving such notice of termination, has
begun and is diligently continuing good faith efforts to cure such
breach, this Agreement shall remain in full force and effect;
b. If either party is determined by a court,
administrative body or peer review organization having jurisdiction, to
have engaged in conduct that results in material harm to the P.C. and
constitutes (i) a felony or other crime involving moral turpitude,
including fraud, theft, or embezzlement or (ii) a failure to act in an
ethical or professional manner, in keeping with accepted dental care
standards, then immediately upon notice by the other party;
c. If either party has engaged in any practice that
results in material harm to the P.C. and violates in any material
respect any federal, state or local law or regulation that is aimed at
protecting the public from coercion into treatment and preventing fraud
upon or abuse of public funding of health services, then immediately
upon notice by the other party;
d. If either party commences a voluntary case under
bankruptcy, insolvency or similar law, or any involuntary case is
commenced against either party under any bankruptcy, insolvency or
similar law and such involuntary case is not dismissed within thirty
(30) days after filing, then immediately upon notice from the other
party; or
e. After the initial forty (40) year term of this
Agreement, either party may also terminate this Agreement, with or
without cause, by giving the other written notice of termination not
less than one (1) year prior to the effective date of termination.
6.3 Rights Upon Termination. The termination of this Agreement
shall not release or discharge either party from any obligation, debt or
liability which shall have previously accrued and remains to be performed upon
the date of termination.
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ARTICLE 7
GENERAL PROVISIONS
7.1 Indemnification. Each party shall indemnify, hold harmless
and defend the other party from and against any liability, loss, claims,
lawsuits, damages, injury, cost, expense or other detriment arising out of or
incident to the performance or nonperformance under this Agreement by such
indemnifying party, its employees, Professional Personnel (in the case of the
P.C.), Administrative Personnel (in the case of ProDent) and agents, including,
without limitation, all consequential damages and attorneys' fees, provided,
however, neither party shall be liable to the other under this Section 7.1 for
any claim covered by insurance, except to the extent liability of the party
exceeds the amount of the coverage.
7.2 Assignment. The rights conferred upon the P.C. hereunder
may not be transferred or assigned without the prior written consent of ProDent
and any assignment in violation of this Section 7.2 shall be void. This
Agreement shall be assignable by ProDent.
7.3 Notices. All notices, requests or instructions hereunder
shall be in writing and delivered personally or sent by registered or certified
mail, postage prepaid, as follows:
(1) If to the P.C.:
000 Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Telephone No.: (000) 000-0000
(2) If to ProDent:
c/o Valley Forge Dental Associates, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No: (000) 000-0000
Either of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date
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of delivery, if hand delivered, and five (5) business days after the date of
mailing, if mailed.
7.4 Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement between the parties hereto with
respect to the transactions contemplated hereby, and no modification hereof
shall be effective unless in writing and signed by the party against which it is
sought to be enforced.
7.5 Further Assurances. Each of the parties hereto shall use
such party's best efforts to take such actions as may be necessary or reasonably
requested by the other party hereto to carry out and consummate the transactions
contemplated by this Agreement.
7.6 Attorneys Fees. Each of the parties hereto shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
7.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey applicable to
agreements made and to be performed entirely within such State, without regard
to any conflict of laws principles which would apply the laws of any other
jurisdiction.
7.8 Article and Section Headings. The article and section
headings in this Agreement are inserted solely for convenience of reference and
are not a part of and are not intended to govern, limit or aid in the
construction of any term or provision hereof.
7.9 Waiver. The waiver of any covenant, condition or duty
hereunder by either party shall not prevent that party from later insisting upon
full performance of the same.
7.10 Amendment. No amendment in the terms of this Agreement
shall be binding on either party unless in writing and executed by the duly
authorized representatives of each party.
7.11 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and both of which taken
together shall constitute one and the same instrument.
7.12 Severability. In the event that any provision of this
Agreement shall be held to be void or unenforceable for any reason, the parties
shall negotiate in
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good faith for a period of up to one hundred eighty (180) days in order to
arrive at a mutually acceptable substitute provision.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the date
first above written.
XXXXXX XXXXXXXX, D.D.S. &
ASSOCIATES, P.A.
By:/s/ Xxxxxx X. Xxxxxxxx, D.D.S.
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx, D.D.S.
Title: President
PRODENT, INC.
By:/s/ W. Xxxx Xxxxxxx
-------------------------------------
Name: W. Xxxx Xxxxxxx
Title: Vice President
