ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT ("Agreement") by and between
SAFEGUARD HEALTH ENTERPRISES, INC., a Delaware corporation, on behalf of its
various subsidiaries ("SafeGuard"), and DENTAL SOURCE OF MISSOURI AND KANSAS,
INC., a Missouri corporation ("Dental Source"), sets forth the terms pursuant to
which SafeGuard and Dental Source agree to the administration of one or more
individual and group dental health coverages to be provided to persons eligible
for such coverage under dental health benefits programs ("Members") paid for by
employers, health and welfare funds, and others ("Group"), and arises out of the
following circumstances:
RECITALS:
A. Dental Source is a Prepaid Dental Plan Organization in the State of
Missouri and Kansas that provides or arranges prepaid dental HMO Products for
its enrollees in geographically defined service areas ("Service Areas").
B. SafeGuard, through its subsidiaries, is licensed in various states
to provide prepaid dental plan benefits to its enrollees.
C. SafeGuard desires that Dental Source provide benefits to those
SafeGuard Members who reside in Missouri and Kansas based upon SafeGuard
contracts that arise outside the State of Missouri and Kansas.
D. Dental Source desires to provide prepaid dental plan benefits to
SafeGuard Members in accordance with the terms and conditions of this Agreement.
In consideration of the mutual promises set forth herein, the parties
hereto agree as follows:
1. PRODUCTS TO BE OFFERED. From time to time SafeGuard will enter into
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a contract with a Group whereby the Group will have employees residing within
the State of Missouri and Kansas. Dental Source agrees to provide services to
SafeGuard whereby Members will receive prepaid dental plan services from Dental
Source through its providers within the State of Missouri and Kansas. The
products currently being sold by SafeGuard in Missouri and Kansas are attached
to the Stock Purchase Agreement entered into by the parties hereto
contemporaneously herewith, at Schedule 5.28 (the "Products"). From time to
time, Dental Source may modify, eliminate or add to the Products described in
Schedule 5.28 referred to above upon ninety (90) days advance written notice to
SafeGuard of such changes, additions or deletions.
2. ADMINISTRATIVE AND OTHER SERVICES.
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2.1 MARKETING. SafeGuard may in the ordinary course of business
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market the Products in all states in which its subsidiaries are licensed. From
time to time, instances will arise where a Group with whom SafeGuard contracts
has Members residing in the State of Missouri and Kansas.
2.2 ENROLLMENT.
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2.2.1 Enrollment. Dental Source will conduct all necessary
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enrollment meetings for Members, and will obtain enrollment cards for those
persons to be covered by Dental Source through its relationship with SafeGuard.
Dental Source shall maintain all enrollment information on its system.
2.2.2 Customer Service. Dental Source shall perform all
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necessary customer service to members enrolled in Dental Source through Groups
to support the enrollment functions.
2.2.3 Disclosure Statements. Dental Source shall be
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responsible for producing and distributing disclosure statements reasonably
necessary and/or required by law of the State of Missouri and Kansas to be
furnished by it to assure the availability of appropriate information for
enrollees regarding the dental health care services to be provided to Members by
Dental Source.
2.3 ELIGIBILITY LISTING. SafeGuard shall provide Dental Source
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with a monthly list of Members by the 20th day of the month preceding the month
of coverage for each month this Agreement is in effect.
2.4 QUALITY ASSURANCE AND UTILIZATION REVIEW. Dental Source shall
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have sole responsibility for the resolution of all grievance lodged by Members,
all quality assurance, and all utilization review functions as may be required
by the State of Missouri and Kansas in connection with Dental Source's license.
2.5 BILLING AND COLLECTION OF PREMIUMS. SafeGuard shall provide
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all necessary services for billing premiums, reconciling accounts, and the
collection of premiums from Groups not domiciled in the State of Missouri and
Kansas for the Products.
2.6 REPORTING.
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2.6.1 Complaints. Any complaints received by one party
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regarding the service, coverage or benefits provided by the other party, shall
be promptly referred to the appropriate party for resolution. Each party will
report to the other the nature and disposition of such customer complaints.
2.6.2 Other Reports. Administrative and other services
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provided by one party on behalf of the other shall be monitored by the other
through reports and other information exchanged between the parties as agreed
upon by the parties from time to time.
2.7 TAXES. Dental Source shall be responsible for reporting and
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paying all required state premium income and other taxes, assessments and
regulatory fees for Members enrolled in Missouri and Kansas.
3. COMPENSATION AND PAYMENT. SafeGuard shall pay Dental Source
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seventy-five percent (75%) of the premiums that SafeGuard receives from its
groups for coverage of Members for the Products sold by SafeGuard and for which
Dental Source provides services to SafeGuard Members enrolled in Missouri and
Kansas. Such payment shall be due and payable by SafeGuard to Dental Source
within ten (10) days after Dental Source submits an invoice to SafeGuard for the
services provided herein. Dental Source shall be responsible for paying all of
its own administrative expenses in connection with each Member enrolled, but
shall not be responsible for any broker commission that may be required to be
paid in connection with any contract for a Group through which such Members are
enrolled.
4. PROVIDERS. Dental Source agrees to maintain a panel of'
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participating dental providers consisting of general dentists and specialists
("Providers") that is reasonable adequate to service the need of the Members.
Dental Source shall be solely responsible for the payment of all provider
compensation of any kind and nature due to Providers as a result of members
covered under this agreement. Dental Source shall also be responsible for all
Provider credentialing as may be required under applicable state law. A copy of
the initial Dental Source Provider list is attached hereto marked Exhibit B. Not
less frequently than fifteen (15) days following the end of each calendar
quarter, or within fifteen (15) days after request by SafeGuard, Dental Source
shall provide to SafeGuard a current list of Providers.
5. TERM AND TERMINATION. This Agreement shall commence on the
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Effective Date as set forth below, shall remain in effect for a period of three
(3) years unless terminated earlier upon: (a) SafeGuard's failure to pay Dental
Source, within ten (10) days after written notice from Dental Source, the
compensation set forth in Paragraph 3, or (b) a material breach by a party of
its obligations hereunder, and such breach is not cured by the party within
thirty (30) days after written notice thereof. Termination of this Agreement
shall not terminate the rights or liabilities of either party to perform its
obligations to the other party or the obligations of Dental Source to Members
pursuant to a contract for any Product with a Group, for those obligations
arising during the term of this Agreement.
6. ARBITRATION. If any dispute relating to this Agreement or
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administration thereof arises which cannot be resolved to the satisfaction or
SafeGuard and Dental Source, the Parties shall submit the dispute to binding
arbitration. The arbitrators are not bound by any rule of law, except that the
arbitration will be conducted under the Commercial Arbitration Rules of the
American Arbitration Association then in effect. The arbitration shall be
conducted in Orange County, California. The parties shall share fees and
expenses of the arbitrator. The prevailing party in such arbitration shall be
entitled to receive as part of the arbitrator's award, attorneys' fees and
costs.
7. INSOLVENCY/CESSATION AND OPERATIONS. In addition to the provisions
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of Paragraph 5 above, this Agreement shall terminate immediately if: (a)
SafeGuard becomes insolvent or ceases operations; or (b) Dental Source becomes
insolvent or ceases operations in Missouri or Kansas. Insolvency or insolvent
shall mean a final determination made by either (a) a court of competent
jurisdiction that SafeGuard or Dental Source is insolvent; or (b) the insurance
authorities of an appropriate jurisdiction declare SafeGuard or Dental Source
insolvent.
8. LITERATURE AND PUBLICITY. No party will distribute any literature
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or other material or release any publicity or information relating to this
Agreement without the other party's prior written consent, which consent shall
not be unreasonably withheld, delayed or conditioned.
9. EXCLUSIVE AGREEMENT. For the term of the Agreement, SafeGuard
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agrees to utilize Dental Source exclusively to provide the services described
herein to SafeGuard Members in the State of Missouri and Kansas. Dental Source
may contract with other health care plans and may provide benefits directly to
members in Missouri and Kansas notwithstanding this Agreement. SafeGuard agrees
not to offer for sale or sell any prepaid dental plan in the State of Missouri
and Kansas for the term of this Agreement.
10. CONFIDENTIALITY. The parties will maintain a free exchange of
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information regarding matters relating to this Agreement. Each party will
notify the other of any complaints, inquiries, or litigation with respect to
matters related to this Agreement and shall cooperate and assist in the defense
of such matters. Each party shall allow the other to audit such parties records
related to this Agreement. All information provided by one party to the other
hereunder shall be treated by the other party, its agents, officers, employees
and representatives, in a confidential manner, and in compliance with all
applicable state and federal laws. Each party agrees to prevent the
unauthorized disclosure of any such information. Each party agrees to keep
confidential all non-public information regarding the other party or its
activities that it obtains pursuant to this Agreement. Further, each party
agrees to maintain the confidentiality of individual medical records and related
information as required by each party's established policies and practices or
required by law. Each party may, however, disclose otherwise confidential
information to any state or federal regulatory agency when required by law. Any
breach of the terms of this covenant shall be deemed a material breach of this
Agreement. In the event of any such breach, the aggrieved party shall be
entitled to seek an injunction restraining the other from disclosing any
confidential information, and to pursue any other legal remedies available to
such party for any actual or threatened breach. This covenant regarding
confidentiality shall survive the termination of this Agreement.
11. INSURANCE. Each party, at its sole expense, shall maintain in full
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force and effect, insurance to provide at least the following protection: (a)
bodily injury and property damage with limits of not less than One Million
Dollars ($1,000,000); and (b) errors and omissions liability which Dental Source
will use its best efforts to obtain during the term of the Agreement with limits
to be determined by mutual agreement by the parties hereto; (c) multi-perils all
risk insurance including contents, and valuable papers with limits of not less
than One Million Dollars ($1,000,000); workers' compensation and unemployment
insurance of types and levels required by applicable laws and regulations.
12. ACCESS TO BOOKS AND RECORDS. Each party shall make available to
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the other all of its books and records relating to this Agreement, and to any
regulatory agency having jurisdiction over the parties for the purpose of
inspection, examining and copying: (a) at all reasonable times, (b) in a form
maintained in accord with the general standards applicable to such book or
record keeping, and for the duration of this Agreement plus thirty-six (36)
months, or, if longer, as required by applicable state law.
13. MISCELLANEOUS PROVISIONS.
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13.1 AMENDMENT. This Agreement may be amended only by written
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agreement signed by both parties hereto.
13.2 AUTHORIZATION OF AGREEMENT. All parties represent and
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warrant, each to the other, that the execution and delivery of this Agreement
has, if such is required, been duly authorized by all necessary action of their
respective shareholders, partners, owners or governing boards, as the case may
be.
13.3 COSTS. Except or otherwise provided in this Agreement, each
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party shall bear the cost of its legal, accounting, consulting and other
services necessary to comply with its duties and obligations under this
Agreement.
13.4 COUNTERPARTS. This Agreement may be executed simultaneously
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in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
13.5 ENTIRE AGREEMENT. This Agreement (together with any exhibits
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attached hereto) constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth herein. 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).
13.6 FORCE MAJEURE. Neither party shall be liable or be deemed in
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breach of this Agreement for any failure or delay of performance which results,
directly or indirectly, from acts of God, civil or military authority, public
disturbance, accidents, fires, or any other cause beyond the reasonable control
of either party.
13.7 FURTHER ASSURANCES. The parties hereto, at any time and from
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time to time, will execute and deliver such further instruments and take such
further action as may reasonably be requested by the other party hereto in order
to cure any defects in the execution and delivery of, or to comply with or
accomplish, the covenants and agreements contained in this Agreement.
13.8 GOVERNING LAW. The validity, interpretation and performance
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of this Agreement shall be governed by and constructed in accordance with the
laws of the State of Missouri.
13.9 HEADINGS. The headings of this Agreement are inserted for
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convenience only and are not to be considered in the interpretation of this
Agreement. They shall not in any way limit the scope or modify the substance or
context of any sections of this Agreement.
13.10 NO ASSIGNMENTS. This Agreement may not be assigned by
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either party without the prior written consent of the other party.
13.11 NOTICES. Notices regarding this Agreement shall be sent
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certified mail, return receipt requested and shall be addressed as follows:
Dental Source: SafeGuard:
Dental Source of Missouri and Kansas, Inc. SafeGuard Health Enterprises, Inc.
00000 Xxxx Xxxxxxx, Xxxxx 000 95 Enterprise, Xxxxx 000
Xxxxxxx, XX 00000 Xxxxx Xxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxx, President and Attention: Xxxxxx X. Xxxxxxxx,
Chief Executive Officer Senior Vice President
Fax: (000) 000-0000 and General Counsel
Fax: (000) 000-0000
With a copy to (which shall not constitute notice)
Gardere Xxxxx Xxxxxx LLP
0000 Xxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxxxxx XX
Fax: (000) 000-0000
13.12 RELATIONSHIP OF PARTIES. Nothing contained in this
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Agreement shall constitute or be construed to be or to create a partnership,
joint venture or other such relationship between the parties. Neither party to
this Agreement shall use the name of the other party to this Agreement in any
promotional or advertising material without prior approval of the other party.
This Agreement shall not constitute an endorsement by one party of the other
party to this Agreement.
13.13 RIGHTS OF THIRD PARTIES. The parties do not intend, and
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nothing in this Agreement shall be deemed, to give any person other than the
parties hereto any right or interest based on this Agreement. The parties
reserve the right to amend this Agreement by mutual consent or to terminate it
without notice to or consent of any person not a party to this Agreement.
13.14 WAIVER. No delay or omission by either party to this
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Agreement in the exercise or enforcement of any of its powers or rights
hereunder shall constitute a waiver of such power or right. A waiver by either
party of any provision of this Agreement must be in writing and signed by such
party, and shall not imply subsequent waiver of that or any other provision.
IN WITNESS WHEREOF, the Undersigned have caused this Agreement to be
executed effective as of November 1, 2001 (the "Effective Date").
DENTAL SOURCE:
Dental Source of Missouri and
Kansas, Inc., a Missouri corporation
By: /s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX, President and
Chief Executive Officer
SAFEGUARD:
Safeguard Health Enterprises,
Inc., a Delaware corporation
By: /s/ Xxxx X. Xxxxx
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XXXX X. XXXXX, Vice President and
Chief Development Officer
By: /s/ Xxxxxx X. Xxxxxxxx
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XXXXXX X. XXXXXXXX, Senior Vice
President and Secretary