AMENDED AND RESTATED SERVICE AGREEMENT

EXHIBIT 10(gg)

 

AMENDED AND RESTATED

SERVICE AGREEMENT

 

BETWEEN

 

SMILEAGE DENTAL CARE, INC.

 

and

 

WISCONSIN DENTAL GROUP, S.C.

 

January 1, 1999

TABLE OF CONTENTS

 

 

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AMENDED AND RESTATED

SERVICE AGREEMENT

 

This agreement is made effective January 1, 1999, between Smileage Dental Care, Inc., a Wisconsin corporation (“Service Company”), and Wisconsin Dental Group, S.C., a Wisconsin corporation (“Provider”).

 

Background Information

 

A. Provider operates as a dental practice providing dental services to the general public in and around the Greater Milwaukee, Wisconsin area through individual dentists who are licensed to practice dentistry in the state of Wisconsin and who are employed or otherwise retained by Provider.

 

B. Service Company is engaged in the business of providing assets, personnel, and services to dental practices other than such services as are directly related to the provision of dental care or the practice of dentistry. Service Company’s services are intended to improve the efficiency and profitability of dental practices and permit the dentists in such practices to focus their efforts solely on rendering quality dental care.

 

C. Provider desires to focus its energies, expertise and time on the practice of dentistry and on the delivery of dental services to patients. To accomplish this goal, Provider has engaged Service Company to provide such services as are necessary and appropriate for the day-to-day administration of the non-dental aspects of Provider’s dental practice pursuant to a Services Agreement dated December 23, 1996, as amended (the “Original Service Agreement”). Provider and Service Company (the “Parties”) desire to continue such engagement and amend and restate the Original Service Agreement to incorporate prior amendments to such agreement and to provide for certain other modifications, all as set forth in this agreement.

 

Statement of Agreement

 

The Parties hereby acknowledge the accuracy of the foregoing Background Information and agree as follows:

 

ARTICLE I. DEFINITIONS

 

Capitalized terms used in this agreement but not otherwise defined herein shall have the respective meanings given those terms in the attached Exhibit A.

 

ARTICLE II. APPOINTMENT AND AUTHORITY OF SERVICE COMPANY

 

§2.1 Appointment . Provider hereby appoints Service Company as its sole and exclusive agent for the performance of the Services, and Service Company hereby accepts such appointment, subject at all times to the provisions of this agreement.

 

§2.2 Authority . Service Company shall have all power, authority, and responsibility reasonably necessary to provide the Services and carry out Service Company’s other obligations under this agreement. Without limiting the foregoing, Service Company shall have the authority to provide the Services in any reasonable manner Service Company deems appropriate to meet the day-to-day requirements of the business functions of Provider. Subject to Article III of this agreement, Service Company is also expressly authorized to negotiate and execute on behalf of Provider contracts that do not relate to the provision of Dental Care. Provider shall give Service Company 30 days prior written notice of Provider’s intent to execute any agreement obligating Provider to perform Dental Care or otherwise creating a binding legal obligation on Provider. Unless an expense is expressly designated as a Service Company Expense in this agreement, all expenses incurred by Service Company in providing services pursuant to this agreement shall be Clinic Expenses.

 

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§2.3 Patient Referrals . The Parties agree that the benefits to Provider hereunder do not require, are not payment for, and are not in any way contingent upon the referral, admission, treatment, or any other arrangement for the provision of any item or service offered by Service Company to patients of Provider in any facility, laboratory, or dental care operation controlled, managed, or operated by Service Company.

 

§2.4 Internal Management of Provider . Matters involving the tax planning, investment planning, and internal management, control, or finances of Provider, including without limitation the compensation of dentist employees of Provider, shall remain the sole and exclusive responsibility of Provider and its shareholders.

 

§2.5 Practice of Dentistry . The Parties acknowledge and agree that: (a) Service Company is not authorized or qualified to engage in any activity that may be construed or deemed to constitute the practice of dentistry; and (b) notwithstanding anything in this agreement to the contrary (i) Provider, through its dentists, shall be solely responsible for and shall have complete authority, responsibility, supervision, and control over the provision of all Dental Care and that all Dental Care shall be provided and performed exclusively by or under the supervision of dentists as such dentists, in their sole discretion, deem appropriate, (ii) Service Company shall not have or exercise any control or supervision over the provision of Dental Care, and (iii) to the extent any act or service required of Service Company under this agreement is reasonably likely to be construed by a court of competent jurisdiction or by any applicable governmental agency to constitute the practice of dentistry, the requirement to perform that act or service by Service Company shall be deemed waived and unenforceable. For purposes of this agreement and as the context permits, the term “dentist” shall be deemed to include those individuals licensed by the State of Wisconsin to practice general dentistry or a dental care specialty such as orthodontics, endodontics, periodontics, prosthodontics, pediatric dentistry, oral surgery, and oral medicine.

 

ARTICLE III. POLICY BOARD

 

§3.1 Formation and Operation of Policy Board . The Parties hereby establish an advisory policy board (the “Policy Board”) which shall provide consultation and advice to Service Company in support of Service Company discharging its responsibility for developing and implementing management and administrative policies for the overall operation of Clinics. The Policy Board shall consist of six members, of which three members shall be designated by Service Company, in its sole discretion, and three members shall be designated by Provider; provided that, unless otherwise agreed by the Parties, the Policy Board members designated by Provider shall be licensed dentists employed by Provider. Each Party shall have the right to designate, remove, and replace its Policy Board designees at any time and from time to time upon notice to the other Party.

 

Except as may otherwise be expressly provided in this agreement or any rules, bylaws, or regulations adopted by the Policy Board, the act of a majority of the members of the Policy Board shall be the act of the Policy Board. The Policy Board’s decisions may be evidenced by either minutes of a Policy Board meeting or written action taken by the Policy Board members making the decision; provided that no written action signed by less than all of the Policy Board members shall be effective unless notice of such action is given to the Policy Board member who is not signing such action at least two business days prior to the effective date of such action. The decisions, resolutions, or recommendations of the Policy Board shall be reviewed by Service Company and, if deemed necessary or appropriate by Service Company, in its sole discretion, shall be implemented by Service Company or Provider, as appropriate.

 

The Policy Board shall hold regular meetings at such places and at such times (not less often than quarterly) as the Policy Board may determine from time to time. Special Policy Board meetings may be called by either Party or any two Policy Board members; provided that notice of any meeting which is not a regularly scheduled meeting shall be given to all Policy Board members at least five business days prior to the meeting, unless such notice is waived by the Policy Board members. Policy Board meetings may be held through the use of telecommunications equipment so long as all members can hear each other clearly.

 

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§3.2 Responsibilities of the Policy Board . The Policy Board shall have the following duties and responsibilities in its advisory capacity to the Parties, provided, however, that no decision, resolution or recommendation of the Policy Board shall be binding on either of the Parties unless specifically agreed to by the Parties either pursuant to the express terms of this agreement or in writing signed by the Party to be bound:

 

(a) Capital Improvements and Expansion . Any renovation and expansion plans and capital equipment expenditures with respect to Clinics shall be the responsibility of Service Company, shall be reviewed by the Policy Board, and shall be based upon economic feasibility, dentist support, productivity, and then-current market conditions.

 

(b) Annual Budgets . All annual capital and operating budgets prepared in accordance with §4.13(a) by Service Company (in consultation with Provider) shall be subject to the review and comment of the Policy Board. Notwithstanding the foregoing sentence, such budgets shall be subject to the review, comment, and approval of Parent. Service Company shall deliver a copy of such approved budget to the Chief Financial Officer of Parent for Parent’s approval.

 

(c) Marketing and Advertising. The Policy Board shall review and make recommendations regarding advertising and other marketing of the dental services performed at any Clinic.

 

(d) Patient Fees; Collection Policies. Subject to §3.3, as a part of the annual operating budget, in consultation with Provider and Service Company, the Policy Board shall review and make recommendations concerning the fee schedules and collection policies for all dental and ancillary services rendered by Provider. Approval of the fee schedules shall be a Dental Decision.

 

(e) Provider and Payor Relationships. Subject to §3.3, decisions regarding the establishment or maintenance of contractual relationships between Provider and outside or institutional dental care providers and third-party payors shall be subject to the review and recommendations of the Policy Board. Subject to §3.3, all discounted fee practices and schedules, including individual provider or specialty discount arrangements, preferred provider organization discounts and capitated fee arrangements, shall be subject to the review and recommendations of the Policy Board. Where there is no clear methodology for the allocation of capitated fees among Provider’s Dental Care Professionals, the Policy Board shall recommend the methodology intended to result in the equitable and appropriate allocation of all related fees consistent with the type and utilization of Dental Care covered under the capitation arrangement.

 

(f) Strategic and Operational Planning. The Policy Board shall review and make recommendations regarding the long-term strategic and short-term operational goals, objectives and plans developed by Service Company.

 

(g) Capital Expenditures. The Policy Board shall review and make recommendations regarding the priority of major capital expenditures.

 

(h) Personnel Planning. The Policy Board shall review and make recommendations regarding Provider and support personnel manpower plans developed by Service Company. The Policy Board shall review and make recommendations regarding any variations to the restrictive covenants in the dentists’ employment or other agreements.

 

(i) Grievance Referrals. The Policy Board shall consider and make recommendations to the Parties regarding grievances pertaining to matters not specifically addressed in this agreement as referred to it by key Provider or Service Company management and supervisory personnel.

 

(j) Patient Concerns and Claims. The Policy Board shall review and monitor a patient claims tracking, monitoring and recovery procedure which shall provide, without limitation, for (i) the timely and appropriate resolution of all claims and related patient and Provider reimbursement decisions, and (ii) the distribution of a summary report setting forth the status and proposed actions with respect to each such claim to Provider and Service Company on a regular basis. All Dental Care related patient concerns and claims reimbursement decisions shall be a Provider Expense.

 

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(k) Environmental Health and Safety. The Policy Board shall review and monitor environmental and workplace health and safety guidelines, the goal of which is to achieve compliance with current national, state and local laws and regulations regarding environmental and workplace health and safety.

 

(l) Emergency Care Services. The Policy Board shall review and periodically make suggestions for improving (i) the organization and delivery of emergency Dental Care by Provider, and (ii) the process and guidelines for ensuring an appropriate response by Provider to dental and in-Clinic medical emergencies as they may occur from time to time.

 

(m) Financial Review. The Policy Board shall review and monitor the financial performance of Provider with respect to the attainment of its budgeted goals.

 

(n) Other. The Policy Board shall have such other duties, responsibilities, and authority as may be set forth in this agreement or agreed upon by the Parties from time to time.

 

§3.3 Dental Decisions . Notwithstanding the preceding section or any other provisions of this agreement to the contrary, all Dental Decisions (defined below) will be made solely by Provider and shall be binding on the Parties; provided that the Policy Board may participate in the analysis and discussion process. For purposes of this agreement, “Dental Decisions” shall mean decisions relating directly to: (a) types and levels of Dental Care to be provided; (b) recruitment of dentists for Provider, including the evaluation of the background, experience, qualifications, specialties, and other credentials of recruited dentists; (c) fee schedules for Provider’s services, including without limitation Provider’s usual and customary fee schedule; (d) any other Dental Care related functions or decisions agreed upon by the Parties; and (e) to the extent required by applicable law, third party payor contracting.

 

ARTICLE IV. RESPONSIBILITIES OF SERVICE COMPANY

 

During the Term, Service Company shall provide all such Services as are necessary and appropriate for the day-to-day administration of the business aspects of Provider’s operations, including without limitation those services set forth in this Article, provided that all such services shall be subject to the applicable Budget.

 

§4.1 Clinics

 

(a) Service Company shall locate, lease, acquire or otherwise procure a Clinic, taking into consideration the professional concerns of Provider. The expenses associated with any such leasing, acquisition, or procurement shall be Clinic Expenses. Any Clinic procured by Service Company for use by Provider shall be procured at commercially reasonable rates.

 

(b) In the event Provider is the lessee of a Clinic under a lease with an unrelated and nonaffiliated lessor, Service Company may require Provider to assign such lease to Service Company upon receipt of consent from the lessor. Provider shall exercise all reasonable efforts to assist in obtaining the lessor’s consent to the assignment. Any expenses incurred in the assignment shall be Clinic Expenses.

 

(c) Service Company shall be responsible for the repair and maintenance of each Clinic, in a manner consistent with Service Company’s responsibilities under the terms of any lease or other use arrangement relating to that Clinic, the costs and expenses of which shall be a Clinic Expense; provided that the costs and expenses of any repairs or maintenance necessitated by the negligence or willful misconduct of Provider or its dentists, other personnel, agents, or invitees shall be a Provider Expense.

 

§4.2 Equipment.

 

(a) Service Company shall provide all non-dental equipment, fixtures, office supplies, furniture and furnishings deemed reasonably necessary by Service Company for the operation of each Clinic and reasonably necessary for the provision of Dental Care.

 

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(b) Service Company shall provide, finance, or cause to be provided or financed such dental related equipment as is reasonably required by Provider. Subject to economic feasibility as set forth in the budgets approved pursuant to this agreement, Provider shall advise Service Company in all dental equipment selections. Except for Special Dental Supplies (defined in §4.3, below), all dental and non-dental equipment acquired for the use of Provider shall be owned by Service Company.

 

(c) Service Company shall be responsible for repairing, maintaining, and keeping in reasonably good condition (ordinary wear and tear excepted), and replacing (as necessary) all equipment provided by Service Company under this agreement, the cost and expense of which shall be a Clinic Expense; and provided that the cost and expense for any repairs, maintenance and replacement necessitated by the negligence or willful misconduct of Provider or its dentists, other personnel, agents, or invitees shall be a Provider Expense.

 

§4.3 Laboratory Services . Service Company shall arrange for laboratory services, including without limitation dental appliance laboratory service, pathology laboratory service, medical laboratory service, and such other laboratory services as are reasonably necessary and appropriate for the operation of each Clinic and the provision of Dental Care therein.

 

§4.4 Supplies . Service Company shall order, procure, purchase, own, and provide to Provider a reasonable inventory of Ordinary Dental Supplies and office supplies as are reasonably necessary and appropriate for the operation of each Clinic and the provision of Dental Care therein. Unless otherwise prohibited by federal and/or state law, Service Company shall also order, procure, purchase and provide on behalf of and as agent for Provider all reasonable Special Dental Supplies required by Provider to provide Dental Care, the cost of which shall be a Clinic Expense. Service Company shall ensure that each Clinic is at all times adequately stocked with all such supplies. The ultimate oversight, supervision and ownership of (a) all office and Ordinary Dental Supplies is and shall remain the sole responsibility of Service Company, and (b) all Special Dental Supplies is and shall remain the sole responsibility of Provider.

 

§4.5 Capital Investment . Access to all needed working capital and capital expenditures in accordance with the budget as approved in accordance with §4.13(a) will be provided by Service Company. Service Company shall determine the source of capital to be invested, which may include (a) intercompany borrowings from Parent (at the rate set forth in clause (j) in the definition of “Clinic Expenses”), and (b) borrowings, leases, or other financing methods through independent third-party financial institutions.

 

§4.6 Support Services . Service Company shall provide or arrange for all printing, stationery, forms, postage, duplication, facsimile, photocopying, and data transmission and processing services, information services (including providing a computer system for clinic functions, billing, communications, and management), and other support services as are reasonably necessary and appropriate for the operation of each Clinic and the provision of Dental Care therein.

 

§4.7 Quality Assurance, Risk Management, and Utilization Review . Service Company shall assist Provider in Provider’s establishment and implementation of procedures to ensure the consistency, quality, appropriateness, and necessity of Dental Care provided by Provider, and shall provide administrative support for Provider’s overall quality assurance, risk management, and utilization review programs. Service Company shall have the authority to monitor Provider’s level of conformance with such procedures and to report its findings to Provider.

 

§4.8 Licenses and Permits . Although Provider shall be solely responsible for obtaining and maintaining all federal, state, and local licenses and regulatory permits required for or in connection with the operation of Provider and in connection with the operation of all dental equipment located in each Clinic, Service Company shall assist Provider with the implementation of a plan designed to ensure that all such licenses and permits are obtained and shall provide reasonable assistance to Provider in obtaining the same. Service Company also shall maintain all licenses and permits required for all equipment (existing and future) located at each Clinic.

 

§4.9 Personnel . Except as provided in §5.2(d) of this agreement and subject to §3.3, Service Company shall employ or otherwise retain and shall be responsible for recruiting, hiring, and terminating all management,

 

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administrative, supervisory, clerical, secretarial, bookkeeping, accounting, payroll, dental assistants, hygienists, laboratory technicians and personnel, and other non-dentist personnel as Service Company deems necessary and appropriate for Service Company’s performance of its duties and obligations under this agreement. The selection, training, and supervision of: (a) dental assistants, hygienists, and other clinical personnel to be employed by Service Company shall be the responsibility of Provider; and (b) all other personnel to be employed by Service Company shall be the responsibility of Service Company. Consistent with reasonably prudent personnel management policies, Service Company shall seek and consider the advice, input, and requests of Provider in regard to personnel matters. Service Company shall have sole responsibility for determining the salaries and fringe benefits of such non-professional personnel, and for withholding all appropriate amounts for income taxes, unemployment insurance, social security, workers’ compensation, and any other withholding required by applicable law.

 

§4.10 Contract Negotiations . Service Company shall advise Provider with respect to and negotiate, either directly or on Provider’s behalf, as appropriate, such contractual arrangements with third parties as are reasonably necessary and appropriate for Provider’s provision of Dental Care, including without limitation negotiated price agreements with third party payors, alternative delivery systems, or other purchasers of group dental care services; provided that no contract or arrangement regarding the provision of Dental Care shall be entered into without Provider Consent.

 

§4.11 Billing and Collection . On behalf of and for the account of Provider, Service Company shall establish and maintain credit and billing and collection policies and procedures, and shall exercise reasonable efforts to bill and collect in a timely manner all professional and other fees for all billable Dental Care provided by Dental Care Professionals, including any such fees paid directly to Provider by Service Company pursuant to the then-current Membership Agreement (or similar agreement for providing professional services to dental plans) between Service Company and Provider. Service Company shall advise and consult with Provider regarding the fees for Dental Care provided by Provider (including any related discounting policy); it being understood, however, that Provider’s consent shall be necessary to establish the fees (subject to §3.2(d), above) to be charged for Dental Care. In connection with the billing and collection services to be provided hereunder, Provider hereby grants to Service Company, throughout the Term (and thereafter as provided in §8.3), an exclusive special power of attorney and appoints Service Company as Provider’s exclusive true and lawful agent and attorney-in-fact, and Service Company hereby accepts such special power of attorney and appointment, for the following purposes:

 

(a) To bill Provider’s patients, in either Provider’s or Service Company’s name (as Service Company deems appropriate) and on Provider’s behalf, for all billable Dental Care provided by or on behalf of Provider to patients.

 

(b) To bill, in either Provider’s or Service Company’s name (as Service Company deems appropriate) and on Provider’s behalf, all claims for reimbursement or indemnification from insurance companies and plans, all state or federally funded dental benefit plans, and all other third party payors or fiscal intermediaries for all covered billable Dental Care provided by or on behalf of Provider to patients.

 

(c) To collect and receive, in either Provider’s or Service Company’s name (as Service Company deems appropriate) and on Provider’s behalf, all accounts receivable generated by such billings 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 to require the payment of any such accounts; provided, however, that extraordinary collection measures, such as filing lawsuits, discharging or releasing obligors shall not be undertaken without Provider Consent.

 

(d) To deposit all amounts collected into the Provider Account. Provider shall transfer and deliver to Service Company all funds received by Provider from patients or third party payors for Dental Care. Upon receipt by Service Company of any funds from patients or third party payors or from Provider for Dental Care pursuant to this agreement, Service Company shall promptly deposit the same into the Provider Account.

 

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(e) To take possession of, endorse in the name of Provider, and deposit into the Provider Account any notes, checks, money orders, insurance payments, and any other instruments received in payment of accounts receivable for Dental Care.

 

(f) To sign checks, drafts, bank notes or other instruments on behalf of Provider, and to make withdrawals from the Provider Account for payments specified in this agreement and otherwise as agreed upon from time to time by the Parties.

 

Upon request of Service Company, Provider shall execute and deliver to the financial institution at which the Provider Account is maintained such additional documents or instruments as Service Company may reasonably request to evidence or effect the special power of attorney granted to Service Company by Provider pursuant to this section and §4.12. The special power of attorney granted herein is coupled with an interest and shall be irrevocable except with Service Company’s written consent. The irrevocable power of attorney shall expire when this agreement has been terminated, all accounts receivable purchased by Service Company pursuant to §7.7, if any, have been collected, and all amounts due to Service Company as described in Article VII have been paid.

 

§4.12 Provider Account .

 

(a) Power of Attorney. Service Company shall have access to the Provider Account solely for the purposes stated herein and shall use all funds on deposit therein to pay all Clinic Expenses in accordance with the terms of this agreement. Provider hereby grants to Service Company an exclusive special power of attorney and appoints Service Company as Provider’s true and lawful agent and attorney-in-fact, throughout the Term (and thereafter as provided in §8.3), and Service Company hereby accepts such special power of attorney and appointment, to make withdrawals from Provider Account for payments specified in this agreement and as requested from time-to-time by Provider. Notwithstanding this exclusive special power of attorney, Provider may, upon reasonable advance notice to Service Company and subject to §4.12(b) of this agreement, request that Service Company draw checks on the Provider Account for Provider Expenses and such other amounts as may be due to Provider under this agreement. Disbursements shall be related to and in such amount so as to ensure that disbursements made without prior Provider Consent are consistent with the expenditures authorized by the Budget.

 

(b) Priority of Payments. All funds that are in the Provider Account shall be applied (to the extent available) in the following order of priority:

 

(i) Reimbursement of Clinic Expenses to Service Company pursuant to §7.1;

 

(ii) Repayment of advances made by Service Company to Provider pursuant to §7.2;

 

(iii) Payment of the Service Fee to Service Company pursuant to §7.3(a);

 

(iv) Payment of Provider Expenses to Provider; and

 

(v) Payment of the Performance Fee to Service Company pursuant to §7.3(b).

 

(c) Further Assurances. Promptly upon request by Service Company from time to time, Provider shall execute a separate power of attorney in form reasonably satisfactory to Service Company for the purpose of further confirming or evidencing the rights granted to Service Company under §§4.11 and 4.12.

 

§4.13 Financial Matters.

 

(a) Annual Budget. At least 30 days prior to the commencement of each calendar year, Service Company, in consultation with Provider, shall prepare and deliver to the Policy Board for its review a proposed Budget, setting forth an estimate of Provider’s revenue and expenses for the upcoming calendar year (including without limitation the Service and Performance Fees associated with the services provided by Service Company hereunder). The Budget shall provide, among other things, that the percentages of Adjusted Gross Revenue established pursuant to item 1 of Exhibit A-1 attached to this agreement shall be allocated to Provider Expense.

 

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In the event a proposed Budget is disapproved by Parent (pursuant to §3.2(b)), Service Company, in consultation with Provider, shall promptly revise such Budget, taking into consideration the comments of Parent, and shall deliver such revised Budget to the Policy Board for review and to Parent for approval. In the event that a proposed Budget has not been approved by Parent by the beginning of the calendar year, then, subject to the provisions of Exhibits A and A-1 attached to this agreement, the Budget for the prior year shall be deemed to be adopted as the Budget for the current year until a new Budget as been approved by Parent.

 

(b) Accounting and Financial Records. Service Company shall establish and administer accounting policies and procedures, internal controls, 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 Provider, all of which shall be prepared and maintained in accordance with GAAP. Service Company shall prepare and deliver to Provider, within 45 days of the end of each calendar quarter, a balance sheet and an income statement reflecting the financial status of Provider in regard to the provision of Dental Care as of the end of such calendar quarter, all of which shall be prepared in accordance with GAAP. In addition, Service Company shall prepare or assist in the preparation of any other financial statements or records as Provider may reasonably request.

 

(c) Review of Expenditures . Provider’s chief executive officer shall review from time to time all expenditures related to the operation of Provider, but such officer shall not have the power to prohibit or invalidate any expenditure.

 

(d) Tax Matters .

 

(i) General. Service Company shall prepare or arrange for the preparation of all tax returns and reports of Provider required by applicable law, which returns and reports shall be prepared by an accountant reasonably acceptable to Provider.

 

(ii) Sales and Use Taxes. Service Company and Provider acknowledge and agree that to the extent that any of the services to be provided by Service Company hereunder may be subject to any state sales and use taxes, Service Company may have a legal obligation to collect such taxes from Provider and to remit the same to the appropriate tax collection authorities. Provider agrees to pay any and all applicable state sales, use, gross receipts, and other similar taxes and charges (other than taxes on Service Company’s net income) with respect to any amount paid to Service Company hereunder and that such amounts shall be a Provider Expense.

 

§4.14 Reports and Records .

 

(a) Dental Records . Service Company shall establish, monitor, and maintain procedures and policies for the timely creation, preparation, filing and retrieval of all dental records generated by Provider in connection with Provider’s provision of Dental Care; and, subject to applicable law, shall ensure that dental records are promptly available to dentists and any other appropriate persons. 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 Provider.

 

(b) Other Reports and Records . Service Company shall timely create, prepare, and file such additional reports and records as are reasonably necessary and appropriate for Provider’s provision of Dental Care, and shall be prepared to analyze and interpret such reports and records upon the request of Provider.

 

§4.15 Recruitment of Provider Dentists . Upon Provider’s request, Service Company shall perform all services reasonably necessary and appropriate in connection with the recruitment of professional dental personnel. Service Company shall provide Provider with model agreements to document Provider’s employment, retention or other service arrangements with such individuals. However, it shall be and remain the sole and complete responsibility of Provider to interview, select, contract with (subject to §5.2, below), supervise, control and terminate all dentists performing Dental Care or other professional services, and Service Company shall have no authority whatsoever with respect to such activities.

 

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§4.16 Service Company’s Insurance . Throughout the Term, Service Company shall, as a Clinic Expense, obtain and maintain with commercial carriers, or through self-insurance, or some combination thereof: (a) appropriate worker’s compensation coverage for the employees of Service Company provided pursuant to this agreement; and (b) professional and comprehensive general liability insurance covering Service Company, Service Company’s personnel, and all of Service Company’s equipment in such amounts and on such terms and conditions as Service Company deems appropriate. Service Company shall cause Provider to be named as an additional insured on Service Company’s property and casualty insurance policies. Upon the request of Provider, Service Company shall provide Provider with a certificate evidencing such insurance coverage. Service Company may also carry, at Service Company’s option and as a Clinic Expense, key person life and disability insurance on any shareholder or dentist employee of Provider in amounts determined as reasonable and sufficient by Service Company. Service Company shall be the owner and beneficiary of any such insurance.

 

§4.17 License of Name and Marks . Service Company hereby grants the Provider, for the Term, a non-exclusive royalty-free license to use the names “Smileage” and “Smileage Dental Care” and all related marks and logos owned by Service Company for the purpose of fulfilling its obligations hereunder, including without limitation providing Dental Care to its patients.

 

§4.18 No Warranty . Provider acknowledges that Service Company has not made and will not make any representations or warranties, express or implied, regarding Service Company’s services under this agreement or the results of those services, including without limitation any representations or warranties that the services provided by Service Company will result in any particular amount or level of dental practice or income to Provider.

 

ARTICLE V. RESPONSIBILITIES OF PROVIDER

 

§5.1 Organization and Operations . As a continuing condition of Service Company’s obligations under this agreement, Provider shall at all times during the Term: (a) be and remain legally organized and operated to provide Dental Care in a manner consistent with all state and federal laws; (b) operate and maintain within the Practice Territory a full time practice of dentistry providing Dental Care in compliance with all applicable federal, state, and local laws, rules, regulations, ordinances, and orders; (c) maintain and use its best efforts to enforce its articles or certificate of incorporation (or other instrument of organization), bylaws, shareholder agreements, and other organizational documents (hereafter in this §5.1 simply “organizational documents”) in the respective forms provided to Service Company prior to execution of this agreement; (d) have at least three executive officers at the level of vice president or above who are also dentist employees of Provider; (e) maintain and use its best efforts to enforce the written employment agreements and independent contractor agreements described in §5.2(a), below; and (f) not, without Service Company Consent, (i) amend any of its employment agreements or organizational documents in any material respect or waive any material rights thereunder, or (ii) engage in any transaction constituting a merger, consolidation, reorganization, sale or purchase of assets outside of the ordinary course of business, liquidation, or dissolution. Provider hereby acknowledges that Service Company would not have entered into this agreement but for Provider’s covenant to maintain such organizational documents and employment agreements, and Provider shall pay to Service Company, in addition to the amounts set forth in Article VII, any damages, compensation, payment, or settlement amounts received by Provider from a dentist who terminates his employment agreement without cause or whose employment agreement is terminated by Provider for cause.

 

§5.2 Provider Personnel.

 

(a) Dentist Personnel . Provider shall retain, as a Provider Expense and not as a Clinic Expense, that number of dentists during the Term which are necessary and appropriate, in Provider’s sole discretion after consultation with Service Company, to provide Dental Care to reasonably meet the demand therefor. Provider shall cause each dentist retained by Provider to hold and maintain a valid and unrestricted license to practice dentistry in the State of Wisconsin, including without limitation any licenses required for the provision of any specialty dental

 

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services, together with all necessary or appropriate board or other certifications. Throughout the Term, Provider shall enter into and maintain a written employment agreement substantially in the form of Exhibit D for all dentists now and hereafter employed by Provider; provided that Provider shall, throughout the Term, enter into and maintain a written employment agreement substantially in the form of Exhibit C with each dentist of Provider who now or hereafter is either an executive officer (at a level of vice president or above) of or Policy Board member designated by Provider; and provided further that Provider shall, immediately upon execution of this agreement, enter into and maintain a written employment agreement substantially in the form of Exhibit C with each of the dentists set forth on Exhibit E. Throughout the Term, Provider shall enter into and maintain a written agreement with each independent contractor retained by Provider, which agreements shall contain confidentiality provisions substantially similar to those contained in the employment agreement in the form of Exhibit D. Provider shall be responsible for paying the compensation and benefits as applicable, for all dentists and any other dentist personnel or other contracted or affiliated dentists, and for withholding all sums for income tax, unemployment insurance, social security, or any other withholding required by applicable law. Service Company may, on behalf of Provider, administer the compensation and benefits with respect to such individuals in accordance with the written agreement between Provider and each dentist. Service Company shall neither control nor direct any dentist in the performance of Dental Care for patients. Provider shall provide to Service Company evidence of such licensing, certifications, and other credentials of the dentists retained by Provider as Service Company may request from time to time.

 

(b) Provider and Patient Scheduling . Provider shall, with the reasonable assistance of Service Company, (i) develop a set of Provider and patient scheduling guidelines and a corresponding scheduling system, and (ii) support Service Company in the implementation of such guidelines and effective operation of such system.

 

(c) Paid Hours Reporting . Provider shall support the development and effective operation by Service Company of a dentist paid hours reporting and monitoring system.

 

(d) N on-Dentist Dental Care Personnel . All non-dentist personnel who provide Dental Care, including without limitation dental hygienists, denturists, dental assistants, and other licensed or certified personnel shall be under such control, supervision and direction of Provider and the dentists retained by Provider in the performance of or in connection with Dental Care for patients as is required under applicable state law and regulations.

 

§5.3 Professional Standards .