EXHIBIT 10.1
Mutual Health Systems, Inc.
Support Services Agreement
"Gentle Dental of Washington"
Date: January 1, 1996
TABLE OF CONTENTS
Section Page
1. Facilities 4
2. Furniture, Fixtures and Equipment 4
3. Use of Trade Names and Trademarks 5
4. Administrative Services 5
5. Duties of Group 9
6. Relationship of Parties 11
7. Confidential Information and Trade Secrets 12
8. Working Capital 13
9. MHS' Compensation 14
10. Definitions 14
11. Miscellaneous Authority and Duties of the Parties 15
12. Term and Termination 16
13. Indemnification 17
14. Assignment 17
15. Governing Law 17
16. Waiver 17
17. Amendment 17
18. Entire Agreement 18
19. Notice 18
20. Arbitration 19
21. Miscellaneous Provisions 19
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Mutual Health Systems, Inc. - Support Services Agreement 2
SUPPORT SERVICES AGREEMENT
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This Agreement is effective as of January 1, 1996 (the "Effective Date") by
and between Mutual Health Systems, Inc., a Washington corporation ("MHS"),
and Tse, Saiget, Watanabe & McClure, Inc., P.S., a Washington professional
services corporation, d/b/a Gentle Dental of Washington ("Group"), and is
made with reference to the following facts:
A. Group is a Washington professional service corporation able to
practice dentistry in and pursuant to the laws of the State of
Washington.
B. Group delivers dental services to enrolled members of health care
plans and to the public at large. Group's dental services are
performed by employed dentists, and by independent dentists under
contract with Group.
C. Group employs dentists, hygienists, nurses and dental assistants
only. Group desires to retain a number of various types of dental
professionals, including practitioners of various specialties, in
many different locations in order to create an extensive provider
network. Group does not employ and is not desirous of employing
administrative and management staff or any other personnel. Group
desires to confine its operations to the delivery of dental care
services free from concern over administrative matters. Group
therefore desires to contract with MHS to provide business
support services which will enable Group to concentrate on the
development and management of the professional aspects of its
dental practice.
D. Group wishes to lease or utilize certain offices and facilities,
equipment, furnishings and supplies which are owned or leased by
MHS and which are necessary for Group to operate dental clinics.
E. MHS has special expertise and experience in the operation and
marketing of dental clinics of the type intended to be operated
by Group. MHS has developed and will continue to develop
expertise in the non-dental aspects of dental facilities where
professional dental care has been and will be provided at low
cost because of efficiencies of scale and administrative
expertise.
F. Group wishes to engage MHS to provide Group with certain
personnel and all necessary and appropriate services relating to
the development, marketing, operations, and administration of all
non-dental facets of Group's dental clinics.
G. Group and MHS are parties to a Support Services Agreement dated
as of January 1, 1995, as amended (the "Prior Agreement"), and
now desire to clarify certain aspects of their existing
relationship by entering into this Agreement.
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Mutual Health Systems, Inc. - Support Services Agreement 3
NOW, THEREFORE, Group hereby exclusively engages MHS, and MHS agrees with
Group, to provide Group the following described facilities, equipment, and
services so as to enable Group to deliver to its patients efficient and
cost-effective dental care, in accordance with the following terms and
conditions:
1. Facilities.
During the term of this Agreement, and all renewals and extensions
hereof, MHS shall lease to Group, for Group's use, suitable facilities
(hereafter referred to individually as a "Clinic" and collectively as
the "Clinics") for Group to perform its dental care services. The
Clinics will be provided in those locations designated by Group and
shall include those tenant improvements that are reasonably required
by Group. MHS shall bear all development costs, acquisition costs, or
lease costs associated with the provision of these facilities and
shall assume the economic risk for, and shall otherwise be fully
liable under, all leases or property development agreements. Title to,
or rights of tenancy to, the Clinics shall remain in MHS, and upon
termination of this Agreement, Group shall immediately surrender the
Clinics to MHS.
2. Furniture, Fixtures and Equipment.
During the term of this Agreement, and all renewals and extensions
hereof, MHS shall lease to Group, at each Clinic at which Group
performs its dental care services, the dental equipment, office
equipment, furniture, fixtures, furnishings and leasehold improvements
reasonably necessary for Group to perform its dental care services.
The use by Group of such furniture, fixtures, furnishings, and
equipment shall be subject to the following conditions:
a. Title to all such furniture fixtures, furnishings, and
equipment shall remain in MHS and upon termination of
this Agreement, Group shall immediately return and
surrender all such furniture, fixtures, furnishings,
and equipment to MHS in as good condition as when
received, normal wear and tear excepted. Group
expressly agrees to execute any appropriate UCC-1
Financing Statement and UCC-1 Fixture Filings, if so
requested in writing by MHS.
b. MHS shall be fully and entirely responsible for all
repairs and maintenance of all such furniture,
fixtures, furnishings, and equipment; provided,
however, that Group agrees that it will use its best
efforts to prevent damage, excessive wear, and
breakdown of
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Mutual Health Systems, Inc. - Support Services Agreement 4
all such furniture, fixtures, furnishings, and
equipment and shall advise MHS of any and all needed
repairs and equipment failures.
3. Use of Trade Names and Trademarks.
During the term of this Agreement, Group shall have a non-exclusive
license to use the name "Gentle Dental," together with such insignia,
logos, slogans and other trademarks as MHS may develop in association
with such name. Group shall comply with all guidelines and
restrictions concerning use of such name and trademarks as MHS may
reasonably impose from time to time. Ownership of such name and
trademarks and the sole right to license the use of such name and all
related trademarks shall remain in MHS. In the event of termination of
this Agreement, Group shall cease all use of such name and all
associated trademarks unless MHS otherwise agrees in writing.
4. Administrative Services.
During the term of this Agreement, and all renewals and extensions
hereof, Group hereby engages MHS as the exclusive provider of all
non-dental functions and non-dentist services relating to the
operation of the Clinics; and MHS agrees to furnish to Group all of
the non-dental functions and services that may be reasonably needed by
Group in connection with the operation of the Clinics. Such non-dental
services and functions shall include the following:
a. Bookkeeping and Accounts
MHS shall provide all bookkeeping and accounting services
reasonably necessary or appropriate to support the Clinics,
including, without limitation, maintenance, custody and
supervision of all of business records, papers, documents,
ledgers, journals and reports (the "Books and Records"), the
preparation, distribution and recording of all remittances by
Group for accounts payable or payroll, and the preparation,
distribution and recording of all bills and statements for
professional services rendered by Group, including the billing
and completion of reports and forms required by insurance
companies, governmental agencies or other third-party payors
(such records, papers, documents, ledgers, journals and reports
shall not be deemed to include patient records and other records,
reports and documents which relate to patient treatment by
Group's dentists). The Books and Records at all times shall be
materially correct and complete and contain correct and timely
entries made with respect to transactions entered into pursuant
hereto in accordance with generally accepted accounting
principles ("GAAP") as in effect at such time.
It is understood, however, that all such business records, papers
and documents are the sole property of Group, shall be available
for inspection by Group at all times,
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Mutual Health Systems, Inc. - Support Services Agreement 5
and shall be delivered to Group upon termination of this
Agreement. Group shall provide MHS with a complete copy of all
such documents, records, and papers at Group's expense upon
termination of this Agreement.
b. Contract Administration.
MHS shall provide Group with administrative services reasonably
necessary to enable Group to perform on a timely basis all
non-dental aspects of prepaid dental care contracts and other
dental care contracts of Group. Such services shall include the
preparation and analysis of reports to enable Group to provide
dentist staffing and supervision at the Clinics for the rendering
of efficient and appropriate dental care to patients.
c. Non-dentist Personnel.
MHS shall employ and provide such support personnel to Group as
may be reasonably necessary to enable Group to perform its dental
services at the Clinics subject to the following:
i. MHS shall provide all personnel at the Clinics
excluding dentists, dental assistants, nurses and
dental hygienists. This shall include, but is not
limited to, the provision of all receptionists,
secretaries, clerks, purchasing and marketing
personnel, janitorial and maintenance personnel, and
nondentist supervisory personnel as may be deemed
reasonably necessary by MHS for the proper and
efficient operation of the Clinics;
ii. MHS shall be responsible for hiring and firing all such
support personnel, and shall determine compensation for
all such personnel, including the determination of the
salaries, fringe benefits, bonuses, health and
disability insurance, workers' compensation insurance,
and any other benefits that each such employee shall
receive; and
iii. MHS shall manage and supervise all licensed support
personnel employed on behalf of Group at the Clinics,
including, but not limited to all nurses, dental
assistants, and dental hygienists, regarding those
aspects of their employment that do not involve
performance under the scope of their licensure;
provided, however that Group shall manage and supervise
all activities of such licensed support personnel
performed under the scope of their licensure. Group
shall be solely responsible for management and
supervision of dentists.
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Mutual Health Systems, Inc. - Support Services Agreement 6
Provision of dental services during extended hours of
operation, generally including at least 60 hours per week
during which Clinics are open to the public, is a central
feature of Group's operations and competitive strategy.
MHS agrees to provide staffing as reasonably required to
permit operation of the Clinics during extended hours of
operation.
d. Supplies.
MHS shall acquire and supply to Group all dental and other
supplies of every kind, name or nature, which may reasonably be
required by Group for the operation of the Clinics, provided that
Group shall be responsible for ordering, receiving and handling
all pharmaceuticals and related supplies for which state or
federal certification, registration or licensure is required.
e. Security and Maintenance.
MHS shall provide to Group all services and personnel reasonably
necessary to provide Group with proper security, maintenance, and
cleanliness of the Clinics and the furniture, fixtures,
equipment, and leasehold improvements located thereat.
Additionally, MHS shall furnish to or obtain for Group all
laundry, linens, uniforms, printing, stationery, forms, telephone
service, postage, duplication services, and any and all other
supplies and services of a similar nature which are reasonably
necessary in connection with the day-to-day operation of the
Clinics.
f. Dentist Recruiting.
MHS shall assist Group in recruiting and screening prospective
dentists and licensed support personnel as employees or
contractors for Group. Group shall be solely responsible for
hiring, supervision, training, evaluation and termination of
dentists. Group shall be responsible for hiring and termination
of licensed support personnel and for all supervision, training
and evaluation of such personnel with respect to all activities
performed under the scope of their licensure.
g. Insurance.
MHS shall use all reasonable efforts to obtain for Group and
maintain in full force and effect during the term of this
Agreement, and all extensions and renewals thereof, comprehensive
commercial liability and property insurance which MHS reasonably
determines to be appropriate to protect against loss in the
nature of fire, other catastrophe, theft, business interruption,
public liability, and non-dental negligence, with minimum
coverage limits of $1,000,000 per occurrence. MHS
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Mutual Health Systems, Inc. - Support Services Agreement 7
shall assist Group in obtaining dental malpractice insurance for
Group and its dentist employees.
h. Billing and Collection
In order to relieve Group of the administrative burden of
handling the billing and collection of sums due for the delivery
of dental services, MHS shall be responsible, on behalf of and
for Group and any contract dentists or independent dentists or
other organizations practicing dentistry for or on behalf of
Group, on their respective billheads as their agent, for billing
and collecting the charges with respect to all dental and other
services provided at the Clinics. Group agrees that it will keep
and provide to MHS all documents, opinions, diagnosis,
recommendations, and other evidence and records necessary for the
purpose of supporting the fees charged for all dental and other
services from time to time.
It is expressly understood that the extent to which MHS will
endeavor to collect such charges, the methods of collecting, the
settling of disputes with respect to charges and the writing off
of charges that may be or appear to be uncollectible shall at all
times be within the sole discretion of MHS (but subject to all
applicable governmental regulations and the terms and conditions
of applicable provider agreements) and that MHS does not
guarantee the extent to which any charges billed will be
collected.
Group or its duly authorized agent shall have the right at all
reasonable times and upon the giving of reasonable notice to
examine, inspect and copy the records of MHS pertaining to such
fees, charges, billings, and collections. At Group's request, MHS
will re-assign to Group, for collection by Group, any accounts
which MHS has determined to be uncollectible.
i. Bank Accounts and Disbursements.
During the term of this Agreement, MHS is hereby expressly
authorized to, and shall, disburse from one or more bank accounts
of Group sums for the payment of Group's expenses as described in
Section 5, MHS' compensation as described in section 9, and all
other costs, expenses and disbursements which are required or
authorized by this Agreement. For administrative convenience, MHS
shall maintain said bank accounts.
j. Market Research.
MHS shall conduct market research with respect to rates, charges,
competitive conditions, competition and business opportunities
for MHS and Group. MHS
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Mutual Health Systems, Inc. - Support Services Agreement 8
shall compile such information and provide marketing reports and
analyses to Group. All such marketing services shall be conducted
in accordance with the laws, rules, regulations and guidelines of
all applicable governmental and quasi-governmental agencies.
k. Contract Negotiations.
MHS shall negotiate on Group's behalf contracts with health
plans, preferred provider organizations, other group plans,
independent provider associations, employers, hospitals, dentists
and others for Group's services at the Clinics, for admission of
Group's patients for hospitalization, and for the provision of
dental care services for Group's patients by other dentists with
specialties not available at Group. Group shall have final
approval and authority with respect to such contracts, and Group
shall have the sole and absolute right not to enter into any such
contracts.
l. Management and Planning Reports.
MHS shall supply Group on a regular, periodic basis such internal
reports as may be necessary or appropriate for the parties to
assist each other in evaluating the non-dental aspects of the
performance and productivity of their respective employees and
contractors as well as in evaluating the efficiency and
effectiveness of the rendition of their respective management and
other nonprofessional services. MHS shall provide Group with data
and reports for Group's exclusive use in conducting Group's
dental practice, evaluating the performance of Group's dentists
and for other purposes related to maintaining and improving
patient care quality and improving the efficiency of Group's
dentists.
5. Duties of Group
a. Conduct of Dental Practice.
Group shall be solely and exclusively in control of all aspects
of the practice of dentistry and the delivery of dental services
at the Clinics. The rendition of all dental professional
services, including, but not limited to, diagnosis, treatment,
surgery, therapy and the prescription of medicine and drugs, and
the supervision of preparation of dental reports shall be the
responsibility of Group. Group shall have the sole right and
authority to hire, employ, train, supervise, terminate, and
compensate all of its dentist-contractors and dentist-employees,
dental assistants, and dental hygienists.
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Mutual Health Systems, Inc. - Support Services Agreement 9
MHS shall have no authority whatsoever with respect to such
activities, and shall have no authority with respect to the
establishment of fees or charges for the rendition of such
services.
b. Staffing of Clinics
Group agrees to assign a dentist to act as Clinical Director at
each Clinic. Group will assure that each Clinic is adequately
staffed during operating hours, including extended hours of
operation, with such dental personnel as may be necessary to
efficiently carry out the practice of dentistry at each Clinic.
c. Professional Personnel.
Group shall ensure that dentists and other licensed personnel
employed or contracted by Group are properly licensed and
trained. Group shall be responsible for monitoring quality of
care, responding to any patient complaints concerning dental
services and undertaking appropriate quality improvement
activities. Group shall arrange for continuing education for
licensed personnel in accordance with all legal requirements and
good professional practice.
d. Wages, etc.
Group shall be solely responsible for payment of all wages,
salaries, bonuses and benefits of its employed licensed
personnel, including all payroll taxes, vacation and sick pay,
insurance and pension or profit sharing contributions.
Group shall be solely responsible for payment of all amounts due
to contracted licensed personnel under service contracts with
Group. MHS shall provide payroll processing and accounts payable
services as provided in this Agreement.
e. Professional Expenses.
Group shall pay all professional dues and license fees,
continuing education costs and similar costs incurred by Group's
employees. Group shall pay the cost of all professional liability
insurance maintained pursuant to paragraph 5.f.
f. Professional Liability Insurance.
Group shall continuously maintain throughout the term of this
Agreement professional liability (malpractice) insurance for all
licensed personnel of Group in amounts not less than $1,000,000
per incident and $3,000,000 annual limit for each dentist and
dental hygienist employed by Group. Group shall purchase extended
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Mutual Health Systems, Inc. - Support Services Agreement 10
reporting endorsements ("tail coverage") for personnel leaving
employment with Group, or on change in insurance policies, if
such coverage is available at reasonable rates. Group shall
require all contracted dentists and dental hygienists to maintain
similar coverages. The minimum amounts of insurance required by
this Agreement shall be increased as necessary to reflect current
standards for dental malpractice coverage.
6. Relationship of Parties.
The President of Group, or another licensed dentist designated by
Group, shall act as Group's liaison to MHS. Group shall delegate to
such person all authority to make decisions on behalf of Group
concerning day-to-day operations. The person so designated shall
consult with MHS on operational matters as requested. If approval by
directors or shareholders of Group is required or requested for any
action recommended or referred for approval by MHS, Group shall take
all reasonable steps to promptly refer the matter for decision to
Group's directors or shareholders, as appropriate.
Group designates MHS' President, or his representative, as Group's
Attorney-In-Fact, with full right and authority, but in each instance
at Group's express direction, to execute contracts on behalf of Group,
including, but not limited to health plan agreements and employment
agreements. As Attorney-In-Fact, MHS' President shall have the right
to authorize expenditures on behalf of Group for all activities
related to its business.
Notwithstanding the above, this Agreement is a business support
services agreement only. MHS shall have no control over Group, and
Group shall retain the sole and exclusive authority over all aspects
of its dental practice including, but not limited to, the authority to
approve the locations of Clinics, the types of improvements,
furnishings, equipment and supplies to be utilized, the manner of
practice of dentistry or related ancillary services, marketing
approaches or advertisements, choice of dental personnel, treatment
decisions, assignment of patients to professionals, the content of
dental evaluation reports, fees charged, programs and services engaged
in, and any aspects of dental practice not listed that are the sole
prerogative of a duly licensed dentist under applicable state law.
In the performance of this Agreement, it is mutually understood and
agreed that all dentists, dental hygienists and dental assistants
practicing at any of the Clinics are at all times acting and
performing as employees of Group or as contractors with Group
("Group's Personnel") and not as employees or agents of MHS. MHS shall
neither have nor exercise any control or direction over the methods by
which Group or Group's Personnel shall practice dentistry.
Group and Group's Personnel shall have no claim under this Agreement
or otherwise against MHS for workers' compensation, unemployment
compensation, sick leave,
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Mutual Health Systems, Inc. - Support Services Agreement 11
vacation pay, retirement benefits, Social Security benefits, or any
other employee benefits, all of which shall be the sole responsibility
of Group. Since the Group's Personnel are not employees of MHS, MHS
shall not withhold on behalf of Group's Personnel pursuant to this
Agreement any sums for income tax, unemployment insurance, Social
Security, or otherwise pursuant to any law or requirement of any
governmental agency, and all such withholding, if any is required,
shall be the sole responsibility of Group. Group shall indemnify and
hold harmless MHS from any and all loss or liability arising with
respect to any of the foregoing benefits or withholding requirements.
Group shall require all dentists in its employ to execute
non-competition agreements in a form satisfactory to MHS that prohibit
such dentists from providing dental services within five miles of a
location at which they provided dental services for Group for a period
of two years after termination of employment with Group. Group shall
take all reasonable steps to enforce such agreements in the event of
any breach thereof.
All patient records, reports and information obtained, generated or
encountered relating to Clinics shall at all times be the property of
Group and so long as in the possession, use or control of either
party, shall be kept in the strictest confidence by both parties. MHS
shall instruct all of its personnel to keep confidential any such
information, as well as any financial, statistical, personnel, and
patient information obtained or encountered relating to Group or to
Group's operations.
Group shall not solicit, employ or contract with any employee of MHS
or any entity or person that employs or contracts with any employee of
MHS, for a period of two years after any such employee ceases to be
employed by MHS. Should Group breach this specific provision, Group
acknowledges that the damages to MHS would be difficult to ascertain,
and shall as reasonable compensation and liquidated damages promptly
pay MHS the sum of $40,000.
7. Confidential Information and Trade Secrets.
Group recognizes that due to the nature of this Agreement, Group will
have access to information of a proprietary nature owned by MHS
including, but not limited to, any and all computer programs, and any
and all operating manuals or similar materials which constitute the
non-dental systems, policies, procedures, and methods of doing
business developed for the operation of facilities managed by MHS.
Consequently, Group acknowledges and agrees that MHS has a proprietary
interest in all such information and that all such information
constitutes confidential and proprietary information and trade secrets
of MHS. Group hereby waives any and all right, title and interest in
and to such trade secrets and confidential information and agrees to
return all copies of such trade secrets and confidential information
related thereto to MHS, at Group's expense, upon the termination of
this Agreement.
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Mutual Health Systems, Inc. - Support Services Agreement 12
Group further acknowledges and agrees that MHS is entitled to prevent
its competitors from obtaining and utilizing its trade secrets and
confidential information. Therefore, Group agrees to hold MHS' trade
secrets and confidential information in strictest confidence and not
to disclose them or allow them to be disclosed, directly or
indirectly, to any person or entity other than those persons or
entities who are employed by or affiliated with MHS or Group, without
the prior written consent of MHS. Group 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 persons
or entities who are employed by or affiliated with MHS or Group any
confidential or proprietary information or trade secret information
obtained by Group from MHS, except as otherwise required by law. Group
agrees to require each independent contractor and employee of the
Group, and any such persons or entities to whom such information is
disclosed for the purpose of performance of MHS' or Group's
obligations under this Agreement, to execute a "Confidentiality
Agreement" regarding such information in such form as from
time-to-time may be approved by Group and MHS.
Group acknowledges and agrees that a breach of this Paragraph 7 will
result in irreparable harm to MHS which cannot be reasonably or
adequately compensated in damages, and therefore MHS shall be entitled
to injunctive and/or equitable relief to prevent a breach and to
secure enforcement thereof, in addition to any other relief or award
to which MHS may be entitled.
8. Working Capital.
a. Assignment of Accounts Receivable to MHS.
Group hereby assigns, without recourse, to MHS all of Group's
accounts receivable and other rights and interests in all sums
which Group receives or becomes entitled to receive for the
performance of dental services by Group's Dentists, for other
services performed by employees of Group, and for charges by
Group for supplies and other items for which Group is entitled to
charge as reflected in invoices issued by Group with respect to
the Clinics; provided, however, that no assignment shall be made
of any sums or rights to payment the assignment of which is
prohibited by law.
b. Remittance to Group.
Periodically, as required to meet Group's financial obligations,
and after deduction of amounts which are retained by MHS as
compensation, cash equal to all remaining Net Revenues shall be
remitted to Group. Group shall be responsible for paying the
expenses described in section 5 above from funds of Group.
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Mutual Health Systems, Inc. - Support Services Agreement 13
9. MHS' Compensation.
For its services hereunder, including lease of all facilities,
furniture, fixtures and equipment at the Clinics, provision of all
employees of MHS who perform services at or for the Clinics, and
provision of insurance, supplies and management services contemplated
hereunder, Group shall pay MHS the following service fee:
during the first calendar year after the Effective Date,
50% of Net Revenues
during the second calendar year after the Effective Date,
51% of Net Revenues
during the third calendar year after the Effective Date,
52% of Net Revenues
during the fourth calendar year after the Effective Date,
53% of Net Revenues
during the fifth calendar year after the Effective Date,
54% of Net Revenues
during the sixth calendar year and for the remainder of the term of
this Agreement and any renewal term 55% of Net Revenues. The service
fee can be adjusted by mutual agreement from time to time. Payment
shall be made by deduction of the amount due from amounts remitted to
Group as provided in paragraph 8.b. above. Monthly payments shall be
made based on unaudited Net Revenues year-to-date; final adjustment of
the fee shall be made based on audited Net Revenue for the calendar
year.
For 1996, the service fee payable to MHS under this Agreement is
allocated to the following services:
10% of Net Revenues Rents and utilities
30% of Net Revenues Support staff and administrative services
10% of Net Revenues Supplies
Increases in MHS' service fee in 1997 and following shall be allocated
proportionately to each of the three service categories. In 2001 and
following, the allocations will be:
11% of Net Revenues Rents and utilities
33% of Net Revenues Support staff and administrative services
11% of Net Revenues Supplies
10. Definitions.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given
in accordance with generally accepted accounting principles ("GAAP"),
and all financial computations hereunder shall be computed unless
otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method of valuation as used in
the preparation of MHS's financial statements.
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Mutual Health Systems, Inc. - Support Services Agreement 14
"Gross Revenues" means all billings by Group for services rendered
during the term of this Agreement, billed at Group's standard rates.
For purposes of capitated service contracts, "Gross Revenues" means
the amount of revenue received under the service contract for services
rendered during the term of this Agreement.
"Net Revenues" means all Gross Revenues net of allowances for
contractual discounts and bad debt. Bad debt allowances shall be
determined in accordance with GAAP. Contractual discount allowances
shall be based on reasonable estimates as determined by MHS.
11. Miscellaneous Authority and Duties of the Parties.
MHS is hereby exclusively authorized by Group to perform all services
required of MHS pursuant to the terms of this Agreement as MHS deems
reasonable and appropriate in order to meet the day-to-day
requirements of Group. MHS may subcontract with other persons or
entities to perform any part or all of the services required of MHS
hereunder.
Each of the parties agrees to cooperate fully with the other in
connection with the performance of their respective obligations under
this Agreement, and both parties agree to employ their best efforts to
resolve any dispute that may arise under or in connection with this
Agreement. Subject to MHS maintaining the confidentiality of patient
records and Group's confidential information, Group shall provide to
MHS full and complete access to the Group's premises, and to Group
charts, Books and Records, in order that MHS can perform its functions
hereunder.
During the term of this Agreement, at Group's direction MHS shall add
facilities or clinics for the practice of dentistry by Group, and
Group shall staff those facilities with dental personnel and shall
deliver dental services therein. MHS shall exclusively provide the
services contemplated by this Agreement in those facilities. Group
shall not open or otherwise participate in the operation of any dental
clinics or otherwise expand its operations other than through the
exclusive relationship with MHS as described in this Agreement.
Notwithstanding any other provisions contained herein, MHS shall not
be liable to Group, and shall not be deemed to be in default
hereunder, for the failure to perform or provide any of the supplies,
services, personnel, or other obligation to be performed or provided
by MHS pursuant to this Agreement if such failure is a result of a
labor dispute, act of God, or any other event which is beyond the
reasonable control of MHS.
12. Term and Termination.
a. Unless sooner terminated in accordance with the
provisions of this Agreement, this Agreement shall
remain in effect for an initial term of
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Mutual Health Systems, Inc. - Support Services Agreement 15
forty (40) years after the Effective Date. Following
the initial term, this agreement shall be automatically
renewed for successive ten (10) year renewal terms
unless more than 180 days prior to the end of the
initial term or any renewal term either party gives
notice of termination.
b. This Agreement may be terminated by any of the
following:
i. In the event of a material breach of this
Agreement by either party, the other party shall
have the right to cancel this Agreement by service
of written notice upon the defaulting party (the
"Default Notice"). In the event such breach is not
cured within thirty (30) days after service of the
Default Notice, this Agreement shall immediately
terminate at the election of the non-defaulting
party upon the giving of a written notice of
termination to the defaulting party no later than
sixty (60) days after the giving of the Default
Notice, unless such breach cannot be cured within
thirty (30) days and the defaulting party gives
timely notice to the other party to such effect
and promptly undertakes appropriate steps to
effect such cure and pursues such action to
conclusion.
ii. MHS may terminate this Agreement upon one (1)
day's notice in the event of the dissolution or
liquidation of the Group.
iii. Upon institution of any voluntary or involuntary
bankruptcy, reorganization, insolvency or
receivership proceedings, or any assignment for
the benefit of creditors, the other party may
immediately terminate this Agreement on written
notice to the party involved in such proceedings.
c. Upon any termination of this Agreement, it is
understood and agreed that the right of Group to occupy
the Clinics and to use and possession of the furniture,
fixtures, furnishings, equipment and leasehold
improvements shall terminate, and Group shall
immediately vacate and surrender possession to MHS of
the Clinics, furniture, fixtures, furnishings,
equipment and leasehold improvements as well as all
other materials and supplies then located in or upon
the premises of such Clinics.
The various rights and remedies herein provided shall be
cumulative and in addition to any other rights and remedies
the parties may be entitled to pursue under the law. The
exercise of one or more of such rights or remedies shall
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Mutual Health Systems, Inc. - Support Services Agreement 16
not impair the rights of either party to exercise any other
right or remedy at law or in equity.
Termination of the Agreement shall not release or discharge
either party from any obligation, debt or liability which
shall have previously accrued and remain to be performed
upon the date of termination.
13. Indemnification.
Each party shall indemnify, hold harmless, and defend the other party
from any and all liability, loss, claims, lawsuits, damages, injury,
costs or expenses (including reasonable attorneys' fees incurred at
trial, on appeal or on review) arising out of or incident to acts or
omissions by such indemnifying party, its employees, contractors and
subcontractors provided, however, neither party shall be liable to the
other party hereunder for any claim covered by insurance, except to
the extent the liability of such party exceeds the amount of such
insurance coverage.
14. Assignment.
This Agreement, and the rights and obligations created hereunder,
shall not be assignable by Group, either voluntarily or by operation
of the law, without the express prior written consent of MHS. Any
assignment without such consent shall be null and void. Group shall
not sublet any Clinic or any part thereof, and Group shall not
sublease any of the furniture, furnishings, leasehold improvements or
equipment referred to in this Agreement without the express prior
written agreement of MHS. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties, their
heirs, executors and assigns.
15. Governing Law.
This Agreement shall be governed by and construed under the laws of
the State of Washington.
16. 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.
17. Amendment.
No amendment to the terms of this Agreement shall be binding on either
party unless in writing and executed by the duly authorized
representatives of each party.
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Mutual Health Systems, Inc. - Support Services Agreement 17
18. Entire Agreement.
This Agreement constitutes the entire agreement between the parties in
connection with the subject matter hereof and supersedes all prior
agreements, whether written or oral, and whether explicit or implicit,
which have been entered into before the execution hereof. Should any
litigation or arbitration arise between the parties, neither party
shall (and each party hereby waives the right to) introduce any parol
evidence which would tend to contradict or impeach any of the express
written terms, conditions, and covenants of this Agreement.
19. Notice.
Any notice or other communication required or which may be given
hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed or sent by facsimile, or sent by certified,
registered or express mail, postage prepaid, and shall be deemed given
when so delivered personally, telegraphed or telexed or sent by
facsimile, or if mailed, two days after the day of mailing, as
follows:
(i) If to MHS to:
Mutual Health Systems, Inc.
7725 NE Highway 99, Suite B
Vancouver, WA 98665
Attention: President
With a copy to:
Stoel Rives LLP
900 SW Fifth Avenue, Suite 2300
Portland, OR 97204-1268
Attention: Edward L. Epstein, Esq.
(ii) If to Group:
Tse, Saiget, Watanabe, & McClure, Inc. P.S.
7725 NE Highway 99, Suite B
Vancouver, WA 98665
Attention: President
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Mutual Health Systems, Inc. - Support Services Agreement 18
20. Arbitration.
Any disagreement which the parties are unable to resolve by mutual
agreement shall be submitted to private arbitration in accordance with
the rules of the American Arbitration Association ("AAA"), except as
modified by this Agreement.
The arbitration shall be conducted by a single, neutral arbitrator
appointed in accordance with AAA procedures. Unless the parties agree
otherwise, the arbitration proceedings and venue for the filing of
exceptions, if any, shall be Clark County, Washington. Discovery of
documents shall be permitted to the full extent permitted by the
Federal Rules of Civil Procedure ("FRCP"). Other types of discovery
available under the FRCP shall be permitted as the arbitrator shall
find to be appropriate. The parties shall share equally the costs of
the arbitrator and all other costs of arbitration, except that each
party shall be solely responsible for its own attorneys' fees and
expenses. Exceptions to the decision of the arbitrator can be filed in
accordance with RCW 7.04.160; in addition to the grounds recognized in
that statute, an exception may be filed based on mistake of law.
Judgment on the arbitration award can be filed in any court with
jurisdiction.
Arbitration under this Agreement shall be governed by the Federal
Arbitration Act, and by Washington law to the extent not inconsistent
with the Federal Arbitration Act.
To the greatest extent consistent with law and disclosure requirements
applicable to either party, and except as required in a judicial
proceeding contemplated by this section 20, the parties shall keep all
matters relating to any arbitration confidential, including the
existence and subject of the arbitration.
21. Miscellaneous Provisions.
a. Changes In Law.
In the event that any state or federal laws or regulations now in
effect or enacted or promulgated after the execution of this
Agreement are interpreted by judicial decision, regulatory agency
or legal counsel in such a manner as to indicate that the
structure of this Agreement may be in violation of such laws or
regulations, the parties shall negotiate in good faith and shall
seek agreement on modifications or amendments to this Agreement
that appropriately address the possible violation of law or
regulation while preserving the intent of this Agreement as
nearly as possible. If the parties are unable to reach agreement
within a reasonable time, the parties shall proceed as set forth
in section 20.
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Mutual Health Systems, Inc. - Support Services Agreement 19
b. Partial Invalidity.
If any one or more of the terms, provisions, promises, covenants,
or conditions of this Agreement or the application thereof to any
person or circumstance shall be adjudged to any extent invalid,
unenforceable, void or voidable for any reasons whatsoever by a
court of competent jurisdiction, 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.
c. Heading, Titles.
The headings appearing herein are for convenience and reference
only and shall not be deemed to govern, limit, modify or in any
manner affect the scope, meaning or intent of the provisions of
this Agreement.
d. Binding Effect.
Subject to the provisions contained herein, this Agreement shall
be binding upon and inure to the benefit of the parties hereto
and their respective successors.
e. Covenants and Conditions.
Each covenant hereof is a condition, and each condition hereof is
as well a covenant by the parties bound thereby unless waived in
writing by the parties hereto.
f. Approval and Consent.
Whenever in this Agreement an approval or consent is required by
one of the parties, the same shall not be unreasonably withheld.
g. Attorneys' Fees.
In the event suit or action is brought to enforce any of the
terms of this Agreement, the prevailing party shall be entitled
to recover fees and expenses incurred in such action or
proceeding, including reasonable attorneys' fees, incurred at
trial, on appeal or on review.
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Mutual Health Systems, Inc. - Support Services Agreement 20
h. Supersedes Prior Agreement.
This Agreement shall amend, restate and supersede the Prior
Agreement and all amendments thereto effective as of the
Effective Date.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the Effective Date.
Mutual Health Systems, Inc. Tse, Saiget, Watanabe & McClure, Inc. P.S.
DANY Y. TSE WILLIAM SAIGET
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Dany Y. Tse William Saiget, DMD
President President
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Mutual Health Systems, Inc. - Support Services Agreement 21