Document:

EXHIBIT 10.2 

Dental Cooperative

 

Management Services Agreement

 

This Management Services Agreement (the “Agreement”) is effective on the date specified in Section 6.12, by and among DENTAL COOPERATIVE, INC., a Utah corporation (“Dental Cooperative” or “Cooperative”); the Provider; and those natural persons, if any, who own Provider (“Dentist(s)”), all as specified on the signature page. THIS AGREEMENT SUPERCEDES ANY AND ALL PRE-EXISTING AGREEMENTS OR UNDERSTANDINGS AMONG THE PARTIES, WHETHER IN WRITING OR OTHERWISE. ANY SEPARATE WRITING PURPORTING TO ALTER THE UNDERSTANDINGS SET FORTH BELOW OR EXEMPT A PROVIDER FROM ANY OF THE UNDERSTANDINGS BELOW MUST BE IN WRITING AND REFERENCE EXPLICITLY THE INTENT TO MODIFY THIS AGREEMENT. 

 

RECITALS

 

WHEREAS, the parties have contemporaneously entered into an Affiliate Member Practice Purchase Agreement (the “Member Agreement”) whereby Dental Cooperative is acquiring the Dental Practice.

 

	
             
 	
            WHEREAS, payment for the Dental Practice will occur over a five (5) year period.
 

 

WHEREAS, during this five (5) year period, Provider will independently manage and maintain the Dental Practice, for which a percent of the Margin relating to the operating of the Dental Practice will be paid to Dentist(s) and a percent of the Margin will be retained by Dental Cooperative, all as further described below. 

 

NOW, THEREFORE, in consideration of the mutual conditions, representations and covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

 

ARTICLE 1

DEFINITIONS

 

Section 1.1      Definitions. For purposes of this Agreement and each of the Operative Documents (unless otherwise defined herein or therein), the following terms shall have the following meanings:

 

 “Base Collections” means an amount selected by Provider that is not greater than the actual Collections of the Dental Practice for a particular consecutive twelve (12) month period within the last twenty-four (24) months that is agreed with Dental Cooperative and is set forth on the Signature Page hereof (the “Base Collections Period”). Notwithstanding this definition appears in this Agreement as of this date and applies to Provider, Dental Cooperative reserves the right to amend this definition in connection with any Agreement with any other provider of Dental Services, including a successor to the Provider covered by this Agreement.

 

 “Closing” and “Closing Date” have the respective meanings set forth in the Member Agreement.

 

 “Collections” means the gross revenues of the Dental Practice arising from the sale of any and all services and/or products in a given period accounted for on a cash basis, representing amounts paid by patients or by insurers or their representatives for services or products and any other revenue of the Dental Practice.

 

	
             
 	
            “Confidential Information” has the meaning set forth in Section 6.1.
 

 

 “Dental Cooperative Margin Allocation” means an amount, calculated each calendar month, that is equal to (i) forty  percent (40%) of the Margin until such time as Collections for the applicable calendar month equals one-twelfth of Base Collections plus (ii) twenty percent (20%) of the Margin for the applicable calendar month to the extent that Collections exceed one-twelfth of Base Collections. 

 

 “Dental Office” means the location or facility specified on the Signature Page (or in an attachment thereto) from which the Provider provides Dental Services. This term will include, if applicable, mobile facilities.

 

 “Dental Practice” means Provider’s business of providing Dental Services and all tangible and intangible assets of that business, including but not limited to cash on hand and accounts receivable, and all licenses and leaseholds needed for the conduct of such business.

 

 “Dental Professional” means any licensed dental professional working at a Dental Practice, whether an independent contractor or employee, including any dentist, dental hygienist, anesthetist and other such position for which licensure is required by law, who is employed or otherwise retained by the Provider to provide Dental Services to patients.

 

 “Dental Services” means all dental and related health care services, including without limitation, examination, diagnosis, preventive care, restoration, surgery and other therapy.

 

	
             
 	
            “Dentist(s)” has the meaning noted in the introduction to this Agreement.
 

 

 “Dentist’s Margin Allocation” shall mean an amount calculated each calendar month that is equal to the monthly Margin less the amount of the Dental Cooperative Margin Allocation for the calendar month in question. 

 

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            “Final Cash Purchase Payment” means fifty percent (50%) of the Practice Valuation.
 

 

	
             
 	
            “Guaranty” means the Guaranty as defined in the Member Agreement.
 

 

 “Indemnified Party” and “Indemnifying Party” have the meanings set forth in Section 6.2(c).

 

	
             
 	
            “Loan” means the Guaranty as defined in the Member Agreement.
 

 

 “Lender” means the entity that makes to Loan. The lender will be an entity identified by Dental Cooperative. 

 

 “Margin” means the provider’s cash Collections less operating expenses (excluding installment payments on the Loan and excluding compensation to Provider or other Dentist(s)) using the Company’s method of accounting (which must be in accordance with GAAP for cash accounting) that is consistently applied. 

 

 “Material Adverse Change” means any effect or change that would be (or could reasonably be expected to be) materially adverse to the business, assets, condition (financial or otherwise), operating results, operations, or business prospects of the Dental Practice (regardless of whether or not such adverse effect or changes can be or has been cured at any time or whether Dental Cooperative has knowledge of such effect or changes on the date hereof or at any time hereafter), including any adverse changes, event, development, or effect arising from or relating to the taking of any action contemplated by this Agreement and the other agreements contemplated hereby. 

 

	
             
 	
            “Member Agreement” Is defined in the recitals.
 

 

 “Minimum Margin” means a Margin not less than forty percent of Collections during monthly and annual accounting periods.

 

 “Operative Document” means each of this Agreement, the Member Agreement, the Guaranty and every other document or certificate to be executed and delivered between or among the parties listed on the signature page of this Agreement in connection with the transactions described herein and in the Member Agreement.

 

 “Practice Purchase Member” means a Provider who has executed an Affiliate Member Practice Purchase Agreement with Dental Cooperative.

 

  “Practice Valuation” means the Practice Valuation as defined in the Member Agreement. 

 

 “Professional Standards Committee” is an advisory committee that is appointed by Dental Cooperative’s board of directors. 

 

	
             
 	
            “Promissory Note” means the Promissory Note as defined in the Member Agreement.
 

 

	
             
 	
            “Provider” has the meaning noted in the introduction to this Agreement.
 

 

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“State” means the jurisdiction(s) in which Dentist(s) is licensed to provide Dental Services.

 

ARTICLE 2

MEMBER SERVICES; MARGIN ALLOCATION

 

Section 2.1  As a Practice Purchase Member, Provider is entitled to participate, at Provider’s sole discretion, in all member services offered by the Cooperative to members in good standing. Member services may include:

 

(a)          group marketing services such as, but not limited to: group contracts, dental plans, direct marketing, referral, media and credit services;  

 

(b)          opportunities to participate in centralized dental supplies and equipment, lab services and other purchasing programs; 

 

	
             
 	
            (c)
 	
            quality assurance and continuing education programs;
 

 

(d)          opportunities to participate in group insurance pools for health, disability, death and other applicable insurance; and 

 

	
             
 	
            (e)
 	
            opportunities to participate in group incentive and bonus programs.
 

 

Dental Cooperative reserves the right to change, modify or terminate any or all of the member services at any time. 

 

Section 2.2        Margin Allocation. In consideration for Provider’s services in managing the practice and the provision of dental services to the practice’s customers, Provider will retain the Dentist’s Margin Allocation each calendar month during the term of this Agreement which amount shall be paid to Dentist(s). The remaining portion of the monthly Margin shall be transferred to Dental Cooperative as payment of the Dental Cooperative Margin Allocation in the manner agreed under Section 2.3. Notwithstanding the foregoing, under no circumstances shall the monthly amount transferred by Provider to Dental Cooperative pursuant to this Section 2.2 be calculated at a Margin amount that is less than the Minimum Margin calculated on 1/12 of the annual Base Collections.
For example, if Collections were $1,000,000 and operating expenses were $650,000, for purposes of calculating the Dental Cooperative Margin Allocation would be calculated using Margin of $400,000 (the Minimum Margin in this example). 

 

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At the end of each calendar quarter, Dental Cooperative will compare actual Collections during the just concluded three (3) month period compared to actual Dental Cooperative Margin Allocation and other amounts transferred. If the total amount of Dental Cooperative Margin Allocation and other amounts transferred to Dental Cooperative in the just concluded quarter is less than the Dental Cooperative Margin Allocations, as may be adjusted as per the prior paragraph, an adjustment payment from Provider will be due by the 15th of the month following the end of the quarter in question. If the total of Dental Cooperative Margin Allocation, as may be adjusted as per the prior paragraph, transferred to Dental Cooperative in the just concluded calendar quarter is more than as agreed for the same quarter, Dental Cooperative shall account for the adjustment by applying a credit to the next
quarter’s Dental Cooperative Margin Allocation, as may be adjusted as per the prior paragraph. 

 

A 5% late fee shall be assessed for any Dental Cooperative Margin Allocation, as may be adjusted as per the first paragraph of this Section 2.2, that is not transferred within twenty (20) days of the due date. In addition, any Dental Cooperative Margin Allocation, as may be adjusted as per the first paragraph of this Section 2.2, amount that is unpaid for more than thirty (30) days after its due date shall bear interest at the rate of 15% per annum.

 

Section 2.3      Transfer of Retained Dental Cooperative Margin Allocation. Provider shall make necessary arrangements with Dental Cooperative and that are reasonably acceptable to Dental Cooperative and Lender to institute an automatic transfer mechanism to transfer the monthly Dental Cooperative Margin Allocation and other amounts payable by Provider to Dental Cooperative, if any, for the immediately prior month from Provider’s bank account to Dental Cooperative on or before the twentieth (20th) day of each month unless otherwise expressly agreed with Dental Cooperative. During the term of this Agreement, the amount of the Dental Cooperative Margin Allocation to be transferred to Dental Cooperative, will be reduced by an amount equal to the monthly payments due by
Provider to Lender under the Loan. 

 

Section 2.4        Deposit of Final Month’s Dental Cooperative Margin Allocation. At Closing, Provider shall deposit with Dental Cooperative an amount of cash equal to the estimated Dental Cooperative Margin Allocation for one month, which shall be applied by Dental Cooperative to the final month’s total Dental Cooperative Margin Allocation due under this Article 2.

 

Section 2.5 The Operative Documents. Concurrently with the execution of this Agreement, the Provider, Dental Cooperative and the Dentist(s) agree to and will execute the Operative Documents. Each of the Operative Documents is an integral part of the agreement described herein, and the effectiveness of each Operative Document is a condition to the effectiveness of this Agreement and the other Operative Documents. The Operative Documents include a Guaranty pursuant to which the Dentist(s) will guaranty to Dental Cooperative that Provider will comply with the undertakings of this Agreement, including transfer of the Dental Cooperative Margin Allocation and other amounts payable to Dental Cooperative under this Agreement, if any. 

 

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ARTICLE 3

PROFIT-SHARING OPPORTUNITIES

 

Dental Cooperative may create one or more incentive profit sharing programs from time to time, which will provide for profit sharing payments to its members and bonus payments for significant contributions to the success of the cooperative venture. These plans will be designed, implemented, administered and terminated in the sole discretion of Dental Cooperative.

 

ARTICLE 4

GENERAL DUTIES AND COVENANTS OF PROVIDER

AND DENTIST(S)

 

Section 4.1      Dental Services. The Provider shall maintain at all times an adequate staff with such Dental Professionals as may be necessary to carry out the practice of dentistry efficiently on behalf of the Provider and shall provide professional Dental Services to patients in compliance at all times with the ethical standards, laws and regulations applicable to the dental profession.

 

Section 4.2      Licensure. The Provider shall ensure that Dentist(s) and each Dental Professional associated with the Dental Practice are duly licensed by the State and in compliance with all applicable federal and local laws. Provider shall promptly provide copies of current licenses of all Dental Professionals at the pre-closing and thereafter on an annual basis.

 

Section 4.3      Notice of Actions. Provider shall comply with and maintain its good standing under the laws of the State and all applicable federal laws and regulations. Provider shall immediately inform Dental Cooperative in the event that any disciplinary or professional malpractice action is initiated against Provider, Dentist(s) or any Dental Professional associated with the Dental Practice.

 

Section 4.4      Active Practice; Exclusive Use of Dental Offices. The Provider shall engage in the practice of dentistry at the Dental Office, whether through the efforts of Dentist(s) or other Dental Professionals, and the Dental Office shall be used exclusively for the practice of dentistry. The Dental Practice conducted at the Dental Office shall be conducted solely by Dentist(s) and other Dental Professionals associated with Provider, and Provider shall not permit any other Dentist(s) or dental professional to use or occupy the Dental Office without the prior written consent of Dental Cooperative.

 

Section 4.5      Employment of Dental Professionals. The Provider shall only employ and contract with licensed Dental Professionals who meet applicable State regulatory and licensing guidelines. Prior to Closing, the Provider shall enter into an agreement with each Dental Professional consistent with the terms of Article 4 of this Agreement, and in particular that binds each Dental Professional to covenants not to compete and not to solicit identical to the covenants contained in Article 4 hereof, to become effective upon termination of such Dental Professional’s relationship with Provider. Evidence of such agreements shall be provided to Dental Cooperative at or prior to Closing. Provider shall continue to require that such provisions be agreed to in a written agreement with any
Dental Professional who is hired by Provider.

 

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            Section 4.6
 	
            Insurance.
 

 

 (a)         Provider shall maintain comprehensive professional liability insurance on its own behalf and covering all Dentist(s) and Dental Professionals associated with the Dental Office as insureds, with limits of not less than $100,000.00 per claim and $300,000.00 per Dental Professional, and a separate limit for Provider. Provider’s written agreement with each Dental Professional (see Section 4.5 above) shall require the Dental Professional to obtain continuing insurance coverage after termination of the Dental Professional’s relationship with Provider, if such insurance is on a claims made basis, through the applicable statute of limitations for dental malpractice actions.

 

 (b)        Provider shall maintain usual and reasonable general commercial liability and property insurance on the assets of the Dental Practice with reputable carriers. Dental Cooperative shall be named as an additional insured or first loss payee on such insurance policies.

 

 (c)         Provider shall obtain and maintain keyman life insurance on Dentist(s) during the term of this Agreement in the amounts necessary to repay the outstanding balance of the Loan and the Final Cash Purchase Price. Dental Cooperative shall be named as primary beneficiary of such insurance and the Provider shall pay the costs of such insurance.

 

 (d)        Each insurance policy required by this Section shall be with a carrier and in a form reasonably acceptable to Lender and Dental Cooperative, including a waiver of subrogation clause in favor of Dental Cooperative. At the pre-closing, Provider shall provide Dental Cooperative with certificates evidencing such insurance coverage, and such insurance policies shall prohibit any cancellation, termination or modification of such policies without giving thirty (30) days’ prior written notice to Dental Cooperative. Thereafter, Provider shall provide annual updates of such certificates to Dental Cooperative.

 

Section 4.7      Medicare/Medicaid Patients. Provider shall not submit a claim to Medicare or Medicaid for any Dental Services provided to a patient who is a Medicare or Medicaid beneficiary without the prior written consent of Dental Cooperative, which consent shall not unreasonably be withheld.

 

Section 4.8      Financial Information. Provider shall provide the following financial information to Dental Cooperative:

 

 (a)         On a calendar monthly basis, within fifteen (15) business days after the end of such month, Provider shall provide a report to Dental Cooperative in the form attached hereto in Appendix 1, setting forth total patient billings, Collection, Margin and other information described in that form. If a specialist, Provider will also report the names and number of referrals received from each Associate during the previous month.

 

 (b)        On a calendar quarterly basis, within thirty (30) business days after the end of such quarter, Provider shall submit copies to Dental Cooperative of Provider’s:

 

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 (i)          balance sheet, statement of cash flows (if any) and income statement, and

 

	
             
 	
            (ii)
 	
            quarterly federal income tax filings.
 

 

 (c)         On an annual basis, within ninety (90) days after the end of Provider’s fiscal year, for Provider:

 

 (i)          balance sheet, statement of cash flows (if any) and income statement; and

 

	
             
 	
            (ii)
 	
            tax filings, with all attachments and exhibits.
 

 

Section 4.9      Right to Audit; Referral to Professional Standards Board. Provider hereby grants Dental Cooperative the right to audit or have an authorized representative audit all books and records of Provider, pertaining to Collections, Margins and all other financial and Dental Practice information during normal business hours of the Dental Practice, provided that Dental Cooperative shall not unreasonably interfere with the Dental Practice. Moreover, in the event of a malpractice claim or felony indictment against Dentist(s) or the Provider, Dental Cooperative shall have the right to summon representatives of the Professional Standards Board to audit the professional practices and records of the Provider.

 

	
             
 	
            Section 4.10 Declining Collections.
 

 

 (a)        If for any reason Provider’s monthly Collections decline below the average monthly Base Collections, Dental Cooperative shall, upon Provider’s request, make available consulting services through the Professional Standards Committee (or their designees) to review practice operations and to recommend remedial actions to restore profitability. Provider shall pay the actual cost of such consulting services.

 

 (b)        Outside professional review of the Dental Practice, at Provider’s expense, shall be required by Dental Cooperative under either of the following conditions:

 

 (i)         The amount of Provider’s monthly Collections for any month is less than sixty percent (60%) of the average monthly Base Collections.

 

 (ii)        The amount of Collections during any consecutive three (3)-month period shall not be less than eighty percent (80%) of three times the average monthly Base Collections.

 

 (c)         If, as a result of the outside review provided under (a) or (b), the Professional Standards Committee determines, in its sole discretion, that the declines in Provider’s Collections cannot be reasonably remediated, Dental Cooperative may notify Provider that it is in breach of this Agreement, which breach will constitute an event of default under this Agreement and will result in termination of this Agreement.

 

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Section 4.11 Declining Margins. 

 

 (a)        If for any reason Provider’s monthly Margins decline below the Minimum Margin during any monthly period, then Dental Cooperative shall, upon Provider’s request, make available consulting services through the Professional Standards Committee (or their designees) to review practice operations and to recommend remedial actions to increase the Margin. Provider shall pay the actual cost of such consulting services.

 

 (b)        Outside professional review of the Dental Practice, at Provider’s expense, shall be required by Dental Cooperative under either of the following conditions:

 

 (i)         The amount of Provider’s monthly Margins declines below thirty percent (30%) of Collections during any monthly period.

 

 (ii)        The amount of Provider’s quarterly Margins declines below forty percent (40%) of Collections during any quarterly period.

 

 (c)         If, as a result of the outside review provided under (a) or (b), the Professional Standards Committee determines, in its sole discretion, that the declines in Provider’s Margins cannot be reasonably remediated, Dental Cooperative may notify Provider that it is in breach of this Agreement, which breach will constitute an event of default under this Agreement and the Member Agreement and will result in termination of this Agreement.

 

Section 4.12     Further Assurances. To give further effect to the transactions described herein, Provider and Dentist(s) shall execute and deliver to Dental Cooperative such additional instruments as may be necessary or advisable.

 

Section 4.13     No Patient Referral Payments; Change in Laws. Nothing in this Agreement or in the Operative Documents shall be construed as a requirement of patient referrals from Provider to any other Dentist, or as compensation for patient referrals from one Dentist to another. If any governmental agency or court shall issue a ruling or decision that significantly affects the rights or obligations of the parties under this Agreement, either party may give the other party written notice of intent to amend this Agreement to address such change in law. If this Agreement is not so amended within thirty (30) days after such notice, either party may terminate this Agreement by written notice to the other party.

 

Section 4.14     Practice of Dentistry. Provider and Dentist(s) will be in control of all aspects of the actual practice of dentistry at the Dental Office and shall be responsible for all patient diagnosis, treatment, therapy, prescription of drugs, and for the creation and maintenance of all dental patient reports and records. If any act or service herein required by the Operative Documents to be performed by Dental Cooperative is construed by a court of competent jurisdiction or by a State licensing authority to constitute the unlawful practice of dentistry, the requirement to perform that act or service by Dental Cooperative shall be deemed waived and unenforceable and shall not constitute a breach or default by Dental Cooperative under any Operative Document.

 

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            Section 4.15
 	
            Files and Records.
 

 

 (a)         Provider and Dentist(s) shall maintain control over all patient dental records of the Dental Practice in accordance with established professional guidelines and practices. In the event that Dentist(s) are no longer running the Dental Practice, then Dentist(s) and Provider agree to assign all patient dental records, patient names and addresses and all other files and records relating to the Dental Practice to such Dental Professionals as Dental Cooperative may retain to operate the Dental Practice. 

 

 (b)        Dental Cooperative shall have access to, and the right to create lists of, patients names and addresses (as provided in the last sentence of this Section 4.15), and the right to review and copy all accounting, billing, patient medical records and collection records on the premises of the Dental Office, either physically or through computer access to records that may be maintained at a remote location.

 

 (c)         Provider shall provide Dental Cooperative with an updated list of the names and addresses of the patients of the Dental Practice within 30 days of a request by Dental Cooperative.

 

 (d)        Dental Cooperative will be bound by confidentiality agreements concerning patient dental records.

 

 (e)         Dental Cooperative desires access to patient billing records for quality review purposes and to provide patients with access to other valuable services and products available through Dental Cooperative. Dental Cooperative may use patient names and addresses under three circumstances: (a) as permitted by Provider; (b) if Provider is in default under or breach of this Agreement, and (c) as described in Section 4.15(a).

 

 (f)         Notwithstanding any other provisions of this Agreement, Dentist(s) and/or Provider shall not disclose to Dental Cooperative any HIPPA protected health information where such disclosure would result in a violation of the HIPPA privacy rules.

 

	
             
 	
            Section 4.16
 	
            Capital Expenditures.
 

 

 (a)         During the term of this Agreement, Provider shall not enter into any lease, acquire new equipment or make any capital expenditure without the advance written consent of Dental Cooperative, which consent shall not be unreasonably withheld. 

 

 (b)         Provider shall obtain non-disturbance/non-attornment agreements in a form provided by Dental Cooperative from any lessor of equipment or real property. 

 

Section 4.17     Notice by Dentist(s) of Adverse Financial Condition. Dentist(s) shall promptly provide to Dental Cooperative written notice of any Material Adverse Change in Dentist(s)’ financial condition measured against Dentist(s)’ financial condition as set forth in the most recent financial statements delivered to Dental Cooperative by Provider and/or Dentist(s) pursuant to the terms of this Agreement.

 

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Section 4.18     Payment of Current Liabilities. Provider shall pay all bills and invoices within 30 days of receipt of the vendor invoice. Notwithstanding the foregoing, Provider may withhold payment of any bill or invoice that Provider believes is in error or otherwise has a bona fide reason to dispute. 

 

Section 4.19    Management of the Dental Practice. It is understood and agreed the Provider may contract with Dr. Meeks to assist Provider in managing the Dental Practice during the term. After the term of this Agreement expires, then the Cooperative intends to retain Dr. Meeks to manage the Dental Practice, provided that Dr. Meeks is not in breach of his obligations to Provider and that Provider was not in breach of this Agreement at the time this Agreement terminated. 

 

ARTICLE 5

TERMINATION 

 

Section 5.1        Term. The term of this Agreement will run until the earlier of (i) the five (5) year anniversary of the effective date, (ii) the date the Member Agreement is terminated, or (iii) this Agreement is otherwise terminate pursuant to its terms. 

 

	
             
 	
            Section 5.2
 	
            Effects of Termination.
 

 

 (a)        Guaranty. Upon termination of this Agreement, any and all amounts earned by Dental Cooperative to the date of termination will be promptly paid to Dental Cooperative. The Guaranty also stands to secure these amounts. As and when all amounts due and owing to Dental Cooperative in connection with the Operative Documents has been paid or otherwise satisfied, following a termination of this Agreement and Guaranty will be deemed null and void and these documents will be surrendered to Provider.

 

 (b)        Advances or Expenses. To the extent Dental Cooperative has advanced any funds or paid any expenses of the Dental Practice as of the date of termination of this Agreement, such amounts will be repaid by Provider. 

 

Section 5.3       Operative Documents Independent. Any termination of this Agreement shall not terminate the Guaranty or other Operative Documents unless expressly provided in this Agreement or as separately agreed in writing between the parties. The Promissory Notes and related loan documents are independent of the Purchase Agreement and other Operative Documents and, as such, are governed solely by the terms set forth in such loan documents.

 

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ARTICLE 6

GENERAL PROVISIONS

 

	
             
 	
            Section 6.1
 	
            Confidentiality.
 

 

 (a)         Provider Confidential Information. Dental Cooperative shall protect all Confidential Information of the Provider and Dentist(s) that it learns or receives, directly or indirectly, in connection with the transactions or relationships contemplated herein, and shall not use the same for its own benefit or the benefit of others except as contemplated in this Agreement. Dental Cooperative shall not disclose any Confidential Information to anyone other than Provider and Dentist(s) except with the express written consent of Provider and Dentist(s). Notwithstanding the foregoing restrictions, Dental Cooperative may use and disclose any information to the extent required by applicable law or by an order of any court or other governmental authority, but only after
Provider and Dentist(s) have been so notified and have had the opportunity, if possible, to obtain reasonable protection for such information in connection with such disclosure. Dental Cooperative may also, under agreement of confidentiality, disclose Confidential Information to its counsel, accountants, potential financing sources and others assisting them, to the extent necessary to obtain such assistance.

 

 (b)         Dental Cooperative Confidential Information. Each of Provider and Dentist(s) shall, and shall cause their respective consultants, advisors, representatives and every entity controlled by them to, keep and maintain in strictest confidence, and shall not use for their benefit or the benefit of others except in connection with the business and affairs of Dental Cooperative, all Confidential Information (as defined below) of Dental Cooperative that Provider and Dentist(s) learn or receive, directly or indirectly, in connection with the transactions or relationships contemplated herein. Each of Provider and Dentist(s) shall not disclose any Confidential Information to anyone outside of Dental Cooperative except with Dental Cooperative’s express written consent.
Notwithstanding the foregoing restrictions, Provider and Dentist(s) may use and disclose any information to the extent required by applicable law or an order of any court or other governmental authority, but only after Dental Cooperative has been so notified and have had the opportunity, if possible, to obtain reasonable protection for such information in connection with such disclosure. Provider and Dentist(s) may also, under agreement of confidentiality, disclose Confidential Information to their respective counsel, accountants, potential financing sources and others assisting them with respect to the transactions contemplated hereby, to the extent necessary to obtain such assistance.

 

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 (c)         Confidential Information Defined. The term “Confidential Information” means (i) all information with respect to (w) Collections, (x) profit or loss figures, (y) customers, clients, suppliers, sources of supply and customer lists, and (z) trade secrets of Dental Cooperative or Provider; (ii) any information relating to the contracts, agreements, business plans, budgets or results of operations, or any other financial information of a party, to the extent such information has not been made available to the public by that party; and (iii) any other information marked or noted to be confidential by the party at the time of disclosure; provided, however, that the term “Confidential Information” shall not include any information (w) that was known
to the other party prior to the date hereof; (x) that is or becomes generally known to the public through sources independent of the other party and through no fault of the other party, (y) that is available or becomes available to the other party from a third party who has a right to disclose it to the other party, or (z) that is independently developed or acquired by the other party without reliance in any way upon the disclosing party’s Confidential Information.

 

	
             
 	
            Section 6.2
 	
            Indemnification.
 

 

 (a)         By Provider and Dentist(s). Provider and Dentist(s), jointly and severally and in solido, shall indemnify, defend and hold Dental Cooperative, its directors, officers, employees and representatives harmless from and against any losses, liabilities, damages, costs (including without limitation, court costs) and expenses (including without limitation, reasonably attorneys’ fees) that Dental Cooperative incurs as a result of, or with respect to (i) any misrepresentation or breach of warranty by Provider or Dentist under this Agreement, and (ii) any breach by Provider or Dentist(s) of, or any failure by Provider or Dentist(s) to perform, any covenant or agreement required to be performed by Provider or Dentist(s) under this Agreement.

 

 (b)         By Dental Cooperative. Dental Cooperative shall indemnify, defend and hold Provider, its directors, officers, employees and representatives, including Dentist(s), harmless from and against any losses, liabilities, damages, costs (including without limitation, court costs) and expenses (including without limitation, reasonably attorneys’ fees) that Provider or Dentist(s) incur as a result of, or with respect to (i) any misrepresentation or breach of warranty by Dental Cooperative under this Agreement, and (ii) any breach by Dental Cooperative of, or any failure by Dental Cooperative to perform, any covenant or agreement required to be performed by Dental Cooperative under this Agreement.

 

 (c)         Notice and Control of Litigation. If any claim or liability is asserted in writing by a third party against a party entitled to indemnification under this Section (the “Indemnified Party”) that would give rise to a claim under this Section, the Indemnified Party shall notify the person giving the indemnity (“Indemnifying Party”) in writing of the same within fifteen (15) days of receipt of such written assertion of a claim or liability. The Indemnifying party shall have the right to defend a claim and control the defense, settlement and prosecution of any litigation. If the Indemnifying Party, within ten (10) days after notice of such claim, fails to defend such claim, the Indemnifying Party will (upon further notice to the Indemnifying
Party) have the right to undertake the defense, comprise or settlement of such claim on behalf of and for the account and at the risk of the Indemnifying Party.

 

Section 6.3       General Construction Principles. Words in any gender are deemed to include the other genders. The singular is deemed to include the plural and vice versa. The 

 

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headings and underlined paragraph titles are for guidance only and have no significance in the interpretation of this Agreement.

 

Section 6.4        Binding Effect. This Agreement is binding on and will inure to the benefit of the parties and their respective successors and assigns.

 

Section 6.5        Notices. Any notices, payment, demand or communication required or permitted to be given to any party by any provision of this Agreement shall be in writing and sent by hand delivery or overnight courier to the following addresses or to replacement addresses provided by notice under this Section 6.5. Any such notice shall be deemed to be delivered, given and received as of the date it is delivered into the hands of the agent who will effect delivery.

 

	
             
 	
            (a)
 	
            Notices to Dental Cooperative:
 

	
             
 	
            Attention President
 

	
             
 	
            2150 South 1300 East, Suite 500
 

	
             
 	
            Salt Lake City, Utah 84106
 

 

	
             
 	
            (b)
 	
            Notices to Provider
 

	
             
 	
            [address provided on Signature Page]
 

 

	
             
 	
            (c)
 	
            Notices to Dentist(s)
 

	
             
 	
            [address provided on Signature Page]
 

 

Section 6.6       Further Assurances. Each party hereto agrees to perform such further acts, and to execute, acknowledge and deliver such documents, as may be reasonably necessary, appropriate or desirable to carry out the provisions and intent of this Agreement and the other Operative Documents.

 

Section 6.7       Governing Law. The internal laws of Utah (without reference to the conflict of law principles thereof) shall govern the validity of this Agreement and the construction of its terms. 

 

Section 6.8        Dispute Resolution. Any dispute arising under this Agreement that cannot be resolved between the parties shall be submitted to binding under the auspices of the American Arbitration Association with venue of the arbitration in Salt Lake City, Utah. A single independent arbitrator shall be appointed through the AAA’s normal selection procedures. The costs of the arbitration assessed by AAA shall be split evenly among the parties to the dispute regardless of the outcome of the arbitration. The AAA’s Commercial Arbitration Rules will govern the proceeding. No attorneys fees or costs of any party may be awarded in the arbitration of any dispute. It is the intent of the parties to resolve disputes without incentive to any party.

 

Section 6.9       Counterpart Execution. This Agreement may be executed in any number of counterparts with the same effect as if all of the Parties hereto had signed the same document. All counterparts shall be construed together and shall constitute one agreement.

 

14

 

 

Section 6.10 Entire Agreement. This Agreement and the other Operative Documents contain the entire agreement among the parties and there can be no modification or variance other than in a separate agreement in writing signed by all parties.

 

Section 6.11 Cross Default. A breach or default of this Agreement by either Provider or by Dentist(s) will be deemed a breach or default by both Provider and Dentist(s). A breach or default of this Agreement by either Provider or by Dentist(s) shall be considered a breach or default of the other Operative Documents.

 

Section 6.12 Effective Date of Agreement. This Agreement shall become effective at the same time that the Member Agreement first becomes effective. 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

15

 

 

SIGNATURE PAGE TO Affiliate Member Practice Purchase Agreement

 

	
            Dental Associates, Inc.
 	
            Dr. Jack Rasmussen
 

	
            Name of Provider
 	
            Name of Dentist(s)
 

 

	
            Corporation; Utah
 	
            Dr. Robert Bayer
 

	
            Type of legal entity and state of organization
 	
            Name of Dentist(s )
 

(Any additional notice addresses are on an attached sheet)

	
            ______________________________________
 

	
            ______________________________________
 

______________________________________

	
            Address of Dental Office
 

(Any additional locations are specified on an attached sheet)

 

	
            Base Collections (12-Months): $456,000
 	
            (1-Month): $38,000
 

 

	
            Generalist? ___X___
 	
            Specialist? _______
 

	
             
 	
            Check one
 

 

Effective Date March 7, 2007

 

	
            Term of Agreement:  5 years
 	
            Termination Date: March 7, 2012
 

 

	
             
 	
            IN WITNESS WHEREOF, the parties have executed this Agreement as of
 

 

March 7, 2007.

 

	
             
 	
            DENTAL COOPERATIVE, INC.
 

 

	
             
 	
            By: /s/ Marlon Berrett
 

	
             
 	
            Name: Marlon Berrett
 

	
             
 	
            Title : President
 

 

	
             
 	
            "PROVIDER"
 	
            DENTAL ASSOCIATES, INC.
 

 

	
             
 	
            By: /s/ Dr. Jack Rasmussen
 

	
             
 	
            Name: Dr. Jack Rasmussen
 

	
             
 	
            Title: President
 

 

	
             
 	
            “DENTIST(S)”
 	
            X /s/ Dr. Jack Rasmussen
 

 

	
             
 	
            X /s/ Dr. Robert Boyer
 

 

16

 

 

APPENDIX 1

 

FORM OF PROVIDER’S MONTHLY FINANCIAL REPORT

 

 

____________________________________

(month/year)

 

	
            Gross Patient Billing: 
 	
             
 	
             
 
	
             

Collections:
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
            Operating Expenses:
 	
             
 	
             
 
	
            Rent
 	
             
 	
             
 
	
            Payroll (non-Dentist)
 	
             
 	
             
 
	
            Supplies
 	
             
 	
             
 
	
            Lab Fees
 	
             
 	
             
 
	
            Equipment Leases
 	
             
 	
             
 
	
            Other
 	
             
 	
             
 
	
            Total Operating Expenses: 
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
            Net Collections Before Allocations (Margin):
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
            Provider Margin Allocation:
 	
             
 	
             
 
	
             

Dental Cooperative Margin Allocation:QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.35    
    

January 1, 2007

WEST END CAPITAL MANAGEMENT (BERMUDA) LIMITED  

 DISCRETIONARY INVESTMENT MANAGEMENT  

 AGREEMENT  

 FOR  

 MONT FORT RE LTD. ILW 2 CELL  

DISCRETIONARY INVESTMENT MANAGEMENT  

THIS AGREEMENT is made as of January 1, 2007, between 

	(1)
	MONT FORT ILW 2 CELL whose registered office is at Crawford House, 23 Church Street, Hamilton HM 11, Bermuda, (the "Client"); and

	(2)
	WEST END CAPITAL MANAGEMENT (BERMUDA) LIMITED whose registered office is at Crawford House, 23 Church Street, Hamilton HM 11, Bermuda
(the "Investment Manager"). 

WHEREBY IT IS AGREED:  

	1.
	Appointment of the Investment Manager

	1.1
	The
Client hereby appoints the Investment Manager as discretionary investment manager of such of the Client's cash, securities and other assets as may be placed with the Investment
Manager for such purposes (the "Portfolio").

	1.2
	This
Agreement will come into effect on the commencement date hereof.

	2.
	The Portfolio  

The
Client will provide details of the initial Portfolio to the Investment Manager. 

	3.
	Representations by the Investment Manager

The
Investment Manager represents, warrants and undertakes to the Client on a continuing basis that: 

	(i)
	The
Investment Manager has all necessary powers and qualifications to manage the investment of the Portfolio.

	(ii)
	The
Investment Manager is a registered Investment Manager under the Investment Business Act 2003.

 

	4.
	Representations by the Client

The
Client represents, warrants and undertakes to the Investment Manager on a continuing basis that: 

	(i)
	it
has authority to enter into this Agreement and that it has taken all steps necessary to appoint the Investment Manager to perform the services envisaged in this
Agreement;

	(ii)
	it
is duly authorised and empowered to perform its duties and obligations hereunder and that the terms of this Agreement do not constitute a breach of any obligations
by which the Client is bound whether arising by contract, operation of law or otherwise;

	(iii)
	the
assets comprising the Portfolio are and will remain free of all liens, charges and other encumbrances, and that the Client is the beneficial owner of Portfolio
assets;

	(iv)
	it
will provide the Investment Manager with such declarations or other documentation with respect to the Client's tax status as the Investment Manager may reasonably
request;

	(v)
	it
will advise the Investment Manager promptly of any changes to the Client's tax status;

	(vi)
	as
a condition of the provision of services by the Investment Manager hereunder, it will produce to the Investment Manager such documents as the Investment Manager may
require as evidence of the Client's authority to enter into this Agreement, and will forthwith advise the Investment Manager of any variation of or supplements to such documents; and

 

	5.
	Discretionary Authority and Investment Guidelines

	5.1
	Subject
to the objectives, guidelines and restrictions set out in the investment guidelines comprising Appendix II (the "Investment Guidelines"), the Client hereby delegates to
the Investment 

Manager,
during the period of this Agreement, full discretionary authority to manage the Portfolio, and for that purpose, as agent for the Client: 

	(i)
	to
take all investment decisions in respect of the portfolio including any delegation to another investment manager for the partial management of the portfolio including
but not limited to an Affiliate as defined in the Bermuda Companies Act;

	(ii)
	to
subscribe for, purchase, sell, exchange, convert or otherwise effect transactions in Portfolio assets and to sign any documentation required in connection with such
transactions;

	(iii)
	to
place orders for the execution of Portfolio transactions with or through such brokers, dealers, agents, market makers or issuers as the Investment Manager may
select, subject to terms of business agreed with the Investment Manager or implied by market practice; and

	5.2
	The
Client hereby consents to the sub-delegation by the Investment Manager of any or all of the services hereunder to other Affiliates and to the employment of agents and
sub-custodians who reasonably appear to the Investment Manager to be duly qualified to perform any or all of the services on behalf of the Client for the purposes of this Agreement.

	5.3
	The
Investment Guidelines may be amended at any time either by agreement or by the Client on written notice to the Investment Manager.

	6.
	Dealing

	6.1
	Best
Execution 

In
dealing with or for the Client, the Investment Manager will take reasonable care to ascertain the price which is the best available at the time for transactions of the kind and size concerned and
will, unless it determines that the circumstances require it to do otherwise in the Client's interest, deal at a price no less advantageous to the Client. The Client agrees that all transactions will
be effected in accordance with the rules and regulations of the relevant market or exchange, if applicable. 

	6.2
	Aggregation 

The
Investment Manager may only aggregate orders or transactions with its own, with those of other Affiliates or those of its clients where it is in the overall best interests of all the clients
concerned. All allocations will be done fairly by the Manager. 

	6.3
	Material
Interests 

The
Investment Manager will avoid conflicts of interest where possible, but Affiliates are involved in many different commercial activities and the Investment Manager acts for other clients, some of
which may have similar objectives to those of the Client. 

When
the Investment Manager takes an investment decision or effects a transaction on behalf of the Client, certain Affiliates or some other connected person may have an interest, relationship or
arrangement that is material or a conflict of interest in relation to the transaction or investment concerned. Neither the Investment Manager nor any of the Affiliates or other connected person shall
be liable to account to the Client for any profit, commission or remuneration received as a result of any such transactions. 

	7.
	Bank and Custody Accounts

The
Client will maintain, in the name of the Client, an interest bearing Call Deposit Account (being one or more accounts as the Client may direct or the Investment Manager considers appropriate), and
a Custody Account through which Portfolio transactions will be settled and on which call balances available for investment will be maintained. The Investment Manager will, on request, give details of
any interest payable on such accounts. The two accounts will be in a major bank ("the Custodian") as may be agreed between the Client and the Investment Manager. 

	8.
	Settlement and Collection

	8.1
	The
Investment Manager will make reasonable efforts to ensure that the Custodian shall settle all transactions subject to it holding or receiving all necessary documents or funds, and
will normally do so on such basis as is usual for the market concerned. Delivery or payment by the other party to any such transaction shall be at the Client's risk, and the Investment Manager's
obligation to account to the Client for any investment or the proceeds of any investment shall be conditional upon receipt by the Custodian of the relevant documents or sale proceeds from the other
party.

	8.2
	The
Custodian may operate a settlement system whereby the Client is debited with the purchase cost or credited with the proceeds of sale on the usual settlement (or subscription) days
for the market concerned, conditionally upon settlement being ultimately effected. This may result in either a benefit or loss to the Custodian where such settlement is effected at other times.

	8.3
	The
Investment Manager will make reasonable efforts to ensure that the Custodian will promptly collect all income receivable in respect of the Portfolio.

	9.
	Reporting

	9.1
	The
Investment Manager will provide the Client with reports in respect of the Portfolio as may be mutually agreed from time to time.

	10.
	Records

	10.1
	The
Investment Manager will maintain records of all transactions effected for the Portfolio.

	10.2
	The
Investment Manager reserves the right to record telephone conversations. Access to such records is highly restricted.

	11.
	Fees and Charges

The
Investment Manager's remuneration for its services under this Agreement is set out in Appendix IV. 

	12.
	Confidentiality

The
Investment Manager will respect and protect the confidentiality of all information concerning the Portfolio and will not, without the Client's prior consent, disclose any such information to a
third party except: (i) in connection with its performance under this Agreement (which may include, without limitation, disclosure of the name of the Client to any broker, dealer or market
maker); or (ii) as required or permitted by law or competent authority; or (iii) on the Client's default either under this Agreement or under any other agreement which the Investment
Manager has entered into on the Client's behalf pursuant to this Agreement, whereupon the Investment Manager may disclose to a third party the Client's name, addresses and such other information
either as the Investment Manager deems necessary or as any counterparty reasonably requires. 

	13.
	Money Laundering Legislation

In
common with all properly regulated offshore jurisdictions, Bermuda has certain statutory provisions which, in summary, make money laundering a criminal offence. Where the Investment Manager knows
or suspects that a client has engaged in criminal conduct, it may be obliged to report such knowledge or suspicion to the appropriate authorities in Bermuda. 

	14.
	Liability and Insurance

	14.1
	In
performing its obligations under this Agreement, the Investment Manager will act with all due care, skill and diligence. Except as provided in Clause 14.2:

	(i)
	the
Investment Manager will not be responsible for any loss attributable to any act, omission or default of any broker, dealer, market maker, deposit-taker,
sub-custodian or agent selected by the Investment Manager provided that the Investment Manager has not acted with gross 

negligence
in selecting or utilising the services of such broker, dealer, market maker, deposit-taker, sub-custodian or agent; and 

	(ii)
	the
Investment Manager will not have any liability to the Client except in the event of the gross negligence, wilful default or fraud of its employees.

	14.2
	The
Investment Manager accepts responsibility for any losses attributable to acts, omissions or defaults for which its agents or sub-custodians are legally liable where
such agents or sub-custodians are Affiliates.

	14.3
	Insurance
cover is maintained for the Investment Manager in respect of professional negligence.

	14.4
	The
Client shall indemnify the Investment Manager against all claims by third parties which may be made against either the Client or the Investment Manager in connection with the
services under this Agreement and all reasonable costs and expenses properly incurred by the Investment Manager in connection with such claims, except to the extent that any claim is due to the gross
negligence, wilful default or fraud of their employees. The Investment Manager will inform the Client of any such claims in respect of which an indemnity is sought under this Agreement.

	14.5
	The
Investment Manager will not in any event have any liability to the Client to the extent that performance of its obligations is prevented or impeded as a consequence of any
circumstances beyond its reasonable control, including (without limitation) nationalisation, currency restrictions, acts of war, acts of God, breakdown or failure of transmission or communications or
computer facilities, postal or other strikes or industrial action, Government action, or the failure or disruption of any stock exchange, clearing house, settlements system or market.

	14.6
	No
warranty is given by the Investment Manager as to the performance or profitability of the Portfolio or any part of it.

	14.7
	The
Investment Manager will not be responsible for the tax consequences of any investment decision taken or transaction effected for the Client.

	15.
	Complaints

The
Investment Manager maintains procedures for the effective consideration and handling of customer complaints. Complaints will be considered promptly by the Compliance Officer of the Investment
Manager. 

	16.
	Termination

	16.1
	This
Agreement may be terminated by the Client at any time on 90 days written notice to the Investment Manager or by the Investment Manager on not less than ninety days' prior
written notice to the Client.

	16.2
	On
notice of termination, the Investment Manager will, unless directed otherwise by the Client, continue to manage the Portfolio until the termination date, and is authorised in any
event to arrange for the retention and/or realisation of such assets as may be required to settle transactions entered into prior to the actual date of termination, and to pay any outstanding
liabilities of the Client.

	16.3
	In
the event of termination of this Agreement, the Client will promptly give the Investment Manager all necessary instructions concerning the liquidation or transfer of the assets
comprising the Portfolio, and (subject to Clause 19.5) the Investment Manager will act in accordance with such instructions. Termination will not affect accrued rights, existing commitments or
any contractual provision intended to survive termination.

	16.4
	The
Client will not be required to make any additional payment to the Investment Manager in respect of termination but will be responsible for any additional expenses necessarily
incurred by the Investment Manager in giving effect to the Client's instructions with regard to the realisation or transfer of Portfolio assets on termination (including any losses necessarily
realised in settling or concluding outstanding obligations). 

	17.
	Client's Authorised Signatories

	17.1
	The
persons identified in the Schedule to Appendix I (the "Authorised Signatories") are authorised, on the Client's behalf, to issue instructions, acknowledgements and notices
to the Investment Manager.

	17.2
	Amendments
to the current list of the Authorised Signatories may be made at any time, on written notice, signed by the relevant number of current Authorised Signatories as detailed
in the Schedule to Appendix 1.

	17.3
	The
Investment Manager shall be entitled to act, in accordance with Clause 19, on instructions given by Authorised Signatories as identified in the Schedule to
Appendix I or as subsequently amended pursuant to Clause 18.2. The Investment Manager shall incur no liability for any action taken on such instructions, in the absence of express
written notice of any change in the Authorised Signatories.

	18.
	Instructions, Communications and Notices

	18.1
	Subject
to Clauses 19.2 and 19.3, all instructions, acknowledgements and notices will be given by letter which may be either delivered personally, posted or sent by facsimile
transmission or email with digital signature to the intended recipient at the addresses set out in Appendix I.

	18.2
	Subject
to Clause 19.3, the Investment Manager will not act upon any instructions or notices received by facsimile transmission until confirmed by letter delivered personally
or by post, or confirmed orally by any one of the Authorised Signatories as detailed in the Schedule to Appendix I.

	18.3
	In
cases of emergency, instructions for withdrawals of cash or other assets from the Portfolio may be given orally by any one of the Authorised Signatories or by facsimile
transmission not confirmed orally; provided that the assets are to be transferred to the bank account in the name of the Client shown in Appendix I or to another account subsequently nominated
by the Authorised Signatories in accordance with Clauses 19.1 and 19.2.

	18.4
	The
Investment Manager may in good faith rely on an instruction, acknowledgement or notice which is reasonably believed to have been issued by an Authorised Signatory of the Client.

	18.5
	The
Investment Manager may decline to accept or act upon any instruction or other communication which it reasonably believes not to have been issued in accordance with the provisions
of this Agreement, or if it reasonably considers that compliance with such instruction would be impracticable or would give rise to a breach of any applicable law or regulation, and in any such
circumstances the Investment Manager will notify the Client accordingly.

	19.
	Amendments

	19.1
	Subject
to Clauses 5.3 and 20.2, this Agreement may be amended at any time by written agreement between the Investment Manager and the Client.

	19.2
	The
Investment Manager may amend this Agreement by at least 30 days prior notice in writing to the Client (unless circumstances dictate a shorter period) where such amendment
is necessary to comply with any law or the requirements of any relevant regulatory or supervisory authority.

	20.
	Entire Agreement

This
Agreement, together with the Appendices, Schedules and any Supplements will constitute the entire agreement between the parties hereto, superseding all prior representations, proposals,
agreements or understandings (whether written or oral) made by any party relating to the subject matter of this Agreement. No party shall have any liability in respect of any such representations,
proposals, agreements or understandings (unless fraudulently made) which are not expressly set out or referred to in this Agreement. 

	21.
	Governing Law

This
Agreement will be subject to and construed in accordance with Bermuda law and the parties irrevocably submit, for the exclusive benefit of the Investment Manager, to the non-exclusive
jurisdiction of the Courts of Bermuda. 

IN
WITNESS WHEREOF, the parties have duly executed this Investment Management Agreement as of the date first written above by their respective officers thereunto duly authorized. 

	/s/ David Brown
	 	 
	

Signed by:

David Brown

Director

For and on behalf of
 MONT FORT ILW 2 CELL	
 	

 
	

/s/ Mark Byrne
	
 	

 
	

Signed by

Mark Byrne

Director

For and on behalf of
 WEST END CAPITAL MANAGEMENT (BERMUDA) LIMITED

 
 

APPENDIX I
  COMMUNICATIONS AND OTHER PARTICULARS    
    

	1.
	The Client:                Mont Fort Re Limited ILW 2 Cell

	2.
	Commencement Date: Upon 3 business days notice from Client to Investment Manager but not later than January 1, 2007. If service not commenced before that
date this contract shall be null and void and no payments due from either party to the other.

	3.
	The Initial Portfolio: As notified by the Client in writing to the Investment Manager.

	4.
	Client's Authorised Signatories: See Schedule attached.

	5.
	Communications Addresses:

The Client:  

Box 223

12 Church Street Suite 224

Hamilton HM 11

Bermuda

Attention:                              Brenton Slade

Telephone No.                       +1(441) 278 4303

Facsimile No.                        +1(441) 296 9879 

The Investment Manager:  

West End Capital Management (Bermuda) Limited

Crawford House

23 Church Street

Hamilton, HM 11

Bermuda

Attention:                              Lesley Cox

Telephone No.                      +1(441) 278 4334

Facsimile No.                       +1 (441) 295 4927 

	6.
	The Client's Bank Account:

Name
of Account:                     Mont Fort Re Ltd.

Bank Name and Address:          HSBC—Bank of Bermuda

                                         
         6 Front Street

                                         
         Hamilton, Bermuda

Account No.:                             1510 847797 

	7.
	The
Client's name may be included in promotional literature or similar publications issued by the Investment Manager. 

SCHEDULE TO APPENDIX I

CLIENT'S AUTHORISED SIGNATORIES

With effect from [Date]  

	Name
 
	 	Position
	 	Signature
	 	Date

	Brenton Slade	 	Director	 	 
	 	 

	

Patrick Boisvert	
 	

Treasurer	
 	

 
	
 	

 

	James O'Shaughnessy	 	Authorized Signatory	 	 
	 	 

	

 	
 	

 	
 	

 	
 	

 

	Authority:	 	Any one to sign o	 	Any two to sign ý	 	 
	

 	
 	

 	
 	

 	
 	

 

	Note:
	Amendments
to the current list of Authorised Signatories may be made at any time on written notice to the Investment Manager, signed by any  two current Authorised Signatories, or by a certified Resolution of the
Board of Directors of the Company. 

APPENDIX II  

 INVESTMENT GUIDELINES  

The
Client will adopt investment management guidelines pursuant to which its investable assets will be managed as directed by the Client in writing from time to time. Until such further direction, the
assets will be managed as follows: 

West
End will manage the investment funds in its long-only fixed income strategy. Investment funds will be managed according to conservative investment guidelines focused on protection and
growth of assets, high credit quality and moderate interest rate risk. This portfolio will be invested 100% in fixed income assets (to include mortgage-backed securities, whole loans, preferred
stocks, etc.) with the following profile: Average rating of AA- with a minimum of A- at purchase, maximum duration of 3.0 years, and a benchmark of the Lehman Aggregate
Index adjusted for a duration of 2.0 years. Risk management limits including duration, credit, asset concentration and liquidity within the investment portfolio will be set and monitored by the
Asset and Liability Committee of the Investment Manager. 

APPENDIX III

REPORTING PACKAGE  

	1.
	Transaction Advices

The
Investment Manager will send the Client copies of contract notes and other transaction advices in respect of Portfolio transactions monthly. 

	2.
	Periodic Valuations

The
Investment Manager will send the Client quarterly a Portfolio Valuation which will include a list of the individual investments comprising the Portfolio, their respective acquisition costs, the
value of each as at the valuation date and the performance of the Portfolio measured relative to the relevant Index. 

Unless
otherwise agreed or stated in the Valuation, the basis of valuation shall be as follows: 

	Securities quoted on a Stock Exchange	 	:	mid-market price between bid and offer or, where this is not available, in accordance with local market practice
	

Quoted Unit Trusts	
 	

:	

mid price between bid and offer or, where this is not available, in accordance with local market practice
	

Other	
 	

:	

cost or the Investment Manager's estimated valuation where appropriate evidence is available.

	3.
	Account Statements

Statements
of the Call Deposit Account will be sent to the Client monthly on which any changes in the basis of interest rates applicable to the Call Deposit Account will be shown. 

	4.
	Tax

The
Investment Manager will provide the Client (and/or the Client's professional advisers) with such information and certificates (including dividend vouchers) as may be reasonably required for the
preparation of tax returns. 

APPENDIX IV

FEES AND CHARGES  

The Investment Manager's Remuneration  

	1.
	The
Investment Manager shall receive for its services under this Agreement a management fee (the "Management Fee") of 0.50% per annum on assets managed. This covers the purchase of
assets (but excludes associated global custody services), together with the ongoing management of the portfolio on a discretionary basis.

	2.
	The
Management Fee shall be paid quarterly in advance and is calculated by reference to the market value of the Portfolio (including cash, accrued dividends and interest but excluding
the value of any investment in collective investment schemes of which any Affiliate acts as manager or adviser and makes a periodic management charge to the scheme for its services) on the first
business day of the quarterly period in respect of which fees are due. Additions to and withdrawals from the Portfolio during any quarterly period are taken into account on a time-weighted
basis.

	3.
	The
Investment Manager will also receive annually a performance fee from the Client (the "Performance Fee"). The Performance Fee if any,
shall be calculated by reference to each issued preferred share of the Client for each period commencing on 1st January (or if later, the date of issue of the relevant preferred share)
and ending on the earliest of (i) 31st December; (ii) the date of redemption of the relevant preferred share; or (iii) termination of this Agreement. The Performance
Fee payable in respect of each preferred share for any period will be an amount equal to 15% of the appreciation (if any) on a cumulative high water mark basis of the Net Asset Value per Share
attributable of the relevant preferred share. If there is no such appreciation, no Performance Fee will be paid in respect of that Ordinary Share for that period. The Investment Manager may, in its
discretion, effectively waive all or part of the Performance Fee with respect to any Shareholder's investment by rebate or otherwise. 

The
Performance Fee (if any) shall be paid to the Investment Manager within five business days following the completion of the annual audited financial statements. 

	4.
	The
Investment Manager is authorised to debit its fees to the Call Deposit Account under advice to the Client.

	5.
	In
the event of termination of the Agreement, fees will be pro-rated by reference to the date on which the Portfolio is transferred to the Client or to the Client's order,
in accordance with the termination provisions of this Agreement. 

QuickLinks

Exhibit 10.35

APPENDIX I COMMUNICATIONS AND OTHER PARTICULARS

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