▇▇▇▇ Cove
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is dated as of the ____ day of
October, 1996, by and among CareMatrix of Massachusetts, Inc., a Delaware
corporation, with its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Manager"), and The Mayfair at ▇▇▇▇ Cove, LLC, a New York
limited liability company, with its principal places of business at ▇/▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇▇▇-▇▇▇▇▇▇ Senior Housing, LLC, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Owner").
WHEREAS, the Owner is the owner of The Mayfair at ▇▇▇▇ Cove, an eighty (80)
unit senior housing facility to be located in Glen Cove, New York (the
"Facility");
WHEREAS, the Owner determined that the hiring of a management company to
provide day-to-day management of the Facility is necessary for the efficient
operation of the Facility;
WHEREAS, the Manager has represented that it is experienced in the
management of similar facilities, is knowledgeable as to the state and federal
requirements governing the operation of senior housing facilities and that the
owners and employees of Manager are qualified management professionals;
WHEREAS, based upon the Manager's representations set forth herein, the
Owner has determined that the hiring of the Manager is cost-effective and
consistent with the Owner's desire to provide quality care to the residents at
the Facility at the lowest cost; and
WHEREAS, the Manager is willing to manage the day-to-day operations of the
Facility on the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. General Duties. The Owner engages the Manager to manage and supervise
the Facility with the objective of providing quality care and services to
residents of the Facility and to carry out the general duties with respect to
the Facility consistent with the Budget (as hereinafter defined) and under the
general supervision and direction of the Owner which include, but are not
limited to, the following:
Supervise on behalf of the Owner, the performance of all such
administrative functions as may be necessary in the management of the Facility;
select, hire (or contract with), train, supervise, monitor the performance of,
and discipline, promote, terminate or fire (subject to the rights of the Owner
under Section 2.1 of this Agreement to approve the hiring, disciplining and
termination of the Executive Director, the Assistant Administrator and Director
of Resident Services) all personnel involved in the administration and
day-to-day operation of the Facility, including, without limitation, management,
resident assistance and other related personnel, custodial, food service,
cleaning, maintenance and other operational personnel, and secretarial or
bookkeeping personnel, each of whom, other than the Executive Director (as
hereinafter defined), shall be employees of the Owner; supervise and perform the
accounting, billing,
purchasing and ▇▇▇▇ payment functions for the Facility; establish systems of
accounts and supervise the maintenance of ledgers and other primary accounting
records by the personnel of the Facility; supervise the financial affairs of the
Facility; establish and supervise the implementation of operating and capital
budgets, including those required to establish reimbursement rates, if any, with
respect to state or federal entitlement programs as well as self-pay rates;
prepare and maintain true, complete and accurate records necessary for the
preparation of such operating budgets; determine which items of cost and expense
properly relate to resident care; establish and administer financial controls
over the operation of the Facility, develop and establish financial standards
and norms by which the income, costs and operations of the Facility may be
evaluated; serve as advisor and consultant in connection with policy decisions
to be made by the Owner; furnish reports to the Owner as the Owner may
reasonably request and provide the Owner with economic and statistical data in
connection with or relative to the operations of the Facility; represent the
Facility in its day-to-day dealings with creditors, residents, personnel, agents
for collection, and insurers; act as agent for the Owner in disbursing or
collecting the funds of the Facility and in paying the debts and fulfilling the
obligations of the Facility; coordinate and supervise a marketing plan for the
Facility to insure that the Facility obtains full occupancy as soon as possible
and, after the Facility has achieved full occupancy, assist in the development
of an annual marketing plan and budget to maintain the resident census at a
proper level; and do all other things necessary or proper for the daily
operation and management of the Facility, including everything necessary to
ensure compliance with all applicable local, state and federal laws governing or
applicable to senior housing facilities. In addition, in order to plan for
current and future operations and to establish short-term and long range
policies and goals for the Facility, the Manager will, under the general
supervision of the Owner, meet on at least a monthly (twice each month during
the first twelve (12) months of operation) basis with Owner's representatives
and the Executive Director to review financial and operational statistics of the
Facility. The Executive Director also will attend monthly regional administrator
meetings and educational programs.
The Manager further agrees that it will:
(i) perform its duties and responsibilities hereunder in compliance
with all applicable laws;
(ii) supervise and direct the management and operation of the
Facility, exercising the degree of care used by an experienced management
company, given the financial resources available to the Facility, the location
of the Facility, the restrictions of applicable laws, and other existing
circumstances; and
(iii) obtain the Owner's prior consent (which shall not be
unreasonably withheld) as to all major policy and business matters relating to
the Facility.
2. Specific Duties. Without limiting the generality of the foregoing, the
Manager shall have the following specific duties:
2.1 Employees. The Manager shall recruit, evaluate, select, and hire a
qualified Executive Director (provided, however, that the wages, salaries and
other compensation of the
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Executive Director shall be the responsibility of the Owner as set forth in
Section 4.2) who shall be responsible for the functional operation of the
Facility and supervision of personnel at the Facility on a day-to-day basis, as
well as all resident assistance, custodial, food service, cleaning, maintenance,
secretarial and bookkeeping personnel for the day-to-day operations of the
Facility. The Executive Director shall be the employee of the Manager and all
such other personnel shall be employees of the Owner, and the Owner shall retain
full responsibility for payment of wages, salaries and other compensation and
benefits for the Executive Director and such other employees. The Manager shall,
subject to approval by the Owner, establish necessary and desirable personnel
policies and procedures, wage structures and staff schedules. The Manager,
subject to approval by Owner, shall have authority to hire, discipline, promote
and discharge employees of the Owner who participate in the day-to-day operation
and administration of the Facility. Both the Manager and the Owner must approve
the hiring and/or firing of the Executive Director, Assistant Administrator and
the Director of Resident Services, which approval shall not be unreasonably
withheld or delayed. The Manager shall: (i) maintain or cause to be maintained
payroll records and prepare weekly and monthly payrolls, withholding taxes and
Social Security taxes; (ii) prepare and submit all required state and federal
tax or benefit returns required with respect to employees, including, without
limitation, the returns required by FICA, FUTA and all applicable unemployment
compensation laws; (iii) maintain in force all required levels of workers'
compensation insurance; and (iv) prepare and submit to the Owner any
certificates of payroll expenses as may be reasonably requested. The Manager
shall not be liable to any employee of the Facility for wages, salaries and
other compensation and benefits, or to the Owner, unless the Manager was
specifically required to obtain the approval of the Owner before committing to a
salary or benefit and such approval was not obtained. The Manager shall not be
liable to the Owner or others for any action or omission on the part of any
employee of the Owner of the Facility, unless the employee was acting under the
express direction of the Manager or unless such employee was following an
express policy or procedure of the Manager and such direction, policy or
procedure is subsequently determined to be the result of gross negligence. The
Manager shall provide the Owner with monthly reports of all hiring, disciplinary
actions, promotions and firings at the Facility for the month, no later than
twenty (20) business days following each month.
2.2 Purchasing. The Manager shall purchase, for the account of the
Owner, all necessary foodstuffs, supplies, materials, appliances, tools and
equipment necessary for the operation of the Facility. The Manager shall arrange
contracts on behalf of the Owner for electricity, gas, telephone, cable
television and any other utility or service necessary for the operation of the
Facility. The Manager shall, on behalf of the Owner, contract for and supervise
the making of any necessary repairs, alterations, and improvements to the
Facility; provided that in the case of any capital expenditure, alteration or
improvement, the cost of which exceeds Ten Thousand ($10,000) Dollars, the
Manager shall obtain the prior written approval of the Owner; and provided
further, that no such prior written approval shall be required if the
expenditure is made under circumstances reasonably requiring emergency action
(so long as the Manager attempts to notify the Owner on a concurrent basis). The
Manager shall prepare and submit to the Owner any certificates of purchasing
expenses incurred for the Facility as may be reasonably requested. All volume
discounts and savings realized by the Manager relating to the Facility shall be
entirely passed through to the Facility.
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2.3 Collection of Accounts. The Manager shall supervise the Facility
bookkeeping personnel which shall prepare and submit bills and collect for the
account of the Owner any and all moneys owing to the Owner from residents.
2.4 Bookkeeping. The Manager shall establish and maintain a record and
bookkeeping system for the operation and conduct of business of the Facility in
accordance with generally accepted accounting principles consistently applied.
Books and records at the Facility may be maintained by an employee of the Owner
under the supervision of the Manager. Full books of account with entries of all
receipts and expenditures related to the operation of the Facility shall be
maintained at the offices of the Manager and shall at all times during normal
business hours be open for inspection by representatives of the Owner.
2.5 Financial Reports. The Manager shall furnish to the Owner the
following financial reports:
(a) as soon as possible and not later than thirty (30) days after the
close of each calendar month, a balance sheet as of the end of the month and a
statement of income and retained earnings for the month and for the
year-to-date, together with a comparison to the budget and a detailed statement
of receipts, disbursements, accounts payable and accounts receivable as of the
end of such monthly period; provided, however, that the computer services
charges connected with the preparation of such information shall not be an
expense of the Owner;
(b) as soon as possible, and not later than sixty (60) days after the
close of each fiscal year, a year-end compilation report, including a balance
sheet as of the end of such year and a statement of income and retained
earnings;
(c) within sixty (60) days after the close of each fiscal year, an
annual audit of the Facility's records (by a public accounting firm selected by
the Owner), the cost of which shall be paid for by the Owner; and
(d) such other and further reports or calculations as may be required
under any financing terms in accordance with the deadlines set forth in any
Financing Agreement.
2.6 Residents. In accordance with the provisions of all applicable
state and federal statutes, as amended from time to time, the Manager shall use
its best efforts to maintain the resident census at the Facility in such numbers
and in such a manner as, in the Manager's judgment, will tend to maintain the
financial stability of the Facility and will comply with the covenants in any
Financing Agreement.
2.7 Budgets. At least sixty (60) days prior to each fiscal year that
commences during the term of this Agreement, the Manager shall submit to the
Owner a proposed budget (the "Budget") projecting the revenue to be available
and funds to be required during such fiscal year in order to operate the
Facility and make capital improvements that may be required in order to keep the
Facility's physical plant in good condition and repair. The Budget shall be
based upon data and information then available to the Manager and shall include,
without limitation,
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estimated salaries and fringe benefits for all employee groups, projected
staffing patterns for the Facility, estimates of required purchases for
supplies, inventory, food and similar items, and an estimate of the level of
rates and charges sufficient to generate revenue necessary to operate the
Facility and make capital improvements projected in the Budget. The Owner shall,
within fifteen (15) business days following receipt of such Budget, notify the
Manager of either the Owner's approval (which approval shall not be unreasonably
withheld) of the Budget or those items of which Owner approves and those items
of which Owner disapproves. As soon as reasonably practical thereafter, the
Owner and the Manager shall attempt to establish a mutually agreeable Budget of
the Facility. In the event that the Owner does not either approve, or
disapprove, in total or in part, the Budget within such fifteen (15) business
day period, as provided herein, then such Budget as proposed by the Manager
shall be deemed approved by the Owner, and the Manager shall be authorized to
implement such program. If any Budget shall not have been approved by the Owner
by the beginning of the fiscal year, the Manager may act in reliance upon the
Budget for the immediately preceding fiscal year, and may make adjustments to
such Budgets provided that the same will not cause the net operating income for
the Facility to vary from the net operating income for the previous year by more
than five percent (5%). The projected Budget submitted by the Manager to the
Owner shall be an estimate of revenue and costs, and the Owner acknowledges that
the projected revenue may not be actually received, and (ii) projected costs may
be exceeded by actual expenses and capital expenditures incurred in connection
with the operation and maintenance of the Facility. By submitting such a
projected Budget, the Manager will not be providing a guarantee or warranty as
to the projected revenue, expenses, or capital expenditures of the Facility.
However, the Manager will at all times endeavor to operate and maintain the
Facility as efficiently and profitably as possible, consistent with the terms of
this Agreement and the projected Budget.
2.8 Insurance. The Manager shall obtain, at the Owner's expense, on
behalf of the Owner and with the Owner's prior approval, all necessary
liability, fire and extended coverage, workers' compensation, and malpractice
insurance covering the Facility, its equipment, the employees of the Owner, and
the employees of Manager, if any, who relate to the operations of the Facility,
which policies of insurance shall name the Owner and the Manager as coinsured
and which policies shall comply with the terms of any Financing Agreement. The
Owner shall bear the expense of the above with respect to the Owner's employees,
equipment and the Facility. The Manager shall bear the expense of the above with
respect to the Manager's employees, if any. Such insurance shall be written by a
responsible insurance company or companies reasonably satisfactory to the Owner
in kinds and amounts and a certificate of insurance shall by provided to the
Owner. The Owner shall retain the right to designate any insurance agent or
agency of its choice through which such insurance shall be obtained.
2.9 Technical and Professional Services. The Manager may, with the
prior approval of the Owner and at the Owner's expense, secure such engineering,
legal, and other specialized technical and professional services as may be
necessary to advise or represent the Owner in connection with any matter
involving or arising out of the ownership and operation of the Facility or the
conduct of affairs of the Facility.
2.10 Marketing. The Manager shall coordinate, supervise and implement
the agreed upon marketing plan (which plan is subject to the Owner's reasonable
approval) for the
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Facility during the fill-up phase (the "Marketing Plan"). Monthly statistical
census analysis reports (except during the first twelve (12) months after the
Facility is open, during which period reports shall be prepared weekly) will be
generated by the Manager and delivered to the Owner. The Manager will recommend
adjustments in the Marketing Plan as needed to achieve full occupancy. For
purposes of this Agreement, the Facility will be considered to have achieved
stabilized occupancy ("Stabilized Occupancy") when ninety-five percent (95%) of
its units have been occupied for a continuous ninety (90) day period. The
Manager will assist the management staff in the continued development and
coordination of advertising and promotional materials, internal and external
public relations programs, sales and staff development programs, and customer
satisfaction programs. The Manager shall assist the Facility's management staff
to develop a yearly Marketing Plan and budget based upon the Facility's yearly
census program and image.
2.11 Administrative. The Manager shall recommend the establishment of,
and implement and supervise procedures, including a policies and procedures
manual, to provide staff review of all operational areas, which status shall be
reviewed in regularly scheduled quarterly meetings and at other meetings as may
be deemed necessary or desirable by the Owner.
2.12 Plant and Maintenance.
(i) the Manager shall supervise the provision of all preventive
maintenance and, to the extent deemed feasible by the Manager and the Owner, the
services of regular Facility maintenance employees shall be used; and
(ii) the Manager shall make recommendations to the Owner regarding
entering into contracts with qualified independent contractors for the
maintenance and repair of air conditioning systems and laundry equipment and for
extraordinary repairs beyond the capability of regular Facility maintenance
employees.
2.13 Access to Facility and Books and Records. Manager shall provide
the Trustee, any Significant Owner and their representatives with access to the
Facility and its books an records upon three (3) Business Days' notice and shall
make available to the foregoing parties its representatives acceptable to a
Majority of Owners to discuss the affairs of the Facility upon reasonable
notice. Manager shall provide to the Owner the information and materials in the
Manager's possession that the Owner is required to furnish under the Financing
Agreement.
2.14 Notice. Manager shall provide the Owner prompt written notice of
any Default or Event of Default under the Financing Agreements of which Manager
has actual knowledge.
3. Management Fee.
3.1 Base Management Fee. As compensation for the services to be
rendered by the Manager during the term of this Agreement, the Manager shall pay
itself, at its principal office given below (or at such other place as the
Manager may from time to time designate in writing), and at the times
hereinafter specified, a monthly management fee (the "Management
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Fee") during the terms of this Agreement equal to five percent (5%) of Net
Revenues. The Management Fee will be paid in arrears and shall be due and
payable on or before the fourth (4th) business day prior to the end of each
month following the month in which services were rendered.
"Net Revenues" as used herein shall mean Gross Revenues (defined below)
less contractual adjustments for uncollectible accounts.
"Gross Revenues" as used herein shall mean and include all revenues
received (excluding any security deposits and investment earnings on any amounts
invested pursuant to any Financing Agreement) from the operation of the
Facility, including, without limitation, all revenue of the Facility for or on
account of any and all goods provided and services rendered or activities during
the period from the date of this Agreement and thereafter, the gross dollar
amount of all such receipts by the Facility from or on behalf of residents
directly connected with the Facility. For purposes of determining the Manager's
compensation pursuant to this Agreement, Gross Revenues shall not include the
proceeds of insurance (other than business interruption or expense insurance),
extraordinary items or the gains upon disposition of assets.
3.2 Subordination of Management Fee. (a) The Manager acknowledges that
its rights to payment are subject to and are subordinated under the Financing
Agreement. In the event that the Manager's fees and expenses are unable to be
paid because of the restrictions of the Financing Agreement, the Manager agrees
that its sole recourse hereunder shall be to terminate this Agreement but that
it shall not be entitled to damages hereunder other than to recover sums due and
owing to it for services rendered and expenses incurred to the date of
termination. In the event that the Manger does not so elect to terminate this
Agreement, the foregoing shall not be construed to be a waiver by any unpaid
fees and expenses. Furthermore, the Manager agrees that so long as any Bond
remains Outstanding, the Manager shall not, without the prior written consent of
a Majority of Owners, collect or attempt to collect all or any part of its
management fees and expenses whether through commencement of proceeding against
the Owner or otherwise, or join with any creditor in any such proceeding or any
Reorganization proceeding unless such management fees and expenses could be paid
under the terms of the Financing Agreement.
(b) Except as otherwise provided in the Financing Agreement, so long
as there is a payment default outstanding under the Bonds, the Manager shall not
demand or accept from the Owner or any other person any payment or additional
collateral with respect to its unpaid management fees.
4. Expenses.
4.1 Manager Expenses. The Manager shall bear the following expenses
incurred by it in the management of the business and properties of the Facility:
(a) Salary and expenses (including, without limitation, payroll taxes,
costs of employee benefit plans, travel, insurance, and fidelity bonds) of all
of the Manager's home office personnel and overhead.
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(b) Salary and expenses (including, without limitation, payroll taxes,
cost of employee benefit plans, travel, insurance and fidelity bonds) of
financial and accounting personnel employed by the Manager to maintain
accounting books and records of the Facility, except as provided below.
4.2 Owner Expenses. Except as otherwise expressly provided herein, the
Owner shall bear all of the expenses of operating and financing the Facility,
and without limiting the generality of the foregoing, it is specifically agreed
that the following expenses of the Facility shall not be borne by the Manager:
(a) Fees and expenses of independent professional persons expressly
retained by the Owner, or retained by the Manager for the account of the Owner
with the prior permission of the Owner, for any purpose; salary, other
compensation or benefits and expenses of all staff employed by the Facility and
the Executive Director.
(b) Principal, interest and discounts on indebtedness incurred or
assumed by the Owner.
(c) Taxes, imposts, levies or other charges on the existence,
operation, receipts, income or property of the Owner, provided, however, that
all interest and penalties incurred as a result of the Manager's failure to
timely file all returns which the Manager is required to file pursuant to this
Agreement, or to make timely payment of all taxes, levies, imposts, or other
charges, to the extent that sufficient funds were available to the Manager as of
the date such payments were due, shall be the responsibility of the Manager.
(d) Supplies and equipment, food, fuel, kitchen and food service
equipment, linens, beds, furniture, clothing and all other supplies and
equipment used in supplying services to residents.
(e) Expenses connected directly or indirectly with the ownership of
real and personal property devoted, used, or consumed in the business of the
Facility, including, without limitation, purchase and/or construction of the
land and buildings used for such purpose, maintenance, repair and improvement of
property, all real estate and personal property taxes assessed, premiums for
property and liability insurance on property owned by the Owner, brokerage
commissions, and fees and expenses of consultants, managers, or agents retained
directly by the Owner.
(f) The Management Fee.
(g) Legal fees and related expenses pertaining to the Facility, any
other litigation or proceedings to which the Owner is a party. However, such
fees shall not include those fees resulting from or arising out of the
negligence by the Manager. In the event that there are insufficient funds
available to the Manager to pay expenses which the Manager is authorized to
incur and pay hereunder, including, without limitation, any taxes to be paid on
behalf of the Owner by the Manager, the Manager shall promptly notify the Owner
of the
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amount necessary to cure and the reason for such deficit and the Owner shall
provide such necessary funds to the Manager within ten (10) days after receipt
of such notice.
4.3 Deposit and Disbursement of Funds.
(i) The Manager shall establish and administer the overall rate
structure of the Facility and shall supervise the issuance of bills and the
collection of accounts for the Owner provided that the same do not fall below
the projections in the Budget by more than ten percent (10%), in which event the
Manager shall obtain the approval of the Owner. The Manager shall take
possession of and endorse the name of the Owner on all notes, checks, money
orders, insurance payments, and any other instruments received in payment of
accounts described below. The Manager shall not expend any monies for expenses
which exceed by more than ten percent (10%) the amount budgeted for such
expenses in the Budget, without the approval of the Owner.
(ii) Subject to the terms of the Financing Agreement, the Manager
shall establish such accounts for the Facility in the Owner's name, separate
from all other accounts and funds of the Manager, with a bank or banks whose
deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") as it
deems necessary or desirable. The Manager, on behalf of the Owner, shall use
reasonable efforts to collect (using legal counsel approved by the Owner, if
necessary) all sums due and owing to Owner in connection with the operation of
the Facility. The Manager and the Owner shall deposit into such accounts all
monies furnished by the Owner as working funds and all receipts and monies
arising from the operation of the Facility or otherwise received by the Owner or
by the Manager for or on the behalf of the Owner.
(iii) Draws on such accounts may be made by the sole signature of an
authorized representative of the Manager or the Owner (or by wiring instructions
from such authorized representative of the Manager or the Owner) and shall be
paid to the Manager to reimburse the Manager for payments made pursuant to this
Agreement by the Manager from its own accounts. The Manager, for the term of
this Agreement may withdraw, by writing checks against such accounts, funds for
reimbursement of all amounts payable pursuant to this Agreement in connection
with the operation of the Facility. The Manager shall make disbursements and
payments from such accounts consistent with the Budget, on behalf and in the
name of the Owner, in such amounts and at such times as are required in
connection with, first, payments required by any Financing Agreement, and
second, payments of ownership, maintenance and operating expenses of the
Facility and the other costs, expenses and expenditures provided for in this
Agreement including the Management Fee.
5. Duty of Manager. The Manager shall render the services called for
hereunder in the utmost good faith and the Manager acknowledges that it is
acting in a fiduciary capacity with respect to the Owner and owes the Owner the
highest duty of care.
6. Relationship of the Parties. The Owner and the Manager are neither
partners nor joint venturers with each other, and nothing herein shall be
construed so as to make them such partners or joint venturers or impose on any
of them any liability as partners or joint venturers. Notwithstanding any
affiliation between the Manager and a member of the Owner, the Manager
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and the Owner acknowledge that all dealings between the Owner and the Manager
are to be conducted on an arms length basis.
7. Term and Termination.
7.1 Period of the Term. This Agreement shall continue for an initial term
of fifteen (15) years commencing on the date the Facility is opened for
occupancy, and ending on the last day of the calendar month in which the
fifteenth (15th) anniversary of such opening date occurs (the "Original
Expiration Date"). The Owner and the Manager agree to execute a certificate
setting forth the date on which the initial term commences promptly after such
opening. Thereafter, this Agreement shall be renewed for up to two (2)
additional five (5) year terms only if the Owner sends the Manager written
notice no less than ninety (90) days prior to the then applicable Expiration
Date that it wishes to have the Agreement renew beyond the then applicable
Expiration Date. As used herein the term "Expiration Date" shall mean the later
of the Original Expiration Date, or the date to which this Agreement has been
extended as provided in this Section 7.1.
7.2 Termination for Cause. Either party may terminate this Agreement by
delivering thirty (30) days written notice (a "Termination Notice") to the other
party in the event that any of the following occurs:
(i) any illegal act engaged in by any party in the operation of the
Facility;
(ii) if any party files or has a petition or complaint in receivership or
bankruptcy filed against it which has not been dismissed within ninety (90) days
of such filing;
(iii)(A) the failure of the Facility to maintain a Debt Service Coverage
Ratio (as defined below) of at least 1.00 for any twelve (12) consecutive months
after the earlier to occur of (1) the Facility reaching stabilized occupancy
(ninety five percent (95%) of the Facility's units having been occupied for a
continuous ninety (90) day period) and (2) twenty-four (24) months after the
Facility is opened; (B) the failure of the Facility to maintain a debt service
coverage ratio of at least 1.00 for the next succeeding six (6) month period;
and (C) the recommendation from an independent management consultant selected by
the Owner and approved by the Manager that the Manager be terminated;
(iv) the failure of the Facility to maintain a Debt Service Coverage Ratio
of at least 1.00 for any twelve (12) consecutive months (the "Initial Period")
after the occurrence of the events described in subsections (iv)(A) and (iv)(B)
above and (B) the subsequent failure of the Facility to maintain a Debt Service
Coverage Ratio of at least 1.00 for the twelve (12) month period commencing on
the first (1st) day of the seventh (7th) month of the Initial Period; and (C)
the recommendation from an independent management consultant selected by the
Owner and approved by the Manager that the Manager be terminated; and
(v) the breach by any party (the "Breaching Party") of any other material
provision in, or obligation imposed by, this Agreement which violation shall
have not been cured to the reasonable satisfaction of the other party (the
"Claiming Party") within thirty (30) days following
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the date on which the Claiming Party delivers notice to the Breaching Party
describing with specificity both the claimed breach and the actions required to
be taken in order to cure the claimed breach; provided that in the event that
the claimed breach is not reasonably susceptible of being cured within thirty
(30) days, the cure period shall be extended for such additional time as may be
reasonably required, provided further that in the event that the Claiming Party
delivers a Termination Notice and the Breaching Party commences legal
proceedings contesting the Termination Notice and the Breaching Party commences
legal proceedings contesting the termination within thirty (30) days following
delivery of the Termination Notice, then this Agreement shall not terminate
unless and until a final judicial resolution of such legal proceedings beyond
the expiration of any appeal period has been issued upholding said termination.
For purposes hereof, Debt Service Coverage Ratio shall mean the ratio of
Cash Available for Debt Service (as defined below) for the applicable period to
the debt service for all long term indebtedness for such period. Cash Available
for Debt Service shall mean, with respect to a particular period, the following
(all determined in accordance with generally accepted accounting principles):
(a) net operating revenues for such period; less (b) all operating expenses for
such period; plus (c) to the extent included in operating expenses, expenses
incurred during such period in respect of (i) the debt service on all long term
indebtedness, (ii) the amortization of financing charges on all long term
indebtedness, (iii) the amortization of acquisition costs attributable to the
acquisition of the Facility, and (iv) depreciation attributable to the Facility
and any other non-cash items.
7.3 Termination for Failure to Pay Fee on a Timely Basis. In addition
to the provisions of Section 7.2 above, the Manager may terminate this Agreement
upon thirty (30) days written notice of the Owner's failure to pay the
Management Fee when due unless the Owner cures the payment default within ten
(10) days after receiving written notice from the Manager.
7.4 Termination Upon Recommendation of Management Consultant. In
addition to the provisions of Section 7.2 hereof, the Owner may terminate this
Agreement in the event that either: (a) such termination is recommended by a
Management Consultant required to be retained pursuant to the Financing
Agreement and any of the conditions of Section 6.20(f) of the Lease Agreement
shall have been satisfied or (b) the Manager fails to implement any
recommendation within a reasonable period of time made in the report of a
Management Consultant required to be retained pursuant to the Financing
Agreement; unless, in any such event, the requirement to so terminate is waived
in writing by the holders of 66 2/3% in aggregate principal amount of Bonds
Outstanding.
7.5 Notice to Holders. In the event that the Owner defaults under
Section 7.2 or 7.3 of this Agreement, simultaneously with the delivery of notice
of any such default to the Owner, and as a condition to the effectiveness
thereof, the Manager shall deliver a copy of such notice to the Holders at the
address set forth in the Lease Agreement. The Holders shall at their option,
have the right to cure any such default within the cure period provided herein.
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8. Indemnification. The Owner shall indemnify the Manager and hold it
harmless of, from, and against all costs, claims, damages or expenses, including
reasonable attorney's fees (collectively "Costs"), incurred or suffered by the
Manager and arising out of acts performed within the scope of this Agreement.
Notwithstanding the foregoing, the Owner shall not have any obligation to
indemnify the Manager or hold it harmless of, from, and against Costs incurred
or suffered by the Manager as a result of the Manager's fraud, willful
misconduct, or negligence, or for Costs incurred or suffered by the Manager as a
result of the Manager's failure to keep true, accurate and complete records. The
Manager shall indemnify the Owner and hold it harmless of, from and against all
Costs incurred or suffered by the Owner as a result of any of the Manager's
fraud, willful misconduct, or negligence, or as a result of the Manager's
failure to submit proper reports to the appropriate regulatory agencies, or to
keep true, accurate and complete records.
9. Fidelity Bond. The Manager agrees to obtain a fidelity bond, employee
dishonesty insurance policy or other similar coverage, in form and amount
satisfactory to the Owner, covering those employees reasonably required to by
covered by the Owner.
10. Amendments. This Agreement shall not be changed modified, terminated,
or discharged, in whole or in part, except by an instrument in writing signed by
the Owner and the Manager, their respective successors or assigns, or otherwise
as provided herein. Such modifications shall be in writing and signed by the
Owner and the Manager.
11. Governing Law. The provisions of this Agreement shall be governed by,
construed, and interpreted in accordance with the laws of the State of New York.
Any change in any applicable law which has the effect of rendering any part of
this Agreement invalid, illegal, or unenforceable shall not render the remainder
of this Agreement invalid, illegal, or unenforceable, and the parties hereto
agree that in the event that any part of this Agreement is rendered invalid,
illegal, or unenforceable, that they shall negotiate in good faith to amend any
such part of this Agreement so as to comply with any such law, as amended, and
further the respective objectives of the parties hereto.
12. Assignment. The Manager may not assign its interest in this Agreement,
without the prior written consent of the Owner, which consent shall not be
unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing,
the Manager may assign its interest in this Agreement to any entity provided
that (i) such entity shall be wholly-owned (directly or indirectly) by the
Manager's parent corporation immediately after the merger with The ▇▇▇▇▇▇▇▇ Care
Company ("CareMatrix Corporation") and (ii) upon such assignment, CareMatrix
Corporation shall remain liable for the Manager's obligations hereunder. The
Owner shall be permitted to assign its rights hereunder and the Manager hereby
consents to the assignment of this Agreement to the Trustee under the Financing
Documents.
13. Successors. This Agreement shall be binding upon and inure to the
benefit of the parties and to their respective successors and assigns.
14. Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope of
intent of this Agreement or the intent of any provision contained in this
Agreement.
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15. Notices. Any notice, demand, consent, or other written instrument to be
given or received under this Agreement ("Notice") required or permitted to be
given shall be in writing signed by the party giving such Notice and/or consent
and shall be hand delivered, sent by nationally recognized overnight carrier or
sent, postage prepaid, by Certified or Registered Mail, Return Receipt
Requested, or by facsimile transmission to the other party at the addresses
listed below:
As to Manager: CareMatrix of Massachusetts, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
cc: CareMatrix of Massachusetts, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
As to Owner: The Mayfair at ▇▇▇▇ Cove, LLC
c/o Chancellor of ▇▇▇▇ Cove, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and The Mayfair at ▇▇▇▇ Cove, LLC
c/▇ ▇▇▇▇▇▇▇ & Belfer Senior Housing, LLC
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
cc: Jordan E. Yarrett, Esq.
Battle ▇▇▇▇▇▇ LLP
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party shall have the right to change the place to which such Notice shall be
sent or delivered by similar notice sent in like manner to all other parties
hereto. All notices sent by certified mail
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or hand delivered shall be deemed received upon delivery or when delivery is
refused to the office or address of the addressee.
16. Property: Trade names, marketing material, marketing ideas and
development material and records developed specifically for and related to this
Facility shall be the property of the Owner. Trade names, ideas and documents,
forms and development material not developed specifically for this Facility are
to be considered proprietary and will remain the property of the Manager. All
operational forms and documents including, but not limited to, policy and
procedure manuals, operational forms, level of care determination systems,
management policy books, inspection control manuals, and management books are
and will remain the property of the Manager. All financial management forms,
documents and software systems including, but not limited to, bookkeeping
manuals, financial forms, financial spreadsheets, database or word processing
forms, financial accounting packages and outcome information systems are and
will remain the property of the Manager. The Manager shall deliver to the Owner
copies of the foregoing documents upon request from the Owner. Upon termination
of this Agreement, the Owner shall have the option to purchase operational
material belonging to the Manager, except for the financial accounting packages
and outcome information systems, at a mutually agreed upon price.
17. Non-Compete Area.
(a) The Manager agrees that it shall not (nor shall any successors,
assigns or Affiliates (as such term is defined in 17 CFR ss. 230.405) engage in
the development, management, ownership or operation of any assisted living or
senior housing facility or project acquisition, in any capacity whatsoever,
without the prior written consent of the Owner, in the area outlined on the map
attached hereto as Exhibit A (the "Designated Area") until the expiration of
this Agreement. Notwithstanding the foregoing, in the event that either member
of the Owner (or any Affiliate of either) identifies any such project within the
Designated Area during the term hereof and the other party does not elect to
participate in the development of such project, then the provisions of this
Section 17 shall not apply to such project.
(b) The Manager agrees that if there shall have occurred and be
continuing an Event of Default under Section 8.01 (a)(1) or 8.02(a)(2) of the
Indenture and an Event of Default under Section 8.01 (A)(5) of the Indenture as
a result of a draw on the Debt Service Reserve Fund, it shall not develop or
operate or participate in the development or operation or oversight of any
assisted living facility within three (3) miles of the Facility other than any
facility with respect to which it has entered into a commitment to purchase the
land on which the facility is to be developed unless the written consent of a
Majority of Owners is obtained. The provisions of this Section 17(b) shall run
to and inure to the benefit of the Trustee.
18. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
l9. Manager to Cooperate with Owner. The Manager covenants that it will
cooperate with the Owner to assist the Owner to meet its obligations under the
Financing Agreement.
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20. Third Parties. This Agreement shall be binding upon, and shall inure to
the benefit of the parties successors and assigns. In addition, the Owner and
the Manager acknowledge and agree that the Trustee is an intended third party
beneficiary of the terms and provisions of this Agreement.
21. Definitions.
21.1 Any capitalized terms used and not defined herein shall have the
meaning given such term in the Financing Agreement.
21.2 The following terms as used in this Agreement shall have the meanings
given:
"Financing Agreement" shall mean the Bonds, the Company Lease, the Lease
Agreement, the Mortgage, Assignment and Security Agreement, the Environmental
Compliance Agreement, the Indenture, the Security Agreement, the Tax Compliance
Agreement and the Tax Regulatory Agreement and any other agreement now or
hereafter delivered as security for the Bonds or the Company's obligations under
any Financing Document.
"Reorganization" shall mean (i) any insolvency or bankruptcy proceeding, or
any receivership, liquidation, reorganization or other similar proceeding in
connection therewith, relative to the Owner or its property, or (ii) any
proceedings for voluntary liquidation, dissolution or other winding-up of the
Owner and whether or not involving insolvency or bankruptcy, or (ii) any
assignment or receivership for the benefit or creditors, or (iv) any
distribution, divisions, marshalling or application of any of the properties or
assets of the Owner or the proceeds thereof, to creditors, voluntary or
involuntary, and whether or not involving legal proceedings.
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IN WITNESS WHEREOF, the parties have executed this Management Agreement as
of the date first set forth above.
WITNESS: CAREMATRIX OF MASSACHUSETTS, INC.
_____________________________ By: ___________________________________
Name: Name:
Title:
WITNESS: THE MAYFAIR AT ▇▇▇▇ COVE, LLC
BY: ▇▇▇▇▇▇▇-▇▇▇▇▇▇ SENIOR
HOUSING, LLC, Member
______________________________ By: ___________________________________
Name: Name:
Title:
BY: CHANCELLOR OF ▇▇▇▇
COVE, INC., Member
______________________________ By: ___________________________________
Name: Name:
Title:
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