Exhibit 10.06
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
This AMENDED AND RESTATED MANAGEMENT AGREEMENT (this "Agreement") is dated
as of the 1st day of April, 1999, by and between CareMatrix of Massachusetts,
Inc., a Delaware corporation, with its principal place of business at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Manager"), and Chancellor of Stuart,
Inc., or its designee or assignee, with its principal place of business at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Owner"), and amends and
restates that certain Management Agreement dated as of January 30, 1997 between
the Manager and the Owner, as the same may have been previously amended to date.
WHEREAS, the Owner is the operator of a 148 unit senior housing facility
located in Jensen Beach, Florida (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;
WHEREAS, the Owner has determined that the services provided by Manager
will augment the services provided by it and the employees of the Facility so as
to increase productivity;
WHEREAS, the Owner has determined that the hiring of the Manager on the
terms and conditions hereinafter set forth will not prevent the Owner from
exercising ultimate control over the policies and operations of the Facility;
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 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; supervise
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 future operations and to establish long range
policies and goals for the Facility, the Manager will, under the general
supervision of the Owner, meet on at least a monthly 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:
(a) perform its duties and responsibilities hereunder in compliance with
all applicable laws;
(b) 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
(c) consult with the Owner and keep the Owner advised 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:
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2.1 EMPLOYEES. The Manager shall recruit, evaluate, select, and
hire a qualified and properly licensed Executive Director 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. Prior to the Conversion
Date (hereinafter defined) all personnel other than the Executive Director 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 personnel. Effective as of the Conversion Date, all such
personnel, as well as the Executive Director, shall be employees of the Manager,
and the Manager shall have full responsibility for payment of wages, salaries
and other compensation and benefits of the Executive Director and such other
personnel. 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: (a)
maintain or cause to be maintained payroll records and prepare weekly and
monthly payrolls, withholding taxes and Social Security taxes; (b) 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; (c) maintain in
force all required levels of workers' compensation insurance; and (d) prepare
and submit to the Owner any certificates of payroll expenses as may be
reasonably requested. Prior to the Conversion Date, 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 quarterly reports of all hiring, disciplinary actions,
promotions and firings at the Facility for the 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
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the Owner any certificates of purchasing expenses incurred for the Facility as
may be reasonably requested.
2.3 COLLECTION OF ACCOUNTS. The Manager shall supervise the
Facility bookkeeping personnel who 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 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 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; and
(c) 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 agreements executed in connection with any Facility Financing
(hereinafter defined) (any such financing agreement or agreements are
collectively referred to herein as a "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. The Manager shall prepare and submit for approval by
the Owner the following: (a) as soon as possible and not later than 30 days
before the close of each fiscal year, or on such earlier date as may be required
under any Financing Agreement, a detailed written capital and operating budget
for the next succeeding fiscal year, broken down by month and showing projected
expenditures and projected revenues for such budget period; and (b) such other
budgets as may be reasonably required of the Owner under any Financing Agreement
or by regulatory authorities showing, inter alia, projected ordinary and
extraordinary expenditures and protected revenues for such budget period.
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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 agree to coordinate and
supervise the agreed upon marketing plan for the Facility during the fill-up
phase (the "Marketing Plan"). Monthly statistical census analysis reports 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
full occupancy when ninety percent (90%) of its units have been occupied for a
continuous 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 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.
(a) attention shall be given to preventive maintenance
(this item may be provided by outside parties if economically feasible) and, to
the extent deemed feasible by the Manager and the Owner, the services of regular
Facility maintenance employees shall be used; and
(b) 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.
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3. MANAGEMENT FEE. (a) As compensation for the services to be
rendered by the Manager during the Term (as hereinafter defined), the Manager
shall pay itself, at its principal office as set forth above (or at such other
place as the Manager may from time to time designate in writing), and at the
times hereinafter specified, a monthly base management fee (the "Base Management
Fee") (i) for the period commencing on the beginning of the Term and continuing
until the date (the "Conversion Date") which is the earlier of (x) the second
anniversary of the date on which the Facility received its certificate of
occupancy permitting operation of the Facility for its intended purpose, or (y)
such date as is designated by the Manager in its sole discretion, equal to the
greater of (I) Ten Thousand Dollars ($10,000) Dollars per month, or (II) ten
percent (10%) of Net Revenues (as hereinafter defined), and (i) for the period
commencing on the Conversion Date and continuing through the remainder of the
Term, equal to the sum of (x) all Facility Expenses (hereinafter defined), and
(y) the greater of (I) Ten Thousand Dollars ($10,000) per month, or (II) ten
percent (10%) of Net Revenues. In addition to the Base Management Fee, as
additional compensation for the services to be rendered by the Manager during
the Term, the Manager shall pay itself, at its principal office as set forth
above (or at such other place as the Manager may from time to time designate in
writing), and at the times hereinafter specified, a monthly incentive management
fee (the "Incentive Management Fee") equal to eighty five percent (85%) of Net
Cash Flow (as hereinafter defined). The Base Management Fee and the Incentive
Management Fee are collectively referred to herein as the "Management Fee".
(b) All Management Fees will be paid in arrears and shall be due
and payable on or before the 15th day of each month following the month in which
services were rendered. The Manager hereby acknowledges and agrees that any and
all Management Fees due hereunder shall be subordinate to any Facility
Financing, as well as to any preferred returns to equity investors of the Owner.
The Owner hereby represents and warrants that as of the date hereof, there
exists no Facility Financing except that certain $19,261,473 mortgage loan by
Meditrust Mortgage Investments, Inc. and that there are no preferred returns
payable to equity investors of the Owner. The Owner hereby covenants and agrees
with the Manager that at no time during the Term of this Agreement shall (i) the
total Facility Financing exceed the sum of (x) all costs incurred by the Owner
in connection with the acquisition, development, construction and fill-up of the
Facility, plus (y) all costs incurred by the Owner in connection with any
capital improvements to the Facility, and (ii) the preferred returns payable to
equity investors of the Owner be increased beyond those set forth herein.
(c) "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 or receivable from or by reason of 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 ▇▇▇▇▇▇▇▇ by the Facility to or on behalf of residents directly or
indirectly connected with the Facility or the provision of all such goods and
services.
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"Facility Expenses" as used herein shall mean and include all personnel and
other expenses incurred in connection with the operation of the Facility,
including, without limitation, all expenses described in Section 4 below, but
specifically excluding any Management Fees and all Facility Financing.
"Net Cash Flow" as used herein shall mean the excess of (i) all Net
Revenue, over (ii) the sum of (x) all Facility Expenses, (y) all Base Management
Fees, and (z) all Facility Financing.
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 personnel employed by the Manager (other than the Executive
Director, who will be paid by the Owner as set forth in Section 4.2 hereof) to
carry out all responsibilities detailed above.
(b) Salary and expenses (including, without limitation,
payroll taxes, cost of employee benefit plans, travel, insurance and fidelity
bonds) of all of the Manager's home office personnel and overhead.
(c) From and after the Conversion Date, all expenses
described in Section 4.2 below, but specifically excluding any Management Fees
and all Facility Financing.
4.2 OWNER EXPENSES. Except as otherwise expressly provided in this
Agreement, the Owner shall bear all of the expenses of operating and financing
the Facility and rendering resident services not expressly assumed by the
Manager, including, without limitation the following:
(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 at the Facility by
the Owner, including, without limitation, all administrative, medical, resident
assistance and other health care personnel and the Executive Director;
custodial, food service, cleaning, maintenance, operational, secretarial and
bookkeeping personnel employed to administer the day-to-day operations of the
Facility and to perform health care and related services in the day-to-day
operations of the Facility's business.
(b) Principal, interest and discounts on indebtedness
incurred or assumed by the Owner with respect to the acquisition, development,
construction, and fill-up of Facility ("Facility Financing").
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(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) Medical 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
design, acquisition, disposition or 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, and 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 gross negligence by the Manager and the Owner shall provide such necessary
funds to the Manager within 10 days after receipt of such notice.
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 amount necessary to cure and
the reason for such deficit and the Owner shall provide such necessary funds to
the Manager within 10 days after receipt of such notice.
4.3 DEPOSIT AND DISBURSEMENT OF FUNDS.
(a) 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 as the true and lawful attorney-in-fact for 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.
(b) 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") or with a savings and loan institution or
institutions whose deposits are insured by the Federal Savings and Loan
Insurance Corporation ("FSLIC") 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.
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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.
(c) Draws on such accounts may be made by the sole
signature of an authorized representative of the Manager (or by wiring
instructions from such authorized representative of the Manager) 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 Owner hereby appoints the
Manager, for the term of this Agreement, as the Owner's true and lawful
attorney-in-fact to 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 Owner agrees to execute from time to
time any additional documents required by any bank wherein such documents are
held to effectuate all powers of attorney referred to herein. The Manager shall
make disbursements and payments from such accounts, on behalf and in the name of
the Owner, in such amounts and at such times as are deemed by the Manager to be
appropriate or 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. All dealings between the
Owner and the Manager are at arms length as between non-related parties.
7. TERM AND TERMINATION.
7.1 TERM. (a) This Agreement shall continue for a term (as the
same may be extended, the "Term") commencing on the date which is 12 months
prior to the anticipated date (as mutually agreed to by the Owner and the
Manager) for the opening of the Facility and continuing for a period of 15 years
after the date on which the Facility receives its certificate of occupancy
permitting the operation of the Facility for its intended use. The Owner and
Manager agree to execute a certificate setting forth the date on which the Term
commences promptly after such opening.
(b) On the conditions that (i) the Manager is not
in default of its obligations hereunder beyond any applicable notice, cure or
grace period at the time of exercise, and (ii) the Facility has had positive
cash flow for each of the three years prior to the commencement of the Extension
Exercise Period (hereinafter defined), the Manager shall have the option (each,
an "Extension Option") to extend the Term for three additional periods of five
years each on the same terms and conditions as set forth in this Agreement. Each
Extension Option shall be exercised in writing by the Manager to the Owner
during the six month period (the "Extension Exercise Period") commencing on the
first day of the then last year of the Term.
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7.2 TERMINATION FOR CAUSE. Either party may terminate this
Agreement by delivering 30 days written notice (a "Termination Notice") to the
other party in the event that any of the following occurs:
(a) any illegal act engaged in by any party in the
operation of the Facility;
(b) if any party files or has a petition or complaint in
receivership or bankruptcy filed against it which has not been dismissed within
90 days of such filing; or
(c) 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 30 days following 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 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 within 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.
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 10
days after receiving written notice from the Manager.
7.4 TERMINATION DUE TO CHANGE IN CONTROL. For so long as the
Owner, or the principals of the Owner, own or control, directly or indirectly,
at least twenty percent (20%) of the outstanding voting stock of the Manager (or
its controlling parent entity), the Owner shall have the right to terminate this
Agreement upon 30 days prior written notice to the Manager in the event of a
"Change in Control" of the Manager (or its controlling parent entity). For
purposes of this provisions, "Change in Control" shall mean, whether through a
single transaction or a series of transactions: (a) the transfer of all or
substantially all of the assets of such entity, (b) the transfer of an equity
interest in such entity after which the acquiror holds more than fifty percent
(50%) of the voting power of all equity interests in such entity, or (c) the
merger, consolidation, or other reorganization of such entity with or into
another entity which results in a change of more that fifty percent (50%) of the
composition of the governing body of such entity.
8. INDEMNIFICATION. The Owner shall indemnify the Manager and hold it
harmless of, for, 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 gross negligence, or for Costs incurred or suffered by the
Manager as a result of the Manager's failure
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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
gross 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. ACCESS TO BOOKS AND RECORDS. As a subcontractor that may be subject to
Section 1861(v) (1) (i) of the Social Security Act (the "Act"), the Manager
shall, upon written request and in accordance with the above-mentioned section
of the Act and regulations promulgated pursuant thereto, make available to the
Comptroller General, the Secretary of Health and Human Services, and their duly
authorized representatives, a copy of this Agreement and access to the Manager's
books, documents, and records necessary to verify the nature and extent of the
costs of services provided to the Owner. Such access will be available until the
expiration of four years after the services to which the costs are related have
been furnished.
The provisions of this Section shall apply only if this Agreement is
covered by the Act and such provisions shall become void and shall be of no
further force or effect if, at the time a request is made, this Agreement is not
subject to the Act. The Manager agrees that if it carries out any of the duties
of this Agreement through a subcontract with a related organization which
subcontract has a value or cost of $10,000 or more over a 12 month period, the
Manager will obtain an identical access requirement in such subcontract.
10. 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.
11. 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.
12. GOVERNING LAW. The provisions of this Agreement shall be governed by,
construed, and interpreted in accordance with the laws of the Commonwealth of
Massachusetts. 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.
13. ASSIGNMENT; SUCCESSORS. Neither the Owner nor the Manager will assign
its interests in this Agreement, without the prior written consent of the other;
provided that (a) the Manager may assign (i) its interests hereunder to an
affiliate, and (ii) its Management Fees to a lender as security for any
financing arrangement of Manager, and (b) the Owner may assign its interests
hereunder to a lender as security with respect to any Financing Agreement.
Subject to the foreoging, this Agreement shall be binding upon and inure to the
benefit of the parties and to their respective successors and assigns.
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14. OWNER'S PURCHASE RIGHTS. In the event the Owner is not the fee title
holder to the Facility, or the land on which the Facility is located, the
Manager shall have the right to assume from the Owner any option to purchase,
right of first offer or right of first refusal which the Owner may hold with
respect to the Facility or the land on which the Facility is located.
15. 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.
16. 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, to the other party at the addresses listed below:
As to Manager: CareMatrix of Massachusetts, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
cc: CareMatrix of Massachusetts, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
As to Owner: Chancellor of ▇▇▇▇▇▇ Springs, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
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 or are hand delivered shall be deemed
received upon delivery or when delivery is refused to the office or address of
the addressee.
17. 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 nursing 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. Upon termination of this Agreement, the
Owner shall have the option to purchase operational material belonging to the
Manager,
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except for the financial accounting packages and outcome information systems, at
a mutually agreed upon price.
18. LEASE OPTION. The Owner hereby agrees that so long as the Manager is
not in default in the performance of any duty or any obligation hereunder, the
Manager shall have the option to lease the Facility at any time during the term
of this Agreement (including any extension thereof) by providing the Owner with
at least ninety (90) days prior written notice of such election. Within thirty
(30) days after the receipt of the Manager's notice to lease, the parties shall
enter into a lease agreement substantially in the form attached hereto as
EXHIBIT A (the "Lease"), which Lease shall include, without limitation, a ten
(10) year initial term (with three (3) 5-year renewal terms) and rental payments
equal to the fair market value (which will be a negotiated percentage of total
project costs) as determined immediately prior to the initial term of the Lease
and immediately prior to any renewal terms.
19. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
[signatures on following page]
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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: By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
WITNESS: CHANCELLOR OF STUART, INC.
By: By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
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