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10(n)
MANAGEMENT SERVICES AGREEMENT
This Agreement is made as of the 25th day of January, 1997 (the "Effective
Date") by and between NovaCare, Inc., ("Manager") a Delaware corporation with
its principal place of business at 0000 X. Xxxxx Xxxxxx, Xxxx xx Xxxxxxx,
Xxxxxxxxxxxx 00000 and NovaCare Employee Services, Inc. ("NovaCare"), a Delaware
corporation with its principal place of business at 0000 Xxx Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, Manager has expertise and resources in general administrative and
business services, including finance, business development, information
technology, regulatory and legal services ("Administrative Services") and in
medical rehabilitation services, including worksite evaluation, injury
prevention, rehabilitation provider network development and work injury
rehabilitation ("Rehabilitation Services") (Administrative Services and
Rehabilitation Services are hereinafter collectively referred to as "Services"),
WHEREAS, NovaCare has decided improve service and reduce costs by taking
advantage of the expertise and resources available to it from Manager; and
WHEREAS, Manager wishes to Provide identified Administrative Services and
Rehabilitation Services to NovaCare pursuant to the terms and conditions
contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and promises herein contained, and intending legally to be bound, the parties
agree as follows:
1. Term and Termination.
1.1 Initial Term. The initial term (the "Initial Term") of this
Agreement shall be from January 25, 1997 through December 31, 2001, unless
sooner terminated pursuant to Section 1.3 below.
1.2 Renewal Term. This Agreement shall automatically renew for an
additional one-year term (a "Renewal Term") upon the expiration of the Initial
Term and each subsequent Renewal Term unless written notice of non-renewal be
given by either party at least nine (9) months prior to the expiration of the
Initial or any Renewal Term.
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1.3 Termination.
1.3.1 By Manager. Manager may terminate this Agreement upon notice
to NovaCare in the event that:
(a) NovaCare fails to pay any sums due hereunder, and such
failure continues for thirty (30) business days after written notice thereof is
sent to NovaCare, certified or registered mail, return receipt requested;
(b) NovaCare fails at any time to procure or maintain any
insurance coverage required by this Agreement;
(c) NovaCare fails to perform or observe any duty, obligation
or covenant contained in this Agreement other than those set forth in
subparagraph (a) or subparagraph (b) above, and such failure continues for ten
(10) days after written notice thereof is sent to NovaCare, certified or
registered mail, return receipt requested;
(d) NovaCare becomes insolvent (that is, unable to pay its
debts as they mature or in accordance with customary business practice) or
commits an act of bankruptcy, or applies for, consents to, or acquiesces in the
appointment of a trustee or a receiver for it or any of its property, or, in the
absence of such application, consent or acquiescence, a trustee or receiver is
appointed for NovaCare or for a substantial part of its property and is not
discharged within thirty days thereof, or if any bankruptcy or insolvency
proceeding, or any dissolution or liquidation proceeding, is instituted by or
against NovaCare and is consented to or acquiesced in by NovaCare or remains for
thirty (30) days undismissed;
(e) there occurs the termination, cessation or liquidation of
the NovaCare's business;
(f) any representation, warranty or statement of material
fact made or furnished to Manager or Manager's representatives by or on behalf
of the NovaCare, or any document, instrument or other paper submitted to Manager
or Manager's representatives by or on behalf of NovaCare, is false or misleading
in any material respect;
(g) Manager determines, and obtains an opinion of counsel to
the effect, that all or a substantial portion of its receipts hereunder are or
will become subject to a sales, value added, gross receipts or similar tax in a
particular jurisdiction as to which it exercises its right to terminate;
(h) there occurs a Change in Control of NovaCare.
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For purposes of this Agreement, a Change in Control of NovaCare shall
be deemed to have occurred if:
(i) a "person" (meaning an individual, a partnership, or other
group or association as defined in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934), either (x) acquires twenty percent (20%) or more of the
combined voting power of the outstanding securities of NovaCare having a right
to vote in elections of directors and such acquisition shall not have been
approved within sixty (60) days following such acquisition by a majority of the
Continuing Directors (as hereinafter defined) then in office or (y) acquires
fifty percent (50%) or more of the combined voting power of the outstanding
securities of NovaCare having a right to vote in elections of directors; or
(ii) Continuing Directors shall for any reason cease to constitute
a majority of the Board of Directors of NovaCare; or
(iii) all or substantially all of the business and/or assets of
NovaCare are disposed of by NovaCare to a party or parties other than a
subsidiary or other affiliate of NovaCare, pursuant to a partial or complete
liquidation of NovaCare, sale of assets (including stock of a subsidiary of
NovaCare) or otherwise.
For purposes of this Agreement, the term "Continuing Director" shall
mean a member of the Board of Directors of NovaCare who either was a member of
the Board of Directors on the date hereof or who subsequently became a Director
and whose election, or nomination for election, was approved by a vote of at
least two-thirds of the Continuing Directors then if office.
1.3.2 By NovaCare. NovaCare may terminate this Agreement upon notice to
Manager in the event that:
(a) Manger becomes insolvent (that is, unable to pay its debts as
they mature or in accordance with customary business practice) or commits an act
of bankruptcy, or applies for, consents to, or acquiesces in the appointment of
a trustee or a receiver for it or any of its property, or, in the absence of
such application, consent or acquiescence, a trustee or receiver is appointed
for Manager or for a substantial part of its property and is not discharged
within thirty days thereof, or if any bankruptcy or insolvency proceeding, or
any dissolution or liquidation proceeding, is instituted by or against Manager
and is consented to or acquiesced in by Manager or remains or thirty (30) days
undismissed;
(b) there occurs the termination, cessation or liquidation of
Manager's business;
(c) any representation, warranty or statement of material fact
made or furnished to NovaCare or NovaCare's representatives by or on
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behalf of Manager, or any document, instrument or other paper submitted to
NovaCare or NovaCare's representatives by or on behalf of Manager, is false or
misleading in any material respect; or
(d) Manager fails to perform or observe any material duty,
obligation or covenant contained in this Agreement, and such failure continues
for ten (10) days after written notice thereof is sent to Manager, certified or
registered mail, return receipt requested;
1.3.3 Automatic Termination. This Agreement shall terminate
automatically upon the expiration or earlier termination of the Subscriber
Services Agreement of even date herewith between the parties hereto.
2. Fees.
2.1 Amount of Fees. For services rendered hereunder, NovaCare shall
pay to Manager Manager's direct costs of providing such services, including
salaries of Manager's employees providing such services and out-of-pocket
expenses associated with providing such services.
2.2 Payment of Fees. Fees provided for under Section 2.1 above shall
be invoiced monthly after services have been delivered. NovaCare shall pay such
invoices within thirty days after receipt.
3. Services.
Manager shall advise NovaCare of its Services capabilities. NovaCare
may request access to Services for use in connection with its business. Manager
shall make Services available to NovaCare as reasonably requested, consistent
with Manager's own business needs. Manager shall not be in breach of this
Agreement for failure to make Services available to NovaCare if, in Manager's
reasonable judgement, such Services cannot be made available without adversely
affecting Manager's business, provided that Manager shall make reasonable
efforts to accommodate NovaCare's requests.
4. Insurance. During the Initial Term of this Agreement and any Renewal
Term, NovaCare shall obtain and maintain general liability insurance, and cause
its insurance carrier to issue a Certificate of Insurance evidencing same to
Manager, naming Manager as an additional named insured and allowing not less
than thirty (30) days' notice of cancellation or material change. The minimum
requirement shall be One Million Dollars ($1,000,000) combined single limit,
Three Million Dollars ($3,000,000) aggregate limit, including, but not
limited to, where applicable, premises, operations, products, completed
operations, contract and broad form property damage, independent contractors,
personal injury, host liquor, and full liquor liability.
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5. Miscellaneous.
5.1 Third Party Rights. This Agreement is intended solely for the
mutual benefit of the parties hereto and does not create any rights of any kind
in a third party. Manager reserves the right and from time to time to assign
its rights, duties and obligations hereunder to any affiliate, provided that
Manager shall guarantee the performance and liability of any such affiliate.
5.2 Integration. This Agreement constitutes the entire agreement
between the parties with regard to the subject matter hereof and supersedes any
and all agreements, whether oral or written, between the parties with respect
to its subject matter.
5.3 Waiver. Failure by either party at any time to require
performance by the other party or to claim a breach of any provision of this
Agreement will not be construed as a waiver of any subsequent breach nor affect
the effectiveness of this Agreement, nor any part thereof, nor prejudice either
party as regards to any subsequent action.
5.4 Governing Law. This Agreement shall be subject to the laws of
the Commonwealth of Pennsylvania.
5.5 Dispute Resolution.
5.5.1 Arbitration. The parties shall attempt amicably to resolve
disagreements by negotiating with each other. In the event that the matter is
not amicably settled through negotiation, any controversy, dispute or
disagreement arising out of or relating to this Agreement (a "Controversy")
shall be resolved exclusively by binding arbitration, which shall be conducted
by a single arbitrator in the Philadelphia, PA area, in accordance with the X-X-
M-S/ENDISPUTE Streamlined (in the case of a dispute within the scope of the
Streamlined Rules and Procedures) or Comprehensive Arbitration Rules and
Procedures (the "Rules"). The parties agree that notwithstanding anything to
the contrary contained in the Rules, the arbitrator shall not award
consequential, exemplary, incidental, punitive or special damages.
5.5.2 Procedure. It is agreed that if any party shall desire
relief of any nature whatsoever from any other party as a result of any
Controversy, such party will initiate such arbitration proceedings within a
reasonable time, but in no event more than twelve (12) months after the facts
underlying said Controversy first arise or become known to the party seeking
relief (whichever is later). The failure of such party to institute such
proceedings within said period shall be deemed a full waiver of any claim for
such relief. The parties shall bear equally all costs of said arbitration
(other than their own attorney's fees and costs). The parties agree that the
decision and award of the Arbitrator shall be final and conclusive upon the
parties, in lieu of all
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other legal, equitable (except as provided in 11.5.3. below) or judicial
proceedings between them, and that no appeal or judicial review of the award or
decision of the Arbitrator shall be taken, but that such award or decision may
be entered as a judgment and enforced in any court having jurisdiction over the
party against whom enforcement is sought.
5.5.3. Equitable Relief. The parties recognize that irreparable injury
may result from a breach of this Agreement and that money damages may be
inadequate to fully remedy the injury. Therefore, either party may, in any such
instance, seek and obtain from a court of competent jurisdiction one or more
preliminary or permanent orders designed to maintain the status quo ante
pending arbitration by (i) restraining and enjoining any act that would
constitute a breach or (ii) compelling the performance of any obligation that,
if not performed, would constitute a breach. Any relief awarded under this
paragraph shall be dissolved upon issuance of the Arbitrator's decision and
order.
5.6 NovaCare Intellectual Property Rights. NovaCare shall own any
and all intellectual property rights incident to any and all process, products,
inventions and discoveries that are created or invented by an Employee of
Manager who was directed by NovaCare to create or develop such process,
product, discovery or invention. NovaCare shall bear any and all costs
associated with any copyrights, trademarks or patents that NovaCare chooses to
obtain to protect NovaCare's intellectual property rights.
5.7 Severability. Should any term, warranty, covenant, condition,
or provision of this Agreement be held to be invalid or unenforceable, the
balance of this Agreement shall remain in force and shall stand as if the
unenforceable part did not exist. The captions in this Agreement are provided
for convenience only and are not part of the terms and conditions of this
Agreement.
5.8 Modification and Implementation. Any modifications to this
Agreement must be in writing and executed by NovaCare and Manager to be
enforceable.
5.9 No Partnership. Nothing set forth herein shall be deemed to
create a partnership or joint venture between Manager and NovaCare and no
fiduciary duty shall arise from the relationship created herein.
5.10 Counterparts. This Agreement may be signed in one or more
counterparts, each of which when executed shall be deemed an original and
together shall constitute one and the same instrument.
5.11 Intention of the Parties. The intention of the parties with
respect to allocation between them of rights, duties and obligations is as set
forth in this Agreement. To the extent that the law of any state requires a
different form of
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agreement to effect the intention of the parties, the parties agree to
negotiate in good faith and to execute separate agreements applicable to such
state.
NOVACARE, INC. NOVACARE EMPLOYEE
SERVICES, INC.
/s/ Xxxxxxx X. Xxxxxx January 25, 1997 /s/ Xxxxx X. Xxxxxx January 25, 1997
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Signature Date Signature Date
Xxxxxxx X. Xxxxxx Xxxxx X. Xxxxxx
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Printed or Typed Name Printed or Typed Name
President President
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Title Title
Management Services
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