EXHIBIT 10.35
LONG TERM CARE FACILITY
MANAGEMENT AGREEMENT
NC HEALTH CARE - ARCHDALE, INC.
THIS MANAGEMENT AGREEMENT (the "Agreement") made as of the 30th day of
June, 1996, by and between NC HEALTH CARE - ARCHDALE, INC., a Georgia
corporation ("Owner") and WELCARE INTERNATIONAL MANAGEMENT CORPORATION
("Manager")
W I T N E S S E T H :
WHEREAS, the Owner presently owns or leases (pursuant to a long term
lease) real and personal property comprising a certain 88 bed nursing home
facility known as Xxxxxxxxxx of Archdale, located in Xxxxxxxx County, North
Carolina (the "Facility"); and
WHEREAS, the Owner desires to retain Manager under the terms of this
Agreement to provide its experience, skill and supervision to manage the
Facility on behalf of Owner; and
WHEREAS, Manager desires to perform the management services on behalf of
Owner under and subject to the terms of this Agreement.
NOW, THEREFORE, in consideration of ten dollars ($10.00) in hand paid, the
premises and mutual promises and covenants of the parties contained herein and
other good and valuable consideration, the receipt, adequacy and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
MANAGEMENT DUTIES AND OBLIGATIONS
1.01 Control Retained by Owner. Owner shall at all times exercise overall
control over the assets and operations of the Facility, and Manager shall
perform the duties herein required to be performed by it as the agent of Owner
and in accordance with the policies and directives from time to time adopted by
Owner.
1.02 Changes in Method of Operation. Manager shall make substantial
changes in the method of operating the Facility only after timely notification
to and approval from Owner which approval shall not be unreasonably withheld.
1.03 Management of Facility. During the term of this Agreement, Manager
shall on behalf of Owner manage all aspects of the operation of the Facility,
including, but not limited to staffing, accounting, billing, collections,
setting of rates and charges and general administration. In connection
therewith, Manager (either directly or through supervision of employees of the
Facility) shall:
(a) Hire on behalf of Owner and retain (to the extent such personnel
are reasonably available in the community in which the Facility is located) an
adequate staff of nurses, technicians, nurse aides, office and other employees,
including a qualified administrator (the "Administrator") and shall promote,
direct, assign and discharge all such employees on behalf of Owner at Manager's
sole discretion. All employees shall be employees
of the Owner and carried on the payroll of the Facility and shall not be deemed
employees or agents of Manager.
(b) Institute and amend, from time to time, general salary scales,
personnel policies and appropriate employee benefits for all employees on behalf
of Owner. Employee benefits may include pension and profit sharing plans,
insurance benefits, incentive plans for key employees and holiday, vacation,
personal leave and sick leave policies.
(c) Issue appropriate bills for services and materials furnished by
the Facility and use its reasonable best efforts to collect accounts receivable
and monies owed to the Facility, design and maintain accounting, billing,
patient and collection records; and prepare and file insurance, Medicare,
Medicaid and any and all other necessary or desirable reports and claims related
to revenue production. Owner hereby grants Manager the right to enforce Owner's
rights as creditor under any contract or in connection with rendering any
services for purposes of collecting accounts receivable and monies owed the
Facility.
(d) Order, supervise and conduct a program of regular maintenance
and repair, except that physical improvements costing more than $10,000 shall be
subject to approval of Owner.
(e) Purchase food, beverage, medical, cleaning and other supplies,
equipment, furniture and furnishings for the account of Owner, except that the
purchase of any single item which costs more than $5,000 shall be subject to
approval by Owner.
(f) Administer, supervise and schedule all patient and other
services of the Facility, including the operation of food, xxxxxx/beautician and
other ancillary services.
(g) Provide for the orderly payment (to the extent funds of Owner
are available therefor) of accounts payable, employee payroll, amounts due on
short and long-term indebtedness, taxes, insurance premiums, and all other
obligations of the Facility.
(h) Institute standards and procedures for admitting patients, for
charging patients for services, and for collecting the charges from the patients
or third parties.
(i) Obtain and maintain insurance coverage for the Facility naming
Owner, Manager and such other persons requested by Owner as insureds as provided
in Section 4.01 hereof.
(j) Negotiate and enter into, in the name of and on behalf of Owner,
such agreements, contracts and orders as Manager may deem necessary or
advisable, for the furnishing of services, concessions and supplies for the
operation and maintenance of the Facility.
(k) Negotiate on behalf of Owner (and in conjunction with Owner's
counsel) with any labor union lawfully entitled to represent employees of Owner
who work at the Facility, but any collective bargaining agreement or labor
contract must be submitted to Owner for its approval and execution.
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(1) Assist in maintaining all licenses and permits required for the
operation of the Facility, its contracts with third party payors and other
similar governmental and non-governmental agencies and intermediaries.
(m) Make periodic evaluations of the performances of all departments
of the Facility.
(n) Design, establish and maintain a suitable accounting system
using accounts and classifications consistent with those used in similar
facilities.
(o) Advise and assist Owner in designing an adequate and appropriate
public relations program.
1.04 Reports to Owner.
(a) Manager shall prepare and deliver to Owner, within forty-five
(45) days after the close of each calendar month, unaudited financial statements
covering such prior month and containing a balance sheet and statement of income
and expenses in reasonable detail. Manager shall also provide any required
assistance to the independent accountants for the Facility, who shall be
selected by Manager and approved by Owner, in the preparation of unaudited (or
audited if so requested by Owner) financial statements for the operation of the
Facility. Such financial statements shall be prepared at Owner's expense in
accordance with generally accepted accounting principles in the health care
field consistently applied and delivered to Manager and Owner promptly after the
end of each fiscal year of the Facility.
(b) Manager shall submit to Owner each twelve (12) months a proposed
budget for the operation of the Facility setting out anticipated income,
expenses and capital expenditures during the succeeding twelve (12) month
period, and shall use reasonable efforts to operate the Facility in accordance
with the provisions of the budget for the Facility submitted to and approved by
Owner. Such proposed budget for the Facility shall be delivered to Owner no
later than thirty (30) days prior to the commencement of the operational fiscal
year of the Facility.
(c) Manager shall schedule periodic management meetings to be
attended by representatives of both Manager and Owner no less frequently than
semi-annually and shall furnish to Owner semi-annual written progress reports
concerning the operation of the Facility.
1.05 Bank Accounts and Working Capital. Manager, in the Facility's name
and on behalf of Owner, shall deposit in a bank account or accounts of the
Facility (the "Operating Accounts") established in Owner's name all funds
received from the operations of the Facility. Owner shall provide sufficient
working capital for the operation of the Facility and shall make deposits in the
Operating Account of such working capital from time to time upon the request of
Manager. All costs and expenses incurred in the operation of the Facility shall
be paid out of the Operating Accounts. Manager shall specify with the approval
of the Owner the signatory or signatories required on all checks or other
documents of withdrawal for the Operating Accounts.
1.06 Access to Books, Records and Documents. If it is ultimately
determined that Section 952 of the Omnibus Reconciliation Act of 1980 and final
regulations promulgated thereunder apply to this Agreement:
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(a) Until the expiration of four years after the furnishing of
services pursuant to this Agreement, Manager shall, as provided in Section 952,
make available, upon written request, to the Secretary of Health and Human
Services, or upon request, to the Comptroller General of the United States, or
any of their duly authorized representatives, this Agreement, and all books,
documents and records of Manager that are necessary to verify the nature of this
Agreement for which payment may be made under the Medicare program; and
(b) If Manager carries out any of the duties of this Agreement
pursuant to a subcontract or subcontracts with an aggregate value or cost of
$10,000 or more over a twelve (12) month period with a related organization,
such subcontract or subcontracts shall contain a clause to the effect that,
until the expiration of four years after the furnishing of such services
pursuant to such subcontract or subcontracts, the related organization shall, as
provided in Section 952, make available, upon written request, to the Secretary
of Health and Human Services, or upon request, to the Comptroller General of the
Untied States, or any of their duly authorized representatives, the subcontract
or subcontracts, and all books, documents and records of such subcontractors for
which payment may be made under the Medicare program.
1.07 Licenses.
(a) Manager shall, on behalf of Owner, use its reasonable best
efforts to apply for, obtain and maintain all necessary licenses, permits,
consents, and approvals from all governmental agencies which have jurisdiction
over the operation of the Facility.
(b) Neither Owner nor Manager shall knowingly take any action or
fail to take any action which may (1) cause any governmental authority having
jurisdiction over the operation of the Facility to institute any proceeding for
the rescission or revocation of any necessary license, permit, consent or
approval, or (2) adversely affect Owner's right to accept and obtain payments
under Medicare, Medicaid, or any other public or private third party medical
payment program.
(c) Manager shall, with the written approval of Owner, have the
right to contest by appropriate legal proceedings, diligently conducted in good
faith in the name of Owner, the validity or application of any law, ordinance,
rule, ruling, regulation, order or requirement of any governmental agency having
jurisdiction over the operation of the Facility. Owner, after having given its
written approval, shall pay attorneys' fees incurred with regard to the contest.
Counsel for any such contest shall be selected by Manager and approved by Owner.
Manager shall have the right, without the written consent of the Owner, to
process all third-party claims for the services of the Facility, including,
without limitation, the full right to contest to the exhaustion of all
applicable administrative proceedings or procedures, adjustment and denials by
governmental agencies or their fiscal intermediaries as third-party payors.
1.08 Administrator. Manager shall employ for the Facility an Administrator
reasonably acceptable to Owner, to serve as the chief executive officer of such
Facility. The Administrator shall be an employee of and shall be compensated by
Owner and Owner shall pay, in advance, on or before the fifth (5th) day of each
month all compensation, including salary, fringe benefits, bonuses and business
expense reimbursements approved by Manager, payable to the Administrator. The
term "fringe benefits" shall include, without limitation, employer's F.I.C.A.
payments, unemployment compensation and other employment taxes,
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bonuses, vacation, personal and sick leave benefits, workers' compensation,
group life, health and accident insurance premiums and disability and other
benefits.
1.09 Taxes. Any federal, state or local taxes, assessments or other
governmental charges properly imposed on the Facility are the obligations of the
Owner, not of Manager, and shall be paid out of the Operating Accounts of the
Facility. With the Owner's prior written consent, Manager may contest the
validity or amount of any such tax or imposition on the Facility in the same
manner as described in Section 1.07(c) hereof.
1.10 Use of Manager's Personnel. An authorized representative of Manager
shall visit the Facility as often as Manager deems necessary. The time spent by
such authorized representative of Manager during such visits and all
out-of-pocket expenses arising from travel and lodging connected with such
visitations shall not be charged separately to Owner.
1.11 Government Regulations. Manager agrees to operate and maintain the
Facility in substantial compliance with the requirements of any material
statute, ordinance, law, rule, regulation or order of any governmental or
regulatory body having jurisdiction over the Facility and to comply with all
orders and requirements of the local board of fire underwriters or any other
body which may exercise similar functions; provided, however, that Manager shall
not be required to expend any funds in order to comply with any such statutes,
ordinances, laws, rules, regulations or orders, and to the extent any funds are
so required, it shall fulfill its obligations hereunder by notifying Owner of
the actions necessary in order to be in compliance therewith.
1.12 Quality Controls. Manager shall activate and maintain on a continuing
basis a "Quality Assurance Program" to provide objective measurements of the
quality of health care provided at the Facility and, in connection therewith,
shall utilize such techniques as patient questionnaires and interviews,
physician questionnaires and interviews, and inspections.
1.13 Staff Specialists. In addition to the other managerial services
provided for herein, Manager shall make available to the Facility, for
consultation and advice, when necessary, specialists in such fields as
accounting, auditing, budgeting, dietary services, environmental control,
management, maintenance, nursing, personnel, pharmacy operations, public
relations, purchasing, quality assurance, systems and procedures, and
third-party reimbursement.
1.14 Performance of Services by Manager. In the performance of its
services hereunder, Manager shall exercise the same standards and degree of care
used by reasonable and prudent managers of nursing homes of similar size, nature
and character as the Facility. Notwithstanding anything herein to the contrary,
Manager shall not be deemed in violation of this Agreement if Manager is
prevented from performing any of its obligations hereunder for any reason beyond
its reasonable control including, without limitation, strikes, walkouts or other
employee disturbances, acts of God, or the action or promulgation of any
statute, rule, regulation or order by any federal, state, or local governmental
or judicial agency or official, nor shall it be deemed in default hereunder or
otherwise liable for any error of judgment or act or omission in the performance
of its services hereunder, which is made in reasonable good faith, except for
its wilful default or gross negligence.
1.15 Extraordinary Services. Owner agrees that any extraordinary or
specialized service recommended by Manager and approved by Owner, even if
provided by Manager, may
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be performed for a separate fee as agreed upon by Manager and Owner in advance
of the performance of such service.
ARTICLE II
TERM AND TERMINATION
2.01 Term. The term of this Agreement shall commence on the date of this
Agreement and, unless sooner terminated as provided herein, shall end on January
31, 2006. Notwithstanding anything to the contrary herein contained, in the
event of default under the applicable Regulatory Agreement with the Federal
Housing Commissioner this Agreement shall be subject to termination in
accordance with the provisions of such Regulatory Agreement without penalty upon
written request of the Federal Housing Commissioner.
2.02 Option to Extend Term. Manager shall have the option to extend the
term of this Agreement for two (2) additional periods of five (5) years each, by
giving written notice to Owner of Manager's exercise of such right and option
not later than three (3) months prior to the end of the original term hereof or
the term hereof as previously extended. Each and all of the provisions of this
Agreement shall apply during the extended term(s) of this Agreement.
2.03 Termination for Cause.
(a) If either party shall apply for or consent to the appointment of
a receiver, trustee or liquidator of such party of all or a substantial part of
its assets, file a voluntary petition in bankruptcy, make a general assignment
for the benefit of creditors, file a petition or an answer seeking
reorganization or arrangement with creditors or take advantage of any insolvency
law, or if an order, judgment or decree shall be entered by any court of
competent jurisdiction, on the application of a creditor, adjudicating such
party bankrupt or insolvent or approving a petition seeking reorganization of
such party or appointing a receiver, trustee or liquidator for such party or all
or a substantial part of its assets, and such order judgment or decree shall
continue unstayed and in effect for any period of one hundred and twenty (120)
consecutive days, then, in case of any such event, the term of this Agreement
shall expire, at the other party's option, upon five (5) days written notice.
(b) If Owner or Manager shall fail to keep, observe or perform any
material covenant, agreement, term or provision of this Agreement to be kept,
observed, or performed by such party, and such default shall continue for a
period of thirty (30) days, (or ten (10) days in the case of a failure to pay
any amounts due Manager under this Agreement) after notice thereof by one party
to the other, then, in case of any such event and upon the expiration of any
period of grace applicable thereto, the term of this Agreement shall expire, at
the option of the nondefaulting party, upon five (5) days written notice to the
other party. Such termination shall be without prejudice to Manager's right to
receive management fees under Article III hereof through the end of the month in
which such termination becomes effective.
2.04 Optional Termination.
(a) Either party has the option to terminate this Agreement, without
damage or penalty, upon ten (10) days prior written notice to the other, upon
the occurrence of either of the following events:
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(i) The Facility or any material portion thereof is damaged
or destroyed to the extent that in the written opinion of an independent
architect or engineer reasonably acceptable to both parties (x) it is not
practicable or desirable to rebuild, repair or restore the Facility within
a period of six (6) months to its condition immediately preceding such
damage, or (y) the conducting of normal operations of the Facility would
be prevented for a period of six (6) months or more; or
(ii) Title to or the temporary use of all or substantially all
the Facility is taken under the exercise of the power of eminent domain by
any governmental authority or person, firm or corporation acting under
governmental authority which in the opinion of an independent architect or
engineer reasonably acceptable to both parties prevents or is likely to
prevent the conducting of normal operations at the Facility for a period
of at least six (6) months.
Provided, however, that in either of such events, if Owner or any
affiliate thereof rebuilds, restores or otherwise rearranges the Facility and
recommences operations thereof, Owner shall give Manager the first option to
manage the Facility under the same terms, conditions, and fees as provided
herein.
(b) Manager shall have the option to terminate this Agreement
without damage or penalty upon ten (10) days prior written notice to the Owner
following the sale, transfer, assignment, or other disposition, in whole or in
part, by the Owner of its interest in the Facility. In the event Owner is a
corporation, any dissolution, merger, consolidation or other transfer of a
substantial portion of the stock of Owner shall constitute an assignment of the
Facility for all purposes of this Section 2.04(b). The term "substantial
portion" means the ownership of stock possessing, and of the right of exercise,
at least fifty percent (50%) of the total combined voting power of all classes
of stock of such corporation, issued, outstanding and entitled to vote for the
election of directors whether such ownership is direct ownership, or indirect
ownership through ownership of stock possessing, and of the right to exercise,
at least fifty percent (50%) of the total combined voting power of all classes
of stock of another corporation or corporations; provided, however, that this
prohibition on stock transfer shall not apply to a "publicly traded
corporation," which term is hereby defined for all purposes under this Agreement
as a corporation whose shares of stock have been registered pursuant to the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, or the state securities laws pursuant to an exemption from the
aforementioned statutes.
ARTICLE III
MANAGEMENT FEE
3.01 Management Fee. Effective as of the date of this Agreement and for
the remainder of the term, Manager shall receive from Owner, and Owner shall pay
to Manager, each month during the term hereof, as the amount due for services, a
management fee equal to six percent (6%) of the Gross Revenues of the Facility.
"Gross Revenues" shall mean, for the Facility, total revenues of such Facility,
including, without limitation, all ancillary fees, charges, rentals and other
revenue derived in any way from the operation of such Facility, on
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an accrual basis, after deduction of allowances for contractual adjustments as
they relate to third-party payors and before deduction of any and all expenses.
3.02 Payment of Management Fees. On or before the tenth (10th) day of each
month during the term hereof, Owner shall be obligated to pay Manager an
estimated management fee, calculated in accordance with Section 3.01 hereof,
based on the estimated Gross Revenues of the Facility during the current month.
All management fees due hereunder shall be withdrawn from the Operating Accounts
and paid to Manager. Any late payments of management fees not made after three
(3) days written notice to Owner shall bear interest equal to the Advance Rate
(as defined in Section 5.11 hereof) from their original due date until fully
paid.
3.03 Adjustment. Within fifteen (15) days after the delivery of the annual
financial statements of the Facility, Owner shall pay to Manager or Manager
shall pay to Owner such amount as is necessary to make the amount of the
management fees paid with respect to the year to which the financial statements
relate equal to the amount of management fees shown to be due by the annual
audit.
ARTICLE IV
COVENANTS OF OWNER
4.01 Insurance. Manager shall provide and maintain, on behalf of Owner and
at Owner's expense, throughout the term of this Agreement, insurance with
responsible companies naming Owner and Manager (as their respective interests
may appear) as insureds in the minimum amounts and covering the risks described
below:
(a) Comprehensive public liability insurance, including personal
injury or death and property damage in the combined single limit of not less
than $500,000.00;
(b) Workmen's compensation, employers' liability or similar
insurance as may be required by law;
(c) Insurance against loss or damage to the Facility from fire,
lightning and such other risks and casualties now or thereafter covered by the
uniform standard form of extended coverage insurance endorsement then in use in
the State of North Carolina and against loss or damage with respect to all
boilers and pressure vessels and pressure pipes, if any, installed in the
Facility and, if the Facility is located within a 100 year flood plain
designated by the Untied States Army Corps of Engineers, against loss or damage
due to floods to be maintained under the National Flood Insurance Program or
under comparable commercial insurance programs; all such policies being in an
amount not less than ninety percent (90%) of the actual replacement cost of the
Facility as determined every two (2) years by the Owner;
(d) Professional liability insurance against claims for bodily
injury or death or otherwise arising out of the operations of the Facility, such
insurance to afford minimum protection of not less than $500,000.00 with respect
to bodily injury or death to any one person;
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(e) Automobile liability insurance covering owned, hired and
non-owned vehicles, such insurance to afford minimum protection of not less than
$500,000.00 for bodily injury or death to any one person in any one accident
(subject to a maximum recovery by all persons in any one accident of
$500,000.00) and $50,000.00 for damage to property (including loss of the use
thereof) in any one accident;
(f) Business interruption insurance in an amount sufficient to cover
the estimated management fees payable hereunder and all other fixed expenses of
the Facility for a period of not less than six (6) months;
(g) Employee fidelity bond or insurance, including comprehensive
coverage for dishonesty, disappearance and discrepancy for all employees of
Owner; and
(h) Such other insurance or additional insurance as both Manager and
Owner shall reasonably deem necessary for protection against claims, liabilities
and losses arising from the operation or ownership of the Facility.
The insurance specified above for the Facility may be provided by any
combination of underlying and umbrella policies, which policies may also cover
other facilities owned, leased or managed by Manager or its affiliates. No
policy shall have deductible provisions in excess of $10,000.00, plus, if an
umbrella policy, the amount of the underlying policy.
4.02 Licensing; Changes and Services. Owner agrees to take or cause to be
taken any and all actions necessary to be taken by it as the overall supervisor
of the assets and operations of the Facility in order to maintain all required
licenses, permits for the operation of the Facility and the Facility's
eligibility to participate in all public or private third-party medical payment
programs, including providing sufficient funds to bring the Facility in
compliance with all applicable fire safety codes and other laws, regulations and
orders, and to correct all structural, maintenance, procedural and staffing
deficiencies as shown on the surveys and reports of governmental agencies having
jurisdiction over the Facility. Owner agrees that it will not, through the
exercise of its overall supervisory powers, substantially change the services
rendered by the Facility during the term hereof without the prior written
approval of Manager.
Nothing contained in this Section 4.02 shall affect the duties and
obligations of Manager with regard to the applying for, obtaining and
maintaining all necessary governmental licenses, permits, consents and approvals
set forth in Section 1.07 hereof.
4.03 Transfer of Ownership. Owner further acknowledges and agrees that
upon the transfer, lease, assignment, sale or other disposition or conveyance of
all or any part of its ownership of the Facility, this Agreement shall remain in
full force and effect unless otherwise terminated as provided in Section
2.04(b). Owner covenants and agrees that in the event that it sells, assigns or
otherwise transfers its ownership of the Facility at any time while this
Agreement is in effect, it will require the transferee to assume the obligations
of the Owner hereunder.
4.04 Damage or Destruction. If the Facility or any portions thereof shall
be damaged or destroyed by fire or other casualty, Owner shall commence to
repair, restore, rebuild or replace any such damage or destruction within sixty
(60) days after such fire or other casualty
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and shall proceed with due diligence to complete such work within a reasonable
period of time.
ARTICLE V
MISCELLANEOUS COVENANTS
5.01 Assignment. Owner shall not assign its rights and/or obligations
under this Agreement without the prior written consent of Manager, except to
Owner's construction or permanent lender, in the event of foreclosure of such
lender's mortgage against the Facility; provided, however, that such lender or
lenders shall first agree in writing to assume and be bound by Owner's
obligations hereunder. Manager shall not assign its rights and/or obligations
under this Agreement, except to an affiliate of Manager, without prior written
consent of Owner.
5.02 Binding Agreement. The terms, covenants, conditions, provisions and
agreements herein contained shall be binding upon and inure to the benefit of
the parties hereto, their successors and assigns.
5.03 Relationship of Parties. Nothing contained in this Agreement shall
constitute or be construed to be or to create a partnership, joint venture or
lease between Owner and Manager with respect to the Facility.
5.04 Notices. All notices, demands and requests contemplated hereunder by
either party to the other shall be in writing, and shall be delivered by hand,
transmitted by cable, telegram or telecopy (receipt confirmed), or mailed,
postage prepaid, registered, or certified mail return receipt requested:
(a) to Owner, by addressing the same to:
NC Health Care - Archdale, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
(b) to Manager, by addressing the same to:
WelCare International Management Corporation
0000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Mr. J. Xxxxxxx Xxxxx, President
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With a copy to:
Xxxx X. Xxxxxx, Esquire
Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.
0000 Xxxxxxxxx Xxxxxx, 000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
or to such other address or to such other person as may be designated by notice
given from time to time during the term of this Agreement by one party to the
other. Any notice hereunder shall be deemed given five (5) days after mailing,
if given by mailing in the manner provided above, or on the date delivered or
transmitted if given by hand, cable, telegraph or telecopy (receipt confirmed).
5.05 Entire Agreement; Amendments. The Agreement contains the entire
agreement between the parties hereto, and no prior oral or written, and no
contemporaneous oral representations or agreements between the parties with
respect to the subject matter of this Agreement shall be of any force and
effect. Any additions, amendments or modifications to this Agreement shall be of
no force and effect unless in writing and signed by both Owner and Manager.
5.06 Governing Law. This Agreement has been executed and delivered in the
State of Georgia, and all the terms and provisions hereof and the rights and
obligations of the parties hereto shall be governed by, and construed and
enforced in accordance with, the laws of the State of Georgia (without regard to
its rules of conflicts of laws).
5.07 Captions and Headings. The captions and headings throughout this
Agreement are for convenience and reference only and do not constitute a part
hereof.
5.08 Disclaimer of Employment of Facility Employees. No person employed in
the operation of the Facility will be an employee of Manager, and Manager will
have no liability for payment of their wages, fringe benefits, payroll taxes and
other expenses of employment.
5.09 Costs and Expenses; Indemnity. All fees, costs and expenses arising
out of, relating to or incurred in the operation of the Facility, including,
without limitation, the fees, costs, and expenses of outside consultants and
professionals, shall be the sole responsibility of Owner. Manager, by reason of
the execution of this Agreement or the performance of its services hereunder,
shall not be liable for or deemed to have assumed any liability for such fees,
costs and expenses, or any other liability or debt of Owner whatsoever, arising
out of or relating to the Facility or incurred at its operation, except the
salary of Manager's employees and the expenses and costs incurred at its central
administrative offices in performance of its obligations hereunder. Owner agrees
to indemnify and hold Manager and its officers, directors, agents and employees
harmless from and against all losses, claims, damages or other liabilities,
including the costs and expenses incurred in connection therewith, arising out
of or relating to the ownership of the Facility (except those resulting from the
wilful misconduct or gross negligence of Manager), including, without
limitation, any liability asserted against Manager or any of its officers,
directors, employees or agents by reason of any action taken by any of the
foregoing while performing the duties of Manager hereunder on behalf of Owner.
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5.10 Responsibility for Misconduct of Employees and Other Persons. Manager
will have no liability whatsoever for damages suffered on account of the
dishonesty, misconduct or negligence of any employee of the Facility or any
officer, director, partner, stockholder, employee or agent of Owner. Manager
shall be liable to the Facility in connection with damage or loss directly
sustained by Owner by reason of the dishonesty, wilful misconduct and gross
negligence of Manager's employees in the operation of the Facility during the
term of the Agreement.
5.11 Advances by Manager. Manager shall have the right, but not the
obligation, to advance to Owner any and all sums required to maintain all
necessary licenses and permits and to otherwise keep the Facility operating as a
fully insured nursing home in good condition and repair. All such sums advanced
by Manager to Owner shall be repaid by Owner, with interest commencing on the
date such sums were advanced at a rate equal to the announced prime rate of
interest of NationsBank, N.A., Atlanta, Georgia, plus two percent (2%) per annum
("Advance Rate"), immediately upon written notice thereof to Owner, and Manager
shall have the right at any time and from time to time to instruct the
signatories of the Operating Accounts to withdraw and pay to Manager amounts
necessary in order to repay such advances.
5.12 Definition of Affiliate. For purposes of this Agreement, the term
"affiliate" shall mean any person or entity which Manager or Owner or their
respective stockholders or individual partners, directly or indirectly, through
one or more intermediaries, controls, is in common control with, or is
controlled by.
5.13 Authorization of Agreement. Manager and Owner represent and warrant,
each to the other with respect to itself, that the execution and delivery of
this Agreement has been duly authorized by all respective action, will not
presently or with the passage of time, the giving of notice, or both result in a
default under or violate or conflict with (i) the provisions of the articles of
incorporation and bylaws of Manager or Owner, or (ii) any other agreement,
mortgage, loan agreement or other contract or instrument by which either party
is bound or to which any of its property or assets are subject, or (iii) any
existing law, regulation, court order or consent decree by which either party is
bound or to which any of its property or assets are subject.
ARTICLE VI
RIGHT OF FIRST REFUSAL
6.01 Owner shall not sell, lease or enter into an agreement for the
provision of management services to the Facility, nor cause or allow the
aforesaid to occur, without first offering the same to Manager in accordance
with the terms and provisions hereof.
6.02 In the event Owner (a) determines to sell or lease the Facility, or
to contract for the provision of management services for the Facility, or (b)
receives from a third party a bona fide offer to purchase, lease or provide
management services to the Facility, which Owner desires to accept, Owner shall,
prior to selling, leasing or contracting for management services, provide
Manager written notice of intention to sell, lease or contract for management
services, or of such offer, as applicable (herein called a "Notice of Offer").
In each event described above, Owner agrees that Manager shall have the primary
right, at its election, to purchase, lease or provide management services, as
the case may be, which option shall be
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exercised by Manager providing written notice of exercise thereof to Owner
within thirty (30) days after Manager's receipt of the Notice of Offer. If,
however, Manager does not elect to exercise such option, then Owner may, at any
time within sixty (60) days after expiration of the offer period, enter into a
contract for the sale or lease of the Facility or the provision of management
services to the Facility with a bona fide third-party service-provider. If Owner
so contracts with such a third party, such third-party shall enter such contract
free and clear of the rights of Manager set forth herein, and in such event,
Manager agrees to execute such release or other instrument as may reasonably be
requested by Owner, but any part of the contract rights which is retained or
reserved by Owner shall remain subject to Manager's right of first refusal as
set forth herein.
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IN WITNESS WHEREOF, the parties hereto have executed, sealed and delivered
this Agreement through their duly authorized representatives, as of the day and
year first above written.
NC HEALTH CARE - ARCHDALE, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxx
President
WELCARE INTERNATIONAL MANAGEMENT
CORPORATION
By: /s/ Xxxx X. Xxxx
-----------------------------------
Xxxx X. Xxxx
Executive Vice President
and Chief Financial Officer
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SCHEDULE 10.35
CHMC has entered into agreements substantially identical to Exhibit 10.35
as follows:
1. Long Term Care Facility Management Agreement dated June 30, 1996 with
NC Health Care - Albemarle, Inc. for Stanly County, North Carolina facility.
2. Long Term Care Facility Management Agreement dated June 30, 1996 with
NC Health Care - Xxxxxxx, Inc. for Cherokee County, North Carolina facility.
3. Long Term Care Facility Management Agreement dated June 30, 1996 with
NC Health Care - Gates, Inc. for Gates County, North Carolina facility.
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