MANAGEMENT AGREEMENT
(CAREMATRIX/NEEDHAM, MA)
This MANAGEMENT AGREEMENT (the "Agreement") is dated as of the day of
June, 1996, by and among CareMatrix of Massachusetts, Inc., a Delaware
corporation, with its principal place of business in Needham, Massachusetts
("CareMatrix"), and Continuum Care of Needham, Inc., a Delaware corporation,
with its principal place of business in Needham, Massachusetts (the "Owner").
WHEREAS, the Owner is the owner and operator of a one hundred forty-two
(142) bed skilled nursing facility located in Needham, Massachusetts (the
"Facility");
WHEREAS, the Owner has 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 health care facilities, is knowledgeable as to the state
and federal requirements governing the licensure, operation, accreditation and
reimbursement of health care facilities and that the owners and employees of
Manager are qualified health care professionals;
WHEREAS, based upon the Manager's representatives 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 high quality care to the patients
at the Facility at the lowest cost;
WHEREAS, the Owner has determined that the services to be provided by the
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, supervise and
operate the Facility with the objective of providing quality care to patients 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
determination of the Administrator, and Director of Nursing Services) all
personnel involved in the administration and day-to-day operation of the
Facility, including, without limitation, management, medical, nursing and other
health care personnel, custodial, food service, cleaning, maintenance and other
operational personnel, and secretarial or bookkeeping personnel, each of whom
shall be employees of the Owner; provided centralized accounting, billing,
purchasing and xxxx 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 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 patient 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 regulatory and rate-setting authorities (including
preparation and submission of reports for reimbursement), creditors, patients,
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 patient
census at a proper level; and to all other things necessary or proper for the
daily operation and management of the Facility, including everything necessary
to ensure compliance with the rules and regulations all applicable governmental
agencies, with Medicare and Medicaid requirements applicable to nursing homes,
and with any other local, state, federal or JCAHO requirements governing or
applicable to nursing 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 Administrator to review
financial and operational statistics of the Facility. The Administrator also
will attend monthly regional administrator meetings and educational programs.
The Manager further agrees that it will:
(i) perform its duties and responsibilities hereunder in compliance with
all applicable laws, subject to the responsibilities of the Owner as the
licensee of the Facility;
(ii) supervise and direct the management and operation of the Facility,
exercising the degree of care used by an experienced management company, given
the financial resources available to the
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Facility, the location of the Facility, the restrictions of applicable laws,
and other existing circumstances; and
(iii) consult with the Owner and keep the Owner advised as to all major
policy and business matters relating to the Facility.
1.1 Opinion of Counsel. The Manager shall have the duty to consult with
counsel for the Owner whenever questions arise as to the meaning and
interpretation of the phrase "relating to patient care" as such phrase is used
above with reference to the submission of expenses for reimbursement pursuant to
applicable state or federal statutes or regulations relating to entitlement
programs. The Manager shall be entitled to rely upon any such opinion when
rendered by counsel.
2. Specific Duties. Without limiting the generality of the foregoing, the
Manager shall have the following specific duties:
2.1 Employees. The Manager shall recruit, evaluate, select, and hire,
on behalf of the Owner, a qualified and properly licensed Administrator 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 on-site medical, nursing, custodial, food service, cleaning,
maintenance, secretarial and bookkeeping personnel for the day-to-day
operations of the Facility. The Administrator and all such other personnel
shall be employees of the Owner, and the Owner shall retain full
responsibility for payment of their wages, salaries and other compensation
and benefits. 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 Administrator, the Executive Director and the Director
of Nursing Services, which approval shall not be unreasonably withheld or
delayed. The Manager shall: (i) maintain payroll records and prepare weekly
and monthly payrolls, withholding taxes and Social Security taxes; (ii)
prepare and submit all required state and federal tax or benefit returns
required with respect to employees, including, without limitation, the
returns required by FICA, FUTA and all applicable unemployment compensation
laws; (iii) maintain in force all required levels of workers' compensation
insurance; and (iv) prepare and submit to the Owner any certificates of
payroll expenses as may be reasonably requested. The Manager shall not be
liable to any employee of the Facility for wages, salaries and other
compensation and benefits, or to the Owner, unless the Manager was
specifically required to obtain the approval of the Owner before committing
to a salary or benefit and such approval was not obtained. The Manager
shall not be liable to the Owner or others for any action or omission on
the part of any employee of the Owner of the Facility, unless the employee
was acting under the express direction of the Manager or unless such
employee was following an express policy or procedure of the Manager, which
policy or procedure is subsequently determined to be incorrect. The Manager
shall provide the Owner with monthly reports of all hiring, disciplinary
actions, promotions and firings at the Facility for the month.
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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 contacts 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 Three Thousand ($3,000) Dollars, the Manager shall obtain the prior
written approval of the Owner; and provided further, that no such prior
written approval shall be required if the expenditure is made under
circumstances reasonably requiring emergency action (so long as the Manager
attempts to notify the Owner on a concurrent basis). The Manager shall
prepare and submit to the Owner any certificates of purchasing expenses
incurred for the Facility as may be reasonably requested.
2.3 Collection of Accounts. The Manager shall prepare and submit bills
and collect for the account of the Owner any and all moneys owing to the
Owner, whether from patients or third party payors such as Medicare or
Medicaid.
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 and in accordance with all requirements of Medicare
and Medicaid or other third party payors. 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 be open for inspection
by representatives of the Owner. The Manager shall be responsible for
filing all local, state and federal tax returns relating to the operation
of the Facility, with the exception of corporate income tax and pension
returns, and shall be responsible for penalties, interest, and audit costs
arising out of late, inaccurate, or incomplete filings or the Manager's
failure to file such tax returns provided, however, that the Owner makes
available sufficient funds for payment of any taxes due).
2.5 Financial Reports. The Manager shall furnish to the Owner the
following financial reports:
(a) as soon as possible and not later than thirty (30) days after the
close of each calendar month, a balance sheet as of the end of the month
and a statement of income and retained earnings for the month and for the
year-to-date, together with a comparison to the budget and a detailed
statement of receipts, disbursements, accounts payable and accounts
receivable as of the end of such monthly period; provided, however, that
the computer services charges connected with the preparation of such
information shall not be an expense of the Owner;
(b) as soon as possible, and not later than sixty (60) days after the
close of each fiscal year, a year-end compilation report, including a
balance sheet as of the end of such year and a statement of income and
retained earnings;
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(c) as soon as possible after the close of the year for rate-setting
purposes and not later than the applicable deadline, a year-end cost report
showing cost and expenditures relating to patient care; such report shall
be, in all respects, in compliance with the requirements of Medicare,
Medicaid or any other third party payor to whom the Owner may be obligated
to furnish reports and in a form suitable for submission to the state of
such third party payor;
(d) such other and further reports or calculations as may be required
under any financing terms in accordance with the deadlines set forth in any
financing agreements encumbering the Facility (any such financing agreement
or agreements are collectively referred to herein as a "Financing
Agreement").
2.6 Patients. 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 patient 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. The Manager shall recommend to the
Owner programs for implementation with third party payors, such as
insurers, federal agencies and state and local agencies, for care of
patients with special medical, care, or rehabilitation needs on a contract
basis, all for the purposes of, in the opinion of the Manager, improving
the financial stability of the Facility; provided, however, that any such
agreement providing for any discount of the Facility's standard rate shall
require the Owner's prior written approval. However, the Manager shall not
introduce any additional function or service into the Facility's program of
health care without first obtaining the consent of the Owner and any
regulatory required by law.
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 thirty (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, project ordinary and extraordinary expenditures and protected
revenues for such budget period.
2.8 Certification, Licenses and Accreditation. The Manager shall
prepare on behalf of the Owner all reports and materials, and follow all
procedures necessary, to obtain and/or maintain all federal and state
certificates, licenses and accreditation necessary to maintain the Facility
as a long-term facility and nursing home.
2.9 Liaison with Agencies. To the extent desired by the Owner, the
Manager shall represent the Owner in all formal or informal proceedings
before all state and federal agencies engaged in the regulation, payment,
rate-setting, and/or licensing of long-term care facilities and nursing
homes. The Owner reserves the right to approve all settlements prior to
their finalization.
2.10 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,
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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 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
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 be 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.
2.11 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.
2.12 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 licensed
beds have been occupied for a continuous thirty (30) day period. The
Manager will assist the management staff if 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.
2.13 Administrative. The Manager shall:
(i) 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 or the
Administrator; and
(ii) provide on-going review and monitoring of all of the Facility's
compliance with applicable regulatory requirements for licensure
reimbursement, which status shall be reviewed in regularly quarterly
meetings and at other meetings as may be deemed necessary or desirable by
the Owner.
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2.14 Plant and Maintenance.
(i) 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
maintenance employees shall be used; and
(ii) The Manager shall make recommendations to the Owner regarding
entering into contracts with qualified independent contractors for the
maintenance and repair of air conditioning systems and laundry equipment
and for extraordinary repairs beyond the capability of regular maintenance
employees.
3. Management Fee
As compensation for the services to be rendered by the Manager during the
term of this Agreement, the Manager shall pay itself, at its principal office
given below (or at such other place as the Manager may from time to time
designate in writing), and at the times hereinafter specified, a monthly
management fee (the "Management Fee") during the terms of this Agreement equal
to five (5%) percent of Net Revenues (as defined below). The Management Fee will
be paid in equal monthly installments in arrears and shall be due and payable on
or before the fifteenth (15th) day of each month following the month in which
services were rendered.
"Net Revenues" as used herein shall mean Gross Revenues (defined below)
less all contractual adjustments for Medicaid and Medicare thereto.
"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 xxxxxxxx by the Facility to or on behalf of patients directly or indirectly
connected with the Facility or the provision of all such goods and services, and
will include, without limitation, such xxxxxxxx to all governmental payors,
including Medicare and Medicaid, such xxxxxxxx to self-paying patients, and such
xxxxxxxx to all other third-party insurance carriers and the gross dollar amount
billed from non-patient care activity but nevertheless arising from the
operation of the Facility including, but not limited to, all revenues received
or receivable by reason of all rooms, beds and other facilities subleased or
goods sold at the Facility, including, without limitation, all revenues received
from any subletting, licensing or other arrangements with third parties relating
to the possession or use of any part of the Facility.
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:
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(a) Salary and expenses (including, without limitation, payroll taxes,
costs of employee benefit plans, travel, insurance, and fidelity bonds) all
of personnel employed by the Manager 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
financial and accounting personnel employed by the Manager to maintain
accounting books and records of the Facility, except as provided below.
4.2 Owner Expenses. Except as otherwise expressly provided herein, the
Owner shall bear all of the expenses of operating the Facility and rendering
patient care not assumed by the Manager, and without limiting the generality of
the foregoing, it is specifically agreed that the following expenses of the
Facility shall not be borne by the Manager.
(a) Fees and expenses of independent professional persons expressly
retained by the Owner, or retained by the Manager for the account of the
Owner with the prior permission of the Owner, for any purpose, salary,
other compensation or benefits and expenses of administrative, medical,
nursing and other health care personnel; 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) Interest and discounts on indebtedness incurred or assumed by the
Owner.
(c) Taxes, imposts, levies or other charges on the existence,
operation, receipts, income or property of the Owner, provided, however,
that all interest and penalties incurred as a result of the Manager's
failure to timely file all returns which the Manager is required to file
pursuant to this Agreement, or to make timely payment of all taxes, levies,
imposts, or other charges, to the extent that sufficient funds were
available to the Manager as of the date such payments were due, shall be
the responsibility of the Manager.
(d) Medical supplies and equipment, food, fuel, kitchen and food
service equipment, linens, beds, furniture, clothing and all other supplies
and equipment used in supplying nursing home care and services to patients.
(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.
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(g) Legal fees and related expenses pertaining to the acquisition,
sale, mortgaging or leasing of property, litigation and proceedings
relating to rates and charges at the Facility, any other litigation or
proceedings to which the Owner is a party. However, such fees shall not
include those fees resulting from or arising out of negligence by the
Manager.
In the event that there are insufficient funds available to the Manager to pay
expenses which the Manager is authorized to incur and pay hereunder, including,
without limitation, any taxes to be paid on behalf of the Owner by the Manager,
the Manager shall promptly notify the Owner of the amount necessary to cure and
the reason for such deficit.
4.3 Deposit and Disbursement of Funds.
(i) The Manager shall establish and administer the overall rate
structure of the Facility and shall supervise the issuance of bills and the
collection of accounts 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.
(ii) The Manager shall establish such accounts for the Facility in the
Manager'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 the Owner in connection with the operation of the Facility,
whether from patients, third party payors or others. 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 operations of
the Facility or otherwise received by the Owner or by the Manager for or on
behalf of the Owner.
(iii) 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.
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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 Period of the Term. This Agreement shall continue for an initial
term of twenty (20) years commencing on July 1, 1996 (the "Commencement
Date"), and ending on June 30, 2016. Thereafter, this Agreement shall be
renewed automatically for three (3) additional five (5) year terms unless
the Owner sends the Manager written notice no less than ninety (90) days
prior to the then applicable Expiration Date that it does not wish to have
the Agreement renew beyond the then applicable Expiration Date. As used
herein the term "Expiration Date" shall mean the later of June 30, 2001, or
the date to which this Agreement has been extended as provided in this
Section 7.1.
7.2 Termination for Cause. Either party may terminate this Agreement for
"cause" by delivering thirty (30) days written notice to the other. "Cause"
shall include, but not be limited to, each of the following:
(i) the violation by either party of any material provision in, or
obligation imposed by, this Agreement which violation shall not have been
cured to the reasonable satisfaction of the other party within thirty (30)
days following the date on which written notice of termination has been
received by the party who has violated a material provision or obligation
imposed by this Agreement;
(ii) any illegal or improper act engaged in by either party in the
operation of the Facility;
(iii) if either party files or has a petition or complaint in
receivership or bankruptcy filed against it which has not been dismissed
within ninety (90) days of such filing; or
(iv) if the Owner is required, pursuant to the terms and conditions of
any Financing Agreement, to retain new management for the Facility.
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 thirty
(30) days after receiving written notice from the Manager.
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7.4 Termination Arising from Unresolved Dispute. In the event that a
dispute arises between the parties regarding the interpretation of a material
provision of this Agreement or the performance by one of the parties of an
obligation hereunder, and the parties are unable to reach a mutual agreement
regarding the dispute within thirty (30) days written notice of any unresolved
dispute given by one of the parties to the other, which notice shall describe
the nature of the dispute, any party may elect to terminate this Agreement by
giving one hundred twenty (120) days written notice to the other of its intent
to terminate. Unless the parties reach mutual agreement regarding the matter in
dispute within such one hundred twenty (120) day period, this Agreement shall
terminate on midnight of the one hundred twentieth (120th) day following the
other parties receipt of notice of termination and all obligations due and owing
hereunder shall forever cease, except to the extent that a right or obligation
has accrued prior to the termination date. The right of a party to terminate
this Agreement pursuant to this section shall be in addition to, and not to the
exclusion of, any other remedies, whether at law or in equity, of the parties
hereunder.
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 to submit proper reports to the
appropriate regulatory agencies, to keep true, accurate and complete records or
to obtain any necessary opinion of counsel as required by Section 1.1 of this
Agreement. The Manager shall indemnify the Owner and hold it harmless of, from
and against all Costs incurred or suffered by the Owner as a result of any of
the Manager's fraud, willful misconduct, or negligence, or as a result of the
Manager's failure to submit proper reports to the appropriate regulatory
agencies, to keep true, accurate and complete records or to obtain any necessary
opinion of counsel as required by Section 1.1 of this Agreement.
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 (4) years after the services to which the costs are related
have been furnished.
The provision of this Section 9 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 twelve (12) month
period, the Manager will obtain an identical access requirement in such
subcontract.
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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 or
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. The Manager agrees to make any reasonable modifications to
the Agreement as may be required by the holder of any Financing Agreement. 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. Neither the Owner nor the Manager will assign its interests
in this Agreement without the prior written consent of the other, which consent
shall not be unreasonably withheld, delayed or conditioned.
14. Successors. This Agreement shall be binding upon and inure to the
benefit of the parties and to their respective successors and assigns.
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 Owner: Continuum Care of Needham, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, III, Esq.
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As to Manager: CareMatrix of Massachusetts, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: President
cc: CareMatrix Corporation
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, III, Esquire
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 shall be deemed received three (3)
days after the date postmarked. All notices that are hand delivered shall be
deemed received upon delivery 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 the 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, and financial accounting packages 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, except for the financial
accounting packages, at a mutually agreed upon price.
18. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
19. Delivery of Management Services. Notwithstanding anything contained in
this Agreement to the contrary, with the prior written consent of the Owner
(which consent shall not be unreasonably withheld, delayed or conditioned) the
Manager shall have the right to engage another management company which provides
management services to similar skilled nursing facilities to perform all or a
portion of the Manager's duties and obligations under this Agreement. The Owner
acknowledges and agrees that Vanguard Health Services, Inc. would be an
acceptable management company to provide all or a portion of the services to be
provided by the Manager under this Agreement.
20. 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.
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Within thirty (30) days after the receipt of the Manager's notice to lease, the
parties shall enter into a lease agreement containing mutually agreeable terms
and conditions (the "Lease"), which 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 as determined immediately prior to the initial
term of the Lease and immediately prior to any renewal terms.
21. Additional Consideration to Owner. In consideration for the Owner
entering into this Agreement, the Manager shall pay to the Owner Two Million
Eight Hundred Thousand ($2,800,0000) Dollars in cash simultaneously with the
execution and delivery of this Agreement by the parties.
IN WITNESS WHEREOF, the parties have executed this Management Agreement as
of the date first set forth above.
WITNESS: CAREMATRIX OF MASSACHUSETTS, INC.
/s/ /s/ Xxxxx X. Xxxxx
________________________________ By: ______________________________
Name: Name:
Title:
WITNESS: CONTINUUM CARE OF NEEDHAM, INC.
/s/ /s/ Xxxxx X. Xxxxx
________________________________ By: ______________________________
Name: Name:
Title:
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