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Exhibit No. 10-5
INTERIM MANAGEMENT AGREEMENT
THIS Interim Management Agreement (this "MANAGEMENT AGREEMENT"), is made
and entered into this 31st day of December, 1998, (the "CLOSING DATE"), by and
between BHG of Pennsylvania, LLC, a Pennsylvania limited liability company
("MANAGER"), and MHM Extended Care Services, Inc., a Delaware corporation
("ECS").
WHEREAS, ECS arranges for the provision of mental health services to
certain nursing home patients in the State of Pennsylvania under contracts with
nursing homes and otherwise;
WHEREAS, on the date of this Management Agreement, ECS and Manager have
closed the transaction contemplated by the Asset Acquisition Agreement between
the parties dated as of December 22, 1998 (the "ASSET ACQUISITION AGREEMENT"),
in which transaction Manager has purchased certain of the assets and business of
the Operations as defined therein, and where such purchase is to be effective as
of the Effective Date;
WHEREAS, any capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Asset Acquisition Agreement; and
WHEREAS, during the period of time between the Closing and the Effective
Date the parties wish to provide for the management of the Operations on the
terms and conditions herein.
NOW, THEREFORE, in consideration of the mutual promises set forth in this
Agreement, and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, it is agreed as follows:
1. Engagement. ECS hereby engages Manager to manage, administer and
operate, at Manager's sole expense, the Acquired Assets and the Operations,
commencing on the Closing, and Manager hereby accepts such engagement. As of the
Closing and until the Effective Date, ECS hereby authorizes Manager to
supervise, manage and direct the day-to-day operations of the Operations and to
perform its duties and exercise its rights under this Management Agreement.
Management and operation of the Operations by Manager shall be consistent with
all applicable standards, rules and regulations and of those federal, state and
local agencies having jurisdiction over or in connection with the Operations.
Manager acknowledges that the Operations do not include, and neither the Asset
Acquisition Agreement nor this Management Agreement extend to the operations
conducted by ECS in any state other than the State and New Jersey.
2. Relationship. Manager is at all times hereunder acting and
performing as an independent contractor and that no act, commission or omission
of either party hereto shall be construed to make or render the other party its
principal, agent, joint venturer or associate, except to the extent specified
herein. Wherever Manager is required to seek the approval of ECS to perform any
of the duties hereunder such approval shall not be unreasonably withheld.
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3. Responsibilities of Manager. For the term of this Management
Agreement and except as otherwise provided herein, as manager of the Operations,
Manager shall have the responsibility to conduct, supervise and manage all
aspects of the Operations, including the obligation to fund all costs and
expenses of the Operations after Closing, and shall have responsibility and
commensurate authority for, but not limited to, the following:
a. Charges. The establishment, maintenance, revision and
administration of the overall charge structure of the Operations.
b. Personnel Administration. At Manager's expense, the hiring
or engaging of employees, independent contractors or otherwise, and supervision
of all personnel needed for the Operations, including the clinical,
administrative and financial staff, the administration of wage scales, rates of
compensation, employee benefits, conditions of employment, in-service training,
attendance a seminars or conferences, staffing schedules and job and position
descriptions with respect to all employees of or contractors to, the Operations.
c. Collection of Accounts. Subject to SECTION 6, the issuance
of bills for services furnished by the Operations and the collection of accounts
and monies owed during the management period.
d. Payment of Accounts and Indebtedness. The payment of
payroll, trade accounts, taxes, rents and all other expenses of operation and
obligations of the Operations arising after Closing.
e. Account and Financial Records. The establishment and
administration of accounting procedures and controls, and systems for the
development, preparation and safekeeping of records and books of accounting
relating to the business and financial affairs of the Operations.
f. Depositories for Funds. Maintenance of accounts in such
banks, savings and loan associations, and other financial institutions as
Manager may from time to time select, (including certificates of deposits) with
such balances therein (which may be interest-bearing or non-interest-bearing) as
Manager shall from time to time deem appropriate, taking into account the cash
needs of the Operations, and the disbursement from such accounts of such amounts
of the Operations' funds as Manager shall from time to time determine to be
appropriate in the discharge of the responsibilities of Manager under this
Agreement.
g. Purchases. The purchase of supplies, and all other
materials and services which Manager shall deem to be necessary for the
operations, subject to all provisions hereof.
h. Administrative and Fiscal Services. Provision of all
administrative and fiscal services to the Operations, including collections,
accounting, auditing (by a certified public accountant selected by Manager),
bookkeeping, budgeting, patient xxxxxxxx and record keeping,
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accounts receivable and accounts payable processing, electronic data processing
and such other services, including marketing, recruiting and quality control, as
may from time to time be required.
i. Patient Records. Supervision of maintenance of patient
records and record retrieval and provision of monitoring services to assist in
quality assurance reviews. After Closing, ECS will provide Manager with access
to all such records.
j. Contracts for Services. Manager shall be empowered to
negotiate, enter into, and administer on behalf of the Operations all contracts
for services which Manager may determine are necessary for the Operations, such
contracts to be upon such terms and for such rates of compensation as Manager
shall determine.
4. Covenants by ECS.
a. Liabilities and Obligations. ECS shall not, during the term
of this Management Agreement, without approval of Manager, incur any new
liabilities or obligations in relation to the Operations, including without
limitation, employment arrangements, debts, mortgages, liens, credit
arrangements, loans or leases.
b. Prompt Consideration. In all matters requiring ECS's
decision or consent under the terms of this Management Agreement, ECS shall
promptly consider such matters and expeditiously advise Manager of its decision
so as not to hinder, damage or delay Manager in its management or direction of
the Operations or its accomplishment of its duties and responsibilities under
the terms of this Management Agreement.
5. Covenants by Manager.
a. Compliance with Agreements and Contracts. Manager will not
take any action that would cause Operations to default on any of its contracts
and agreements.
b. Patient Confidentiality. With respect to patients who
receive treatment as part of the Operations, Manager shall assure compliance
with all statutes, regulations, and rules concerning patient confidentiality.
6. Collection of Accounts Receivable. In consideration of its
services rendered under this Management Agreement, Manager shall have the right
to collect and retain all accounts receivable arising with respect to the
Operations on and after the Closing, to the extent such accounts receivable are
assignable, and ECS hereby assigns to Manager all of its rights, title, and
interest in and to such accounts receivable. Promptly upon receipt of payment
for any accounts receivable arising with respect to the Operations on and after
the Closing that are not assignable, ECS shall promptly forward such payment to
Manager. If Manager receives any payments of accounts receivable arising from
services rendered before the Closing, Manager will
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not negotiate payment of the check, but will instead promptly give ECS
possession of the check duly endorsed, if necessary, to ECS. If ECS receives any
payments of accounts receivable arising from services rendered on and after the
Closing, ECS will not negotiate payment of the check, but will instead promptly
give Manager possession of the check duly endorsed, if necessary, to Manager. If
such check includes payment of an account or accounts receivable arising both
from the Operations before as well as after the Closing Date, the party
receiving such payment shall promptly forward to the other party such portion of
the payment to which that party is entitled.
7. Regulatory Compliance. The parties shall comply in all respects
with all applicable requirements of the Medicare and Medicaid programs as they
may exist from time to time.
8. Limitation of Liability; Indemnifications.
a. ECS shall indemnify Manager and any and all subsidiaries,
parents and affiliates of Manager, and the officers, directors, stockholders,
members and employees of Manager and its subsidiaries, parents and affiliates,
and shall hold each of them harmless from and against, any and all liability,
claims, losses, costs, actions, judgment or damages, and any expenses relating
thereto (including reasonable attorneys' fees and expenses), arising (a) from
the ownership and/or operation of the Operations in respect of any and all
periods prior to the Closing under the Asset Acquisition Agreement and/or (b) as
a result of the acts or omissions (negligent or otherwise) of ECS's agents,
officers or employees prior to the Closing under the Asset Acquisition Agreement
(including, without limitation, any claims by, or liability to, third parties,
any governmental agency, or patients of the Operations).
b. Manager shall indemnify ECS and any and all subsidiaries,
parents and affiliates, and the officers, directors, stockholders and employees
of ECS and its subsidiaries, parents and affiliates, and shall hold each of them
harmless from and against, any and all liability, claims, losses, costs,
actions, judgments or damages, and any expenses relating thereto (including
reasonable attorneys' fees and expenses), arising from (a) the Operations during
the term of this Agreement (including, without limitation, all payroll, trade
accounts, short and long-term indebtedness, taxes, rents, and all other expenses
of operations and obligations of the Operations to the extent that such expenses
or obligations accrue on or after the Closing) and/or (b) Manager's performance
under this Management Agreement and/or (c) as a result of the acts or omissions
(negligent or otherwise) of Manager's agents, officers or employees (including,
without limitation, any claims by, or liability to, third parties, Manager and
its subsidiaries and affiliates, any governmental agency, or patients of the
Operations).
c. Each party acknowledges that the other has made no
representations or warranties, express or implied, and assumes no financial or
other responsibilities or liabilities in connection with this Management
Agreement except as specifically provided herein and in the Asset Acquisition
Agreement.
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9. Insurance. Manager shall maintain at all times during the term of
this Agreement, at Manager's own expense, professional liability insurance
covering Manager and its employees, officers and directors with limits of one
million ($1,000,000) dollars per occurrence and three million ($3,000,000)
dollars in the aggregate. Manager shall maintain at all times during the term of
this Agreement, at Manager's own expense, general comprehensive liability
insurance in such amounts, with such coverages and with such companies as may be
commercially reasonable. All of the insurance required to be maintained under
this SECTION 9 shall contain an endorsement naming ECS as additional insured
thereunder and shall not be cancelable without 10 days prior written notice to
Manager and ECS.
10. Term and Termination.
a. Term. The term of this Agreement shall begin on the date of
the Closing under the Asset Acquisition Agreement and shall terminate on the
Effective Date, as defined in SECTION 9.2 of the Asset Acquisition Agreement.
b. Events of Default and Termination. Either party shall have
the right to terminate this Agreement prior to the Effective Date: (i) on the
occurrence of a material breach hereof by the other party not cured within five
business days of the delivery of notice as to such breach; or (ii) if any change
in applicable law renders this Agreement, in whole or in material part, illegal
or unenforceable. Manager may terminate this Agreement at any time, with or
without cause, on three business days notice to ECS. Such termination shall not
effect transfer of the Acquired Assets under the Asset Acquisition Agreement and
Closing.
11. Notice. Any notice or other communication by either party to the
other shall be in writing and shall be deemed to have been delivered if
delivered personally or mailed, postage prepaid, registered or certified mail
addressed as follows:
To ECS: MHM Extended Care Services, Inc.
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: President
To Manager: BHG of Pennsylvania, LLC
00000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx
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with a copy to:
Ungaretti & Xxxxxx
0000 Xxxxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
or to such other address, and to the attention of such other person or officer
as either party may designate in writing.
12. Modification and Changes. This Agreement cannot be changed or
modified except by another agreement in writing executed by both parties.
13. Headings. The headings contained herein are for convenience of
reference only and are not intended to define, limit or describe the scope or
intent of any provisions of this Agreement.
14. Confidentiality. The parties agree that the terms and conditions
of this Agreement shall remain confidential. No party shall distribute this
Agreement, or any part thereof, to an third parties unless required by law or by
contractual requirements.
15. Governing Law. This Agreement shall be deemed to have been made
and shall be construed and interpreted in accordance with the laws of the State
of Delaware.
In witness whereof, the parties have executed this Management Agreement
as of the date first above written.
MHM EXTENDED CARE SERVICES, INC.
By: /s/ XXXXXX X. XXXXXXX
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Its: Executive Vice President
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Printed Name: Xxxxxx X. Xxxxxxx
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BHG OF PENNSYLVANIA, LLC
By: Integrated Health Options, LLC
Its: Manager
By: /s/ XXXXX X. XXXXXXXXX
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Its: Manager
Printed Name: Xxxxx X. Xxxxxxxxx
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