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EXHIBIT 10.21
NURSING HOME MANAGEMENT AGREEMENT
[CAMBRIDGE NURSING HOME, CAMBRIDGE]
This Management Agreement (the "Agreement") effective August 1, 1996,
between Capital Senior Living, Inc., a Texas Corporation ("Manager"), and
Cambridge Nursing Home Limited Liability Company, a Massachusetts limited
liability company ("Lessee").
WITNESSETH:
WHEREAS, Lessee leases that certain 119 bed facility (the "Facility")
located at 0 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx and commonly known as
Cambridge Nursing Home.
WHEREAS, Manager is an experienced and qualified manager in the field of
long-term care management; and
WHEREAS, Lessee desires to engage Manager, and Manager is willing, to
manage the Facility, pursuant to the terms and conditions set forth herein.
NOW THEREFORE, for and in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Retention of Manager. Lessee hereby retains Manager to provide
management services in connection with the facility under the
terms and conditions set forth herein.
2. Responsibilities of Manager. During the Term, as defined below,
Manager shall provide the following management consulting and
advisory services to Lessee in connection with the operation of
the Facility.
A. Facility Administrator. Manager shall select and direct
the performance of the Facility Administrator, who shall
be responsible for the operation of the Facility and
execution on a daily basis of policies established by
Manager and Lessee in accordance with the Agreement.
B. Other Personnel. Manager shall recruit, select, train,
promote, and terminate the employment of all Facility
personnel, which personnel shall all be deemed to be
employees of Manager; establish the salary levels,
personnel policies and employee benefits with respect
thereto; and establish employee performance standards as
needed during the Term to ensure the efficient operation
of all departments within and services offered by the
Facility. All Facility personnel shall be the employees
of Manager. Manager will also be responsible for the
payment of employee payroll, benefits and related employee
expenses (including payroll taxes) as part of Facility
operating expenses (payable
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out of Facility funds) and the distribution of employee
income tax withholding forms at year end.
C. Fiscal Year: Budgets. The fiscal year for the Facility
shall be January 1 through December 31. Within
approximately 60 days following the date of this
Agreement, Manager shall review and modify the facility's
current operating budget and submit this revised budget to
Lessee for approval. In addition, at least forty-five
(45) days prior to the start of each fiscal year, Manager
shall prepare and submit to Lessee for its review and
approval, which approval shall not be unreasonably
withheld, and annual operating budget and an annual
capital expenditure budget for the following year
(collectively, the "Budgets"). Thereafter, Manager shall
be entitled to make or commit Lessee to make expenditures
which are reflected in the Budgets, as well as
expenditures which individually do not exceed 10% of the
amounts set forth therein for the applicable expense item
(the "Budget Threshold"). Except for emergency repairs
referred to in Section 2 (I), any unbudgeted expenditures
and/or expenditures in excess of the Budget Threshold
shall be subject to Lessee's approval, which shall not be
unreasonably withheld.
D. Bank Accounts: Payment of Facility Expenses: Distribution
of Facility Net Cash Flow. Manager shall utilize existing
accounts and maintain a checking account (s) in the name
of Lessee and/or the Facility, as appropriate, for the
benefit and account of Lessee in a bank of Manager's
selection and shall deposit therein all money received in
the course of the operation of the Facility. Manager
shall pay for the benefit of Lessee all expenses incurred
in the operation of the Facility, including, but not
limited to payment of Manager's fees and expenses
hereunder, payroll, benefits and related employee
expenses, repayment of working capital loans and the
interest thereon and Facility debt service payments, all
of which shall be paid by check drawn on such accounts.
Manager shall apply revenue derived from the operation of
the Facility in the following order:
i. Payment of Facility operating expenses (which shall
include any and all costs, expenses or fees
associated with the operation of the Facility),
including Manager's fees and other expenses set
forth in Section 4, but excluding debt service.
ii. Payment of Facility debt service expenses,
including working capital loans, if any.
iii. Deposit into bank account(s) to satisfy the
requirements of Section 8.
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iv. The balance of the cash to Lessee.
E. Operational Policies. Manager shall maintain all
operational policies necessary to establish and maintain
the operational standards appropriate for the nature of
the Facility.
F. Rent and Charges. Manager shall establish the schedules
of recommended rents and charges, including any and all
special charges for services rendered to the residents of
the Facility.
G. Information. Manager may develop any necessary
informational material, mass media releases and other
related publicity materials in connection with the
Facility.
H. Regulatory Compliance. Manager shall use its best efforts
to obtain and maintain in the name of Lessee or Manager,
as appropriate under applicable state law, and at the
expense of Lessee, all licenses, permits, qualifications
and approvals from any applicable governmental or
regulatory authority necessary for the lawful operation of
the Facility as a long-term care facility.
I. Capital Equipment and Improvement. Manager shall advise
Lessee as to capital equipment and Facility improvements
which are needed to maintain or upgrade the quality of the
Facility and said equipment, or to replace obsolete or
rundown equipment. Lessee shall review and act upon
Manager's recommendations as expeditiously as possible.
Manager shall not be liable for any cost or liability
which Lessee may incur in the event Lessee disregards
Manager's recommendations. Manager shall make all
necessary and approved repairs, replacements and
maintenance within the budgetary limits set forth in the
annual capital expenditure budget prepared by Manager
pursuant to Section 2 (C). Notwithstanding any contrary
provisions in this Agreement, Manager shall be entitled,
without Lessee's consent, to make or commit Lessee to make
unbudgeted expenditures and/or expenditures in excess of
the Budget Threshold for the purposes of emergency repairs
involving manifest danger to persons or property or
required to avoid suspension of any necessary service at
the Facility. However, in no instance shall these
unbudgeted expenditures exceed $5,000 without the prior
authorization of the owner.
J. Supplies and Non-Capital Equipment. Manager shall
purchase supplies and non-capital equipment needed to
operate the Facility within the budgetary limits set forth
in the annual operating budget prepared by Manager
pursuant to Section 2 (C).
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K. Ancillary Services. Manager shall negotiate for the
provision of necessary ancillary services through
qualified contractors and on an ongoing basis shall review
and analyze the performance of said ancillary services
contractors and, if necessary, shall negotiate additional
or alternative contractual arrangements therefor. If any
contracts for such services are with related parties to
the Manager they will not exceed the cost of similar
services that could be provided by an unrelated third
party.
L. Legal Matters. Manager and Lessee shall jointly agree on
appropriate legal counsel for matters pertaining to the
Facility. Lessee shall be responsible for all legal fees,
including allocated charges for internal counsel.
M. Bookkeeping and Accounting. Manager shall provide
bookkeeping and accounting procedures necessary for the
operation of the Facility and the preparation of proper
financial records. Bookkeeping and accounting procedures
and systems shall be in accordance with the operation
capital and cash programs developed by Manager, which
programs shall conform to generally accepted accounting
principles.
N. Collection of Accounts. Manager shall issue bills and
collect accounts and monies owed for services and
materials furnished by the Facility, and shall be entitled
to enforce the rights of Lessee of the Facility as
creditor under any contract of in connection with the
rendering of any service; provided, however, that any
expenses incurred by Manager in so doing shall be treated
as Facility operating expenses, which shall be payable out
of Facility funds.
O. Reports. Manager shall prepare and provide to Lessee the
following reports, which shall be due at Lessee's office
no later than the 15th of each month except where
otherwise stated. These reports shall reflect operations
at the Facility:
i. Daily cash receipts journal to be faxed to Lessee
on Friday of each week;
ii. Daily census reports to be faxed to Lessee on
Friday of each week;
iii. Management fee calculations to be faxed to Lessee
monthly on or before the 10th of the month;
iv. Balance sheet;
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v. Operating statement;
vi. Aging of accounts payable and aging of accounts
receivable that ties to the balance sheet;
vii. check register for the month;
viii. Any additional reasonable operational information
which may from time to time be specifically
requested by Lessee.
P. Insurance. Manager, on behalf and at the expense of
Lessee, shall obtain and maintain all such insurance
coverage, which shall include property damage insurance
covering the Facility and the furniture, fixtures and
equipment situated therein, and comprehensive general
liability and professional liability insurance, for the
protection of Lessee, Manager, Facility employees and
volunteers of the Facility. Notwithstanding the
foregoing, Lessee shall provide all employee health and
worker's compensation insurance for its employees. Any
changes in insurance carrier or coverage deemed necessary
by Manager shall be implemented only following review and
approval by Lessee.
3. Term. This Agreement shall become effective on the day the Lessee files
an application for licensure as a long term care facility with the
Division of Health Care Quality of the Massachusetts Department of
Public Health and thereby has the effect of license and shall continue
in full force and effect until August 1, 2005, hereinafter referred to as
the "Term", unless sooner terminated as provided in paragraph 9 below.
4. Management Fees. For services performed hereunder, Lessee shall pay to
Manager the following:
A. Management Fee. Commencing with the signing of this
Agreement, Lessee shall pay to Manager seven percent (7%)
of the Gross Revenues generated during the immediately
preceding month and shall be payable on the 15th day of
the month following that month in which revenues were
actually collected. "Gross Revenues" shall mean all
collected cash receipts generated by the Facility. If the
services of Manager commence or terminate other than on
the first day of a month, the compensation set forth in
the Section 4 (B) shall be prorated for the number of days
for which services are actually rendered.
B. Expense Reimbursement. Lessee shall reimburse Manager for
the following items:
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i. Reasonable food, lodging and travel expenses for
service to the facility.
ii. general overhead and salaries [and other expenses
permitted by the Second Amended and Restated
Limited Partnership Agreement of HealthCare
Properties, L.P., a Delaware limited partnership,
dated as of May 31, 1995]
iii. Any other items set forth in this Agreement as
reimbursable items.
C. Late Charges. Lessee shall pay to Manager, to the extent
permitted by applicable law, interest on any amount owing
to Manager under this Agreement which is not paid when
due, for any period for which any of the same is overdue
(without regard to any grace period), at a rate equal to
the lesser of (i) four percent in excess of the rate
announced from time to time by Chase Manhattan Bank, N.A.
as its prime or reference rate, as such rate may change
from time to time, and (ii) the maximum rate of interest
permitted by applicable law.
D. Method of Payment. Lessee shall pay the amounts set forth
in Sections 4 (B) and (C) monthly, in advance, no later
than the fifteenth (15th) day of the month during which
such amounts are earned or paid. Manager shall be
entitled to disburse all such amounts to itself out of the
accounts provided for in Section 2 (D).
5. Proprietary Interest. The systems, methods, procedures and
controls employed by Manager and any written materials or
brochures developed by Manager to document the same shall not, at
any time, be utilized, distributed, copies or otherwise employed
or acquired for use outside of this Facility, except with
Manager's prior written consent, which Manager may withhold in
its sole discretion. Neither Lessee nor Lessee's designee shall
be entitled to utilize any written material or brochure outside
of this Facility which Manager may have developed to document
said systems, methods, procedures or controls.
6. No Guaranty of Profitability. Lessee acknowledges that Manager
does not guaranty that the Facility will be profitable.
7. Lessee Inspection. During the term, Lessee shall have the right,
upon request and at reasonable times, to inspect the Facility and
to inspect and/or audit all books and records pertaining to the
operation thereof.
8. Responsibility for Funding. Lessee shall make funds available
sufficient to fund payroll and all accounts payable on reasonable
terms in the account (s) referred to in Section 2 (D). These
funds shall be greater than or equal to the greater of
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(A) the sum of all current and unpaid invoices (both those
received and those pending), note or installment payments,
payrolls, rents, expenses, management fees and other charges
incident to the operation of the Facility which will become due
and payable within the next succeeding 45 days, and (B) such
amount as Manager, in its reasonable judgment, deems necessary
for the proper operation of, or improvements or repairs to, the
Facility.
9. Termination.
A. This Agreement may be terminated by the Lessee:
1. In the event of material breach by Manager
of a material term hereof, which breach is not cured
within 60 days after notice by the Lessee (unless Manager
is using commercially reasonable efforts to cure such
failure, in which case such period shall be extended for
one year) and such failure is the result of Manager's
willful misconduct, gross negligence, or unlawful act as
finally determined by a court having such jurisdiction
regarding such matter.
2. In the event that a petition in bankruptcy
is filed by Manager or its permitted assignee, or in the
event Manager or its permitted assignee makes an
assignment for the benefit of creditors or takes advantage
of an insolvency act, by notice to the manager or
assignee.
3. In the event that (i) Manager's or any
permitted assignee's corporate existence is dissolved and
the duties under this Agreement are not assumed by Manager
or Manager's Affiliate (ii) Manager or any permitted
assignee ceases to do business for any reason, by notice
to the Manager or such assignee, and the duties under this
Agreement are not assumed by Manager or Manager's
Affiliate.
B. This Agreement may be terminated by Manager in the event
that Manager fails to receive reimbursement of
reimbursable expenses or any compensation due Manager
pursuant to the terms of this Agreement, or any other
compensation due Manager, and such failure continues for a
period of 60 days after Managers written notice thereof to
Lessee. Manager may terminate this Agreement effective
immediately upon expiration of 60-day period without
further notice to Lessee; provided, however, that this
Agreement shall not be so terminated if the Lessee pay
Manager all such expenses and compensation then due and
payable on or before the expiration of said 60-day period.
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C. No termination of this Agreement shall affect any
obligation owing by either party hereto to the other which
accrued prior to the effective date of such termination.
D. Notwithstanding any earlier provisions, and as per Section
N, Number 8 of the Second Amended and Restated Limited
Partnership Agreement of HealthCare Properties, L.P. (the
"Partnership Agreement"), the Parties' agree that should
the Manager become an affiliated party (as defined in
Section B of the Partnership Agreement) with the General
Partners of HealthCare Properties, L.P., either Manager or
Lessee may terminate this Agreement on sixty (60) days
written notice; Provided however, that such cancellation
provision shall be deemed waived if Manager disassociates
itself from the General Partners during any such sixty
(60) day notice period. Alternatively, Manager may
successfully avoid the sixty (60) day cancellation clause
by assigning its management obligations to an unaffiliated
entity reasonably judged to be capable of fulfilling the
Partnership needs for such services.
10. Miscellaneous.
A. Disclaimer of Employment of Facility Employees. No person
employed by the Lessee will be an employee of Manager, and
Manager shall have no liability for payment of their
wages, payroll taxes and other expenses of employment.
All such persons will be employees of the Lessee, or,
pursuant to Section (K) hereof, independent contractors or
the employees or independent contractors.
B. Relationship of the Parties: Disclaimer of Liability:
Indemnification. The relationship of Manager to Lessee
shall be that of an independent contractor and all acts
performed by Manager Pursuant to this Agreement during the
Term shall be deemed to be performed in its capacity as an
independent contractor. Manager shall not be liable for
any loss, expense or liability incurred by or asserted
against Lessee, unless such loss, expense cost or
liability results from the gross negligence or willful
misconduct of Manager. Lessee shall indemnify and hold
Manager harmless from and against any and all loss,
expense, cost or liability incurred by or asserted against
Manager arising from or related to the Facility; provided,
however, that Lessee shall not be obligated to indemnify
Manager for any loss, expense, cost or liability which
results from Manager's gross negligence or willful
misconduct.
C. Employee Non-Solicitation. Recognizing the unique
services provided by employee of Manager, during the Term
and for a period of two (2) years after termination of
this Agreement, Lessee shall not directly or
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indirectly solicit or employ any employees of Manager to
become employees of Lessee without Manager's prior written
consent, which Manager may withhold in its sole
discretion. Likewise, Manager shall not directly or
indirectly solicit or employ any employees of Lessee to
become employees of Manager without Lessee's prior written
consent, which Lessee may withhold in its sole discretion.
D. Assignment: Binding Effect. This Agreement shall not be
assigned by either party without the prior written consent
of the other party, which consent shall not be
unreasonably withheld, Notwithstanding the foregoing,
Manager may assign its rights and obligations hereunder to
an entity controlling, controlled by or under common
control with Manager. This Agreement shall be binding
upon and insure to the benefit of the permitted successors
and assigns of the parties.
E. Notices. All notices required or permitted hereunder
shall be given in writing and shall be personally
delivered or be sent by registered or certified mail,
postage prepaid, to the following addresses or at such
other places as either party shall designate in writing:
If to Manager: Capital Realty Group Senior
Housing, Inc.
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
If to Lessee: Cambridge Nursing Home Limited
Liability Company
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Xx. Xxxxx X. Xxxxxx
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
And in either instance a copy shall be sent to:
Xxxx X. Xxxxxxxx, Esq.
Goulston & Storrs
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
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Notices shall be deemed effective upon receipt.
F. Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject
matter hereof and shall supersede all prior
understandings, agreements or arrangements, oral or
written, between the parties.
G. Amendment. This Agreement shall not be modified or
amended except by written instrument signed by both of the
parties.
H. Captions. The captions and headings used herein are for
convenience of reference only and shall not be construed
in any manner to limit or modify any of the terms hereof.
I. Attorney's Fees. In the event either party brings an
action to enforce this Agreement, the prevailing party in
such action shall be entitled to recover from the other
all costs incurred in connections therewith, including
reasonable attorney's fees. Reasonably attorney's fees
shall include reasonable charges allocated for internal
counsel.
J. Severability. In the event one or more of the provisions
of this Agreement is deemed to be invalid, illegal or
unenforceable in any respect under applicable laws, the
validity, legality and enforceability of the remaining
provisions hereof shall not, in any way, be impaired
thereby.
K. Representations. Each of the parties represents and
warrants to the other as follows:
i. The execution, delivery and performance of this
Agreement (a) are within the corporate and
partnership powers of the respective parties, (b)
have been duly authorized by all necessary
corporate or partnership action, and (c) do not and
will not (1) require any consent or approval by
stockholders or partners, or (2) violate any
provision of any law, rule, regulation, order,
writ, judgment, decree or award presently in effect
having applicability to the parties or the articles
of incorporation, bylaws, partnership or joint
venture agreements of the parties.
ii. This Agreement constitutes the valid and binding
obligations of Lessee and Manager, respectively,
enforceable in accordance with its terms.
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L. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all
of which together shall constitute but one and the same
instrument.
M. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Texas.
N. Access to Records, Cost Reports and Financial Statements.
Each of the parties hereby grant the other, and the
appropriate governmental agency access to all contracts,
books, documents and records necessary to verify the costs
of any contract between any subcontractor and any
Medicaid/Medicare provider in accordance with
state/federal statutory and/or regulatory requirements.
IN WITNESS WHEREOF, the parties have each caused the Agreement to be duly
executed by its duly authorized officer, as of the date first written above.
Lessee: CAMBRIDGE NURSING HOME LIMITED
LIABILITY COMPANY a Massachusetts
limited liability company
By: Cambridge Nursing Home, Inc., its
Managing Member
By: /s/ Xxxxx X. Xxxxxxxx
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Its Vice President
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Hereunto duly authorized
Manager: CAPITAL SENIOR LIVING, INC.
By: /s/ Xxxxx Johnanessan
---------------------------------
Its President
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Hereunto duly authorized
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