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REVISED MANAGEMENT FEE
EXHIBIT 10.131
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT (the "Agreement") is
entered into as of this 7th day of December, 2000, by and between FRIENDSHIP
COMMUNITY MENTAL HEALTH CENTER ("CMHC"), and OPTIMUMCARE(R) CORPORATION
("Manager"), a Delaware Corporation.
RECITALS
A. CMHC operates a Community Mental Health Center in Phoenix, Arizona,
including a Partial Hospitalization Program (the "Out-Patient Program")
for the treatment of psychiatric disorders, and
B. Manager is in the business of providing management services for the
treatment of patients with psychiatric disorders; and
C. Pursuant to the Agreement dated June, 97 between CMHC and Manager (the
"Original Agreement"), Manager agreed to provide certain services,
including but not limited to Out-Patient Program management and
direction, and CMHC agreed to provide appropriate program and office
space for the use of the Out-Patient Program during the term of the
Agreement; and
D. The parties desire to amend and restate the Original Agreement to
clarify and revise certain provisions as set forth herein.
THEREFORE, for and in consideration of the mutual promises and
agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged, the parties
agree as follows:
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AGREEMENT
1. DEFINITIONS
(a) "Confidential Information" of the Manager shall mean all documents and
other materials provided by Manager not available through sources in
the public domain. Manager's documents and other materials may include,
but are not limited to, memoranda, manuals, handbooks, production books
and audio and visual recordings, which contain information relating to
the Out-Patient Program (including written materials distributed to
Out-Patient Program patients or for promotion of the Out-Patient
Program); and all models, techniques, formulations and procedures used
to provide psychiatric services to Program patients.
(b) "Employee Benefits" shall include, by way of illustration and not
limitation, the employer's contribution under the Federal Insurance
Contributions Act, unemployment compensation and related insurance,
payroll and other employment taxes, pension and retirement plan
contributions, worker's compensation and related insurance, group life,
health, disability and accident insurance, severance and other
benefits.
(c) A "Patient Day" shall be deemed to exist with each out-patient visit to
the Out-Patient Program. An outpatient visit is defined as a patient
attending at least three (3) therapy sessions a day.
(d) "Out-Patient Program" shall mean the out-patient partial
hospitalization psychiatric program managed by Manager at CMHC.
2. TERM
Subject to the termination provisions set forth in Section 12, the Agreement
shall have a term
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of ten years commencing on the day first written above.
3. COVENANTS OF CMHC
CMHC will:
(a) Have and maintain throughout the term of this Agreement ultimate
control and authority for the operation and administration of the
Out-Patient Program.
(b) Furnish necessary and identified program space as per Exhibit A and
rent said space to the Manager for the duration of this Agreement as
described in Addendum 1. CMHC will cooperate with Manager in providing
appropriate program space for a potential capacity of at least forty
(40) chairs.
(c) Provide support activities including: (i) maintenance of or
installation of carpet and decorating of patient treatment areas as
needed; (ii) furniture, (iii) clerical support and (iv) all telephone
expenses at CMHC. (For illustration see Addendum 2)
(d) CMHC has in effect a schedule of fees and patient charges for the
administrative and technical component of all services rendered by the
Out-Patient Program. Said fees and charges may be modified by HCFA
based upon subsequent Cost Report reviews. CMHC shall give notice of
such modifications to Manager. CMHC shall xxxx all patients and third
party payors for CMHC's fees and charges with reference to services
provided by the Out-Patient Program in accordance with such schedule.
CMHC shall provide record keeping services in accordance with state and
federal laws and regulations, and furnish Manager with all information
necessary for Manager to xxxx the Management Fee described in Section
8.
(e) Staff the Out-Patient Program with a qualified Administrator, Assistant
Administrator,
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and Unit Secretary and be solely liable to those personnel for their
wages, compensation and employee benefits. Such personnel shall comply
with the Out-Patient Program policies and procedures as mutually agreed
upon in writing by CMHC and Manager. CMHC shall not, without Manager's
prior written consent (which shall not be unreasonably withheld),
deviate, change or otherwise decrease the agreed staffing.
(f) Maintain the CMHC's license from the Arizona Department of Health
Services and pay all related fees associated with the license.
(g) Provide Manager's employees and contracted personnel with copies of all
relevant CMHC Policies and Procedures, as amended from time to time.
(h) Indemnify, save harmless, and defend Manager from all claims and
liability and expenses (including reasonable attorney's fees) arising
solely from the negligence of or breach of this Agreement by CMHC or
its employees or contracted personnel.
(i) Maintain professional and comprehensive general liability insurance for
itself and its employees and contracted personnel in an amount not less
than $5,000,000 per occurrence or claim and whenever reasonably
requested provide Manager with a certification from the insurer stating
that such insurance is in effect and which also states that Manager
will be given at least ten (10) days advance written notice of any
cancellation, non-renewal, or changes in policy limits, deductibles, or
co-insurance. Any deductible or co-insurance or aggregate limits shall
be subject to Manager's approval, which shall not be unreasonably
withheld. Manager agrees that $100,000 is an acceptable deductible or
co-insurance. If a liability insurance policy is procured pursuant to
this Section 3(i) on a "claims made," rather than on an "occurrence"
basis, then such policy shall include an
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option to purchase a "tail" or an extended reporting period, which
option shall be exercisable upon termination or cancellation of said
policy or upon any material modification of said policy that has the
effect of causing the coverage of said policy to fail, in any respect,
to meet the requirements of this Section 3(i), regardless of whether
such termination, cancellation or modification shall occur during the
term hereof or thereafter. The tail or extended reporting period shall
provide coverage meeting all of the requirements set forth in this
Section 3(i), for a period of at least seven (7) years after
termination, cancellation or modification of the underlying policy.
Such policy shall provide that the carrier shall give CMHC or Manager
thirty (30) calendar days advance written notice of the date upon which
the option may be exercised regardless of whether such date shall occur
during the term hereof or thereafter and shall specifically provide
that Manager shall be permitted to exercise the option upon the failure
of CMHC to do so. Upon such notice, CMHC shall take steps, including
the payment of money, necessary to exercise such option, and if CMHC
shall fail to effectively exercise such option, then the Manager may do
so, and CMHC shall fully and immediately reimburse Manager, within ten
(10) calendar days notice thereof by Manager, for all monies expended
by Manager in connection therewith.
4. COVENANTS OF MANAGER
Manager shall be responsible for providing the following at its sole cost and
expense: (For illustration see Exhibits and Addendums).
(a) Rent facility as described on Exhibit A from CMHC for the duration of
this agreement.
(b) Pay for all supplies and materials necessary for operating the
Out-Patient Program.
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(c) Pay for dietary services for all patients in the Out-Patient Program.
(d) Provide for Out-Patient Program management and direction.
(e) Provide for Out-Patient Program marketing including a liaison to
promote community awareness concerning the care and treatment of the
Out-Patient Program's patients.
(f) Provide housekeeping services for the Out-Patient Program's patients
and Manager's administrative offices located at the CMHC.
(g) Provide the following personnel, in such number as deemed appropriate
in the sole discretion of Manager to appropriately staff the
Out-Patient Program:
(i) A full-time Out-Patient Program Director;
(ii) Personnel trained in the provision of social services;
(iii) Personnel trained in the provision of psychological services;
(iv) Personnel trained to conduct therapy, activities, and other
services, in such number as deemed appropriate in the sole
discretion of Manager;
(v) Personnel trained to provide registered nursing services;
(vi) Professional counseling staff as needed to provide for the
professional counseling of Out-Patient Program patients and to
adequately supervise and operate the Out-Patient Program.
All such personnel shall be subject to CMHC approval and CMHC
shall be deemed to have accepted such personnel unless it
informs Manager otherwise in writing within five (5) business
days of receipt of all such required information. Such personnel
shall not be deemed employees or contracted personnel or
borrowed servants of CMHC. Manager shall have full
responsibility for their wages,
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compensation and employee benefits and acts or omissions.
(h) Provide to CMHC an accounting of Manager's expenses in operating the
Out-Patient Program.
(i) Provide Out-Patient Program orientation and training for all
appropriate personnel.
(j) Indemnify, save harmless, and defend CMHC from all claims and liability
and expenses (including reasonable attorney's fees) (1) arising solely
from the negligence of or breach of this Agreement by Manager or its
employees or contracted personnel or (2) arising out of CMHC negligence
if the sole basis for any such negligence consists of entering into
this Agreement with Manager, failing to properly supervise, monitor, or
oversee Manager or its employees or agents, or failing to properly
review or act upon its review of the qualifications of Manager or its
employees or contracted personnel.
(k) Consult, manage and support the Out-Patient Program personnel's efforts
to provide quality psychiatric treatment while maintaining prudent
control of patient length of stay.
(l) Maintain professional and comprehensive general liability insurance for
itself and its employees and contracted personnel in an amount not less
than $5,000,000 per occurrence or claim and whenever reasonably
requested provide CMHC with a certificate from the insurer stating that
such insurance is in effect and which also states that CMHC will be
given at least ten (10) days advance written notice of any
cancellation, non-renewal, changes in policy limits, deductible, or
co-insurance or aggregate limits. Any deductible or co-insurance or
aggregate limits shall be subject to CMHC's approval, which shall not
be unreasonably withheld. CMHC agrees that $100,000 is an acceptance
deductible or co-insurance. Manager shall use reasonable efforts to
maintain "tail" coverage if
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necessary for any terminated "claims made" policy so as to apply to any
of its acts or omissions which occur during the term of this Agreement
until the expiration of any applicable statute of limitation but not to
exceed seven (7) years. Manager shall use reasonable efforts to have
CMHC named as an additional insured on Manager's insurance with respect
to any claim or liability arising solely out of any act of omission by
Manager, its employees, or contracted personnel.
(m) Until the expiration of five (5) years after the furnishing of such
services to be provided under this Agreement, Manager shall make
available, upon written request, to the Secretary of Health and Human
Services or upon request to the Comptroller General of the United
States of America, or their duly authorized representatives, this
Agreement and books, documents and records which are necessary to
certify the nature and extent of reimbursable costs under the Medicare
laws.
(n) Comply with all applicable laws (including but not limited to 42 U.S.C.
1395 (nn) (b) or any similar law or regulation), regulations, CMHC
policies and procedures, Program policies and procedures and any
applicable standards of care.
(o) Use reasonable efforts to resolve any issues regarding acceptability of
Out-Patient Program personnel to CMHC personnel and to Out-Patient
Program patients that may arise with respect to any of Manager's
employees or contracted personnel.
(p) Provide monthly written reports to CMHC regarding all significant
aspects of the operation of the Out-Patient Program.
(q) Commit no act or omission that adversely affects the CMHC license.
(r) Admit patients to the Out-Patient Program (including but not limited to
Medicare and
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Medicaid patients) only if the admission is ordered by a physician on
the Out-Patient Program staff with admitting privileges.
(s) Provide appropriate utilization review and quality assessment services
for all Out-Patient Program patients, such utilization review
responsibilities to include filing and pursuing clinical appeals with
the CMHC's fiscal intermediary, Blue Cross & Blue Shield of Phoenix,
Arizona.
5. ADVANCEMENT OF FUNDS BY MANAGER
Upon the written request of CMHC, Manager agrees to advance funds
necessary to cover(1) the wage, compensation and employee benefits
expense of the Administrator, Assistant Administrator, and Unit
Secretary and (2) such other expenses of CMHC as approved by the Manager
in its sole discretion. Any amounts advanced to CMHC pursuant to this
provision shall be subject to repayment, with interest from the date
thereof at the rate of 8.0% per annum, from CMHC's collection of
Out-Patient Program accounts receivable in the month immediately
following the advance; provided, however, that if CMHC does not have
funds sufficient to cover its repayment obligation, including interest,
in the month immediately following the advance, such repayment
obligation shall be due and owing in full in each subsequent month until
repaid.
6. REPRESENTATION AND WARRANTS OF CMHC
CMHC hereby represents to Manager as follows:
(a) CMHC is a corporation duly organized and validly existing in good
standing under the laws of the State of Arizona with the power and
authority to carry on the business in which it is engaged and to
perform its obligations under this Agreement.
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(b) The execution of this Agreement and the performance of the obligations
of the CMHC hereunder will not result in any breach of any of the
terms, conditions or provisions of any agreement or other instrument to
which CMHC is a party or by which it may be bound or affected, or any
governmental license, franchise, permit or other authorization
possessed by the CMHC, nor will such execution and performance violate
any Federal, State or local law, rule or regulation.
(c) There is no litigation, administrative proceeding or investigation
pending or threatened against CMHC (nor is the CMHC subject to any
judgment, order, decree or regulation of any court or other
governmental administrative agency) which would materially adversely
affect the performance of CMHC's obligations hereunder.
(d) No Certificate of Need is required by CMHC from any state regulatory
agency for the operation of the Out-Patient Program.
7. REPRESENTATIONS OF MANAGER
Manager hereby represents to CMHC as follows:
(a) Manager is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware with the power and
authority to carry on the business in which it is engaged and to
perform its obligations under this Agreement.
(b) The execution of this Agreement and the performance of the obligations
of the Manager hereunder will not result in any breach of any of the
terms, conditions or provisions of any agreement or other instrument to
which the Manager is a party or by which it may be bound or affected,
or any governmental license, franchise, permit or other authorization
possessed by the Manager, nor will such execution and performance
violate any Federal,
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State or local law, rule or regulation.
(c) There is no litigation, administrative proceeding or investigation
pending or threatened against Manager (nor is Manager subject to any
judgement, order, decree or regulation of any court or other
governmental administrative agency) which would materially adversely
affect the performance of Manager's obligations hereunder.
8. MANAGEMENT FEE
As compensation for the services provided by Manager pursuant to this
Agreement, CMHC shall pay to Manager a Management Fee equal to NINETY
THOUSAND DOLLARS ($90,000) per month during the first six months that
this Agreement is in effect. Thereafter, CMHC shall pay to Manager a
Management Fee equal to ONE HUNDRED AND SIXTY THOUSAND DOLLARS
($160,000) per month. The parties agree that the Management Fee
represents fair market value for the service provided. The parties
further agree that the Management Fee shall be subject to adjustment
annually, in Manager's sole discretion, based on changes in the Consumer
Price Index (the "CPI").
9. MEALS AND TRANSPORTATION
CMHC and Manager agree that the Management Fee does not include meals
and transportation services provided to patients of the Out-Patient
Program. Manager agrees to provide such meals and transportation
services, at its sole expense, where necessary to comply with State
Certification Requirements.
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10. CONFIDENTIAL AND PROPRIETARY INFORMATION
(a) CMHC agrees and acknowledges that Confidential Information is disclosed
to it in confidence with the understanding that it constitutes business
information developed by Manager. CMHC further agrees that it shall not
use such Confidential Information for any purpose other than in
connection with the Out-Patient Program. CMHC further agrees not to
disclose such Confidential Information to any third party except as
required by law or regulation or in order to serve the purposes of the
Out-Patient Program or as permitted by written authorization of
Manager.
(b) Manager hereby grants to CMHC for the term of this Agreement, a
non-exclusive license to use the registered service marks of Manager
when identifying the Out-Patient Program. These service marks are the
exclusive property of Manager. Manager reserves the right to restrict
the use of the service marks in any manner in which Manager believes in
its reasonable discretion to be detrimental to Manager or the value of
the service marks. CMHC acknowledges Manager's exclusive right, title
and interest in the service marks and agrees that it will not at any
time do or cause to be done any act or thing, directly or indirectly,
contesting or in any way impairing or tending to impair Manager's
exclusive right, title or interest in the service marks and the
goodwill symbolized thereby.
(c) Manager agrees not to disclose Confidential Information pertaining to
the CMHC business or Out-Patient Program patients except as required by
law or regulation or as permitted by written authorization of CMHC or
the respective patient, as the case may be.
(d) CMHC hereby grants to Manager for the term of this Agreement a
non-exclusive license to use the registered service marks of CMHC when
identifying the Out-Patient Program.
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These service marks are to remain the exclusive property of CMHC when
identifying the Out-Patient Program. CMHC reserves the right to
restrict the use of the service marks in any manner in which CMHC
believes in its reasonable discretion to be detrimental to CMHC or the
value of the service marks. Manager acknowledges CMHC's exclusive
right, title and interest in the service marks and agrees that it will
not at any time do or cause to be done any act or thing, directly or
indirectly, contesting or in any way impairing or tending to impair
CMHC's exclusive right, title or interest in the service marks and the
goodwill symbolized thereby.
11. RECRUITMENT OF EMPLOYEES AND AGENTS
(a) CMHC acknowledges that Manager has expended and will continue to expend
substantial time, effort, and money to train its employees and
contracted personnel in the operation of the Out-Patient Program. The
employees and contracted personnel of Manager who will operate the
Out-Patient Program at the CMHC will have access to and possess
Confidential Information of Manager. CMHC, therefore, agrees that for
the earlier of two (2) years after the cessation of the employment or
agency relationship between the Manager and the employee or agent or
two (2) years after termination of this Agreement, it will not
knowingly (and it will not induce any of its affiliates to) employ or
solicit the employment of, or in any way retain the services of any
employee, former employee, or contracted personnel or former agent of
Manager if such individual has been employed or retained by Manager in
the Out-Patient Program unless Manager gives CMHC prior written consent
thereto or unless this Agreement is terminated by CMHC pursuant to
Section 12 of this Agreement.
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(b) Manager agrees that during the same respective period of time, it will
not knowingly (and it will not induce any of its affiliates to) employ
or solicit the employment of or in any way retain the services of any
employee, former employee, or contracted personnel or former agent of
CMHC without CMHC's prior written consent.
12. TERMINATION
(a) Manager may terminate this Agreement upon the occurrence of any of the
following:
(1) By written notice to CMHC, if CMHC should have a bankruptcy,
reorganization or similar action filed by or against it, become
insolvent, or go into liquidation for any purpose.
(2) In the event CMHC fails to comply with the terms of this
Agreement in any material respect, including substantial
completion of all refurbishing in the identified Program space,
Manager shall, in writing, notify CMHC of the nature of the
breach, and CMHC shall have thirty (30) days to cure such breach
or the Agreement will thereupon be terminated upon written
notice to CMHC.
(3) By written notice to CMHC if CMHC fails to maintain any license
granted to it by a regulatory agency without which the
Out-Patient Program would be materially and adversely affected.
(4) By written notice to CMHC if CMHC fails to maintain professional
and general liability insurance in the minimum amount of
$5,000,000.
(b) CMHC may terminate this Agreement upon the occurrence of any of the
following:
(1) By written notice to Manager if Manager should have a
bankruptcy, reorganization or similar action filed by or against
it, become insolvent, or go into liquidation for
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any purpose.
(2) In the event Manager fails to comply with the terms of this
Agreement in any material respect, CMHC shall, in writing,
notify Manager of the nature of the breach, and Manager shall
have thirty (30) days to cure such breach or the Agreement will
thereupon be terminated upon written notice to Manager.
(3) By written notice to Manager if Manager fails to provide
professional and general liability insurance in the minimum
amount of $5,000,000.
13. ARBITRATION AND ATTORNEY'S FEES
(a) Compulsory Arbitration: Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
binding arbitration in accordance with the rules of the American
Arbitration Association, and judgement on the award rendered may be
entered in any court having jurisdiction. However, this shall not apply
with respect to any claim for indemnity for bodily injury or death.
(b) Attorneys' Fees: If any legal action (including arbitration) is
necessary to enforce the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees and costs awarded
against the other party in addition to any other relief to which that
party may be entitled.
14. MISCELLANEOUS
(a) Governing Law: The validity of this Agreement and of any of its terms
or provisions, the interpretation of the rights and duties of the
parties hereunder, and the construction of the terms or provisions
hereof shall be governed in accordance with the laws of the State of
California.
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(b) Force Majeure: If either of the parties hereto is delayed or prevented
from fulfilling any of its obligations under this Agreement by force
majeure, said party shall not be liable for said delay or failure.
"Force Majeure" means any cause beyond the reasonable control of a
party, including but not limited to an act of God, act or omission of
civil military authorities, fire, strike, flood, riot, war, delay of
transportation, or inability due to the aforementioned causes to obtain
necessary labor, materials, or facilities.
(c) Severability: If any part of this Agreement is held to be void or
unenforceable, such part will be treated as severable, leaving valid
the remainder of this Agreement notwithstanding the part found void or
unenforceable.
(d) Waiver: A waiver by either party of a breach or failure to perform
shall not constitute a waiver of any provision hereof or of any other
breach or failure whether or not similar. There shall be no waiver
unless in writing signed by the party against whom the waiver is sought
to be enforced.
(e) Binding Effect: This Agreement shall be binding on the successors, and
assigns of the respective parties, provided, however, neither party may
assign or otherwise transfer this Agreement or delegate obligations
hereunder without the other's written consent.
(f) Complete Agreement: This Agreement constitutes the complete
understanding of the parties and supersedes all other agreements,
either oral or in writing, between the parties hereto with respect to
the subject matter hereof, and no other agreement, representation,
statement, or promise relating to the subject matter of this Agreement
which is not contained herein shall be valid or binding. There shall be
no amendment unless in writing signed by both parties.
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(g) No Agency or Partnership: The relationship between Manager and CMHC is
that of independent contractors and nothing in the Agreement shall be
deemed to create an agency, joint venture, partnership or similar
relationship between the parties hereto. Neither party shall have the
right to bid for the other or enter into any contract or commitment in
the name of, or on behalf of the other.
(h) Notice: All notices hereunder shall be in writing, delivered personally
or by U.S. Certified or Registered postal mails, postage prepaid,
return receipt requested to the addresses listed below, and shall be
deemed given when delivered personally or upon the earlier of actual
receipt or five (5) days after deposit in the U.S. Mail, with proper
postage affixed. Each party may change his address by written notice to
the other.
CMHC's Address: Friendship Community Mental Health Center
000 Xxxx Xxxxxxxx
Xxxxxxx, XX 00000
Manager's Address: OptimumCare Corporation
00000 Xxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, XX 00000-0000
(i) UCC1 and Security Agreement: CMHC agrees to allow Manager, at Manager's
expense, to file a UCC1 payment promise against the CMHC's Out-Patient
Program accounts receivables referred to in this Agreement. CMHC
further agrees to enter into a Security Agreement, granting Manager an
on-going security interest in CMHC's Out-Patient Program accounts
receivables referred to in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day first written above.
OPTIMUMCARE CORPORATION FRIENDSHIP COMMUNITY
MENTAL HEALTH CENTER
---------------------------------- -----------------------------------------
By: Xxxxxx X. Xxxxxxx By: Xxxxxx X. Xxxxxxx
Its: Chief Executive Officer Its: Chief Executive Officer
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EXHIBIT A
Approximately 7844 Sq. Ft. of office space in commercial building located at 000
Xxxx Xxxxxxxx, Xxxxxxx, XX 00000.
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ADDENDUM 1
Manager will rent from CMHC the program space described in Exhibit A for
the duration of this agreement. Said rent shall be paid monthly from the
effective date of this agreement. Payment will be made to the building owner or
as requested by CMHC.
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ADDENDUM 2
ILLUSTRATION
1. CMHC pays for the following:
A. Telephone
B. Office Supplies
C. Postage
D. Clerical Support
E. Furniture
F. Copy Machine/Fax
G. Two Computers
H. Billing Services
I. Stationary
J. Admin. Business Cards
K. Accounting Fees
L. Annual Audit
M. Preparation of Cost Reports
N. General Liability Insurance
O. Educational Costs for Admin. Employees
2. Manager pays for following expenses as Manager deems necessary or
appropriate for program management.
A. Yellow Page Advertising
B. Therapy Supplies
C. Housekeeping Services
D. Clinical Business Cards
E. Printing of Brochures
F. Beverages - Soft Drinks and Coffee
G. Meals for Clients
H. Nursing Supplies
I. Transcription Services
J. Toilet Paper, Paper Towels and Kleenexes
K. Salaries and Benefits of all Clinical Staff
L. All costs associated with transporting patients
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EXHIBIT 10.131b
PROMISSORY NOTE
THIS PROMISSORY NOTE is made this 7TH DAY OF DECEMBER, 2000, in the
amount of _____________ DOLLARS ($1,100,000.00).
For value received, the undersigned Friendship Community Mental Health
Center, Inc. ("Maker") promises to pay to the order of OptimumCare Corporation
("Payee") ____________ Dollars ($1,100,000.00), in lawful money of the United
States of America, being due and payable at OptimumCare Corporation, 00000 Xxx
Xxxxx Xxxxx Xxxxx 000, Xxxxxx Xxxxxx, XX 00000, or elsewhere as Payee may
direct, with interest from the date hereof, at the rate of 8.0 % per annum,
until paid. Maker shall pay said principal and interest in monthly installments
equal to the amount of Maker's monthly collections of psychiatric outpatient
accounts receivables until the amount due and owing on this Promissory Note is
paid in full.
1. This Note shall be in default:
(a) If any amount due hereunder is not paid within ten (10) days after
receipt by Maker of notice of delinquency which notice may be sent five (5) days
after the end of each month and shall be deemed received when delivered to MAKER
AT 000 XXXX XXXXXXXX, XXXXXXX, XXXXXXX 00000 (or such other address of which the
undersigned shall give notice in writing) by prepaid registered mail or by
courier. SUCH DELIVERY MAY BE EVIDENCED BY A RECEIPT SIGNED BY THE MAKER AT THE
ABOVE ADDRESS; OR
(b) If on more than three (3) occasions during the term of this
instrument, payments of principal and interest shall not have been made on the
due date thereof, provided notice with respect to such delinquency shall be
given in the manner as noted above.
THIS NOTE SHALL NOT BE IN DEFAULT IF:
(a) IF ANY PAYMENT OF PRINCIPAL OR INTEREST HAS NOT BEEN MADE ON THE DUE
DATE THEREOF, AND THE REASON IS DUE TO NONPAYMENT OF CLAIMS BY THE INTERMEDIARY.
IF MAKER SUBSEQUENTLY RECEIVES PAYMENT FROM THE INTERMEDIARY FOR THE NONPAID
CLAIMS, MAKER WILL IMMEDIATELY ISSUE PAYMENT TO PAYEE, AND THIS NOTE SHALL NOT
BE IN DEFAULT.
2. If this Note shall be in default by virtue of either of the instances set out
above, the Payee or holder hereof may, without further notice or demand,
accelerate the payment schedule of principal and interest then due hereunder and
the same shall immediately be and become due and payable, and Maker shall
thereupon be liable for all costs and attorneys fees for collection and
foreclosure herein or elsewhere provided.
3. In the event of default as provided hereunder, the acceptance by Payee of a
partial payment or of part of the amount then due under this instrument shall
not be deemed a waiver of such default, and even though accepting such payment
or such portion of an amount in arrears, Payee, at Payee's
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option, accelerate the balance of amounts due hereunder and be entitled to
immediate payment thereof.
4. ANY CONTROVERSY, DISPUTE OR CLAIM ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, OR THE BREACH OR ALLEGED BREACH THEREOF, SHALL BE SETTLED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION
ASSOCIATION, AND JUDGMENT ON THE AWARD MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION.
5. Except as expressly provided herein, Maker waives demand, presentment,
protest, notice of protest, suit, and all other requirements necessary to hold
it liable, and agrees that the time of payment may be extended at the option of
the Payee for such period of time as it sees fit, without notice to Maker.
6. The singular use of pronouns, nouns and verbs herein includes the plural use
whenever the number of parties so dictates. The masculine gender of pronouns
includes the feminine and neuter.
7. If any provision of this instrument shall, for any reason, be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof, but this instrument shall be construed as if such
invalid or unenforceable provision had never been contained herein.
8. Any sum paid hereunder when paid shall first be applied to the cost of
collecting or attempting to collect this instrument, if such sum is collected
after the engagement by Payee of an attorney to collect same, then the remainder
thereof shall be applied to the principal balance.
9. Maker reserves the right to prepay all or greater amounts of any part of this
indebtedness, at any time and from time to time, without penalty.
10. THIS INSTRUMENT SHALL BE BINDING ON THE SUCCESSORS AND ASSIGNS OF THE
RESPECTIVE PARTIES, PROVIDED HOWEVER THAT NEITHER PARTY MAY ASSIGN OR OTHERWISE
TRANSFER THIS INSTRUMENT OR DELEGATE OBLIGATIONS HEREUNDER WITHOUT THE OTHER'S
WRITTEN CONSENT.
11. By affixing his signature hereto, the undersigned hereby acknowledges
receipt of a copy of this instrument and of all instruments executed in
connection with this transaction.
12. THIS INSTRUMENT CONSTITUTES THE COMPLETE UNDERSTANDING OF THE PARTIES HERETO
WITH RESPECT TO THE SUBJECT MATTER HERETO, AND NO OTHER INSTRUMENT, AGREEMENT,
REPRESENTATION, STATEMENT, OR PROMISE RELATING TO THE SUBJECT MATTER OF THIS
INSTRUMENT WHICH IS NOT CONTAINED HEREIN SHALL BE VALID OR BINDING. THERE SHALL
BE NO AMENDMENT HEREOF UNLESS SUCH AMENDMENT IS IN WRITING AND IS SIGNED BY BOTH
PARTIES.
2
24
IN WITNESS WHEREOF the Maker has hereunto set its hand and seal the day
and year first stated above.
By: 12/7/00
----------------------------- ------------------------------
Xxxxxx X. Xxxxxxx Xxxxxx Xxxxxxx
Chief Executive Officer Chief Executive Officer
12-7-00
------------------------------
Xxxxx X. Xxxxxxxx
President
3
25
EXHIBIT 10.131c
SECURITY AGREEMENT
This SECURITY AGREEMENT is made and entered into December 7, 2000 by
and between FRIENDSHIP COMMUNITY MENTAL HEALTH CENTER, INC., an Arizona
corporation ("Borrower") and OPTIMUMCARE (R) CORPORATION, a Delaware corporation
("Lender").
WHEREAS, Lender has provided services pursuant to that certain Agreement
dated July 1, 1997 between Lender and Borrower (the "Management Agreement"); and
WHEREAS, Borrower owes Lender a Management Fee for services rendered
under the Management Agreement;
WHEREAS, Borrower desires to pay Lender all amounts due and owing and
grant Lender a security interest in accounts receivables, and Lender desires to
collect such payment and not pursue collection of amounts past due under the
Management Agreement;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. GRANT OF SECURITY INTEREST. Borrower hereby grants, transfers and assigns to
Lender, to the extent permitted by law, a continuing security interest in all of
Borrower's accounts specific to the partial hospitalization program operated by
Borrower and managed by Lender, together with the proceeds and products thereof,
however evidenced, now owned or hereafter acquired by whatsoever means (all of
which are hereinafter called "Collateral"), to secure the payment of all
indebtedness of Borrower to Lender on any note and the liability of Borrower to
Lender under this Security Agreement and any other liability of Borrower to
Lender, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, howsoever created or evidenced (all of
which liabilities are hereinafter called "Obligations") including, without
limitation, Borrower's obligations to Lender the Management Fee under the
Management Agreement dated July 1, 1997 between Lender and Borrower, and that
certain Promissory Note (the "Note") dated December 7, 2000, between Lender and
Borrower.
2. BORROWER'S REPRESENTATIONS. Borrower hereby represents, covenants, warrants
and agrees as follows:
2.1. to perform and pay the Obligations, including interest, in
accordance with the terms of the documents evidencing the Obligations;
2.2. that as to any Collateral and subject to the provisions of this
Security Agreement: (a) Borrower is the sole and unrestricted owner of
said Collateral; (b) there are not now and will not be any set-offs or
counterclaims of any nature against said Collateral; (c) except for the
security interest of Lender herein, there are no other security
interests or liens outstanding against said Collateral; (d) Borrower is
fully authorized and empowered
26
to grant a security interest in said Collateral; and (e) all information
now or hereafter provided to Lender on any schedule or certificate in
regard to any Collateral is and shall at all times be true and correct;
2.3. to deliver to Lender at such intervals and in such form as Lender
shall hereafter require a schedule of all its Collateral. Said schedule
or schedules shall contain the names and addresses of the parties
obligated on the Collateral and the amount due and owing;
2.4. to provide Lender with any information it reasonably requests in
regard to said Collateral and to allow Lender at reasonable time or
times to inspect its books and records in regard to said Collateral and,
within twenty (20) calendar days of a request, to provide copies thereof
to Lender and to allow Lender, upon reasonable cause, to verify the
existence of said Collateral with the parties obligated thereon;
2.5. to xxxx its records by stamp or other means to show the security
interest of Lender therein;
2.6. at its own expense, to maintain and keep the Collateral free and
clear from all claims for liens and other claims;
2.7. on request by Lender to execute and deliver to Lender such
financing statements and other documents and to do such other things as
Lender may, from time to time, request to maintain a valid security
interest in said Collateral to secure the payment of all Obligations;
and
2.8. to pay all reasonable and necessary expenses, including reasonable
attorneys' fees and legal expenses, incurred by Lender in collecting the
proceeds thereof.
3. COLLECTION AND SEGREGATION OF COLLATERAL. Until such time as Lender shall
notify Borrower to the contrary, Borrower shall, at its own expense, endeavor to
collect as and when due all amounts upon the Collateral and take such action
with respect to such collection as Borrower may deem advisable. At any time
after the occurrence of an event of default, after notification to Borrower,
Lender may notify any party obligated on any of the Collateral to make payment
to Lender of any amounts due or to become due thereunder, or, upon request of
Borrower, at its own expense, Borrower will notify any and all parties obligated
on the Collateral to make payment to Lender of any amounts due or to become due
thereunder. Except as Lender may otherwise consent in writing, after the
occurrence of and during the continuance of an event of default, to the extent
permitted by law, Borrower will segregate all items received in payment or
otherwise as proceeds of any of Collateral from the other funds of Borrower and
upon request by Lender will forthwith remit to Lender all cash, checks, drafts,
chattel paper or other instruments which are received by Borrower in payment or
as proceeds of Collateral and deposit all proceeds or items which are in payment
of or the proceeds of said Collateral in a deposit account of Borrower in a bank
designated by Lender, from which Borrower shall have no right to withdraw except
upon consent of Lender. With respect to any Collateral due or to
- 2 -
27
become due to Borrower pursuant to programs established under Title XVIII of the
Social Security Act (42 U.S.C. Section 1395-1395ccc) or under Title XIX of the
Social Security Act (42 U.S.C. Section 1396-1396(s)), as such Acts and the
programs thereunder may be amended from time to time, Borrower agrees to
establish separate lockbox and depository accounts with Borrower's depository
bank for the benefit of Lender, subject to 42 U.S.C. Section 1395g(c).
Specifically, with respect to such Medicare, Medicaid and CHAMPUS claims,
Borrower will: (a) establish and maintain in the name of and on behalf of
Borrower, at Lender's expense, a lock box account ("lock box") with a depository
institution satisfactory to Lender into which all collections in respect to
Medicare, Medicaid and CHAMPUS receivables shall be deposited, and (b) deliver
to such depository institution instructions directing the institution to remit
collections in the lock box account to the Lender within one business day of
receipt.
4. DEFAULT. In the event of the occurrence of any one of the following (each
being an "event of default"), Borrower shall be in default hereunder:
4.1. failure of Borrower to make any payment to Lender when due,
including any installment on any Obligation;
4.2. breach of any warranty, covenant or agreement contained herein
which breach continues unremedied for thirty (30) days after Borrower is
given notice thereof by Lender;
4.3. bankruptcy, insolvency, however expressed or indicated of Borrower,
or Borrower's inability to pay debts as they mature; and
4.4. breach of any warranty, covenant or agreement contained in the
Management Agreement or the Note.
5. REMEDIES. At any time after the occurrence of and during the continuance of
an event of default, Lender shall have all the remedies of a secured party under
the Uniform Commercial Code of Arizona, including, without limitation thereto
the following: (1) Lender shall have the right to notify all parties obligated
under the Collateral to make any payments due or to become due on said
Collateral directly to Lender or to whomever Lender may designate; (2) Lender
shall be appointed agent and attorney for Borrower and authorized to collect
said payments and to compromise and settle any set-offs and counterclaims
asserted against said Collateral; and (3) upon request, Borrower shall deliver
to Lender all of its books and records relating in any way to Collateral and
shall assist Lender in locating the parties obligated on the said Collateral.
Lender will give Borrower at least five (5) days' written notice of any intended
disposition of the Collateral. All proceeds received from the Collateral or from
the disposition of Collateral shall first be applied to the payment of expenses
incurred in connection with the collection and disposition of the Collateral
(including, without limitation, reasonable attorneys' fees and legal expenses)
and the balance of such proceeds may be applied towards the payment of any of
the Obligations and in such order of application as Lender may, from time to
time, elect.
- 3 -
28
6. GENERAL. The terms and definitions of the Arizona Uniform Commercial Code are
hereby incorporated into this agreement and made a part hereof by reference. No
waiver by Lender of any act of default by Borrower shall operate as a waiver of
any other default by Borrower. All undertakings, warranties and covenants made
by Borrower and all rights, power and authority given to and conferred upon
Lender have been made and given jointly and severally and shall be binding upon
Borrower's legal representatives and assigns.
IN WITNESS WHEREOF, the Borrower and the Lender have executed this
Security Agreement on the dates set forth below effective as of the 7th day of
December, 2000.
BORROWER LENDER
FRIENDSHIP COMMUNITY MENTAL OPTIMUMCARE (R) CORPORATION
HEALTH CENTER, INC.
By: Xxxxxx X. Xxxxxxx By: Xxxxxx X. Xxxxxxx
------------------------------ -------------------------------------
Signature Signature
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx
---------------------------------- -----------------------------------------
Name Name
Chief Executive Officer Chief Executive Officer
---------------------------------- -----------------------------------------
Title Title
12/7/00 Dec 7 2000
---------------------------------- -----------------------------------------
Date Date
- 4 -
29
EXHIBIT 10.131d
STATE OF ARIZONA
Approved by The Secretary of FORM UCC-1 [Space below used by filing office]
State of Arizona, Rev. 10/90
Return copy or recorded original to: ARIZONA UNIFORM COMMERCIAL CODE
FINANCING STATEMENT - Form UCC-1
This FINANCING STATEMENT is
presented for filing (recording)
pursuant to the Arizona Uniform
Commercial Code.
1. Debtor(s) (last name first and address): 2. Secured Party(ies) and address:
Friendship Community Mental OptimumCare Corporation
Health Center, Inc. 00000 Xxx Xxxxx Xxxxx
0000 Xxxxx 00xx Xxxxxx #0 Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxx Xxxxxx, XX 00000-0000
3. Name and Address of Assignee of 4. [X] If checked, products of
Secured Party(ies): collateral are also covered.
5. This Financing Statement covers
the following types (or items) of
property:
See Exhibit A attached hereto and
made a party hereof.
6. If the collateral is crops,
the crops are growing or to
be grown on the following
described real estate:
7. If the collateral is (a) goods which are or are to become fixtures; (b)
timber to be cut; or (c) minerals or the like (including oil and gas), or
accounts resulting from the sale thereof at the wellhead or minehead to which
the security interest attaches upon extraction, the legal description of the
real estate concerned is:
And, this Financing Statement is to be recorded in the office where a mortgage
on such real estate would be recorded. If the Debtor does not have an interest
of record, the name of a record owner is:
8. This Financing Statement is signed by the Secured Party instead of the debtor
to perfect or continue perfection of a security interest in:
[ ] collateral already subject to [ ] collateral as to which the filing
a security interest in has lapsed or will lapse.
jurisdiction when it was
brought into this state.
[ ] proceeds of collateral because [ ] collateral acquired after a change
of a change in type or use. of name, identity, or corporate
structure of the Debtor.
Dated: Dec 7, 2000
----------------------------------
(Use
Xxxxxx X. Xxxxxxx 12/7/00 whichever
------------------------------------- is
SIGNATURE(S) OF DEBTOR(S) OR ASSIGNOR applicable) Xxxxxx X. Xxxxxxx
Chief Executive Officer -------------------------------------
SIGNATURE OF SECURED PARTY OR ASSIGNEE
30
EXHIBIT 10.131e
EXHIBIT A
TO
UCC-1 FINANCING STATEMENT
Debtor: Secured Party:
------ --------------
Friendship Community Mental OptimumCare(R) Corporation
Health Center 00000 Xxx Xxxxx Xxxxx
0000 Xxxxx 00xx Xxxxxx #0 Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxx Xxxxxx, XX 00000-0000
Collateral:
Any and all Accounts (as defined in Section 47-9106 of the Arizona
Uniform Commercial Code - Secured Transactions) generated by the partial
hospitalization program operated by Debtor and managed by Secured Party,
together with the proceeds and products thereof, however evidenced, now owned or
hereafter acquired by whatsoever means, to secure the payment of all
indebtedness of Debtor to Secured Party on any note and on the liability of
Debtor to Secured Party under such Security Agreement by and between Debtor and
Secured Party, and on any other liability of Debtor to Secured Party, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, howsoever created or evidenced and all rights to receive
payments, whether for goods sold or leased by the Debtor, for services rendered
by the Debtor or otherwise, whether or not earned by performance, together with
all security interests or other security held by or granted to the Debtor to
secure such rights to payment, all other rights related thereto including any
right of stoppage in transit and all rights in any of such sold or leased goods
which are returned or repossessed.
31
EXHIBIT 10.131f
AMENDED AND RESTATED
OPTION TO PURCHASE FRIENDSHIP CMHC
THIS OPTION TO PURCHASE FRIENDSHIP CMHC (the "Option") is entered into
as of this 7th day of Dec, 2000, by and among Xxxxxx Xxxxxxx, in his individual,
Xxxxx Xxxxxxxxx, in her individual capacity, (collectively, the "Shareholders")
and OPTIMUMCARE(R) CORPORATION ("OptimumCare"), a Delaware Corporation.
RECITALS
A. Friendship CMHC (the "CMHC") operates a Community Mental Health Center
in Phoenix, Arizona, including a Partial Hospitalization Program (the
"Out-Patient Program") for the treatment of psychiatric disorders, and
B. OptimumCare is in the business of providing management services for the
treatment of patients with psychiatric disorders; and
C. Pursuant to that certain Amended and Restated Management Agreement
dated December 7, 2000 (the "Management Agreement") between CMHC and
OptimumCare, OptimumCare provides certain services, including but not
limited to Out-Patient Program management and direction, and CMHC
provides appropriate program and office space for the use of the
Out-Patient Program; and
D. The parties desire to provide for OptimumCare, in its sole discretion,
to have the option to purchase all issued and outstanding stock in the
CMHC.
THEREFORE, for and in consideration of the mutual promises and
agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged, the parties
agree as follows:
32
AGREEMENT
1. OPTION TO PURCHASE. At any time following the initial ninety (90) days of the
Management Agreement, OptimumCare, in its sole discretion, may purchase all of
the issued and outstanding stock of the CMHC for the price of TEN THOUSAND
DOLLARS ($10,000), which the Shareholders agree represents the fair market of
the stock. OptimumCare shall provide thirty (30) days written notice to the
Shareholders of OptimumCare's intent to exercise its rights under this Option.
2. TERM. The initial term of this Option shall be ten (10) years. Thereafter,
this Option shall renew for successive one (1) year terms, unless otherwise
terminated by OptimumCare.
3. TERMINATION. This Option shall terminate immediately upon written notice from
OptimumCare to the Shareholders.
4. AMENDMENT. In the event that other individuals or entities desire to become
shareholders in the CMHC, OptimumCare shall have the right to approve the sale
of shares to such individuals or entities. As a condition to purchasing shares
in the CMHC, such individuals or entities shall be required to execute an Option
with provisions that are substantially similar to those contained herein.
33
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day first written above and effective on the Effective Date.
OPTIMUMCARE CORPORATION
Xxxxxx X. Xxxxxxx
----------------------------------
By: Xxxxxx X. Xxxxxxx
------------------------------
Its: Chief Executive Officer
-----------------------------
XXXXXX XXXXXXX
Xxxxxx X. Xxxxxxx
----------------------------------
Chief Executive Officer
XXXXX XXXXXXXXX
Xxxxx Xxxxxxxx
----------------------------------
President
