Exhibit 10.1
AMENDMENT TO
MANAGEMENT AGREEMENT
THIS AMENDMENT TO MANAGEMENT AGREEMENT (this "Amendment") is dated as
of the 1st day of January, 1999, by and between CareMatrix of Massachusetts,
Inc., a Delaware corporation, with its principal place of business at 000 Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "Manager"), and CCC of New Jersey,
Inc., a Delaware corporation, or its designee or assignee, with its principal
place of business at 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Owner"), and amends that certain Management Agreement dated as of January 1,
1998 between the Manager and the Owner, as the same may have been previously
amended to date.
WHEREAS, the Owner is the operator of a 100 bed assisted/independent
living facility located in Park Ridge, New Jersey (the "Facility");
WHEREAS, the Owner determined that the hiring of a management company
to provide day-to-day management of the Facility is necessary for the efficient
operation of the Facility;
WHEREAS, the Owner and the Manager are parties to a certain Management
Agreement dated as of January 1, 1998 with respect the management of the
Facility (as previously amended to date, the "Original Agreement");
WHEREAS, the Owner and the Manager desire to amend the Original
Agreement, as more particularly set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Section 2.1 of the Original Agreement is hereby deleted in its
entirety, and replaced with the following:
"2.1 EMPLOYEES. The Manager shall recruit, evaluate, select,
and hire a qualified and properly licensed Executive Director who shall
be responsible for the functional operation of the Facility and
supervision of personnel at the Facility on a day-to-day basis, as well
as all resident assistance, custodial, food service, cleaning,
maintenance, secretarial and bookkeeping personnel for the day-to-day
operations of the Facility. Prior to the Conversion Date (hereinafter
defined) all personnel, including, without limitation, the Executive
Director, shall be employees of the Owner, and the Owner shall retain
full responsibility for payment of wages, salaries and other
compensation and benefits for the Executive Director and such other
personnel. Effective as of the Conversion Date, all such personnel,
including, without limitation, the Executive Director, shall be
employees of the Manager, and the Manager shall have full
responsibility for payment of wages, salaries and other compensation
and benefits of the Executive Director and such other personnel. The
Manager shall, subject to approval by the Owner, establish necessary
and desirable personnel policies and procedures, wage structures and
staff schedules. The Manager, subject to approval by Owner, shall have
authority to hire, discipline, promote and discharge employees of the
Owner
who participate in the day-to-day operation and administration of the
Facility. Both the Manager and the Owner must approve the hiring and/or
firing of the Executive Director, Assistant Administrator and the
Director of Resident Services, which approval shall not be unreasonably
withheld or delayed. The Manager shall: (a) maintain or cause to be
maintained payroll records and prepare weekly and monthly payrolls,
withholding taxes and Social Security taxes; (b) prepare and submit all
required state and federal tax or benefit returns required with respect
to employees, including, without limitation, the returns required by
FICA, FUTA and all applicable unemployment compensation laws; (c)
maintain in force all required levels of workers' compensation
insurance; and (d) prepare and submit to the Owner any certificates of
payroll expenses as may be reasonably requested. Prior to the
Conversion Date, the Manager shall not be liable to any employee of the
Facility for wages, salaries and other compensation and benefits, or to
the Owner, unless the Manager was specifically required to obtain the
approval of the Owner before committing to a salary or benefit and such
approval was not obtained. The Manager shall not be liable to the Owner
or others for any action or omission on the part of any employee of the
Owner of the Facility, unless the employee was acting under the express
direction of the Manager or unless such employee was following an
express policy or procedure of the Manager and such direction, policy
or procedure is subsequently determined to be the result of gross
negligence. The Manager shall provide the Owner with quarterly reports
of all hiring, disciplinary actions, promotions and firings at the
Facility for the month."
2. Subsection 2.5(c) of the Original Agreement is hereby deleted in its
entirety, and replaced with the following:
"(c) such other and further reports or calculations as may be
required under any financing terms in accordance with the deadlines set
forth in any financing agreements executed in connection with any
Facility Financing (hereinafter defined) (any such financing agreement
or agreements are collectively referred to herein as a "Financing
Agreement")."
3. Section 3 of the Original Agreement is hereby deleted in its
entirety, and replaced with the following:
"3. MANAGEMENT FEE. (a) As compensation for the services to be
rendered by the Manager during the Term (as hereinafter defined), the
Manager shall pay itself, at its principal office as set forth above
(or at such other place as the Manager may from time to time designate
in writing), and at the times hereinafter specified, a monthly base
management fee (the "Base Management Fee") (i) for the period
commencing on the beginning of the Term and continuing until the date
(the "Conversion Date") which is the earlier of (x) the second
anniversary of the date on which the Facility received its certificate
of occupancy permitting operation of the Facility for its intended
purpose, or (y) such date as is designated by the Manager in its sole
discretion, equal to the greater of (I) Ten Thousand Dollars ($10,000)
Dollars per month, or (II) five percent (5%) of Net Revenues
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(as hereinafter defined), and (i) for the period commencing on the
Conversion Date and continuing through the remainder of the Term, equal
to the sum of (x) all Facility Expenses (hereinafter defined), and (y)
the greater of (I) Ten Thousand Dollars ($10,000) per month, or (II)
five percent (5%) of Net Revenues. In addition to the Base Management
Fee, as additional compensation for the services to be rendered by the
Manager during the Term, the Manager shall pay itself, at its principal
office as set forth above (or at such other place as the Manager may
from time to time designate in writing), and at the times hereinafter
specified, a monthly incentive management fee (the "Incentive
Management Fee") equal to eighty five percent (85%) of Net Cash Flow
(as hereinafter defined). The Base Management Fee and the Incentive
Management Fee are collectively referred to herein as the "Management
Fee".
(b) All Management Fees will be paid in arrears and shall be
due and payable on or before the 15th day of each month following the
month in which services were rendered. The Manager hereby acknowledges
and agrees that any and all Management Fees due hereunder shall be
subordinate to any Facility Financing, as well as to any preferred
returns to equity investors of the Owner. The Owner hereby represents
and warrants that as of the date hereof, there exists no Facility
Financing except that certain $15,187,681 mortgage loan by Meditrust
Mortgage Investments, Inc., and that there are no preferred returns
payable to equity investors of the Owner. The Owner hereby covenants
and agrees with the Manager that at no time during the Term of this
Agreement shall (i) the total Facility Financing exceed the sum of (x)
all costs incurred by the Owner in connection with the acquisition,
development, construction and fill-up of the Facility, plus (y) all
costs incurred by the Owner in connection with any capital improvements
to the Facility, and (ii) the preferred returns payable to equity
investors of the Owner be increased beyond those set forth herein.
(c) "Net Revenues" as used herein shall mean Gross Revenues
(defined below) less contractual adjustments for uncollectible
accounts.
"Gross Revenues" as used herein shall mean and include all
revenues received or receivable from or by reason of the operation of
the Facility, including, without limitation, all revenue of the
Facility for or on account of any and all goods provided and services
rendered or activities during the period from the date of this
Agreement and thereafter, the gross dollar amount of all such xxxxxxxx
by the Facility to or on behalf of residents directly or indirectly
connected with the Facility or the provision of all such goods and
services.
"Facility Expenses" as used herein shall mean and include all
personnel and other expenses incurred in connection with the operation
of the Facility, including, without limitation, all expenses described
in Section 4 below, but specifically excluding any Management Fees and
all Facility Financing.
"Net Cash Flow" as used herein shall mean the excess of (i)
all Net Revenue, over (ii) the sum of (x) all Facility Expenses, (y)
all Base Management Fees, and (z) all Facility Financing."
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4. Section 4 of the Original Agreement is hereby deleted in its
entirety, and replaced with the following:
"4. EXPENSES.
4.1 MANAGER EXPENSES. The Manager shall bear the following
expenses incurred by it in the management of the business and
properties of the Facility:
(a) Salary and expenses (including, without
limitation, payroll taxes, costs of employee benefit plans, travel,
insurance, and fidelity bonds) of all personnel employed by the Manager
to carry out all responsibilities detailed above.
(b) Salary and expenses (including, without
limitation, payroll taxes, cost of employee benefit plans, travel,
insurance and fidelity bonds) of all of the Manager's home office
personnel and overhead.
(c) From and after the Conversion Date, all
expenses described in Section 4.2 below, but specifically excluding any
Management Fees and all Facility Financing.
4.2 OWNER EXPENSES. Except as otherwise expressly provided
in this Agreement, the Owner shall bear all of the expenses of
operating and financing the Facility and rendering resident services
not expressly assumed by the Manager, including without limitation, the
following:
(a) Fees and expenses of independent professional
persons expressly retained by the Owner, or retained by the Manager for
the account of the Owner with the prior permission of the Owner, for
any purpose; salary, other compensation or benefits and expenses of all
staff employed at the Facility by the Owner, including, without
limitation, all administrative, medical, resident assistance and other
health care personnel and the Executive Director; custodial, food
service, cleaning, maintenance, operational, secretarial and
bookkeeping personnel employed to administer the day-to-day operations
of the Facility and to perform health care and related services in the
day-to-day operations of the Facility's business.
(b) Principal, interest and discounts on indebtedness
incurred or assumed by the Owner with respect to the acquisition,
development, construction, and fill-up of Facility ("Facility
Financing").
(c) Taxes, imposts, levies or other charges on the
existence, operation, receipts, income or property of the Owner,
provided, however, that all interest and penalties incurred as a result
of the Manager's failure to timely file all returns which the Manager
is required to file pursuant to this Agreement, or to make timely
payment of all taxes, levies, imposts, or other charges, to the extent
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that sufficient funds were available to the Manager as of the date such
payments were due, shall be the responsibility of the Manager.
(d) Medical supplies and equipment, food, fuel,
kitchen and food service equipment, linens, beds, furniture, clothing
and all other supplies and equipment used in supplying services to
residents.
(e) Expenses connected directly or indirectly with
the design, acquisition, disposition or ownership of real and personal
property devoted, used, or consumed in the business of the Facility,
including, without limitation, purchase and/or construction of the land
and buildings used for such purpose, maintenance, repair and
improvement of property, all real estate and personal property taxes
assessed, premiums for property and liability insurance on property
owned by the Owner, brokerage commissions, and fees and expenses of
consultants, managers, or agents retained directly by the Owner.
(f) The Management Fee.
(g) Legal fees and related expenses pertaining to the
Facility, and any other litigation or proceedings to which the Owner is
a party. However, such fees shall not include those fees resulting from
or arising out of the gross negligence by the Manager and the Owner
shall provide such necessary funds to the Manager within 10 days after
receipt of such notice.
In the event that there are insufficient funds available to the Manager
to pay expenses which the Manager is authorized to incur and pay
hereunder, including, without limitation, any taxes to be paid on
behalf of the Owner by the Manager, the Manager shall promptly notify
the Owner of the amount necessary to cure and the reason for such
deficit and the Owner shall provide such necessary funds to the Manager
within 10 days after receipt of such notice."
5. Section 7.1 of the Original Agreement is hereby deleted in its
entirety, and replaced with the following:
"7.1 TERM. (a) This Agreement shall continue for a term (as
the same may be extended, the "Term") commencing on the date which is
12 months prior to the anticipated date (as mutually agreed to by the
Owner and the Manager) for the opening of the Facility and continuing
for a period of 15 years after the date on which the Facility receives
its certificate of occupancy permitting the operation of the Facility
for its intended use. The Owner and Manager agree to execute a
certificate setting forth the date on which the Term commences promptly
after such opening.
(b) On the conditions that (i) the Manager is not in
default of its obligations hereunder beyond any applicable notice, cure
or grace period at the time of exercise, and (ii) the Facility has had
positive cash flow for each of the three years prior to the
commencement of the Extension Exercise Period (hereinafter defined),
the Manager shall have the option (each, an "Extension
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Option") to extend the Term for three additional periods of five years
each on the same terms and conditions as set forth in this Agreement.
Each Extension Option shall be exercised in writing by the Manager to
the Owner during the six month period (the "Extension Exercise Period")
commencing on the first day of the then last year of the Term."
6. Sections 13 and 14 of the Original Agreement are hereby deleted in
their entirety, and replaced with the following:
"13. ASSIGNMENT; SUCCESSORS. Neither the Owner nor the Manager
will assign its interests in this Agreement, without the prior written
consent of the other; provided that (a) the Manager may assign (i) its
interests hereunder to an affiliate, and (ii) its Management Fees to a
lender as security for any financing arrangement of Manager, and (b)
the Owner may assign its interests hereunder to a lender as security
with respect to any Financing Agreement. Subject to the foreoging, this
Agreement shall be binding upon and inure to the benefit of the parties
and to their respective successors and assigns.
14. OWNER'S PURCHASE RIGHTS. In the event the Owner is not the
fee title holder to the Facility, or the land on which the Facility is
located, the Manager shall have the right to assume from the Owner any
option to purchase, right of first offer or right of first refusal
which the Owner may hold with respect to the Facility or the land on
which the Facility is located."
7. Section 16 of the Original Agreement is hereby deleted in its
entirety, and replaced with the following:
"16. NOTICES. Any notice, demand, consent, or other written
instrument to be given or received under this Agreement ("Notice")
required or permitted to be given shall be in writing signed by the
party giving such Notice and/or consent and shall be hand delivered,
sent by nationally recognized overnight carrier or sent, postage
prepaid, by Certified or Registered Mail, Return Receipt Requested, to
the other party at the addresses listed below:
As to Manager: CareMatrix of Massachusetts, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Executive Officer
cc: CareMatrix of Massachusetts, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
As to Owner: CCC of New Jersey, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
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Any party shall have the right to change the place to which such notice
shall be sent or delivered by similar notice sent in like manner to all
other parties hereto. All notices sent by certified mail or are hand
delivered shall be deemed received upon delivery or when delivery is
refused to the office or address of the addressee."
8. Except as modified by this Amendment, the terms and conditions set
forth in the Original Agreement shall remain unchanged and in full force and
effect.
[signatures on following page]
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IN WITNESS WHEREOF, the parties have executed this Amendment, or caused
it to be executed by their respective duly authorized representatives, as an
instrument under seal as of the date first set forth above.
WITNESS: CAREMATRIX OF MASSACHUSETTS, INC.
By: /s/ Xxxxxxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------- -----------------------------
Name: Xxxxxxxxx Xxxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President
WITNESS: CCC OF NEW JERSEY, INC.
By: /s/ Xxxxxxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------- -----------------------------
Name: Xxxxxxxxx Xxxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President
