ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT entered into as of this 27th day of February, 1996 by and between
Manor Care, Inc., a Delaware corporation (together with its subsidiaries and
affiliates, other than In Home Health, Inc., hereinafter referred to as "Manor
Care") and In Home Health, Inc. a Minnesota corporation (together with its
subsidiaries, hereinafter referred to as "In Home").
WHEREAS, Manor Care and In Home desire to formalize the provision of
services by Manor Care to In Home;
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and sufficient consideration, the receipt of which is
acknowledged, the parties agree as follows:
1. SCOPE OF AGREEMENT. Manor Care will, consistent with the terms of
this Agreement, provide, or cause to be provided to In Home, those certain
corporate, administrative and management services listed on Exhibit A ( each
service individually referred to as a "Service" and all services collectively
referred to as the"Services") attached hereto and made part of this Agreement,
and In Home, in consideration thereof, shall pay Manor Care in accordance with
Section 3 below.
2. TERM. This Agreement shall have a retroactive commencement date of
November 1, 1995 and shall terminate as of
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June 30, 1996. Thereafter, Manor Care agrees to provide the Services on a
quarter-to-quarter basis, beginning July 1, 1996 and continuing until
terminated by either party either as to a particular Service or as to the
Services by means of at least ninety (90) days prior written notice.
3. FEES AND PAYMENT.
A. In Home will pay Manor Care Forty Thousand Dollars ($40,000.00)
per month for certain corporate, administrative and management services listed
in Exhibit A, attached hereto.
B. In addition to the amount paid under Section 3(A) of this
Agreement, In Home will pay Manor Care Three Thousand Dollars ($3,000.00) per
month for any and all services provided by the Manor Care Reimbursement
Department under this Agreement.
C. In Home will pay Manor Care an administrative fee for the support
received from the Manor Care Managed Care Center ("Managed Care Center"). Such
fee shall be equal to five (5) percent of the expenses incurred by the Managed
Care Center. Such expenses are estimated by the parties to be approximately
Fifteen Thousand Dollars ($15,000.00) per month.
D. In Home will reimburse Manor Care for expenses incurred within the
Manor Care Alternate Site Division ("Alternative Site") Departments 020-070,
020-071 and 020-074 for periods from November 1, 1995 forward. This does not
include any portion of the Alternate Site Management Fee originally planned for
Manor Care Fiscal Year 1996 or any expenses which should have been
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accrued before November 1, 1995 and which ultimately will be transferred to
Alternate Site Department 020-084 or such new department established for the
same purpose. It is the intent of In Home to absorb the personnel related costs
and other expenses of Alternate Site Departments 020-070, 020-071 and 020-074
into In Home by March, 1996. Thereafter, the only remaining expenses within
Alternative Site Departments 020-070, 020-071 and 020-074 will be for the
personnel and other expenses involved with the management and support of the
Managed Care Center. Alternate Site will transfer $15,000 per month to the
Managed Care Center for the management and support supplied by employees within
Alternate Site and In Home.
E. In Home will reimburse Manor Care for expenses incurred within
the Manor Care Hospice Division Department 022-035 from November 1, 1995
forward. This does not include any portion of the Manor Care Hospice Division
Management Fee originally planned for Manor Care Fiscal Year 1996 or any
expenses which should have been accrued before November 1, 1995 and which will
be transferred to Alternate Site Department 020-084 or such new department
established for the same purpose. It is the intent of In Home to absorb the
personnel related costs and other expenses of the Manor Care Hospice Division
Department 022-035 into In Home by March, 1996.
F. Alternate Site services for which In Home does not receive any
benefit will be expenses separated into an Alternate Site Department 020-084
(Disease Management Department) and will be
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included in Manor Care financials. Such expenses will include the planned Manor
Care Fiscal Year 1996 Management Fees for its Alternate Site and Hospice
Division.
G. Reports for Alternate Site Departments 020-070, 020-071, 020-074,
and Hospice Division Department 022-035 will be sent to Xxx Xxxxx, the In Home
Vice President and Controller, for review and audit. Any correction from the
incorrect assignment of cost will be corrected as soon as possible in the next
month.
H. In Home will receive a cost allocation from Manor Care's home
office cost report (relating to provisions addressed in Subsections A-E of this
Section 3) to include within In Home's cost report for allowable reimbursement
from Medicare. Any changes in this allocation process requires the approval of
the Audit Committee of In Home.
I. Notwithstanding the above, any of the expenses paid by In Home
under this Agreement for any Manor Care employee (whether actually transitioned
to In Home during the period, or not) shall be returned or credited by Manor
Care in the event that such employee is terminated on or before May 31, 1996
J. The Audit Committees of Manor Care and the special committee of
the In Home Board of Directors will retrospectively review and agree to each
company's fiscal year charges for the administrative service fees described
herein, and prospectively review and agree to the succeeding year's budgeted
administrative service fees. This will be done in both 1996 and all subsequent
years during which this Agreement is in effect.
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4. PERFORMANCE OF SERVICES. Manor Care shall perform the Services with
the same degree of care, skill and prudence customarily exercised for its own
operations.
5. LIMITATION ON LIABILITY; INDEMNIFICATION. Except as provided in the
following sentence, neither party shall have any liability under this Agreement
to the other party for damage or loss of any type suffered by the other party or
any third party as a result of the performance or non-nonperformance of the
Services provided hereunder and neither party will be responsible for general,
special, indirect, incidental or consequential damages, whether known or
unknown, that the other party or any third party may incur or experience on
account of entering into or relying on this Agreement. Each party shall
indemnify, defend and hold the other party, its directors, officers and
employees harmless from and against all damages, losses and out-of-pocket
expenses (including attorney fees) caused by or arising out of any willful
failure to perform any obligation or agreement herein.
6. ASSIGNMENT. In Home shall not assign or transfer any of its rights
under this Agreement without the prior written consent of Manor Care.
7. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing
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and shall be deemed to have been given the earlier of when actually received or
three (3) business days after such writing is deposited in the United States
mail, registered or certified mail, return receipt requested, or sent by Federal
Express or other similar overnight courier services, addressed to the parties as
stated below or to such other address as a party may designate by notice:
If to Manor Care:
Manor Care, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
ATTN: General Counsel
If to In Home:
In Home Health, Inc.
Xxxxxxx Xxxxxx, Xxxxx 000
000 Xxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000-0000
ATTN: Chief Financial Officer
8. GOVERNING LAW. This agreement shall be governed by the laws of the
State of Minnesota.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
between the parties and supersedes all proposals, commitments, writings,
negotiations and understandings, oral and written, and all other communications
between the parties relating to the subject matter of this Agreement. This
Agreement may not be amended or otherwise modified except in writing duly
executed by all of the parties. A waiver by any party of any breach or
violation of this Agreement shall not be deemed or construed as a waiver of any
subsequent breach or violation thereof.
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10. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.
11. SEVERABILITY. Should any part, term or condition hereof be declared
illegal or unenforceable or in conflict with any other law, the validity of the
remaining portions or provisions of this Agreement shall not be affected
thereby, and the illegal or unenforceable portions of the Agreement shall be and
hereby are redrafted to conform with applicable law, while leaving the remaining
portions of this Agreement intact.
12. FORCE MAJEURE. No party shall be deemed to have breached this
Agreement or be held liable for any failure or delay in the performance of all
or any portion of its obligations under this Agreement if prevented from doing
so by a cause or causes beyond its control. Without limiting the generality of
the foregoing, such causes include acts of God or the public enemy, fires,
floods, storms, earthquakes, riots, strikes, lock-outs, wars and war-operations,
restraints of government power, communication line or other utility failure or
other circumstances beyond such party's control, or by reason of the judgment,
ruling or order of any court or agency of competent jurisdiction or change of
law or regulation subsequent to the execution of this Agreement.
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13. SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 7, this
Agreement is solely for the benefit of the parties and their respective
successors and assigns. There are no third party beneficiaries of or to this
Agreement.
14. HEADINGS. Section headings are for convenience only and do not
control or affect the meaning or interpretation of any terms or provisions of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MANOR CARE, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Its Sr. V.P.
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IN HOME HEALTH, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Its CEO
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EXHIBIT A
SERVICE TO BE PROVIDED
1. LEGAL SERVICES. Manor Care will provide ongoing legal services
necessary to support the day-to-day business activities of In Home. Such
services include, but are not limited to, legal support for development and
implementation of a corporate compliance plan, acquisitions, preparation and
filing of necessary reporting disclosures with the SEC and provision of public
reports to investors upon request, labor and contracting matters. This
Agreement constitutes prior written approval of In Home for Manor Care to engage
outside legal services on behalf of In Home when necessary and to supervise such
outside counsel. In Home will be billed directly for the cost of outside
counsel.
2. CASH MANAGEMENT. Manor Care will provide ongoing cash management
services to maintain cash resources required to carry out daily operating
activities. Services include daily case concentration of depository receipts and
daily funding of disbursement accounts for payroll and general operating
expenditures. Additionally, all cash delivered to Manor Care will earn interest
as provided in that certain Inter-Company Debt and Credit Agreement entered into
between the parties.
3. FINANCE AND ACCOUNTING SERVICES. Manor Care will assist In Home in
conducting any internal audits and in formulating and implementing various
financial plans.
4. INSURANCE SERVICES. Manor Care will assist in providing to In Home
general and professional liability, workers' compensation, comprehensive
automobile liability and property insurance.
5. INFORMATION SERVICES. Manor Care will provide In Home with certain
information support development and planning services.
6. HUMAN RESOURCES & TRAINING. Manor Care will provide In Home with
support in maintaining and expanding In Home's work force through assistance in
development of hiring programs, training programs, and maintenance of an
employee database as may be required by federal, state and local mandates.
7. EMPLOYEE BENEFIT PLANS. Manor Care will, on behalf of In Home,
provide advice and assistance, as needed, with respect to employee benefit
plans, including among others, health, welfare and retirement plans, for the
benefit of In Home employees.
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8. REAL ESTATE. Manor Care will assist In Home in meeting its expansion
requirements by identifying office space, home health care and hospice locations
and negotiating leases and terms of purchase agreements.
9. OTHER SERVICES. As may be requested by In Home, Manor Care will, from
time to time, provide services not described above, including, but not limited
to, Government Relations, Purchasing and Reimbursement (the "Other Services").
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