EXHIBIT 10.10
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") dated as of May 13, 2002
("Effective Date"), by and between Mariner Health Care Management Company, a
Delaware corporation ("Manager") and ____________ ("Owner").
BACKGROUND
WHEREAS, Owner operates the various facilities listed on Exhibit A
hereto (the "Facilities") that provide long-term and skilled nursing care and
related services to patients of various acuity levels (the "Business");
WHEREAS, Owner desires to engage Manager to manage the Facilities, and
the Business on the basis, terms and conditions set forth below;
WHEREAS, Manager employs individuals with considerable experience and
expertise in managing long-term care and skilled nursing facilities similar to
the Facilities, and Manager is willing to provide such services to the
Facilities on the basis, terms and conditions set forth below;
WHEREAS, Owner desires to license from Manager the proprietary
materials listed on Exhibit B hereto (the "Proprietary Materials"); and
WHEREAS, Manager desires to sublicense to Owner the service marks,
trademarks, tradedress, tradenames, designs and logos (the "Marks") indicated on
Schedule A to the form of Marks & Logo License Agreement (the "Sublicense
Agreement") attached as Exhibit C hereto, on the terms and conditions set forth
therein.
NOW, THEREFORE, in consideration of the mutual representations,
covenants and agreements set forth below, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, Manager and Owner
agree as follows:
ARTICLE I
RETENTION OF MANAGER
1.1 RETENTION. For and during the term of this Agreement, Owner
hereby grants to Manager the sole and exclusive right, and employs Manager to
supervise and manage the Facilities and the Business in the name and for the
account of Owner upon the terms and conditions hereinafter set forth.
1.2 ACCEPTANCE. Manager accepts such appointment and agrees that
it will (a) perform its duties and responsibilities hereunder in accordance with
this Agreement, and (b) use commercially reasonable efforts to supervise and
direct the management and operation of the Facilities and the Business in an
efficient manner. Subject to the foregoing and to the other provisions of this
Agreement, Manager, without the approval of Owner (unless such approval is
herein specifically required as to policies and manner of operation), shall have
the unrestricted control and sole discretion with regard to the operation and
management of the Facilities for all customary purposes (including the exercise
of its rights and performance of its duties provided for in Article III hereof),
and the right to determine all policies affecting the appearance, maintenance,
standards of operation, quality of service, and any other matter affecting each
Facility or the conduct of the Business. Provided, however, that ultimate
responsibility for the operation of the Facility will remain with Owner as the
licensee for such Facility.
1.3 INDEPENDENT CONTRACTOR. The parties hereto expressly
acknowledge and agree that Manager is at all times acting and performing under
this Agreement as an independent contractor; provided, however, that Manager is
authorized to act as Owner's agent to the extent provided herein.
1.4 OWNERSHIP. Owner and its Affiliates shall own and/or hold all
licenses, permits and contracts obtained with respect to the Facilities (subject
to Section 3.8 hereof), and shall be the "provider" within the meaning of all
third-party contracts for the Facilities. Specifically, and without limitation,
Owner shall, to the extent allowed by law, own, hold or be a party to (a) the
Medicare provider number, (b) the Medicare provider agreement with the Centers
for Medicare and Medicaid Services ("CMS"), and (c) the Medicare certification,
(d) the Medicaid provider number, (e) the Medicaid provider agreement and (f)
the Medicaid certification for each Facility participating in such programs.
ARTICLE II
TERM
The initial term of this Agreement shall commence on the Effective Date
and shall continue for a period of one (1) year (the "Initial Term"). After the
Initial Term, this Agreement shall automatically renew for successive one year
terms (each a "Renewal Term"); provided that following the Initial Term this
Agreement may be cancelled by either party hereto upon thirty (30) days prior
written notice.
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ARTICLE III
RIGHTS AND DUTIES OF MANAGER
During the Term of this Agreement, and in the course of its management
of each Facility and the Business, Manager shall (either directly or through the
supervision, direction and management of the Facilities), as agent and on behalf
of Owner, perform or cause to be performed the following services:
3.1 GENERAL. Manager shall manage the operation of the Facilities
and the conduct of the Business thereof, including, but not limited to, (a) the
provision of long-term nursing care, specialty medical services (including, but
not limited to, rehabilitation, medically complex care and sub-acute care) and
where appropriate assisted living services to patients at the Facilities and (b)
the provision of staffing, accounting (but not external audit), billing,
collection, rate setting, and general on-site administrative services at the
Facilities. Without limitation of the foregoing, Manager shall provide each
Facility with all of the customary management services and techniques which
Manager employs in managing other facilities which it manages and Manager may
engage third-party consultants and professionals to perform such services as may
be reasonably necessary in Manager's business judgment. Provided, however, that
ultimate responsibility for the operation of the Facility shall remain with
Owner, as licensee.
3.2 EMPLOYEES. Manager, on Owner's behalf, shall hire or cause to
be hired, supervise and train an adequate staff, as required by law and subject
to availability, of nurses, nurse aides, office and other employees, including
an administrator (the "Administrator") and a registered nurse as director of
nursing (the "Director of Nursing") (each of whom may be replaced by Manager
from time to time), and promote or cause to be promoted, direct, assign and
discharge or cause to be discharged all such employees at Manager's sole
discretion. All employees shall be employees of Owner, Manager or such other
entity as Manager may have contracted with to provide employees to the
Facilities or a Facility (the "Contract Employer") and shall be carried on the
payrolls of the Manager, appropriate Facility or Contract Employer, as
determined from time to time by Manager. Manager shall also coordinate all
health and welfare insurance coverage (including COBRA matters) and other
benefits that shall be offered to such employees. It is agreed that the salaries
of all those working primarily at a Facility and all other fees and expenses
incurred in connection with the employment of such individuals shall be charged
directly to Owner as an expense of the operation of the subject Facility.
Manager shall be responsible for overseeing the payment of all federal, state
and local employment and other taxes with respect to all individuals working
primarily at a Facility and all such taxes shall be charged directly to Owner as
an expense of the operation of the subject Facility. Manager shall be
responsible for overseeing compliance with laws and regulations pertaining to
workers compensation insurance and all expenses (including, without limitation,
the cost of workers compensation insurance premiums) shall be charged directly
to Owner as an expense of the operation of the subject Facility.
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3.3 LABOR AND EMPLOYMENT MATTERS. Manager will handle and settle
all employee relations matters, union and non-union and will negotiate, on
Owner's behalf, with any labor union lawfully entitled to represent the
employees at any Facility, but any collective bargaining agreement or labor
contract resulting therefrom must first be approved by Owner who shall be the
only person authorized to execute the same. All fees and costs of outside
professionals in conducting such negotiations shall be paid out of Facility
Funds (as defined below) and the labor cost related to the operation of any
Facility shall be an expense of the operation of the subject Facility.
3.4 CONCESSIONAIRES, ETC. Manager shall have authority to
negotiate and consummate, in the name of and for the account of Owner, contracts
or arrangements with concessionaires, licensees, tenants, and other intended
users of any Facility. Any fees, expenses and charges incurred in connection
therewith shall be charged directly to Owner as an expense of the operation of
the subject Facility. Any revenue derived from concession, licenses or tenants
shall inure to the Owner.
3.5 ANCILLARY SERVICES, UTILITIES, ETC. Manager shall have
authority to enter into such contracts in the name of and for the account of
Owner as may be deemed necessary or advisable for the furnishing of all such
ancillary services, utilities, concessions, supplies and other services as may
be needed from time to time for the maintenance and operation of any Facility.
Manager shall have authority to contract for, or supervise the contracting
process in connection with, ancillary services required by the Facilities,
including, but not limited to, food, xxxxxx, beautician, pharmacy (drug and
I.V.), rehabilitation and respiratory therapy services, and mobile diagnostic
services. All fees, expenses and charges incurred in connection with the
provision of ancillary supplies and services by Manager to the patients of any
Facility shall be charged directly to Owner as an expense of the operation of
the subject Facility. Manager may contract with an Affiliate of Manager for the
provision of goods or services so long as the contracted terms are at least as
favorable as those that would be obtained through an arms length negotiation
with a third party provider.
3.6 PURCHASES. Manager shall establish purchasing strategies,
suppliers and pricing for Facility staff of food, beverages, operating supplies,
and other materials and supplies as may be needed from time to time for the
maintenance and operation of each Facility. All direct fees, expenses and
charges incurred in connection with the foregoing shall be an expense of the
operation of the subject Facility.
3.7 REPAIRS. Manager shall make or install or cause to be made or
installed in the name of and for the account of Owner any proper repairs,
replacements, additions and improvements in and to each Facility and the
furnishings and equipment thereof in order to keep and maintain the same in good
repair, working order and condition, and outfitted and equipped for the proper
operation thereof in accordance with (a) industry standards comparable to those
prevailing in other similar facilities, (b) all applicable state or local rules,
regulations, or ordinances, and (c) the terms and conditions of any lease,
mortgage or other financing arrangement identified in writing to Manager.
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3.8 LICENSES AND PERMITS. Manager shall apply for and use
commercially reasonable efforts to obtain and maintain in the name and for the
account of Owner, all licenses and permits required in connection with the
ownership of each Facility and the conduct of the Business thereof. If Manager
is required by law to obtain any license or permit in its name, Manager will use
commercially reasonable efforts to obtain and maintain such license or permit in
its name, at Owner's expense. Owner will cooperate with Manager in applying for,
obtaining, and maintaining such licenses and permits.
3.9 BILLING AND COLLECTION. Manager shall supervise the issuance
of bills or invoices for services and materials furnished by the Business and
supervise the collection of accounts receivable and monies owed to the Business;
design and maintain accounting, billing, patient and collection records; and
prepare and file, or supervise the preparation and filing of, insurance,
Medicare, Medicaid and any and all other necessary or desirable applications,
reports and claims related to revenue production. Owner expressly constitutes
and appoints Manager, to the extent permitted by applicable law, as Owner's
agent to administer, process and collect, on Owner's behalf and in its name, all
private party insurance, Medicare, Medicaid and other receivables. Manager shall
have the right to enforce Owner's rights as creditor under any contract relating
to the Business or in connection with rendering any services for the purposes of
collecting accounts receivable and monies owed to any aspect of the Business,
and Manager shall make commercially reasonable efforts to collect all such
receivables and monies.
3.10 OVERSIGHT OF CLINICAL AND QUALITY MANAGEMENT AND OPERATING
STANDARDS. Manager will provide regional management infrastructure for clinical
care quality assurance and overall operation of the Facilities. Manager will
develop and institute standards, procedures and policies for admitting and
discharging patients, for charging patients for services and for collecting the
charges from patients or third parties. The parties contemplate that such
standards, procedures and policies shall be substantially the same as the
standards, procedures and policies employed for such purposes in similar
facilities managed by Manager.
3.11. BUDGETS. Manager shall prepare for Owner's approval at least
thirty (30) days prior to the commencement of Owner's fiscal year, an operating
budget and a capital budget for the succeeding fiscal year. The operating budget
shall provide a detailed listing of all sources of revenue and expense. The
capital budget shall provide details of all planned capital improvements to the
Facility during the succeeding fiscal year.
3.12. FINANCIAL STATEMENTS. Manager shall also furnish or arrange
for the preparation of such other reports and information as may be reasonably
requested from time to time which may include (but shall not be limited to: (a)
unaudited monthly financial statements of the Business for the month then ended,
prepared on a basis consistent with the annual statements; (b) monthly census
information of the Facilities as of the end of such month in sufficient detail
to show by pay or mix (i.e., private pay, Medicare, Medicaid and other) and the
average monthly census of the Facilities; (c) an aged accounts receivable report
from each aspect of the Business in sufficient detail to
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show amounts due from each class of customer-mix by the account age
classifications of thirty (30) days, sixty (60) days, ninety (90) days, one
hundred twenty (120) days, and over one hundred twenty (120) days; and (d) any
other operating statistics or financial information as Owner may from time to
time reasonably request.
3.13 INSURANCE.
(A) Manager shall obtain and maintain, liability
insurance covering Manager's obligations arising hereunder and
malpractice insurance. Manager may obtain such insurance from companies
and through brokers offering the appropriate coverage at a commercially
reasonable cost. Manager shall also maintain, an errors and omissions
policy and directors' and officers' liability policy protecting Owner,
Manager and their respective officers, directors, executives, key
employees and Affiliates from and against claims, demands, losses, law
suits or expenses in connection with any alleged acts or omissions
regarding the management of the Facilities or any aspect of the conduct
of the Business thereof. All fees, expenses and charges incurred in
connection with the foregoing shall be an expense of the operation of
the subject Facility.
(B) Manager will obtain and maintain, as an expense of
the Facilities, insurance of the character and in the amount deemed
appropriate by Manager in its own discretion.
(C) All policies of liability insurance shall name Owner,
Manager, and all officers, directors, and Affiliates of Manager as the
insureds thereunder, as their respective interests may appear. All
policies of hazard and liability insurance shall provide coverage in
the form required by any mortgagee or lessor pursuant to the terms of
relevant mortgages, notes, deeds of trust or leases as provided by
Owner to Manager.
(D) Manager shall maintain, as an expense of the
Facilities, patient care insurance in an amount Manager deems necessary
or appropriate in its own discretion. In addition, Manager may maintain
an umbrella liability policy in an amount it deems appropriate.
(E) Manager and Owner shall give prompt notice to the
other of any claims made against either of them arising out of or in
connection with the conduct of the Business for which insurance may be
available and shall cooperate fully with each other and with any
insurance carrier to the end that all such claims will be properly
investigated, defended and adjusted.
(F) All insurance obtained by Manager for the benefit of
Owner may be provided by companies or through brokers providing similar
insurance for the facilities and business managed by Manager or owned
and operated by its Affiliates (other than Owner) and such insurance
may be provided on an omnibus basis insofar as providing coverage for
the Manager's facilities and business as
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well as the Facilities and the Business and may also be obtained from
any offshore Affiliate of Manager established for such purpose which
may be a policy issued by a so-called "captive" insurance company. In
any event, the cost of any of the foregoing insurance shall be
allocated by Manager between Manager and Owner on such basis as Manager
deems commercially appropriate. All insurance obtained by Manager will
be on such terms (including deductibles, aggregate coverages and any
self-insured retention amounts) as Manager may deem appropriate in
light of prevailing conditions in the market for such insurance and as
is consistent with established industry practice.
3.14 GOVERNMENTAL REGULATION.
(A) Manager shall use commercially reasonable efforts to
take such action as shall be necessary or appropriate to insure that
each Facility and the conduct of the Business thereof complies with all
federal, state and local laws, rules, regulations and ordinances
applicable to the subject Facility or the conduct of the Business
thereof, including, without limitation, the particular laws and
regulations applicable to skilled nursing and long-term care
facilities.
(B) Manager and Owner shall promptly provide to each
other, as and when received, copies of all notices, reports and
correspondence from governmental agencies that assert deficiencies or
charges against any Facility or that otherwise relate to the
suspension, revocation, or any other action adverse to any approval,
authorization, certificate, determination, license or permit required
or necessary to own or operate any Facility and to conduct the Business
thereof. Manager is authorized to appeal any action taken by any
governmental agency against any Facility; provided, however, that Owner
shall adequately secure and protect Manager from loss, cost, damage or
expense by bond or other means satisfactory to Manager in order to
contest by proper legal proceedings the validity of any such statute,
ordinance, law, regulation or order (or its purported application to
any Facility), provided that such contest shall not result in the
suspension of the Business of the Facility; and provided, further, that
Owner shall have no obligation to secure and protect Manager from any
loss, cost, damage or expense that is ultimately determined to have
arisen solely and directly out of Manager's material breach of any of
its covenants under this Agreement.
3.15 TAXES. Manager shall cause all taxes, assessments and charges
of every kind imposed upon any entity owning a Facility or any Facility by any
governmental authority, including interest and penalties thereon (collectively,
"Taxes"), to be paid when due from Facility Funds, subject to the terms of any
lease, mortgage or other financing arrangement pertaining to the subject
Facility. Manager shall not cause such Taxes to be paid if (a) such Taxes are
being contested by Owner in good faith at its sole expense and without cost to
Manager, (b) any enforcement action for nonpayment of such Taxes is stayed, and
(c) Owner shall have given Manager written notice of such contest and stay and
authorized the non-payment thereof, not less than ten (10) days prior to the
date on which such Taxes are due and payable. Interest or penalty payments shall
be reimbursed
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by Manager to Owner if imposed upon Owner solely by reason of the gross
negligence on the part of Manager in making the payment if Facility Funds are
available therefor.
3.16 LEGAL ACTIONS. Manager shall institute, with counsel of its
choosing, in its own name or in the name of Owner, but in any event at the
expense of Owner, any and all legal actions or proceedings to defend any claims
asserted by any third party against any Facility, Manager, Owner or the
officers, directors, employees and Affiliates of Manager and Owner, collect
charges, rent, or other sums due the Business or to lawfully oust or dispossess
tenants or other persons in possession under, or lawfully cancel, modify, or
terminate any lease, license, or concession agreement for the breach thereof or
default thereunder by the tenant, licensee, or concessionaire. Unless otherwise
directed by Owner, Manager may take, at Owner's expense, appropriate steps to
protect and/or litigate to final judgment in any appropriate court any violation
or order affecting any Facility.
3.17 BOOKS AND RECORDS. Manager on behalf of Owner shall supervise
and direct the keeping of full and accurate books of account and such other
records reflecting the results of operation of the Business as required by law.
In connection therewith, Manager shall, directly or through an Affiliate,
provide or contract for data processing required to maintain the financial, and
accounting records of the Business.
3.18. COLLECTION AND DISBURSEMENT OF FUNDS. Manager shall deposit
with one or more institutions, each of which shall be a member of the Federal
Deposit Insurance Corporation, all monies arising from and received in
connection with the operation of the Facilities and the conduct of the Business
thereof or otherwise received by Manager for and on behalf of Owner (the
"Facility Funds"). Manager shall have authority to access such accounts and
shall disburse and pay from said accounts, on behalf of Owner, in the following
order of priority, as and when required to be made in connection with:
(A) Payment of all costs and expenses arising out of the
administration, maintenance and operation of the Facilities, including,
without limitation, payroll for all employees of the Business and
related payroll taxes, fees or other charges required by a governmental
body, costs of vendors, insurance, utilities, Taxes and the fees and
expenses of outside consultants retained by Manager for the benefit of
Owner in connection with the conduct of the Business;
(B) Payment of Manager's Management Fee (including any
accrued and unpaid Management Fees, plus all accrued and unpaid
interest thereon, for prior periods), reimbursable expenses of Manager
(including any accrued and unpaid interest thereon), and all items of
corporate overhead not included in SG&A Expense (as defined below);
(C) Payment of any Facility rent or debt service on a
first mortgage (if any) on any Facility; and
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(D) Payment of any amounts due from Facility in regard of
other outstanding indebtedness.
3.19. PAYMENT OF EXPENSES. Except for SG&A Expenses (as defined
below), all expenditures and advances of every kind required or permitted of
Manager under this Agreement are for Owner's account ("Owner Expenditures").
Manager is authorized to pay all Owner Expenditures from Facility Funds. Owner
shall pay directly (or reimburse Manager promptly if Manager advances funds for)
any Owner Expenditures not paid from Facility Funds.
3.20. ACCOUNTS PAYABLE. Manager is authorized to process and pay on
behalf of Owner such accounts payable as Manager shall determine necessary or
desirable in order to efficiently administer the affairs of the facilities under
its management. Manager shall pay the Facility's accounts payable and other
obligations from Facility Funds. Manager does not assume any of Owner's
obligations or liabilities by virtue of this authorization and shall not be
obligated to advance any of its own funds on behalf of Owner. Provided however,
should Manager advance funds on behalf of Owner, Owner shall promptly reimburse
Manager any amounts advanced, upon request of Manager.
ARTICLE IV
RIGHTS AND DUTIES OF OWNER
During the Term of this Agreement, Owner makes the following covenants
which are material covenants and upon which Manager relies as an inducement to
enter into this Agreement:
4.1 RIGHTS OF INSPECTION. Owner shall have the right to enter upon
any of the Facilities upon reasonable advance notice to Manager for the purpose
of examining or inspecting same or examining or making extracts of books and
records of the Facilities, but the same shall be done with as little disruption
to the Business of the subject Facility as possible. The books and records of
the subject Facility shall not be removed from the Facility without the express
written consent of Manager. Owner acknowledges that some books and records will
be maintained at Manager's central office which books and records shall be
available for Owner's inspection upon reasonable advance notice.
4.2 COOPERATION WITH MANAGER. Owner will fully cooperate with
Manager in operating and supervising the operations of the Facilities and will
reimburse Manager for all funds expended or costs and expenses incurred to which
Manager is entitled to reimbursement hereunder. Manager shall not be required to
seek or obtain Owner's approval for any actions which Manager, in its sole
judgment, deems necessary or appropriate for the proper operation of the
Facilities and the provision of patient care in a manner that is consistent with
the operation of other facilities that are managed by Manager or owned and
operated by an Affiliate of Manager. Owner shall execute and deliver any and all
applications and other documents that may be reasonably deemed by
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Manager to be necessary or proper to be executed by Owner in connection with the
operation of the Business.
4.3 OPERATING CAPITAL. Manager shall utilize the Facility Funds as
working capital for the operation of the Facilities (including the payment of
Management Fees and reimbursable expenses owed to Manager). If additional
working capital is required, Manager shall notify Owner thereof in writing and
specifying the amount and purpose of such additional working capital and Owner
shall provide Manager with such additional working capital within fifteen (15)
business days thereafter.
4.4 CAPITAL IMPROVEMENTS. Manager shall utilize the Facility Funds
to make all capital expenditures, repairs, replacements, additions and
improvements, whether approved by Owner or otherwise required or authorized by
Section 3.7 in order to maintain and continue standards of operation of the
Facilities and to comply with the requirements of any lease, mortgage or other
financing arrangement applicable to any Facility. If additional capital
improvement funds are required, Manager shall notify Owner thereof in writing
specifying the amount and purpose of such additional capital improvement funds
and Owner shall provide Manager with such additional capital improvement funds
within fifteen (15) business days thereafter.
ARTICLE V
COMPENSATION
5.1 MANAGEMENT FEE. In consideration for the services rendered by
Manager under this Agreement, Manager shall be paid a fee equal to five percent
(5%) of net revenues realized by Owner each month while this Agreement is in
effect (the "Management Fee"). The Management Fee shall be payable monthly.
5.2 SG&A EXPENSE. Except as otherwise expressly provided for
elsewhere herein, all SG&A Expense of the Manager shall be for the account of,
and shall be borne by, Manager. Manager shall promptly reimburse the Business
for any SG&A Expense paid by the Business.
ARTICLE VI
ITEMS LICENSED TO OWNER
6.1 PROPRIETARY MATERIALS. Manager hereby grants Owner a
non-exclusive license to use the Proprietary Materials during the term of this
Agreement; provided, however, that the Proprietary Materials are used
exclusively in connection with the conduct of the Business. Owner expressly
acknowledges that it has no ownership or other interest in any of the
Proprietary Materials. Owner is prohibited from sublicensing its right to use
the Proprietary Materials to any third party. Upon termination of this
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Agreement, Owner agrees to promptly return or destroy at Manager's request all
Proprietary Materials in its possession.
6.2 MARKS. Manager hereby grants Owner a non-exclusive license to
use the Marks on the terms and conditions set forth in the Sublicense Agreement.
ARTICLE VII
LICENSES, PERMITS, CERTIFICATIONS AND CONTESTS
7.1 LICENSES GENERALLY. Manager, as agent of Owner, shall at
Owner's expense assist Owner in applying for, in the name of Owner, and
obtaining and maintaining, on behalf of Owner, all necessary licenses, permits
and approvals to operate the Business to substantially comply with all
applicable laws, rules and regulations and to be eligible for participation in
the Medicaid Program and Federal Medicare Program. Neither Owner nor Manager
shall knowingly take any action or fail to take any action which such party
knows will cause any governmental authority having jurisdiction over the
operation of the Business to institute any proceeding for the suspension,
rescission or revocation of any necessary license, permit or approval. Manager
shall not take any action or fail to take action which Manager knows will
adversely affect the Owner's right to accept and obtain payments under Medicare,
Medicaid or any other public or private third-party medical payments programs.
7.2 CONTESTS BY MANAGER. Manager shall, with the approval of and
at the expense of Owner, have the right, on behalf of Owner, to contest by
appropriate legal proceedings, diligently conducted in good faith in the name of
Owner, the validity or application of any agreement, law, ordinance, rule,
ruling, regulation, order or requirement of any governmental agency having
jurisdiction over the operation of the Business, including, without limitation,
enforcement actions initiated against Owner or any Facility for alleged
violations of applicable laws. Owner shall reasonably cooperate with Manager
with regard to any such contest. Counsel for any such contest shall be selected
by Manager. Manager shall, at Owner's cost and expense, process all third-party
payment claims and appeals for the services provided by the Business, including
without limitation, exhaustion of all applicable administrative proceedings or
procedures, adjustment and denials by governmental agencies or their fiscal
intermediaries and other third-party payors.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Owner and Manager make the following representations and
warranties to each other:
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8.1 STATUS. The representing party is a corporation duly organized
and validly existing in good standing under the laws of its state of formation,
and has all necessary power and authority to carry on its business as now being
conducted, to operate its properties as now being operated, to enter into this
Agreement and to observe and perform its obligations hereunder.
8.2 AUTHORITY AND DUE EXECUTION. The representing party has the
corporate power and authority to execute and deliver this Agreement and all
related documents and to carry out the transactions contemplated by this
Agreement. This Agreement constitutes a valid and binding obligation of the
representing party, enforceable against such party in accordance with its terms,
except to the extent that its enforceability is limited by applicable
bankruptcy, reorganization, insolvency, receivership or other laws of general
application or equitable principles relating to or affecting the enforcement of
creditors' rights.
ARTICLE IX
TERMINATION RIGHTS
9.1 TERMINATION. Following the Initial Term, this Agreement shall
be terminable by either party hereto upon thirty (30) days prior written notice.
If Owner engages in any transaction pursuant to which it conveys a majority or
substantially all of the assets associated with the Business to a third party or
a third party acquires fifty percent (50%) or more of Owner's outstanding equity
securities or the Owner merges or consolidates with a third party, the Manager
shall have the option of terminating this Agreement upon ten (10) days prior
written notice.
9.2 SURVIVING RIGHTS UPON TERMINATION. If either party exercises
its option to terminate this Agreement pursuant to this Article IX, each party
shall account for and pay to the other all sums due and owing pursuant to the
terms of this Agreement within thirty (30) days after the effective date of
termination. Without limiting the generality of the foregoing, within thirty
(30) days after the effective date of termination of this Agreement, Owner shall
be obligated to pay to Manager all accrued and unpaid Management Fees through
the date of such termination and all reimbursable expenses of Manager, together
with all accrued and unpaid interest thereon, notwithstanding that available
Facility Funds may not be sufficient for such purposes. All other rights and
obligations of the parties under this Agreement shall terminate.
9.3 TERMINATION OF SUBLICENSE AGREEMENT. The Sublicense Agreement
shall terminate concurrent with the termination of this Agreement.
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ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION OF OWNER BY MANAGER. Manager shall indemnify
and hold Owner and its officers, directors, stockholders, employees and
Affiliates harmless from any and all claims, losses, judgments, damages,
expenses and liabilities whatsoever (including reasonable attorneys' fees)
incurred by any of them, arising out of any third-party claims that are caused
solely by any grossly negligent act, willful omission or fraud of Manager in
connection with the performance of its duties under this Agreement; provided,
however, that Manager's obligation to indemnify Owner shall not extend to any
Medicare cost disallowances, or any Medicare, Medicaid, or other governmental
fines or penalties. Manager's obligations under this Section 10.1 shall not
survive termination of this Agreement.
10.2 INDEMNIFICATION OF MANAGER BY OWNER. Owner shall indemnify and
hold Manager and Manager's officers, directors, stockholders, employees and
Affiliates harmless from any and all claims, losses, judgments, damages,
expenses and liabilities whatsoever (including reasonable attorneys' fees)
incurred by any of them in connection with, by reason of, or arising out of: (i)
Manager's performance of services, or undertaking of responsibilities under this
Agreement; (ii) Manager's status as Manager of the Facilities; (iii) any default
by Owner in fulfilling Owner's obligations under this Agreement; (iv) any damage
to property or injury or death to persons, occurring in or with respect to any
Facility; and/or (v) any other claim asserted against any of them in connection
with the Facilities or any matter relating thereto, excluding, however, any
matters covered by Manager's indemnify under Section 10.1 above. Owner's
obligations under this Section 10.2 shall not survive termination of this
Agreement.
10.3 CONTROL OF DEFENSE OF INDEMNIFIABLE CLAIMS. A party seeking
indemnification under this Article X (the "Indemnitee") shall give the other
party (the "Indemnitor") prompt written notice of the claim for which it seeks
indemnification. Failure of the Indemnitee to give such prompt notice shall not
relieve the Indemnitor of its indemnification obligation, provided that such
indemnification obligation shall be reduced by the amount of any actual damages
suffered by the Indemnitor resulting from a failure to receive prompt notice
hereunder. The Indemnitor shall provide the defense of such claim, including,
without limitation, retention and payment of attorneys; provided, however, that
in the event there are defenses and/or counterclaims available to the Indemnitee
that are not shared by or available to Indemnitor, then the Indemnitee may
retain (at Indemnitor's expense) counsel to assert such defenses and/or
counterclaims.
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ARTICLE XI
CONDEMNATION
If the whole of any Facility shall be taken or condemned in any eminent
domain, condemnation, compulsory acquisition, or like proceeding by a competent
authority for any public or quasi-public use or purpose or if such portion
thereof shall be taken or condemned as to make it unsuitable for its primary
intended use, then this Agreement shall cease and terminate as to such Facility
on the date on which Owner shall be required to surrender possession of the
Facility. Manager shall continue to supervise and direct the management of the
Facility until such time as Owner shall be required to surrender possession of
the Facility as a consequence of such taking or condemnation.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 NO PARTNERSHIP OR JOINT VENTURE. Nothing contained in this
Agreement shall constitute or be construed to be or create a partnership or
joint venture between Owner, its successors, or assigns, on the one part and
Manager, its successors, or assigns, on the other part. Notwithstanding the
foregoing, the parties hereby agree that they shall each have a duty to act in
good faith and to deal fairly with the other party hereto.
12.2 GOVERNMENT REGULATIONS. In accordance with their respective
obligations under this Agreement, Owner and Manager shall use their best efforts
to maintain the Business in compliance with the requirements of any statute,
ordinance, law, rule, regulation or order of any governmental or regulatory body
having jurisdiction over the Business. If for any reason any term or condition
of this Agreement is found to be invalid or contrary to government laws, rules,
regulations or orders, Owner and Manager agree to immediately and in good faith
modify such term or condition to comply with such government law, rule,
regulation or order.
12.3 ASSIGNMENT. This Agreement may be assigned by Manager. Neither
this Agreement nor any rights or obligations under it may be assigned by Owner
without Manager's prior written consent. In the event of any permitted
assignment, this Agreement will bind and inure to the benefit of the parties and
their respective successors and permitted assigns.
12.4 GOVERNING LAW; VENUE. This Agreement is made under, and shall
be construed and enforced in accordance with, the laws of the State of Georgia
applicable to agreements made and to be performed solely therein, without giving
effect to principles of conflicts of law. The parties irrevocably submit and
consent to the jurisdiction of any Georgia state court sitting in Xxxxxx County,
Georgia or Federal court sitting in Atlanta, Georgia over any action or
proceeding arising out of or relating to this Agreement, and
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the parties hereby irrevocably agree that all claims in respect of any such
action or proceeding may be heard and determined in such Georgia state or
Federal court.
12.5 FURTHER ASSURANCES. At any time and from time to time during
the term of this Agreement, at either party's request, each party shall promptly
execute and deliver all such further agreements, certificates, instruments and
documents, including a certificate of Owner in a form reasonably satisfactory to
Manager, stating that this Agreement is in effect with respect to, and is
binding against, Owner, and each party shall perform such further actions, as
the other party may reasonably request in order to fully consummate the
transactions contemplated by this Agreement and carry out the purposes and
intent of this Agreement.
12.6 CERTAIN DEFINITIONS.
(A) AFFILIATE. The term "Affiliate," as used in this
Agreement, means a person that, directly or indirectly, controls or is
controlled by, or is under common control with, the person specified.
(B) FACILITIES. The term "Facilities," as used in this
Agreement, means the collective reference to all of the long-term care
facilities, and the equipment and supplies at such facilities, of Owner
at the date of this Agreement, subject to the effect of subsequent
acquisitions and dispositions, including as of the date hereof, without
limitation, the facilities set forth on Exhibit A hereto.
(C) GAAP. The term "GAAP," as used in this Agreement,
means generally accepted accounting principles, as in effect in the
United States of America on the date hereof and applied on a basis
consistent with the manner in which such principles were applied in the
preparation of the historical financial statements of Owner.
(D) PERSON. The term "person," as used in this Agreement,
means any individual, sole proprietorship, joint venture, corporation,
business unit, partnership, governmental body, regulatory agency or
other entity of any nature.
(E) SG&A EXPENSE. The term "SG&A Expense," as used in
this Agreement, means the non-extraordinary sales, general and
administrative expenses of the Business that are incurred by Manager in
connection with fulfilling its obligations under this Agreement and
which are not reimbursable by Owner including, by way of example, the
salaries and employment costs of Manager's officers and central office
staff as well as Manager's central office overhead not specifically
allocable to the Business in general or any Facility in particular
pursuant to the terms of this Agreement. Notwithstanding the foregoing,
third party expenses relating to (i) external auditing, (ii) third
party legal fees and expenses and (iii) the various fees, charges and
expenses specifically enumerated in Article III as expenses of the
operation of the subject Facility, including, without limitation,
insurance coverage for the Facilities, the Business, the officers,
employees, agents and representatives of the Business shall not be
included in SG&A Expense.
15
12.7 HEADINGS, ETC. The article and paragraph headings contained
herein are for convenience of reference only and are not intended to define,
limit, or describe the scope of intent of any provision of this Agreement. The
Exhibits attached hereto form part of this Agreement.
12.8 APPROVAL OR CONSENT. Whenever under any provisions of this
Agreement, the approval or consent of either party is required, the decision
thereon shall be promptly given and such approval or consent shall not be
unreasonably withheld, unless this Agreement expressly provides that a decision
shall be made in a party's sole discretion. It is further understood and agreed
that whenever under any provisions of this Agreement the approval or consent of
Owner is required, such approval or consent may be given by any person or
persons (each a "Designee") designated in a notification given to Manager by the
Board of Directors of Owner. For all purposes under this Agreement, Manager
shall determine solely from the latest such notification received by it the
Designees authorized to give such approval or consent. Manager shall rely
exclusively and conclusively on the designation set forth in such notification,
notwithstanding any notice of knowledge to the contrary and any approval or
consent given by any such Designee shall be conclusively valid and binding on
Owner.
12.9 ENFORCEABILITY. Should any provision of this Agreement be
unenforceable as between the parties, such unenforceability shall not affect the
enforceability of the other provisions of this Agreement.
12.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.11 ENTIRE AGREEMENT, AMENDMENT & WAIVER. This Agreement
constitutes the final and entire agreement between the parties relating to its
subject matter and supersedes any and all prior or contemporaneous letters,
memoranda, representations, discussions, negotiations, understandings and
agreements, whether written or oral, with respect to such subject matter, all of
the same being merged herein. This Agreement may be amended, modified or
supplemented only by a writing that refers explicitly to this Agreement and that
is signed by authorized representatives on behalf of both parties. No waiver
will be implied from conduct or failure to timely enforce any rights. No waiver
will be effective unless in a writing signed on behalf of the party against
which the waiver is asserted.
12.12 NOTICES. All notices, reports, requests, approvals, and other
communications required or permitted under this Agreement must be in writing and
will be deemed effective upon receipt at the principal place of business of the
receiving party.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Management Agreement
to be executed on their behalf by their duly authorized representatives, as of
the day and year written above.
OWNER:
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
MANAGER:
MARINER HEALTH CARE MANAGEMENT COMPANY
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
17
EXHIBIT A
FACILITIES
EXHIBIT B
PROPRIETARY MATERIALS
EXHIBIT C
MARKS & LOGO LICENSE AGREEMENT
This Marks & Logo License Agreement ("License") is made and entered into as of
the Effective Date of the Management Agreement ("Agreement"); is by and between
Mariner Health Care Management Company ("Manager") and ____________________
("Owner"), both as identified in the Agreement; and except as otherwise
expressly stated herein, is subject to the terms and conditions of the
Agreement.
BACKGROUND
WHEREAS, Manager owns or licenses right, title and interest in and to the
trademarks, service marks, trade dress, trade names, designs and logos listed on
Schedule A attached hereto and made a part hereof (collectively, the "Marks");
WHEREAS the Marks are used on or in connection with its business of providing
healthcare, assisted and extended living, skilled nursing and other like
services (the "Business"); and
WHEREAS, Owner desires to obtain a license under the Marks to use certain Marks,
and Manager is willing to grant such a license to Owner, upon the terms and
subject to the conditions of this License.
NOW, THEREFORE, in consideration of the above premises and the covenants and
terms set forth herein, the parties agree as follows:
1. LICENSE. From the Effective Date (as defined in the Agreement) until
the earlier of such date as (i) the Agreement terminates, expires or is deemed
void ("Termination") and (ii) this License is terminated or cancelled as
provided herein, Manager hereby grants to Owner a limited, revocable,
non-exclusive license to use, display and perform the Marks in connection with
Owner's Business.
2. QUALITY STANDARDS. Owner shall use the Marks so as to uphold the high
quality standards presently associated with the Marks, and Manager shall have
the right to monitor the use of the Marks by Owner for compliance with such
standards, as determined by Manager in its discretion. From time to time Manager
may issue guidelines with regard to the use of the Marks or a Xxxx, and Owner
agrees to immediately comply in full with such guidelines. Initially, the
current standards employed by Manager are agreed to be sufficient with respect
to Owner's use of the Marks.
3. ACKNOWLEDGEMENT OF OWNERSHIP. Owner acknowledges that (i) Manager and
its licensors are the sole and exclusive owner of the Marks, (ii) Owner has no
legal or equitable rights to the Marks, (iii) Owner's sole right to use the
Marks is pursuant to this License, (iv) Owner will cease all use of the Marks,
including any use within its company name, upon Termination of this License,
and (v) any rights accruing from Owner's use of the Marks shall accrue to the
benefit of Manager and/or its licensors. Owner agrees to never challenge or
contest Manager's ownership of, or license rights in, the Marks or the
enforceability or validity of the Marks in favor of Manager or its licensors.
Owner shall fully cooperate with Manager in any attempts by Manager or its
licensors to protect its rights in the Marks or to acquire new rights in the
Marks and will execute all necessary truthful papers relating to the
acquisition of such rights. Owner acknowledges and agrees that Manager's
licensors are direct and intended third party beneficiaries of the License
and may enforce its rights directly against or through Owner to the extent
it relates to licensors' Marks.
4. TERMINATION.
4.1 TERMINATION FOR CAUSE. Manager may terminate this License upon written
notice of such termination, if Owner commits a material breach of this License
and fails to correct or cure such breach within thirty (30) days following
written notice by Manager specifying the breach. A serious misuse of the Marks
by Owner that injures the goodwill of the Marks or the Manager's rights therein
shall be considered a material breach. In the event that the Agreement
terminates or expires, this License shall automatically terminate when the
Agreement terminates.
4.2 TERMINATION FOR CONVENIENCE. Manager shall be entitled to terminate
this License for its convenience and without cause and without compensation to
Owner upon ninety (90) days' prior notice to Owner if Manager determines, in its
sole discretion, that it is no longer in Manager's best interest for this
License to remain in effect.
5. DISCLAIMER. THE MARKS ARE LICENSED AND PROVIDED "AS IS". TO THE MAXIMUM
EXTENT PERMITTED BY LAW, (I) ALL WARRANTIES UNDER THIS LICENSE, WHETHER
EXPRESSED OR IMPLIED, INCLUDING (WITHOUT LIMITATION) THOSE OF MERCHANIBILITY,
TITLE AND FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED; AND (II) MANAGER
SHALL NOT BE LIABLE TO OWNER, OR ANY THIRD PARTY, UNDER OR ARISING FROM THIS
LICENSE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES,
WETHER IN TORT, CONTRACT OR OTHERWISE, INCLUDING (WITHOUT LIMITATION) ANY LOST
PROFITS OR LOSS OF GOODWILL. MANAGER'S MAXIMUM LIABILITY IN AGGREGATE UNDER OR
ARISING FROM THIS AGREEMENT, OR ITS OBLIGATIONS OR LICENSES GRANTED UNDER IT,
SHALL NOT EXCEED $100.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have executed, sealed and delivered this License
through their duly authorized representatives as of the Effective Date.
OWNER:
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
MANAGER:
MARINER HEALTH CARE MANAGEMENT COMPANY
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SCHEDULE A
MARKS & LOGO LICENSE AGREEMENT
LIST OF MARKS
