MANAGEMENT AGREEMENT
THIS AGREEMENT entered into this 3rd day of July, 2001 by and between
Premier Home Healthcare Services, Inc., a New York corporation (hereinafter
referred to as the "Manager") and Star Multi Care Services, Inc., a New York
corporation (hereinafter referred to as the "Agency"). This Agreement shall
become effective as set forth in Section 1.
Whereas, Manager and Agency are New York State licensed home care services
agencies; and
WHEREAS, the Agency desires to employ Manager, under the terms of this
Agreement, to provide its experience, skills and supervision and to make
available certain personnel in the New York operations of Agency's home care
services agency with the full authority and ultimate control of the Agency
remaining with its Board of Directors (hereinafter the "Board"); and
WHEREAS, Manager has entered into an Asset Purchase Agreement (the
"Purchase Agreement") with the Agency dated as of the date hereof.
NOW, THEREFORE, in consideration of the premises and the obligations
undertaken by the parties pursuant hereto, the parties hereby agree as follows:
1. EMPLOYMENT SERVICES AND DUTIES
1.1 Employment. Agency hereby retains Manager, and Manager hereby
agrees to act as manager of the New York operations of the Agency (The " New
York Operations"), subject to all the provisions hereof; provided that the
Manager shall not render any services or receive any compensation hereunder
until the Effective Date (as hereinafter defined).
1.2 Authority and Responsibilities of Manager. From the Effective
Date, Manager shall have the authority and responsibility to conduct, supervise
and effectively manage the day-to-day operation of the New York Operations,
including but not limited to, collecting all revenues and applying all such
revenues collected to expenses of the Agency. In the absence of oral or written
direction or written policies of the Board (the "Board"), Manager shall be
expected to exercise the reasonable business judgment of a management company in
its management activities. Manager shall specifically have responsibility and
commensurate authority, subject to the direction of the Board to act on its
behalf under this Agreement, in accordance with the written policies of the
Board, and the budgets approved by the Board as hereinafter provided, for the
following activities:
(a) Charges. The establishment, maintenance, revision and
administration of the overall charge structure of the New York Operations
pursuant to pertinent regulations, including, but not limited to, patient
charges, charges for ancillary services, charges for supplies and special
services.
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(b) Personnel Administration. The hiring, discharge,
supervision and management of all employees of the New York Operations,
including the determination, from time to time, of the numbers and
qualifications of employees needed in the various departments and services of
the Agency. The establishment, revision and administration of wage scales, rates
of compensation, employee benefits, rates and conditions of employment,
in-service training, attendance at seminars or conferences, staffing schedules,
and job and position descriptions with respect to all employees of the New York
Operations. Manager shall hire and discharge the staff of the New York
Operations, including professional employees pursuant to misconduct of such
employees or the staffing requirements of the Agency necessary for quality
patient care.
(c) Collection of Accounts. The issuance of bills for services
and materials furnished by the New York Operations, and the collection of
accounts and monies owed to the New York Operations for services provided by the
Agency or by the Manager on behalf of the New York Operations from the Effective
Date and thereafter, including the responsibility to enforce the rights of the
Agency as creditor under any contract or in connection with the rendering of any
service.
(d) Payment of Accounts and Indebtedness. The payment of
payroll, trade accounts, amounts due on short and long-term indebtedness, taxes
and all other obligations of the New York Operations incurred by the Agency or
by the Manager from the Effective Date and thereafter; provided, however, that
the responsibility of the Manager on behalf of the New York Operations under
this paragraph shall be limited to the exercise of reasonable diligence and care
to apply the funds collected in the operation of the Agency to the obligations
incurred in such operations in a timely and prudent manner, and Manager shall
not become personally liable or act in a guarantor capacity with respect to any
such obligation of the Agency through the Effective Date.
(e) Accounting and Financial Records. The establishment and
administration of accounting procedures and controls, in accordance with
generally accepted accounting principles and the establishment and
administration of systems for the development, preparation and safekeeping of
records and books of account relating to the business and financial affairs of
the New York Operations.
(f) Depositories for Funds. The maintenance of accounts in
such banks, savings and loan associations, and other financial institutions as
the Board may, from time to time, select (including certificates of deposit)
with such balances therein (which may be interest bearing or non-interest
bearing) as Manager shall, from time to time, deem appropriate, taking into
account the operating needs of the New York Operations and the disbursements
from such accounts of such amounts of the Agency's funds as Manager, from time
to time, determine is appropriate in the discharge of its responsibilities under
this Agreement; provided, however, that Manager shall not, in any case, have any
obligation to supply, out of its own funds, working capital for the Agency.
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(g) Purchases and Leases. The management of all purchases and
leases of real property, equipment, supplies and all materials and services
which Manager shall deem to be necessary in the operation of the New York
Operations . Any purchase agreement which will obligate the Agency beyond the
term of this Agreement, and any purchase or lease of real property or capital
equipment, shall be subject to approval of the Board.
(h) Quality Control. The evaluation of all quality control
aspects of the New York Operations , and the implementation, with Board
approval, of quality control programs designed to meet standards imposed by
appropriate certifying agencies and to bring about a high standard of health
care in accordance with Board policies and resources available to the Agency.
(i) Compliance with Law. During the course of performing its
duties under this Agreement, the Manager agrees to comply with all applicable
federal, state and local statutes, regulations, rules and guidelines.
1.3. Contracts for Services. Manager shall be empowered to
negotiate, enter into, terminate and administer on behalf of the New York
Operations contracts for services by medical, paramedical and other persons and
organizations.
1.4 Prohibited Acts and Retention of Powers by Agency.
Notwithstanding any other provision of this Agreement the Board retains and the
Manager is prohibited from exercising:
(a) direct independent authority to hire or fire the Manager
or the Agency's Administrator;
(b) independent control of the Agency's books and records;
(c) authority over the disposition of assets and the
authority to incur on behalf of the Agency liabilities
not normally associated with the day-to-day operation of
the Agency; and
(d) authority for the independent adoption and enforcement
of policies affecting the delivery of health care
services.
1.5 Commissioner's Approval. This effectiveness of this Agreement is
subject to the approval of the Commissioner (the "Commissioner") of the New York
State Department of Health (the "Department") It shall be the sole agreement
between Manager and the Agency for the purpose of managing the day-to-day
activities of the Agency, or any portion thereof, and any amendments or
revisions to this Agreement which increase the amount or extent of authority
delegated to Manager shall be effective only with the prior written consent of
the Commissioner.
2. ADMINISTRATOR AND OTHER PERSONNEL
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2.1 Administrator. Manager may, during the term hereof, provide the
services of a qualified agency administrator (the "Administrator"), whose
initial and continuing appointment and term of appointment shall be subject to
the approval of the Board and who will act as the chief administrative officer
of the Agency. The Administrator will be and remain the employee of Manager for
the term of this Agreement. His duties shall be, to the extent the Manager is
authorized hereunder, to effect or deal with any of the following, to:
(a) Equip the Agency with all necessary and needed facilities
for the care and treatment of patients and for the use of officers and employees
thereof, and purchase all necessary supplies.
(b) Have general supervision and control of the records and
accounts of the Agency and all its internal affairs; maintain discipline
therein, and enforce compliance with and obedience to all rules, bylaws, and
regulations adopted by the Board for the discipline and management of said
Agency, and the employees thereof, and make and enforce such further rules,
regulations and orders as it may deem necessary, not inconsistent with law, or
with the rules, regulations and directions of the Board.
(c) Appoint such employees as it may reasonable think proper
and necessary for the efficient performance of the business of the Agency,
prescribe their duties and discharge any such employee pursuant to the
provisions of law.
(d) Cause proper accounts and records of the business and
operations of the Agency to be kept regularly from day to day, in books and on
forms provided for that purpose; see that such accounts and records are
correctly made up for the annual report to the Board; and present the same to
the Board on request, who shall incorporate them in their annual report.
(e) Cause a careful examination to be made of the physical
condition of all persons treated by the Agency; and shall cause a record to be
kept of the condition of each patient when treated, and from time to time
thereafter.
(f) Collect and receive all money due the Agency, keep an
accurate account of the same, and report the same at the ensuing meeting of the
Board.
2.2 Controller. Manager may provide, during the term hereof, a
qualified agency controller (the "Controller"), whose initial and continuing
appointment and the term of appointment shall be subject to the approval of the
Board, who shall act as the chief accounting and financial officer of the
Agency. The Controller will be and remain an employee of Manager for the term of
this Agreement.
3. DIVISION OF AUTHORITY AND RESPONSIBILITY
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The Board. The Agency's Board shall retain full legal
authority over the operation of the Agency and ongoing responsibility for
compliance with all statutory and regulatory requirements. Any powers not
delegated specifically to Manager through the provisions of this Agreement shall
remain with the Board. The Board shall represent the Agency in matters
pertaining to the interpretation of this Agreement; provided that in any
situation in which, pursuant to the terms of this Agreement, the Board shall be
required or permitted to take any action, to give any approval or to receive any
report, Manager shall be entitled to rely upon the written statement of the
Chairman of the Board of the Agency to the effect that any such action or
approval has been taken or given.
4. COMMUNICATIONS AND REPORTS
Manager shall be available to report to and consult with the Board
on such matters and at such times as the Board shall reasonably request.
5. LICENSING; ACCREDITATION
Both Manager and Agency agree to abide by all laws, ordinances,
rules and regulations of state, local or Federal governments pertaining to
operation of the Agency and to the operation of this Agreement. Notwithstanding
any other provision in this Agreement, the Agency remains responsible for
insuring that any service provided pursuant to this Agreement complies with all
pertinent provisions of Federal, State and local statutes, rules and
regulations.
6. COMPENSATION
As compensation for the management services to be rendered
hereunder, the Agency shall pay to Manager a management fee in the amount of
Ten($10.) Dollars per month.
7. TERM OF AGREEMENT
7.1 The term of this Agreement shall commence upon (the "Effective
Date") the date this Agreement is approved by the Commissioner of the Department
and shall terminate on the Closing Date of the sale to the Manager of the Assets
of the New York Operations or (ii) the date mutually agreed upon by the Manager
and the Agency, whichever is earlier but in no case after June 30, 2002 (the
"Term").
7.2 This Agreement may be terminated by the Commissioner, without
financial penalty to the Board, not more than sixty (60) days after notification
to the parties by the Department of a determination that the management of the
Agency is so deficient that the health and safety of patients would be
threatened by continuation of this Agreement.
7.3 The Board may terminate this Agreement and discharge Manager and
any employee appointed by the Manager from their positions at the Agency without
Cause (as hereinafter defined) upon 30 days prior notice to Manager or with
Cause upon 5 business days prior notice to Manager. For this purpose "Cause"
means intentional misconduct, gross negligence or violation of
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this Agreement by Manager that causes material loss or injury to the Agency or
materially interferes with its performing health care services if such conduct
or violation is not cured within 10 business days after notice, specifying such
conduct or violation in reasonable detail, is given to Manager by the Board.
7.4 This Agreement may be terminated by Manager upon the occurrence of an
Event of Default (as hereinafter defined)
1.8. INSURANCE; INDEMNIFICATION
8.1 Insurance. The Manager shall secure and maintain, or cause to be
secured and maintained, with respect to the New York Operations, during the term
of this Agreement, Worker's Compensation Disability and Employer's Liability,
and Comprehensive General and Professional Liability (including Personal Injury,
Products and Completed Operations Liability, and Blanket Automobile Liability)
Insurance providing-reasonable limits of liability. It is further agreed that
all such policies of insurance, are to be written or amended to include the
Agency, its agents, servants, employees, officers and directors as Additional
Insureds if possible. If Manager shall fail to obtain or pay the premiums on
insurance and maintain in force any such insurance, Agency may obtain the same
for the account of Manager and at the expense of Manager. Notwithstanding the
foregoing, the Agency shall indemnify and hold Manager harmless from any and all
liability, including reasonable attorney's fees, caused by or resulting from the
negligent or intentional acts or omissions of any member of the Board, unless
such liability is primarily caused by the intentional misconduct of Manager.
8.2 Indemnification.
(a) If any legal proceeding shall be instituted, or any claim or
demand made, against the Manager for which the Agency must indemnify the
Manager, the Manager shall give prompt written notice of the claim to the
Agency. The omission so to notify the Agency, however, shall not relieve the
Agency from any duty to indemnify which otherwise might exist with regard to
such claim unless (and only to the extent that) the omission to notify
materially prejudices the ability of the Agency to assume the defense of such
claim of its insurer.
(b) After the Agency has received notice from the Manager that a
claim has been asserted against the Manager for which the Agency must indemnify
the Manager, the Agency shall promptly pay to the Manager the amount of such
damages in accordance with and subject to the provisions of this Section;
provided, however, that no such payment shall be due during any period which the
Agency is contesting in good faith either its obligation to make such
indemnification or the amount of damages payable or both. After the Agency has
received notice from the Manager that a claim has been asserted against it by a
third party, the Agency shall have the right, upon giving written notice to the
Manager, to participate in the defense of such claim or to elect to assume the
defense against the claim, at its own expense, through an attorney selected by
the Agency and
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approved by the Manager, which approval shall not be unreasonably withheld;
provided, however, that it shall be a condition to such election to assume such
defense that (i) the Agency shall provide the Manager with evidence reasonably
acceptable to the Manager that the Agency will have the financial resources to
defend against the claim and to fulfill its indemnification hereunder and (ii)
the Agency conducts the defense of the claim actively and diligently. If the
Agency fails to give notice of such election within thirty days (30) after
notice, then the Agency shall be deemed to have elected not to assume the
defense of such claim and the Manager may defend against the claim with its own
attorney.
(c) If the Agency so elects to participate in the defense of such
claim or to assume the defense against a claim within thirty (30) days after
notice and the conditions set forth above are satisfied, then the Manager will
cooperate and make available to the Agency (and its representatives) at
reasonable times on prior written notice to Manager, all employees, information,
books and records in its possession or under its control which are reasonably
necessary or useful in connection with such defense; and if the Agency shall
have elected to assume the defense of a claim, then the Agency shall have the
right to compromise and settle in good faith any such claim with the consent of
the Manager (such consent not to be unreasonably withheld) provided that the
conditions set forth above are satisfied. If the Agency shall elect to defend or
to agree in writing to compromise or to settle any such claim, then it shall be
bound by any ultimate judgment or settlement as to the existence and amount of
the claim, and the amount of said judgment or settlement shall be conclusively
deemed for all purposes of this Agreement to be a liability on account of which
the Manager is entitled to be indemnified hereunder. If the Agency is conducting
the defense of a claim, the Manager may retain separate co-counsel at its cost
and expense and participate in such defense.
(d) If the Agency does not elect to assume or is deemed to have
elected not to assume the defense of a claim or in the event any of the
conditions set forth above becomes unsatisfied then: (i) the Manager alone shall
have the right to conduct such defense but shall use its best efforts to inform
the Agency as to the status of any proceedings; (ii) the Manager shall have the
right to compromise and to settle, in good faith, the claim without the prior
consent of the Agency; (iii) the Agency will periodically reimburse the Manager
for costs (including reasonable legal fees); and (iv) if it is ultimately
determined the claim of loss which shall form the basis of such judgment or
settlement is one that is validly an obligation of the Agency that elected not
to assume the defense, then the Agency shall be bound by any ultimate judgment
or settlement as to the existence and the amount of the claim and the amount of
said judgment or settlement (including the costs and expenses of defending such
claims) shall be conclusively deemed for all purposes of this Agreement to be a
liability on account of which the Manager is entitled to be indemnified
hereunder.
A claim for indemnification for any matter not involving a third
party claim may be asserted by notice to the party for whom indemnification is
sought. After receipt of such notice, the Agency shall pay the Manager the
amount of such damages within thirty (30) days; provided, however, that no such
payments shall be due during any period in which the Agency is contesting in
good faith either its obligation to make such indemnification or the amount of
damages payable or both.
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9. MISCELLANEOUS
9.1 Employment of Agency Employees. As of the Effective Date The
Manager shall be responsible for all wages and benefits of the health care
employees providing services in the New York area, including the withholding
and/or payment of all federal, state and local payroll taxes including FICA,
Medicare, unemployment insurance, worker's compensation insurance, and federal
and state payroll taxes for field employees. Due to the Manager's
responsibilities for wages, benefits and payroll taxes, and solely for the
purposes of providing such payroll services, all of the Agency's health care
employees providing services in the New York area shall be employees of the
Manager. However, the Agency's Board of Directors reserves the authority to hire
or terminate the Administrator .
9.2 Non-Assumption of Liabilities. Manager shall not, by entering
into and performing this Agreement, become liable for, and the Agency shall
indemnify Manager against, any of the existing or future obligations through the
Effective Date, liabilities or debts of the Agency, However, commencing on the
Effective Date, the Manager shall be solely liable for the debts and liabilities
of the New York Operations and incurred by Manager from the date thereof, and
Manager agrees to indemnify, defend and hold harmless Agency from and against
any and all claims, demands, costs, and liabilities, including reasonable
attorneys' fees, made or charged against Agency which arise from Manager's
breach of any of its material obligations hereunder.
9.3 Access to the Agency; Confidentiality of Records. Manager shall,
during the term hereof, be given complete access to the Agency, its record,
offices and facilities in order that it may carry out its obligations hereunder,
subject to confidential requirements of patient medical records as established
by the Board. Manager shall use its best efforts to maintain the confidentiality
of all files and records, including patient records, of the Agency, disclosing
the same only as directed by law or by the Board in any particular instance.
9.4 Disclaimer of Intent to Become Partners. Manager and the Agency
shall not, by virtue of this Agreement, be deemed partners or joint venturers in
the operation of the Agency or any related facility. It is expressly understood
that Manager is hereby retained by Agency to manage the Agency on behalf of the
Agency, and that Manager is constituted the agent of the Agency only for the
purpose of carrying out its obligations under this Agreement.
9.5 Restriction on Assignment. Neither party hereto may assign its
interest in nor delegate the performance of its obligations under this Agreement
to any other person without obtaining the prior written consent of the other
party and, if required, prior approval pursuant to law, except that Manager may
assign its interest or delegate the performance of its obligations to a
wholly-owned subsidiary of Manager, which is qualified to manage agencies in the
State of New York and approved by the Commissioner.
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9.6 Headings. The headings to the various sections of this Agreement
have been inserted for convenient reference only and shall not modify, define,
limit or expand the expressed provisions of this Agreement.
9.7 Effect of Invalidity. Should any part of this Agreement, for any
reason, be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect as
if this Agreement had been executed with the invalid portion thereof eliminated.
9.8 Amendments. Any amendments to this Agreement, which shall be
provided to and approved by the Commissioner, shall be in writing and signed by
the parties and the Board.
9.9 Legal Proceedings. Legal proceedings commenced by the Agency or
the Manager arising out of any of the transactions or obligations contemplated
by this Agreement shall be brought exclusively in the federal courts or, in the
absence of federal jurisdiction, state courts, in either case in Nassau County,
New York. The Agency and the Manager irrevocably and unconditionally submit to
the jurisdiction of such courts and agree to take any and all future action
necessary to submit to the jurisdiction of such courts. Each of the Agency and
the Manager irrevocably waives any objection which it may now or hereafter have
to the laying of venue of any suit, action or proceeding brought in any federal
or state court in Nassau County, New York, and further irrevocably waives any
claims that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
9.10 No Continuing Waiver. The waiver of any party of any breach of
this Agreement shall not operate as, or be construed to be, a waiver of any
subsequent breach.
9.11 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given, if mailed by certified or registered mail, postage prepaid and via
facsimile:
If to the Agency: Star Multi Care Services, Inc.
00 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxxxxx X. Xxxxx, Esq.
Meritz & Xxxxx, LLP
0 Xxxxxx Xxxxx
Xxx Xxxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
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Fax: (000) 000-0000
E-Mail: xxxxxx@xxxxxxxxx.xxx
If to the Manager: Premier Home Healthcare Services, Inc.
000 Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxxxx@xxxxxxxxxxxxxxxxxxxxx.xxx
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
Meltzer, Lippe, Xxxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Tel: (000) 000-0000 x000
Fax: (516) 741-3808E-mail: xxxxxxxxxxxx@xxx.xxx
or to such other person and address as either party may designate in writing.
9.12 Applicable Law. This Agreement shall be construed and enforced
in accordance with laws of the State of New York, without giving effect to
conflicts of law principles.
9.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all such counterparts
shall together constitute but one and the same agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.
PREMIER HOME HEALTHCARE SERVICES, INC.
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
President
STAR MULTI CARE SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
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Xxxxxxx Xxxxxxxxx
President
