MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT ("Agreement") is made and entered into
as of this 21st day of May 1999, by and between NewCare Health Corporation, a
Nevada corporation (including all subsidiaries and affiliates) owning or
leasing or managing any facilities, hereinafter the "Facilities" or a
"Facility", the above corporation, subsidiaries and affiliates referred to as
"Owner", and Lenox Healthcare, Inc, a Massachusetts corporation ("Manager")
(Owner and Manager are hereinafter also referred to collectively as
"Parties"). The Facilities are those which are currently operating as well as
those future operations as may be approved Owner's Board of Directors.
WHEREAS, Owner desires to contract with Manager to perform certain
management duties at the Facilities (the "Management Services"), and desires
to perform such Management Services pursuant to the terms of this Agreement,
without assuming any of Owner's other duties or obligations, and without
assuming any duties or obligations of any other person or entity under any
other agreement.
NOW, THEREFORE, the Parties hereby agree as follows:
1. ENGAGEMENT
1.1 Engagement. Pursuant to the terms of this Agreement, Owner hereby
engages, and Manager hereby accepts such engagement, to provide the Management
Services and take the actions described in this Agreement. Manager, subject
to the terms of this Agreement, shall have the right and authority to perform
the Management Services and take the actions described herein.
2. RESPONSIBILITIES
2.1 Agent; Authority. During the Term (as defined in Section 6
below), the Manager shall act as agent of the Owner with general authority to
manage, direct and supervise the operation of the Facilities. Owner hereby
appoints the Manager as its attorney-in-fact, and, subject to the provisions
of Section 2.3 below, hereby grants full authority for operating and
maintaining the Facilities in the respective states in which each such
Facility operates. The Management Services shall include those services set
forth in Sections 2.2 through 2.12 hereof.
2.2 Programs; Compliance with Law. Subject to the provisions of 2.3
below and Owner's obligations thereunder, Manager shall use reasonable efforts
to administer all necessary programs, plans, procedures and services required
to be offered, present or provided at the Facilities, and shall use reasonable
efforts to comply with all statutes, regulations, rules, ordinances and
policies whatsoever of all federal, state, county, municipal or other
governmental authorities having jurisdiction over the operation of the
Facilities.
2.3 Maintenance of Licenses; Agreements. Manager in Owner's name
shall maintain all licenses, permits, operating or occupancy certificates,
transfer or transportation agreements, and insurance certificates relating to
the maintenance and operation of the Facilities, including maintaining a
quality assessment and assurance committee as required for Medicare
certification as a skilled nursing facility.
2.4 Personnel; Administrator. On behalf of the Owner, the Manager
shall investigate, hire, promote, supervise, and discharge (as necessary)
full-time and part-time on-site personnel necessary for the efficient
discharge of the Management Services (collectively, the "Personnel"). All
Personnel, except for the Administrator described below, shall be employees of
Owner, or independent contractors, or leased employees, and shall be paid as
an expense of the operation of the Facilities. The Manager shall exercise
reasonable care in the selection of Personnel and also shall:
(a) Employ a properly licensed nursing home administrator (who
shall be an employee of Manager) responsible for the management of the
Facilities ("Administrator"). His or her salary, benefits and other
compensation shall be determined by Manager in its sole discretion and treated
as an expense of the operation of the Facilities;
(b) Ensure, consistent with the Management Agreement, that all
Personnel (except for the Administrator) shall be employees of Owner, or
independent contractors, or leased employees, and all salaries, benefits,
wages, and other compensation of the Personnel shall be determined by the
Manager in its sole discretion and shall be charged as an expense of the
operation of the Facilities;
(c) Use reasonable efforts to assure compliance with all
applicable employment, wrongful discharge, anti-discrimination, occupational
safety, and health and other similar laws and regulations affecting employment
of Personnel, and with private employment or union contracts; and
(d) Negotiate with any labor union lawfully entitled to represent
all or any group of Personnel, if any.
2.5 Contracts. Manager shall, in the name of the Owner, and as an
expense of the Facilities (a) enter into, renew, if necessary, or cancel all
contracts, including those for electricity, gas, water, telephone, cleaning,
fuel oil, vermin extermination, trash removal, linen service, pharmacy,
therapy and all other services in the ordinary course of the operation of the
Facilities; and (b) purchase all supplies and equipment necessary to maintain
and to operate the Facilities. Owner represents that, as agent for the Owner,
the Manager has the right to enter into such contracts and to make such
purchases in the name of the Owner. Owner shall give Manager such
powers-of-attorney or further power-of-attorney, as may be necessary to
implement this section.
2.6 Promotional Activities. As an expense of the operation of the
Facilities, the Manager shall be responsible for conducting promotional
activities on behalf of the Facilities, including media advertising and
related marketing efforts.
2.7 Utilities and Supplies. As an expense of the operation of the
Facilities, the Manager shall purchase all utilities, supplies and other items
necessary for the efficient operation of the Facilities.
2.8 Maintenance. As an expense of the operation of the Facilities,
the Manager shall maintain the improvements and grounds of the Facilities,
including interior and exterior cleaning, painting and decorating, plumbing,
carpentry and other normal maintenance and repair work.
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2.9 Bookkeeping; Accounting. The Manager shall provide all necessary
bookkeeping and accounting for the operation of the Facilities, including, but
not limited to, the establishment of one or more bank accounts for the
collection and disbursement of funds in accordance with Section 3.4 below.
Manager shall provide to Owner monthly financial statements regarding the
Facilities' operations during the Term of this Agreement (as defined in
Section 6 below) and, upon request, copies of any licensure or Medicare
surveys related to the Facilities that it receives during the Term.
2.10 Invoicing; Collections. The Manager shall invoice and collect
for all services performed at the Facilities on and after the Effective Date
(as defined in Section 6 below), and, to the extent not yet invoiced or
collected, for services performed prior to the Effective Date, shall process
and pay on behalf of Owner from the Facilities' funds accounts payable that
are generated, and shall process and pay all of the Facilities' payroll,
including payroll taxes. The Manager shall use diligent efforts to collect
all such fees and charges and other revenues relating to the Facilities on
behalf of Owner.
2.11 Patient Trust Account. The Manager shall establish and maintain
records and procedures to account for all patient funds deposited with the
Facilities. A "Patient Trust Account" shall be established in accordance with
the terms hereof and all disbursements therefrom and records and procedures
relating thereto shall conform with the requirements of third party
reimbursement, licensure and all other applicable requirements and the terms
hereof. The Owner agrees to transfer to Manager any and all such patient
funds on the Effective Date and agrees to provide all records and accounts
relating to such patient funds to Manager on the Effective Date.
2.12 Taxes and Rent.
(a) To the extent not otherwise paid, the Manager shall cause to
be paid as an expense of the Facilities when due: (i) all taxes, assessments,
levies, fees, water and sewer rents and charges, and all other governmental
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, which are, at any time prior to or during the term hereof, imposed
or levied upon or assessed against (A) the Facilities, (B) any Rent (as
defined in any Lease for a Facility), Additional Rent (as defined in any Lease
for a Facility) under the Lease or other sum payable under the Lease or (C)
the Lease or the leasehold estate thereby created, or which arise in respect
of the operation, possession or use of the Facilities; (ii) all gross receipts
or similar taxes imposed or levied upon, assessed against or measured by any
Rent (as defined in a Lease), Additional Rent (as defined in a Lease) or other
sum payable under a Lease; (iii) all sales, use or similar taxes and all
withholdings and payroll taxes, at any time levied, assessed or payable on
account of the acquisition, leasing, use or operation of the Facilities; and
(iv) all charges for utilities serving the Facilities. If any such tax or
assessment may legally be paid in installments, Manager may pay such tax or
assessment in installments.
(b) The Manager shall deliver to Owner a copy of any assessment,
tax notice or tax bill received by Manager and, to the extent not otherwise
paid, shall pay the same as and when due; provided, Manager shall not cause
such payment to be made if (i) same is in good faith being contested by Owner
at its sole expense and without cost to Manager, (ii) enforcement thereof is
stayed, and (iii) 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 tax assessment, or charge is due and
payable.
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2.14 Change of Manager's Authority. Manager has complete authority to
carry out its obligations hereunder without hindrance or interference from any
officer or employee of NewCare, and Manager may in all instances use its own
reasonable discretion regarding matters within its authority and areas of
responsibility.
3. OWNER'S AND MANAGER'S RESPONSIBILITIES
3.1 Responsible Licensee. In addition to its obligations and duties
under the Management Agreement, the Manager shall use best efforts to cause
the Owner to remain the responsible licensee of the Facilities such that Owner
is fully liable and legally accountable at all times for all aspects of the
operation and management of the Facilities, including assuming responsibility
for obtaining services that meet professional standards and principles that
apply to professionals providing services to a Medicare-certified skilled
nursing facility, and assuming responsibility for the timeliness of the
services as interpreted by applicable Medicare regulations. Owner represents
that, as agent for the Owner, the Manager may act in the name of Owner
regarding operations of the Facilities under the permits issued in Owner's
name by state and federal regulatory authorities, to the extent allowable
under all applicable federal and state statutes and regulations. Owner shall
give Manager such power-of-attorney or further power-of-attorney as may be
necessary to implement this section.
3.2 Change/Reduction in Operations. The Manager has the right and
authority, without any prior consent from Owner, to change and/or reduce the
licensed bed configuration, based upon shifts in census, Medicare capacity or
economy of operations, if this is necessary for the efficiency of the
operation. Moreover, Manager has the right and authority, with the prior
consent of Owner (which shall be in Owner's sole discretion), to suspend or to
terminate Facility operations at any Facility upon thirty (30) days' written
notice to Owner.
3.3 Management Fee. The management fee ("Management Fee") for the
first month will be calculated based on the Medicare home office cost report
for Lenox Healthcare, Inc. It is calculated by dividing the total licensed
bed days (for all facilities managed by Manager and its affiliates as of
9/30/98) into the total Medicare cost from the prior year home office cost
report as of 9/30/98 to get a per day licensed bed cost. The per day licensed
bed cost will be multiplied by the number of licensed beds managed for Owner
to get the monthly management fee. A reconciliation will be done at the end
of each quarter by preparing a home office cost report for that quarter and
calculating a new per day licensed bed cost and management fee (after the
first quarter, the cost and the licensed bed days corresponding to the
Facilities to be managed pursuant to this Agreement, as well as any other
costs and licensed bed days of other subsequent facilities managed by Manager
in future, shall be included in the calculation). This management fee will be
compared to the management fee paid for that quarter and an adjustment will be
made to the subsequent management fees to correct the over or under payment of
management fees by the actual cost. The subsequent months management fees
will be calculated by using the new per day licensed bed cost and any
adjustment that was needed.
3.4 Collection and Disbursement of Funds.
(a) Manager shall deposit all funds received by it from the
operation of the Facilities and all working capital loans in a bank account or
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bank accounts bearing the name of NewCare (hereinafter the "Agency Accounts")
with a bank or trust company. Such funds shall in no event be commingled with
other funds. Manager shall have no liability or responsibility for any loss
resulting from the insolvency, malfeasance or nonfeasance of the banks, banks,
or trust companies with which such funds are deposited.
(b) Subject to existing restrictions with Owner's
receivables-based lender, Manager shall control the Agency Accounts and have
the right and authority to make withdrawals from and to use the Agency
Accounts for the purposes of operating the Facilities and performing its
obligations hereunder or under the Corporate Management Agreement of even date
herewith between the Parties, as well as paying the Management Fee herein or
the Corporate Management Fee under said Corporate Management Agreement, until
the expiration or sooner termination of this Agreement and the Corporate
Management Agreement, at which time Manager shall resign as signatory on the
account(s) and cooperate in making Owner's designees the signatories on the
account(s).
(c) Out of such Agency Accounts, Manager is authorized to pay all
costs of operations, defined as all debt service payments, all operating
expenses, all management fees, plus interest thereon at the same rate of
interest as that described in Section 4 below for late payments past their due
date. Manager may make all other payments which it deems necessary and
appropriate for the operation of the Facilities.
(d) Receivables collected by the Manager relating to the
Facilities and all other revenues of Owner (collectively, the "Gross Revenue")
will be used by the Manager to pay the operating expenses, fees, accrued
liabilities and other expenditures of the Facilities in the following order:
(I)
Payroll of all Facilities employees, including the
Administrator and any administrative staff.
Payroll-related expenses, employee benefits and employment
taxes.
Manager's Management Fee, to be calculated in accordance
with Section 3.3.
Payment of Owner's corporate overhead, as follows:
payments under individual executive employment contracts, as disclosed on
Owner's most recent 10-K, for those employees remaining with Owner in their
executive capacities on and after the effective date of this Agreement; and,
all reasonable and necessary corporate overhead expenses as determined by
Owner's Board of Directors (including but not limited to payment of reasonable
outside attorneys' fees and legal costs with regard to Owner's corporate
litigation, as well as other outside consultants engaged by Owner with respect
general corporate matters).
Rent (including additional rents, if any) or other
lease-required payments to landlords, for the Facilities.
Debt Service: Principal and Interest on Debt, for the
Facilities.
Non-payroll related Operating Expenses; and,
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Capital Expenditures Reserve of $300.00 per licensed bed
per annum.
(II) Owner shall cause any and all revenues of the Facilities,
including, but not limited to, patient receivables, to be transferred to the
Manager.
(III) To the extent that payments for services occurring on or
after the Effective Date are received by Owner, it agrees that it shall
transfer such payments to Manager within five (5) business days of its receipt
of such funds. To the extent that payments for services occurring before the
Effective Date are received by Manager, it shall deposit such funds into the
appropriate account.
Owner acknowledges that Manager is acting in reliance on its
understanding of the existing arrangements with respect to the Facilities, and
on Manager's ability to have access to the revenues from the Facilities. To
the extent that Manager does not have access to such revenues for whatever
reason, Owner hereby agrees to provide sufficient funds to Manager to pay all
of the expenses, accrued liabilities and expenditures of the Facilities on a
timely basis, including the Management Fee (payable as provided in Section 3.4
(d) (I) (c) above), and Owner and agrees to cooperate with Manager to ensure
that it does have access to such funds.
In addition to the above, the parties agree that:
(A) Everything done by Manager in the performance of
its obligations and all its expense incurred under the portion of this
Agreement relating to managerial services shall be for and on behalf of Owner.
(B) Any services or persons who physical presence in
the Facilities is necessary to obtain or maintain licensure or certification,
if applied for or sought, in the Medicaid or Medicare programs, shall be a
direct expense chargeable to the Facilities as a cost of operation, and not to
Manager, except for a (a) preparation and filing of cost reports and (b)
preparation of operating and capital expenditure budgets. For example, if the
Director of Nurses is terminated or otherwise quits, and Manager sends its own
employee to perform the day to day duties of that position, this is chargeable
to the Facilities; where, however, Manager's employee is sent to assist in the
training or supervision of the nursing department, this is not chargeable to
the Facilities. Also, where licensure requires a specific consultant or
position (e.g. 8 hrs. of registered dietician supervision per month), any
staff person or subsidiary employee of Manager who satisfies this requirement
is chargeable to the Facilities.
(e) The Parties acknowledge and agree that if the Gross Revenue
is not sufficient to pay such operating expenses, accrued liabilities and
other expenditures, the Manager shall have no obligation to pay the amount of
any deficiency from Manager's own funds. Any and all financial shortfalls are
the responsibility of the Owner. The Capital Expenditure Reserve may be used
by the Manager for reasonable and necessary capital improvements at the
Facilities.
3.5 Notice to Manager. Provided there is actual notification
received by an executive of Owner, within two (2) business days of Owner's
receipt of any communication (either oral or written) regarding the
Facilities, Owner agrees to notify Manager of the substance of such
communication and to send to Manager a copy of any written communication.
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3.6 Consent of Owner. Owner agrees promptly to supply to Manager any
consent that is required in connection with the execution and performance of
this Agreement, including but not limited to Owner's consent to open bank
accounts using Owner's federal identification number.
3.7 General Cooperation with Manager. Owner agrees to cooperate
fully with Manager's performance of the Management Services, and shall make
available such records, books of account and personnel as Manager shall
reasonably require to perform hereunder. Owner shall provide Manager with a
full accounting of the Facilities, including, but not limited to, accounts
receivable and patient trust accounts as of the Effective Date (as defined in
Section 6 below).
3.8 Limitation of Manager's Liability. Notwithstanding any other
provision of this Agreement to the contrary, Manager is not responsible for
any obligations or actions or failure to act during any period prior to the
Effective Date. Operating revenues for periods prior to the Effective Date
shall be available to pay operating expenses accruing both before and after
the Effective Date. Where there is a shortfall in revenues to cover expenses,
the Manager shall have absolute discretion as to which expenses to pay. The
Manager shall notify the Owner of any shortfalls in revenue, but the failure
to so notify shall not result in any liability to Manager. The Parties
acknowledge and agree that Manager shall not be required to make any of its
financial resources available for the operation of the Facilities. Manager's
sole obligation is to perform the Management Services hereunder; any and all
shortfalls are the responsibilities of the Owner.
4. MANAGER'S COMPENSATION
4.1 Compensation. As compensation for the Management Services,
Manager shall be entitled to a Management Fee payable on the first day of each
month in advance from the Gross Revenue payable as provided in section 3.4 (d)
(I) (c) above, with interest to accrue until paid of ten (10%) percent per
annum, compounded monthly, or the highest rate allowable by law, whichever is
less.
5. INSURANCE
5.1 Coverage. The Manager shall maintain, as an expense of the
Facilities, liability insurance covering Manager's obligations herein and
malpractice insurance. The Parties agree that Manager may obtain such
insurance from companies and through brokers offering the necessary coverage
at the lowest cost. The Manager shall also maintain, as an expense of the
Facilities, an errors and omissions policy and directors' and officers'
liability policy protecting Manager, its officers, directors, executives, key
employees and controlling persons from and against claims, demands, losses,
law suits or expenses in connection with any alleged acts or omissions
regarding its and their management of the Facilities or any aspect thereof.
5.2 Facilities Coverage. Manager will maintain, as an expense of the
Facilities, insurance of the character and in the amount required by Owner or
any first mortgagee of the Facilities identified in writing to Manager.
5.3 Named Insureds. All policies of liability insurance shall name
Owner, Manager, and any first mortgagee of the Facilities identified in
writing to Manager, and all officers, directors, and controlling persons of
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Manager as the insureds thereunder, as their respective interests may appear.
All policies of hazard insurance shall include loss payment clauses in the
form required by any mortgagee identified in writing to Manager.
5.4 Patient Care Insurance. Manager shall maintain, as an expense of
the Facilities, such insurance in an amount Manager deems necessary in its own
discretion. In addition, Manager may maintain an umbrella policy in an amount
it deems appropriate.
5.5 Notice of Claims. Each Party shall give prompt notice to the
others of any claims made against any one of them 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.
6. TERM; DEFAULT; EARLY TERMINATION; REMEDIES; RIGHTS
6.1 Term. The Term of this Agreement shall commence at 12:01 A.M.,
June 1, 1999 (the "Effective Date") and terminate five (5) years thereafter
("Term").
6.2 Default; Termination for Cause. A Party (a "Defaulting Party")
shall be in breach of this Agreement if such Defaulting Party fails to keep,
observe or perform any agreement, term or provision of this Agreement to be
kept, observed or performed by it, and such breach continues for a period of
sixty (60) days (or such shorter period required under the circumstances by
federal, state or local regulation, or such longer period if such breach
cannot reasonably be cured within sixty (60) days) after delivery of notice
from a non-Defaulting Party of the nature of the breach and the steps that the
Defaulting Party must take to cure such breach. Any non-Defaulting Party may
terminate this Agreement immediately and without further action at the end of
such period if the Defaulting Party has not cured its breach. Manager may
terminate under this Section 6.2 if the total Management Fee for any month is
not received by Manager when such Management Fee is due and payable and there
is no cure within the prescribed cure period of sixty (60) days.
6.3 Immediate Termination. Either Owner or Manager may terminate this
Agreement immediately if: (a) Owner or Manager loses its Certification or
ability to participate in Medicare or Medicaid for any reason or (b) the other
Party suffers the appointment of a receiver or files in bankruptcy or suffers
the filing of an involuntary bankruptcy.
6.4 Remedies Upon Breach. Upon the occurrence of a breach by a
Defaulting Party, a non-Defaulting Party may terminate this Agreement in
addition to any other remedy available to it at law or in equity after any
available cure period.
6.5 Rights Upon Expiration or Termination. Upon the expiration or
early termination of this Agreement, the Parties shall have the following
rights and obligations:
Manager, with due diligence, shall (1) remove from the Facilities all of
its property and any employees or representatives of Manager in a manner that
will not endanger the health or safety of the patients of the Facilities, (2)
assign to Owner any agreement that Owner elects to assume, (3) assist Owner in
returning the operation of the Facilities to Owner or any successor for the
Facilities and (4) retain copies of all patient records, employee records,
minutes from quality assurance meetings and incident reports for the period
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from the Effective Date to the date of such expiration or termination. All of
Manager's property, including but not limited to, all documents related to the
general policies and procedures relating to the administration of the
Facilities that were prepared by or at the request of the Manager, shall
remain the sole possession of the Manager.
Upon any termination or the expiration pursuant to this section, the
obligations of the Parties (except those specified as surviving) shall cease
as of the date specified in the notice of termination, except that Manager
shall be entitled to receive any and all compensation that may be due
hereunder through the effective date of such termination or expiration.
7. INDEMNIFICATION
7.1 Indemnification of Manager. Owner acknowledges that Manager's
agreement to enter into this Agreement may expose Manager to certain risks.
Owner agrees to indemnify and hold harmless and defend Manager, its
shareholders, directors, officers, agents and employees (collectively,
"Manager Indemnitees") from and against any liability, loss, cost, expense,
claim, damage, suit, action or proceeding ever suffered or incurred by
(including actual attorneys' fees and expenses) (collectively, "Claims") which
are related to or in connection with: the proper exercise of its obligations
as Manager under this Agreement, any misrepresentations made to the Manager in
connection with the execution or discharge of this Agreement or the failure of
the Owner to comply with its obligations under this Agreement (including, but
not limited to, claims for property damage, bodily injuries and/or deaths
caused by an act or omission); provided, however, that Owner shall not be
obligated to indemnify Manager Indemnitees for Claims to the extent that they
are due to the gross negligence or willful misconduct of Manager or its
employees. Out-of-pocket charges and expenses incurred by the Manager
(including, without limitation, actual out-of-pocket attorneys' fees and
expenses) in connection with the enforcement, protection or preservation of
any right or claim of Manager Indemnitees under this Agreement, including
those resulting from any dispute regarding this indemnification, shall be the
responsibility of and paid for or reimbursed (at the option of Manager) by
Owner. Notwithstanding any contrary provision in this Agreement, the
obligations of Owner in this Section 7.1 shall survive the expiration or other
termination of this Agreement. Owner's insurance shall be endorsed to cover
Manger as additional insureds and shall be in sufficient amounts and with
deductibles, if any, that are deemed satisfactory to Manager at all times.
7.2 Operation of Indemnity. Manager shall have the right to offset the
amount of any claims or damages for which it reasonably believes it is
entitled to indemnification against revenues of the Facilities: provided
however, that prior to exercising any such right to offset, Manager shall give
written notification to Owner stating the reasons for such offset with copies
of any invoices or documentation which may be reasonably available to Manager.
Once Manager has sent such notification, it may proceed to offset the
corresponding amount.
7.3 Claims by Third Party. The Manager shall give notice within a
reasonable time to the Owner upon notice of any third party claim or the
commencement of any third party legal proceedings ("Third Party Claim")
arising after the Effective Date against the Manager for which is entitled to
indemnification hereunder. Owner shall cooperate in the defense of such Third
Party Claim. Manager shall have the right to assume and control, at Owner's
expense, any Third Party Claim which Manager, in its reasonable discretion,
believes may have a material impact on the business at the Facilities.
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7.4 Indemnification of Owner. Manager agrees to indemnify and hold
harmless and defend Owner, its shareholders, directors, officers, agents and
employees (collectively, "Owner Indemnitees") from and against any liability,
loss, cost, expense, claim, damage, suit, action or proceeding ever suffered
or incurred by (including attorneys' fees and expenses) (collectively,
"Claims") which are related to or in connection with: any gross negligence or
willful misconduct of Manager or its employees, including any
misrepresentations made to Owner in connection with the execution or discharge
of this Agreement or the failure of the Owner to comply with its obligations
under this Agreement (including, but not limited to, claims for property
damage, bodily injuries and/or deaths caused by an act or omission); provided,
however, that Manager shall not be obligated to indemnify Owner Indemnitees
for Claims to the extent that they are due to the gross negligence or willful
misconduct of Manager or its employees. Out-of-pocket charges and expenses
incurred by the Owner (including, without limitation, out-of-pocket attorneys'
fees and expenses) in connection with the enforcement, protection or
preservation of any right or claim of Owner Indemnitees under this Agreement,
including those resulting from any dispute regarding this indemnification,
shall be the responsibility of and paid for or reimbursed (at the option of
Owner) by Manager. Notwithstanding any contrary provision in this Agreement,
the obligations of Owner in this Section 7.4 shall survive the expiration or
other termination of this Agreement. Manager's insurance shall be endorsed to
cover Owner as additional insureds and shall be in sufficient amounts and with
deductibles, if any, that are deemed satisfactory to Owner at all times.
8. MISCELLANEOUS PROVISIONS
8.1 Notices. All notices, requests, demands and other communications
required or permitted to be given or made under this Agreement shall be in
writing and shall be deemed to have been given (a) on the date of transmission
by facsimile, with proof of receipt thereof or (b) on the date following the
date of (i) deposit in the United States mail, postage prepaid, by registered
or certified mail, return receipt requested, effective when received or (ii)
delivery to a nationally recognized overnight courier service effective when
received. In each case, it is to be addressed as follows, or to such other
address, person or entity as the Party shall designate by notice to the other
in accordance herewith;
If to Manager: Thomas M. Clarke
President and Chief Executive Officer
Lenox Healthcare, Inc.
75 South Church Street, Suite 650
Pittsfield, MA 01201
Fax No. (413) 448-2120
If to Owner: NewCare Health Corporation
6000 Lake Forrest Drive, Suite 200
Atlanta, GA 30328
Attention: General Counsel
Fax No. (404) 255-5789
8.2 Waiver of Subrogation. Manager and Owner each hereby waive any
rights of recovery against the other, or against the officers, employees,
agents and representatives of the other, for loss or damages to such waiving
Party's property or the property of others under its control, where and to the
extent that such loss or damage is insured against under any insurance policy
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in force at the time of such loss or damage. Upon obtaining the policies of
insurance required hereunder, Manager and Owner shall give notice to the
insurance carriers that the foregoing mutual waiver of subrogation is
contained in this Agreement.
8.3 Continued Liability of Parties. Unless otherwise expressly
stated, expiration or termination of the Term pursuant to Section 6 shall not
relieve any Party hereto of any of its liabilities and obligations hereunder
that accrued prior to expiration or termination of the Term.
8.4 Patient Records. Manager and Owner shall preserve the
confidentiality of the records of all patients of the Facilities as required
by all applicable federal and state statutes, regulations, and rules of
accrediting organizations for skilled nursing facilities, and use the
information in such records solely for the limited purposes necessary to
perform their respective obligations hereunder.
8.5 Governing Law. This Agreement shall be construed and enforced in
accordance with, and the performance of its terms shall be governed by, the
laws of the State of Delaware, without giving effect to conflict of laws
principles.
8.6 Assignability. No Party shall assign any of its rights and
obligations under this Agreement without obtaining the prior consent of the
other Parties.
8.7 Right of first Refusal. Manager shall have, and is hereby
granted, a right of first refusal upon the exact same terms and conditions as
the offer received by Owner which Owner is willing to accept, to purchase,
where a third party purchase is contemplated, or to lease, where a third party
transfer of a leased Facility is contemplated, any of the Facilities which are
the subject matter of this Agreement. Owner shall give Manager no less than
ten (10) days' prior written notice of any proposed sale, or lease transfer,
as the case may be, setting forth all financial and all other terms and
conditions thereof. Manager may send Owner written notice of its willingness
to purchase or lease the Facility upon the same terms and conditions within
said 10-days after its receipt of notice from Owner, in which event the
parties shall within ten (10) days thereafter enter into binding purchase and
sale, or lease assignment or transfer agreement, of the Facility or
Facilities.
8.8 Non-Waiver. No waiver by any Party hereto of any failure of any
other Party to keep or perform any provision, covenant or condition of this
Agreement shall be deemed to be a waiver of any preceding or succeeding breach
of the same or any other provision, covenant or condition. All rights and
remedies herein granted or referred to are cumulative. If any Party resorts
to any one remedy, it shall not be precluded from resorting to any other right
or remedy provided by law or in equity.
8.9 Required Prior Regulatory Approval. Manager shall not formally
begin managing those Facilities in the State of Kansas until regulatory
authority is received. Manager will assist Owner with Facilities in the State
of Kansas until such time as regulatory authority is received. Owner and
Manager shall work together to achieve such regulatory approval.
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8.10 NewCare as Facility Manager. As to each Facility covered by this
Agreement that Owner is itself managing, Manager shall have the option to: (a)
take an assignment of Owner's management function, if any required approvals
(by the owner of the property or by any third party to this Agreement) can be
obtained for such assignment; subject thereto, Owner hereby agrees to so
approve and assign; or (b) to include as a Facility under this Agreement, with
Owner continuing as the manager of the Facility with Manager as its consultant
under a consultant services agreement. Upon termination of this Agreement,
any assignment by Owner to Manager under this Section 8.10 shall also
terminate automatically.
8.11 Regional Offices. Manager shall have complete and unconditional
authority to hire and dismiss all regional personnel and terminate regional
offices as necessary. All regional team members shall be direct employees of
Manager.
8.12 No Financial Responsibility by Manager. It is understood and
agreed that Manager shall have no responsibility or obligation of any kind or
nature to make any payments or to in any manner fund any payments or
activities contemplated under this Agreement, including but not limited to,
those payments and Owner liabilities contemplated under Section 3.4 hereto.
8.13 Headings. The headings of this Agreement are inserted for
convenience only and are not to be considered in the interpretation of this
Agreement. They shall not in any way limit or expand the scope, or modify the
substance or context, of any section of this Agreement.
8.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.15 Enforcement. If any Party seeks to enforce this Agreement, the
prevailing party in any lawsuit shall be entitled to receive from the other
Party its reasonable attorneys' fees, court costs, costs of collection and
reasonable expenses.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
LENOX HEALTHCARE, INC.
("Manager")
/s/ Thomas Clarke
By: Thomas Clarke
Its: President
NEWCARE HEALTH CORPORATION
("NewCare")
/s/ Chris Brogdon
By: Chris Brogdon
Its: Chairman
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