Exhibit 10.21
FORM OF AMENDED AND RESTATED MANAGEMENT AGREEMENT
[ ]
THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT (the "Agreement") is
made as of the 14th day of March, 2002 between [ ], a Delaware
corporation (the "Management Firm") and BALANCED CARE TENANT (MT), INC., a
Delaware corporation (the "Operator").
Witnesseth:
WHEREAS, the Operator executed and delivered that certain Master
Facility Lease Agreement dated as of the date hereof (the "Lease") whereby the
Operator leased from MEDITRUST ACQUISITION COMPANY II LLC, a Delaware limited
liability company (the "Lessor") certain "Leased Property" (as defined in the
Lease); and
WHEREAS, Operator is or will be the sole operator of [ ] with
[ ] licensed beds (located in [ ] units) located in [
], that is situated on a portion of the Leased Property (the "Facility"), and
has or will have a license from the State of [ ] to operate the
Facility; and
WHEREAS, the Management Firm is experienced in operating such
facilities and is willing to be the manager of the Facility on behalf of the
Operator, as an independent contractor pursuant to the terms and conditions set
forth herein; and
WHEREAS, Operator wishes to engage Management Firm as the operator and
manager of the Facility; and
WHEREAS, during the term of this Agreement, the Management Firm shall
be the manager of the Facility on behalf of the Operator.
NOW, THEREFORE, in consideration of the promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Scope of Work. Operator hereby appoints Management Firm as the operator and
manager of the Facility during the term of this Agreement. The Management Firm
shall have responsibility and authority for the day-to-day operation and
management of the
Facility and shall take all actions necessary or desirable to manage the
Facility and to fulfill its duties hereunder, including without limitation to:
(i) operate and maintain the Facility on behalf of the Operator as [ ]
facility providing residential care services; (ii) collect all room and board
revenue, as well as other revenue on behalf of the Operator, and timely pay all
debts and other obligations relating to the Facility, including operating
expenses, fixed expenses and taxes; (iii) ensure the Facility complies with
applicable Federal, state and local laws and regulations, and with the terms and
conditions of the Lease and the other Lease Documents (as defined in the Lease);
(iv) provide all necessary services to ensure that the Facility provides quality
care to its residents; (v) recruit, hire and train personnel as needed for the
operation of all departments and services of the Facility; (vi) maintain such
bank accounts as may be necessary or desirable for the operation of the Facility
(the "Operating Accounts"); (vii) establish salary levels, performance
standards, personnel policies and employee benefits; and (viii) take all other
actions necessary or desirable to operate and manage the Facility in accordance
with prudent practice and industry standards. In addition, without modifying,
limiting, releasing or otherwise affecting the Operator's obligations under the
Lease, the Management Firm and the Operator agree that all obligations and
duties of the Operator under the Lease Documents related to the operation of the
Facility (including, without limitation, obligations relating to maintenance of
insurance for the Facility and repairs and maintenance of the Facility) shall be
included in the scope of work to be performed hereunder and are hereby delegated
to the Management Firm to be performed by the Management Firm on behalf of the
Operator.
Notwithstanding anything to the contrary contained herein or in any
Lease Document, the Operator shall retain and exercise ultimate authority for
the operation of the Facility. The Management Firm agrees to follow all
instructions and directives of the Operator relating to the management and
operation of the Facility.
In performing its duties, the Management Firm (through its in-house
corporate staff or independent contractors) shall perform the following with
respect to the Facility, as well as any other matters reasonably related thereto
commencing upon the date of this Agreement:
2
(a) Management Information Systems (MIS)
Support centralized Facility information systems that provide
systems management for the following areas:
-- Accounts Receivable
-- Accounts Payable
-- Coordination of Payroll with Third Party Vendor
-- Financial Reporting
-- Marketing
-- General Ledger
The Management Firm shall be responsible for billing and collection of
Accounts Receivable.
(b) Legal Counsel
(i) Prepare or coordinate with outside legal counsel for
preparation of documents for operation of the Facility, including
resident agreements, supplier/vendor contracts, service contracts,
equipment leases and other ancillary contracts; (ii) prepare or
coordinate licensure and other regulatory applications; (iii)
coordinate all litigation involving the Facility with local counsel or
the insurance company; (iv) coordinate with local counsel on local law
issues affecting the Facility; (v) process working capital requests and
apply for, negotiate and obtain letters of credit; and (vi) provide
legal counsel or coordinate with local counsel to provide counsel to
the Facility's Human Resources Department.
The parties acknowledge that all outside counsel expenses under the
foregoing paragraph shall be an expense of the Operator.
(c) Accounting/Tax
(i) Provide an accountant to supervise all accounting
activities; (ii) implement accounting policies and guidelines; (iii)
provide a centralized cash management system; (iv) deposit in Operating
Accounts all funds received from the operations of the Facility and
satisfy obligations
3
of the Facility from such Operating Accounts; (v) negotiate and
administer working capital line of credit available to the Facility;
(vi) supervise the Facility's internal control structure; (vii) provide
payroll, income and real estate tax support as follows: prepare or
supervise preparation of all tax returns, assist the Facility in the
event of a tax audit, assist the Facility with technical issues
relating to payroll, excise and other taxes, and monitor pending and
final Federal, State and local tax law changes; (viii) maintain the
Facility's accounting and tax records; (ix) provide operations
expertise through site visits and strategies to maximize fiscal
performance; and (x) develop and implement a budget for operations,
capital outlay and cash requirements. All checks or other documents for
withdrawal of funds shall be signed by the appropriate officer of the
Management Firm or its designee. Deposits may be made by the
appropriate officer of the Management Firm or its designee.
(d) Human Resources
(i) Implement all personnel policies and guidelines; (ii)
recruit management personnel of the Facility, including the community
director of the Facility, which recruitment and the salaries related
thereto shall be an expense of the Operator; (iii) provide on-going
training for the Facility's Human Resources Director; (iv) negotiate
and administer all employee benefit plans including health insurance,
dental insurance, life insurance, long-term disability insurance, and
retirement/401K; (v) negotiate and administer general and professional
liability, workers' compensation, property, and vehicular insurance
plans; (vi) monitor the Facility's compliance with Federal, State and
local employment laws; (vii) respond to all government compliance
agencies and legal proceedings as necessary; (viii) implement and
monitor safety/loss control programs; (ix) develop and implement career
planning and manpower development strategies; (x) recruit, employ and
train personnel as needed
4
for the operation of all departments and services of the Facility; and
(xi) establish salary levels, performance standards, personnel policies
and employee benefits for all employees within applicable budgetary and
regulatory limits. All persons engaged to work at the Facility shall be
the employees of the Management Firm, but each such employee's salary
and benefits shall be considered an operating expense of the Facility.
(e) Program Development
(i) Provide ongoing program development and management
consultation; (ii) supply select program manuals for local modification
and implementation; and (iii) provide program development/management
training.
(f) Quality Management
(i) Provide model quality management systems and implement
such including risk management, resident/family satisfaction, licensing
and accreditation, and program evaluation; and (ii) provide ongoing
monitoring of the Facility resident outcomes, compare with regional and
national norms, and make program modifications.
(g) Marketing/Communication
(i) Hire, direct and supervise marketing department staff;
(ii) train staff (program managers, rehabilitation liaisons, marketing
representatives, etc.) in marketing skills; (iii) organize strong sales
efforts within the target area, develop program mix strategies, and
develop marketing plans for the Facility; (iv) establish an
intake/admission system and continuously review the admission process;
(v) develop image building advertising strategies for the Facility; and
(vi) develop and produce Facility selected promotional literature.
(h) Contracting
5
Negotiate and execute contracts and agreements related to the
Facility with third parties and parties affiliated with the Management
Firm; provided that all contracts and agreements with parties
affiliated with the Management Firm shall be on terms no less favorable
than terms for comparable contracts and agreements with unaffiliated
parties.
(i) Miscellaneous
(1) Obtain and maintain in the name of Operator, the
license to operate the Facility, and any other
licenses and certifications required for operation of
the Facility and use reasonable efforts to procure
eligibility for Operator to participate in other
applicable referral or payor programs.
(2) Purchase supplies, using procurement practices in
accordance with industry standards, and lease
equipment under national and regional agreements or
purchase contracts of the Management Firm or its
affiliated companies and provide to the Operator all
benefits resulting therefrom to the extent permitted
by their terms and by law. All such supplies so
purchased shall become property of the Operator. Once
leases are completed, equipment shall become property
of the Operator.
(3) Review and analyze the performance of ancillary
services under contract and negotiate contractual
arrangements therefore.
(4) Maintain books and records for the Facility at the
Management Firm's home office for the purpose of
providing services under this Agreement. The
Management Firm shall make available to the Operator
and the Lessor, and their respective agents,
accountants, and attorneys during normal business
hours all books and records pertaining to the
Facility, and the Management Firm shall
6
promptly respond to any questions of the Operator
with respect to such books and records and shall
confer with the Operator at all reasonable times,
upon request, concerning the operation of the
Facility.
(5) Order, supervise and conduct a program of regular
maintenance and repair of the Facility at the
Operator's cost and expense.
(6) Supervise and provide for the operation of food
service facilities for the Facility.
(7) Make periodic evaluations of the performance of all
departments of the Facility and investigate and
report, upon request, any inconsistency between
expenditures and budget.
(8) Implement all policies and procedures reasonably
necessary for the operation of the Facility
consistent with applicable regulations.
(9) Xxxxxx a working relationship between Management Firm
and any authorized volunteer or auxiliary groups
interested in providing support to the Facility and
residents of the Facility.
2. Additional Services. It is the intention of the parties that the Management
Firm be responsible for providing all service necessary or desirable for the
efficient and orderly management and operations of the Facility; provided, the
cost and expense of operating the Facility is to be paid by Operator. The
Management Firm shall actively utilize staff specialists in its employ or that
of its affiliates in such areas as accounting, budgeting, marketing,
reimbursement, dietary, housekeeping, clinical, pharmaceutical, purchasing and
third party payments in the management of the Facility when considered desirable
by the Management Firm. The expense of such personnel shall be the
responsibility of Operator.
7
3. Financial Statement. The Management Firm shall prepare and deliver to the
Operator an unaudited balance sheet within forty-five (45) days after the close
of each fiscal quarter of the Operator. The Management Firm shall also cause an
un-audited annual statement to be made of the financial records of the Facility
and a copy of such report shall be provided to the Operator as soon as it is
available after the end of the fiscal year. The cost of the reports shall be an
expense of the Facility and shall be paid for by the Operator. The fiscal year
for the Facility shall coincide with the Operator's fiscal year. All financial
statements are to be prepared in accordance with GAAP. Without limiting any
other provision hereunder, the Management Firm shall prepare and deliver all
financial statements and reports relating to the Operator or the Facility
required by Lessor pursuant to the Lease.
4. Property Interests/Confidentiality. (a) The technical systems, methods,
policies, procedures and controls, copyrights, trade-names, trademarks,
service-marks, "know-how" and all other intellectual property rights related
thereto employed by the Management Firm (the "Intangible Rights") are to remain
the property of the Management Firm and are not, at any time, to be utilized,
distributed, copied or otherwise employed or acquired by the Operator except as
authorized in writing by the Management Firm or except as may be required by
law.
(b) Operator understands and acknowledges that Management Firm has
devoted substantial time, energy and expense to developing a process and
procedure to manage and operate facilities such as the Facility, and that such
processes, procedures, Intangible Rights and the information and materials
compiled or prepared in connection therewith, including without limitation
marketing plans, business plans, pricing information, information on
competition, demographics, suppliers and providers of services and financing
arrangements (collectively "Confidential Information") are proprietary to
Management Firm and the confidential information of the Management Firm.
Operator shall not disclose to any party any Confidential Information, without
the prior written consent of Management Firm, except as may be required by law
or except as may be required by the Lessor.
(c) The provisions of this Section shall survive the expiration or
sooner termination of this Agreement.
8
5. Term of Agreement. The term of this Agreement shall commence upon the date
hereof, and continue for a period of five (5) years thereafter. This Agreement
shall be automatically renewed for additional one (1) year terms unless either
party gives the other party notice of its intent not to renew, which notice must
be given at least ninety (90) days prior to the expiration of the then current
term.
6. Termination. (a) The Operator may terminate this Agreement upon written
notice if the Management Firm defaults in the performance of any material
covenant, agreement, term or provision of this Agreement to be performed by it
and such default continues for a period of forty-five (45) days after written
notice to the Management Firm from the Operator stating the specific default or,
if such default is not subject to cure within forty-five (45) days, such longer
period as may be required to effect a cure, provided Management Firm initiates
curative action within forty-five (45) days and thereafter is diligently and in
good faith pursuing such cure.
(b) The Management Firm may, after the expiration or sooner termination
of the Lease, terminate this Agreement upon written notice in the event any one
or more of the following events shall occur:
(1) If the Operator shall fail to timely pay to the Management
Firm any Management Fee required to be paid in accordance with
Paragraph 9 hereof and such failure continues for ten (10)
days after written notice to the Operator; or
(2) If the Operator defaults in the performance of any other
material covenant, agreement, term or provision of this
Agreement to be performed by the Operator and such default
continues for a period of forty-five (45) days after written
notice to the Operator from the Management Firm stating the
specific default or, if such default is not subject to cure
within forty-five (45) days, such longer period as may be
required to effect a cure, provided the defaulting party
initiates curative action within forty-five
9
(45) days and thereafter is diligently and in good faith
pursuing such cure; or
(3) If the Facility or a material portion thereof is damaged or
destroyed by fire or other casualty and the Operator fails to
commence to repair, restore, rebuild or replace any such
damage or destruction within ninety (90) days of the
occurrence of such damage or destruction, and thereafter to
complete such work within a reasonable period of time.
In the event of termination of this Agreement by either party pursuant
to Section 6(a) or 6(b) above, the Management Firm shall have the right to enter
the Facility and remove all of its personal property and Intangible Rights
material.
(c) The Management Firm and Operator acknowledge and agree that this
Agreement shall automatically terminate upon the expiration or sooner
termination of the Lease, unless the Operator has acquired fee title to the
Facility.
7. Liability and Indemnification/Force Majuere. (a)By the Management Firm. The
Management Firm shall indemnify, defend, save and hold harmless the Operator,
its shareholders, officers, directors, employees, or agents from and against all
demands, claims, actions, losses, damages, deficiencies, liabilities, costs and
expenses (including, without limitation, attorney's fees, interest, penalties
and all amounts paid in investigation, defense or settlement of any of the
foregoing) asserted against or incurred by the Operator, its shareholders,
officers, directors, employees, or agents, in connection with, or arising out
of, or resulting from a breach of any covenant, agreement, representation or
warranty of the Management Firm. The provisions of this Section shall survive
the expiration or sooner termination of this Agreement.
(b) By the Operator. The Operator shall indemnify, defend, save and
hold harmless the Management Firm, its shareholders, officers, directors,
employees, or agents from and against all demands, claims, actions, losses,
damages, deficiencies, liabilities, costs and expenses (including, without
limitation, attorney's fees, interest, penalties and all amounts paid in
investigation, defense or settlement of any of the
10
foregoing) asserted against or incurred by the Management Firm, its officers,
directors, employees, or agents, in connection with, or arising out of, or
resulting from a breach of any covenant, agreement, representation or warranty
of the Operator; provided, however, the Operator shall not be required to
provide indemnification hereunder in the event that the claim for which the
indemnification has arisen results from a breach of a duty or obligation of the
Operator under the Lease Documents that has been delegated to the Management
Firm hereunder. The provisions of this Section shall survive the expiration or
sooner termination of this Agreement.
(c) No Bar to Claims. Nothing contained herein shall preclude either
party from asserting any claims or suits against the other party that may arise
out of the terms and provisions of this Agreement.
(d) Force Majuere. The Management Firm shall not be deemed to be in
violation of this Agreement, and its performance shall be excused, if it is
prevented from performing any of its obligations hereunder for any reason beyond
its control, including without limitation, shortages in labor or supplies, war,
acts of God, failure of the Operator to advance funds, or changes in any statute
or regulation of Federal, State or local government, or any agency thereof.
8. Relationship Between Parties. The relationship of the Management Firm to the
Operator shall be that of independent contractor.
9. Management Fee. The Management Firm for the services rendered hereunder shall
be entitled to six percent (6%) of Gross Revenues (as defined in the Lease) of
the Facility as its sole compensation for management of the Facility (the
"Management Fee"). Payment of the Management Fee or any other amounts due to the
Management Firm from the Operator or the Facility shall be subordinated to
payment and other charges due to the Lessor under the Lease and the other Lease
Documents (as defined in the Lease). The Management Fee shall be paid monthly,
and shall be based on the financial operations of the Facility as of the end of
each calendar monthly. To the extent that the year-end audited financial
statements for the Facility disclose that the Management Fee actually received
during the year then ended was greater or less than what should have been
received, Operator shall (in case of underpayment) pay upon demand the shortfall
and
11
(in the case of overpayment) shall be credited against the Management Fee due in
the next succeeding quarter such overpayment.
10. Funding of Costs and Expenses by the Operator. The Operator shall at all
times provide sufficient working capital for operation of the Facility and shall
deposit such capital from time to time into the Operating Accounts of the
Facility in advance of the time required to be disbursed by the Management Firm.
11. No Approval by the Operator. The Management Firm shall, not less frequently
than annually, adopt a plan of operation for the Facility which shall set forth
proposed staffing, budgets, program and related matters; and such matters shall
be subject to approval of the Operator or its designee, and shall be subject to
the approval of the Lessor as provided in the Lease.
12. Other Facilities. Operator understands and acknowledges that Management Firm
is in the business of operating facilities such as the Facility, and that
Management Firm intends to continue to manage and operate such other facilities,
provided that such other facilities are not located within a 10-mile radius of
the Facility. Nothing contained herein shall be deemed to be construed as a
restriction on the Management Firm's right to so operate and manage such other
existing facilities or facilities that may be opened in the future. The
Management Firm acknowledges that it is included within the definition of
Leasing Group set forth under the Lease, and agrees to be bound by the
provisions of Section 11.5.4 of the Lease. The provisions of this Section 12
shall survive the expiration or sooner termination of the Lease and/or this
Agreement and may be enforced by the Lessor or any Purchaser (as defined in the
Lease) as a third party beneficiary.
13. Notices. All notices required or permitted hereunder shall be given in
writing by actual delivery or by Registered or Certified U.S. Mail, postage
prepaid. Notice shall be deemed given upon delivery, or if given by mail, upon
depositing with the U.S. Postal Service. Notice shall be delivered or mailed to
the parties at the following addresses or at such other places as a party shall
designate in writing.
12
Management Firm:
[ ]
c/o Balanced Care Corporation
0000 Xxxxx Xxxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Legal Department
The Operator:
Balanced Care Tenant (MT), Inc.
c/o Balanced Care Corporation
0000 Xxxxx Xxxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Legal Department
14. [INTENTIONALLY DELETED].
15. Entire Agreement. This writing contains the entire agreement between the
parties and shall be binding upon and inure to the benefit of their successors
and assigns. Any modifications or changes in this Agreement shall be effective
only if in writing and signed by the parties hereto.
16. Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be an original, and all of which taken together shall be
deemed to constitute one and the same instrument.
17. Construction. This Agreement shall be constructed in accordance with the
laws of the Commonwealth of Pennsylvania, exclusive of its conflicts of laws.
18. Compliance with Federal Records Requirements. To the extent required under
applicable law, the Management Firm shall, (and if Management Firm carries out
any of the duties under this Agreement through a subcontract with a related
organization and such subcontract has a value or cost of $10,000 or more during
any 12-month period, such subcontract shall contain a clause to the effect that
the subcontractor shall), until the expiration of four (4) years after the
furnishing of services hereunder, make available upon written request by the
Secretary of Health and Human Service or the Comptroller General of the United
States or any of their duly authorized representatives, this Agreement and the
books, documents and records of the Management Firm (or such
13
subcontractor) that are necessary to verify the nature and extent of the costs
furnished under this Agreement.
19. Successors and Assigns. Except with respect to the collateral assignment of
its interest in this Agreement to the Lessor, Operator may not assign this
Agreement, expressly, by operation of law, or otherwise, without the prior
written consent of the Management Firm, which consent may be withheld in the
sole discretion of the Management Firm. Management Firm may not assign this
Agreement, expressly, by operation of law, or otherwise, without the prior
written consent of the Operator; provided, however, subject to the prior consent
of the Lessor (which consent shall not be unreasonably withheld, conditioned or
delayed) Management Firm may assign its rights and obligations hereunder without
consent to any company controlled by or under common control with the Management
Firm.
20. Lease Documents/Notices From Lessor. The Management Firm acknowledges that
it has received true, complete and correct copies of all Lease Documents, and
that the Management Firm shall operate the Facility in accordance with the terms
of the Lease Documents so provided. In the event of any inconsistency between
the terms of the Lease Documents and the terms of this Agreement, the terms of
the Lease Documents shall control. Operator shall immediately provide to
Management Firm all notices received from the Lessor.
Signatures on following page
14
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have affixed their names by their proper officers or duly authorized
representatives as of the day and year first above written.
WITNESS/ATTEST: THE MANAGEMENT FIRM:
[ ]
/s/ Xxxxxxxx X. Xxxxxx
By:/s/Xxxxx X. Xxxxxx
Title: Vice President and Secretary
WITNESS/ATTEST: THE OPERATOR:
BALANCED CARE TENANT (MT), INC.
/s/ Xxxxxxxx X. Xxxxxx
By:/s/Xxxxx X. Xxxxxx
Title: Vice President and Secretary
15
