Exhibit 10.28

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (the “Agreement”) is made and entered into on July 26,
2013 (the “Effective Date”), by and between MCL NURSING, LLC, a Georgia limited
liability company (hereinafter called “Owner”), and ADCARE OKLAHOMA MANAGEMENT,
LLC, a Georgia limited liability company (hereinafter called “Manager”).

 

Owner and Manager agree that Manager shall manage that certain nursing facility
commonly known as “McLoud Nursing Center”, and located at 701 South 8th Street,
McLoud, Oklahoma (the “Facility”), operated by Owner, on the following terms and
conditions:

 

SECTION ONE: MANAGEMENT DUTIES AND OBLIGATIONS

 

1.01                        Management of Facility.  During the term of this
Agreement, Manager shall supervise the management of the Facility including but
not limited to staffing, accounting, billing, collections, setting of rates and
charges and general administration. In connection therewith, Manager (either
directly or through supervision of employees of the Facility) shall:

 

(a)                                 Hire on behalf of Owner and maintain (to the
extent such personnel are reasonably available in the community in which the
Facility is located) an adequate staff of nurses, technicians, office and other
employees, including an administrator, at wage and salary rates for various jobs
classifications approved from time to time by Owner; and release employees at
Manager’s discretion.

 

(b)                                 Recommend and institute, subject to approval
of Owner, appropriate employee benefits. Employee benefits may include pension
and profit sharing plans, insurance benefits, and incentive plans for key
employees and vacation policies.

 

(c)                                  Design and maintain accounting, billing,
patient and collection records; prepare and file insurance, and any and all
other necessary or desirable reports and claims related to revenue production.

 

(d)                                 Order, supervise and conduct a program of
regular maintenance and repair of the Facility except that physical improvements
costing more than $5,000.00, shall be subject to prior approval of Owner which
shall not be unreasonably withheld.

 

(e)                                  Purchase supplies, drugs, solutions,
equipment, furniture, and furnishings on behalf of Owner, except that purchases
of items of equipment which cost more than $5,000.00, shall be subject to prior
approval of Owner which shall not be unreasonably withheld.

 

(f)                                   Administer and schedule all services of
the Facility.

 

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(g)                                  Supervise and provide the operation of food
service facilities.

 

(h)                                 Provide for the orderly payment (to the
extent funds of Owner are available) of accounts payable, employee payroll,
taxes and insurance premiums.

 

(i)                                     Institute standards and procedures for
admitting patients, for charging patients for services, and for collecting the
charges from the patients or these parties.

 

(j)                                    Advise and assist Owner in obtaining and
maintaining adequate insurance coverage with Owner, Manager and such other
persons as requested by Owner named as insured for the Facility. Manager shall
advise Owner with regard to the availability, nature and desirable policy limits
of insurance coverage for the Facility, and shall request and receive bids for
such coverage.

 

(k)                                 Negotiate on behalf of Owner (and in
conjunction with Owner’s counsel) with any labor union lawfully entitled to
represent employees of the Owner who work at the Facility, but any collective
bargaining agreement of labor contract must be submitted to Owner for approval
and execution.

 

(l)                                     Make periodic evaluation of the
performance of all departments of the Facility paying particular attention to
those departments where there is an inconsistency between expenditures and
budget.

 

(m)                             Establish and maintain books of account using
accounts and classifications consistent with those used by Manager at other
facilities owned or lease by it or its affiliates.

 

(n)                                 Advise and assist Owner in designing an
adequate and appropriate public and personnel relations program.

 

1.02                        Reports to Owner.  Manager shall prepare and deliver
to Owner monthly financial statements (unaudited) containing a balance sheet and
statement of income in reasonable detail, and such monthly financial statements
will be delivered to Owner within 30 days after the close of each calendar
month. Manager shall submit to Owner each month a census report for the
Facility.

 

1.03                        Bank Accounts and Working Capital.  Manager shall
deposit all funds received from the operation of the Facility in and Operating
Account in a bank or banks presently being used by the Facility or such other
banks as are designated from time to time by Owner. Owner shall provide
sufficient working capital for the operation of the Facility and shall made
deposits in the Operating Accounts of such working capital from time to time
upon the request of Manager. All costs and expenses incurred in operation of the
Facility shall be paid out of the Operating Accounts. All checks or other
documents withdrawal must be signed by the Owner. Deposits may be made by
Comptroller of the Manager or his designee.

 

1.04                        Access to Records and Facility.  The books and
records kept by Manager for the Owner shall be maintained by the Facility,
although Manager shall have the right to maintain

 

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copies of such records at its home office for the purpose of providing services
under this Agreement. Manager shall make available to Owner, its agents,
accountants and attorneys, during normal business hours, all books and records
pertaining to the Facility and Manager shall promptly respond to any questions
of Owner with respect to such books and records and shall confer with Owner at
all reasonable times, upon request, concerning operation of the Facility. In
addition, Owner shall have access to the Facility at all reasonable hours for
the purpose of examining or inspecting the Facility.

 

1.05                        Licenses.

 

(a)                                 Manager shall use its best efforts to manage
the Facility in a manner necessary to maintain all necessary licenses, permits,
consents, and approvals from all governmental agencies, which have jurisdiction
over the operation of the Facility. Manager shall not assume the liability for
any employee action or negligence prohibiting the intent of this provision to be
met.

 

(b)                                 Neither Owner nor Manager shall knowingly
take any action which may (1) cause any governmental authority having
jurisdiction over the operation of the Facility to institute any proceeding for
the rescission or revocation of any necessary license, permit, consent or
approval, or (2) adversely affect Owner’s right to accept and obtain payments
under Medicare, Medicaid, or any other public or private medical payment
program; however, this Agreement in no way guarantees or warrants that any or
all of the above will not or could not occur.

 

(c)                                  Manager shall, with the written approval of
Owner, have the right to contest by appropriate legal proceedings, diligently
conducted in good faith, in the name of the Owner, the validity or application
of any law, ordinance, rule, ruling, regulation, order or requirement of any
governmental agency having jurisdiction over the operation of similar
facilities. Owner, after having given its written approval, shall cooperate with
Manager with regard to the contest, and Owner shall pay the reasonable
attorney’s fees incurred with regard to the contest. Counsel for any such
contest shall be mutually selected by Manager and Owner. Manager shall have the
right, without the written consent of the Owner, to process all third-party
payment claims for the services of the Facility, including the full right to
contest adjustments and denials by governmental agencies (or their fiscal
intermediaries) as third-party payor.

 

(d)                                 Manager shall provide to Owner all
correspondence from any governmental entity involving surveys, taxes or other
actions relating to the Facility, within five (5) days of receipt.

 

1.06                        Taxes.  Any taxes or other governmental obligations
properly imposed on the Facility are the obligations of the Owner, not of
Manager, and shall be paid out of the Operating Accounts of the Facility. With
the Owner’s written consent, Manager may contest the validity or amount of any
such tax or imposition of the Facility in the same manner as described in
Section 1.05(c).

 

1.07                        Use of Manager’s Personnel.  Manager shall actively
utilize Manager staff specialists in such areas as accounting, auditing,
budgeting, computer services, dietary services,

 

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housekeeping, industrial engineering, interior design, legal, nursing,
personnel, pharmaceutical, purchasing, systems and procedures, and third-party
payments for services of facilities in the management of the Facility when
considered desirable by Manager or upon the reasonable request of Owner.

 

SECTION TWO: TERM AND TERMINATION

 

2.01                        Term.  The Term of this Agreement shall on the
Effective Date and shall continue for a period of five (5) years thereafter,
unless sooner terminated. Following the end of the initial term, this Agreement
shall thereafter, automatically renew for one (1) year terms, unless sooner
terminated.

 

2.02                        Termination.  Owner may terminate this Agreement
upon giving Manager thirty (30) days written notice. Manager may terminate this
Agreement at any time upon giving the Owner thirty (30) days written notice.

 

SECTION THREE: MANAGEMENT FEE

 

3.01                        Fee to Manager.  During each month of this
Agreement, Owner shall pay Manager a fee in an amount equal to five percent (5%)
of the aggregate gross revenues of the Business computed in accordance with
GAAP.

 

SECTION FOUR: COVENANTS OF OWNER

 

4.01                        Insurance.  Owner shall provide and maintain
throughout the Term, the following insurance with responsible companies naming
Owner and Manager (as its interest may appear) as insured thereunder in amounts
approved by Owner and Manager.

 

(a)                                 public liability insurance and insurance
against theft of or damage to patient’s property in the Facility or its
Premises;

 

(b)                                 workman’s compensation, employers’ liability
or similar insurance as may be required by law;

 

(c)                                  such other insurance or additional
insurance as Manager and Owner together shall reasonably deem necessary for
protection against claims, liabilities and losses arising from the operation or
ownership of the Facility.

 

SECTION FIVE: MISCELLANEOUS

 

5.01                        Binding on Successors and Assigns.  The terms,
covenants, conditions, provisions and agreements herein contained shall be
binding upon and inure to the benefit of the parties hereto, their heirs,
administrators, executors, successors and assigns.

 

5.02                        Negation of Partnership, Joint Venture and Agency. 
Nothing in this Agreement contained shall constitute or be construed to be or to
create a partnership, joint venture or lease

 

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between Owner and Manager with respect to the Facility. the parties intend for
the relationship of Manager to Owner under this Agreement to be that of an
independent contractor, not that of an agent.

 

5.03                        Notices.  All notices hereunder by either party to
the other shall be in writing. All notices, demands and requests shall be deemed
given when mailed, postage prepaid, registered, or certified mail, return
receipt requested,

 

(a)

Owner:

Two Buckhead Plaza

 

 

3050 Peachtree Road, NW

 

 

Suite 355

 

 

Atlanta, Georgia 30305

 

 

Attn: Manager

 

 

 

(b)

Manager:

1145 Hembree Road

 

 

Roswell, Georgia 30076

 

 

Attn: Manager

 

or to such other address or to such other person as may be designated by notice
given from time to time during the term by one party to the other.

 

5.04                        Entire Agreement.  This Agreement contains the
entire agreement between the parties hereto, and no representations or
agreements, oral or otherwise, between the parties not embodied herein or
attached hereto shall be of any force and effect. Any additions or amendments to
this Agreement subsequent hereto shall be of no force and effect unless in
writing and signed by the party to be bound.

 

5.05                        Governing Law.  This Agreement has been executed and
delivered in the State of Oklahoma, all the terms and provisions hereof and the
rights and obligations of the parties hereto shall be construed and enforced in
accordance with the laws thereof.

 

5.06                        Captions and Headings.  The captions and headings
throughout this Agreement are for convenience and reference only, and the words
contained therein shall in no way be held or deemed to define, limit, describe,
explain, modify, amplify or add to the interpretation, construction or meaning
of any provision of or the scope or intent of this Agreement nor in any way
affect this Agreement.

 

5.07                        Disclaimer of Employment of Facility Employees.  No
person employed by Owner in cooperation of the Facility will be an employee of
Manager, and Manager will have no liability for payment of wages, payroll taxes
and other expenses of employment, except that Manager shall have the obligation
to exercise reasonable care on its management of the Facility to properly apply
available Facility funds to the payment of such wages and payroll taxes.

 

5.08                        Impossibility of Performance.  Neither party to this
Agreement shall be deemed to be in violation of this Agreement if it is
prevented from performing any of its obligations hereunder for any reason beyond
its control, including without limitation, acts of God or of the

 

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public enemy, flood or storm, strikes or statutory regulation or rule of any
federal, state, or local government, or any agency thereof.

 

5.09                        Non-Assumption of Liabilities.  Manager shall not,
by entering into and performing this Agreement, become liable for any of the
existing or future obligations, liabilities or debts of Owner, and Manager shall
not be managing the Facility assume or become liable for any of the obligations,
debts and liabilities of Owner, and Manager will in its role as Manager of the
Facility have only the obligation to exercise reasonable care in its management
and handling of the funds generated from the operation of the Facility.

 

5.10                        Responsibility for Misconduct of Employees and Other
Personnel.  Manager will have no liability whatever for damages suffered on
account of the dishonesty, willful misconduct or negligence of an employee of
the Owner regarding the Facility in connection with damage or loss directly
sustained by it by reason of the dishonesty, willful misconducts and gross
negligence of employees in the operation of the Facility during the term of this
Agreement.

 

5.11                        Rights Cumulative, No Waiver.  No right or remedy
herein conferred upon or reserved to either of the parties hereto is intended to
be exclusive of any other right or remedy, and each and every right and remedy
shall be cumulative and in addition to any other right or remedy given
hereunder, or now or hereafter legally existing upon the occurrence of any event
of default hereunder. The failure of either party hereto to insist at any time
upon the strict observance or performance of any of the provisions of this
Agreement or to exercise any right or remedy as provided in this Agreement shall
not impair such right or remedy to be construed as a waiver or relinquishment
thereof. Every right and remedy given by this Agreement to the parties hereto
may be exercised from time to time and as often as may be deemed expedient by
the parties hereto, as the case may be.

 

5.12                        Time of Essence.  Time is of the essence of this
Agreement.

 

5.13                        Invalid or Unenforceable Provisions.  If any terms,
covenants or conditions of this Agreement or the application thereof to any
person or circumstances other than those to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant or
condition of this Agreement shall be valid and shall be enforced to the fullest
extent permitted by law.

 

5.14                        Counterparts.  This Agreement may be executed in
several counterparts, each of which shall be deemed an original and all such
counterparts together shall constitute one and the same instrument.

 

5.15                        Authorization of Agreement.  Manager and Owner
represent and warrant, each to the other, that this Agreement has been duly
authorized by its respective Board of Directors and, if required by law,
shareholders; and that this Agreement constitutes a valid and enforceable
obligation of Manager and Owner in accordance with its terms upon approval by
OSDH of the CON Application for Exemption for a Licensed Nursing Facility
Management Agreement.

 

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5.16                        Designation.  Owner agrees that, during the term of
this Agreement, Manager shall have the right to designate and make public
reference to the Facility as a Manager managed facility.

 

[Signatures on Next Page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, the day and
year first above written.

 

 

 

OWNER:

 

 

 

 

 

MCL NURSING, LLC

 

 

 

 

 

 

By:

/s/ Christopher F. Brogdon

 

 

CHRISTOPHER F. BROGDON,

 

 

MANAGER

 

 

 

 

 

 

 

MANAGER:

 

 

 

 

 

 

 

ADCARE OKLAHOMA MANAGEMENT, LLC

 

 

 

 

 

 

By:

/s/ Boyd P. Gentry

 

 

BOYD P. GENTRY, CEO

 

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