EX 10.75.1
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is
made and entered into as of December 18, 1997, between
ALCO VII, L.L.C. , a North Carolina limited liability
company with offices at 00 0xx Xxxxxx, X.X., Xxxxxxx,
Xxxxx Xxxxxxxx ("Owner"), and EMERITUS CORPORATION, a
Washington corporation with offices at 0000 Xxxxxxx
Xxxxxx, Xxxxx 000. Xxxxxxx Xxxxxxxxxx 00000
("Manager").
WITNESSETH
WHEREAS, Owner is the owner of a 83-unit assisted
living facility being developed in Biloxi, Mississippi,
together with the equipment, furnishings, and other
tangible personal property that will be used in
connection therewith (the "Facility"); and
WHEREAS, Manager is engaged in the ownership and
operation of similar facilities and is experienced in
various phases of the management, operation and
ownership thereof; and
WHEREAS, Owner desires to engage Manager as an
independent contractor to manage the Facility for
Owner's account during the term herein provided, and
Manager desires to accept such engagement, upon the
terms and subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the mutual
promises and covenants herein contained, and intending
to be legally bound hereby, the parties agree that the
foregoing recitals are true and correct and constitute
an integral part of this Agreement, and the parties
further agree as follows:
ARTICLE 1
ENGAGEMENT OF MANAGER
1.1 ENGAGEMENT. During the term of this Agreement
and subject to a plan of operation for the Facility to
be developed by Manager and approved by Owner (the
"Plan of Operation"), Owner grants to Manager the sole
and exclusive right, and engages Manager to supervise,
manage, and operate the Facility in the name and for
the account of Owner upon the terms and conditions
hereinafter set forth. Owner is contracting herein for
an end result, and does not intend to provide any day-
to-day supervision of Manager. Manager shall provide
its own management systems, which shall be considered
proprietary material and will remain the property of
Manager. The Plan of Operation shall include the
program design (in accordance with the regulations of
the state where the Facility is located (the "State"))
and define the capital expenditure and operating
budgets for the Facility, as agreed to by the parties.
the Plan of Operation shall be reviewed on a monthly
basis and, if necessary, revised, upon the mutual
agreement of the parties.
1.2 ACCEPTANCE. Subject to the Plan of Operation,
Manager accepts such engagement and agrees that it will
(a) faithfully and diligently perform its duties and
responsibilities hereunder; (b) use its best skills,
efforts and attention to supervise and direct the
management and operation of the Facility in an
efficient manner, as an assisted living facility, in
substantial compliance with all applicable laws and in
Owner's best interest; and (c) consult with Owner and
keep owner advised of all major policy matters relating
to the Facility. Subject to the foregoing and to the
other provisions of this Agreement, Manager, without
the approval of the Owner (unless such approval is
herein specifically required), shall have the control
and discretion with regard to the operation and
management of the Facility for all customary purposes
(including the exercise of its rights and performance
of its duties provided for in Article 3 hereof, and the
right to determine policies affecting the appearance,
maintenance, standards of operation, quality
of service, and other matters reasonably relating to
Manager's interest hereunder, which affect the Facility
or the operation thereof, and Owner shall not attempt
to assert management control over Facility or its
employees during the term of this Agreement.
ARTICLE 2
TERM
The term of this Agreement shall be for a period of two
years commencing on the date that the first resident
occupies one of the units in the Facility (the
"Commencement Date") and ending on the earlier to occur
of (i) a date two years after the Commencement Date
(ii) the occurrence of the Commencement Date (as
defined in the Lease Agreement of even date herewith
between Owner and Manager with respect to the
Facility), unless terminated earlier pursuant to
Article 8 or Section 11. 2 hereof. This Agreement shall
be automatically extended for additional terms of one
year each unless and until terminated pursuant to the
terms herein, or upon written notice by Manager of its
intent not to extend 90 days prior to the end of the
then term.
ARTICLE 3
RIGHTS AND DUTIES OF THE MANAGER
During the term of this Agreement and in the
course of its management and operation of the Facility,
subject to the Plan of Operation:
3.1 EMPLOYEES. Manager shall hire, train,
promote, discharge, and supervise the work of the
Facility's executive director, department heads, and
all operating and service employees performing services
in and about the Facility. All of such employees shall
be employees of Owner, except the executive director
who shall be an employee of Manager, and the aggregate
compensation, including fringe benefits with respect to
such employees (including the executive director)
shall, within the agreed Operating Budget, be charged
to Owner as an expense of the operation of the
Facility. Manager shall comply with all applicable laws
concerning employees, their compensation, and any
retirement or profit sharing plans, including payroll
deductions and tax reporting. The term "fringe
benefits" as used herein shall include but not be
limited to the employer's contribution of FICA,
unemployment compensation, and other employment taxes
retirement plan contributions, worker's compensation,
group life, accident, and health insurance premiums
profit sharing contributions, disability, and other
similar benefits. All such employees shall be covered
by appropriate professional liability, workers
compensation, unemployment and other liability
insurance, including errors and omission coverage, as
approved by Manager and Owner. The cost of same shall
be charged to Owner as an additional expense of the
operation of the Facility. Manager shall provide Owner
with evidence of any such insurance upon request.
3.2 LABOR CONTRACTS. Manager, if requested by
Owner, will negotiate, on Owner's behalf, with any
labor union lawfully entitled to represent the
employees at the Facility, but any collective
bargaining agreement or labor contract resulting
therefrom must first be approved by Owner, who shall be
the only person authorized to execute the same. All
such negotiations conducted by Manager shall be at
Owner's expense and shall be subject to approval by
Owner, which approval shall not be unreasonably
withheld.
3.3 CONCESSIONAIRES, ETC. Manager shall negotiate
and consummate in the name of the Owner contracts with
concessionaires, licensees, tenants, residents and
other intended users of the Facility. Any fees and
expenses incurred in connection therewith shall, within
the agreed Operating Budget, be charged to Owner as an
expense of the operation of the Facility.
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3.4 ANCILLARY SERVICES, UTILITIES, ETC. Manager
shall, within the agreed Operating Budget, enter into
such contracts in the name of and at the expense of
Owner as may be deemed necessary or advisable for the
furnishing of all ancillary services, utilities,
concessions, supplies and other services as may be
needed from time to time for the maintenance and
operation of the Facility. manager is authorized to
contract for or to provide ancillary services,
including, but not limited to, pharmacy (drug and IV),
rehabilitation and respiratory therapy services, and
mobile diagnostic services, through providers which may
be affiliates of Manager, provided that such services
are rendered at levels of quality and pricing that are
competitive with those provided in the community.
3.5 PURCHASES. Manager shall be solely
responsible to arrange for the purchases of food,
beverages, operating supplies, and other materials and
supplies in the name of and for the account, and at the
expense of Owner, within the agreed Operating Budget,
as may be needed from time to time for the maintenance
and operation of the Facility.
3.6 REPAIRS. At all times during the term of this
Agreement, Manager shall, within the agreed Operating
Budget, make or install or cause to be installed at
Owner's expense and in the name of the Owner any proper
repairs, replacements, and improvements in and to the
Facility and the furnishings and equipment in order to
keep and maintain the same in good repair, working
order and condition, and outfitted and equipped for the
proper operation thereof in accordance with industry
standards comparable to those prevailing in other
similar facilities, and all applicable state or local
rules, regulations, or ordinances. All maintenance and
repair work undertaken by Manager shall be done in a
workmanlike manner, leaving the Facility free of liens
for labor and material to the extent funds are provided
by owner'. Manager hereby grants to Owner the right to
inspect and access to the Facility at all reasonable
times; provided, however, that Owner shall have not
duty to conduct any inspection.
3.7 LICENSES AND PERMITS. Manager shall apply for,
and use its best efforts to obtain and maintain in the
name and at the expense of the Owner, all licenses and
permits required in connection with the management and
operation of the Facility. Owner agrees to cooperate
with Manager in applying for, obtaining and maintaining
such licenses and permits.
3.8 INSURANCE. Manager shall apply for, obtain and
maintain on behalf of Owner, and at Owner's expense, at
all times during the term of this Agreement, the
following insurance in such amounts and coverage as may
be appropriate and mutually agreed upon by Owner and
Manager or as may be required by any financing or lease
arrangements of Owner, whichever is greater:
(a) insurance on the Facility on a replacement
cost basis (including the equipment, furnishings and
other tangible personal property used in connection
therewith) against loss and damage by fire and
lightning with coverage extended by means of an
extended coverage endorsement to a fire insurance
policy so as to include loss or damage arising out of
windstorm, and hail, provided such insurance is
reasonably available, and sprinkler damage, if
reasonably available;
(b) insurance on the Facility against loss or
damage, including business interruption insurance, for
boilers and machinery, heating apparatus, pressure
vessels, and pressure pipes installed in the Facility;
(c) commercial primary and excess general
liability, including automobile liability (as needed),
products liability bonds, professional and other
liability, and property damage insurance,
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insuring Owner and Manager against loss or liability
for damages or personal injury, death, or property
damage arising or resulting from the management,
maintenance, operation and/or use of the Facility;
(d) such workers' compensation and other similar
insurance as may be required by law or as may be
required to insure Owner and Manager against loss or
the payment of damages for such liabilities as may be
imposed by law;
(e) unemployment Compensation insurance through
the appropriate state agencies; and fidelity and
honesty insurance.
(f) fidelity and honesty insurance.
Forthwith after the effective date of this
Agreement, Manager shall submit to Owner for its
approval, which approval shall not be unreasonably
withheld, a proposal setting forth the kinds and
amounts of insurance which Manager intends to obtain,
in connection with the operation of the Facility
(including, without limitation, insurance of the kinds
and in the respective amounts described in paragraphs
[a] through [f] of this section) and Owner shall be
deemed to have approved the proposal unless Owner has
disapproved in writing within ten days of submission of
the proposal by Manager.
All insurance provided for under the foregoing
provisions of this Section shall be effected by
policies issued by insurance companies of good
reputation, sound adequate financial responsibility,
and properly licensed and qualified to do business in
the State and which are acceptable to any Secured
parties (hereinafter defined).
All of the policies of insurance of the character
described in Paragraphs (a) - (b) of this Section shall
be carried in the names of Owner, Manager, the secured
parties, if any, under any mortgage, deed of trust or
security instrument from time to time outstanding
affecting the Facility (the "Secured Parties"). Any
losses payable under such policies of insurance shall
be payable to Owner, Manager, and such Secured Parties
as their respective interests may appear. Each of the
policies of insurance referred to in paragraphs (c) -
(f) of this Section shall insure Owner and Manager.
Owner, Manager and their respective officers, partners,
directors, shareholders, managers and employees shall,
to the extent permissible, be named as additional
insureds under all such policies.
3.9 GOVERNMENTAL REGULATION.
(a) Manager shall perform its duties hereunder to
insure that the facility and the management thereof by
Manager complies in all material respects with all
Federal, state and local laws, rules, orders,
determination, regulations and ordinances affecting or
issued in connection with the Facility, or the
management thereof by Manager, including any laws and
regulations applicable to the Facility, and with the
prior written consent of Owner, Manager shall make
arrangements for any alterations or repairs ordered or
required thereby, if not included in the Operating
Budget.
(b) Manager shall immediately provide to Owner,
as and when received by Managers, all notices, reports
or correspondence from governmental agencies that
assert deficiencies or charges against Facility or that
otherwise relate to the suspension, revocation, or any
other action adverse to any approval, authorization,
certificate, determination, license or permit required
or necessary to own or operate the Facility. Manager
may appeal any action taken by any
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governmental agency against the Facility; provided,
however, that Owner shall adequately secure and protect
Manager from loss, cost, damage or expense by bond or
other means reasonably satisfactory to Manager in order
to contest by proper legal proceedings the validity of
any such statute, ordinance, law, regulation or order,
provided that any such contest shall not result in the
suspension of operations of the Facility and, provided,
further, that Owner shall have not obligation to secure
and protect Manager from any loss, cost, damage or
expense that arise directly out of Manager's
negligence, misconduct, or breath of any of its
obligations under this Agreement.
3.10 TAXES. Manager shall give notice to Owner of
all taxes, assessments, penalties, fines, and charges
of every land imposed upon the Facility by any
governmental authority within five days of receipt of
notification other than in the normal course of
business, including interest and penalties thereon, and
shall cause such items to be paid when due if funds are
available, except that Manager shall not cause such
payment to be made if (i) same is in good faith being
contested by the 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 authorized the nonpayment thereof
not less than ten days prior to the date on which such
tax assessment, penalty or charge: is due and payable.
3.11 Deposit and Disbursement of Funds. Upon the
implementation of this Agreement, Owner shall initiate
an operating reserve fund in a financial institution
and available to Manager as Owner's agent hereunder in
an amount to be agreed upon by the parties. Such
reserve fund shall be used by manager to meet the
financial payments noted below until sufficient
revenues are generated by operation of the Facility to
reasonably meet those financial obligations on a
monthly basis. manager shall promptly deposit in a
banking institution acceptable to Owner, which is a
member of the FDIC, in accounts in Manager's name as
agent for Owner, all Gross Revenues, as defined below,
and moneys and Facility income arising from the
operation of the Facility, or otherwise received by
Manager for and on behalf of Owner ("Facility Funds"),
which funds shall be Owner's funds. No amounts
deposited with Facility Funds shall in any event be co-
mingled with any other funds of Manager. Manager shall
pay from the reserve amount and/or, once sufficient
Facility Funds are generated and received to meet the
monthly operating expenses of the Facility, manager
shall pay from Facility Funds on behalf of and in the
name of Owner, and in the following order of priority,
and in each case, in such amounts and at such times as
are required to be made in connection with:
(a) all costs and expenses arising out of the
ownership, maintenance, and operation of the Facility,
including the reimbursable expenses of Manager
hereunder pursuant to Exhibit A attached hereto ;
(b) payment of Facility Debt Service;
(c) Manager' s Base Management Fee provided for in
Article 5, below (including any accrued and unpaid Base
Management Fees for prior periods); and
(d) the balance of the Facility Funds shall be
disbursed to Owner within five days of receipt of such
funds.
It is expressly acknowledged that financial
responsibility for payment of the costs and expenses
noted above is that of the Owner. If the available
Facility Funds previously deposited by Manager, or the
reserve amounts previously placed in the Accounts by
Owner are insufficient in any month to pay all of the
amounts described in paragraphs (a) - (c), Owner shall
promptly, upon the request of Manager, advance to
Manager, or pay into those accounts described above,
for use
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by Manager on Owner' s behalf, any additional amounts
necessary and sufficient to allow Manager to pay all
amounts due hereunder. Manager shall not be required to
advance any sums on Owner's behalf to meet any
financial obligations of Owner pursuant to the
management of Facility. Owner's failure to promptly
advance funds, or to deposit any reserve amounts where
required hereunder and where written demand has been
made by Manager, shall be considered a breach by Owner
of this Agreement.
As used herein, "Facility Debt Service" means
scheduled payments of the principal and interest with
respect to:
(i) the indebtedness identified on Exhibit B
attached hereto, and
(ii) any additional indebtedness incurred by
Owner for the improvement, maintenance, or
operation of the facility.
"Facility Debt Service" does not include any
amounts payable by reason of involuntary prepayments or
the acceleration of such indebtedness for any reason.
3.12 STATEMENTS. Manager shall deliver or cause to
be delivered to Owner statements
as follows:
(a) On or about the 30th day after the end of each
calendar month (except for the final month of the
fiscal year as noted in 3.12(b) below, a profit and
loss statement and balance sheet statement (both
prepared on an accrual basis) showing the results of
the operation of the Facility for the preceding
calendar month and the year to date, and having annexed
thereto a computation of the management fee (as
determined under Article 5 hereof for such preceding
month and the year to date.
(b) On or before 45 days after the close of each
fiscal year during the term of this Agreement, Manager
will also deliver or cause to be delivered to Owner a
balance sheet and related statement of profit and loss
showing the assets employed in the operation of the
Facility and the liabilities incurred in connection
therewith as of the end of the fiscal year, and the
results of the operations of the Facility during the
preceding 12 months then ended, and having annexed
thereto (i) a copy of the Medicare and Medicaid cost
report, if any, prepared by Manager with respect to the
Facility for such twelve-month period, and (ii) a
computation of the management fee for any such 12-month
period and payments made according to Section 3.11. All
costs and expenses incurred in connection with the
preparation of any statements, schedules, computation,
and other reports required under this Section 3.12(b)
shall be borne by Owner.
(c) Within 30 days of filing, copies of the 10-Q
and 10-K of Manager filed with the United States
Securities and Exchange Commission.
(d) Within 45 days after the end of each quarter,
each of the following certified by the chief financial
officer of Manager to be true and correct:
(i) unaudited financial statements of the
Manger prepared in accordance with generally
accepted accounting principles consistently
applied, which statements shall include a balance
sheet and statement of income and expenses for the
quarter then ended;
(ii) if requested by Owner, within 15 days of
the end of each calendar month, an aged accounts
receivable report of the Facility in sufficient
detail to show amounts due
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from each class of patient-mix (i.e., private,
Medicare (if any), Medicaid (if any) and V.A.) by
the account age classifications of 30 days, 60
days, 90 days, 120 days, and over 120 days;
(iii) within 45 days after the end of each
calendar quarter, the quarterly financial
statement and census date for the Facility,
properly completed and certified by Manager to be
true and correct;
(iv) within ten days of filing or receipt all
cost reports required by any regulatory or
licensing agency and any amendments thereto filed
with respect to the Facility and all responses and
statements of deficiencies (with plans of
correction attached thereto, if required, within
the period prescribed by law);
(v) within ten days of receipt, copies of all
licensure and certification survey reports and
statements of deficiencies (with plans of
correction attached thereto, if required, within
the period prescribed by law;
(vi) within ten days of receipt, a copy of
the Medicaid rate calculation worksheet (or the
equivalent thereof, if any, issued by the
applicable Medicaid agency for the Facility;
(vii) upon Owner's request, evidence of
payment of any applicable provider bed taxes or
similar taxes.
3.13 COMPLAINTS; INVESTIGATIONS; LEGAL ACTIONS.
Manager shall receive, consider, and handle any
complaints of residents, guests or users of any of the
services of the Facility. Using reasonable judgment,
Manager shall notify Owner of all material written
complaints regarding the quality of resident care or
operation of the Facility received by Manager. Manager
shall comply with the procedures and policies for
reporting of adverse resident occurrences at the
Facility to the insurance company or to such other
persons as Owner may designate. Manager shall promptly
notify Owner of any pending, threatened or initiated
investigation, by any governmental or administrative
agency, regarding any aspect of operation of the
Facility. Manager shall promptly notify Owner if it is
served with process in any legal action regarding any
aspect of its operation of the Facility Manager shall
institute, in its own name or in the name of the Owner
at the expense of the Owner, appropriate legal actions
or proceedings to collect charges, rent, or other sums
due the Facility or to lawfully oust or dispossess
Residents or other persons in possession under (or
lawfully cancel, modify or terminate) any lease,
license, or concession agreement for the breach thereof
or default thereunder by the Resident, licensee or
concessionaire.
Unless otherwise directed by Owner, Manger shall
take, at Owner's expense, appropriate legal steps with
respect to any alleged violation, or a adverse order,
rule, or regulation affecting the Facility. Any counsel
to be engaged under this or the next preceding
paragraph of this Section shall be approved by owner,
which approval shall not be unreasonably withheld.
Manager shall promptly notify Owner of all such
actions.
3.14 MANAGEMENT SERVICE. Manager shall use its
best efforts to manage and operate the Facility with a
maximum of efficiency in a manner to achieve optimal
financial performance and productivity of personnel and
in a quality manner for the residents of the Facility
commensurate with standards for comparable facilities
in the State, provided that this is done in a manner
consistent with good business practices.
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3.15 DATA PROCESSING. Manager shall, directly or
through an affiliate or subcontractor (the cost of
which shall, within the agreed Operating Budget, be
borne by Owner), provide the data processing required
to maintain the financial, payroll, and accounting
records of the Facility.
3.16 INDEMNIFICATION. Manager shall at all times
indemnify and hold harmless Owner, its agents,
representatives, partners, joint venturers, officers,
directors, and shareholders, from and against any and
all claims, losses, liabilities, actions, proceedings,
and expenses (including reasonable attorneys' fees and
costs) arising out of Manager's management or operation
of the Facility; provided that the foregoing indemnity
will not include Owner's willful acts or negligence.
The provisions of this Section 3.16 shall survive the
termination or expiration of this Agreement.
3.17 BOOKS AND RECORDS. Manager, on behalf of
Owner, shall supervise and direct the keeping of full
and accurate books of account and such other records
reflecting the results of operation of the Facility in
accordance with sound business and accounting practices
and as required by law.
3.18 OTHER DUTIES. Manager shall not take any
action or inaction that would constitute a default
under any note, loan agreement, mortgage, trust deed,
lease or other agreement executed by Owner relating to
the Facility. Owner shall deliver to Manager a copy of
each such agreement prior to execution thereof.
3.19 SECURITY DEPOSITS. If required by state law,
Manager shall collect and disburse resident security
deposits in accordance with the applicable rental
agreements and all other applicable state and federal
laws and regulations. Such deposits, if any, shall be
deposited in a separate FDIC insured trust account
(maintained in compliance with applicable law) held in
the name of Owner. The balance of such account shall at
all times equal or exceed the liability therefor to all
residents.
3.20 OPERATING BUDGET. Subject to the Plan of
Operation, Manager shall, 60 days prior to the
Commencement Date prepare a pro forma budget, and about
January 1 of each year thereafter, prepare an operating
budget for that year, based on the immediately prior
year's operating experience (the "Operating Budget").
The Operating Budget shall include, but not be limited
to estimated revenues and operating expenses for the
ensuing year. If Owner objects to the Operating Budget
submitted by Manager, Owner shall provide Manager with
written notice of such objection, stating the reasons
for such objections, within 30 days after receipt. If
Manager disagrees with Owner's objections, Manager
shall notify Owner of such disagreement within ten days
after Manager's receipt of Owner's objections. If the
parties cannot resolve any dispute within ten days
thereafter, then the matter may be submitted to
arbitration pursuant to Article 10 hereof and the
parties shall use the Operating Budget for the previous
period pending the resolution of such arbitration
proceeding. At the same time as the Operating Budget is
submitted to Owner, Manager shall submit, for Owner's
approval, a narrative report of Manager's major
management goals and intended actions for the
succeeding fiscal year so as to enable Owner to
evaluate Manager's intended conduct of the affairs of
the Facility during that period. Once the budget is
mutually agreed to by the parties, Manager shall use
its best efforts to manage and operate the Facility
within the budget. However, Manager is not guaranteeing
that Facility shall make a profit at any time or that
anticipated financial projections can be met under this
Agreement. All expenses shall be charged to the proper
budget account and no expense may be classified (or
reclassified) for the purpose of avoiding an excess in
the annual budgeted amount of any accounting category.
The parties agree to confer from time to time with
regard to the budget and to adjust the budget as is
reasonably necessary for the operation of the Facility.
Owner understands and agrees that there
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may be emergencies that arise from time to time which
might require immediate expenditures by Manager to
assure the continuous operation of the Facility which
are not in the budget. Owner may specify the format of
the budget from time to time.
Manager shall, in addition, provide to Owner a
capital improvements budget (the "Capital Expenditures
Budget") covering all anticipated capital improvements
and expenditures. The Capital Expenditures Budget is
subject to Owner's approval and the same procedures set
forth above with respect to the Operating Budget.
Notwithstanding anything contained herein to the
contrary. Manager shall not incur any expense or
capital expenditure in excess of $5,000 for any single
item or $10,000 in any fiscal year above the approved
budget without Owner's specific written authorization;
provided however, Manager shall have the authority to
incur such expenses and capital expenditures without
Owner's prior approval if such expense or capital
expenditure is immediately necessary for: (i) the
health or safety of the residents of the Facility, or
(ii) to comply with any applicable law, rule or
regulation governing the operation of the Facility
("Emergency Expenditures"). Manager shall promptly
provide Owner with written notice describing the cost
and reason for any such Emergency Expenditure. Owner
shall promptly review Manager's request for
authorization of expenses and capital expenditures in
excess of the aforesaid limits which are not Emergency
Expenditures.
3.21 FEES AND CHARGES. Subject to approval of
Owner, Manager shall establish, maintain, revise and
administer the overall charge structure of the
Facility, including, without limitation, monthly fees,
rentals, and charges of any kind, charges for ancillary
services, any and all items sold at the Facility and
any other services provided at the Facility. Manager
shall be responsible for the timely billing and
collection from residents or third party payors of the
amounts due and payable from residents for the services
provided by the Facility. Manager shall be responsible
for making timely and complete rate filings as required
by law, and all posting or filing of notices, charges
and fees required by law.
3.22 RESIDENT-MANAGEMENT RELATIONS. Manager will
encourage and assist residents of the Facility in
forming and maintaining representative organizations to
promote their common interests and will maintain good-
faith communication with such organizations so that
problems affecting the Facility and its residents may
be avoided or solved on the basis of mutual self
interest.
3.23 CONSTRUCTION OF IMPROVEMENTS TO EXISTING
FACILITY. Except as otherwise provided herein, Manager
shall not make or cause to be made any alterations,
additions, replacements or improvements on, in, about
or to the Facility without the prior written consent of
Owner. The entire cost of construction of any such new
improvements to the existing facility and all expenses
connected therewith, shall be borne and paid by Owner
exclusively. Prior to the commencement of any such
alterations, additions, replacements or improvements,
Manager shall submit to and obtain Owner' s written
approval of the plans and specifications thereof.
Manager agrees that such plans and specifications shall
require the contractor to post an adequate performance
bonds.
Manager agrees to make and construct all such
repairs, improvements and installations in accordance
with all laws, rules and regulations of applicable
governing bodies and agencies, to diligently complete
such construction once the same has commenced. All
improvements constructed by Manager upon the Facility
shall, upon termination of this Agreement, belong to
Owner. Manager shall save and hold Owner harmless and
the Facility harmless from any and all liability of any
kind on account of such work or improvement while this
Agreement remains in effect. Owner shall have the right
at any time to post the Facility with such notices as
may be required to protect Owner's interest in the
Facility from mechanics' liens or other liens of a
similar
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nature. The failure to disapprove Manager's plans and
specifications within 60 days after receipt thereof by
Owner shall be automatically deemed disapproval
thereof.
3.24 USE OF THE FACILITY'S PROPERTY. Manager shall
not utilize any hazardous materials on the Facility's
property except in accordance with applicable legal
requirements and will not permit any contamination
which may require remediation under applicable
Hazardous Materials Law as defined herein). Manager
shall not dispose of any hazardous materials or
substance within the sewage system of the Facility's
property, and that it shall handle all "red bag" wastes
in accordance with applicable Hazardous Materials Laws.
"Hazardous Materials Law" shall mean any law
regulation, or ordinance relating to environmental
conditions, medical waste or industrial hygiene,
including the Resource Conservation Recovery Act of
1976 ("RCRA"), the Comprehensive Environmental Response
Compensation Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization
Act of 1986 ("XXXX"), the Hazardous Materials
Transportation Act, the Federal Water Pollution Control
Act, the Clean Air Act, the Clean Water Act, the Toxic
Substance Control Act, the Safe Drinking Water Act, the
Atomic Energy Act and all similar federal, state and
local environmental statutes and ordinances, whether
heretofore or hereafter enacted or effected and all
regulations, orders, or decrees heretofore or hereafter
promulgated thereunder.
3.25 ACCESS TO BOOKS, RECORDS AND DOCUMENTS. In
the event the Facility participates in the
Medicare/Medicaid programs, for purposes of Section
1861(v)(1)(I) of the Social Security Act as amended,
and any written regulation thereto, if the value or
cost of services rendered by Manager to Owner is
$10,000 or more over a 12-month period, including
without :imitation services rendered pursuant to this
Agreement, Manager agrees as follows:
(a) Until the expiration of four years after the
furnishing of such services, Manager shall, upon
written request, make available to the Secretary of the
Department of Health and Human Services (the
"Secretary"), the Secretary's duly authorized
representative, the Comptroller General, or the
Comptroller General's duly authorized representatives,
such books, documents, and records as may be necessary
to certify the nature and extent of costs of such
services; and
(b) If any such services are performed by way of
subcontract with another organization and the value or
cost of such subcontracted services is $ 10,000 or more
over a 12-month period, such subcontract shall contain
and Manager shall enforce a clause to the same effect
as subsection (a) immediately above.
The availability of Manager's books, documents and
records shall be subject at all times to all applicable
legal requirements, including without limitation such
criteria and procedures for seeking and obtaining
access as may be promulgated by the Secretary by
regulation.
ARTICLE 4
RIGHTS AND DUTIES OF OWNER
During the term of this Agreement:
4.1 RIGHT OF INSPECTION. Owner (or its
representative) shall have the right to enter upon any
part of the Facility during regular business hours upon
reasonable advance notice to Manager for the purpose of
examining or inspecting same or examining or making
copies or extracts of books and records of the
Facility, but this shall be done with as little
disruption to the business of the Facility as is
practicable. However, the books and records of the
Facility shall not
10
be removed from the Facility without the expressed
written consent of Manager. Owner acknowledges that
some books and records will be maintained at Manager's
principal place of business, but that such books and
records shall be available for inspection by Owner or
its representative. The parties will agree in writing
as to which books and records must be kept at the
Facility.
Owner shall direct all inquiries regarding
operations, procedures, policies, employee relations,
patient care, and all other matters concerning the
Facility to the Manager's divisional director of
operations or other officer of Manager as it may from
time to time designate in a written notice to Owner.
Notwithstanding the foregoing, Owner shall retain the
right to contact the executive director regarding
matters pertinent to the Facility.
4.2 COOPERATION WITH MANAGER. Subject to the
provisions of Article 5 below, Owner shall cooperate
with Manager in operating and supervising the Facility
and shall reimburse Manager for all funds reasonably
expended or costs and expenses reasonably incurred to
which Manager is entitled to reimbursement pursuant to
Exhibit A of this Agreement and all out of pocket
expenses paid or incurred by Manager for the operation
of the Facility, including reasonable and necessary
traveling expenses of executives of Manager, and all
reasonable costs and expenses of any business promotion
or personnel training program of the Facility, as
reflected in the Operating Budget.
4.3 CAPITAL IMPROVEMENTS. Subject to the capital
Expenditures Budget, Owner shall provide Manager by
depositing into the reserve account or Facility Funds
such amount of funds as may be required from time to
time to make all necessary capital improvements to the
Facility, in order to maintain and continue standards
of operation of the Facility as a retirement community
and assisted living care center. If Manager in its
professional judgment determines that additional
capital improvement funds are required, Manager shall
notify Owner thereof in writing for Owner's consent
which shall not be unreasonably withheld. Upon such
consent, Owner shall provide Manager with such increase
in capital improvement funds, by depositing the funds
in the reserve account or Facility Funds within 30 days
thereafter.
4.4 INDEMNIFICATION. Owner shall at all times
indemnify and hold harmless Manager, its agents,
representatives, partners, joint venturers, officers,,
directors, and shareholders, from and against any and
all claims, losses, liabilities, actions, proceedings,
and expenses (including reasonable attorneys' fees and
costs) arising out of Owner' s operation of the
Facility prior to the Commencement Date and Owner's
ownership of the Facility, including the performance of
its obligations with respect to any loans secured by a
security interest in the Facility. Such claims, losses,
liabilities, actions, proceedings and expenses are
considered the responsibility of Owner absent
documentation of responsibility for such claims by
Manager. The provisions of this Section 4.4 shall
survive the termination or expiration of this
Agreement.
ARTICLE 5
COMPENSATION AND DISTRIBUTIONS
5.1 Management Fees. As full compensation for all
to the services to be rendered by Manager during the
term of this Agreement (but not including reimbursement
for costs or expenses incurred by manager on behalf of
Owner of the Facility hereunder), Owner shall pay to
Manager at its principal office, or at such other place
as Manager may from time to time designate in writing,
and at the times herein after specified, a management
fee equal to five percent of Gross Revenues (as defined
below) derived from the operation of the Facility on a
monthly basis
11
determined on the accrual method of accounting. Such
management fee (the "Base Management Fee") shall be
payable from Facility Funds monthly upon delivery to
Owner of the monthly financial statement referred to in
Section 3.12 (each date being hereinafter referred to
as a "Payment Date") and shall be calculated based upon
the Facility's Gross Revenues during the preceding
month as set forth in such financial statements.
5.2 GROSS REVENUES. For purposes of determining
such management fees, "Gross Revenues" for any period
shall be determined on the basis of all revenues and
income of any kind derived, directly or indirectly,
from the operation of the Facility during such period (
including rental or other payment from concessionaires,
licensees, Residents, and other users of the Facility,
but excluding therefrom all bequests, gifts, or similar
donations) whether on a cash basis or on credit, as
determined in accordance with generally accepted
accounting principles consistently applied, excluding,
however:
(a) federal, state, and municipal excise, sales,
and use taxes collected directly from residents as a
part of the sales prices of any goods and services;
(b) proceeds of any life insurance policies;
(c) gains arising from the sale or other
disposition of capital assets;
(d) any reversal of any contingency or tax
reserve;
(e) interest earned on sinking funds, Social
Security Accounts, bonds funds, etc. originally and
specifically formed as a requirement of any bond issue
utilized to finance the Facility; and any refunds,
contractual adjustments, income set-offs or bad debt
expense.
The proceeds of business interruption insurance
or proceeds received as a result of Medicare and
Medicaid audits shall be included in Gross Revenues
from the Facility. However, funds required to be repaid
as a result of Medicare and Medicaid audits shall be
deducted from Gross Revenues of the Facility.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF POWER
Owner and members of Owner represent and warrant
to Manager as follows:
6.1 ORGANIZATION AND STANDING OF OWNER. Owner is a
limited liability company duly organized, validly
existing and in good standing under the laws of the
State of North Carolina and is qualified to do business
in each other jurisdiction where such qualification is
necessary, or shall be qualified within thirty (30)
days hereof. Copies of the Articles of Organization and
Operating Agreement of Owner, and all amendments
thereof to date, have been, if requested, delivered to
Manager and are complete and correct. The Owner has the
power and authority to own the property and assets now
owned by it and to conduct the business currently being
conducted by it.
6.2 ABSENCE OF CONFLICTING AGREEMENTS. Neither the
execution or delivery of this Agreement, including all
Schedules and Exhibits hereto, or any of the other
instruments and documents required or contemplated
hereby and thereby ("Transaction Documents") by Owner,
nor the performance by Owner of the transactions
contemplated hereby and thereby, conflicts
12
with, or constitutes a breach of or a default or
requires the consent of any third party under (i) the
Articles of Organization or Operating Agreement of
Owner, or (ii) to the best of its knowledge after due
inquiry, any applicable law, rule judgment, order,
writ, injunction, or decree of any court, currently in
effect; or (iii) to the best of its knowledge after due
inquiry, any applicable rule or regulation of any
administrative agency or other governmental authority
currently in effect; or (iv) any agreement, indenture,
contract or instrument to which Owner is now a party or
by which the assets of Owner are bound.
6.3 CONSENTS. Except as set forth in Schedule 6.3,
no authorization, consent, approval, license, exemption
by, filing or registration with any court or
governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, is or
will be necessary in connection with the execution,
delivery and performance of this Agreement by the
Owner.
6.4 LEGAL PROCEEDINGS. Other than as set forth on
Schedule 6.4, there are no claims, actions, suits or
proceedings or arbitrations, either administrative or
judicial, pending or, to the knowledge of Owner,
overtly threatened against or affecting Owner, its
affiliates or shareholders, or their ability to
consummate the transactions contemplated herein, at law
or in equity or otherwise, before or by any court or
governmental agency or body, domestic or foreign, or
before an arbitrator of any kind.
6.5 ABSENCE OF CERTAIN EVENTS. Except as set forth
on Schedule 6.5, Owner has not:
(a) sold, assigned or transferred any of its
assets or properties, except in the ordinary course of
business;
(b) mortgaged, pledged or subjected to any lien,
pledge, mortgage, security interest, conditional sales
contract or other encumbrance of any nature whatsoever,
the Facility's assets;
(c) made or suffered any amendment or termination
of any material contract, commitment, instrument or
agreement other than in the ordinary course of
business;
(d) failed to pay or discharge when due any
liabilities, the failure to pay or discharge which has
caused or will cause any actual material damage or give
rise to the risk of a material loss to Owner;
(e) changed any of the accounting principles
followed by them or the methods of applying such
principles ;
(f) entered into any material transaction other
than in the ordinary course of business;
or
(g) received any notice of any adverse
determination made by any licensing authority or
reimbursement source which may reasonably be expected
to have a material adverse effect on the revenues or
operations of the Facility. Owner shall report to
Manger, within five business days after receipt
thereof, any written notices that Owner or the Facility
is not in compliance in any material respect with any
of the foregoing.
6.6 COMPLIANCE WITH LAWS. Except for notices of
non-compliance as to which Owner has taken connective
action acceptable to the applicable governmental
agency, and as set forth in Schedule 6.6, Owner has not
within the period of twelve months preceding the date
of this
13
Agreement, received any written notice that it fails to
comply in any material respect with any applicable
federal, state, local, or other governmental agency
having jurisdiction over Owner ("Governmental
Requirements"). Owner shall report to Manager, within
five business days after receipt thereof, any written
notices that Owner is not in compliance in any material
respect with any of the foregoing.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF MANAGER
Manager represents and warrants to Owner as
follows:
7.1 ORGANIZATION AND STANDING OF MANAGER. Manager
is a corporation duly organized, validly existing and
in good standing under the laws of the State of
Washington. Copies of the Articles of Incorporation and
By-Laws of Manager, and all amendments thereof to date,
have been, if requested, delivered to Owner and are
complete and correct. Manager has the power and
authority to own the property and assets now owned by
it and to conduct the business currently being
conducted by it.
7.2 ABSENCE OF CONFLICTING AGREEMENTS. Neither the
execution or delivery of this Agreement, including all
Schedules and Exhibits hereto, or any of the other
instruments and documents required or contemplated
hereby and thereby by Manager, nor the performance by
Manager of the transactions contemplated hereby and
thereby, conflicts with, or constitutes a breach of or
a default or requires the consent of any third party
under (i) the Articles of Incorporation or By-Laws of
Manager, or (ii) to the best of its knowledge after due
inquiry, any applicable law, rule, judgment, order,
writ, injunction, or decree of any court, currently in
effect; or (iii) to the best of its knowledge after due
inquiry, any applicable rule or regulation of any
administrative agency or other governmental authority
currently in effect; or (iv) any agreement, indenture,
contract or instrument to which Manager is now a party
or by which the assets of Manager are bound.
7.3 CONSENTS. Except as set forth in Schedule 7.3,
no authorization, consent, approval, license, exemption
by, filing or registration with any court or
governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, is or
will be necessary in connection with the execution,
delivery and performance of this Agreement by the
Manager.
7.4 LEGAL PROCEEDINGS. Other than as set forth on
Schedule 7.4, there are no claims, actions, suits or
proceedings or arbitrations, either administrative or
judicial, pending or, to the knowledge of Manager,
overtly threatened against or affecting Manager, its
affiliates or shareholders, which affect their ability
to consummate the transactions contemplated herein, at
law or in equity or otherwise, before or by any court
or governmental agency or body, domestic or foreign, or
before an arbitrator of any kind.
7.5 COMPLIANCE WITH LAWS. Except for notices of
non-compliance as to which Manager has taken corrective
action acceptable to the applicable governmental
agency, and as set forth in Schedule 7.5, Manager has
not within the period of 12 months preceding the date
of this Agreement, received any written notice that it
fails to cc: :ply in any material respect with any
applicable federal, state, local or other governmental
laws or ordinances, or any applicable order, rule or
regulation of any Federal, state, local or other
governmental agency having jurisdiction over Manger.
Manager shall report to Owner, within five business
days after receipt thereof, any written notices that
Manager is not in compliance in any material respect
with any of the
14
foregoing.
ARTICLE 8
TERMINATION RIGHTS
This Agreement may be terminated and, except as
to liabilities or claims or either party hereto which
have accrued prior to the effective date of
termination, the obligations of the parties with
respect to this Agreement may be terminated only upon
the occurrence of any of the following events;
8.1 TERMINATION BY OWNER. If at any time or from
time to time during the term of this Agreement any of
the following events shall occur and not be remedied
within the applicable period of time herein specified,
namely:
(a) Manager applies for or consents to the
appointment of a receiver, trustee, or liquidator of
Manager of all or a substantial part of its assets,
files a voluntary petition in bankruptcy or is the
subject of an involuntary bankruptcy proceeding, makes
a general assignment with creditors or takes advantage
of any insolvency law, or if an order, judgment or
decree is entered by any court of competent
jurisdiction, on the application of a creditor,
adjudicating Manager as bankrupt or insolvent or
approving a petition seeking reorganization of Manager
or appointing a receiver, trustee, or liquidator of
Manager or of all or a substantial part of its assets,
and such order, judgment or decree continues unstayed
and in effect for any period of 90 consecutive days;
(b) Manager shall fail to keep, observe, or
perform any material covenant, agreement, term or
provision of this Agreement to be kept, observed, or
performed by Manager; or Manager's failure to
substantially comply with the state and local
regulations concerning the development and operating of
similar facilities, and such material default or
failure to substantially comply with state and local
regulations shall continue unabated for a period of 60
days after written notice thereof by Owner to Manager;
(c) The license or licenses required for the
operation of the Facility are at any time suspended,
terminated, or revoked beyond the applicable appeal
period for any reason due to acts of commission or
omission of Manager; or
(d) The Facility or any portion thereof is damaged
or destroyed by fire or other casualty and (i) Owner
fails to undertake to repair, restore, rebuild, or
replace any such damage or destruction within 60 days
after such fire or other casualty, or fails to complete
such work. diligently, and (ii) Owner fails to permit
Manager to undertake to repair, restore, rebuild, or
replace any such damage or destruction within 60 days
after such fire or casualty;
then in case of any such event and upon the expiration
of the period of grace applicable thereto, except for
an event under Sections 8.1(c) or 8.1(d) there being no
grace period, this Agreement shall terminate at Owner's
option and upon ten days written notice to Manager;
provided, however, that if an event under Sections
8.1(c) or 8.1(d) occurs, this Agreement shall terminate
immediately upon notice to Manager.
8.2 TERMINATION BY MANAGER. If at any time or
from time to time during the term of this Agreement any
of the following events shall occur and not be timely
cured:
15
(a) Owner fails to keep, observe, or perform any
material covenant, agreement, term or provision of this
Agreement to be kept, observed, or performed by Owner,
and such default continues for a period of 6o days
after written notice thereof by Manager to, Owner;
(b) The Facility or any portion thereof is damaged
or destroyed by tire or other casualty and (i) Owner
fails to undertake to repair, restore, rebuild, or
replace any such damage or destruction within 60 days
after such fire or other casualty, or fails to complete
such work diligently, and (ii) Owner fails to permit
Manager to undertake to repair, restore, rebuild, or
replace any such damage or destruction within 60 days
after such fire or casualty;
(c) Owner applies for or consent: to the
appointment of a receiver, trustee, or liquidator of
Owner or of all or a substantial part of its assets,
files a voluntary petition in bankruptcy or admits in
writing its ability to pay its debts as they become
due, makes a general assignment for the benefit of
creditors, files a petition or any answer seeking
reorganization or arrangements with creditors or to
take advantage of any insolvency law, or if an order,
judgment or decree is entered by a court of competent
jurisdiction, on the application of a creditor,
adjudicating Owner bankrupt or appointing a receiver,
trustee, or liquidator of Owner or with respect to all
or a substantial part of the assets of Owner, and such
order, judgment or decree continues unstayed and in
effect for any period of 90 consecutive days;
(d) Any license, lease or sub-lease necessary for
the operation of the Facility is suspended, terminated,
or revoked and such suspension, termination, or
revocation continues unstayed and in effect for a
period of 60 consecutive days; or
then in case of any such event and upon the expiration
of the period of grace applicable thereto, this
Agreement shall terminate at Manager's option and upon
ten days written notice to Owner.
8.3 SURVIVING RIGHTS UPON TERMINATION. If either
party exercises its option to terminate pursuant to
this Article 8, each party shall forthwith, but in no
event later than ten days after the termination date of
this Agreement, account for and pay to the other all
sums due and owing pursuant to the terms of this
Agreement. All other rights and obligations of the
parties under this Agreement shall terminate, except
the obligations of the parties for damages caused by a
breach of this Agreement, a duty of a party required
under applicable law or regulation, or the
indemnification provisions contained in this Agreement
or as expressly stated herein.
ARTICLE 9
CONDEMNATION
If the whole of the Facility is taken or
condemned in any eminent domain, condemnation,
compulsory acquisition, or like proceeding, by a
competent authority for any public or quasi-public use
or purpose, or if a portion thereof is taken or
condemned so as to make the balance of the Facility
unsuitable for its primary intended use, then this
Agreement shall terminate on the date on which the
Owner is required to surrender possession of the
Facility. Manager shall continue to supervise and
direct the management of the Facility until such time
as Owner is required to surrender possession of the
Facility by reason of such taking or condemnation.
If only a part of the Facility is taken or
condemned and the taking or condemnation of
16
such part does not make the balance unsuitable for its
primary intended use, this Agreement shall not
terminate.
In the event that the parties are unable, within a
period of 30 days after controversy arising between
them, to agree upon the apportionment of any award or
are otherwise in dispute as to any matter arising under
this Article, any such dispute shall be resolved by
arbitration in accordance with the provisions of
Article 11 below, and the costs thereof or incurred
therein shall be borne or apportioned and paid as
determined by said arbitration.
ARTICLE 10
ARBITRATION
If any controversy should arise between the
parties relating to this Agreement, involving any
matter, either party may serve upon the other a written
notice stating that such party desires to have the
controversy determined by a single arbitrator. If the
parties cannot agree within 15 days from the service of
such notice as to the selection of such arbitrator, an
arbitrator shall be selected or designated by the
American Arbitration Association upon written request
of either party hereto. Arbitration of such
controversy, disagreement, or dispute shall be
conducted in accordance with the rules then in force of
the American Arbitration Association, and the decision
and award of the arbitrator so selected shall be
binding upon owner and Manger. The arbitration will be
held in the city and state where the Facility is
located Notwithstanding the foregoing, if a dispute
arises between the parties to this Agreement that also
involves or is related to a third party or parties not
bound to arbitration under this Agreement, then, unless
both parties to this Agreement agree to proceed in
arbitration, that dispute or any other related disputes
shall not be subject to this arbitration provision.
Both parties, however, shall make a good faith
effort to resolve any controversy, which effort shall
continue for a period of 30 days prior to any demand
for arbitration. Unless otherwise specified in the
decision of the arbitrators, the prevailing party shall
be reimbursed by the non-prevailing party for any
reasonable out-of-pocket expenses (including travel
expenses and reasonable attorney's fees and expenses)
incurred as a result of its participation in any such
arbitration and the non-prevailing party will pay all
other costs associated with such proceedings.
If the issue to be arbitrated is Manager' s
alleged breach of this Agreement, and as a result
thereof Owner has the right to terminate this
Agreement, Manager shall continue to manage the
Facility hereunder pending the outcome of such
arbitration, provided Manager posts bond of any money
damages in dispute.
ARTICLE 11
SUCCESSORS AND ASSIGNS
11.1 ASSIGNMENTS BY MANAGER. Manager, without the
consent of Owner, shall have the right to assign this
Agreement to a wholly or majority owned subsidiary,
provided that Manager shall not hereby be released from
its obligations hereunder and no event of default then
exists under Section 8.1 hereof.
Except as otherwise permitted herein, Manager
shall have no right to assign this Agreement.
17
11.2 SALE, ASSIGNMENT, OR SUBLEASE BY OWNER. Any
sale, sub-lease, or assignment by Owner with respect to
the Facility, other than to Manager or one of its
affiliates, shall be expressly subject to the terms and
provisions of this Agreement and shall not relieve
Owner of its liability or obligations hereunder. Owner
shall cause any purchaser, assignee, or sublessee to
deliver to Manager written acknowledgment of its
agreement to perform hereunder including the payment of
the management fee described herein. Upon such sale,
lease, sublease or assignment by Owner to a third party
other than CapBay IV, Ltd., or its successors,
affiliates or permitted assigns, manager may terminate
this Agreement upon ten (10) days written notice to
Owner, its lessee, sublessee or assignee.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 NOTICES. Any notice or other communication by
either party to the other shall be in writing and shall
be deemed to have been duly given upon the date
delivered if delivered personally, or upon the date
received if mailed postage prepaid, registered, or
certified mail, addressed as follows:
Owner: ALCO VII, L.L.C.
00 0xx Xxxxxx X. X.
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Manager: EMERITUS CORPORATION
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
or to such other address, and to the attention of such
other person or officer as either party may designate
in writing by notice,
12.2 NO PARTNERSHIP OR JOINT VENTURE. Nothing
contained in the Agreement shall constitute or be
construed to be or create a partnership or joint
venture between Owner, its successors, or assigns on
the one part and Manager, its successors, or assigns on
the other part.
12.3 MODIFICATIONS AND CHANGES. This Agreement
cannot be changed or modified except by written
agreement of the parties.
12.4 UNDERSTANDING AND AGREEMENTS. This Agreement
constitutes the entire understanding and agreement
between the parties with respect to Manager's operation
and management of the Facility, and supersede any and
all understandings or agreements, whether written or
oral, concerning any matters described herein. No
subsequent agreements or understandings between the
parties concerning any matter herein can after the
terms of this Agreement except by written agreement of
the parties.
12.5 HEADINGS. The article and paragraph headings
contained herein are for convenience of reference only
and are not intended to define, limit, or describe the
scope of intent of any provision of this Agreement.
12.6 APPROVAL OR CONSENT. Whenever under any
provisions of this Agreement, the approval or
disapproval of either party is required, notice of such
approval or disapproval shall
18
be promptly given and any requested approval shall not
be unreasonably withheld. Whenever, under any provision
of this Agreement, the approval or disapproval of Owner
is required, such approval or disapproval may be given
by the person or any one of the persons, as the case
may be, designated in a notification signed by or on
behalf of Owner. For all purposes under this Agreement,
Manager may rely upon the latest such notification
received by it, notwithstanding any knowledge to the
contrary.
12.7 GOVERNING. This Agreement shall be deemed to
have been made and shall be construed and interpreted
in accordance with the laws of the State.
12.8 SEVERABILITY. If any provision of this
Agreement is held to be unenforceable or invalid for
any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties
to the extent possible. In any event, all other
provisions of this Agreement shall be deemed valid and
enforceable to the fullest extent.
12.9 COUNTERPARTS. This Agreement may be executed
in two or more counterparts, each of which shall be
deemed an original, but all of which shall constitute
one and the same instrument.
12.10 THIRD-PARTY RIGHTS. Nothing expressed or
referred to in this Agreement will be construed to give
any person other than the parties to this Agreement and
the Lender any legal or equitable rights or remedy or
claim under or with respect to this Agreement or any
provision of this Agreement. The Agreement and all of
its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and
the Lender and their successors and assigns. Lender is
an intended third-party beneficiary of this Agreement.
IN WITNESS WHEREOF, the parties hereto have
executed and delivered this Agreement effective as of
the day and year first above written.
OWNER
ALCO VII, L.L.C. a North
Carolina limited
liability company
By: /s/
-------------------
--------------------
Its: Manager
MANAGER:
EMERITUS CORPORATION, a
Washington
corporation
By: /s/ Xxxxxxx X.
Xxxxxxxxxx
------------------
-----------------------
Its: President
19
