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EXHIBIT 10.28
FORM OF MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is made and entered into
as of , between ALCO II, L.L.C., a North Carolina limited
liability company, having its principal office at 00 Xxxxx Xxxxxx, X.X.,
Xxxxxxx, Xxxxx Xxxxxxxx 00000 ("Owner"), and
, a Delaware corporation, having its principal office at 0000 Xxxxxx Xxxxx,
Xxxxx 000, Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000 ("Manager").
WITNESSETH
WHEREAS, Owner is the owner of an assisted living facility being
developed in , which facility, together with the equipment,
furnishings, and other tangible personal property that will be used in
connection therewith (the "Facility"), upon completion of development will be
doing business under a name mutually agreeable to Owner and Manager; 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
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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 commencing on the
date that a certificate of occupancy is issued for the Facility (the
"Commencement Date") and ending on the earlier to occur of (i) the date that is
two years after the Commencement Date or (ii) the Breakeven Date (as defined in
that certain Lease Agreement of even date herewith (the "Lease") between Owner
and BCC of Roanoke, Inc.), 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
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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.
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 no 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:
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(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, 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
(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.
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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 Manager, 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 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 no obligation to secure and protect Manager from any loss, cost,
damage or expense that arise directly out of Manager's negligence, misconduct,
or breach 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 kind 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 (the "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 prior to the
Commencement Date. 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 Fund 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;
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(b) payment of rent under the Lease and the 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.
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 Fund 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 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 amounts in the Reserve Fund 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
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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, if any.
(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 Manager 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 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 data 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 Manger. 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,
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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, Manager shall take, at Owner's
expense, appropriate legal steps with respect to any alleged violation, or
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.
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. Except for Owner's obligations and liabilities
under Section 3.11, 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.
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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 July 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 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 the health or safety of the residents 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, or 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.
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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
bond.
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
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 limitation
services rendered pursuant to this Agreement, Manager agrees as follows:
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(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 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
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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
without limitation, any of the foregoing arising out of Owner's breach of any
of the terms or conditions of the Loan Agreement of even date herewith (the
"Loan Agreement") between Owner and Capstone Capital Corporation. 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 of 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 or
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 six percent of
Gross Revenues (as defined below) derived from the operation of the Facility on
a monthly basis determined on the accrual method of accounting. Such management
fee (the "Base Management Fee") shall be payable monthly from either the
Reserve Fund or the Facility Funds, as the case may be, upon delivery to Owner
of the monthly financial statement referred to in Section 3.12 (each such 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 the 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;
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(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
(f) 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 OWNER
Owner and shareholders 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 the Commonwealth
of Virginia. Copies of the Articles of Incorporation and By-Laws 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 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 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.
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6.5 COLLECTIVE BARGAINING, LABOR CONTRACTS, EMPLOYMENT PRACTICES, ETC.
During the two years prior to the date hereof, there has been no material
adverse change in the relationship between Owner and its employees, nor any
strike or material labor disturbance by such employees affecting Owner's
business and, to the knowledge of Owner, there is no indication that such a
change, strike or labor disturbance is likely. Except as set forth on Schedule
6.5, Owner's employees are not represented by any labor union or similar
organization and Owner has no reason to believe that there are pending or
threatened any activities, the purpose of which is to achieve such
representation, of all or some of Owner's employees. Except as set forth on
Schedule 6.5, Owner has no collective bargaining or other labor contracts,
employment contracts, pension, profit-sharing, retirement, insurance, bonus,
deferred compensation or other employee benefit plans, agreements or
arrangements with respect to Owner's employees. Owner is in material compliance
with the requirements prescribed by all federal, state and local statutes,
orders and governmental rules and regulations applicable to any of its employee
benefit plans, agreements and arrangements, including, without limitation, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
6.6 ABSENCE OF CERTAIN EVENTS. Except as set forth on Schedule 6.6,
since June 30, 1995, 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 Manager, 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.
6.7 COMPLIANCE WITH LAWS. Except for notices of non-compliance as to
which Owner has taken corrective action acceptable to the applicable
governmental agency, and as set forth in Schedule 6.7, Owner has not within the
period of twelve months preceding the date of this Agreement, received
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any written notice that it fails to comply 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 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 Delaware and is qualified to do business in the Commonwealth of
Virginia. 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, 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.
7.5 COLLECTIVE BARGAINING, LABOR CONTRACTS, EMPLOYMENT PRACTICES, ETC.
During the two years prior to the date hereof, there has been no material
adverse change in the relationship between Manager and its employees, nor any
strike or material labor disturbance by such employees affecting Manager's
business and, to the knowledge of Manager, there is no indication that such a
change, strike or labor disturbance is likely. Except as set forth on Schedule
7.5, Manager's
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employees are not represented by any labor union or similar organization and
Manager has no reason to believe that there are pending or threatened any
activities, the purpose of which is to achieve such representation, of all or
some of Manager's employees. Except as set forth on Schedule 7.5, Manager has
no collective bargaining or other labor contracts, employment contracts,
pension, profit-sharing, retirement, insurance, bonus, deferred compensation or
other employee benefit plans, agreements or arrangements with respect to
Manager's employees. Manager is in material compliance with the requirements
prescribed by all federal, state and local statutes, orders and governmental
rules and regulations applicable to any of its employee benefit plans,
agreements and arrangements, including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
7.6 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 comply 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 Manager. 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
foregoing.
ARTICLE 8.
TERMINATION RIGHTS
This Agreement may be terminated and, except as to liabilities or
claims of 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
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 for any reason due to acts of
commission or omission of Manager; or
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(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:
(a) Owner fails to keep, observe, or perform any material covenant,
agreement, term or provision of this Agreement or the Loan Agreement (or any
other financing arrangements with respect to the Facility) to be kept,
observed, or performed by Owner, and such default continues for a period of 60
days after written notice thereof by Manager to Owner;
(b) The Facility or any portion thereof is damaged or destroyed by
fire or other casualty and (i) Owner fails to undertake to repair, restore,
rebuilt, 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, rebuilt, or
replace any such damage or destruction within 60 days after such fire or
casualty;
(c) Owner applies for or consents 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 inability 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 arrangement
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
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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 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
Manager. 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
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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 for 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.
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.
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 II, L.L.C.
00 Xxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Sirote & Permutt, P.C.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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Manager: BCC DEVELOPMENT AND MANAGEMENT CO.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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 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.
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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.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement effective as of the day and year first above written.
Owner:
ALCO II, L.L.C.
By
-----------------------------
Xxxxxxx X. Xxxxxxxx
Managing Member
Manager:
BCC DEVELOPMENT AND MANAGEMENT CO.
By
-----------------------------
Xxxxx X. Xxxxx
Vice President
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SCHEDULE TO EXHIBIT 10.28 FILED PURSUANT TO INSTRUCTION 2 TO ITEM 601(a) OF
REGULATION S-K
MANAGEMENT AGREEMENT
PROJECT/FACILITY LOCATION OWNER DATE
------------------------- ----- ----
Roanoke, VA ALCO II, L.L.C. 6/30/97
Harrisonburg, VA ALCO I, L.L.C. 6/30/97
Danville, VA ALCO III, L.L.C. 9/3/97
