PARTNERSHIP AGREEMENT
OF
TDC/EMERITUS PASO XXXXXX ASSOCIATES
This Agreement is made and entered into as of
the 1st day
June, 1995 between TDC CONVALESCENT INC., a
California corporation
( "TDC" ) and EMERITUS CORPORATION, a Washington
corporation ("Emeritus"). TDC and n Emeritus are
sometimes referred to herein individually as
"Partner" and collectively as "Partners." The
Partners desire to form a general partnership upon
the terms and conditions set forth herein. Except
as otherwise provided herein
the rights and liabilities of the Partners shall
be governed by
the Washington Uniform Partnership Act, Ch. 25.04
RCW.
It is agreed:
Section 1. NAME. The name of the Partnership.
shall be TDC/Emeritus Paso Xxxxxx Associates
(sometimes referred to herein as the
"Partnership").
Section 2. OFFICE. The principal office of
the Partnership shall be at 0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000, or at such
other place designated by the Partners. The
principal office of the Partnership in the state
of Washington shall be at Market Place One, 0000
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx
00000.
Section 3. TERM, The term of the Partnership
shall be 25 years unless sooner terminated as
provided herein.
Section 4. PURPOSE AND POWERS.
4.1 PURPOSE. The purpose af the Partnership
shall be to acquire and own the real property in
Paso Xxxxxx, California described on Exhibit A
attached hereto (the "Property"), to develop,
construct and operate a residential care facility
with approximately 100 units on the Property, (the
Property and improvements constructed thereon are
collectively referred to herein as the "Project"),
and to do all things necessary or incidental to
the foregoing. The Partnership shall have no
other purpose without the unanimous consent of the
Partners.
4. 2 POWERS. Subject to the provisions of
this Agreement, the Partnership shall have the
following powers:
(a) To conduct and operate the business
of the Partnership and to execute such documents
and instruments as the Partners in their
discretion determine are necessary, convenient or
incidental to accomplish the purpose of the
Partnership, including, without limitation notes,
mortgages, deeds of trust, leases, management
agreements, contracts and other documents.
(b) To acquire real and personal property by
purchase ,
lease or otherwise as may be necessary, convenient
or incidental to accomplish the purposes of the
Partnership.
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(c) To enter into such construction design,
development, management and other agreements as
the Partners determine are necessary, convenient
or incidental to the development and operation of
the Property, including, without limitation, the
agreements set forth in Section 6.5 below.
(d) To borrow money on a secured or
unsecured basis on such terms and conditions and
in such amounts as the Partners determine is
necessary, convenient or appropriate to accomplish
the purposes of the Partnership.
(e) To institute, prosecute, defend,
settle, compromise and dismiss legal and other
proceedings brought by or against the Partnership
or the Partners.
(f) To procure and maintain insurance
covering the subject risks to which the
Partnership or its operations may be
(g) To open bank accounts in the name
of the Partnership, designate the authorized
signatures therefor and make deposits and
withdrawals from Partnership accounts on the
signatures of one or more designated individuals.
(h) To pay expenses incurred in
performing the business and purposes of the
Partnership.
(i) To do all other things necessary,
incidental or convenient to accomplish the
purposes of the Partnership. .
Section 5. PERCENTAGE INTERESTS CAPITAL
CONTRIBUTIONS PROFITS AND LOSSES AND CASH
DISTRIBUTIONS.
5.1 PERCENTAGE INTERESTS. The Partners shall
have the Percentage Interest in the Partnership as
set forth opposite each Partner's name below:
Partner Percentage Interest
---------- --------------------
----
TDC
50%
Emeritus
50%
The Percentage Interest of the Partners shall be
subject to adjustment as provided in Section 5.3.
5.2 INITIAL CAPITAL CONTRIBUTIONS. Upon
execution of this Agreement, each of the Partners
shall contribute to the Partnership all of their
interest in the Property and all plans, licenses,
permits, contracts, and other rights with respect
to the Project. Each Partner shall be credited
with making a contribution to the
Partnership equal to its actual out-of-pocket cost
for its contributions pursuant to this Section
5.2, net of any reimbursement received from the
Partnership. If the contributions to the
partnership pursuant to this Section 5.2 are
uneven; the Partnership shall reimburse the
Partner making the greater contribution in the
amount required to equalize the contributions of
both Partners.
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5.3 Capital Contributions After Initial
Capital Contribution. If the Partnership requires
contributions from time to time (in excess of the
Initial Capital Contributions provided for in
Section 5. 2 and amounts borrowed by the
Partnership from time to time), the Partners by
Percentage Interest shall contribute such amounts
in cash to the Partnership when required.
In the event either Partner fails to
contribute its share of capital to the
Partnership, then the other Partner who has
contributed its share may at its option:
(a) Treat the noncontributing Partner as a
Defaulting Partner under Section 8,
(b) Contribute the amount required from the
noncontributing Partner and elect to readjust the
Percentage Interests of the Partners in the
Partnership so that the Percentage Interest of
each Partner is in the ratio of a fraction, the
numerator of which is the aggregate contributions
of each Partner pursuant to this Section 5. 3 and
Section 5. 2 and the denominator of which is the
aggregate contributions of both Partners pursuant
to this Section 5.3 and Section 5.2, or
(c) May advance the noncontributing Partner's
pro rata share to the Partnership and treat such
amount as a loan from the contributing Partner to
the noncontributing Partner (a "Default Loan").
Such Default Loans shall bear interest at the
lesser of the maximum rate permitted by law or
Seattle-First National Bank's published prime rate
in effect as of the first day of each calendar
month, plus two percent per annum. Default Loans
shall be repayable within thirty (30) days after
written demand and if not sooner repaid, shall be
repaid from any cash distributions otherwise to be
made to the noncontributing Partner by the
Partnership or offset against any amount to be
paid to the noncontributing Partner in purchase of
its interest in the Partnership.
5.4 PAYMENT OF GUARANTEE. Any amount paid by
a Partner to a lender of the Partnership which is
credited as a reduction to the liabilities of the.
Partnership, whether such payment is made by such
Partner as a guarantor of the indebtedness or in
some other capacity, shall be treated as a
contribution to the Partnership. The Partner
making such payment shall be entitled to a right
of contribution from the other Partner, so that
the Partners, respective contributions are in
proportion to their Percentage Interests, and upon
reimbursement to the Partner making the payment of
the excess-amount, the books of the Partnership
shall be adjusted to reflect the net contribution
made by each.
5.5 ALLOCATION OF PROFITS AND LOSSES. Profits
and Losses of the Partnership resulting from
operations shall be allocated between the Partners
in proportion to their Percentage Interests.
Profits and Losses of the Partnership resulting
from the sale or disposition of Partnership assets
shall be allocated in accordance with Section 9.3.
Solely for federal income tax purposes, if the
book value of any Partnership assets differs from
its adjusted tax basis and Section 704(c) of the
Internal Revenue Code of 1986 as amended (the
"Code" ) applies to such Partnership assets, , the
Partners, distributive shares of depreciation,
amortization, gain or loss as computed for federal
income tax purposes for Partnership assets shall
be allocated between the Partners so as to take
into account any variation between the adjusted
tax basis of such assets to the Partnership and
their book value in accordance with the Treasury
Regulations promulgated under Section 704(c) of
the Code.
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5.6 CASH DISTRIBUTIONS FROM OPERATIONS. Cash
flow of the Partnership in any period shall
consist of the total cash receipts of the
Partnership less all cash disbursements and less
reserves reasonably required for Partnership
business, as agreed upon from time to time by the
Partners. Cash flow of the Partnership resulting
from operations shall be distributed quarterly
between the Partners in accordance with Percentage
Interests. Cash flow of the Partnership resulting
from the sale or disposition- of Partnership
assets or financing proceeds shall be distributed
between the Partners in accordance with Section
9.2.
5. 7 NO INTEREST ON CAPITAL CONTRIBUTIONS. No
interest shall be paid on any capital
contributions or capital accounts of the Partners.
Section 6. MANAGEMENT AND ACCOUNTING
6.1 MANAGEMENT. Except as provided in Section
6.2, all management decisions or other matters
affecting the Partnership shall be made by
unanimous agreement of the Partners, including but
not limited to, approval of the Project design,
development budget and change orders, sale of the
Project and dissolution of the Partnership prior
to the end of its stated term. Upon completion of
the development of the Property, the Partners
shall prepare or cause to be prepared an annual
operating budget for the Property, which shall
include, among other things, a projection of
Partnership income and expense, capital
expenditures, and cash flow. Unless otherwise
agreed, all expenditures by or on behalf of the
Partnership shall be made in accordance with said
budget. Partners may designate from time to time
one of them to implement the decisions of the
Partners and shall designate a Partner to be the
"Tax Matters Partner" of the Partnership.
6.2 PROJECT FINANCING. Emeritus shall have
sole responsibility to secure construction and
take-out permanent financing for the Project (the
"Project Loan").
Emeritus shall have full authority to commit the
Partnership to the Project Loan, and to execute
such commitment letters, mortgages, deeds of
trust, security documents, pledges, assignments,
notes, and other documents which Emeritus, in its
discretion, determines are necessary or
appropriate to document and close the Project
Loan. Notwithstanding the foregoing, without the
prior written approval of TDC, Emeritus shall not
commit the Partnership to any Project Loan in
which the lender receives an equity interest in
the Partnership or receives any payment of
interest (or otherwise) calculated by referenced
to the gross income, net income or gain of the
Partnership or the Project.
6.3 ACCOUNTING. The Partnership shall
prepare financial statements in accordance with
generally accepted accounting principles ("GAAP"),
and federal income tax returns shall be filed
using the accrual method of accounting. The fiscal
year of the Partnership shall be the calendar
year. All books and records of Partnership shall
be open at all times for inspection by either
6.4 CAPITA1 ACCOUNTS.
(a) Establishment of Capital Accounts.
The Partnership shall establish and maintain a
capital account ( "Capital Account" ) for each
Partner in accordance with Treasury Regulations
issued under Code Section 704.
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(i) The Capital Account for each
Partner shall be increased to reflect: (1) such
Partner's contributions, (2) such Partner's share
of Profits (including all gain as calculated
pursuant to Section 1001 of the Code) of the
Partnership, and (3) such Partner's share of
income and gain exempt from tax.
(ii) The Capital Account of each
Partner shall be reduced to reflect: (1) the
amount of money and the fair market value of
property distributed to such Partner (net of
liabilities securing such distributed property
that the Partner is considered to assume or take
under Section 152), (2) such Partner's share of
non-capitalized expenditures not deductible by the
Partnership in computing its taxable income as
determined under Code Section 705(a)(2)(B) and
Treas. Reg. Section 1.704-1(b) (2) (iv) (i), ( 3 )
such Partner's share of Losses of the Partnership,
and ( 4 ) such
Partner's share of amounts paid or incurred to
organize the Partnership to the extent that an
election under Code Section 709(b) has not
properly been made for such amounts.
(b) ADJUSTMENTS. If the Partnership
distributes an asset to a Partner in kind, and the
fair market value of such asset differs from its
adjusted basis for federal income tax purposes,
the Capital Accounts of both Partners shall be
adjusted as though the Partnership had sold such
asset for its fair market value on the date of
such distribution and the resulting income, gain,
loss or deduction had been allocated to the
Partners to the extent that such income, gain,
loss or deduction had not previously been
reflected in the Partners' Capital Accounts.
(c) DEFINITIONS. "Profits" or "Losses" means,
for each fiscal year, an amount equal to the
Partnership's taxable income or taxable loss under
Section 703(a) of the Code (including all items of
income, gain, loss or deduction required to be
stated separately under Section 703 (a) (1) of the
Code), adjusted as required to take into account
any variances between the "tax" and "book" basis
of Partnership assets, as required pursuant to the
Treasury Regulations promulgated under Section
704(c) of the Code. .
6. 5 TRANSACTIONS WITH PARTNER'S.
(a) DEVELOPMENT FEE. The Partnership
shall pay a development fee of $150,000 for
services to develop and manage construction of the
Project, which shall be payable $100,000 to TDC
and $50,000 to Emeritus. The above amounts shall
be payable in six equal monthly installments
commencing on the date of the first construction
loan draw.
(b) PROPERTY MANAGEMENT. The Partnership
shall retain TDC to provide property management
services. TDC shall receive a management fee of
six percent of the gross operating income from the
Project. Prior to the opening of the Property, TDC
shall execute a management agreement with the
Partnership in the form attached hereto as Exhibit
B, subject to such changes as may be agreed upon
by the Partners, if any.
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Section 7. TRANSFERS.
7.1 TRANSFER PROHIBITED. Without the prior
written consent of the other Partner, no Partner
may directly or indirectly sell, transfer, assign,
pledge or otherwise encumber, voluntarily or
involuntarily, all or any part of its interest in
the Partnership except as provided in this Section
7, any other transfer or encumbrance shall be
void. Notwithstanding the foregoing, both Partners
hereby agree and consent to a pledge of their
Partnership interests as required to obtain the
Project Loan in accordance with Section 6.2 above.
7.2 RIGHT OF FIRST REFUSAL. A Partner may
sell its entire interest in the Partnership upon
compliance with the following conditions:
(a) In the event a Partner ("Selling
Partner") desires to sell its entire interest in
the Partnership and receives a written offer
("Offer") therefor which the Selling Partner
intends to accept, the Selling Partner before
accepting such Offer shall first notify the other
Partner and provide it with a copy of the Offer.
The Offer must contain all material terms relating
to the purchase and sale (including the name of
the transferee), the consideration must be
entirely monetary (but may include the delivery of
a promissory note), and the Offer must contain a
provision that the transferee agrees to be bound
by all the terms and conditions of this Agreement.
(b) After receiving a copy of the Offer,
the other Partner shall have sixty (60) days
within which to elect to purchase the interest of
the Selling Partner upon the terms and conditions
set forth in the Offer. If the other Partner does
not respond or does not elect to purchase the
interest of the Selling Partner within 60 days,
the Selling Partner may effect the purchase and
sale to the purchaser identified in the Offer and
upon the terms and conditions set forth in the
Offer, but not otherwise. Any such sale shall be
completed within 90 days of the date on which the
other Partner notifies the Selling Partner of its
decision not to purchase the interest, or, if no
such notice is provided, the expiration of the
period during which the other Partner may elect to
purchase the interest of the Selling Partner. If
such sale does not occur within the 90 day period
specified above, then this Section 7.2 shall again
be applicable in its entirety.
(c) In the event the other Partner
elects to purchase the interest of the Selling
Partner, the other Partner shall close the
purchase and sale within the time period set forth
in the Offer or within 60 days after receipt of
the offer, whichever is later.
7.3 BUY-SELL IN EVENT OF DEADLOCK. If the
Partners are unable to agree concerning the
affairs of the Partnership, either Partner may
proceed as follows:
(a) The Partner declaring the deadlock
"Initiating Partner") shall provide to the other
Partner a written notice of its intention to
invoke the provisions of this section together
with a) price for all the assets of the
Partnership (!'Price Notice
(b) The other Partner within thirty (30)
days after receipt of the written notice and the
Price Notice provided for in subsection 7.3(a)
must elect to either: (i) purchase the interest of
the Initiating Partner in the Partnership for the
amount, if any, the Initiating Partner would
receive if the assets of the Partnership were sold
for cash equal to the price specified in the Price
Notice and the Partnership immediately liquidated
in
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accordance with Sections 9.2 and 9.3 (i.e.,
allocating all gain or loss upon the sale and
liquidation, satisfying all debts- and
obligations, and then distributing the balance of
the proceeds to the Partners), or (ii) sell its
interest to the Initiating Partner for the amount
the other Partner would receive if the assets of
the Partnership were sold for cash equal to the
price specified in the Price Notice and the
Partnership immediately liquidated in accordance
with Sections 9.2 and 9.3.
(c) The purchase and sale shall close
within 3o days after the other Partner has
notified the Initiating Partner of its election
pursuant to subsection 7. 3 (b). If the Initiating
Partner or the other Partner fails to purchase and
sell in accordance with the election pursuant to
subsection 7.3(b), it shall be a Defaulting
Partner as defined in Section 8, and the other
Partner shall have the rights and remedies
provided for therein.
(d) A Partner who is a Defaulting
Partner as defined in Section 8 may not invoke the
provisions of this Section '7.3.
7. 4 PURCHASE OF DEFAULTING PARTNER 'S
INTEREST. In the event either Partner shall be a
Defaulting Partner, the other Partner may elect to
purchase the interest of the Defaulting Partner in
the Partnership upon the following terms:
(a) The other Partner shall notify the
Defaulting Partner of its election to purchase the
Defaulting Partner's interest and along with such
notice shall designate an MAI appraiser who shall
establish within twenty (20) days thereafter the
appraised fair market value of the Partnership's
assets. Goodwill of the Partnership, if any, shall
not be considered in determining fair market
value. The cost of the appraisal shall be charged
to the Defaulting Partner.
(b) The other Partner shall then
purchase the Defaulting Partner's interest in the
Partnership for an amount equal to 90% of the
amount the Defaulting Partner would have received
had the assets of the Partnership been sold for
the appraised fair market value determined as
provided in subsection 7. 4 (a), the liabilities
of the Partnership satisfied, and the assets of
the Partnership distributed in cash as provided in
Section 9.2.
(c) The purchase shall close within 30
days after the appraised fair market value is
determined as provided in subsection 7. 4 (a).
7.5 GENERAL CONDITIONS. The Partner whose
interest is purchased pursuant to Sections 7. 3
through 7. 4 shall be indemnified by the
purchasing Partner from any Partnership
liabilities except to the extent any such
liabilities were not known and taken into account
in determining the amount the Partner would
receive pursuant to Section 9.2. The purchasing
Partner shall pay the applicable purchase price in
cash at closing and the Selling Partner shall
assign its partnership interest and convey by
quitclaim deed its interest in the Project to the
purchasing Partner at closing; provided, however,
the purchasing Partner at its option may pay 25%
of the applicable purchase price in cash and the
balance in three equal annual installments of
principal and interest with interest at 12% per
annum for any purchase pursuant to Section 7.4. In
the case of any sale pursuant to Sections 7.2
through 7. 4, the Purchasing Partner shall be
entitled to assign all or of a portion of its
rights to purchase to an assignee, but such
assignment shall not release the Purchasing
Partner of any purchase obligation it may have.
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Section 8. DEFAULT.
8.1 EVENTS OF DEFAULT. A Partner shall be in
default ( "Defaulting Partner" ) hereunder upon
the occurrence of any of the following events:
(a) If such Partner makes an assignment for
the benefit of creditors or applies for the
appointment of a trustee, liquidator or receiver
for its assets or commences any proceedings
relating to such Partner under any federal or
state law relating to bankruptcy, insolvency
reorganization or similar laws;
(b) If such Partner has a proceeding
commenced against it relating to the appointment
of a trustee, liquidator or receiver or pursuant
to any proceedings under any federal or state law
relating to bankruptcy, insolvency, reorganization
or similar laws,
which proceeding is not dismissed or stayed within
ninety ( 9 0 ) days after the filing of such
proceeding;
(c) If such Partner suffers its interest in
the Partnership to become subject to any
attachment, levy, execution or other judicial
seizure which is not dismissed or stayed within
ninety (90) days;
(d) If such Partner either (i) fails to
contribute capital to the Partnership as provided
in Section 5 and the other Partner fails to
exercise the options provided for in Sections
5.3(b) or (c) or (ii) fails to repay a Default
Loan within 30 days after demand;
(e) If such Partner transfers its interest in
violation of Section 7; or
(f) If such Partner breaches or fails to
perform any other provision of this Agreement and
such breach or failure is not cured within 30 days
after written notice from the other Partner
provided, however, if the default cannot be cured
within 30 days but is curable without material
irreparable harm to the Partnership, the
defaulting Partner shall be entitled to a
reasonable time to complete the cure, provided it
commences the cure within 30 days and diligently
prosecutes the cure to completion, but in no event
shall such cure period be more than 180 days.
8.2 REMEDIES. Upon either Partner becoming a
Defaulting Partner, the other Partner may:
(a) Dissolve and terminate the
Partnership as provided in Section 9. In such
event if the other Partner asserts damages, were
caused by the Defaulting Partner, the other
Partner may cause the Partnership to pay in escrow
from funds otherwise distributable to the
Defaulting Partner, an amount up to the damages
reasonably asserted against the Defaulting
Partner. Upon payment of funds into escrow
pursuant to the preceding sentence, the other
Partner shall promptly provide notice to the
Defaulting Partner setting forth the nature of the
default asserted against the Defaulting Partner,
the amount of damages claimed, the manner in which
damages have been calculated, and the amount which
has been paid into escrow which shall remain in
escrow until the Partners agree on a distribution
thereof or until a final non-appealable order of a
court of competent jurisdiction is entered
providing for the distribution thereof;
(b) Elect to purchase the interest of
the Defaulting Partner pursuant to Section 7.4; or
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(c) Pursue any remedy at law or in
equity against the Defaulting Partner.
A Defaulting Partner shall have no right to
vote upon or otherwise participate in management
or winding up of the affairs of the Partnership,
whether pursuant to Section 6.1 or otherwise,
regardless of whether the remaining Partner has
commenced to exercise any available remedies.
Section 9. DISSOLUTION AND TERMINATION.
9.1 DISSOLUTION. The Partnership shall
dissolve upon expiration of its term as stated in
Section 3 above, or if earlier, upon the
occurrence of any of the following events:
(a) Unanimous agreement of the Partners
;
(b) Sale or disposition of all the
Partnership assets ;
(c) Election of the nondefaulting
Partner pursuant to Section 8.2;
(d) The Partners are unable to arrange
the financing or secure the permits required to
develop the Project; or
(e) Any other event which causes a
dissolution of the Partnership under state or
federal law.
Neither Partner shall have the right to
dissolve or terminate the Partnership for any
reason other than as set forth above or to
withdraw from the Partnership other than as set
forth in Section 7 and each Partner hereby waives
any other right it may have.
9.2 DISTRIBUTION OF CASH UPON TERMINATION. If
the Partnership is dissolved pursuant to Section
9.1, the Partnership affairs shall be wound up as
expeditiously as possible, the assets sold, and
the Partnership terminated. Either Partner may be
a purchaser of any or all of the assets. A
Defaulting Partner shall have no right to
participate in winding up the affairs of the
Partnership or in determining the disposition of
Partnership assets. After payment of all
Partnership liabilities and expenses of sale and
allocations pursuant to Section 9. 3, the
remaining cash shall be distributed to the
Partners in accordance with their positive Capital
Accounts as adjusted by the allocations provided
for in Section 9.3; provided, however, that any
Partner which has a negative Capital Account
balance (following the allocations pursuant to
Section 9.3) shall be required to contribute to
the Partnership for distribution cash in an amount
equal to such negative Capital Account balance,
which contribution shall be made in all events
within ninety (90) days of liquidation of the
Partner s interest as determined under Treasury
Regulations Section 1.704-1(b) (2) (i) (g).
Following a liquidation of the Partnership
and notwithstanding the provisions of Section 8. 2
(b), a Defaulting Partner shall remain liable to
the other Partner for any damages which resulted
from the Defaulting Partner's breach of this
Agreement.
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9.3 ALLOCATION OF GAIN AND LOSS UPON
LIQUIDATION. Any Profits or Losses upon
disposition of the Partnership assets which cause
a dissolution of the Partnership (including gain
or-loss resulting from condemnation, conversion,
insurance awards, or similar capital events)
("Gain on Sale" or "Loss on Sale ", respectively)
shall be allocated between the Partners as
follows:
(a) Loss on Sale shall be allocated
between the Partners as follows:
(i) First, proportionately to
those Partners having positive Capital Account
balances until all positive Capital Accounts have
been reduced to zero; and
(ii) Thereafter, to the Partners
in proportion to their Percentage Interests.
(b) Gain on Sale to the extent available
shall be allocated b2tween the Partners as
follows:
(i) First,
proportionately to those Partners having negative
Capital Account balances until such negative
balances are eliminated;
(ii) Second, to the Partners in
such amounts as necessary to cause the Capital
Account of each Partner to be equal to the excess
of such Partner's aggregate Capital Contributions
over the amount of distributions to such Partner
pursuant to Section 5.5; and
(iii) Thereafter, to the
Partners in proportion to their Percentage
Interests.
Section
Section 10. CONFLICTS OF INTEREST. The
Partners shall devote so much of their time to the
business of the Partnership as in their reasonable
judgment the conduct of the Partnership's business
reasonably requires. Except as otherwise provided
in the following sentence and in the Management
Agreement, the Partners and their affiliates may
engage in business ventures and activities of any
nature and description independently or with
others or not in competition with the business of
the Partnership, and shall have no obligation to
disclose business opportunities available to them,
and neither the Partnership nor either of the
Partners shall have any rights in or to such
independent ventures and activities or the income
or profits derived therefrom by reason of their
acquisition of interests in the Partnership.
Notwithstanding the foregoing, neither Partner
shall engage in any such business or venture in a
manner which is intended, or is reasonably likely,
to cause harm to the business of the Partnership.
Section 11. INDEMNITY AND CONTRIBUTION. All
liabilities of the Partnership shall be shared by
the Partners by Percentage Interest. Excepti as
otherwise provided herein, the Partnership and
each Partner by its respective Percentage
Interest shall indemnify, defend and hold harmless
either Partner against any Partnership liability
in excess of such Partner's respective Percentage
Interest thereof. Any Partner who incurs a
Partnership liability without authority to do so
shall indemnify, defend and hold harmless the
Partnership and the other Partner against the
entire amount of such liability.
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Section 12. NOTICES. Any notice required or
permitted under this Agreement shall be delivered
to the address set forth opposite each Partner's
name on the signature page hereof.
Section 13. GOVERNING LAW. This Agreement
shall be governed by the internal 2aws of the
State of Washington.
Section 14. AGREEMENT BINDING UPON ON
SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the successors and assigns of the
Partners.
Section 15. ARBITRATION.
Any controversy or claim between the Parties
including but not limited to those arising out of
or relating to this Agreement including any claims
based on or arising from an alleged tort, shall be
determined by arbitration in accordance with the
Commercial Arbitration Rules of the American
Arbitration Association (AAA) as modified below.
All statutes of limitations which would otherwise
be applicable shall apply to any arbitration
proceeding hereunder.
There shall be one arbitrator agreed upon by
the Parties, or if the Parties cannot agree, then
the arbitrator shall be selected by the
administrator of the AAA office in Seattle,
Washington. The arbitrator shall be an attorney
with at least 5 years, experience in assisted
living or residential care facilities and at least
15 year experience in real estate and partnership
transactions. The venue of the arbitration shall
be Seattle, Washington.
There shall be no discovery or dispositive
motion practice (such as motions for summary
judgment or to dismiss or the like) except as may
be permitted by the arbitrator, who shall
authorize only such discovery as may be shown to
be necessary to ensure a fair hearing, and no such
discovery permitted by the arbitrator shall extend
the time limits contained herein.
The arbitrator shall not be bound by the
rules of evidence or of civil procedure, but
rather may consider such writings and oral
presentations as reasonable businessmen would use
in the conduct of their day-to-day affairs, and
may require the parties to submit some or all of
their case by written declaration or such other
manner of presentation as the arbitrator may
determine to be appropriate. It is the intention
of the parties to limit live testimony and cross-
examination to the extent necessary to ensure a
fair hearing to the parties on significant and
material issues.
The arbitrator shall take such steps as may
be necessary to hold the hearing within ninety
(90) days of the initial request for arbitration
and to conclude the hearing within two (2) days;
and the arbitrator's written decision shall be
made not later than fourteen (14) calendar days
after the hearing. The parties have included these
time limits in order to expedite the proceeding,
but they are not jurisdictional, and the
arbitrator may for good cause afford or permit
reasonable extensions or delays, which shall not
affect the validity of the award. The written
decision shall contain a brief statement of the
claim(s) determined and the award made on each
claim. Absent fraud, collusion or willful
misconduct by the arbitrator, the award shall be
final and judgment may be
11
entered in any court having jurisdiction thereof.
The arbitrator may award attorneys' fees and costs
to the prevailing party but shall not have the
power to award punitive damages.
The parties have included the foregoing
provisions limiting the scope and extent of the
arbitration with the intention of providing for
prompt, economic and fair resolution of any
dispute.
Section 16. PRONOUNS. As required by the
context, all pronouns shall be deemed to refer to
and include masculine feminine, neuter, singular,
and plural.
Section 17. ENTIRE AGREEMENT. This Agreement
constitutes the entire agreement among the parties
and supersedes any prior agreement or
understandings among them, oral or written, all of
which are hereby cancelled. This Agreement may not
be modified or amended except with the unanimous
approval of all of the Partners.
Section 18. NO WAIVER. The failure of any
Partner to insist upon strict observance or
performance of any of the provisions of this
Agreement, or to exercise any right or remedy
provided for in this Agreement shall not impair
its rights or
remedies or be construed as a waiver or release
with respect to any continuing or subsequent
defaults. Each Partner's rights and remedies
granted hereunder may be exercised from time to
time and as often as such Partner shall be deem
desirable. All rights and remedies provided to a
Partner hereunder shall be cumulative and in
addition to all other rights and remedies provided
herein.
Section 19. SEVERABILITY. In the event one or
more provisions contained in this Agreement is
deemed to be invalid or unenforceable in any
respect for any reason, the validity and
enforceability of the remaining provisions shall
not be impaired in any way.
Section 20. COUNTERPARTS. This Agreement may
be executed in several counterparts, each of which
shall be deemed an original, but all of which
shall constitute one agreement, binding on all of
the parties hereto, notwithstanding that all of
the parties are not signatory to the same
counterpart.
Section 21. PARAGRAPH HEADINGS. Paragraph
headings shall be inserted solely for the
convenience of the parties and shall not be
considered a part of this Agreement for
interpretation or construction.
TDC CONVALESCENT, INC., .a
California corporation
BY: /s/ Xxxxxx X. Xxxxx,
----------------------------
-----------
Xxxxxx X. Xxxxx, President
EMERITUS CORPORATION, a
Washington corporation.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------
-------------------
Xxxxxxx X. Xxxxxxxxxx, President
