AGREEMENT TO PROVIDE MANAGEMENT SERVICES
TO A LONG TERM CARE FACILITY
AGREEMENT TO PROVIDE MANAGEMENT
SERVICES TO A LONG TERM CARE FACILITY
This Agreement made as of this 27th day of June, 1996, between
SERVICEMASTER DIVERSIFIED HEALTH SERVICES, L.P., a
Tennessee limited partnership (hereinafter referred to as "Manager"), and
EMERITUS CORPORATION, a Washington corporation (hereinafter
referred to as "Owner").
WHEREAS, Owner is the lessee of a long term care facility located at
000 Xxxxxxxx Xxx Xxxxxxxxxxxxxx, XX 00000 (the "Facility"); and
WHEREAS, Owner wants someone to manage the Facility on its behalf;
WHEREAS, Manager is experienced and qualified in the field of health
care management
WHEREAS, Owner has determined that Manager's price is economical
in light of the range of services which it provides; and
WHEREAS, Manager is willing to operate the Facility on Owner's
behalf, pursuant to the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenant; herein contained, IT IS AGREED AS FOLLOWS:
I. Management and Consulting Responsibilities of Manager: Owner
hereby engages Manager and Manager hereby accepts such engagement
and agrees to provide management consulting and advisory services to
Owner in connection with the operation of the Facility, upon the
terms and conditions set forth in this Agreement. By entering into this
Agreement, Owner does not delegate to Manager any powers, duties or
responsibilities which it is prohibited by law from delegating. Owner also
retains such other authority as shall not have been expressly delegated to
Manager pursuant to this Agreement. Subject to the foregoing, Manager
shall provide the following services:
A. Operational Policies and Forms: Manager shall implement
operational policies and procedures and develop such new policies and
procedures as it deems necessary to insure the establishment and
maintenance of operational standards appropriate for the nature of the
Facility.
B. Charges: Consistent with the operating budget developed by
Manager and approved by Owner pursuant to Paragraph I(L), Manager
shall establish the schedules of recommended charges including any and all
special charges for services rendered to the patients at the Facility. Owner
shall have the right to review the charge schedules established by Manager.
1
C. Information: Manager shall develop any informational material,
mass media releases, and other related publicity materials, which it deems
necessary for the operation of the Facility. Owner shall have the right to
review and approve all such materials.
D. Regulatory Compliance: Manger, with the assistance of Owner if
requested by Manager, shall use its best efforts to maintain all licenses,
permits, qualifications and approvals from any applicable governmental or
regulatory authority for the operation of the Facility, including without
limitation certification of the Facility as a provider of services under Titles
XVIII (Medicare) and XIX (Medicaid) of the Social Security Act, and to
manage the operations of the Facility in full compliance with all applicable
laws and regulations.
E. Equipment and Improvements: Manager shall advise Owner as to
equipment and improvements which are needed to maintain or upgrade the
quality of the Facility and said equipment, to replace obsolete or run-down
equipment or to correct any other survey deficiencies which may be cited
during the term of this Agreement. Owner shall review and act upon
Manger's recommendations as expeditiously as possible. Manager shall not
be liable for any cost or liability which Owner may incur in the event
Owner disregards Manger's recommendations. Manager shall make all
necessary and approved repairs, replacements and maintenance within the
budgetary limits set forth I the annual capita budget prepared by Manager
pursuant to Paragraph I(L) and in a workmanlike and lien free manner.
F: Accounting: Manager shall provide home office and accounting
support to the Facility. All accounting procedures and systems utilized in
providing said support shall be in accordance with the operating capital and
cash programs developed by Manager, which programs shall conform to
generally accepted accounting principles and shall not materially distort
income or loss. In addition, Manger shall maintain all of the Facility books
and records in such manner as may be required to ensure that Owner is able
to prepare or cause to be prepared its applicable local, state, and federal tax
returns in accordance with the requirements of law, it being understood and
agreed that Owner, and not Manger, shall be obligated to prepare or cause
to be prepared all such tax returns. Manager shall also prepare and timely
file all necessary cost reports for the Facility in order to seek the maximum
amount of Medicare and Medicaid reimbursement available to it at law.
The taxes and any reimbursement obligations due to Medicare and/or
Medicaid shall be deemed to be Facility operating expenses and shall be
paid out of the revenues of the Facility or the working capital provided by
Owner.
G: Reports: Manager shall prepare and provide to the Owner any
reasonable operational information which may from time to time be
specifically requested by Owner, including any information needed to assist
Owner in completing its tax returns and in complying with any reporting
obligations imposed by any mortgagees. In addition, (i) within twenty-
2
eight (28) days after the end of each calendar month, Manger shall provide
Owner with an unaudited balance sheet of the Facility, dated the last day of
such month, and an unaudited statement of income and expenses for such
month relating to the operation of the Facility and (ii) within forty-five (45)
days after the end of the fiscal year o the Facility, Manger shall provide
Owner with unaudited financial statements including a balance sheet of the
Facility, dated the last day of said fiscal year, and a statement of income
and expense for the year then ended relating to the operation of the Facility.
Manger will cooperate with Owner in cross-referencing Owner's chart of
accounts.
H. Bank Accounts: Manager shall, on behalf of Owner, establish and
maintain a checking account in the name of Owner doing business under
the name of the Facility and shall deposit therein all money received during
the term of this Agreement in the course of the operation of the Facility;
provided, however, that during the term hereof, withdrawals and payments
from this account shall be made only on checks signed by a person or
persons designated by Manager and Owner. Owner shall be given notice as
to the identity of said authorized signatories. Withdrawals from this account
shall be made in the order of priority set forth in Section X.(B) below. In
the event the revenues generated by the Facility are at any time insufficient
to pay all of the expenses associated with its operation and to pay
Manager's "Base Fee" (as that term is defined below), Owner
shall, within five (5) days of its receipt of a written demand by Manager,
deposit in the Facility bank account sufficient funds to satisfy the then
working capital needs of the Facility. The amounts so advanced shall be
deemed to be loans by Owner (the "Owner Loans") to the Facility and shall
be repaid by Manager from future Facility revenues in accordance with the
provisions of Section IX hereof.
I. Personnel: Manager shall recruit, employ, train, promote, direct,
discipline, suspend and discharge Facility personnel; establish salary levels
consistent with the amounts reflected in the operating budget prepared by
Manager and approved by Owner pursuant to Paragraph (L); and establish
employee performance standards, all as needed during the term of this
Agreement to ensure the efficient operation of all departments within and
services offered by the Facility. Excluding the Facility administrator, all of
the Facility personnel, including the Facility Medical Director, shall be the
employees of Owner and, accordingly, shall be subject to Owner's
employee benefit plans and personnel policies and procedures; provided,
however, that Manager may be responsible for all payroll related services,
including the issuance of payroll checks and assisting Owner with the filing
of payroll tax returns. The Facility administrator, the Facility Medical
Director and all department heads shall be subject to the prior written
approval of Owner. Owner is responsible for all compensation and other
employee benefits, of any nature, associated with Manager's employment
of the administrator, to the extent such amounts have been approved by
Owner as part of the annual operating budget, and shall promptly reimburse
Manager therefor.
3
J. Supplies and Equipment: Manager shall have the authority to
purchase, on behalf of Owner, supplies and non-capital equipment needed
to operate the Facility within the budgetary limits set forth in the annual
operating budget prepared by Manager and approved by
Owner pursuant to Paragraph I(L). To the extent available, and subject to
applicable law, Manager will offer Owner participation in Manager's
national purchasing contracts. Owner consents to and authorizes Manager's
purchase of required supplies and equipment from Manger's affiliates,
provided that the prices to be paid to any such affiliate are comparable to
the prices which would be available to Owner from non-affiliate suppliers
in the marketplace. Any purchasing agreement or lease of capital equipment
that will obligate Owner beyond the Term, shall be subject to approval
of Owner.
K. Legal Proceedings: Manager shall coordinate all legal matters and
proceedings with Owner's counsel.
L. Budgets: The Facility shall be operated on a fiscal year of January
1 through December 31. Within forty-five (45) days after the
commencement of the term of the Agreement and within forty-five (45)
days prior to the start of each fiscal year commencing with fiscal 1997 (if
applicable), Manager shall prepare and submit to Owner for its review and
approval, which approval shall not be unreasonably withheld, an annual
operating budget, an annual capital expenditure budget, and an annual cash
flow projection. In the event a budget has not been agreed upon by the
beginning of the fiscal year, the budget in effect for the prior fiscal year
shall continue in effect until the new budget is agreed upon. Thereafter, any
expenditures made during the year pursuant to said budgets and/or any
expenditures on an item-by-item basis exceeding by no more than l0% the
amounts set forth therein for the applicable expense item (the "Budget
Threshold") may be made without Owner's prior approval. Any
unbudgeted expenditures and/or any expenditures in excess
of the Budget Threshold shall be subject to Owner's prior approval, which
approval shall not be unreasonably withheld. Manager shall be allowed to
make emergency expenditure or expend money for matters outside the
budget plus ten percent (l0%) to preserve licensure and/or certification of
the facility and the health and safety of patients so long as said expenditures
are promptly explained in writing to Owner, to Owner's reasonable
satisfaction, fifteen (15) days following the date said expenditure is made.
M. Collection of Accounts: Manager shall issue bills and collect
accounts and monies owed for goods and services furnished by the Facility,
including, but not limited to, enforcing the rights of Owner and the Facility
as creditor under any contract or in connection with the rendering of any
services; provided, however, that any expenses incurred by Manager in so
doing shall be treated as Facility operating expenses, which shall be payable
out of Facility funds deposited in the bank account described in Section
I(H).
4
N. Ancillary Services: Manager shall provide ancillary and Medicare
Part B type services and products at Manager's option with all said products
and services being billable to Medicare or third parties. No such products or
services shall be billable to the Facility except as billable to (and
collectible from) Medicare or other third parties by the Facility.
II. Insurance: Owner shall maintain insurance covering all risks normally
insured by nursing homes, including (i) comprehensive general liability in
adequate amounts as determined by Owner but no less than the amount of
One Million Dollars ($ 1,000,000) per occurrence and Three Million
Dollars ($3,000,000) in the aggregate, (ii) professional liability coverage in
an amount not less than One Million Dollars ($1,000,000) per occurrence
and Three Million Dollars ($3,000,000) in the aggregate, and (iii)
statutorily required coverage, including workers' compensation, as
provided below, with respect to employees of the Facility other than
Manger's employees. All liability policies shall name Manager as a co-
insured and ServiceMaster Diversified Health Services, Inc. And the
ServiceMaster Company, Limited Partnership, as additional insureds and
shall not be cancelable except on thirty (30) days prior notice to Manager.
Owner shall also maintain casualty insurance covering normal hazards to
the Facility at not less than eighty percent (80%) replacement
value of all permanent structures. Manager shall obtain, at its expense,
workers' compensation and other statutorily required coverage with respect
to its own employees. Owner shall provide workers' compensation and
other statutorily required coverage for its employees. Manager and Owner
may agree that some or all of the foregoing insurance may be obtained
through policies obtained by Manager, in which event Owner shall be
named as a co-insured.
III. Proprietary Interest: The systems, methods, procedures and controls
employed by Manager and any written materials or brochures developed by
Manager to document the same are to remain the property of Manager and
are not, at any time during or after the term of this Agreement, to be
utilized, distributed, copied or otherwise employed or acquired by Owner,
exceptas authorized by Manager.
IV. Term of Agreement: The term of this Agreement shall commence on
July 1,1996 (the "Commencement Date"), and shall continue for a period of
three (3) years thereafter, unless sooner terminated (i) due to the fact that
50% or more of the Facility is damaged or destroyed or taken by
condemnation proceedings or otherwise, whether Owner elects to rebuild or
repair or (ii) upon the occurrence of an Event of Default or (iii) by Health
Care Property Investors, Inc. ("HCPI"), as the owner of the Facility, in the
event of the termination of the lease under which Owner operates
the Facility upon the occurrence of an event of default thereunder. Owner
shall have the option to extend the term of this Agreement for five (5)
successive one (1) year periods, which extension right shall be exercisable
by written notice delivered to Manager not later than ninety (90) days prior
5
to the commencement of each such one (1) year extension. Any such option
to extend shall be subject to the consent of Manager which shall be given or
denied within ten ( 10) days following receipt of Owner' s written notice. If
Manager fails to notify Owner within said ten ( I 0) day period, Manager
shall be deemed to have given its consent to said extension.
V. Default: Either party may terminate this Agreement, as specified in
this Section V, in the event of a default ("Event of Default") by the other
party.
(a) With respect to Manager, it shall be an "Event of Default"
hereunder:
(i) If Manager shall fail to keep, observe or perform any material
agreement, term or provision of this Agreement, and such default shall
continue for a period of thirty 30) days after notice thereof shall have been
given to Manager by Owner, which notice shall specify the event or events
constituting the default; provided, however, that if any such failure by
Manager has caused or threatens to cause any injury to the life or safety of
any of the patients and/or employees of the Facility which may result in the
revocation of the Facility's operating license, there shall be no cure period
provided to Manager hereunder and Owner shall have the right to
immediately terminate this Agreement upon written notice to Manager; or
(ii) If Manager shall apply for or consent to the appointment of a
receiver, trustee or liquidator of Manager of all or a substantial part of its
assets, file a voluntary petition in bankruptcy, or admit in writing its
inability to pay its debts as they become due, make a general
assignment for the benefit of creditors, file a petition or an answer seeking
reorganization or arrangement with creditors or taking advantage of any
insolvency law, or if an order judgment or decree shall be entered by a
court of competent jurisdiction, on the application of a creditor,
adjudicating Manager, a bankrupt or insolvent or approving a petition
seeking reorganization of Manager, or appointing a receiver, trustee or
liquidator of Manager, of all or a substantial part of its
assets.
(b) With respect to Owner, it shall be an Event of Default hereunder:
(i) If Owner shall fail to make or cause to be made any payment to
Manager required to be made hereunder (other than its working capital
obligation), and such failure shall continue for a period of thirty (30) days;
(ii) If Owner shall fail to keep, observe or perform any material
agreement, term or provision of this Agreement and such default shall
continue for a period of thirty (30) days after notice, which notice shall
specify an event or events constituting the default thereof by Manager
to Owner; provided, however, that in the case of Owner's failure to provide
necessary working capital upon demand by Manager, it shall be deemed to
6
be an Event of Default hereunder if the same is not paid within ten ( 10)
days of Manager's initial demand therefor without any further notice from
Manager being required;
(iii) If Owner shall fail to make payments, or keep any covenants,
owing to any third party which are beyond the control of Manager to make
or keep, and which would cause Owner to lose possession of the Facility or
any personal property which would be required to operate the Facility in the
normal course; or
(iv) If Owner shall be dissolved (other than as a result of a transfer
of the ownership of the Facility to a limited partnership in which Owner's
shareholders are general and/or limited partners) or shall apply for or
consent to the appointment of a receiver, trustee or liquidator of Owner or
of all or a substantial part of its assets, file a voluntary petition in
bankruptcy, or admit in writing its inability to pay its debts as they become
due, make a general assignment for the benefit or creditors, file a petition or
an answer seeking reorganization or arrangement with creditors or
taking advantage of any insolvency law, or if an order, judgment or decree
shall be entered by a court of competent jurisdiction, on the application of a
creditor, adjudicating Owner a bankrupt or insolvent or approving a petition
seeking reorganization of Owner or appointing a receiver, trustee
or liquidator of Owner of all or a substantial part of its assets.
VI. Remedies Upon Default:
(a) If any Event of Default by Owner shall occur, Manager may, in
addition to any other remedy available to it in law or equity on account of
such Event of Default, forthwith terminate this Agreement, and neither
party shall have any further obligations whatsoever under this
Agreement, but Manager shall immediately be entitled to receive payment
of all amounts theretofore unpaid but earned to the date of termination.
(b) If any Event of Default by Manager shall occur, Owner may, in
addition to any other remedy available to it in law or equity on account of
such Event of Default, forthwith terminate this Agreement, and neither
party shall have any further obligation whatsoever under this
Agreement; provided, however, that Manager shall immediately be entitled
to receive payment of all amounts theretofore unpaid but earned to date of
termination, subject to Owner's right to receive payment of damages from
Manager, the amount of which damages shall not exceed the aggregate
amount of all "Management Fees" (as that term is defined below) paid to
Manager through the date of the occurrence of the Event of Default;
provided, however, said limitation on damages shall not apply as a
limitation on the indemnity obligations of Manager as set forth in Section
XXII below.
7
VII. Owner's Inspection: During the term hereof, Owner shall have the
right, upon request and at reasonable times, to inspect the Facility and to
inspect and/or audit all books and records pertaining to the operation
thereof.
VIII. Facility Operations:
A. No Guarantee of Profitability: Manager does not guarantee that
operation of the Facility will be profitable, but Manager shall use its best
efforts to operate the Facility in as cost efficient and profitable a manner as
possible.
B. Standard of Performance: In performing its obligations under this
Agreement, Manager shall use its best efforts and act in good faith and with
professionalism in accordance with acceptable and prevailing standards of
health care and the policies adopted by, and resources available to, the
Facility.
C. Force Majeure: Manager will not be deemed to be in violation of
this Management Agreement if it is prevented from performing any of its
obligations hereunder for any reason beyond its control, including, without
limitation, strikes, shortages, war, acts of God, lack of the Owner's financial
resources, or any statute, regulation or rule of federal, state or local
government or agency thereof.
IX. Withdrawal of Funds by Owner; Minimum Bank Balance:
Owner may withdraw the then accumulated operating cash surplus
(as determined by Owner and Manager) from the Facility bank account in
excess of Five Thousand Dollars ($5,000.00). Owner shall maintain such
minimum balance in the bank account, if any, as Owner and Manager deem
to be appropriate to effectively and efficiently operate the Facility, which
minimum balance may be zero if Owner and Manager agree to sweep said
account on a daily basis, Manager shall advise Owner within ten ( 10) days
in the event there is a surplus cash balance in the Facility bank
account.
X. Distribution of Facility Revenues: Management Fee:
A. Management Fee. In consideration for the services provided
hereunder, Manager shall receive, on a monthly basis, the amounts
identified in Section X. (B) below to be distributed to Manager in
accordance with the priority of distribution set forth therein (collectively,
the "Management Fees").
B. Distribution of Facility Revenues. The "gross revenues" (as
defined below) generated each month by the Facility shall be computed and
distributed monthly commencing one (1) month following the
Commencement Date in the following order of priority:
8
(i) First, to pay to Manager an amount equal to three percent (3%)
of all such gross revenues (the "Base Fee");
(ii) Second, to pay all costs and expenses incurred said month with
respect to the ownership and operation of the Facility, including without
limitation, all rent and additional rent due under the Lease with HCPI, but
excluding all federal, state and local taxes which are assessed based on the
revenues derived from the operations at the Facility;
(iii) Third, to pay to Owner a twelve percent ( 12%) per annum
cumulative return on Owner's initial investment in the Facility, which
investment is equal to Four Hundred Ninety-Six Thousand Five Hundred
Eighty-Three Dollars ($496,583.00);
(iv) Fourth, to pay to Manager an amount equal to fifty percent
(50%) of all "net income" (as that term is defined below), after payment of
the foregoing distributions (the "Additional Fee"); provided, however, the
total of the Base Fee and the Additional Fee shall not exceed five percent
(5%) of the total gross revenues generated by the Facility for said month;
and
(v) Fifth, all remaining net income following the distributions of
the foregoing sums, shall be distributed twenty percent (20%) to Manager
(the "Residual Fee") and eighty percent (80%) to Owner.
For purposes hereof, (a) the term "gross revenues" shall mean all
revenues received each month from the operations at the Facility, but shall
specifically excluding the proceeds from the sale of any Facility equipment
and any insurance and condemnation proceeds and (b) the term
"net income" shall mean all gross revenues less those amounts paid each
month which are referred to in subparagraphs "(i)", "(ii)" and "(iii)" of
Section X. (B) above.
C. Proration of Fee. If the services of Manager commence or terminate
(for any reason, including those set forth in Paragraph V) other than on the
first day of the month, the Base Fee and the Additional Fee reflected above
shall be prorated in proportion to the number of days for which services are
actually rendered. The Residual Fee shall not be subject to proration but
shall only be due and payable if this Agreement has been in effect for the
full month to which said Residual Fee relates.
E. Payment of Fee. The Base Fee and the Additional Fee provided for
herein shall be disbursed by Manager to itself out of the Facility bank
account in the order of priority reflected in Section I(H). The Residual Fee
shall be payable by Owner to Manager monthly within fifteen (15) days
following Owner's receipt of Manager's monthly financial report as
provided for in Section I. (G) above, it being understood and agreed that
9
Manager shall have no right to pay the same to itself from the Facility bank
account unless specifically authorized to do so in writing by
Owner.
F. Distributions to Owner. Owner shall be permitted to withdraw from
the Facility operating account any amounts owed to it in accordance with
the foregoing priority of distributions.
XI. Manager's Designated Representative. In any situation in which,
pursuant to the terms of this Agreement, Manager shall be required or
permitted to take any action with respect to Owner, give any report or
make any request to or of Owner, Manager shall act by and through
"Manager's Representative" (as defined below) and Owner shall be
permitted to rely on any such approval or action so taken by the Manager's
Representative as an approval or action taken by the Manager hereunder.
The "Manager's Representative" shall mean and refer to Xxxx Xxxxxx or
such other individual as shall be designated by Manager and approved by
Owner as provided below. In the event Manager at any time wishes to
replace the then current Manager's Representative whichhas been approved
by Owner, Manager shall notify Owner in writing of the proposed
replacement and provide such information as Owner shall reasonably
request regarding the qualifications and experience of said replacement. In
the event Owner disapproves of Manager's designated replacement and
Owner and Manager are unable to agree on an alternative replacement,
Owner shall have the right to terminate this Agreement by written notice to
Manager.
XII. Assignment: This Agreement shall not be assigned by either party
without the prior written consent of the other party, which consent shall not
be unreasonably withheld; provided, however, that Owner shall have the
right to assign this Agreement without Manager's consent to a
limited partnership in which the shareholders of Owner are general or
limited partners and to which ownership of the Facility is transferred.
XIII. Notices: All notices required or permitted hereunder shall be given
in writing by hand delivery, by registered or certified mail, postage prepaid,
by overnight delivery or by facsimile transmission (with receipt confirmed
with the recipient). Notice shall be delivered or mailed to the
parties at the following addresses or at such other places as either party
shall designate in writing.
To Manager: ServiceMaster Diversified Health Services, L.P.
0000 Xxxxxx Xxxxxx, X 0xx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn. : President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
10
To Owner: Emeritus Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 98 I 21
Telephone: 000-000-0000
Facsimile: 000-000-0000
XIV. Relationship of the Parties: The relationship of the parties shall be
that of Owner and Independent Contractor and all acts performed by
Manager during the term hereof as Manager of the Facility shall be deemed
to be performed in its capacity as an independent contractor. Nothing
contained in this Agreement is intended to or shall be construed to give rise
to or create a partnership or joint venture or lease between Owner, its
successors and assigns on the one hand, and Manager, its successors and
assigns on the other hand.
XV. Entire Agreement: This Agreement contains the entire agreement
between the parties and shall be binding upon and inure to the benefit of
their successors and assigns, and shall be construed in accordance with the
laws of the State of Washington. This Agreement may not be
modified or amended except by written instrument signed by both of the
parties hereto.
XVI. Captions: The captions used herein are for convenience of
reference only and shall not be construed in any manner to limit or modify
any of the terms hereof.
XVII. Attorney's Fees: In the event either party brings an action to
enforce this Agreement, the prevailing party in such action shall be entitled
to recover from the other all costs incurred in connection therewith,
including reasonable attorney's fees.
XVIII. Severability: In the event one or more of the provisions contained
in this Agreement is deemed to be invalid, illegal or unenforceable in any
respect under applicable law, the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be impaired
thereby.
XIX. Cumulative; No Waiver: A right or remedy herein conferred upon
or reserved to either of the parties hereto is intended to be exclusive of any
other right or remedy, and each and every right and remedy shall be
cumulative and in addition to any other right or remedy given
hereunder, or now or hereafter legally existing upon the occurrence of an
Event of Default hereunder. The failure of either party hereto to insist at
any time upon the strict observance or performance of any of the provisions
of this Agreement or to exercise any right or remedy as provided in this
Agreement shall not impair any such right or remedy or be construed as a
waiver or relinquishment thereof with respect to subsequent defaults. Every
right and remedy given by this Agreement to the parties hereof may be
exercised from time to time and as often as may be deemed expedient by
the parties thereto, as the case may be.
11
XX. Authorization for Agreement: The execution and performance of
this Agreement by Owner and Manager have been duly authorized by all
necessary laws, resolutions or corporate action, and this Agreement
constitutes the valid and enforceable obligations of Owner and Manager in
accordance with its terms.
XXI. Disclaimer of Employment of Facility Employees: No person
employed by the Facility will be an employee of Manager, and Manager
shall have no liability for payment of their wages, payroll taxes, and other
expenses of employment, except that Manager shall have the obligation to
exercise reasonable care in its management of the Facility and to apply
available funds to the payment of such wage and payroll taxes. All such
persons will be employees of the Facility or independent contractors or the
employees of independent contractors, as appropriate under the
terms of this Agreement.
XXII. Indemnification: Except as provided in this Section XXII. below,
Manager will have no liability whatsoever for damages suffered on account
of and Owner agrees to indemnify and hold Manager entirely harmless
from, the willful misconduct or negligence of any employee of Owner.
Manager hereby agrees to indemnify and hold Owner harmless from and
against, any and all liability, loss, cost and/or expense which is determined
by a court of competent jurisdiction to have arisen as a result of the active
negligence or willful misconduct of Manager or any of its employees or
agents. Notwithstanding the foregoing, each of the parties agree that prior
to making a claim under the foregoing indemnity, the indemnified party
agrees to first make a claim against any applicable insurance policy which
is required to be maintain hereunder for the loss or damage incurred by the
indemnified party. Based on said prior insurance claim, the foregoing
indemnity shall apply only to the extent the indemnified party did not
receive reimbursement from any available insurance
proceeds.
XXIII. Access of the Government to Books and Records: In the event the
services provided hereunder have a 12-month cost or value of $10,000 or
more (or such other amount as may hereafter be established by law):
(a) Until the expiration of four years after the furnishing of services
pursuant to this Agreement, Manager shall make available upon written
request to the Secretary of the United States Department of Health and
Human Services, or upon request to the Comptroller General of the
United States, or any of their duly authorized representatives, this
Agreement, and books, documents and records that are necessary to certify
the nature and extent of such costs.
(b) If Manager or its affiliates carries out any of the duties of this
Agreement through a subcontract, with a related organization, such
subcontract shall contain a clause to the effect that until the expiration of
12
four years after the furnishing of such services pursuant to such
subcontract, the related organization shall make available, upon written
request to the Secretary of the United States Department of Health and
Human Services, or upon request to the Comptroller General of the United
States, or any of their duly authorized representatives, the subcontract, and
books, documents and records of such organization that are necessary to
certify the nature and extent of such costs.
(c) The parties agree that any applicable attorney-client or other legal
privileges shall not be deemed waived by virtue of this Agreement.
XXIV. Counterparts: This Agreement may be executed in any number of
counterparts, each of which shall be an original, and each such counterpart
shall together constitute but one and the same Agreement.
XXV. Non-Solicitation/No-Hire: Manager acknowledges and agrees that
for a period of one hundred and twenty days ( 120) after the termination or
expiration of the term of this Agreement, it will not, without Owner's prior
written consent, directly or indirectly solicit the employment of or
hire any of the employees of Owner associated with the operation of the
Facility at anytime during the term hereof. Manager further acknowledges
and agrees that in the event of a breach by Manager of its obligations
hereunder, the damages suffered by Owner may be difficult to ascertain and
accordingly Owner shall have the right to seek an injunction barring
Manager from any such violation or from any future violations of the terms
of this Section XXV.
IN WITNESS WHEREOF, the parties have hereto caused this
Agreement to be duly executed, as of the day and year first above written.
[Signatures of the parties on following page]
13
OWNER: EMERITUS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------
Its: President
MANAGER: SERVICEMASTER DIVERSIFIED
HEALTH SERVICES, L.P.
By: /s/ Xxxxxx X. Xxxxx
----------------------
Its: Pres. Capital Serv.