1
EXHIBIT 99.8
MANAGEMENT CONSULTING AGREEMENT
FOR
CERTAIN KARRINGTON HOMES
JANUARY 1, 1999
OWNER: KARRINGTON HEALTH, INC.
CONSULTANT: SUNRISE ASSISTED LIVING MANAGEMENT, INC.
2
INDEX
SECTION: CAPTION: PAGE:
-------- -------- -----
ARTICLE I DEFINITIONS........................................................... 1
ARTICLE II APPOINTMENT OF CONSULTANT AND PRIMARY GOAL OF
AGREEMENT............................................................. 3
Section 2.01 Appointment of Consultant............................................. 3
Section 2.02 Goals................................................................. 3
ARTICLE III CONSULTING FEE........................................................ 4
Section 3.01 Consulting Fee........................................................ 4
ARTICLE IV DUTIES AND RIGHTS OF CONSULTANT....................................... 4
Section 4.01 Authority of Consultant; Right of Possession.......................... 4
Section 4.02 Marketing Services.................................................... 4
Section 4.03 Implementation of Consulting Services................................. 5
Section 4.04 Management Consulting Services........................................ 5
Section 4.05 Consultant's Home Office Employees.................................... 5
Section 4.06 Personnel Administration.............................................. 5
Section 4.07 Purchasing............................................................ 6
ARTICLE V REVENUE AND EXPENSES, CREDITS AND COLLECTIONS, AND
DEPOSITORIES FOR FUNDS................................................ 6
Section 5.01 Revenue and Expenses.................................................. 6
Section 5.02 Credits and Collections............................................... 6
Section 5.03 Depositories for Funds................................................ 6
ARTICLE VI FINANCIAL RECORDS..................................................... 7
Section 6.01 Accounting and Financial Records...................................... 7
Section 6.02 Access................................................................ 7
ARTICLE VII APPROVED BUDGET....................................................... 7
ARTICLE VIII INTENTIONALLY LEFT BLANK
i
3
ARTICLE IX INTENTIONALLY LEFT BLANK
ARTICLE X INTENTIONALLY LEFT BLANK
ARTICLE XI INSURANCE............................................................. 8
ARTICLE XII TERMINATION OF AGREEMENT.............................................. 8
Section 12.01 Termination........................................................... 8
ARTICLE XIII DEFAULTS.............................................................. 8
Section 13.01 Default by Consultant................................................. 8
Section 13.02 Default by Owner...................................................... 8
Section 13.03 Remedies of Owner..................................................... 9
Section 13.04 Remedies of Consultant................................................ 9
Section 13.05 No Waiver of Default.................................................. 9
ARTICLE XIV LEGAL ACTIONS, GOVERNING LAW, LIABILITY OF CONSULTANT
AND INDEMNITY ........................................................ 9
Section 14.01 Legal Actions......................................................... 9
Section 14.02 Legal Fees and Costs.................................................. 10
Section 14.03 Choice of Law and Venue............................................... 10
Section 14.04 Liability of Consultant............................................... 10
Section 14.05 Indemnity............................................................. 11
ARTICLE XV REGULATORY AND CONTRACTUAL REQUIREMENTS............................... 11
Section 15.01 Regulatory and Contractual Requirements............................... 11
Section 15.02 Equal Employment Opportunity.......................................... 12
Section 15.03 Equal Housing Opportunity............................................. 12
ARTICLE XVI INTENTIONALLY LEFT BLANK
ARTICLE XVII MISCELLANEOUS PROVISIONS.............................................. 12
Section 17.01 Additional Assurances................................................. 12
Section 17.02 Consents, Approval and Discretion..................................... 12
ii
4
Section 17.03 No Brokerage.......................................................... 13
Section 17.04 Notices............................................................... 13
Section 17.05 Severability.......................................................... 13
Section 17.06 Gender and Number..................................................... 13
Section 17.07 Division and Headings................................................. 14
Section 17.08 Confidentiality of Information........................................ 14
Section 17.09 Right to Perform...................................................... 14
Section 17.10 Assignment by Consultant.............................................. 14
Section 17.11 Entire Agreement/Amendment............................................ 14
iii
5
LIST OF EXHIBITS
Exhibit A Description of Facilities
iv
6
MANAGEMENT CONSULTING AGREEMENT
THIS MANAGEMENT CONSULTING AGREEMENT (the "Agreement") is made as of
the 31st day of December, 1998, between SUNRISE ASSISTED LIVING MANAGEMENT,
INC., a Virginia corporation ("Consultant"), and KARRINGTON HEALTH, INC., an
Ohio corporation ("Owner").
WHEREAS, Owner is the owner and/or operator of certain assisted living
facilities described in Exhibit A, attached hereto and made a part hereof
(collectively, the "Facilities"); and
WHEREAS, Owner, in anticipation of its pending merger with Sunrise
Assisted Living, Inc., the parent of Consultant, has determined it is in Owner's
best interest to implement certain of Consultant's best practices in order to
achieve improved occupancy levels and improved financial results and to ensure
an orderly transition upon the consummation of the merger; and
WHEREAS, Owner and Sunrise Assisted Living, Inc. have determined it is
in their mutual best interest to prepare for the management transition that will
occur as a result of the merger, particularly in the areas of marketing and
operations, by entering into this Agreement; and
WHEREAS, Owner wishes to engage Consultant to assist Owner in the
management of the Facilities and Consultant desires to perform such consulting
duties as described herein with regard to the Facilities.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the following meanings when used in the
Agreement:
1.01 Affiliate. The term "Affiliate" shall mean any one or more
individuals or entities which control, are controlled by, or are under common
control with the Consultant.
1.02 Agreement. The terms "Agreement" and this "Agreement" shall mean
this Management Consulting Agreement between Owner and Consultant, and any
amendments thereto as may be from time to time agreed to in writing by the
parties.
5
7
1.03 Approved Budget. The term "Approved Budget" shall mean the budget
approved for the operation of the Facilities as set forth in Section 7.01
hereof.
1.04 Commencement of Management Consulting Services. The term
"Commencement of Management Consulting Services" shall mean that date when Owner
requests such services to begin which in no event shall be later than January 1,
1999.
1.05 Facilities. The term "Facilities" shall mean the assisted living
facilities described in Exhibit A which are the subject of this Agreement.
1.06 Facility Expenses. The term "Facility Expenses" shall mean those
costs and expenses directly related to the operating costs of the Facilities,
which expenses and payment of expenses shall be administered by the Owner from
the Facilities' income derived as further set forth herein. Facility Expenses
shall not include debt service and property taxes.
1.07 GAAP. The term "GAAP" shall mean generally accepted accounting
principles, consistently applied.
1.08 Legal Requirements. The term "Legal Requirements" shall mean any
law, code, rule, ordinance, regulation or order of any governmental authority
having jurisdiction over the business or operation of the Facilities or the
matters which are the subject of this Agreement, including any resident care or
health care, building, zoning or use laws, ordinances regulations or orders,
environmental protection laws and fire department rules.
1.09 Management Consulting Services. The term "Management Consulting
Services" shall mean the consulting services described in this Agreement, all as
are authorized and approved by Owner.
1.10 Mortgage. The term "Mortgage" shall mean any mortgage or deed of
trust recorded against the Facilities as security for a secured loan.
1.11 Revenues. The term "Revenues" shall mean all monies received by
Owner from residents of the Facilities for occupancy fees and health care fees,
including any community fees, with the exception of any pass-through fees and
any escrow monies held for the residents by the Owner. Any community fees or
deposits which are refunded to a resident shall be credited against revenues
during the month in which such refunds are made. It shall also mean proceeds
from rental interruption insurance actually received and all applicable
miscellaneous revenues, such as that from vending machines.
1.12 State. The term "State" shall mean the States in which the
Facilities are located, as applicable, and any regulatory agencies within such
States with overview authority or other authority over the Facilities, unless
otherwise specifically indicated.
6
8
1.13 Term. The "Term" of this Agreement shall be the period beginning
when this Agreement is executed and ending one year after the date of this
Agreement.
1.14 Renewal. This Agreement shall automatically renew for one (1)
year periods unless either party shall give the other party written notice of
termination within sixty (60) days prior to the expiration of the initial Term
or any renewal terms.
ARTICLE II
APPOINTMENT OF CONSULTANT AND PRIMARY GOAL OF AGREEMENT
2.01 Appointment of Consultant. Owner hereby appoints Consultant and
Consultant hereby accepts appointment, subject to the terms and conditions of
this Agreement, as the sole and exclusive consultant to the Owner for the daily
operation and management of the Facilities. Consultant's advice to Owner in the
operation, direction, management and supervision of the Facilities shall take
into account the methods and standards of operation that have heretofore been in
place in the Facilities, as well as Consultant's methods and standards.
Consultant accepts said appointment and agrees to consult in the management of
the Facilities during the Term of this Agreement in accordance with the terms
and conditions hereinafter set forth.
2.02 Goals. It is the joint goal of Owner and Consultant to:
a. Establish and maintain programs to promote the most
effective utilization of the Facilities' services;
b. Provide quality services to residents of the Facilities (the
"Residents") in a manner consistent with the form of
resident agreement in use at the Facilities and the Approved
Budget (as hereinafter defined);
c. Maintain a public image of excellence for the Facilities;
d. Maintain quality staffing of the Facilities;
e. Manage the Facilities on a sound financial basis;
f. Maintain a sound financial accounting system for the
Facilities;
g. Maintain adequate internal fiscal controls through proper
budgeting, accounting procedures, and timely financial
reporting;
h. Prevent loss of revenues from the Facilities and establish
sound cash flow through sound billing and collection
procedures and methods; and
7
9
i. Take such other steps as are necessary to provide high
quality care to the Residents.
ARTICLE III
CONSULTING FEE
3.01 Consulting Fee.
As compensation for the services to be rendered by Consultant
in accordance with the terms of this Agreement, Owner shall pay to Consultant on
a monthly basis a consulting fee (the "Consulting Fee") equal to seven percent
(7%) of the Revenues or such other amount as may be agreed to in writing by the
parties from time to time. Consultant shall also receive from Owner an
additional monthly incidental expenses reimbursement which will pay for out of
pocket expenses, including travel by visiting Home Office Employees, associated
with running the Facilities.
The Consulting Fee will cover the cost of Consultant's
supervision and general overall consulting management services for the
Facilities, including Consultant's overhead costs and its Home Office Employees'
salaries and fringe benefits, and such services to be provided in accordance
with this Agreement.
ARTICLE IV
DUTIES AND RIGHTS OF CONSULTANT
4.01 Authority of Consultant; Right of Possession. Facility management
shall remain with Owner. Except as otherwise specifically provided in this
Agreement, Consultant shall be responsible for the proper and efficient
operation of the Facilities. Consultant shall advise Owner in matters relating
to management and operation of the Facilities, including, without limitation,
the following: fees and charges for providing accommodations, food services,
care services, and related services to residents and their guests; supervision
of resident care; credit policies; food and beverage services; environmental
services; procurement of inventories, supplies and services; promotion and
publicity; and, generally, all activities necessary for the operation and
management of the Facilities. Owner shall remain responsible for employment
policies; the receipt, holding and disbursement of funds; and the maintenance of
bank accounts.
4.02 Marketing Services. Consultant shall provide the following
services (the "Marketing Services"):
a. Prepare marketing plan and marketing strategy for the
Facilities, and a budget (the "Marketing Budget") for such
plan and strategy.
b. Direct the marketing efforts for the Facilities.
8
10
c. Plan and implement community outreach, public relations and
special events programs.
4.03 Implementation of Consulting Services. Consultant, in performing
its services hereunder, shall consult with and advise Owner's designated
management staff regarding proposed changes in policies and procedures or other
significant matters related to management and operation of the Facilities, and
Consultant's proposed action may be implemented only upon Owner's consent and
approval. On at least a weekly basis, Consultant and Owner shall discuss
Consultant's services in order to ensure appropriate and effective communication
between the parties.
4.04 Management Consulting Services. Consultant shall use its best
efforts to implement all aspects of the operation of the Facilities in
accordance with the terms of this Agreement, and shall have responsibility and
commensurate authority for all such activities. In addition to any other duties
set forth in this Agreement, Consultant shall:
a. Assist Owner in purchasing such inventories, provisions,
food, supplies and other expendable items as are necessary to
maintain the Facilities in a proper manner.
b. Assist Owner in recruiting, hiring and training all new
employees to be employed at the Facilities.
c. Consult with Owner regarding the care provided to Residents
of the Facilities as provided for in the resident agreement.
d. Advise Owner regarding resident fees and consult with Owner's
manager regarding the best professional efforts to collect
such fees.
e. Oversee all day-to-day operations.
4.05 Consultant's Home Office Employees. As part of the provision of
the services provided by Consultant, Consultant shall from time to time make its
employees who are not working directly at the Facilities (the "Home Office
Employees") available to Owner for consultation and advice related to the
Facilities. Home Office Employees include Consultant's home office staff and
staff at other facilities managed by Consultant and its Affiliates with
experience in areas such as accounting, budgeting, finance, human resources,
construction, development, marketing, food service and purchasing. Owner may
reasonably request such services, but the decision to provide Home Office
Employees shall be at the sole discretion of Consultant. The services of Home
Office Employees shall be provided at no additional charge to Owner. Owner will
reimburse Consultant for all reasonable travel and related expenses of Home
Office Employees visiting the Facilities or traveling elsewhere on behalf of the
Facilities.
9
11
4.06 Personnel Administration. The current personnel at the Facilities
shall remain employees of Owner (unless terminated by Owner) and shall be paid
by Owner. Upon agreement between Owner and Consultant, such employees and any
new Facility employees may become employees of Consultant, and the salaries,
costs and benefits of such employees would become the responsibility of
Consultant and would be Facility Expenses. Consultant shall assist Owner in
recruiting, hiring, training, promoting, assigning, supervising and discharging
the personnel of the Facilities. Owner shall be responsible for the formulation,
implementation, modification and administration of wage scales, rates of
compensation, employee insurance, employee taxes, and personnel policies with
respect to the current personnel of the Facilities and any new Facility
employees who are employed by Owner in accordance with the Approved Budget.
4.07 Purchasing. Consultant shall use, on behalf of the Facilities,
such purchasing systems and procedures developed by or otherwise available to
Consultant for all items that are consistent with the Approved Budget. In
furtherance thereof, Consultant shall utilize, to the extent that they offer
competitive prices, any national purchasing contracts that Consultant may from
time to time have in effect with suppliers of equipment and supplies. Consultant
shall not enter into any purchase or service contract not generally contained
within the Approved Budget, without the prior consent of Owner. Any purchase by
Consultant made pursuant to or otherwise ancillary to this Agreement shall be
made with Consultant acting as agent for and at the expense of the Facilities or
Owner. Owner acknowledges that the Consultant is not a merchant and thus is not
making any representations or warranties with respect to the goods or services
purchased by the Consultant for use at the Facilities, implied or otherwise.
Consultant shall fully disclose to Owner any material interest of Consultant
and/or Affiliate in any vendor and Consultant shall establish to Owner's
reasonable satisfaction that the purchase or contract was made after a
competitive selection process and at a fair market price.
ARTICLE V
REVENUE AND EXPENSES, CREDITS AND COLLECTIONS, AND
DEPOSITORIES FOR FUNDS
5.01 Revenue and Expenses. Until April 1, 1999 or such other date as
agreed to by Owner and Consultant, Owner shall be responsible for collecting all
Revenues and for paying Facility Expenses as agreed in the Approved Budget. All
fees due to Consultant under this Agreement and any incidental expense
reimbursement will be deducted from the Revenues as Facility Expenses.
5.02 Credits and Collections. Consultant shall assist Owner with its
credit and collection policies and procedures, including instituting reasonable
steps necessary to effectuate monthly billing by the Facilities, and the
collection of accounts and monies owed to the Facilities.
5.03 Depositories for Funds. Owner shall maintain accounts and
investments in banks, savings and loan associations, and/or other financial
institutions in Owner's
10
12
name. Owner shall maintain such balances therein as Owner shall deem
appropriate, taking into account the cash flow operating needs of the Facilities
and the disbursement from such accounts of such amounts of Facilities' funds as
Owner shall from time to time reasonably determine to be appropriate, as well as
remaining in accordance with the Approved Budget and taking into account Owner's
desire to maintain as much of its funds in interest-bearing accounts as is
reasonably feasible. It is expressly understood that it is Owner's
responsibility to provide the funds needed to manage the Facilities in a manner
designed to meet the mutual goals of Owner and Consultant set forth in Section
2.02 above.
ARTICLE VI
FINANCIAL RECORDS
6.01 Accounting and Financial Records. Until April 1, 1999 or such
other date as agreed to by Owner and Consultant, Owner shall, at its own
expense, establish and administer accounting procedures, controls and systems
for the development, preparation and safekeeping of records and books of account
relating to the business and financial affairs of the Facilities, including
payroll, accounts receivable and accounts payable. ,
6.02 Access. Consultant shall have the right at all reasonable times
during the usual business hours of the Facilities to audit, examine, and make
copies of books of account maintained by Owner with respect to the Facilities.
Such right may be exercised through any agent or employee designated by
Consultant or by an independent public accountant designated by Consultant.
ARTICLE VII
APPROVED BUDGET
7.01 Consultant shall prepare in advance and deliver to Owner for
Owner's approval, a capital expenditure and operations budget for the
Facilities' fiscal year (in which each proposed expenditure will be designated
either as required or desirable) and set forth an estimate of operating revenues
and expenses, together with an explanation of anticipated changes to resident
charges, payroll rates and positions, non-wage cost increases, and all other
factors differing from the current fiscal year. The budget, as proposed, shall
be considered by Owner and, in consultation between Owner and Consultant, the
budget for the ensuing fiscal year will be prepared by the Consultant with the
final contents of the budget to be determined mutually by Consultant and Owner
(the "Approved Budget"). If there is a delay in the finalization of a new
budget, or if Owner shall fail to approve the newly proposed budget, Consultant
shall continue to provide Consulting Services under the expired Approved Budget
until a new budget is approved, or until the termination notice given above
becomes effective.
ARTICLE VIII
Intentionally Left Blank
11
13
ARTICLE IX
Intentionally Left Blank
ARTICLE X
Intentionally Left Blank
ARTICLE XI
INSURANCE
11.01 Consultant shall obtain and carry professional liability
insurance in its name for its operation of the Facilities. Owner shall maintain
its current policies of insurance for the Facilities. Owner shall consult with
Consultant prior to renewing any of its current policies of insurance.
ARTICLE XII
TERMINATION OF AGREEMENT
12.01 Termination. This Agreement shall automatically terminate at the
end of the Term, unless renewed, as provided in Section 1.14 hereof. Consultant
may terminate, subject to the provisions of Section 13.04 and the notice and
cure provisions set forth in Section 13.02, if Owner defaults under any material
provision of this Agreement, subject to the notice and cure provisions set forth
in Section 13.02. Owner may sooner terminate this Agreement if Consultant
defaults under any material provision of this Agreement, subject to the notice
and cure provisions set forth in Section 13.01. Owner may terminate this
Agreement as the result of the institution of bankruptcy proceedings against
Consultant. Owner may terminate this Agreement without notice in the event the
pending merger between Owner and Sunrise Assisted Living, Inc. is not
consummated by April 1, 1999.
If any of these events occur, Consultant shall be compensated for its
services only through the date of termination.
ARTICLE XIII
DEFAULTS
13.01 Default by Consultant. Consultant shall be deemed to be in
default under this Agreement in the event Consultant shall fail to keep, observe
or perform any material covenant, agreement, term or provision of this Agreement
to be kept, observed or performed by Consultant, and such default shall continue
(i) for a period of ten (10) days after Consultant receives written notice from
Owner specifying the default in case of monetary defaults or (ii) for a period
of thirty (30) days after Consultant receives written notice from Owner in the
case of non-monetary defaults; provided, however, that if such non-monetary
default cannot be cured within such thirty (30) day period, then Consultant
12
14
shall be entitled to such additional time as shall be reasonable, provided
Consultant is capable of curing same, has proceeded to commence cure of such
default within said period, and thereafter diligently prosecutes the cure to
completion.
13.02 Default by Owner. Owner shall be deemed to be in default
hereunder in the event Owner shall fail to keep, observe or perform any material
covenant, agreement, term or provision of this Agreement to be kept, observed or
performed by Owner and such default shall continue (i) for a period of ten (10)
days after written notice thereof by Consultant to Owner in case of monetary
defaults or (ii) for a period of thirty (30) days after written notice thereof
by Consultant to Owner in the case of non-monetary time defaults; provided,
however, if such default cannot be cured within such thirty (30) day period,
then Owner shall be entitled to such additional time as shall be reasonable,
provided that Owner is capable of curing same, has proceeding to commence cure
of such default within said period, and thereafter diligently prosecutes the
cure to completion.
13.03 Remedies of Owner. Upon the occurrence of an event of default by
Consultant as specified in Section 13.01 of this Agreement and expiration of any
applicable cure period provided by this Agreement, Owner shall be entitled to
terminate this Agreement, to remove Consultant from the day-to-day management of
the Facilities and replace Consultant with a substitute Consultant and otherwise
to exercise all of its rights at law or in equity.
13.04 Remedies of Consultant. Upon the occurrence of an event of
default by Owner as specified in Section 13.02 of this Agreement and the
expiration of any applicable cure period provided by this Agreement, Consultant
shall be entitled to terminate this Agreement and to exercise all of its rights
at law or in equity.
13.05 No Waiver of Default. The failure of Owner or Consultant to seek
remedy for any violation of, or to insist upon the strict performance of, any
term or condition of this Agreement shall not prevent a subsequent act by Owner
or Consultant which would have originally constituted a violation of this
Agreement by Owner or Consultant, from having all the force and effect of an
original violation. Owner or Consultant may waive any breach or threatened
breach by Owner or Consultant or any term or condition herein contained. The
failure by Owner or Consultant to insist upon the strict performance of any one
of the terms or conditions of this Agreement or to exercise any right, remedy or
election herein contained or permitted by law shall not constitute or be
construed as a waiver or relinquishment for the future of such term, condition,
right, remedy or election, but the same shall continue and remain in full force
and effect. All rights and remedies that Owner or Consultant may have at law, in
equity or otherwise for any breach of any term or condition of this Agreement,
shall be distinct, separate and cumulative rights and remedies and no one of
them, whether or not exercised by Owner or Consultant, shall be deemed to be in
exclusion of any right or remedy of Owner or Consultant.
13
15
ARTICLE XIV
LEGAL ACTIONS, GOVERNING LAW,
LIABILITY OF CONSULTANT AND INDEMNITY
14.01 Legal Actions. Legal counsel for Consultant and Owner shall
cooperate in the defense or prosecution of any action affecting the Facilities.
Consultant shall not institute any legal action affecting the Facilities without
Owner's consent. Owner shall immediately forward all legal notices to Consultant
which relate to the Facilities. Consultant shall advise and assist Owner in
instituting or defending, as the case may be, in the name of the Facility, Owner
and/or Consultant, but in any event as a Facility Expense, all actions arising
out of the operation of the Facilities and not attributable to the gross
negligence or willful misconduct of Consultant, and any and all legal actions or
proceedings to collect charges, third party payments, rents, or other incomes
for Consultant, Owner or the Facilities, or to lawfully evict or dispossess
residents of the Facilities, or to lawfully cancel, modify, or terminate any
lease, license, or concession agreement in the event of breach or default
thereof, or to defend any action brought against Owner. Consultant shall assist
Owner to take the acts necessary to protest or litigate to a final decision in
any appropriate court or forum, as a Facility Expense, any violation, order,
rule, or regulation affecting the Facilities.
14.02 Legal Fees and Costs. In the event either party elects to incur
legal expenses to enforce or interpret any provision of this Agreement against
the other party to this Agreement, the prevailing party shall be entitled to
recover such legal expenses, including without limitation, reasonable attorney's
fees, costs and necessary disbursements, in addition to any other relief to
which such party shall be entitled.
14.03 Choice of Law and Venue. Whereas Consultant's principal place of
business is in the Commonwealth of Virginia, and the Facilities are located in
various states, the parties agree that this Agreement shall be governed by and
construed in accordance with the laws of Virginia, which shall be the exclusive
courts of jurisdiction and venue for any litigation, special proceeding or other
proceeding between the parties that may be brought, or arise out of, or in
connection with, or by reason of this Agreement.
14.04 Liability of Consultant.
a. Standard of Care. Consultant agrees to use its best efforts
to exercise, with respect to all services provided by
Consultant under or pursuant to this Agreement, a high and
qualified standard of care, skill, and diligence such as is
at least comparable to that at other assisted living
facilities owned by other parties and managed by Consultant
and Affiliates, and as is reasonably necessary for the
maintenance of any license or permit required for the
Facilities.
14
16
b. Other Persons. Consultant shall not be responsible for the
acts or omissions of any of Owner's other contractors or any
subcontractor, or any employees of Owner, or any persons
representing Owner performing any services for or in
connection with the Facilities, or any consultants or other
persons engaged by Owner with respect thereto, unless and
only to the extent Consultant is supervising, or should be
supervising the same, and Consultant shall be responsible
only for the performance of Consultant's obligations
hereunder in accordance with the terms hereof.
c. Non-Recourse. In the event that Consultant makes any claim
against the Facilities and Owner, Consultant's recourse shall
be limited to the provisions of this Agreement. Consultant
shall have no recourse to directors, officers, employees, and
shareholders of the Owner.
d. Notwithstanding any other provisions of this Agreement, the
maximum liability of Consultant to Owner for any breach of
this Agreement or for any claims arising hereunder shall be
limited to the amount of insurance carried by Consultant
pursuant to Article XIX hereinabove and the amount of the
Consulting Fee paid as of the date of such breach or claim.
14.05 Indemnity. Consultant will defend, indemnify and hold Owner
harmless from and against any claims, losses, expenses, costs, suits, actions,
proceedings, demands or liabilities that are asserted against, or sustained or
incurred by Owner because of Consultant's breach of this Agreement or because of
legal actions or regulatory violations arising from Consultant's gross
negligence, fraud, or willful misconduct. Further, Consultant will defend, at
its own expense, any actions brought directly against Consultant as a result of
gross negligence in managing and/or operating the Facilities. The scope of the
foregoing indemnities includes any and all costs and expenses properly incurred
in connection with any proceedings to defend any indemnified claim, or to
enforce the indemnity, or both, provided, however, that Consultant's liability
under that indemnity shall be limited as set forth in Section 14.04 (d). Owner
will defend, indemnify, and hold Consultant harmless, from and against any and
all claims, expenses, losses, costs, suits, actions, proceedings, demands, or
liabilities that are asserted against, or sustained or incurred by Consultant in
the proper performance of Consultant's duties under this Agreement or otherwise
within the scope of the agency established by the parties to this Agreement.
Recovery upon an indemnity contained in this Agreement is shall be reduced
dollar-for-dollar by any applicable insurance collected by either Owner or
Consultant.
15
17
ARTICLE XV
REGULATORY AND CONTRACTUAL REQUIREMENTS
15.01 Regulatory and Contractual Requirements. Consultant shall use
its best efforts to assist Owner to cause all things to be done in and about the
Facilities reasonably necessary to comply with the requirements of any
applicable constitution, statute, ordinance, law, rule, regulation, or order of
any governmental or quasi-governmental regulatory body or agency, or board of
fire underwriters respecting the use of the Facilities or the construction,
maintenance, or operation thereof. Consultant shall use its best efforts to
assist Owner in obtaining and maintaining all Federal, State and county permits
and licenses needed for its operation of licensed assisted living facilities
providing personal care services. Owner agrees upon request by Consultant to
sign promptly and without charge applications for licenses, permits or other
instruments necessary for operation of the Facilities and to provide such
information and perform such acts relative to the ownership of the Facilities as
are required by law, regulation or governmental practice in order for obtaining
and/or maintaining any license, permit, instrument, certificate, certification
or approval with respect to the proper operation of the Facilities.
The parties understand and agree that certain deficiencies or
situations of non-compliance with various Legal Requirements (such as building
codes, OSHA, ADA, health care regulations and the like) are likely to occur from
time to time in the normal course of business operations. Such occurrences will
not constitute a breach or default of Consultant hereunder, provided that, (i)
they are not materially beyond the general experience of similar Facilities
operations located in the State in terms of scope, seriousness, or frequency,
and (ii) Consultant takes all reasonable actions in a timely manner to cure such
deficiencies or situations of non-compliance. The costs (including any fines for
non-compliance) of curing such deficiencies or circumstances of non-compliance
shall constitute Operating Expenses unless incurred by reason of Consultant's
willful failure, gross negligence or default hereunder.
15.02 Equal Employment Opportunity. Without limitation of any
provision set forth herein, Owner and Consultant expressly agree to abide by any
and all applicable Federal and/or State equal employment opportunity statutes,
rules and regulations, including, without limitation, Title II of the Civil
Rights Act of 1964, the Equal Pay Act of 1963, the National Labor Relations Act,
the Fair Labor Standard Act, the Rehabilitation Act of 1983, and the
Occupational Safety and Health Act of 1970, all as may be from time to time
modified or amended.
15.03 Equal Housing Opportunity. Without limitation of any provision
set forth herein, Owner and Consultant expressly agree to abide by any and all
applicable Federal and/or State equal housing opportunity statutes, rules and
regulations, all as may be from time to time modified or amended.
16
18
ARTICLE XVI
Intentionally Left Blank
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.01 Additional Assurances. The provisions of this Agreement shall be
self-operative and shall not require further agreement by the parties except as
may be herein specifically provided to the contrary; provided, however, at the
request of either party, the party requested shall execute such additional
instruments and take such additional acts as the requesting party may deem
necessary to effectuate this Agreement.
17.02 Consents, Approval and Discretion. Except as expressly provided
herein to the contrary, whenever this Agreement requires any consent or approval
to be given by either party or either party must or may exercise discretion, the
parties agree that such consent or approval shall not be unreasonably withheld
or delayed and such discretion shall be reasonably exercised, in good faith.
17.03 No Brokerage. Each party represents to the other that it has not
engaged a broker in connection with this transaction, and agrees to defend,
indemnify, and hold the other party harmless from any claim made by a broker
through the indemnifying party.
17.04 Notices. All notices, demands, consents, approvals, and requests
given by either party to the other hereunder shall be in writing and shall be
sent by hand, by overnight courier, or by registered or certified mail, postage
prepaid, to the parties at the following addresses:
Owner: Karrington Health, Inc.
000 Xxx Xxxxxxxxx Xx.
Xxxxxxxx, Xxxx 00000
Attn: Xxxx X. Xxxxxxxx, President
Copy to: Xxxxxxx Xxxxx, Esquire
Karrington Health, Inc.
000 Xxx Xxxxxxxxx Xx.
Xxxxxxxx, Xxxx 00000
Consultant: Sunrise Assisted Living Management, Inc.
0000 Xxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxxx Xxxxxxx
Copy to: Xxxxxx X. Xxxxxx, Esquire
17
19
Sunrise Assisted Living, Inc.
0000 Xxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
or to such other address and to the attention of such other person as either
party may from time to time designate in writing. Notices shall be effective
upon receipt. Refusal to accept delivery shall constitute receipt.
17.05 Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstance is held to be invalid or
unenforceable for any reason, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.
17.06 Gender and Number. Whenever the context of this Agreement
requires, the gender of all words herein shall include the masculine, feminine,
and neuter, and the number of all words herein shall include the singular and
plural.
17.07 Division and Headings. The divisions of this Agreement into
sections and subsections and the use of captions and headings in connection
therewith are solely for convenience and shall have no legal effect whatsoever
in construing the provisions of this Agreement.
17.08 Confidentiality of Information. Consultant and Owner agree to
keep confidential and not to use or to disclose to others, except as expressly
consented to in writing by the other party or required by law, any and all of
their respective secrets or confidential technology, proprietary information,
customer lists, or trade secrets, or any matter or items ascertained through
their association with each other. Consultant and Owner further agree that
should Consultant leave the active service of Owner, Consultant will return to
Owner any Facility information of any kind pertaining to Residents of the
Facilities, business, sales, financial condition or products and Owner will
return to Consultant any and all of Consultant's confidential information
obtained by Owner. All funds related to and accounts opened on behalf of the
Facilities also will be returned to Owner.
17.09 Right to Perform. In the event that Owner or Consultant shall
fail to perform any duty or fulfill any obligation hereunder to the material
detriment of the other, Owner or Consultant, in addition to any rights or
remedies available to it under law, shall have the right, but not the obligation
to perform any such duty or fulfill any such obligation, but in no way
obligating the party beyond any termination period allowable hereunder.
17.10 Assignment by Consultant. Consultant shall have the right to
assign this Agreement to an affiliate or subsidiary of Consultant.
18
20
17.11 Entire Agreement/Amendment. With respect to the subject matter
hereof, this Agreement supersedes all previous contracts and constitutes the
entire Agreement between the parties, and no party shall be entitled to benefits
other than those specified herein. As between the parties, no oral statements or
prior written material not specifically incorporated herein shall be of any
force and effect. The parties specifically acknowledge that in entering into and
executing this Agreement, the parties rely solely upon the representations and
agreements contained in this Agreement and no others. All prior representations
or agreements not expressly incorporated herein, whether written or verbal, are
superseded, and no changes in or additions to this Agreement shall be recognized
unless and until made in writing and signed by both parties hereto. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal by their duly authorized offices, all as of the day and
year first above written.
WITNESS/ATTEST: OWNER:
Karrington Health, Inc.
/s/ Xxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxxx
------------------ -------------------------------------
Name: Xxxx X. Xxxxxxxx
-----------------------------------
Title: President
----------------------------------
WITNESS/ATTEST: CONSULTANT:
Sunrise Assisted Living Management, Inc.,
a Virginia corporation
Xxxxx X. Xxxxxxx By: /s/ Xxxxxxx Xxxxxxx
---------------- -------------------------------------
Name: Xxxxxxx Xxxxxxx
-----------------------------------
Title: Executive VP of Operations
----------------------------------
19
21
Exhibit A
to
Management Consulting Agreement
Karrington of Bexley
Karrington on the Scioto
Karrington at Xxxxxx Creek
Karrington of Shaker Heights
Karrington Place
Karrington of South Hills
Karrington at Fall Creek
Karrington Commons of Buffalo
Karrington Commons of Xxxxxxx
Xxxxxxxxxx Cottages of Xxxxxxx
Xxxxxxxxxx Cottages of Waterloo
Karrington Cottages of Mankato
Karrington Cottages of Rochester I
Karrington Cottages of Rochester II
Karrington Cottages of Rochester III
Karrington Cottages of Rochester IV
Karrington Cottages of Buffalo I
Karrington Cottages of Buffalo II
Karrington of Willow Lake
Karrington of Fort Xxxxx
Xxxxxxxxxx of Fremont
Karrington of Wooster
Karrington of Bath
Karrington of Gahanna
Karrington of Xxxxxx
Xxxxxxxxxx of Cottages of Rochester V
Karrington of Rocky River
Karrington of South Xxxxxxxxx
Xxxxxxxxxx of Presque Isle Bay
Karrington of Xxx Arbor
Karrington of Poland
Karrington of Monroeville
Karrington of Park Ridge
Karrington of Xxxxxxx
Xxxxxxxxxx of Oakwood
Karrington of Albuquerque St. Xxxxxxx Place
Karrington of Kenwood
Karrington of Englewood
Karrington of Colorado Springs
20
