EXHIBIT 10.33
LONG TERM CARE FACILITY
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement") made as of the 1st day of
December, 0000 xxxxxxx XXXXXXXX XX XXXXXXXX, INC. ("Manager") and HP/NORTH
CAROLINA TV, INC. ("Owner").
W I T N E S S E T H:
WHEREAS, Owner owns an approximately four acre site in Xxxxx County, North
Carolina, on which it has constructed a nursing home facility ("The Facility");
and
WHEREAS, the Owner wishes to retain Manager under the terms of this
Agreement to provide experience, skill and supervision to operate the Facility
on behalf of Owner; and
WHEREAS, Manager wishes to provide management services on behalf of Owner
under and subject to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants of
the parties contained herein, and for such other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I.
MANAGEMENT DUTIES AND OBLIGATIONS
1.01 Control Retained by Owner. Owner, shall at all times exercise overall
control over the assets and operations of the Facility, and Manager shall
perform the duties herein required to be performed by it as the agent of Owner
and in accordance with the policies and directives from time to time adopted by
Owner. Owner has reviewed the policies and procedures created by Manager and
adopts them for use in the facility.
1.02 Ownership of Manuals. Manager is the sole and only owner of all
policy and procedure manuals.
1.03 Management of Facility. During the term of this Agreement, Manager
shall on behalf of Owner manage all aspects of the operation of the Facility,
including, but not limited to, staffing, accounting, billing, collections,
setting of rates and charges and general administration. In connection
therewith, Manager (either directly or through supervision of employees of the
Facility) shall:
(a) Hire on behalf of manager and retain (to the extent such
personnel are reasonably available in the community in which the Facility is
located) an adequate staff of nurses, technicians, nurse aides, office and other
employees, including and
administrator (the "Administrator") and shall promote, direct, assign and
discharge all such employees on behalf of Owner at Manager's sole discretion.
All such employees shall be employees of the Manager and carried on the payroll
of the Facility.
(b) Institute and amend from time to time general salary scales,
personnel policies and appropriate employees benefits for all employees on
behalf of Owner. Employee benefits may include pension and profit sharing plans,
insurance benefits, incentive plans for key employees and holiday, vacation,
personal leave and sick leave policies.
(c) Issue appropriate bills for services materials furnished by the
Facility and use its best efforts to collect accounts receivable and monies owed
to the Facility, design and maintain accounting, billing, patient and collection
records; and prepare and file insurance, Medicare, Medicaid and any and all
other necessary or desirable reports and claims related to revenue production.
Owner hereby grants Manager the right to enforce Owner's rights as creditor
under any contract or in connection with rendering any services for purposes of
collecting accounts receivable and monies owed the Facility.
(d) Order, supervise and conduct a program of regular maintenance
and repair, except that any physical improvements costing in the aggregate more
than $10,000 in any given year shall be subject to approval of Owner.
(e) Purchase food, beverage, medical, cleaning and other supplies,
equipment, furniture and furnishings for the account of Owner, except that the
purchase of any single item which costs more than $25,000 shall be subject to
approval of Owner.
(f) Administer, supervise and schedule all patient and other
services of the Facility, including the operation of food, xxxxxx/beautician and
other ancillary services.
(g) Provide necessary funds for and pay all of the accounts, payable
indebtedness, taxes, insurance premiums, and all other obligations of the
Facility.
(h) Institute standards and procedures for admitting patients, for
charging patients for services, and for collecting the charges from the patients
or third parties.
(i) Obtain and maintain insurance coverage for the Facility naming
Owner, Manager and such other persons requested by Owner as insured as provided
in Section 4.01 hereof.
(j) Negotiate and enter into in the name of and on behalf of Manager
such agreements, contracts and orders as it may deem necessary or advisable, for
the furnishing of services, concessions and supplies for the operation and
maintenance of the Facility.
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(k) Negotiate on behalf of Owner with any labor union lawfully
entitled to,represent employees of Owner who work at the Facility, but any
collective bargaining agreement or labor contract must be submitted to Owner for
its approval and execution. Manager agrees to provide owner with prompt notice
of all labor negotiations.
(l) Maintain all licenses and permits required for the operation of
the facility, its contracts with third party payors and other similar
governmental and nongovernmental agencies and intermediaries.
(m) Make periodic evaluations of the performances of all
departments of the Facility.
(n) Design, establish and maintain a suitable accounting system
using accounts and classifications consistent with those used in similar
facilities.
(o) Designing an adequate and appropriate public relations program.
(p) Acquire at Manager's cost and expense all items required to
properly equip and operate the facility which are not provided for by Owner.
1.04 Reports to Owner.
(a) Manager shall prepare and deliver to Owner within 45 days after
the close of each calendar month unaudited financial statements covering the
prior month and containing a balance sheet and statement of income in reasonable
detail. Manager shall also provide any required assistance to the independent
accountants for the Facility, who may be selected by Manager in the preparation
of unaudited financial statements for the operation of the Facility.
1.05 Bank Accounts, Working Capital.
(a) Manager, in the Facility's name and on behalf of Owner, shall
deposit in a bank account or accounts of the Manager or the Facility (the
"Operating Accounts") established in Manager's name all funds received from the
operations of the Facility. Manager shall provide sufficient working capital for
the start up of the Facility and shall be responsible thereafter for such
working capital, which shall be deposited into the Operating Accounts. Manager
shall specify the signatory or signatories required on all checks or other
documents of withdrawal for the Operating Accounts.
(b) As partial consideration for entering into this Agreement,
Manager hereby agrees that the Owner will not incur any operating or managing
losses as a result of the operation of the Facility. The Manager agrees to
provide sufficient operating capital as needed in order to operate the Facility
and to pay the
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debts and obligations for the operation of the Facility as well as the Owner's
Option Fee. The revenue generated by the Facility, together with amounts funded
by the Manager, will at least equal the amount necessary to pay for the
operating costs, owner's option fee, and other costs associated with the
ownership and operation of the Facility. In the event that funds are necessary
in order to operate any deficit, the Manager will as soon as possible and not
less than ten (10) days, deposit such amount into the Operating Accounts.
1.06 Record Requirements. If it is ultimately determined that
Section 952 of the Omnibus Reconciliation Act of 1980 and final regulations
promulgated thereunder apply to this Agreement:
(a) Until the expiration of four years after the furnishings of
services pursuant to this Agreement, Manager shall as provided in said Section
952, make available, upon written request, to the Secretary 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 all books documents
and records of Manager that are necessary to verify the nature and extent for
the costs of any services furnished pursuant to this Agreement for which payment
may be made under the Medicare program and;
(b) If Manager carries out any of the duties of this Agreement
through a subcontract with an aggregate value or cost of $ 10,000 or more over a
twelve-month period with a related organization, such subcontracts, the related
organization shall as provided in said Section 952 make available, upon written
request, to the Secretary 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 or subcontracts, and all books, documents and
records of such organization that are necessary to verify the nature and extent
of the costs of any services furnished pursuant to such subcontract or
subcontracts for which payment may be made under the Medicare program.
1.07 Licenses.
(a) Manager shall apply for, obtain and maintain all necessary
licenses, permits, consents, and approvals from all governmental agencies which
have jurisdiction over the operation of the Facility, Manager agrees that its
management and operation of the Facility shall materially comply with
representations in the Certificate of Need Application for the Facility on file
with the North Carolina Department of Human Resources, Division of Facility
Services and shall materially comply with all conditions placed upon the
Certificate of Need.
(b) Neither Owner nor Manager shall knowingly take any action or
fail to take any action which may (1) cause any governmental authority having
jurisdiction over the operation of the Facility to institute any proceeding for
the rescission or
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revocation of any necessary license, permit, consent or approval or (2)
adversely affect Owner's right to accept and obtain payments under Medicare,
Medicaid, Blue Cross, or any other public or private third-party medical payment
program.
(c) Manager shall with the written approval of Owner, have the right
to contest by appropriate legal proceedings, diligently conducted in good faith
in the name of Owner, the validity or application of any law, ordinance, rule,
ruling, regulation, order or requirement of any governmental agency having
jurisdiction over the operation of the Facility. Owner, shall cooperate with
Manager in regard to any such contest, and pay in accordance with Section
1.05(b) the attorney fees incurred with respect to such contest. Counsel for any
such contest shall be selected by Manager and approved by Owner.
(d) Manager shall have the right, without the written consent of
Owner, to process all third-party payment claims for the services of the
Facility, including, without limitations the full right to contest to exhaustion
all applicable administrative proceedings or procedures, adjustment and denials
by governmental agencies or their fiscal intermediaries as third-party payors.
1.08 Administrator. Manager shall hire for the Facility a qualified
administrator (the "Administrator") of the Facility. The Administrator shall be
an employee of and shall be compensated by the Manager.
1.09 Taxes. Any federal, state or local taxes, assessments or other
governmental charges properly imposed on the Facility are the obligations of the
Facility and shall be paid out of the Operating Accounts of the Facility.
1.10 Use of Manager's Personnel. An authorized representative of Manager
shall visit the Facility as often as Manager deems necessary. The time spent by
such arising from travel and lodging connected with such visitations shall not
be charged separately to Owner, but shall be paid by Manager out of its own
management fees.
1.11 Government Regulations. Manager agrees to operate and maintain the
Facility in substantial compliance with the requirements of any statue,
ordinance, law, rule, regulation or order of any governmental or regulatory body
having jurisdiction over the Facility.
1.12 Quality Controls. Manager shall implement and maintain on a
continuing basis a Quality Assurance Program at the Facility and in connection
therewith shall utilize such techniques as the Manager deems appropriate in
order to fulfill its duties herein.
1.13 Staff Specialist. In addition to the other managerial services
provided for herein, Manager shall make available to the Facility for
consultation and advice, as it deems appropriate, specialist in such fields as
accounting, auditing, budgeting,
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dietary services, operations, public procedures, and third-party reimbursement.
1.14 Performance of Services by Manager. In the performance of its
services hereunder, Manager shall exercise the same standards and degree of care
used by reasonable and prudent managers of nursing homes of similar size, nature
and character as the Facility. Notwithstanding anything herein to the contrary,
Manager shall not be deemed in violation of this Agreement, if it is prevented
from performing any of its obligations hereunder for any reason beyond its
reasonable control including, without limitations, strikes, walkouts or other
employee disturbances, acts of God or the promulgation of any statute, rule,
regulation or order by any federal state, or local governmental or judicial
agency or official, nor shall it be deemed in default or gross negligence,
1.15 Extraordinary Services. Owner agrees that any extraordinary or
specialized service recommended by Manager and approved by Owner, even if
provided by Manager, may be performed for a separate fee as agreed upon by
Manager and Owner in advance of the performing of such service.
1.16 Benefits and Burdens. Owner and Manger hereby agree that all of the
benefits and burdens arising out of the operation of the facility shall inure to
and/or be the sole responsibility of the Manager.
ARTICLE II.
TERMS AND TERMINATION
2.01 Term. The term of this Agreement shall commence on the date of
licensure of the Facility ("Commencement Date") and continue for three (3) years
from the Commencement Date (the "Term"), unless earlier terminated by either
part exercise of rights under the Option Agreement of even date herewith.
2.02 Term for Non-Payment. Furthermore, if any payment required to be made
by Manager hereunder, is not made within fifteen days (15) of its due date, then
Owner shall have the right after fifteen days (15) notice to terminate this
Agreement. If Owner does not receive from Manager any monthly Option Fee payment
within fifteen (15) days after such payment is due, Owner, at its option may
charge a late charge equal to five percent (5%) of such amount, which shall be
deemed an additional expense of Manager, and such charge shall be due and
payable by Manager to Owner upon notice to Manager. Further, any Option Fee
payment not received within fifteen (15) days after the due date shall be
considered a default by Manager under this Agreement and Option Agreement.
ARTICLE III.
MANAGEMENT FEE
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3.01 Management Fee. Each month during the term hereof, Manager shall
receive from Owner, and Owner shall pay to Manager as the amount due for
services, a management fee equal to the Adjusted Net Income of the Facility.
"Adjusted Net Income" shall mean net income or loss of the Facility determined
in accordance with generally accepted accounting principles plus depreciation
and amortization of deferred expenses less principal payments of the Facility's
mortgage.
3.02 Payment of Management Fees. All managements fees due hereunder shall
be paid to Manager. Any late payments of management fees not made after three
(3) days written notice to Owner shall bear interest from their original due
date equal to the Advance Rate (as defined in Section 5.11 hereof) until fully
paid. Notwithstanding anything herein to the contrary the management fees
provided under this Article III shall be subordinate and subject to the
agreements of Manager provided in Section 1.05(b) above.
ARTICLE IV.
INSURANCE
4.01 Insurance.
(a) Manager shall, at its sole cost and expense, procure and
maintain at all times during the term of this Agreement comprehensive general
liability insurance in standard form with such insurance company or companies as
may be acceptable to Owner, insuring Manager and Owner as additional insured
against liability for damage or injury, including death, to property or to any
person entering upon or using the premises or any of the improvements thereon,
or sidewalks and walkways adjacent thereto. Such insurance as procured by the
Manager shall afford immediate protection, with the limit of not less than One
Millon Dollars ($1,000,000.00) in respect to any one accident or occurrence and
in respect to bodily injury, death and/or property damage with a Two Millon
Dollars ($2,000,000.00) aggregate limit, with not more than Ten Thousand Dollars
($10,000.00). deductible.
Such comprehensive general liability insurance shall include blanket
contractual liability coverage which insures the indemnification of Owner by
Manager as set forth in this Agreement (which coverage or the amount thereof
shall in no way limit such indemnification), Manager shall furnish Owner with a
certificate with respect to such insurance in a form satisfactory to Landlord.
(b) Coverage afforded under the terms of such policy or policies
may, after the expiration of the first (1st) year of this Agreement, be
increased, from time to time during the term, as Owner may, in his reasonable
discretion, require.
(c) If Manager fails to comply with foregoing requirements relating
to insurance, Owner may obtain such insurance and Manager shall pay Owner upon
demand the premium costs thereof
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plus interest at the rate of ten percent (10%) per annum from ten (10) days
after the date of demand by Owner until paid by Manager.
(d) Manager shall at its own cost during the term of this Agreement
insure for benefit of Owner, Manager and other persons having an insurable
interest and designated by Owner, including any mortgagee of Owner's interest in
the premises, all improvements on the premises and all fixtures installed by
Owner and located thereon, in an amount equal to the full replacement value of
such improvements and fixtures (with replacement cost endorsement). Such
policies shall contain coverage against loss, damage or destruction by fire and
such other hazards as are covered and protected against at standard rates under
policies of insurance, referred to and known as "special form including theft,"
as the same may exist, from time to time.
(e) Such "special form including theft" shall be amounts sufficient
to prevent Owner and Manager from becoming co-insurers under the terms of the
applicable policies, but in any event an amount not less than ninety per cent
(90%) of the then "full replacement cost." The term "full replacement cost"
shall mean the actual replacement cost less physical depreciation of the
building, including the foundation and excavation costs. Owner and Manager shall
agree on the initial value of the premises at the commencement of this Agreement
which shall be increased annually by building cost index factors as may be
determined by the Xxxxxxxx Xxxxxxx Valuation Guide or other appraisal source
mutually agreed upon by Owner and Manager.
(f) Manager, at its sole cost and expense, shall also maintain
professional liability insurance in an amount equal to One Million Dollars
($1,000,000.00) per occurrence.
(g) Manager, at its sole cost and expense, shall also maintain
earthquake insurance coverage in an amount equal to the value of the
improvements based on the valuation formula in (e) above subject to such
reasonable deductibles and limitations on coverages as may apply.
(h) Manager, at its sole cost and expense, shall maintain business
interruption insurance in an amount sufficient to cover the requirements of
Section 1.05(b) of this Agreement.
(i) All policies of insurance provided for in this paragraph shall
name Owner and Manager and the holder of any mortgage on the premises as
insured, as their respective interest appear, and shall otherwise comply with
requirements of the mortgage, so long as not inconsistent with the terms of this
Agreement.
(j) All insurance provide for in this paragraph shall be effective
under valid and enforceable policies issued by insurers which have been approved
in writing by Owner, which approval shall not be unreasonably withheld. Upon
execution of this Agreement and
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thereafter not less than thirty (30) days prior to the expiration dates of the
expiring policies furnished pursuant to this paragraph or any other paragraph of
this Agreement, an original of the policies or certificates relating thereto
bearing notations evidencing the payments of premiums or accompanied by other
evidence satisfactory to Owner of such payments shall be delivered by Manager to
Owner.
(k) Each policy provided for in this paragraph shall contain an
agreement by the insurer that such policy shall not be canceled without at least
thirty (30) days prior written notice to Owner and the holder of any mortgage of
the premises and an agreement that any loss otherwise payable thereunder shall
be payable notwithstanding any act of negligence of Owner or Manager which
might, absent agreement, result in the forfeiture in all or part of such
insurance payment.
(l) Manager may provide any insurance required by this Agreement in
the form of a blanket policy, provided that Manager shall furnish satisfactory
proof of such blanket policy complies in all respects with the provisions of
this Agreement, and that the coverage thereunder is at least equal to the
coverage which would have been provided under separate policy covering only the
premises.
(m) Owner shall not be required to prosecute any claim against or
contest any settlement proposed by any insurer provided that Manager may, at his
expense, prosecute any such claim or contest any such settlement. Owner will
join therein at Manager's written request only upon receipt by Owner of any
indemnity from Manager against all costs, liabilities and expenses in connection
with such prosecution or contest.
(n) Insurance claims by reason of damage to or destruction of any
portion of the premises shall be adjusted by Owner. Any such proceeding for
adjustment shall be governed by the provisions of this Agreement.
(o) If Manager shall default in the obtaining or maintaining of any
insurance required hereunder, Owner shall have the right, but not the
obligation, to take whatever action is necessary to pay all appropriate premiums
to obtain or maintain such insurance, in which events any amounts paid for
premiums by Owner shall be deemed additional rent and shall be paid by Manager
to Owner upon demand plus ten percent (10%) per annum interest from ten (10)
days after such demand until payment.
ARTICLE V.
MISCELLANEOUS COVENANTS
5.01 Assignment. Owner shall not assign its rights and/or obligations
under this Agreement without the prior written consent of Manager, which shall
not be unreasonably withheld, except to
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Owner's construction or permanent lender, in the event of foreclosure of such
lender's mortgage against the Facility. Manager shall not assign its rights
and/or obligations under this Agreement, without the prior written consent of
Owner. Neither party shall unreasonably withhold such consents.
5.02 Licensing: Changes and Services. Manager agrees to take or cause to
be taken any and all actions necessary to be taken by it as the overall
supervisor of the assets and operations of the Facility in order to maintain all
required licenses, permits for the operation of the Facility and the Facility's
eligibility to participate in all public or private third-party medical payment
programs, including providing sufficient funds to bring the Facility in
compliance with all applicable fire safety codes and other laws, regulations and
orders, and to correct all structural, maintenance, procedural and staffing
deficiencies as shown on the surveys and reports of governmental agencies having
jurisdiction over the Facility. Manager agrees that it will not through the
exercise of its overall supervisory powers substantially change the services
rendered by the Facility during the term hereof without the prior written
approval of Owner. Nothing contained in this Section 5.02 shall derogate from
Manager's duties under Section 1.07 hereof.
5.03 Damage or Destruction. If the Facility or any portion thereof shall
be damaged or destroyed by fire or other casualty, Owner shall commence to
repair, restore, rebuild or replace any such damage or destruction within sixty
(60) days upon receipt of insurance proceeds sufficient to enable Owner to
rebuild or replace the damage. Upon the commencement of such work Owner shall
proceed with due diligence to complete such work within a reasonable period of
time.
5.04 Binding Agreement. The terms, covenants, conditions, provisions and
agreements herein contained shall be binding upon and inure to the benefit of
the parties hereto, their successors and assigns.
5.05 Relationship of Parties. Nothing contained in this Agreement shall
constitute or be construed to be or to create a partnership, joint venture or
Agreement between Owner and Manager with respect to the Facility.
5.06 Notices. All notices, demands and requests contemplated hereunder by
either party to the other shall be in writing, and shall be deemed given when
delivered by hand, or national recognized overnight courier, transmitted by
cable, telephonic facsimile (fax), telegram, or mailed, postage prepaid,
registered, or certified mail return receipt requested:
(a) to Owner by addressing the same to:
Xxxxx X. Xxxxx
Xxxxx/Xxxxxxx Med-Com, Inc.
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0000 0xx Xxxxxx, X.X.
Xxxxxxx, XX 00000
(b) to Manager, by addressing the same to:
Xxxxxxx X. Xxxxxxx
Cardinal of Kentucky, Inc.
0000 Xxxxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
or to such other address or to such other person as may be designated by notice
given from time to time during the term by one party to the other, Any notice
hereunder shall be deemed given five (5) days after mailing, if given by mailing
in the manner provided above, or on the date delivered or transmitted if given
by hand, cable, fax, overnight courier, or telegraph.
5.07 Entire Agreement: Amendments. This Agreement contains the entire
agreement between the parties hereto, and no prior or written, and no
contemporaneous oral representations or agreements between the parties with
respect to the subject matter of this Agreement shall be of any force and
effect. Any additions, amendments or modifications to this Agreement shall be of
no force and effect unless in writing and signed by both Owner and Manager.
5.08 Governing Law. This Agreement has been executed and delivered in the
State of North Carolina, and all the terms and provisions hereof and the rights
and obligations of the parties hereto shall be construed and enforced in
accordance with the laws thereof.
5.09 Captions and Headings. The captions and headings throughout this
Agreement are for convenience and reference only, and the works contained
therein shall in no way by held or deemed to define, limit, describe, explain,
modify, amplify or add to the interpretation, construction or meaning of any
provision of or the scope or intent of this Agreement nor in any way affect this
Agreement.
5.10 Authorization or Agreement. Manager and Owner represent and warrant
each to the other with respect to itself, that the execution and delivery of
this Agreement has been duly authorized by all respective action, will not
presently or with the passage of time, the giving of notice or both result in a
default under or violate or conflict with (i) the provisions of the partnership
agreement or articles of incorporation and bylaws, as the case may be, of
Manager of Owner, or (ii) any other agreement, mortgage, loan agreement or other
contract or instrument to which either party is bound or by which any of their
property or assets is subject, or (iii) any existing law, regulation, court
order or consent decree to which either party is bound or any of their property
or assets are subject.
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5.11 Indemnification. Manager agrees to indemnify, protect and hold
harmless Owner from and against any and all liabilities and damages (a) arising
from or out of any occurrence in, upon or at the Nursing Facility or any part
thereof, or the occupancy or use by Manager of the Nursing Facility, the
Personal Property or any part thereof, or occasioned wholly or in part by any
act or omission of Manager, its agents, contractors, employees or invitees in
connection with the Nursing Facility or the Personal Property during the term of
this Management Agreement, or (b) related to any claims, assessments,
chargebacks or other expenses (whether owed to or assessed by a private or
governmental party) arising in connection with the operation or other use of the
Nursing Facility or the Personal Property during the term of this Management
Agreement. Owner agrees to indemnify, protect and hold harmless Manager from and
against liabilities and damages arising from or occasioned wholly or in part by
any act or omission of Owner, its agents, contractors, employees or invitees in
connection with the Nursing Facility or the Personal Property during the term of
this Management Agreement.
IN WITNESS WHEREOF, the parties hereto have executed, sealed and delivered
this Agreement through their duly authorized representatives, as of the day and
year first above written.
HP/NORTH CAROLINA IV, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Vice President
ATTEST:
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Asst. Secretary
(Corporate Seal)
CARDINAL OF KENTUCKY, INC.
By: /s/ Xxxxxxx Xxxxxxx
----------------------
Vice President
ATTEST:
/s/ Xxxx X. Xxxxxxx
-----------------------------
Assistant Secretary
(Corporate Seal)
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