EXHIBIT 5
INTERIM MANAGEMENT SERVICES AGREEMENT
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This Interim Management Services Agreement ("Agreement") is made as of
September 30, 1997 (the "Effective Date"), between ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇ ▇. ▇▇▇▇▇▇, d/b/a G.W.E. Partnership, with offices located at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (collectively, "Operators")
and Senior Quarters Management Corp., a New York corporation (the "Manager").
WHEREAS, Operators are the licensed operators of the facilities
described in Exhibit A attached hereto and incorporated herein by this reference
(collectively, the "Facilities");
WHEREAS, Operators may delegate the performance of certain services
relating to the Facilities pursuant to Section 9(B) of the Operating Agreements
listed on Exhibit B attached hereto and incorporated herein by this reference
(collectively, the "Operating Agreements"), or by agreeing with Manager to
terminate the existing Management Services Agreements applicable to the
Facilities and entering into this Agreement;
WHEREAS, Manager is financially stable and qualified in the field of
managing adult-care facilities such as the Facilities, and operators desire to
engage Manager to provide services in connection with the operation of the
Facilities, pursuant to Operators' supervision and direction, on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, Manager is willing to provide such services on an interim
basis, on the terms and subject to the conditions set forth in this Agreement,
commencing with the "Effective Time", of the merger of Prometheus Acquisition
Corp. with and into Kapson Senior Quarters Corp. (the "Company") as defined in
that certain Agreement and Plan of Merger dated as of the Effective Date among
Prometheus Senior Quarters LLC, Prometheus Acquisition Corp. and Company.
NOW THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties do hereby agree as
follows:
I. RESPONSIBILITIES OF OPERATORS.
A. Operators hereby engage Manager to provide management and
consulting services to the Facilities, and Manager hereby accepts such
engagement and agrees to provide such services for the compensation set forth in
Section VII, upon the terms and conditions set forth in this Agreement. During
the term of this Agreement, Manager shall provide the services set
forth below, all of which shall be subject to the supervision and review of
Operators. Manager and Operators understand and agree that notwithstanding any
other provision of this Agreement, Operators remain responsible for operation of
the Facilities in accordance with applicable law and regulations. Consequently,
Operators shall retain the right, power and authority to promulgate all policies
and procedures regarding operation of each Facility and the right to direct
Manager and other third parties in the performance of their responsibilities;
all such policies and directives shall be binding upon, and complied with by
Manager. Notwithstanding the current authority of Operators, Operators
acknowledge that Manager typically works with greater discretion than is
provided pursuant to the Operating Agreements. Consequently, Operators shall, at
the election of Manager, (x) work with the owner of the applicable Facility (the
"Owner") to amend the Operating Agreements, substantially in the form of Exhibit
C hereto, to clarify that the powers of the Operators primarily are to (1) issue
such directives to Manager as are required by or appropriate under applicable
law and regulations with respect to services of Manager, (2) establish such
policies and procedures as are required by or appropriate under applicable law
and regulations with respect to any or all of the matters covered by this
Agreement, (3) supervise Manager and (4) ensure that the Facilities comply with
applicable law, or (y) use their reasonable best efforts to facilitate a
transition of the Operators of the Facility to an Operator or Operators approved
by Owner and Manager.
a. OPERATIONAL POLICIES AND FORMS. Subject to the review by
the operator pursuant to those certain operating Agreements described in Exhibit
B attached hereto and incorporated herein by this reference, and the Annual
Budgets (as defined in the Operating Agreements), Manager shall establish and
implement appropriate operational policies and procedures, and shall develop
such new policies and procedures as it may deem necessary to insure the
establishment and maintenance of operational standards appropriate for the
nature of the Facilities.
b. CHARGES. Manager shall prepare on behalf of operators
schedules of charges, including any and all special charges for services
rendered at the Facilities.
c. INFORMATION. Manager shall develop any informational
material, mass media releases, and other related publicity materials that it
deems necessary for the operation of the Facilities.
d. REGULATORY COMPLIANCE. Manager and Operators shall use
their reasonable best efforts to maintain all licenses, permits, qualifications
and approvals from any applicable governmental or regulatory authority required
for the operation
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of the Facilities, to operate the Facilities in compliance with applicable laws
and regulations, and to comply with such laws and regulations in performing
their respective obligations relating to the Facilities. In addition, Manager
shall provide all information required by applicable governmental agencies, and
shall cooperate with governmental inspection and enforcement activities. Manager
shall comply with all applicable provisions of law and regulations.
Notwithstanding the provisions herein requiring Manager to comply with
applicable law, operators remain responsible for the operation of the Facilities
in compliance with such applicable law and regulations.
e. EQUIPMENT AND IMPROVEMENTS. Subject to the Annual Budgets,
Manager shall recommend, and, if approved by Operators, acquire or effect, on
behalf of an Owner, the equipment and improvements that it determines are needed
to maintain or upgrade the quality, to replace obsolete or rundown equipment, or
to correct any other survey deficiencies which may be cited during the term of
this Agreement. Manager shall make all such repairs and maintenance approved by
operators in a workmanlike and lienfree manner.
f. ACCOUNTING. Manager shall arrange for and supervise
accounting support to the Facilities, including the following:
(1) A monthly balance sheet and statement of
operations for each Facility, to be submitted to its Owner within thirty (30)
days after the end of each calendar month;
(2) Resident billing records;
(3) Accounts receivable and collection records;
(4) Accounts payable records;
(5) All payroll functions, including, preparation of
payroll checks, establishment of depository accounts for withholding taxes,
payment of such taxes, filing of payroll reports and the issuance of W-2 forms
to all employees;
(6) A complete general ledger for the purposes of
recording and summarizing all transactions for each Facility;
g. Manager shall prepare and file all necessary reports as
required by applicable governmental authorities and simultaneously provide a
copy to the Operators.
h. Manager shall be responsible for preparation and delivery
of all reports required to be delivered to any lenders at the time and in the
manner required by such lenders.
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All accounting procedures and systems utilized in providing said support shall
be in accordance with the operating capital and cash programs developed or put
in place by an Owner or developed by Operators. Upon Manager's recommendation,
Operators may determine to engage a third party (in addition to Manager) to
assist it in the performance of the accounting duties provided for herein.
i. REPORTS. Manager shall prepare and provide to Operators any
information that is required to be furnished by Operators to an Owner under the
Operating Agreements and any other reasonable operational information which may
from time to time be specifically requested by operators, including any
information needed to assist Operators in completing their tax returns and in
complying with any reporting obligations imposed by any regulatory agencies or
mortgages or lessors of the Facilities. In addition: (1) within thirty (30) days
after the end of each calendar month, Manager shall provide Operators and the
applicable owner with an unaudited balance sheet of the Facilities, dated the
last day of such month, and an unaudited statement of income and expenses for
such month relating to the operation of each Facility and (2) within ninety (90)
days after the end of the fiscal year of each Facility, Manager shall provide
Operators and the applicable Owner with unaudited financial statements including
a balance sheet of such Facility dated the last day of said fiscal year and a
statement of income and expense for the year ended relating to the operation of
such Facility. In addition, Manager shall prepare and send to Operators and the
applicable owner monthly occupancy reports and related information with respect
to each Facility. All books, records, forms and reports of the Facilities in
connection with operation of the Facilities shall be Operators' property,
provided, however that Manager may retain copies of all books, forms and records
(of the Facilities and not the residents) operators maintain for the files of
Manager.
j. BANK ACCOUNTS. Manager shall establish and maintain
necessary bank accounts and shall deposit therein all money received during the
term of this Agreement in the course of the operation of each Facility, and
shall make such withdrawals and payments from such accounts as are necessary and
appropriate to fulfill the responsibilities described in this Agreement.
Operator shall be given notice as to the identity of authorized signatories. All
expenses incurred in the operation of the Facilities shall be paid in accordance
with the Operating Agreements.
k. PERSONNEL. Manager shall recruit, hire, train, promote,
direct, discipline and fire, if necessary, all Facility personnel, including the
Administrator and Program Coordinator, if any, of the Facilities, establish
salary levels, personnel
policies and employee benefits; and establish employee performance standards,
all as Manager determines to be necessary or desirable during the term of this
Agreement to ensure the efficient operation of all departments within, and all
services offered by the Facilities. All of the foregoing obligations shall be
undertaken in accordance with the Annual Budget, Operators' authority and
control, and applicable law and regulations. All of the personnel of each
Facility shall be the employees of the owner of such Facility, unless otherwise
agreed by the applicable Owner and Operators (and Manager if such personnel
shall be employees of Manager), and all salary, bonuses, fringe benefits,
payroll taxes and related expenses payable to or in respect of the Facility's
personnel shall be expenses of the respective Facilities. Notwithstanding the
above, the Operators shall retain the authority to discharge any person working
in a Facility.
1. SUPPLIES AND EQUIPMENT. Manager shall purchase supplies and
non-capital equipment needed to operate the Facilities within the budgetary
limits set forth in the Annual Budget. In purchasing said supplies and
equipment, if possible, Manager shall take advantage of any national or group
purchasing agreements to which Manager or Operators or any of their affiliates
may be a party.
M. LEGAL PROCEEDINGS. Manager shall monitor and, pursuant to
owner's direction, act with respect to, all legal matters and proceedings that
are within the scope of Manager's authority pursuant to this Agreement,
including without limitation, any necessary legal actions or proceedings to
collect obligations owing to the Facilities, the cancellation or termination of
any contract or agreement for breach thereof or default thereunder, and other
actions necessary to enforce the rights and obligations of the residents,
sponsors, licensees, customers and other users for the Facilities. Manager shall
give notice promptly to Owner and Operators of all demands, claims and all legal
actions.
n. ANNUAL BUDGETS. PREPARATION. Manager shall timely prepare
and deliver to Operators for their review and submission to the applicable Owner
proposed annual budgets ("Annual Budget(s)") for each Facility. Such proposed
Annual Budgets shall be prepared in accordance with the Operating Agreements.
Manager and Operators acknowledge that (x) projected revenue may not be actually
received and (y) projected costs may be exceeded by actual expenses and capital
expenditures incurred in connection with the operation and maintenance of the
Facilities. By submitting such a projected Annual Budget, Manager will not be
deemed to be providing a guarantee or warranty as to the projected revenue,
expenses or capital expenditures of the Facilities.
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o. COLLECTION OF ACCOUNTS. Manager shall issue bills and
collect accounts and monies for goods and services furnished by each Facility,
including, but not limited to, enforcing the rights of Operators, any owner and
the Facilities as creditor under any contract or in connection with the
rendering of any services. Any actions taken by Manager to collect said accounts
receivable shall be in accordance with the applicable laws, rules and
regulations governing the collection of accounts receivable.
p. CONTRACTS. Manager shall negotiate, prepare for execution,
cancel or terminate agreements and contracts as Operators deems necessary or
advisable for the operation of each Facility, including, without limitation, the
furnishing of concessions, supplies, utilities, extermination, refuse removal
and other services. Manager shall be entitled to utilize any entities affiliated
with Manager to provide these services, provided that the rates and prices
therefor, are competitive.
B. EXCLUSIVE REPRESENTATIVE. Operators are the exclusive
representative of each Owner pursuant to the Operating Agreements for purposes
of communicating and dealing directly with the regulatory authorities,
governmental agencies, employees, independent contractors, suppliers, residents,
sponsors, licensees, customers and guests of each Facility. Operators however
acknowledge that Manager typically acts as exclusive representative of each
owner for such purposes; consequently, Operators shall use reasonable best
efforts to work with Owners to enable Manager to serve such role in the future,
including by enacting appropriate amendments to the Operating Agreements, in all
instances except where Operators are required by law to serve such function. In
addition, each Owner may maintain contact and working relationships with the
abovementioned persons and entities.
II. INSURANCE. Manager shall arrange for and maintain all necessary and
proper hazard insurance covering each Facility, including the furniture,
fixtures and equipment situated thereon, all necessary and proper malpractice
and public liability insurance for Manager's, Operators' and Owners' protection
and for the protection of Manager's, Operators' and Owners, officers, partners,
agents and the personnel of the Facilities. Subject to the prior written
approval of Operators, Manager shall also arrange for and maintain all employee
health and worker's compensation insurance for the personnel of the Facilities.
Any insurance provided pursuant to this paragraph shall comply with the
requirements of any applicable Facility mortgage or lease and, with the
exception of the insurance maintained by Manager for its own protection, shall
be an expense of the Facilities.
III. CONFIDENTIAL MATERIALS. Operators hereby provide an exclusive,
irrevocable license to Manager to use the systems, methods, procedures and
controls employed by Operators on behalf
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of each Owner and any written materials or brochures developed to document the
same. Notwithstanding the foregoing, Manager shall use reasonable best efforts
to keep such systems, methods, procedures and controls confidential and to
prevent them from being utilized, distributed, copied or otherwise employed or
acquired, except on behalf of an Owner or its affiliates.
IV. TERM OF AGREEMENT; EFFECT OF TERMINATION. The term of this
Agreement shall commence on the Effective Date and shall terminate on the fifth
(5th) anniversary of the Effective Date, unless sooner terminated as hereinafter
provided. This Agreement may be terminated: (i) in accordance with Section V,
(ii) by Manager upon the death or continuing disability of all of the Operators,
or (iii) by the Manager by giving at least thirty (30) days, prior written
notice to Operators at any time after the occurrence of a Change in Control of
an Owner. Upon any termination of this Agreement other than pursuant to Section
V, the parties hereto shall have no further obligations or liabilities hereunder
except for the respective right of Manager or its representatives, estates,
successors or assigns to receive fees through the date of termination, and
except that upon the expiration or earlier termination of this Agreement for any
reason, the parties shall cooperate (at the applicable Owner's expense) to
minimize the impact of the change on the residents. To the extent that Manager
provides management services to operators hereunder in connection therewith,
Manager shall be entitled to receive fees in accordance with Section VII hereof.
For purposes of this Agreement, "disability" shall mean the inability to provide
services hereunder due to illness, injury or other medical reasons for a period
of more than one hundred eighty (180) consecutive days, and a "Change in
Control" of an Owner shall be deemed to have occurred if any person or group
(within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934
(the "Exchange Act") or any successor provision) shall acquire beneficial
ownership (determined in accordance with Rule 13d-3 promulgated under the
Exchange Act or any successor provision) of securities of such Owner
representing both: (i) at least 30% of the total outstanding voting power of
securities of an Owner entitled to vote for the election of directors of such
Owner and (ii) a greater percentage of such voting power than is owned at such
time in the aggregate by Manager and its affiliates.
V. EVENTS OF DEFAULT AND REMEDIES.
A. DEFAULT. Each of the following shall constitute an Event of
Default hereunder:
1. If any Operating Agreement is terminated by Operators as a result
of an Event of Default (as defined therein) committed by an owner.
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2. If either Manager, on the one hand, or the Operators,
collectively, on the other, fail to perform in any material respect any term,
provision, or covenant of this Agreement and such failure (i) continues after
written notice from the other party or parties specifying such failure to
perform for a period of thirty (30) days unless such failure cannot reasonably
be cured within such 30-day period, (ii) the defaulting party fails to endeavor
vigorously and continuously to cure such default as promptly as is practicable;
it being understood and agreed that Operators' obligations under this Agreement
may be performed by one or more of ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇,
and that performance of such obligations by one or more of such individuals
shall constitute performance by the Operators.
3. If an Event of Default shall be committed or suffered by Manager
under any other agreement (as defined therein) pursuant to which Manager
provides management services for any adult-care facility (whether or not owned
by an Owner) for which operators act as the licensed operators.
4. If Manager is dissolved or liquidated, applies for or consents to
the appointment of a receiver, trustee or liquidator of all or a substantial
part of its assets, files a voluntary petition in bankruptcy or is the subject
of an involuntary bankruptcy filing, makes a general assignment for the benefit
of creditors, or files a petition or an answer seeking reorganization or
arrangement with creditors or to take advantage of any insolvency law, or if an
order, judgment or decree shall be entered by any court of competent
jurisdiction, on the application of a creditor, adjudicating Manager bankrupt or
insolvent or approving a petition seeking reorganization of Manager or
appointing a receiver, trustee or liquidator for such party of all or a
substantial part of its assets, and such order, judgment or decree shall
continue unstayed and in effect for any period of sixty (60) consecutive days.
5. If Operators transfer or terminate the operating certificate or
other material licenses or permits of the Facility other than pursuant to
Section I(A) of this Agreement, or as required by the Owner or by law.
B. REMEDIES. At any time after the occurrence and during the
continuance of an Event of Default, the party who has not committed or suffered
the Event of Default (with any Event of Default of an Owner being deemed to be
an Event of Default by Operators for this purpose) may, at its option, terminate
this Agreement by giving written notice to the other party and shall be entitled
to exercise all rights and remedies available under applicable law.
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C. LIQUIDATED DAMAGES UNDER OPERATING AGREEMENT. Operators and Manager
shall use reasonable best efforts not to cause an Event of Default under the
terms of the operating Agreements. If an Operating Agreement terminates by
action or default on the part of the Owner, Operators shall pay to Manager an
amount equal to the liquidated damages Operators may receive, if any, pursuant
to the applicable Operating Agreement, within thirty (30) days following the
receipt of such payment.
VI. FACILITY OPERATIONS.
A. STANDARD OF PERFORMANCE; ACTING WITHIN BUDGET. In performing
its obligations under this Agreement, Manager shall use its reasonable best
efforts and act in good faith and with professionalism in accordance with the
Annual Budgets and the prevailing standards of the adult-care facilities
industry in each area in which a Facility is located and in accordance with
applicable law.
B. FORCE MAJEURE. The parties will not be deemed to be in
violation of this Agreement if they are prevented from performing any of their
respective obligations hereunder for any reason beyond their control, including,
without limitation, strikes, shortages, war, acts of God, or any statute,
regulation or rule or action of a federal, state or local government or an
agency thereof.
VII. FEES.
A. Commencing at the Effective Time, if any Facility has not
yet begun admitting residents for occupancy, Operators shall pay Manager a
start-up fee equal to forty thousand ($40,000) dollars payable in equal monthly
installments for such Facility.
B. Commencing on the day a Facility begins admitting residents
for occupancy and until an Operating Agreement is amended or superseded pursuant
to Section I(A) of this Agreement, Manager shall be entitled to receive fees
from Operators equal to: the greater of (1) the sum of five (5*1) percent of
total gross revenues less $1,000 or (2) $11,500, payable to Manager monthly on
the fifteenth (15th) day of each month.
Such fees shall be paid to Manager contemporaneously with the
payment of the fees paid to Operators. Operators shall have no liability to
Manager hereunder to the extent fees are not paid by owner to Operators, but in
such event at the election of Manager, (a) Operators shall assign to Manager its
rights to seek redress against owner for nonpayment of its fees to the extent
that such rights are assignable or (b) Operators shall continue to pursue fees
from owner at the expense of Manager.
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VIII. ASSIGNMENT; DELEGATION.
A. MANAGEMENT SERVICES AGREEMENT. This Agreement shall not be
assigned (including by operation of law, whether by merger or consolidation
(excluding a merger effected solely for the purpose of changing Manager's
jurisdiction of incorporation that does not affect the stock ownership of
Manager in any material respect) or otherwise) by Manager, on the one hand, or
by any of the Operators, on the other, without the prior written consent of the
other party or parties.
B. DELEGATION. Notwithstanding any other provision of this
Agreement to the contrary, Operators hereby delegate to Manager only those
powers, duties or responsibilities set forth herein. All other powers and duties
remain with the Operators. The Manager shall not exercise any powers, duties or
responsibilities that it is prohibited by applicable law or regulations from
exercising.
IX. NOTICES. All notices required or permitted hereunder shall 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). Notices given by Operators may be signed by any of the Operators.
Notices shall be delivered or mailed to the parties at the addresses specified
below or at such other places as either party shall designate in writing:
To Operators: ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇
▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
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To Manager: Senior Quarters Management Corp.
c/o Lazard Freres Real Estate
Investors L.L.C.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇▇▇ ▇. Mechanic, Esq.
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:(▇▇▇) ▇▇▇-▇▇▇▇
X. RELATIONSHIP OF THE PARTIES. The relationship of Manager to
Operators in connection with this Agreement shall be that of an independent
contractor and all acts performed by Manager during the term hereof shall be
deemed to be performed in its capacity as an independent contractor. To the
fullest extent permitted under applicable law, the Operators shall not be deemed
to have any fiduciary duties to Manager or its stockholders in connection with
Managers' provision of services hereunder or any matters arising out of or
related thereto. Nothing contained in this Agreement is intended to or shall be
construed to give rise or create a partnership or joint venture or lease between
Manager, its successors and assigns on the one hand, and Operators and their
assigns on the other hand.
XI. ENTIRE AGREEMENT. As of the Effective Time, this Agreement and any
documents executed in connection herewith shall supersede all previous
management services agreements between the parties and relating to the
Facilities, contain the entire agreement among the parties and be binding upon
the respective successors and assigns of the parties, provided however that any
successor or successors of the Operators shall be approved in advance by an
Owner under the terms of the Operating Agreement applicable to such Owner. This
Agreement shall be construed in accordance with the laws of the State of New
York (without regard to the State of New York choice of law provisions). This
Agreement may not be modified or amended except by written instrument signed by
the parties hereto.
XII. 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.
XIII. SEVERABILITY. In the event one or more of the provisions contained
in this Agreement is deemed to be invalid,
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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.
XIV. CUMULATIVE. NO WAIVER. No right or remedy herein conferred upon or
reserved to any 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 any 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
respective parties hereto may be exercised from time to time and as often as may
be deemed expedient by such parties.
XV. PROSPECTIVE LEGAL EVENTS. CONTRACT MODIFICATIONS FOR PROSPECTIVE
LEGAL EVENTS.
A. The parties hereto agree that in the event that applicable
regulatory agencies request modifications to the text hereof prior to the
Effective Time, the parties shall work in good faith to make modifications to
this Agreement or to cooperate in restructuring their relationship as
appropriate, provided that any such restructuring shall, to the maximum extent
possible, preserve the underlying economic, financial and general business
arrangements between Owner and Operators. The parties acknowledge that such
agencies may require either or both parties to obtain appropriate regulatory
licenses and approvals.
B. In the event any state or federal laws or regulations, now existing
or enacted or promulgated after the Effective Date, are interpreted by judicial
decision, a regulatory agency or legal counsel of either party in such a manner
as to indicate that the structure of this Agreement may be in violation of such
laws or regulations, Manager and Operators shall use reasonable best efforts to
amend this Agreement, to the maximum extent possible, to preserve the underlying
economic and financial arrangements between Manager and Operators. The parties
acknowledge that such amendment may require reorganization of Manager or
Operators, or both, and may require either or both parties to obtain appropriate
regulatory licenses and approvals.
XVI. RIGHT OF FIRST REFUSAL. Operators agrees that in the event that
Operators receive an opportunity to purchase a Facility pursuant to a Right of
First Refusal set forth in the Operating Agreements, Operators shall immediately
inform Manager; if Manager determines that Manager wishes to acquire such
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Facility itself or through a designee, Manager shall so inform Operators within
fifteen (15) business days and Operators shall negotiate in good faith as the
agent of Manager in obtaining the Facility on behalf of Manager.
XVII. 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. Operators shall retain
a copy of this Agreement on file, to be available for inspection by regulatory
authorities.
XVIII. COSTS AND EXPENSES OF FACTLITY: INDEMNITY. All fees, costs,
expenses and purchases arising out of, relating to, or incurred in the operation
of the Facility, shall be the sole responsibility of Owner. Operators, by reason
of the execution of this Agreement and the performance of their services to the
Facility, shall not be liable for or deemed to have assumed any liability for
such fees, costs, and expenses, or any other liability or debt of Owner
whatsoever, arising out of or relating to the Facility or incurred in its
operation. Operators agree to indemnify, defend, pay on behalf of, and hold
Owner, Manager and their officers, directors, agents and employees harmless from
and against all losses, claims, damages and other liabilities arising out of the
willful misconduct, misappropriation of funds or fraud of Operators. Manager
agrees to indemnify, defend, pay on behalf of, and hold Operators and their
officers, directors, agents and employees harmless from and against all losses,
claims, damages and other liabilities arising out of the operation of the
Facility (except those resulting from the willful misconduct, misappropriation
of funds, fraud or gross negligence of Operators), including, without
limitation, any liabilities asserted against Manager or any of its officers,
directors, agents and employees by reason of any action or inaction taken by any
of the foregoing while performing the duties of Manager hereunder. The terms of
this Section XVIII shall survive the expiration or earlier termination of this
Agreement.
XIX. FURTHER ASSURANCES. Notwithstanding any other provisions of this
Agreement, Operators shall not (A) take or permit any action or (B) refrain from
taking or permitting any action, if such act or refusal would cause Operators to
violate, either immediately or with the passage of time, any law, rule,
regulation, code of ethics or fiduciary obligation in their capacity as licensed
Operators. Any decision by Operators to override any action or recommendation of
Manager shall not be deemed a breach of this Agreement, and shall not be an
Event of Default, if such action or refusal is necessary for Operators to
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maintain compliance with any such law, rule, regulation, code of ethics or
fiduciary obligation.
IN WITNESS WHEREOF, the parties have hereto caused this Agreement to be
duly executed, as of the day and year first above written.
MANAGER:
SENIOR QUARTERS MANAGEMENT CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President/Secretary
OPERATORS:
G.W.E. PARTNERSHIP
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
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