TRIPLE NET MANAGEMENT AGREEMENT
THIS TRIPLE NET MANAGEMENT AGREEMENT (hereinafter "Agreement") is dated as
of October 19, 1998, among SunRise Healthcare Corporation, a New Mexico
corporation ("Owner") and Lexington Healthcare Group, Inc., a Delaware
corporation ("Manager").
RECITALS
A. Owner is the lessee and operator of the Facilities (as defined below)
pursuant to the Leases (as defined below).
B. Pursuant to an Agreement for Assignment and Assumption of Leases, dated
October 19, 1998, (the "Assignment Agreement"), Owner shall assign to Manager
all of owner's interests as lessee under Mediplex of Greater Hartford
(Bloomfield Manor), Litchfield Hills, and Xxxxx House. Pursuant to a purchase
agreement between Tor Associates, an Illinois limited partnership, and Manager,
(the "Purchase Agreement"), Manager shall purchase Heritage Heights Care Center.
C. Owner and Manager are desirous of permitting Manager to assume
operational responsibility for the Facilities pending the closing of the
assignments pursuant to the Assignment Agreement and pending the purchase of
Heritage Heights Care Center pursuant to the Purchase Agreement.
D. Owner and Manager are desirous of documenting the terms and conditions
under which Manager will assume operational responsibility for the Facilities.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, Owner and Manager hereby agree as follows:
AGREEMENT
A. FACILITY MANAGEMENT
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
"Xxxxx House" means the 90 bed nursing home facility located at 00 Xxxx
Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxx;
"Closing Date" shall mean the date both the transactions contemplated by
the Assignment Agreement and the transaction contemplated by the Purchase
Agreement have closed as, respectively, set forth therein;
"Commencement Date" means October 28, 1998;
"Facilities" means collectively Mediplex of Greater Hartford (Bloomfield
Manor), Litchfield
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Hills, Xxxxx House, and Heritage Heights Care Center;
"Heritage Heights Care Center" means the 150 bed long-term care facility
located at 00 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx;
"Leases" shall collectively mean the following leases:
Lease Agreement, dated October 1, 1997, between Xxxxx Connecticut
Associates Limited Partnership as "Lessor" and Owner as "Lessee" for
Xxxxx House;
Lease Agreement, dated March 1, 1996, between Tor Associates, an
Illinois limited partnership as "Lessor" and Owner as "Lessee" for
Heritage Heights Care Center;
Lease and Security Agreement, dated September 28, 1994 between
Nationwide Health Properties, Inc., a Maryland corporation
("Nationwide") as "Lessor" and Owner as "Lessee" for Mediplex of
Greater Hartford (Bloomfield Manor); and
Assignment and Assumption of Lease with Consent of Lessor, dated
November 1, 1990, between Nationwide as "Lessor" and Owner as
"Lessee" for Litchfield Hills;
"Litchfield Hills" means the 120 bed skilled nursing facility also known
as "Torrington Extend-A-Care" located at 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxx
"Management Fee" shall be as defined in Section A.4.
"Mediplex of Greater Hartford (Bloomfield Manor)" means the 113 bed
skilled care nursing facility, located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxx;
"Operating Account" shall be as defined in Section A.4.3;
"Owner's Expenses" shall be as defined in Section A.4.3;
"Reconciliation Statement" shall be as defined in Section A.4.1;
"Term" shall mean the term of this Agreement as defined in Section A.2.1.
"Termination Date" shall mean the last day of the Term;
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2. Term/Delegation of Duties.
2.1 The term of this Agreement ("Term") shall begin on the Commencement
Date and end on the earlier of (a) the Closing Date, (b) thirty (30) days
after the date on which either the Purchase Agreement or the Assignment
Agreement is terminated for any of the reasons provided for therein, or
(c) pursuant to Section E, below. Without limiting the foregoing, this
Agreement shall terminate, at Owner's election, as to all of the
Facilities or as to only the affected Facility (y) thirty (30) days after
the date on which either Manager or Owner is informed that the certificate
of need for any Facility has been revoked, rescinded or otherwise not in
effect or (z) upon damage or destruction to any Facility and Owner elects
pursuant to Section D.14, below, not to restore the same.
2.2 As of the Commencement Date and continuing until the last day of the
Term, Manager does hereby assume responsibility for the day to day
operations of the Facility on the terms and conditions set forth herein.
2.3 By entering into this Agreement, Owner does not delegate to Manager
any powers, duties or responsibilities which it is prohibited by law from
delegating. Owner also retains such other authority as shall not have been
expressly delegated to Manager pursuant to this Agreement.
2.4 In the event this Agreement is terminated pursuant to Section
A.2.1(b), A.2.1(c), A.2.1(y) or A.2.1(z): (i) Manager shall cooperate with
Owner in a smooth transition of operational responsibility for the
Facilities or the affected Facility, as the case may be, back to Owner or
its designee subject to Owner's obligation to reimburse Manager for any
prepaid expenses in accordance with the provisions of Section A.3.2.4
hereof and to account for any accounts receivable of Manager which relate
to the Term in accordance with the provisions of Section A.6.7 hereof;
(ii) all such accounts receivable shall be remitted and/or retained by
Owner until all amounts due from Manager to Owner are paid in full; and
(iii) Manager shall have the right to seek reimbursement for any
reasonable and necessary expenditure that would be considered a capital
expenditure under generally acceptable accounting principles (each, a
"Capital Cost") if Manager obtained the prior written consent of Owner for
each such Capital Cost prior to expenditure.
3. Covenants of Manager. In conjunction with the management of the Facility,
throughout the Term hereof Manager covenants and agrees as follows:
3.1 To pay any and all costs and monetary penalties imposed by any
authority having jurisdiction over the Facilities or over the continued
licensure of the Facilities in Owner's name, as a result of any
deficiencies during the Term in Manager's operation of the Facilities;
provided, however, that Manager acknowledges and agrees that it shall be
responsible for such costs and penalties even if the same are imposed
after the Term.
3.2 To operate the Facility in a manner that maintains in good standing
and full force its licenses and, if applicable, certification under the
Medicare and/or Medicaid programs and under applicable state law.
3.3 To pay and be responsible for any and all direct and indirect expenses
incurred on or
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after the Commencement Date in the operation of the Facilities which
relate to the period covered by the Term, including, without limitation,
payroll, insurance, utilities, equipment leases, taxes and maintenance.
Manager will reimburse Owner for all prepaid expenses paid by Owner prior
to the date of this Agreement which relate to the period covered by the
Term and, in the event of the termination of this Agreement in accordance
with Sections A.2.1(b), (c), (y) or (z), subject to prior approval of
Capital Costs as set forth above, Owner will reimburse Manager for all
prepaid expenses relating to the period after expiration of the Term.
Notwithstanding the foregoing, Owner and Manager further agree as follows:
(a) All expenses incurred for the period prior to the Commencement
Date shall be the responsibility of Owner.
(b) All vacation and sick pay earned or accrued prior to the
Commencement Date and payable after the Commencement Date shall be
the responsibility of Owner but shall be paid by Manager as and when
due from amount delivered by Owner to Manager on the Commencement
Date in accordance with the provisions of Section A.7 hereof. All
vacation and sick pay earned after the Commencement Date shall be
the responsibility of Manager and shall be paid from the revenues of
the Facility collected by Manager in accordance with the terms of
this Agreement or from any working capital provided by Manager in
order to meet the operating expenses of the Facility.
(c) The Owner's Expenses (as defined below) shall be paid by Owner.
3.4 To maintain complete and accurate records of all transactions relating
to the Facility, including patient trust accounts or resident security
deposits and other funds held by Manager for any patients or residents,
and make such records available for inspection by Owner or any of its
representatives at all reasonable times upon reasonable notice from Owner
to Manager.
3.5 To comply with all applicable federal, state and local government
laws, rules and regulations with respect to the operation and maintenance
of the Facilities and performance by Manager under this Agreement.
3.6 To keep the Facilities and personal property therein in good repair,
reasonable wear and tear excepted.
3.7 To maintain the supplies, inventory, food and perishables located at
the Facilities at the levels required to be maintained by Owner under the
terms of the Leases.
3.8 To advise Owner as to any and all significant issues related to the
Facility including, but not limited to, survey results, changes in the
administrator/executive director, union organizing activities, material
damage to any Facility and the commencement or threatened commencement of
any administrative action by any governmental authority.
3.9 To be fully responsible for taking any and all action which may be
necessary in the event of any action to revoke or rescind any Facility's
license or, if applicable, its Medicare or
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Medicaid provider agreements.
3.10 Not to take any action during the Term which would jeopardize any
Facility's license, or Medicare or Medicaid provider agreements.
3.11 To the extent that, after the Commencement Date, Owner receives any
premium adjustments which require the payment of an additional premium
with respect to its workers compensation coverage for the period prior to
the Commencement Date or covered by the Term, which adjustments Owner is
able to demonstrate are attributable to the loss experience of the
Facility during the Term, Manager shall, upon demand of Owner, promptly
remit an amount equal to said additional premium payments to Owner.
3.12 To negotiate employment contracts with all unions representing the
employees of the Facilities (with such negotiations and contracts to be
subject to the prior approval of Owner as to each Facility and with Owner
having the right but not the obligation to participate in all such
negotiations and discussions).
3.13 To provide Owner on a timely basis with all information necessary to
file cost reports, and to assist Owner in connection with and respond to
any audit or survey of any of the Facilities by any governmental or
quasi-governmental agency.
3.14 Except to the extent of any nondelegatable duties hereunder, to
perform all obligations on Owner's part to be performed under the Leases,
including, without limitation, compliance with all local, state and
federal, statutes, ordinances, and regulations, maintenance and repair of
the Facilities, and repair and replacement of personal property in the
normal course.
3.15 To the extent any repairs, alterations or replacements are to be made
to any Facility exceeding $2,500, in any one instance, Manager shall
obtain the prior written approval of Vice President of Owner.
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4. Management Fee/Occupancy Fee.
4.1 In consideration for the services provided under this Management
Agreement (the "Management Fee"), Manager shall (A) be entitled to retain
the excess of any revenues earned by Manager during the term hereof over
expenses incurred by Manager during the Term and (B) be responsible for
any excess of expenses incurred over revenues earned, in the operation of
the Facilities during the Term. For purposes hereof, the expenses for
which Manager shall be responsible shall include all direct and direct
expenses arising from or in connection with the operation, use, and
management of the Facilities; provided, however, such expenses shall not
include and only not include (i) any facility rent payments due under the
Leases or under any master lease or ground lease senior to any of the
Leases and (ii) the costs of any alterations, additions or improvements to
the extent made by Owner pursuant to Section D.13 (collectively, "Owner's
Expenses"). Except with respect to the Owner's Expenses, Owner shall have
no responsibility for any expenses related to the ownership or operation
of the Facilities during the Term, all of which shall be borne directly by
Manager. The Management Fee shall be paid in arrears on a monthly basis as
follows: Within the first twelve (12) business days of each month
following the Commencement Date Manager shall provider Owner with a
detailed reconciliation of income and expenses for each Facility, together
with supporting documentation, including invoices of expenditures (each, a
"Reconciliation Statement"). Within ten (10) business days following
receipt of the Reconciliation Statement, Owner shall review and either
approve or disapprove the Reconciliation Statement or portion thereof. To
the extent the Reconciliation Statement is disapproved, Manager shall
review and address Owner's objections, and resubmit the Reconciliation
Statement or portion thereof in accordance with this Section.
4.2 Owner shall have the right to audit all books and records maintained
by Manager for the Facilities during the Term and for a period of two (2)
years after the Termination Date. All audits shall be at Owner's cost,
shall be conducted during normal business hours and shall be conducted at
the Facility or, of such books and records are maintained by Manager at a
central business office, then at such office; provided, however, if a
material error is discovered, the cost of such audit shall be borne
exclusively by Manager, and Manager shall in such event promptly reimburse
Owner for such audit. A "material error" shall be an error in payment
exceeding two percent (2%) of the correct payment due.
4.3 In connection with its activities hereunder, Manager shall collect all
operating revenues for each Facility and shall deposit the same in a
separate bank account for each Facility (the "Operating Account"). Manager
shall not commingle any other funds with those maintained in other
operating accounts and shall not withdraw any amounts therefrom except as
provided herein. Additionally, Manager agrees to maintain an appropriate
amount of working capital for each Facility, which amount shall be
designated by Owner and subject to the approval of Manager, which approval
shall not be unreasonably withheld, conditioned or delayed. Manager shall
pay out of the Operating Account first all operating expenses, and,
second, its Management Fee pursuant to Section 4.1, above, to the extent
revenue exceeds operating income.
4.4 Manager shall keep complete books of accounts, ledgers, files, and
other records (including for state and federal reimbursement) as Owner
shall reasonably deem necessary
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for the management of each Facility as a skilled nursing or long term care
facility in accordance with industry standards and generally accepted
accounting principles consistently applied.
5. Covenants of Owner. Owner covenants and agrees as follows:
5.1 Not to take any action during the Term which would jeopardize any
Facility's license under which Manager is operating the Facility or
interfere with Manager's operations thereat or be inconsistent with
Owner's obligations under the Leases.
5.2 Effective as of the Commencement Date, to take such commercially
reasonable action as may be necessary to add a waiver of subrogation
provision in favor of Manager to its property insurance policies and, upon
request, to provide Manager with evidence thereof.
5.3 Effective as of the Commencement Date to take such commercially
reasonable action as may be necessary to add Manager as an additional
insured on its general/professional liability and property insurance
policies and to provide Manager with evidence thereof.
5.4 Not to take any action which would cause the cancellation or
termination of the general/professional liability insurance in effect with
respect to any of the Facilities or a reduction in the amount of coverage
afforded thereunder as of the Commencement Date, it being understood and
agreed that Owner shall have no liability hereunder in the event said
coverage is adversely affected as a result of the failure by Manager to
pay the premiums due with respect thereto during the Term in accordance
with the provisions of Section A.3.4.
5.5 Effective as of the Commencement Date, to use its commercially
reasonable efforts to secure endorsements to the policies of
general/professional liability and property insurance which reflect that
they are primary insurance coverage and to provide Manager with evidence
thereof.
5.6 To pay and be responsible for any and all expenses incurred in
connection with the operation of the Facility, whether due before or after
the Commencement Date, which relate only to the period prior to the
Commencement Date, including, without limitation, payroll, insurance,
utilities, principal and interest payments due under any mortgage debt
secured by the Facilities as of the Commencement Date, equipment leases,
taxes and maintenance.
5.7 To pay as and when due all of the Owner's Expenses (as defined above).
6. Accounts Receivable/Cost Reports.
6.1 Manager shall purchase the "Accounts Receivable" from Owner as of the
"Calculation Date" (as those terms are defined in Paragraph 6 of the
Assignment Agreement) and which purchase shall be pursuant to Paragraph 6
of the Assignment Agreement. In the event the "Assignment Date" occurs
under the Assignment Agreement, the Accounts Receivable for the Facilities
shall be allocated, if at all, pursuant to the Assignment Agreement and
the "Operations Transfer Agreement" attached as Exhibit D thereto.
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6.2 If overpayments or under payments are assessed or paid for the entire
calendar year 1998, then the amount due or owing shall be allocated
between Owner and Manager to reflect the number of days in 1998 during
which the affected Facility was operated by Owner and the number of days
in 1998 during which the affected Facility was operated by Manager. In the
event the federal or state agencies making payments to Owner for services
performed prior to Commencement Date make any claim for reimbursement of
overpayments occurring for any such period, then Owner agrees to save,
indemnify and hold Manager harmless from and against any and all loss,
damage, injury or expense incurred by Manager because of any such claim.
No delay by Manager in tendering such claims to Owner shall affect Owner's
obligations hereunder unless Owner is actually harmed as a result of said
delay. The provisions of this Section 6.2 shall survive termination of
this Agreement.
6.3 If, following the Commencement Date, Manager receives payment from any
federal or state agency or other third party payor which payment
represents reimbursement with respect to payment for services rendered by
Owner prior to the Commencement Date and which services are not included
as part of the Accounts Receivable, or, if this Agreement is terminated
pursuant to Sections A.2.1(a), A.2.1(c), A.2.1(y) or A.2.1(z), after the
Termination Date, then Manager shall promptly forward such payments to
Owner in accordance with the following provisions:
6.3.1 If such payments either specifically indicate on the
accompanying remittance advice, or if the parties agree, that they
relate to the period prior to the Commencement Date, a copy of the
applicable remittance advice shall be forwarded to Owner by Manager
and the payment received by Manager shall be deposited directly in
Owner's operating account at the nearest branch of Owner's
designated bank, it being understood and agreed that Owner shall
provide Manager with such authority as may be needed to effect such
deposits and in the absence of such authority that Manager shall be
deemed to have fulfilled its obligations hereunder by remitting the
payment to Owner along with the remittance advice; and
6.3.2 If such payments indicate on the accompanying remittance
advice, or if the parties agree, that they relate to the period on
or after the Commencement Date, they shall be accounted in the next
Reconciliation Statement.
6.3.3 If such payments indicated on the accompanying remittance
advice, or if the parties agree, that they relate to periods both
prior to and after the Commencement Date, the portion thereof which
relates to the period on and after the Commencement Date shall be
accounted in the next Reconciliation Statement, and the balance
shall be deposited by Manager or remitted to Owner in accordance
with the provisions of Section A.4.1.
6.3.4 Any payments received by Manager after the Commencement Date
from private pay patients which indicate the service period to which
they relate shall be applied in accordance with the direction of the
patient. Any payments received by Manager during the first forty
five (45) days after the Commencement Date from or on behalf of
private pay patients with outstanding balances as of the
Commencement Date which fail to designate the period to which they
relate, will first be applied by Manager to reduce the patient's
pre-Commencement Date balances, with any excess
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applied to balances due for services rendered by Manager after the
Commencement Date. Thereafter all non-designated payments will first
be applied to any post-Commencement Date balances, with the excess,
if any, remitted to Owner.
6.4 In the event after the Commencement Date, Owner receives any payments
from any federal or state agency which represents reimbursement for
services rendered by Manager after the Commencement Date but before the
Termination Date, Owner shall credit such payments to Manager as part of
the calculation of the Management Fee pursuant to Section A.4.1, above.
6.5 Nothing herein shall be deemed to limit in any way Owner's rights and
remedies to recover accounts receivable due and owing Owner under the
terms of this Agreement or any other agreement with patients, patients'
representatives and third party payors.
6.6 In the event the parties mutually determine that any payment hereunder
was misapplied by the parties, the party which erroneously received said
payment shall remit the same to the other within ten (10) days after said
determination is made.
6.7 Owner shall have the right to inspect all receipts of Manager in order
to confirm Manager's compliance with the obligations imposed on it under
this Section and in order to confirm the accuracy of any Reconciliation
Statement.
6.8 If any third party payor conducts an audit relating to any period
prior to the Termination Date, Owner shall have the exclusive option of
contesting, at Owner's expense, the results of such audit in whatever
manner may be provided by state or federal law, but Owner shall not have
the right to settle such audit on terms which would require a payment by
Manager for any period covered by the Term without the prior written
consent of Manager, which consent shall not be unreasonably withheld,
conditioned, or delayed.
6.9 If this Agreement is terminated by reason of Sections A.2.1(b),
A.2.1(c), A.2.1(y) or A.2.1(z), then Manager shall not be excused from the
purchase of the Accounts Receivable pursuant to the Assignment Agreement;
however, the following provisions shall apply:
6.9.1 If and to the extent any Facility participates in Medicare or
Medicaid, Owner shall prepare and file with the appropriate Medicare
and Medicaid agencies its final cost reports in respect to its
operation of such Facility or Facilities as soon as practicable
after the Termination Date. Owner shall, upon request by Manager,
promptly provide Manager with copies of such reports. Manager shall
provide Owner with such information for the period from the
Commencement Date to the Termination Date as Owner may need to
complete such final cost reports.
6.9.2 With respect to the accounts receivable of Manager which
relate to the services rendered by Manager during the Term such
amounts shall be credited pursuant to Section 4, above.
7. Employees/Employee Benefits. From and after the Commencement Date through the
Termination Date, the employees of the Facilities shall become the employees of
Manager and shall be entitled to all benefits afforded by Manager its employees,
which benefits shall be paid by
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Manager subject to Owner's obligation on the Commencement Date to provide
Manager with a schedule of all earned and accrued vacation and sick pay as of
the Calculation Date and to credit the amounts owed by Manager under this
Agreement, under the Assignment Agreement, and under the Operations Transfer
Agreement (attached as Exhibit D to the Assignment Agreement) in the amount
shown on such schedule. Manager shall pay such vacation and sick pay as and when
used by the employees of the Facilities. On the Termination Date all of the then
employees of the Facility shall remain employees of Manager effective as of the
Termination Date; provided, however, that in the event the Termination Date
occurs as a result of the termination of this Agreement in accordance with the
provisions of Section A.2.1(b), A.2.1(c), A.2.1(y), or A.2.1(z), then the
employees shall become the employees of Owner, and Owner shall be required to
hire all of such employees effective as of the Termination Date, and Manager
shall have no further obligations with respect to such employees, other than
those obligations that arose before the Termination Date (including, without
limitation, vacation and sick pay). Notwithstanding the foregoing, consistent
with the provisions of Section A.3.4 hereof, payroll shall be prorated as of
12.01 AM. on the Commencement Date and shall be prorated again, if applicable,
as of 12.01 AM on the Termination Date in the event this Agreement is terminated
pursuant to Section A.2.1(b), A.2.1(c), A.2.1(y), or A.2.1(z).
8. Default. Either party may terminate this Agreement in the event of a default
("Event of Default") by the other party.
8.1 With respect to Manager, it shall be an "Event of Default"
hereunder:
8.1.1 If Manager shall fail to keep, observe or perform any material
agreement, term or provision of this Agreement and such default
shall continue for a period of ten (10) days (or such longer cure
period as may be agreed upon by Owner and Manager in light of the
nature of the default) after notice thereof shall have been given to
Manager by Owner, which notice shall specify the event or events
constituting the default.
8.1.2 If Manager shall be dissolved or shall apply for or consent to
the appointment of a receiver, trustee or liquidator of Manager of
all or a substantial part of its assets, file a voluntary petition
in bankruptcy, or admit in writing its inability to pay its debts as
they become due, make a general assignment for the benefit of
creditors, file a petition or an answer seeking reorganization or
arrangement with creditors or taking advantage of any insolvency
law, or if an order judgment or decree shall be entered by a court
of competent jurisdiction, on the application of a creditor,
adjudicating Manager, a bankrupt or insolvent or approving a
petition seeking reorganization of Manager, or appointing a
receiver, trustee or liquidator of Manager, of all or a substantial
part of its assets.
8.2 With respect to Owner, it shall be an Event of Default hereunder:
8.2.1 If Owner shall fail to keep, observe or perform any material
agreement, term or provision of this Agreement and such default
shall continue for a period of ten (10) days (or such longer period
as may be agreed upon by Owner and Manager in light of the nature of
the default) after notice, which notice shall specify an event or
events constituting the default thereof by Manager to Owner.
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8.2.2 If Owner shall fail to make payments, or fail to keep any
covenants, owing to any third party which are beyond the control of
Manager to make or keep, and which would cause Owner to lose
possession of any Facility.
8.2.3 If Owner shall be dissolved or shall apply for or consent to
the appointment of a receiver, trustee or liquidator of Owner or of
all or a substantial part of its assets, file a voluntary petition
in bankruptcy, or admit in writing its inability to pay its debts as
they become due, make a general assignment for the benefit or
creditors, file a petition or an answer seeking reorganization or
arrangement with creditors or taking advantage of any insolvency
law, or if an order, judgment or decree shall be entered by a court
of competent jurisdiction, on the application of a creditor,
adjudicating Owner a bankrupt or insolvent or approving a petition
seeking reorganization of Owner or appointing a receiver, trustee or
liquidator of Owner of all or a substantial part of its assets.
9. Remedies Upon Default:
9.1 If any Event of Default by Manager shall occur, Owner may terminate
this Agreement and xxx Manager to recover any damages which Owner may
incur as a result of (i) physical damage to any Facility caused by Manager
which is not covered by insurance or (ii) the loss by any Facility of its
licensure or, if applicable, Medicare or Medicaid certification as of the
date of said termination. The termination of this Management Agreement
pursuant to this Section 9.1 shall have no affect on the rights and
obligations of Manager under the Assignment Agreement; provided, however,
Owner may, in its sole and absolute discretion, elect to terminate the
Assignment Agreement as to all or any of the Facilities as a result of
such Event of Default.
9.2 If any Event of Default by Owner shall occur, Manager may either xxx
to specifically enforce Owner's obligations which are the subject of such
breach or terminate this Agreement and xxx for damages suffered as a
result of such breach.
B. INDEMNIFICATION
1. By Manager. Manager hereby agrees to indemnify, defend and hold harmless,
Owner, its employees and agents, from all claims, demands, liabilities, suits,
costs and expenses (including reasonable attorneys' fees) arising out of a
breach by Manager of its obligations hereunder, including, without limitation,
any claims, demands, liabilities, suits, costs and/or expenses incurred by Owner
based in whole or in part on any claims by any of the lessors under the Leases.
2. By Owner. Owner agrees to indemnify and hold harmless Manager, its employees
and agents, from all claims, demands, liabilities, suits, costs and expenses
(including reasonable attorneys' fees) arising out of a breach by Owner of its
obligations hereunder.
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C. REPRESENTATIONS AND WARRANTIES
1. By Manager. Manager hereby represents and warrants that it has or as of the
Commencement Date will have all necessary power and authority to operate the
Facilities and to carry on its business as it is now being conducted. Manager
has all necessary power and authority to enter into this Agreement and to
execute all documents and instruments referred to herein or contemplated hereby
and all necessary action has been taken to authorize the individual executing
this Agreement to do so. This Agreement has been duly and validly executed and
delivered by Manager and is enforceable against Manager in accordance with its
terms, except as such enforceability may be limited to applicable creditors'
rights laws or principles of equity.
2. By Owner. Owner hereby represents and warrants that it has all necessary
power and authority to enter into this Agreement and to execute all documents
and instruments referred to herein or contemplated hereby and all necessary
action has been taken to authorize the individual executing this Agreement to do
so. This Agreement has been duly and validly executed and delivered by Owner and
is enforceable against Owner in accordance with its terms, except as such
enforceability may be limited to applicable creditors' rights laws or principles
of equity.
D. GENERAL PROVISIONS
1. Further Assurances. Each of the parties hereto agrees to execute and deliver
any and all further agreements, documents or instruments necessary to effectuate
this Agreement and the transactions referred to herein or contemplated hereby or
reasonably requested by the other party to perfect or evidence their rights
hereunder.
2. Notices. All notices to be given by either party to this Agreement to the
other party hereto shall be in writing, and shall be sent by hand delivery,
certified mail, facsimile transmission or overnight delivery to the parties at
the addresses set forth below and shall be deemed delivered upon actual receipt
or refusal of receipt thereof:
If to Owner: Lexington Healthcare Group, Inc.
0000 Xxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xx. Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
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with copy to: Xxxxx Xxxxxxx, Esq.
Rogin, Nassau, Xxxxxx, Lassman & Xxxxxx
Xxxx Xxxxx X
Xxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Manager: 000 Xxx Xxxxxx, XX
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx XxXxxxxx, Vice-President
Telephone: (000) 000-0000
Fax: (000) 000-0000
with copy to: Pillsbury Madison & Sutro LLP
000 Xxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
3. Payment of Expenses. Each party hereto shall bear its own legal, accounting
and other expenses incurred in connection with the preparation and negotiation
of this Agreement and the consummation of the transaction contemplated hereby,
whether or not the transaction is consummated.
4. Entire Agreement; Amendment; Waiver. This Agreement, together with the other
agreements referred to herein, constitutes the entire understanding between the
parties with respect to the subject matter hereof, superseding all negotiations,
prior discussions and preliminary agreements. This Agreement may not be modified
or amended except in writing signed by the parties hereto. No waiver of any
term, provision or condition of this Agreement in any one or more instances,
shall be deemed to be or be construed as a further or continuing waiver of any
such term, provision or condition of this Agreement. No failure to act shall be
construed as a waiver of any term, provision, condition or rights granted
hereunder.
5. Assignment. Neither this Agreement nor the rights, duties or obligations
arising hereunder shall be assignable or delegable by either party hereto.
6. Joint Venture; Third Party Beneficiaries. Nothing contained herein shall be
construed as forming a joint venture or partnership between the parties hereto
with respect to the subject matter hereof. The parties hereto do not intend that
any third party shall have any rights under this Agreement.
7. Captions. The section headings contained herein are for convenience only and
shall not be considered or referred to in resolving questions of interpretation.
8. Counterparts. This Agreement may be executed in one or more counterparts and
all such counterparts taken together shall constitute a single original
Agreement.
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9. Governing Law. This Agreement shall be governed in accordance with the laws
of the State of Connecticut.
10. Severability. In the event one or more of the provisions contained in this
Agreement is deemed to be invalid, illegal or unenforceable in any respect under
applicable law, the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be impaired thereby.
11. Attorneys Fees. In the event of litigation or other proceedings involving
the parties to this Agreement to enforce or interpret any provision hereof, to
enforce any remedy available upon default under this Agreement or seeking a
declaration of the rights of either party under this Agreement, the prevailing
party shall be entitled to recover from the other such reasonable attorneys fees
and costs as may be actually incurred, including its costs and fees on appeal.
12. Confidentiality. In the event the transaction contemplated by this Agreement
fails to occur for any reason, Owner and Manager agree to keep confidential any
proprietary information disclosed to it by the other party during the course of
this transaction.
13. Alterations, Additions or Improvements. During the Term, Manager shall not
make or suffer to be made any alterations, additions or improvements to any of
the Facilities without first obtaining the written consent of the Owner, which
consent may be withheld in Owner's sole and absolute discretion. The cost of any
such capital alteration, addition or improvement to the extent approved by Owner
prior to expenditure and not an item of maintenance or repair (which cost shall
be borne by Manager) shall be at the sole cost and expense of Owner. Any work
undertaken by Manager with the consent of Owner shall be undertaken in
compliance with all laws, ordinances, rules and regulations of the appropriate
jurisdiction or any other authorized public authority. Further, all such work
shall be undertaken in strict accordance with the terms and conditions of the
Lease of the affected Facility. Manager further agrees to hold harmless Owner
from any liability, damage, loss or expense arising out of such alterations,
additions or improvements. Any such alteration, addition or improvement which is
affixed to the Facility shall, unless otherwise agreed by Owner and Manager at
the time such alteration, addition or improvement is approved by Owner, be and
remain the property of Owner in the event this Agreement is terminated pursuant
to Sections A.2.1(b) or A.2.1(y) or, as to Heritage Heights Care Center only,
shall be conveyed by Owner to Manager in the event this Agreement is terminated
pursuant to Section A.2.1(a), it being understood and agreed that in the event
the lessor of any Facility conditioned its approval of such alteration, addition
or improvement on the removal thereof at the end of the term of the applicable
Lease, then Manager shall be required to remove the same at its sole cost and
expense on such expiration date.
14. Risk of Loss and Insurance.
14.1 Owner shall maintain during the Term such property insurance with
respect to the Facilities as it deems to be necessary and appropriate to
comply with the terms of the Leases. Manager agrees that the cost of such
insurance shall be treated in the Reconciliation Statements as an expense
for which Manager is responsible under the terms of this Agreement for
purposes of calculating the Management Fee.
14.2 Manager, at its sole cost and expense, shall maintain during the Term
such workers
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compensation insurance as required by the State of Connecticut and the
following coverages in the following amounts:
Third Party Liability: $1,000,000/$2,000,000 per location
Professional Liability: $1,000,000/$3,000,000 per location
Umbrella (including professional
liability): $5,000,000/$5,000,000
Auto: $1,000,000 CSL
Employer's Liability: $1,000,000.
During the Term, Manager shall cause Owner to be added as an additional
insured on all such policies of covering risks of third party liabilities
and professional negligence and as a loss payee and additional insured on
business interruption policies. All third party liability and professional
liability coverage shall be written on an occurrence basis. All such
policies shall be issued by a Connecticut licensed carrier having an A.M.
Bests Rating of A-VII or above. On the Commencement Date, Manager shall
provide Owner with a certificate of insurance, acceptable to Owner's risk
management department, that all such insurance is in place. Such
certificate shall provide that Owner will be provided with at least sixty
(60) days prior written notice of any cancellation or material change in
any such policies.
14.3 In the event any Facility is damaged, destroyed or taken in whole or
in part during the Term and Owner determines in its reasonable discretion
that such damage, destruction or taking renders the Facility unsuitable
for its use as a skilled nursing facility or long term care facility as
the case may be, Owner shall have the right on written notice to Manager
delivered no later than thirty (30) days after the date of such damage,
destruction or taking to advise Manager of its election not to rebuild the
Facility, in which case, as set forth in Section A.2.1(z), this Agreement
as to such Facility shall terminate as of the date of such damage,
destruction or taking. In the event Owner elects or is deemed to have
elected to rebuild the Facility, then Owner shall proceed with all due
diligence to do so, and Manager's obligations under this Agreement to
operate such Facility shall be abated until such reconstruction or repair
is completed and the Facility is again tenantable and operational but
Manager's financial obligations hereunder as to such Facility shall not be
abated during such period of repair or reconstruction provided Owner
proceeds with all due diligence to commence and complete the same.
14.4 If a Facility is damaged, destroyed or taken in part during the Term,
and Owner determines in its reasonable discretion that such damage,
destruction or taking does not render the Facility unsuitable for its use
as a skilled nursing facility or long term care facility as the case may
be, then Owner shall be required to reconstruct or repair the Facility to
the extent practicable, and this Agreement shall remain in full force and
effect as to such Facility.
15. Authority. Manager shall have no right or authority, express or implied, to
commit or otherwise obligate Owner in any manner whatsoever except to the extent
specifically provided herein or specifically authorized in writing by the Owner.
Manager shall have no right, title or interest in any Facility, nor any claim,
lien, charge, encumbrance, right of lis pendens or other right of any kind or
nature whatever with reference thereto, arising out of this Agreement or the
performance of its services hereunder.
16. Independent Contractor. In performing its services hereunder, Manager shall
be an
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independent contractor and not an employee, agent or partner of Owner, except
that Manager shall be the authorized agent of Owner limited solely to the
performance of Manager's obligations set forth in this Agreement.
17. Lessor Consents. As a condition for Owner's and Manager's benefit to the
effectiveness of this Agreement, (i) the Lessor of each Facility shall have
approved of this Agreement by execution of documentation reasonably acceptable
to Owner and (ii) Manager shall have executed and delivered to Owner an
"Agreement for Assignment and Assumption of Leases" together with all ancillary
documentation required by Owner to assign the Leases to Manager and for Manager
to assume the Leases from Owner. If the conditions in preceding clauses (i) and
(ii) are not satisfied or waived in writing by Owner by October 28, 1998, this
Agreement shall in any event be void.
E. LABOR STRIKES.
In the event of a strike by the employees of the Facilities represented by
the New England Health Care Employees Union District 1199, then Manager and
Owner shall immediately thereafter in good faith negotiate an arrangement for
the sharing of the additional costs resulting from the strike. If the parties
are unable to reach such a mutually acceptable arrangement within ten (10)
business days following the first day of the strike, then both parties shall
have the right, at any time thereafter until such a mutually acceptable
arrangement is reached, to terminate this Agreement.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the
day and year first above written.
Owner: SUNRISE HEALTHCARE CORPORATION, a
New Mexico corporation
By:
---------------------------
Xxxx Xxxx, Controller
Manager: LEXINGTON HEALTHCARE, INC., a Delaware
corporation
By:
---------------------------
Xxxxx Xxxxxx,
Its:
----------------------
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FIRST AMENDMENT TO TRIPLE NET MANAGEMENT AGREEMENT
This First Amendment to Triple Net Management Agreement ("Amendment") is
made effective as of October 28, 1998 between SunRise Healthcare Corporation, a
New Mexico corporation ("Owner") and Lexington Healthcare Group, Inc., a
Delaware corporation ("Manager") with reference to the following facts:
A. Owner and Manager entered into that certain Triple Net Management
Agreement dated October 19, 1998 ("Agreement").
B. Owner and Manager desire to extend the outside date for satisfaction of
the conditions set forth in Section 17 of the Agreement.
Therefore, for valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties agree to amend the Agreement as follows:
1. The reference in the last line of Section 17 of the Agreement to
"October 28, 1998" is hereby replaced with "November 15, 1998."
2. Except as amended by this Amendment, the Agreement remains unmodified
and in full force and effect.
Owner: SUNRISE HEALTHCARE CORPORATION, a New Mexico
corporation
By:
-----------------------------------
Xxxx Xxxx, Controller
Manager: LEXINGTON HEALTHCARE, INC., a Delaware
corporation
By:
-----------------------------------
Xxxxx Xxxxxx, President
-1-
SECOND AMENDMENT TO TRIPLE NET MANAGEMENT AGREEMENT
This Second Amendment to Triple Net Management Agreement ("Amendment") is
made effective as of October 30, 1998 between SunRise Healthcare Corporation, a
New Mexico corporation ("Owner") and Lexington Healthcare Group, Inc., a
Delaware corporation ("Manager") with reference to the following facts:
A. Owner and Manager entered into that certain Triple Net Management
Agreement dated October 19, 1998, as amended by that certain First Amendment to
Triple Net Management Agreement, dated October 28, 1998 (collectively, the
"Agreement").
B. Owner and Manager desire to further amend the Agreement as set forth
below.
Therefore, for valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties agree to amend the Agreement as follows:
1. Section 17 of the Lease is hereby deleted in its entirety and replaced
with the following:
"17. Conditions Subsequent. On or before November 16, 1998, (i) the Lessor
of each Facility shall have approved of this Agreement by execution of
documentation reasonably acceptable to Owner and Manager, and (ii) Manager
shall have executed and delivered to Owner an "Agreement for Assignment
and Assumption of Leases" together with all ancillary documentation
required by Owner to assign or sublease, as the case may be, the Leases to
Manager. If these conditions are both not satisfied by November 16, 1998,
then this Agreement shall automatically terminate, and Manager shall
return operations of the Facilities to Owner."
2. Except as amended by this Amendment, the Agreement remains unmodified
and in full force and effect.
Owner: SUNRISE HEALTHCARE CORPORATION, a New Mexico
corporation
By:
-----------------------------------
Xxxx Xxxx, Controller
Manager: LEXINGTON HEALTHCARE, INC., a Delaware
corporation
By:
-----------------------------------
Xxxxx Xxxxxx, President
-1-
THIRD AMENDMENT TO TRIPLE NET MANAGEMENT AGREEMENT
This Third Amendment to Triple Net Management Agreement ("Amendment") is
made effective as of November 1, 1998 between SunRise Healthcare Corporation, a
New Mexico corporation ("Owner") and Lexington Healthcare Group, Inc., a
Delaware corporation ("Manager") with reference to the following facts:
A. Owner and Manager entered into that certain Triple Net Management
Agreement dated October 19, 1998, as amended by that certain First Amendment to
Triple Net Management Agreement, dated October 28, 1998, and the Second
Amendment to Triple Net Management Agreement, dated October 30, 1998
(collectively, the "Agreement").
B. Owner and Manager desire to further amend the Agreement as set forth
below.
Therefore, for valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties agree to amend the Agreement as follows:
1. The term "Commencement Date" as defined in Section A.1 of the Agreement
is hereby amended to be November 1, 1998.
2. Except as amended by this Amendment, the Agreement remains unmodified
and in full force and effect.
Owner: SUNRISE HEALTHCARE CORPORATION, a New Mexico
corporation
By:
-----------------------------------
Xxxxxx X. Xxxxxx,
Chief Financial Officer
Manager: LEXINGTON HEALTHCARE, INC., a Delaware
corporation
By:
-----------------------------------
Xxxxx Xxxxxx, President
-1-
FOURTH AMENDMENT TO TRIPLE NET MANAGEMENT AGREEMENT
This Fourth Amendment to Triple Net Management Agreement ("Amendment") is
made effective as of November 16, 1998 between SunRise Healthcare Corporation, a
New Mexico corporation ("Owner") and Lexington Healthcare Group, Inc., a
Delaware corporation ("Manager") with reference to the following facts:
A. Owner and Manager entered into that certain Triple Net Management
Agreement dated October 19, 1998, as amended by that certain First Amendment to
Triple Net Management Agreement, dated October 28, 1998, the Second Amendment to
Triple Net Management Agreement, dated October 30, 1998 (the "Second
Amendment"), and the Third Amendment to Triple Net Management Agreement, dated
November 1, 1998 (collectively, the "Agreement").
B. Owner and Manager desire to further amend the Agreement as set forth
below.
Therefore, for valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties agree to amend the Agreement as follows:
1. Section 17 of the Lease as amended by the Second Amendment is hereby
deleted in its entirety and replaced with the following:
"17. Conditions Subsequent. On or before November 25, 1998, (i) the Lessor
of each Facility shall have approved of this Agreement by execution of
documentation reasonably acceptable to Owner and Manager, and (ii) Manager
shall have executed and delivered to Owner an "Agreement for Assignment
and Assumption of Leases" together with all ancillary documentation
required by Owner to assign or sublease, as the case may be, the Leases to
Manager. If these conditions are both not satisfied by November 25, 1998,
then this Agreement shall automatically terminate, and Manager shall
return operations of the Facilities to Owner."
2. Except as amended by this Amendment, the Agreement remains unmodified
and in full force and effect.
Owner: SUNRISE HEALTHCARE CORPORATION, a New Mexico
corporation
By:
-----------------------------------
Xxxxxx X. Xxxxxx,
Chief Financial Officer
[SIGNATURE BLOCKS CONTINUED ON FOLLOWING PAGE]
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Manager: LEXINGTON HEALTHCARE, INC., a Delaware
corporation
By:
-----------------------------------
Xxxxx Xxxxxx, President
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