EX 10.1.3
GUARANTY OF MANAGEMENT AGREEMENT
(XX XX - 14 Operating Facilities)
This Guaranty of Management Agreement ("Agreement") dated as of the _____ day of
March, 1999, is entered into by Emeritus Corporation, a Washington corporation
("Emeritus"), in favor of AL Investors II LLC, a Delaware limited liability
company ("AL Investors II"), for itself and as sole managing member on behalf of
each of the Facility Entities as set forth in Exhibit A (collectively "Facility
Entities" and each a "Facility Entity"). Al Investors II and the respective
Facility Entity which owns a Facility are sometimes collectively referred to
herein as "Owner" or with respect to all Facilities "Owners". All capitalized
terms not otherwise defined herein shall have the meaning set forth in Exhibit
A.
This Agreement is made with reference to the following facts:
A. AL Investors II has entered into (a) a Purchase and Sale Agreement dated of
even date herewith with Meditrust Company LLC, a Delaware limited liability
company ("Meditrust") relating to the purchase of the Facilities, and (b) a
Supplemental Purchase Agreement dated of even date herewith with Emeritus,
Emeritus Properties I, Inc., ESC G.P. I, Inc. and ESC I, L.P. in connection with
the purchase of the Facilities (collectively the "Purchase Agreements"). Closing
under the Purchase Agreements will occur simultaneously and the resulting pool
of fourteen (14) Facilities will each be owned by the respective Facility Entity
and managed by Emeritus Management LLC and Emeritus Management I LP and their
Affiliates (the "Managers") pursuant to a Management Agreement with Option to
Purchase between Managers and Owners dated the same date of this Agreement
("Management Agreement"). Existing leases of the Facilities by an Emeritus
Affiliate from Meditrust and the existing management agreements for each of the
Facilities have been terminated.
B. Under the terms and conditions of the Management Agreement, Managers have
agreed to manage all of the Facilities and perform other obligations as set
forth therein.
C. Concurrently with the execution of the Management Agreement, Emeritus agreed
to enter into this Agreement in favor of Owners guaranteeing the Managers'
obligations under the Management Agreement. Owners would not have entered into
the Purchase Agreements or the Management Agreement without execution and
delivery of this Agreement.
In consideration of the Owners entering into the Purchase Agreement and the
Management Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Emeritus agrees as follows:
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1. Obligations. Emeritus hereby absolutely, unconditionally and irrevocably
guarantees to each of Owners prompt payment and performance to Owners when due,
whether by acceleration or otherwise, of all indebtedness, liabilities, and
obligations of Managers to Owners of any kind or nature whatsoever under or
arising from the Management Agreement, or any modification, supplementation or
replacement thereof, or from other dealings by which any one or more of Owners
may become a creditor of Managers including but not limited to all of the
foregoing which arise or would accrue but for the filing of any bankruptcy or
other insolvency proceedings by or against any Manager (the "Obligations").
2. Consent to Modification of Obligations. Without affecting, diminishing or
otherwise impairing the liability of Emeritus hereunder and without notice to or
consent of Emeritus, Owners may from time to time grant renewals, extensions,
indulgences, releases and discharges to Managers or any other Person liable for
any of the Obligations, and may take security for payment of the Obligations,
and may release any or all security or refrain from perfecting any interest in
any security granted by Managers or any guarantor or other person or entity
liable for any of the Obligations. Owners may amend or modify the Obligations or
any document or instrument executed to evidence the Obligations and otherwise
may deal with the Managers or any other Person liable for any of the
Obligations, without notice to or consent of Emeritus, and without affecting,
diminishing, or otherwise impairing the liability of Emeritus under this
Agreement.
3. Consent to Waivers, Etc. by Owners. Owners may from time to time consent to
any action or non-action of Managers under the Management Agreement or any other
Person liable for any of the Obligations, which, in the absence of such consent,
violates or may violate the provisions of the Management Agreement or any
document or instrument otherwise executed in connection with the Obligations,
and such consent may be granted by Owners, without notice to or consent of
Emeritus and without in any manner affecting, diminishing, or impairing the
liability of Emeritus under this Agreement. No waiver, modification, extension,
forbearance, or delay on the part of the Owners with respect to the Obligations
or with respect to any document, instrument or agreement evidencing the
Obligations, securing repayment of the Obligations or otherwise executed in
connection with the Obligations, and no act or thing which might, but for this
provision of this Agreement, be deemed a legal or equitable discharge of a
surety, shall operate to release the obligations of Emeritus under this
Agreement, and no delay on the part of the Owners in exercising any of their
options, powers, or rights under this Agreement, or any partial or single
exercise thereof shall constitute a waiver of any other rights hereunder.
4. Continued Effectiveness of Agreement. This Agreement shall continue to be
effective, or be reinstated, as the case may be, if at any time payment of all
or any part of the Obligations is rescinded or otherwise must be returned by
Owners upon the insolvency, bankruptcy, or reorganization of any of the Managers
all as though such payment to Owners had not been made.
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5. Form and Powers of Managers. No change in the name, purposes, capitalization,
ownership, form or organization of Managers shall in any way affect, diminish,
or otherwise impair the liability of Emeritus. Owners shall not be obligated to
inquire into the powers of the Managers notwithstanding that any of the
Obligations may be in excess of the powers of the Managers.
6. Guaranty of Payment and Performance. This is a guaranty of payment and
performance and Owners shall not be obligated to exhaust their recourse against
the Managers, or any other Person, or any security they may have for performance
or payment of the Obligations before being entitled to payment and performance
from Emeritus of the Obligations.
7. Effect of Certain Laws. Notwithstanding the provisions of the laws of any
state, this Agreement shall remain in full force and effect and no invalidity,
irregularity, or unenforceability (by reason of any bankruptcy or similar law,
any other law or any order of any Governmental Authorities thereof purporting to
reduce, amend, or otherwise affect any liability or obligation of the Managers)
and no release or discharge of the Managers, or rejection of the Management
Agreement by any one or more of the Managers or any trustee, receiver or similar
official on behalf of the Managers (whether pursuant to 11 U.S.C. Section 365 or
otherwise), in any receivership, bankruptcy, liquidation, winding-up,
reorganization or other proceedings shall affect, diminish, or otherwise impair
or otherwise be a defense to this Agreement. If Owners are stayed by any
bankruptcy or other proceeding with respect to Managers from declaring the
Obligations immediately due and payable from Managers, it may nevertheless do so
as to Emeritus.
8. No Conditions to Agreement. This Agreement is absolute and unconditional and
has been delivered free of any conditions and no representations have been made
to Emeritus affecting or limiting the liability of Emeritus under this
Agreement. This Agreement is in addition to and not in substitution for any
agreement of Emeritus in the Management Agreement, the Purchase Agreements or in
any other document or instrument executed by Emeritus agreeing to perform all or
any part of the Obligations.
9. Continuing Agreement. This is a continuing guaranty and agreement. No action
or proceeding brought or instituted under this Agreement and no recovery in
pursuance thereof shall be a bar or defense to any further action or proceeding
which may be brought under this Agreement by reason of the same or any further
default or defaults under this Agreement or in the performance and observance of
the terms, covenants, conditions, and provisions in the Obligations, or any
document, instrument or agreement evidencing the Obligations, securing repayment
of the Obligations or otherwise executed in connection with the Obligations.
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10. Certain Waivers by Emeritus. Emeritus hereby waives presentment, protest,
notice, demand, notice of nonpayment or action on delinquency in respect to any
of the Obligations and all other suretyship defenses generally. Emeritus waives
acceptance of this Agreement. Emeritus agrees that no release, delay,
compromise, indulgence, or other action or failure to act by Owners with respect
to any other Person liable for any of the Obligations shall in any manner
affect, diminish or impair the liability of Emeritus under this Agreement.
11. Survival. This Agreement shall survive expiration or sooner termination of
the Management Agreement for the period prior to December 31, 2001 with respect
to all terms and provisions of the Management Agreement which by their terms
survive expiration or sooner termination of the Management Agreement.
12. Subordination. Emeritus hereby subordinates any and all debts owed to
Emeritus by Managers or any other Person liable for any of the Obligations, and
any and all security for such debts, to the prior payment and performance in
full of the Obligations.
13. Joint and Several Obligation. Emeritus' obligations to Owners for payment
and performance of the Obligations shall be joint and several with the
obligations of Managers therefor.
14. Waiver of Subrogation. Emeritus waives all rights of subrogation to the
rights of Owners, and all rights of indemnity, contribution and reimbursement
against Owners, but not against Managers, but any such claim shall not be
asserted by Emeritus against Managers until after expiration of the Management
Agreement, payment and performance of all obligations to Owners, and in any
event shall be subordinate to all claims of Owners. Owners shall have no
obligation whatsoever to reimburse or otherwise pay Emeritus for any payments or
performance rendered under this Agreement by Emeritus.
15. Miscellaneous.
15.1 Notices. All notices required or permitted hereunder shall be deemed given:
(1) three calendar days following mailing via regular U.S. mail, return receipt
requested; or (2) one business day after deposit with a commercial courier
service which provides evidence of delivery for "next day" delivery;, or (3)
upon sending to a facsimile number set forth in this agreement or provided in a
notice to the party sending the notice by the party receiving the notice in
writing, provided that a copy is sent the same business day by commercial
courier as set forth above; or (4) upon actual receipt of notice, whichever is
earlier. The parties shall promptly give written notice to each other of any
change of address or facsimile number, and notice to the addresses or facsimile
numbers stated herein shall be deemed sufficient unless written notification of
a change has been received.
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15.2 Governing Law. This Agreement has been executed and delivered to Owners in
the State of Washington. Emeritus agrees that the law of the State of Washington
(exclusive of principles of conflicts of law) shall be applicable for the
purpose of construing this Agreement, determining the validity hereof and
enforcing the same. Emeritus hereby consents to the jurisdiction of the courts
of the State of Washington or to any federal court sitting in the State of
Washington. Al Investors II or Owners may enforce any or all of the provisions
of this Agreement directly against Emeritus in the State of Washington or any
other jurisdiction in which Emeritus does business or at its option may enforce
this Agreement on behalf of any Facility Entity in the state in which such
Facility Entity owns a Facility.
15.3 No Waiver. No delay or omission to exercise any right, power or remedy
accruing to Owners upon any breach or default of Emeritus shall impair such
rights, powers or remedies of Owners, nor shall it be construed to be a waiver
of any such breach or default, or of any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring.
15.4 Assignment. Owners reserve the right to transfer or assign any or all of
their right, title and interest under this Agreement, including assignment to
any Mortgagee, and Emeritus hereby consents to any such transfer or assignment,
provided such assignee (other than any Mortgagee) assumes the Owners'
obligations under the Management Agreement accruing after the date of such
assignment.
15.5 Captions. Any captions applied to the sections of this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any of the provisions of this Agreement.
15.6 Invalidity. If any term, condition or provision of this Agreement shall be
held invalid for any reason, such offending term, condition or provision shall
be stricken therefrom, and the remainder shall not be affected.
15.7 Entire Agreement. This Agreement constitutes the complete and final
expression of the entire agreement between the parties pertaining to the subject
matter hereof, but is in addition to and not in substitution for the obligations
of Emeritus under the Management Agreement. This Agreement may be amended only
by a written instrument executed by Emeritus and Owners.
15.8 Binding Effect. This Agreement shall inure to the benefit of Owners, its
successors and assigns, and shall be binding upon Emeritus and its successors
and assigns, as the case may be. This Agreement may be terminated only by means
of a written document duly executed by Owners.
15.9 Legal Expenses. In the event of any default on the Obligations, or in the
event that any dispute arises relating to the interpretation, enforcement or
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performance of this Agreement, the prevailing party shall be entitled to collect
from the other party on demand all fees and expenses incurred in connection
therewith, including but not limited to fees of attorneys, accountants,
appraisers, consultants, expert witnesses, arbitrators, mediators and court
reporters. Without limiting the generality of the foregoing, the prevailing
party shall be entitled to all such costs and expenses incurred in connection
with: (a) arbitration or other alternative dispute resolution proceedings, trial
court actions and appeals; (b) bankruptcy or other insolvency proceedings of
Managers, Emeritus, any other party having any liability for any portion of the
Obligations or any party having any interest in any security for any of the
Obligations; (c) any default by Managers or Emeritus under the Management
Agreement; (d) all claims, counterclaims, cross-claims and defenses asserted in
any of the foregoing whether or not they arise out of or are related to this
Agreement; (e) all preparation for any of the foregoing; and (f) all settlement
negotiations with respect to any of the foregoing.
15.10 Jury Trial Waiver. EMERITUS AND OWNERS HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW
OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT.
TO THE EXTENT APPLICABLE, EMERITUS IS HEREBY ADVISED THAT ORAL AGREEMENTS OR
ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING
REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
DATED this ______________ day of March, 1999.
EMERITUS CORPORATION, a
Washington corporation
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Chairman
Address: 0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
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EXHIBIT A
TO GUARANTY OF MANAGEMENT AGREEMENT
(XX XX - 14 Operating Facilities)
Certain Defined Terms
XX XX Holdings: XX XX Holdings LLC, a Delaware limited liability company, which
is the sole member of AL Investors II.
AL Investors II: AL Investors II LLC, a Delaware limited liability company
XX XX Development Management Agreement: That certain Management Agreement with
Option to Purchase dated on or about the same date hereof among AL Investors II
and Emeritus Corporation and its Affiliates relating to the management of up to
five (5) assisted living facilities.
AL Management Agreement: That certain Management Agreement With Option to
Purchase dated December 30, 1998 Among AL Investors LLC and Emeritus Corporation
and its Affiliates relating to the management of twenty-five (25) assisted
living facilities.
Affiliate: with respect to any Person (i) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person, (ii) any other Person that owns, beneficially, directly or indirectly,
five percent (5%) or more of the outstanding capital stock, shares or equity
interests of such Person or (iii) any officer, director, employee, general
partner or trustee of such Person, or any other Person controlling, controlled
by, or under common control with, such Person (excluding trustees and Persons
serving in a fiduciary or similar capacity who are not otherwise an Affiliate of
such Person). For the purposes of this definition, "control" (including the
correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, through the ownership of voting securities,
partnership interests or other equity interests.
Agency Account: The Agency Account to be maintained for each Facility for
payment of Fixed Operating Expenses and Operating Expenses as described in
Section 8.1 of the Management Agreement.
Annual Plan(s): as defined in Section 4.2 of the Management Agreement.
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Award: all compensation, sums or anything of value awarded, paid or received on
a total or partial Condemnation.
Base Management Fee: as defined in Section 7.1 of the Management Agreement.
Bankruptcy Event: Any of Emeritus or Managers admit in writing its inability to
pay debts as they become due; or applies for, consents to, or acquiesces in the
appointment of, a trustee, receiver or other custodian or makes a general
assignment for the benefit of creditors, or in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian is appointed and
is not discharged within sixty (60) days after such appointment; or an order for
relief is entered or a petition is filed under Xxxxx 00, Xxxxxx Xxxxxx
Bankruptcy Code, with respect to any of them; or any other bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, now or hereafter in effect, is commenced with
respect to any of them.
Business Day: any day which is not a Saturday or Sunday or a public holiday
under the laws of the United States of America or the State of Washington.
Capital Improvements: as defined in Section 12 of the Management Agreement.
Cash Available for Distribution: on any date the amount contained in the Agency
Accounts (as defined in Section 8.1 of the Management Agreement), minus an
amount (to be retained in the Agency Accounts) equal to any reasonably projected
Operating Deficit for the succeeding 30 days, taking into account all Operating
Expenses and Fixed Operating Expenses and all anticipated Total Revenues during
such 30-day period.
Casualty: the damage or destruction by act of God or otherwise of any portion of
any Facility which Owner reasonably estimates would cost more than $50,000 to
repair or restore.
Change of Control: shall mean the occurrence of any one of the following events
with respect to Emeritus:
(a) any Person or group of Persons within the meaning of Rule 13d-5 under
the Act as defined below) other than Emeritus, any of its subsidiaries, or any
trustee, fiduciary or other person or entity holding securities under any
employee benefit plan or trust of Emeritus or any of its subsidiaries), together
with all "affiliates" and "associates" (as such terms are defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended (the "Act")) of such
Person or
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group, shall become the "beneficial owner" (as such term is defined in Rule
13d-3 under the Act), directly or indirectly, of securities of Emeritus
representing a greater percentage than that then owned by Xxxxxx X. Xxxx,
together with all "affiliates" and "associates" of Xxxxxx X. Xxxx (as defined
above) of either (A) the combined voting power of Emeritus' then outstanding
securities having the right to vote in an election of Emeritus' Board of
Directors ("Voting Securities") or (B) the then outstanding shares of Stock of
Emeritus; or
(b) Persons who, as of the date hereof, constitute Emeritus' Board of
Directors (the "Incumbent Directors") cease for any reason, including, without
limitation, as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board, provided that any
person becoming a director of Emeritus subsequent to the date hereof whose
election or nomination for election was approved by a vote of at least a
majority of the Incumbent Directors shall, for purposes of this Plan, be
considered an Incumbent Director; or
(c) the stockholders of Emeritus shall approve (A) any consolidation or
merger of Emeritus or any subsidiary where the shareholders of Emeritus,
immediately prior to the consolidation or merger, would not, immediately after
the consolidation or merger, beneficially own (as such term is defined in Rule
13d-3 under the Act), directly or indirectly, shares representing a majority of
the voting shares of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any), (B) any
sale, lease, exchange or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single plan) of all or
substantially all of the assets of Emeritus or (C) any plan or proposal for the
liquidation or dissolution of Emeritus; or
(d) other than by reason of death or legal disability, Xxxxxx Xxxx ceases
to be the chief executive officer of Emeritus.
Change of Control with respect to any Manager shall mean the occurrence of any
event whereby 100% of the ownership interests in such Manager are no longer
owned by Emeritus.
Closing: the date of closing under the Purchase Agreements.
Code: the Internal Revenue Code of 1986, as amended.
Commencement Date: as defined in Section 2.1 of the Management Agreement.
Compensation: the direct salaries and wages paid to, or accrued for the benefit
of, any employee working and employed at each Facility together with all
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reasonably customary fringe benefits payable to, or accrued for the benefit of
such employee, including employer's contribution under FICA., unemployment
compensation, or other employment taxes, pension fund contributions, workmen's
compensation, group life and accident and health insurance premiums, and other
reasonable employee benefits customary in the industry.
Condemnation: with respect to any Facility or any interest therein or right
accruing thereto or use thereof (i) the exercise of the power of condemnation,
whether by legal proceedings or otherwise, by a Condemnor or (ii) a voluntary
sale or transfer to any Condemnor under threat of condemnation.
Condemnor: any public or quasi-public authority, or private corporation or
individual, having the power of condemnation.
Contracts: Collectively, all Provider Agreements, Residency Agreements, Ordinary
Contracts and Major Contracts.
CPA: The certified public accountants retained to provide necessary accounting
services for the Facility or Owner, the selection of which shall be subject to
approval by Owner.
Date of Taking: the date the Condemnor has the right to possession of the
property being condemned.
Environmental Laws: means all federal, state, and local laws, ordinances and
regulations and standards, rules, policies and other governmental requirements,
administrative rulings, and court judgments and decrees in effect now or in the
future and including all amendments, that relate to Hazardous Materials and
apply to the Facilities or to the Land and/or the Improvements. Hazardous
Materials Laws include, but are not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the
Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water
Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801, and their state analogs.
Excluded Expenses: depreciation, amortization and other non-cash expenses; items
to be provided or paid for at Owner's or Managers' sole expense as provided
herein; costs and expenses resulting from or required to cure any matter or
defect which constitutes a breach of warranty, representation or indemnity under
the Purchase Agreements, the Licensing Agreement, or the Management Agreement
which cost or expense shall be the sole responsibility of the breaching party;
unreasonable or excessive charges or expenses.
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Escrow Holder: First American Title Insurance Company.
Extension Term: as defined in Section 2.2 of the Management Agreement.
Facility or Facilities: Each of the assisted living facilities, including the
Land, Improvements, and Personal Property associated therewith, located in the
city and state as set forth below:
Facility City State Units Beds Facility LLC and LP
Name
Colonial Park
Club Sarasota FL 90 110 AL Investors II
Sarasota LLC
Park Club of
Fort Xxxxx Fort Xxxxx FL 90 100 AL Investors II Fort
Xxxxx LLC
Park Club of
Oakbridge Lakeland FL 77 94 AL Investors II
Lakeland LLC
Park Club of
Xxxxxxx Brandon FL 89 110 AL Investors II
Xxxxxxx LLC
Highland Hills Pocatello ID 49 57 AL Investors II
Pocatello LLC
Ridge Wind Chubbuck ID 110 96 AL Investors II
Chubbuck LLC
Lakewood Inn Coeur d'Alene ID 73 109 AL Investors II Coeur
D'Alene
The Pines of
Tewksbury Tewksbury MA 49 50 AL Investors II
Tewksbury LLC
Meadowbrook Ontario OR 53 82 AL Investors II
Ontario LLC
Xxxxxxxx Place Anderson SC 127 84 AL Investors II
Xxxxxxxx LLC
Elmbrook Estates Lubbock TX 79 100 Lubbock AL Investors
II LP
Fairhaven Estates Bellingham WA 98 110 AL Investors II
Bellingham LLC
Hearthstone Moses Lake WA 50 100 AL Investors II Moses
Lake LLC
Xxxxxxxxx Xxxxx Xxxxxxx Xxx XX 84 92 AL Investors II
Federal Way LLC
Facility Accounts: as defined in Section 8.1 of the Management Agreement.
Facility Entity: each of the Facility LLC's or LP's which owns a Facility as set
forth opposite the name of each Facility above and their respective successors
or assigns.
Fixed Operating Expenses: for any period, all fixed costs and expenses of
owning, and operating the Facilities in the aggregate except where the Agreement
expressly provides that Fixed Operating Expenses shall be determined for each
Facility to the extent such costs and expenses are not included in Operating
Expenses, including but not limited to (a) Managers' Base Management Fee
(excluding the amount of any Accrued Management Fee accrued during such period);
(b) all amounts to be paid into the Reserve Account and the cost of Capital
Improvements approved by Owners not funded from the Reserve Account; (c) the
debt service on account of the Senior Loan; (d) the real and personal property
ad valorem taxes and assessments; and (e) all costs and expenses of all property
and casualty insurance on or in respect of the Facilities provided for herein
and the amount of all self-insured losses or deductibles. Fixed Operating
Expenses shall not include the Excluded Expenses.
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Furnishings and Equipment: all furniture, furnishings, beds, equipment, food
service equipment, apparatus and other personal property used in (or if the
context so dictates, required in connection with), the operation of each
Facility, other than Operating Equipment, Operating Supplies and fixtures
attached to and forming part of the Improvements.
GAAP: means generally accepted accounting principles applied on a consistent
basis.
Governmental Authorities: Collectively, all agencies, authorities, bodies,
boards, commissions, courts, instrumentalities, legislatures, and offices of any
nature whatsoever of any government, quasi-government unit or political
subdivision, whether with a federal, state, county, district, municipal, city or
otherwise and whether now or hereinafter in existence which exercises
jurisdiction over any Facility.
Group Service: as defined in Section 3.2.4 of the Management Agreement.
Hazardous Substances: "Hazardous Substances" shall mean petroleum and petroleum
products and compounds containing them, including gasoline, diesel fuel and oil;
explosives; flammable materials, radioactive materials; polychlorinated
biphenyls ("PCBs") and compounds containing them; lead and lead-based paint;
asbestos or asbestos-containing materials in any form that is or could become
friable; underground storage tanks, whether empty or containing any substance;
any substance the presence of which on any Facility is prohibited by any
federal, state or local authority; any substance that requires special handling;
and any other material, or substance now or in the future defined as a
"hazardous substance," "hazardous material," hazardous waste," "toxic
substance," "toxic pollutant," "contaminant," or "Pollutant" within the meaning
of any Environmental Law. Provided, however, Hazardous Substances shall not
include the safe and lawful use and storage of quantities of (i) pre-packaged
supplies, medical waste, cleaning materials and petroleum products customarily
used in the operation and maintenance of comparable Facilities, (ii) cleaning
materials, personal grooming items and other items sold in pre-packaged
containers for consumer use and used by occupants of any Facility; and (iii)
petroleum products used in the operation and maintenance of motor vehicles from
time to time located on the Facilities' parking areas, so long as all of the
foregoing are used, stored, handled, transported and disposed of in compliance
with Environmental Laws.
Impositions: collectively, all taxes (including, without limitation, all capital
stock and franchise taxes of AL Investors II, XX XX Holdings, or any Facility
Entity, all ad valorem, property, sales and use, single business, gross
receipts, transaction privilege, rent or similar taxes), assessments (including,
without limitation, all
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assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and assessments levied by condominium
associations), ground rents, water and sewer rents other than normal utility
charges, excises, tax levies, fees (including, without limitation, license,
permit, inspection, authorization and similar fees), and all other charges
imposed by Governmental Authorities, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character in
respect of the Facility (including all interest and penalties thereon due to any
failure in payment by Manager), which at any time prior to, during or in respect
of the Term of the Management Agreement may be assessed or imposed on or in
respect of or be a Lien upon (a) Facility Entities' interest in the Facility,
(b) the Facility or any rent or income therefrom or any estate, right, title or
interest therein, or (c) any occupancy, operation, use or possession of, sales
from, or activity conducted on, or in connection with, the Facility or the
leasing or use of the Facility. Notwithstanding the foregoing, "Impositions"
shall not include: (1) any tax based on net income (whether denominated as a
franchise or capital stock or other tax) imposed on any Owners or Managers, (2)
any tax imposed with respect to the sale, exchange or other disposition of a
Facility or the proceeds thereof, or (3) any principal or interest on any
Mortgage; provided, however, the provisos set forth in clause (1) of this
sentence shall not be applicable to the extent that any real or personal
property tax, assessment, tax levy or charge pursuant to the first sentence of
this definition and which is in effect at any time during the Term hereof is
totally or partially repealed, and a tax, assessment, tax levy or charge set
forth in clause (1) is levied, assessed or imposed expressly in lieu thereof.
Improvements: the buildings, structures (surface and sub-surface) and other
improvements now or hereafter located on the Land.
Initial Term: as defined in Section 2.1 of the Management Agreement.
Insurance Requirements: all terms of each insurance policy required to be
carried in this Agreement, or agreed to be carried by Owners and Managers, and
all orders, rules, regulations and other requirements of the National Board of
Fire Underwriters (or any other body exercising similar functions) applicable to
the Facilities or the operation thereof.
Junior Loan: any indebtedness incurred by Owners which is secured by a mortgage,
pledge, and related security instruments against, among other things, the
membership interests of XX XX Holdings in AL Investors II and/or the membership
interests of AL Investors II in the Facility Entities. Initially, the Junior
Loan is evidenced by that certain Loan Agreement among XX XX Holdings, AL
Investors II, AL Investors Development and the Facility Entities and Senior
Housing Partners I, L.P. dated on or about the same date hereof ("Initial Junior
Loan").
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Land: the parcel or parcels of land on which each of the Facilities is situated,
together with all rights of ingress and egress thereto and parking associated
therewith as legally described in the Purchase Agreements.
Leases: Collectively, the Ordinary Leases and Major Leases.
Legal Requirements: collectively, all statutes, ordinances, by-laws, codes,
rules, regulations, restrictions, orders, judgments, decrees and injunctions
(including, without limitation, all applicable building, health code, zoning,
subdivision, and other land use and assisted living licensing statutes,
ordinances, by-laws, codes, rules and regulations), whether now or hereafter
enacted, promulgated or issued by any Governmental Authority, Accreditation Body
or Third Party Payor affecting a Facility Entity or any Facility or the
ownership, construction, development, maintenance, management, repair, use,
occupancy, possession or operation thereof or the operation of any programs or
services in connection with a Facility, including, without limitation, any of
the foregoing which may (i) require repairs, modifications or alterations in or
to any Facility, (ii) in any way affect (adversely or otherwise) the use and
enjoyment of any Facility or (iii) require the assessment, monitoring, clean-up,
containment, removal, remediation or other treatment of any Hazardous Substances
on, under or from any Facility. Without limiting the foregoing, the term "Legal
Requirements" includes all Environmental Laws and shall also include all Permits
and Contracts issued or entered into by any Governmental Authority, any
Accreditation Body and/or any Third Party Payor and all Permitted Encumbrances.
Lending Group: GMAC Commercial Mortgage in a debt facility referred to herein as
the Initial Senior Loan secured by the Facilities in the maximum aggregate
original principal balance of $68,000,000.
Licensing Indemnity Agreement: that certain Licensing Indemnity Agreement
between Emeritus Corporation and AL Investors II dated on or about the same date
hereof.
Lien: with respect to any real or personal property, any mortgage, mechanics' or
materialmen's lien, pledge, collateral assignment, hypothecation, charge,
security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property which secures or is intended to secure the payment of money, whether or
not inchoate, vested or perfected, other than the Mortgage.
Major Contracts: Any contract for the purchase of goods or services or any other
agreement which requires payments in excess of $50,000 per year for any Facility
or which cannot be terminated without penalty or termination fee on sixty (60)
days notice or in which the provider of the goods or services is Emeritus or an
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Affiliate (except pursuant to Group Services approved in connection with an
Annual Plan).
Major Lease: Any Lease which has a noncancellable term in excess of one year or
a rental payment in excess of $10,000 per year or pursuant to which Emeritus or
an Affiliate is the lessee or lessor.
Managed Care Plans: all health maintenance organizations, preferred provider
organizations, individual practice associations, competitive medical plans, and
similar arrangements.
Management Fee: an amount equal to seven percent (7%) of Total Revenue for all
Facilities, subject to the provisions of Section 7.2 of the Management
Agreement.
Medicaid: the medical assistance program established by Title XIX of the Social
Security Act (42 US C xx.xx. 1396 et seq.) and any statute succeeding thereto.
Medicare: the health insurance program for the aged and disabled established by
Title XVIII of the Social Security Act (42 USC xx.xx. 1395 et seq.) and any
statute succeeding thereto.
Mortgage: collectively, the terms and conditions of the Senior Loan and the
Junior Loan.
Mortgagee: the holder or beneficiary of a Mortgage and their respective
successors and assigns.
Operating Deficit and Operating Profit: for any period, the amount, if any, by
which Total Revenues for that period is less than or exceeds, respectively, the
sum of (i) Operating Expenses and (ii) Fixed Operating Expenses for that period
in each case determined on a cash basis.
Operating Equipment: all dishes, glassware, bed coverings, towels, silverware,
uniforms and similar items used in, or held in storage for use in (or if the
context so dictates, required in connection with) the operation of the
Facilities.
Operating Expenses: for any period, all reasonable costs and expenses of owning
and operating the Facilities in the aggregate except where the Agreement
expressly provides that Operating Expenses shall be determined for each Facility
(which costs and expenses do not include the Fixed Operating Expenses or the
Excluded Expenses) including the following:
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(a) The cost of all Operating Equipment and Operating Supplies placed in
use, with the exception of the Operating Equipment and Operating Supplies
initially supplied by the Facility Entities. The cost of maintaining and
operating the vans and buses for each Facility (but not any debt service or
lease payments which shall remain the sole expense of Emeritus).
(b) The Compensation of all employees working and employed by Managers at
the Facilities. The Compensation of Managers' or Emeritus' home office or
executive or other personnel not regularly employed at the Facilities shall not
be included in Operating Expenses or Fixed Operating Expenses, but reasonable
out-of-pocket travel expenses of Managers or Owners' executive personnel while
traveling to and from a Facility on business shall be reimbursable as an
Operating Expense; provided, however, that if such business travel relates to
business or properties other than with respect to the Facilities, then such
travel expenses shall be equitably prorated between such other business or
properties and the Facilities.
(c) The cost of all utilities including, without limitation, electricity,
water, gas, heat and other utilities, and office supplies and equipment, and
goods and services purchased under all Contracts, including leasing expenses in
connection with telephone and data processing equipment and such other equipment
as the parties hereto may agree upon in writing.
(d) The cost of repairs to and maintenance of the Facilities whether
performed by Facility employees or contracted to third parties.
(e) Insurance premiums for all insurance required under this Agreement and
self-insured losses and deductibles with respect to such insurance coverages
(but excluding premiums and self-insured losses and deductibles on property and
casualty insurance which are included in Fixed Operating Costs). Premiums on
policies for more than one year will be prorated over the period of insurance
coverage and premiums under blanket policies will be equitably allocated among
properties covered.
(f) All Impositions (except for real and Personal Property ad valorem taxes
and assessments which shall be a Fixed Operating Expenses).
(g) Except as otherwise provided in Section 6.1 of the Management
Agreement, legal fees and fees of any CPA for services directly related to the
operations of the Facilities (whether incurred by Owners or Managers).
(h) The costs and expenses of technical consultants and specialized
operational experts for specialized services in connection with non-recurring
work on operational, functional, design or construction problems and activities
whether
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incurred by Owner or Manager; provided, however, that if such costs end expenses
have not been included in the Annual Plan, the same shall be subject to approval
by Owner.
(i) All expenses for marketing the Facilities and all expenses of sales
promotion and public relations activities as set forth in the Annual Plan
(j) The cost of Group Services, as provided in Section 3.2.4 of the
Management Agreement.
(k) Bad debts or uncollectible amounts from residents of the Facilities.
(l) Refund of deposits to residents under Residency Agreements
(m) Owners' reasonable costs and expenses of administering, supervising,
and managing Owners' activities in connection with this Agreement and any
Mortgage, including Owners' reasonable cost and expense of preparing and filing
federal, state and local income tax returns and audits.
(n) All other reasonable expenses and charges incurred in the operation
and management of the Facilities to the extent set forth in the Annual Plan or
otherwise approved by the Owners or as otherwise set forth in the Agreement.
Operating Period: the period beginning with the Commencement Date and ending
upon the expiration of the Initial Term.
Operating Supplies: consumable items used in, or held in storage for use in (or
if the context so dictates, required in connection with), the operation of the
Facilities, including food, medical supplies, fuel, soap, cleaning materials,
and other similar consumable items.
Operating Year: the Operating Years shall coincide with and be identical with
the calendar years, except that the first Operating Year shall be the period
beginning on the Commencement Date and ending on the following December 31,
1999, and such long or short year, as applicable, shall constitute a full
Operating Year as used herein.
Ordinary Contracts: All agreements and contracts to purchase goods and services
(excluding Major Contracts) in the ordinary course of business of refurbishing,
owning, operating or managing the Facilities, or the operation of any programs
or services in conjunction with the Facility and all renewals, replacement and
substitutions therefor with any Governmental Authority, Accreditation Body or
Third Party Payor or entered into with any third Person, excluding, however, any
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agreements pursuant to which money has been or will be borrowed or advanced, the
Leases, any agreement creating or permitting any Lien or other encumbrance on
title (except for the Permitted Exceptions), and any Major Contract.
Ordinary Leases: Collectively, all subleases, licenses, use agreements,
equipment leases, concession agreements, tenancy at will agreements and other
occupancy agreements (but excluding any Residency Agreement, Facility Lease or
Major Lease), whether oral or in writing, entered into by Managers affecting a
Facility.
Overdue Rate: on any date, a rate of interest per annum equal to the greater of:
(i) a variable rate of interest per annum equal to one hundred twenty percent
(120%) of the Prime Rate, or (ii) twelve percent (12%) per annum; provided,
however, in no event shall the Overdue Rate be greater than the maximum rate
then permitted under Legal Requirements.
Permits: collectively, all permits, licenses, approvals, qualifications, rights,
variances, permissive uses, accreditation, certificates, certifications,
consents, agreements, contracts, contract rights, franchises, interim licenses,
permits and other authorizations of every nature whatsoever required by, or
issued under, applicable Legal Requirements relating or affecting a Facility or
the construction, development, maintenance, management, use or operation
thereof, or the operation of any programs or services in conjunction with the
Facility and all renewals, replacements and substitutions therefor, now or
hereafter required or issued by any Governmental Authority, Accreditation Body
or Third Party Payor to Owners or Managers.
Permitted Exceptions: (i) all encumbrances to title present at closing pursuant
to the Purchase Agreements; (ii) liens for Impositions not delinquent; (iii)
easements, restrictions on use, zoning laws and ordinances, rights of way and
other encumbrances and minor irregularities in title, whether now existing or
hereafter arising, which are approved by Owner and do not individually or in the
aggregate materially impair the use of any Facility.
Person: any individual, corporation, general partnership, limited partnership,
joint venture, stock company or association, company, bank, trust, trust
company, land trust, business trust, unincorporated organization, unincorporated
association, Governmental Authority or other entity of any kind or nature.
Personal Property: all machinery, equipment, furniture, furnishings, vans,
buses, movable walls or partitions, computers or trade fixtures, goods,
inventory, supplies, the name of the Facility, and other personal or intangible
property used in the operation of the Facility, including, but not limited to,
all Operating Equipment, Furnishings and Equipment and Operating Supplies.
Notwithstanding the foregoing,
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title to the vans and buses shall remain in Emeritus or Managers and be held in
trust by them for the benefit of the respective Owner; provided that legal title
to the vans and buses shall be transferred to the respective Facility Entity
upon expiration or sooner termination of the Management Agreement as provided in
Section 9.6 of the Management Agreement.
Primary Intended Use: the use of the Facility as an assisted living facility and
such ancillary uses as are permitted by applicable Legal Requirements and may be
necessary in connection therewith or incidental thereto.
Prime Rate: the variable rate of interest per annum from time to time set forth
in the Wallstreet Journal as the prime rate of interest and in the event that
the Wallstreet Journal no longer publishes a prime rate of interest, then the
Prime Rate shall be deemed to be the variable rate of interest per annum which
is the prime rate of interest or base rate of interest from time to time
announced by any major bank or other financial institution reasonably selected
by AL Investors.
Provider Agreements: all participation, provider and reimbursement agreements or
arrangements, if any, in effect for the benefit of Owners or Managers in
connection with the operation of the Facility relating to any right of payment
or other claim arising out of or in connection with participation in any Third
Party Payor Program.
Put and Purchase Agreement: that certain Put and Purchase Agreement between
Xxxxxx Xxxx and XX XX Holdings dated on or about the same date hereof.
Residency Agreement: all contracts, agreements and consents executed by or on
behalf of any resident or other Person seeking services at the Facility,
including, without limitation, assignments of benefits and guarantees.
Senior Loan: any indebtedness incurred by Owners which is secured by any
mortgage, deed of trust and related security instruments against a Facility.
Initially, the Senior Debt is evidenced by that certain Loan Agreement between
AL Investors II (and the Facility Entities) and GMAC Commercial Mortgage
Corporation dated on or about the same date hereof ("Initial Senior Loan").
Third Party Payor Programs: collectively, all third party payor programs in
which the Emeritus Entities presently or in the future may participate,
including without limitation, Medicare, Medicaid, Blue Cross and/or Blue Shield,
Managed Care Plans, other private insurance plans and employee assistance
programs.
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Third Party Payors: collectively, Medicare, Medicaid, Blue Cross and/or Blue
Shield, private insurers and any other Person which presently or in the future
maintains Third Party Payor Programs.
Title Company: First American Title Insurance Company.
Total Revenues: collectively, but without duplication all revenues generated by
reason of the operation of the Facilities in the aggregate, except where the
Agreement expressly provides that Total Revenues shall be determined for each
Facility, directly or indirectly received by any Facility Entity or Managers,
including, without limitation, all resident revenues received or receivable for
the use of, or otherwise by reason of, all rooms, units and other facilities
provided, deposits received from residents under Residency Agreements, meals
served, services performed, space or facilities leased pursuant to the Leases or
goods sold on or from the Facility, all amounts from Third Party Payors, and all
revenues from all ancillary services provided at or relating to any Facility;
provided, however, that Total Revenues shall not include:
(a) federal, state or local sales, use, gross receipts and excise taxes
and any tax based upon or measured by said Total Revenues which is added to or
made a part of the amount billed to the resident or other recipient of such
services or goods, whether included in the billing or stated separately, which
is paid to the Governmental Authority;
(b) proceeds from sale of capital assets, including the sale of the
Facility and proceeds therefrom other than sale of Furnishings and Equipment in
the ordinary course of business,;
(c) proceeds of any insurance other than business interruption insurance;
(d) proceeds of any financing or capital contributions to Owners;
(e) interest or earnings on the Reserve Account;
(f) any Award resulting from Condemnation;
(g) any other income or proceeds from any source other than in the
ordinary course of business of the Facility.
Except as otherwise specifically indicated, all references to Section and
Subsection numbers refer to Sections and Subsections of this Agreement, and all
references to Exhibits refer to the Exhibits attached hereto. The words
"herein,"
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"hereof", "hereunder", "hereinafter", and words of similar import refer to this
Agreement as a whole and not to any particular Section or Subsection hereof
unless the context otherwise requires.
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