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EXHIBIT 99.6
AMERICAN RETIREMENT VILLAS PROPERTIES II,
A CALIFORNIA LIMITED PARTNERSHIP
PROPERTY MANAGEMENT AGREEMENT
THIS AGREEMENT is made by and between AMERICAN RETIREMENT VILLAS
PROPERTIES II, a California limited partnership (the Partnership), and
AMERICAN RETIREMENT VILLAS CORPORATION, a California corporation
(Agent).
1. EMPLOYMENT OF AGENT
1.1 The Partnership hereby employs Agent, and Agent accepts
the employment, as manager of and exclusive leasing agent for each
facility owned or operated by the Partnership (a Facility). A schedule
of the facilities is attached and by this reference is made a part of
this Agreement.
1.2 Partnership acknowledges that Agent is in the business
of managing retirement facilities both for its own account and for
others. It is hereby expressly agreed that Agent and its affiliates
may continue to engage in such activities and may manage facilities
other than those presently managed by it (whether or not such other
facilities may be in competition with the Partnership).
1.3 With respect to the Partnership, Agent acknowledges that
it is also its Managing General Partner.
2. AGENT'S DUTIES AND AUTHORITY
2.1 General. Agent shall have the sole and exclusive
authority to manage and supervise each Facility and the business and
affairs associated with or related to daily Facility operation. Such
duties and authority shall include, by way of example and not
limitation, those set out in Paragraphs 2.2 through 2.8 below.
2.2 Renting. Agent shall establish policies and procedures
for directing the marketing activities of personnel engaged by or on
behalf of the Partnership. Agent shall have the sole discretion to
establish the terms and conditions of occupancy by the tenants, and is
hereby authorized to direct and control Partnership employees in
entering into rental agreements and collecting rents on behalf, in the
name, and for the account of the Partnership. Agent shall cause the
Partnership to advertise as appropriate.
2.3 Repair, Maintenance and Improvements. Agent shall make
and execute, or supervise and have control over the making and
executing of all decisions concerning the acquisition of furniture,
fixtures and supplies, and shall purchase or lease personal property in
the
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name and for the account of the Partnership. Agent shall make and
execute, or supervise and have control over the making and executing of
all decisions concerning the maintenance, repair and landscaping. All
costs incurred in connection therewith shall be on behalf, in the name,
and for the account of the Partnership. Agent will not, however, in
its capacity as Agent, incur any single obligation for any single
Facility in excess of $10,000 without the Partnership s prior written
approval.
2.4 Personnel.
2.4.1. Agent shall select all vendors, suppliers,
contractors, subcontractors and employees reasonably required to
operate and maintain each Facility. All such acts shall be on behalf,
in the name, and for the account of the Partnership and any employees
hired shall be carried on the payroll of either the Partnership or a
corporation organized to employ such personnel and shall not be deemed
to be Agent's employees. All salaries and tax obligations for the
individuals other than Agent's own employees shall be charged to the
Partnership, which hereby authorized Agent to pay such obligation with
Partnership funds.
2.4.2 Under some circumstances, certain individuals
performing services for or at a Facility may be employees of the Agent.
With regard to such individuals, Agent shall be responsible for payment
of all employer obligations. Partnership shall reimburse Agent for
such expenses as appropriate.
2.4.3 Whenever the services of independent
contractors are employed, Agent shall use its best efforts to obtain
them at the best price available. Cost to the Partnership shall be
reasonable and shall not exceed the cost of like services obtainable in
the open market, if any.
2.5 Service Agreement. Agent, or Partnership employees
acting pursuant to Agent's direction, shall negotiate and execute on
behalf and in the name of the Partnership, utility, service, concession
and supply agreements for the maintenance, repair and operation of the
Facility.
2.6 Funds and Accounting.
2.6.1 Agent shall collect, deposit in a separate
bank account maintained by or for the Partnership, and disburse all
funds on behalf and in the name of the Partnership. After deducting
expenses, including its management fee, and any reserve required by the
Partnership, any balance remaining shall remain in the account for the
benefit of the Partnership, or be remitted to the Partnership if the
Agent has such funds in a separate trust account. If there is a
deficit in any period, it is the Partnership's responsibility to cure
that deficit, either by making direct payments or by paying Agent who
will, in turn, pay items due. Agent shall not be
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required to advance any of its funds for the Partnership or any
Facility. If in its discretion, Agent does advance such funds,
Partnership agrees to reimburse Agent immediately.
2.6.2 Agent shall pay all operating expenses, debt
service, insurance premiums and taxes from Partnership monies.
2.6.3 As a convenience to the Partnership, Agent
shall withhold each month a sum sufficient to pay annual taxes,
insurance, and other expenses billed on an annual basis. From the
amounts so withheld Agent shall make all payments prior to any
delinquency. If at any time funds withheld are insufficient to make
timely payments, Agent shall notify the Partnership which will
immediately supply the necessary balance.
2.6.4 Agent shall maintain accurate records of all
monies received and disbursed, which records shall be open to the
Partnership at all reasonable times. Agent shall also render to the
Partnership a monthly statement showing all receipts, disbursements,
rentals, vacancies and delinquencies. Agent shall not be responsible
for the preparation of any Partnership financial statements or income
tax returns but shall make books and records available so that
statements and returns may be prepared.
2.6.5 The Partnership agrees that, on Agent's
request, funds will be provided to create a permanent operating reserve
account, the amount of which Agent will, in consultation with the
Partnership, determine annually.
2.7 Collection and Enforcement. Agent shall supervise and
direct personnel engaged by or on behalf of the Partnership in the
collection of rents and receivables and the billing of all accounts
payable, and shall be responsible for establishing policies and
procedures to minimize the amount of delinquent accounts receivable.
When appropriate, Agent shall cause to be instituted, on behalf and in
the name of the Partnership, any and all legal actions or proceedings
Agent deems advisable to collect charges, rent or other income due to
the Partnership or to oust or dispossess tenants or other persons
unlawfully in possession under any lease, license, concession agreement
or otherwise, and to collect damages for breach or default. All costs
and fees incurred shall be the Partnership's responsibilities.
2.8 Insurance. Agent shall use its best efforts to assure
that there is obtained and kept in force, at the expense of the
Partnership, fire, comprehensive, liability and other insurance
policies in amounts generally carried with respect to similar
facilities.
3. PARTNERSHIP OBLIGATIONS
The Partnership hereby agrees to cooperate with Agent in the
performance of its duties under this Agreement and to that end, upon
Agent's request, to provide reasonable temporary office space for Agent
s employees on the premises, to give agent access to all
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Partnership files, books and records relevant to the Facility, and to
execute all documents or instruments and hire and discharge such
employees as Agent in its sole judgment deems necessary or advisable to
enable it to fulfill its duties under this Agreement.
4. COMPENSATION
4.1 For services rendered pursuant to this Agreement, the
Partnership shall pay Agent, monthly, five percent (5%) of the gross
revenues actually collected, but in no case shall the fee be less than
$1,000 per month. "Gross revenues" means all Partnership receipts
arising from operation of each Facility or machines or concessions
located at a Facility. Gross revenues shall be determined on a cash
basis.
4.2 In addition, the Partnership shall pay or Agent shall be
reimbursed for the following expenses:
4.2.1 Direct costs reasonably incurred in providing
accounts payable, general ledger services, and such other accounting-
type services (including any costs for electronic date processing).
4.2.2 Direct costs reasonably incurred for the
employment of professional consultants such as lawyers and accountants
and independent contractors and employees who render services for the
marketing, maintenance and operation of each Facility.
4.2.3 Direct costs such as time, travel, lodging,
meals and the like reasonably incurred by Agent for its personnel to
investigate, prepare, advise, argue and appeal real and personal
property tax appeal case(s), or eminent domain proceedings.
4.2.4 All other reasonable out-of-pocket costs
attributable to the maintenance and operation of each Facility.
5. INDEMNIFICATION
5.1 Agent shall not be liable to the Partnership or any
other person for any payment due, unless the necessary funds have been
provided to Agent.
5.2 Neither Agent nor any of its employees or agents shall
be liable for any honest mistake in judgment or for any loss due to
such mistake, or the negligence, dishonesty, fraud or bad faith of any
employee or agent, provided that they were selected with reasonable
care. The Partnership shall indemnify, hold harmless, and provide a
defense by counsel of Agent's choosing, Agent and its employees and
agents, against any and all costs, expenses, fees, claims, suits,
damages, judgments, and liability to third parties arising out of or
in connection with the Facility or on behalf of the Partnership or its
business, excepting only Agent's willful misconduct or gross
negligence. In any question concerning this Agreement or operation of
the
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Facility, Agent may consult with counsel and any action taken or
omitted on the advice of such counsel shall be deemed justified and
taken in good faith.
6. TERM AND TERMINATION
This Agreement shall become effective when signed by both
Parties, or on the date of the issuance of the Certificate of
Occupancy, or actual possession, whichever last occurs, and shall
continue for the Partnership's Term, so long as it owns the Facility.
If Agent or Partnership breaches any term of this Agreement and such
breach is not cured after reasonable Notice, this Agreement may be
cancelled by either party on sixty (60) days Notice to the other.
7. MISCELLANEOUS AND PROCEDURAL
7.1 Notice.
Unless otherwise specified in a written Notice, any
written communication required under this Agreement shall be deemed
given when actually received by the party intended, or seventy-two (72)
hours after being deposited, postage prepaid, in the United States Mail
(whichever first occurs), to the parties at the addresses set out
beneath their signature.
7.2 Binding Effect; Assignment.
This Agreement shall bind and inure to the benefit of
the parties, their successors, assigns, personal representatives, heirs
and legatees. Neither this Agreement nor any right hereunder shall be
assignable by the Partnership and any attempt to do so shall be void
abinitio. Agent shall have the right to assign this Agreement to an
affiliate or a wholly or majority owned subsidiary; provided, however,
any such assignee must assume all Agent s obligations hereunder. The
Partnership s rights hereunder will be enforceable against any such
assignee and Agent shall not be released from its liabilities hereunder
unless the Partnership shall expressly agree thereto in writing.
7.3 Entire Agreement; Modification.
All negotiations are merged into this Agreement which
contains the entire understanding between the parties. No material
provision can be amended except by a mutual writing to which a majority
of the Partnership's Limited Partners have consented.
7.4 Severability.
If any provision of this Agreement, or any portion
hereof, is to be held invalid, void or unenforceable, the remaining
portions of this Agreement and the enforceability of this Agreement as
a whole shall remain in effect.
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EACH PARTY, BY ADDING ITS SIGNATURE BELOW, ACKNOWLEDGES THAT
IT HAS READ, UNDERSTANDS AND BEEN DULY AUTHORIZED TO EXECUTE AND BE
BOUND BY THIS AGREEMENT.
THE PARTNERSHIP: AGENT:
AMERICAN RETIREMENT VILLAS AMERICAN RETIREMENT VILLAS
PROPERTIES II, A CALIFORNIA CORPORATION, a California
LIMITED PARTNERSHIP, corporation,
BY: /s/ By: /s/
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Gary L. Davidson, John A. Booty, President
General Partner
Address for Notice: Address for Notice:
245 Fischer Avenue, #D-1 245 Fischer Avenue, #D-1
Costa Mesa, CA 92626 Costa Mesa, CA 92626
June 28, 1990 June 28, 1990
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Date of Signature Date of Signature
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FACILITY SCHEDULE A
PROPERTY MANAGEMENT AGREEMENT
AMERICAN RETIREMENT VILLAS PROPERTIES II,
A CALIFORNIA LIMITED PARTNERSHIP
The following facilities will operate under this Agreement as of
the designated Effective Date.
NAME ADDRESS UNITS EFFECTIVE DATE
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RETIREMENT INN OF 250 Myrtle Road 68 April 1989
BURLINGAME Burlingame, CA 94010
RETIREMENT INN OF 290 N. San Tomas Aquino Rd. 72 April 1989
CAMPBELL Campbell, CA 95008
COVINA VILLA 825 W. San Bernardino Rd. 66 Oct. 1988
Covina, CA 91722
RETIREMENT INN OF 501 King Drive 95 April 1989
DALY CITY Daly City, CA 94015
RETIREMENT INN OF 38801 Hastings Street 70 April 1989
FREMONT Fremont, CA 94536
RETIREMENT INN OF 1621 E. Commonwealth Ave. 68 April 1989
FULLERTON Fullerton, CA 92631
MONTEGO HEIGHTS 1400 Montego 175 Dec. 1989
LODGE Walnut Creek, CA 94595
VALLEY VIEW LODGE 1228 Rossmoor Parkway 125 April 1989
AT ROSSMOOR Walnut Creek, CA 94595
RETIREMENT INN OF 175 E. Remington Drive 138 April 1989
SUNNYVALE Sunnyvale, CA 94087
THE INN AT WILLOW 1185 Pedro Street 85 April 1989
GLEN San Jose, CA 95126
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