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AGREEMENT TO PROVIDE MANAGEMENT
SERVICES TO WASHINGTON ASSISTED LIVING FACILITIES
This Agreement made as of the 31st day of December, 2001, by and between
Regent Assisted Living, Inc., an Oregon corporation (hereinafter referred to as
"Licensee") and Emeritus Corporation, a Washington corporation (hereinafter
referred to as "Manager").
WHEREAS, as set forth more fully in Exhibit A, Licensee either owns, leases
or manages under contract or in its capacity as the managing member of the
Licensee or lessee of, the assisted living facilities which are licensed under
Washington law as boarding homes and which are described in Exhibit A (the
"Facilities" and, where the context requires, individually, a "Facility") and
is, in each instance, authorized to engage a manager or submanager in connection
with its operation of the Facilities;
WHEREAS, Licensee wants someone to manage or submanage, as applicable, the
Facilities on its behalf;
WHEREAS, Manager is experienced and qualified in the field of assisted
living facilities management and has agreed to manage or submanage, as
applicable, the Facilities on behalf of Licensee, pursuant to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, IT IS AGREED AS FOLLOWS:
I. Responsibilities of Manager: Licensee hereby engages Manager and
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Manager hereby accepts such engagement and agrees to provide management,
consulting and advisory services to Licensee in connection with the operation of
the Facilities, upon the terms and conditions set forth in this Agreement;
provided, however, Licensee has and retains under this Agreement the ultimate
responsibility for the operational decisions of the Facility. By entering into
this Agreement, Licensee does not delegate to Manager any powers, duties or
responsibilities which it is prohibited by law from delegating. Licensee also
retains such other authority as shall not have been expressly delegated to
Manager pursuant to this Agreement. Subject to the foregoing, Manager shall
provide the following services:
(a) Operational Policies and Forms: Manager shall develop and
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implement such operational policies and procedures as may be necessary to ensure
the ongoing licensure of the Facilities and the establishment and maintenance of
operational standards appropriate for the nature of the Facilities. Licensee
shall have the right to review and approve all such policies and procedures and
to recommend changes to such policies and procedures in the event, in its
capacity as the licensed operator of the Facilities, it believes that such
changes are needed to ensure the compliance of the Facilities with applicable
licensure laws.
(b) Charges: Manager shall establish the schedules of recommended
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charges, including any and all special charges for services rendered to the
residents at the Facilities. Licensee shall have the right to review and
approve the fee schedules as the same may change from time to time. Residents
of the Facilities shall be provided with notice of any changes in the schedules
of charges in accordance with RCW Chapter 70.120, the Long Term Care Residents
Rights Act, and, if applicable, the terms of their admission agreement and the
policies and procedures of the Facilities.
(c) Information: Manager shall develop any informational material,
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mass media releases, and other related publicity materials, which are necessary
or appropriate for the operation of the Facilities, all of which Licensee shall
have the right to review and approve. If and to the extent any such materials
developed by Manager contain Manager's name or logo, the same shall clearly
reflect that Manager is the manager and shall not, directly or indirectly, give
the appearance that Manager is the licensee of the Facility. Further, when
Manager takes any action on behalf of Licensee, any communication or
correspondence must clearly indicate that it is acting as the agent of Licensee.
(d) Regulatory Compliance: Subject to the force majeure and notice and
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cure right contained in the Agreement below, Manager shall assist Licensee in
maintaining all licenses, permits, qualifications and approvals from any
applicable governmental or regulatory authority for the operation of the
Facilities, it being understood and agreed that under Washington law, Licensee
is responsible for ensuring that all such licenses are obtained and maintained
and that the Facilities are operated in compliance with all applicable laws and
regulations, including, but not limited to, the laws and regulations governing
the licensure of boarding homes and local, state and federal employment rules
and regulations. Manager shall manage the operation of the Facilities in a
manner which will ensure their full compliance with all applicable laws and
regulations; provided, however, Manager shall not be deemed to be in default of
its obligations under this Section I(d) in the event (i) of a violation of any
applicable law or regulation which occurs during the first thirty (30) days
after the Commencement Date (the "Protected Period"), (ii) of the citation of
any deficiency or deficiencies which do not result in the threatened revocation
of the licensure or Medicaid certification of, or the imposition of a ban on
admissions at, the affected Facility or Facilities and which deficiency or
deficiencies are timely corrected in accordance with a plan of correction
approved by the applicable regulatory authority, (iii) Manager, at the direction
of Licensee, is duly contesting the application of any law to the operation of a
Facility or Facilities and compliance therewith is stayed during the period that
such contest is pending or (iv) compliance with law requires the expenditure of
funds which require the approval of Licensee and for which Licensee refuses or
fails to provide such approval. In order to ensure Manager's compliance with
its obligations under this Section I(d) Licensee shall provide Manager prior to
the Commencement Date with a copy of any agreements or orders to which Licensee
may be a party in connection with the operation of the Facilities. Within 48
hours of receipt or sooner if deemed necessary by Licensee to correct any cited
deficiencies in a timely manner, Manager shall provide Licensee with copies by
fax, overnight mail, email or other comparable means of expedited transmission
of any written notices of non-compliance which it receives from any governmental
authority having jurisdiction over the Facilities in which such authorities
threaten a loss or licensure or Medicaid certification of, or the imposition of
a ban on admissions at or the imposition of civil or criminal penalties against,
a Facility or Licensee. In addition, Licensee shall have the right to approve,
which approval shall not be unreasonably withheld, any plan of correction
developed by Manager including, but not limited to, any plan of correction with
respect to any survey or other governmental action which threatens revocation of
the licensure or Medicaid certification of, or a ban on admissions at or the
imposition of civil or criminal penalties against, a Facility or Licensee and to
approve the election by Manager to contest the application of any law to the
operation of a Facility or Facilities.
(e) Capital Repairs, Replacements and Improvements: Recognizing the
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Licensee is ultimately responsible for compliance with and meeting all
applicable state boarding home licensing requirements, Manager shall make all
capital repairs, replacements and improvements which are necessary for the
efficient and effective operation of the Facilities and their compliance with
law unless doing so involves an expenditure requiring Licensee's approval in
accordance with the terms of this Agreement and Licensee fails to provide such
approval. The cost of such capital repairs, replacements and improvements shall
be within the budgetary limits set forth in the annual capital budgets prepared
by Manager pursuant to Paragraph I(L); provided, however, Manager shall not be
deemed to be in default of its obligations under this Section I(e) in the event
the cost of such repairs, replacements and/or improvements exceeds the
applicable budgetary limits provided such repairs, replacements and/or
improvements are (a) of such an emergency nature that Licensee's prior notice
and approval is not feasible in order to adequately protect the Facilities and
the health and safety of the occupants or (b) the cost of such repairs,
replacements and/or improvements are within 10% of the budgetary limits set
forth in the annual approved capital budget then in effect for the affected
Facility or Facilities prepared by Manager pursuant to Paragraph I(L). Any
other capital expenditures for repairs, replacements or improvements that
exceed such budgetary limits shall be subject to the prior approval of the
Licensee, which approval shall not be unreasonably withheld; provided, however,
Licensee shall not be deemed to have unreasonably withheld its approval if (i)
Licensee lacks the financial resources to cover the cost of such capital repair,
replacement or improvement or (ii) the cost of such capital repair, replacement
or improvement will exceed $25,000 individually or in the aggregate with other
unbudgeted capital repairs, replacements or improvements undertaken by Manager
in the same fiscal year. In performing the foregoing repairs, replacements
and improvements Manager shall use the Facilities' on site maintenance personnel
as and where possible and shall otherwise contract with qualified third parties
to provide the necessary services and shall undertake the same or cause the same
to be undertaken in a ▇▇▇▇▇▇▇ like and lien free manner.
(f) Accounting:
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(i) Manager shall, at its expense, provide accounting support to
the Facilities. Licensee acknowledges and agrees that such accounting support
shall not include the preparation of Licensee's corporate financial statements
or securities filings, but only the individual financial statements for the
Facilities, in each case meeting the requirements of Section 1(G). Manager
shall not be required to reflect in the financial statements for the Facilities
any corporate accounting adjustments provided to Manager by Licensee until such
time as Manager fully understands the rationale for such adjustment.
(ii) All accounting procedures and systems utilized in providing
said support shall be in accordance with the operating capital and cash programs
developed by Manager, which programs shall conform to generally accepted
accounting principles ("GAAP") and shall not materially distort income or loss;
provided, however, Manager shall have no liability for errors in the financial
statements prepared during the term of this Agreement which arise from errors in
starting accounting balances provided by Licensee to Manager pursuant to Section
I(f)(v).
(iii) In addition, as a cost of operating the Facilities, Manager shall
prepare or cause to be prepared all payroll tax returns, sales and use tax
returns, real and personal property tax returns, informational tax returns,
Forms 5500 and local or state gross receipts and/or business and occupation tax
returns and Manager shall cause to be paid all of the taxes reflected on such
returns as being due, which taxes shall be paid from the cash receipts of the
Facilities or the working capital provided by Licensee under the terms of this
Agreement. All other tax returns, including Licensee's local, state or federal
income tax returns and state corporate franchise tax returns and third party
payor cost reports, shall be prepared by Licensee or its designee and the taxes
and other payments due thereunder shall be the sole responsibility of Licensee.
(iv) Nothing herein shall preclude Manager from delegating to a third
party a portion of the accounting duties provided for in this section; provided,
that such delegation shall not relieve Manager from ultimate liability for the
timely and complete performance of the obligations provided for herein or for
the expense thereof, to the extent such expense is to be borne hereunder by
Manager. Licensee acknowledges and agrees that in the event Manager retains one
or more third parties to review the real and/or personal property tax returns or
utility bills of the Facilities or other third party charges in an effort to
effect cost savings for the Facilities, the fees and expenses of such third
parties shall be paid from the cash receipts of the Facilities or the working
capital provided by Licensee under the terms of this Agreement.
(v) In order to enable Manager to provide the accounting support
services described in this Section, prior to the Commencement Date, Licensee
shall provide to Manager the information and shall take the transition actions
described in Exhibit B hereto (the "Accounting Transition Services"), it being
understood and agreed that Manager will not be able to fully perform its
obligations under this Section I(f) unless and until Licensee has fully complied
with its obligations with respect to the Accounting Transition Services.
Manager acknowledges and agrees that the Accounting Transition Services address,
among other things, resident trust funds. Manager and Licensee further
acknowledge and agree that all trust funds held by Licensee for resident's
custodial accounts shall remain the responsibility of Licensee to administer;
provided, Manager shall provide to Licensee an accounting of all amounts held in
trust for residents on not less than a monthly basis. Licensee shall be
responsible for all fiduciary and custodial obligations with respect to such
funds and be directly accountable to the residents with respect thereto;
provided, Manager shall comply with all legal requirements related to accounting
for and holding resident trust funds to the extent that Manager is involved in
the Facility's resident trust funds.
(g) Reports: Manager shall prepare and provide to Licensee any
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reasonable financial and operational information with respect to the Facilities
which may from time to time be specifically requested by Licensee, including any
information needed to assist Licensee in completing the tax returns for which it
is responsible under Section I(f),in complying with any reporting obligations
imposed on Licensee or Licensee's parent under its leases and loan agreements or
as a publicly traded company, in refinancing any of the debt secured by the
Facilities and in complying with the reporting obligations described in Exhibit
C. In addition, by no later than thirty (30) days after the end of each calendar
month, Manager shall provide Licensee with an unaudited balance sheet of the
Facilities, dated the last day of such month, and an unaudited statement of
income and expenses for such month and for the fiscal year to date relating to
the operation of the Facilities showing the variance between the actual and
budgeted operating results of the Facilities for said month and in the form
attached hereto as Exhibit D and with a census report for the month indicating
the number of units occupied and the number of units vacant. Upon request
Manager shall cooperate with Licensee or Licensee's certified public accountant
in the event Licensee elects, or is required, to have audited annual financial
statements prepared. The financial statements prepared by Manager shall be
prepared in accordance with (i) GAAP, consistently applied, (ii) this Agreement,
and (iii) the procedures and practices provided for in this Agreement.
(h) Bank Accounts:
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(i) With respect to each of the Facilities, Manager shall
establish and maintain a checking account for each of the Facilities in the name
set forth opposite the name of each of the Facilities in Exhibit E (each of
which accounts shall hereinafter be referred to as the "Depository Account") and
shall deposit therein all money received during the term of this Agreement in
the course of the operation of the applicable Facility including any money
received upon the collection of accounts receivable which are outstanding as of
the Commencement Date for goods sold or services rendered at the Facilities
prior to the Commencement Date and shall pay therefrom the expenses incurred in
the operation of the applicable Facility during the Term of, and in accordance
with the terms of, this Agreement.
(ii) During the Term hereof, withdrawals and payments from the
Depository Account for each Facility shall be made only on checks signed by a
person or persons designated by Manager but Manager shall have no ownership
interest in or other rights to the Depository Account other than the right to
make withdrawals therefrom and to make deposits thereto; and provided, further
that Licensee shall be given notice as to the identity of said authorized
signatories.
(iii) Withdrawals from the Depository Account for each Facility
shall be made first to pay to Licensee the management fee due with respect to
such Facility as set forth in Exhibit F (the "Regent Management Fees"), which
Regent Management Fees shall be deposited in an account established by Licensee
in Seattle, Washington (the "Regent Account") and thereafter to pay the expenses
of operating such Facility, including payroll and related state and federal
payroll tax obligations (the "Daily Operating Expenses") and rent and debt
service payments to the lenders and landlords set forth in Exhibit G and in the
amounts set forth in Exhibit G as the same may be amended from time to time to
reflect changes in such rent and debt service payments or in the amounts
otherwise specified by Licensee to Manager in writing from time to time (the
"Property Expenses"); provided, however, that regardless of the priority of
payments set forth in this Section I(h)(iii), Licensee shall be required to
ensure that all expenses related to the care of the residents of the Facilities
are paid, it being understood and agreed that any limitation on resources or
insufficiency of funds of the Licensee or the Facilities shall not excuse
Licensee, as the licensed operator of the Facility, from fulfilling its
obligation to ensure that the Facilities meet all applicable state licensing
requirements. Exhibit G shall also reflect when the rent or debt service
payment is due under the terms of the applicable lease or loan documents and any
available grace period. The Daily Operating Expenses and the Property Expenses
shall be paid by Manager in such order of priority as Manager deems appropriate
from time to time to the operation of such Facility, provided, however, Daily
Operating Expenses and the Property Expenses shall be paid by no later than
their due date or, if applicable, before the expiration of any applicable grace
period in which payment may be made prior to the occurrence of a default under
the terms of the applicable lease, loan agreement, contract, agreement or
purchasing arrangement, unless resulting from the failure of Licensee to provide
the Working Capital Funds (as defined in Section I(h)(v) below) or Management
Fee Funds (as defined in Section I(h)(v) below) as and when due in accordance
with Section I(h)(v) below. Manager shall make any rent and debt service
payments which are made by it by wire transfer in accordance with wiring
instructions provided by Licensee to Manager.
(iv) Any excess funds in the Depository Account for a Facility,
after establishing the working capital reserves required by Section VIII(c),
shall be distributed by Manager to Licensee.
(v) In the event (A) at any time Manager determines in the
exercise of its reasonable judgment that there are insufficient funds in the
Depository Account or in the Other Authorized Accounts (as hereinafter defined),
in the case of a Designated Facility (as hereinafter defined), to maintain the
minimum bank balance required by Section VIII(c) and pay all Daily Operating
Expenses and Property Expenses due and payable in the following thirty (30) day
period (the "Working Capital Funds") or (B) in the event there are at any time
insufficient funds available in the Regent Account to pay Manager's Base
Management Fee (as defined below) (the "Management Fee Funds"), no less than
three (3) days prior to the date on which Manager determines that Working
Capital Funds or Management Fee Funds, as applicable, are required, Manager
shall provide Licensee with a verbal demand therefor followed by a written
confirmation of such demand, which written confirmation shall specify in
reasonable detail the amount needed and the reason therefor and, Licensee shall,
within five (5) business days of its receipt of such written demand by Manager,
deposit in the applicable Depository Account or the Regent Account, as
applicable, the amount so demanded by Manager. For purposes hereof, the Other
Authorized Accounts shall be defined as those accounts designated in writing by
Licensee to Manager from which Manager is authorized to draw funds in order to
meet the working capital needs of certain other Facilities designated in writing
by Licensee to Manager (the "Designated Facilities" or individually a
"Designated Facility"), provided the designation shall not be effective unless
the same is accompanied by either (i) an opinion of Licensee's outside legal
counsel confirming that it has reviewed all necessary legal documents and
determined that Licensee is authorized to lend money from the Other Authorized
Accounts for the benefit of the Designated Facilities or (ii) a certificate, in
form and substance reasonably acceptable to Manager signed by Licensee's
Representative to the effect that Licensee is authorized to lend money from the
Other Authorized Accounts for the benefit of the Designated Facilities, along
with appropriate supporting documentation with respect to the statements
contained in such certificate, which documentation shall be in form and
substance acceptable to Manager in the exercise of its reasonable discretion.
Licensee acknowledges and agrees that in no event will Manager have any
obligation to pay any Daily Operating Expenses or the Regent Management Fee
other than from funds available in the applicable Depository Account, including
funds deposited therein by Manager after withdrawing funds from the Other
Authorized Accounts, if applicable, or to provide its own funds to satisfy or
support in any manner the working capital needs of the Facilities or to pay its
own Base Management Fee, and that (i) such working capital is to be provided
solely from the cash receipt of the Facilities, if applicable, withdrawals from
the Other Authorized Accounts and the working capital provided by Licensee
pursuant to this Section I(h) and (ii) such management fees are to be paid from
the funds deposited by Manager in payment of the Regent Management Fees and by
Licensee pursuant to this Section I(h)(v), if applicable, in the Regent Account.
(vi) Licensee acknowledges and agrees that in the course of its
operation of the Facilities Manager may incur common expenses benefiting all of
the facilities owned and/or operated by Manager, including the Facilities (the
"Common Expenses"). Such Common Expenses shall be included in the Daily
Operating Expenses of the Facilities and may be paid from the cash in the
applicable Depository Account(s) if (i) the same relate to the direct cost of
corporate, regional or divisional meetings or training sessions held by Manager
and in which the administrative personnel of the Facilities have participated
("Meeting and Training Common Expenses"), (ii) the same are included within the
approved annual capital or operating budgets ("Budgeted Common Expenses") or
(iii) the same are not Meeting and Training Common Expenses or Budgeted Common
Expenses (the "Other Common Expenses") but are approved by Licensee, which
approval shall not be unreasonably withheld, after Manager has provided
Licensee with a specification setting forth in reasonable detail the nature of
such Other Common Expenses.
(i) Personnel: All of the personnel of the Facilities, including the
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community directors, business managers and the Wellness Directors, if
applicable, shall be the employees of Licensee and the salaries, bonuses,
commissions, state and federal payroll and social security tax obligations and
benefits paid to or on behalf of such employees shall be deemed to be included
in the Daily Operating Expenses of the Facilities and thus shall be paid from
the Facilities Depository Account, subject to the limitation set forth in
Section II with respect to the payment of Insurance Costs (as defined in Section
II). Notwithstanding the foregoing, Manager shall recruit, employ, train,
promote, direct, discipline, suspend and discharge the personnel of the
Facilities; establish salary levels, personnel policies and employee benefits;
and establish employee performance standards, all as needed during the term of
this Agreement to ensure the efficient operation of all departments within and
services offered by the Facilities; provided, however, that ultimate control
over the community directors, including their appointment, and over personnel
matters relating to the operation of the Facilities and the care provided to the
residents of the Facilities and responsibility for the staffing levels, and
training of the personnel at, the Facilities shall remain with Licensee.
(j) Supplies and Equipment: Manager shall purchase supplies and
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non-capital equipment needed to operate the Facilities. In purchasing said
supplies and equipment, if possible without Manager incurring personal liability
for the cost of such supplies and equipment, Manager shall take advantage of any
national or group purchasing agreements to which Manager may be a party.
(k) Legal Proceedings: Manager shall, with the assistance and at the
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direction of Licensee and its legal counsel, take any and all appropriate steps
to protect and/or assist in litigating to a final decision in an appropriate
court or forum any such third party claim of violation, order, rule or
regulation affecting the Facilities and its operation or any claim, loss,
violation or cause of action relating to the Facilities, it being understood and
agreed that under Washington law any administrative appeals of licensing or
contract action/enforcement imposed by the Washington Department of Social and
Health Services ("DSHS") may only be filed by Licensee or by Manager if it is
expressly authorized to do so by Licensee. All of the costs incurred in any
litigation of third party claims respecting the Facilities, including the
reasonable legal fees and expenses of legal counsel retained to defend Licensee
and/or Licensee and Manager jointly and/or any landlord or lender, shall be
included in the Daily Operating Expenses and shall be reimbursed from the funds
in the Depository Account of the applicable Facility established pursuant to
Section 1(h) if previously paid by Licensee or shall be paid from the funds in
the Depository Account of the applicable Facility if not previously paid by
Licensee. Nothing herein shall be construed as precluding Licensee from seeking
to recover from Manager the fees and expenses described in this Section I(k) to
the extent Manager is otherwise liable therefore under the default or
indemnification provisions of this Agreement.
(l) Budgets:
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(i) The Facilities shall be operated on a fiscal year of January 1 through
December 31.
(ii) Licensee and Manager shall agree prior to the Commencement
Date (as hereinafter defined) on an initial operating budget and capital budget
for the period from the Commencement Date through December 31, 2002.
(iii) Prior to the start of each subsequent fiscal year, Manager
shall prepare and submit to Licensee for its review and approval, which approval
shall not be unreasonably withheld, an annual operating budget, an annual
capital expenditure budget, an annual operating plan, an annual marketing plan
and an annual cash flow projection for each of the Facilities. The annual
operating budget and capital expenditure budget shall be prepared using the
format set forth in Exhibit H. In the event a budget for a Facility has not been
agreed upon by the beginning of the fiscal year for any reason whatsoever
including Licensee's or Manager's unreasonable refusal to approve the same,
Manager sole remedy shall be that the operating results of the prior fiscal year
for such Facility plus 5% shall serve as the budget for the following fiscal
year for such Facility unless and until the new budget is agreed upon, it being
understood and agreed that the refusal by Licensee or Manager to approve a
budget shall not be deemed to be an Event of Default hereunder.
(m) Collection of Accounts: Manager shall issue bills for goods and
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services furnished by the Facilities during the term of this Agreement and shall
attempt to collect the balances reflected on such bills, including, but not
limited to, enforcing the rights of Licensee and the Facilities as creditor
under any contract or in connection with the rendering of any services;
provided, however, that any expenses incurred by Manager in so doing with
respect to any Facility shall be included in the Daily Operating Expenses of
such Facility and shall be payable out of funds deposited in the Depository
Account of such Facility described in Section I(h). In addition, upon request
by Licensee, Manager shall issue bills and collect accounts and monies owed for
goods and services furnished by the Facilities prior to the Commencement Date.
Regardless of any standard of performance set forth in this Agreement, Licensee
acknowledges and agrees that there can be no assurances that Manager will be
able to collect any or all of the Facilities' accounts receivable.
(n) Contracts. Manager shall negotiate and enter into any and all
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contracts necessary from time to time in connection with the day to day
operation of the Facilities including, but not limited to, contracts for water,
electricity, natural gas, telephone, sewer, cleaning, trash removal, pest
control and extermination, cable, elevator and boiler maintenance, pharmacy
services, therapy services and other appropriate ancillary services and
contracts for the provision of various services which are designed to identify
potential cost savings to the Facilities, such as utility and tax ▇▇▇▇ review
services; provided that such contracts can be terminated on no more than 90 days
notice. Any contract which cannot be terminated on no more than 90 days notice
shall require the approval of Licensee before the same may be executed by
Manager, which approval shall not be unreasonably withheld. Manager shall have
the right to contract with entities which are owned by or under common ownership
with Manager provided the terms of any such contracts are no less favorable than
the terms then offered by unrelated third parties for the same or similar goods
or services. All contracts shall be entered into in the name of Licensee or
the Facilities. All resident leases or admission agreements entered into by
Manager in connection with the operation of the Facilities shall comply with the
Long Term Care Residents Act, RCW Chapter 70.129.
(o) Manager's and Licensee's Representative: Manager hereby appoints
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▇▇▇▇▇ ▇▇▇▇▇ (the "Manager's Representative") as the person employed by Manager
with whom Licensee shall interact and upon whose decisions Licensee shall be
authorized to rely, and Licensee hereby appoints ▇▇▇▇ ▇▇▇▇▇ (the "Licensee's
Representative") as the person employed by Licensee with whom Manager shall
interact and upon whose decisions Manager shall be authorized to rely, with
respect to the performance by Manager of its duties hereunder. Manager shall
have the right from time to time during the term of this Agreement to replace
the Manager's Representative upon written notice to Licensee designating the
replacement Manager's Representative and Licensee shall have the right from time
to time during the term of this Agreement to replace the Licensee's
Representative upon written notice to Manager designating the replacement
Licensee's Representative. Nothing herein shall be construed as imposing any
personal liability on the Manager's Representative or Licensee's Representative
with respect to the acts or omissions of Manager or Licensee, respectively,
under this Agreement. Owner and Licensee shall use good faith efforts to notify
DSHS in the event of any changes in the Manager's Representative or the
Licensee's Representative but neither shall be in default of its obligations
hereunder should it fail to do so. Any such notice to DSHS shall be sent to the
following address (the "DSHS Address"): Residential Care Services (Attn: ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ 98504-5600).
II. Insurance: Licensee shall, at its sole cost and expense, arrange
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for and maintain all necessary and proper property insurance covering the
Facilities, the furniture, fixtures, and equipment situated thereon, and all
necessary and proper professional and commercial general liability insurance
for Licensee's and Manager's protection. Manager shall, at its sole cost and
expense, maintain commercial general liability insurance for its operations.
All such liability insurance policies shall include coverage for liability to
each party's respective employees involved in the operation of the Facilities
and arising from any improper employment practices (except in the case of
Manager where Licensee acknowledges no such coverage shall be provided by
Manager) and employee crime and theft coverage. All such policies of liability
insurance shall name the other party as, as well as any landlord or lender
identified by Licensee to Manager in writing as additional insureds thereunder
(except in the case of Manager's directors and officers insurance and employee
crime insurance as to which Licensee acknowledges Manager has advised it no such
additional insureds shall be named). In addition, each party shall provide all
employee health and worker's compensation insurance required for their
respective employees. Each party shall be responsible for all deductibles due
with respect to any insurance maintained by it and for any uninsured losses of
any nature whether arising from an failure by the party to maintain insurance or
from the loss not being covered under the terms of any policy of insurance
maintained by the party. All premiums, claims and deductibles related to the
Licensee's insurance covered by this Section II (the "Insurance Costs") shall,
at Licensee's request, be paid by Manager from the applicable Facility's
Depository Account provided (i) Licensee has provided Manager in writing with
reasonable details concerning the amount to be paid and the purpose of such
payment, (ii) there are sufficient funds, whether in the form of cash receipts
of the Facilities or working capital funds deposited by Licensee, in the
Depository Account to enable Manager to pay the same from the Depository
Account, (iii) all other Daily Operating Expenses and the Regent Management Fee
which are then due and payable have been paid from the Depository Account as of
the time when Licensee requests payment of the premiums, deductibles and/or
claims from the Depository Account, (iv) Manager's Base Management Fee which is
then due and payable have been paid from the Regent Account as of the time when
Licensee requests payment of the premiums, deductibles and/or claims from the
Depository Account and (v) Licensee in not otherwise in default of its
obligations under this Agreement.
III. Proprietary Interest and Noncompetition:
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(a) The systems, methods, procedures and controls employed by
Manager and Licensee and any written materials, computer software or policies
developed by Manager and Licensee to document the same are to remain the
property of Manager and Licensee, respectively, and are not, at any time during
or after the term of this Agreement, to be utilized, distributed, copied or
otherwise employed or acquired, except as authorized by the respective Licensee
thereof, provided, however, that upon request of Licensee, Manager shall
negotiate in good faith the terms and conditions upon which Licensee may be
permitted by Manager to use such systems, methods, procedures, controls,
materials, software or brochures containing Manager's name or logo for a limited
transitional period following the termination of this Agreement, which terms and
conditions shall be satisfactory to both Manager and Licensee in their
respective discretion. Any written materials developed or used by Manager in
connection with the operation of the Facilities shall meet the requirements of
Section I(c) of this Agreement, if applicable.
(b) With respect to each of the Facilities, from the Commencement
Date until the earlier to occur of (i) the termination of this Agreement by
Manager as a result of the occurrence of an Licensee Event of Default or (ii)
the date on which Licensee, voluntarily or involuntarily, losses possession of
such Facility or (iii) three years after the expiration of the term of this
Agreement as to such Facility for any reason whatsoever other than the reasons
set forth in clause (ii), Manager shall not solicit, discuss, negotiate or enter
into any agreement or arrangement by which the Manager would obtain any
substantial control of the ownership or management of such Facility from any
third party having an interest in such Facility superior to the Licensee's. The
restrictions in the preceding sentence shall be applicable, without limitation,
to any purchase, lease, license, franchise, partnership, joint venture or other
means, direct or indirect by which Manager or any entity or person controlling,
controlled by or under common control with Manager obtains substantial ownership
or control of one or more of the Facilities; provided, however, nothing herein
shall be construed to prohibit the acquisition by an entity under common control
with Manager of the Facility in Folsom, California and of one of the Facilities
in Scottsdale, Arizona.
IV. Term of Agreement and Termination Payments:
-----------------------------------------------
(a) The Term of this Agreement shall commence on January 1, 2002 (the
"Commencement Date.
(b) The Term of this Agreement shall terminate upon the first to occur
of the following:
(i) the occurrence of an Event of Default hereunder and the exercise by
Manager or Licensee, as applicable, of its right to terminate this Agreement as
a result thereof; or
(ii) on written notice from Licensee to Manager delivered within the last
ninety days of the third year of the term of this Agreement (the "Termination
Period") terminating this Agreement as of the end of the third (3rd) year of the
term of this Agreement (the "Termination Notice"); provided, however, if
the Termination Notice is not delivered by Licensee within the Termination
Period, then this Agreement shall automatically renew for successive one year
terms, subject to Licensee's right to terminate the same on no less than ninety
(90) days written notice to Manager; or
(iii) on no less than ninety (90) days written notice from either Licensee
or Manager as to all, but not less than all, of the Facilities; or
(iv) with respect to one or more Facilities, by Licensee or Manager on no
less than ninety (90) days prior written notice in the event that at any time
during the term of this Agreement Licensee will no longer own or control such
Facilities whether resulting from a sale or other reasons, whether voluntary or
involuntary; or
(v) with respect to one of more of the Facilities, by Licensee in the event
it is unable on or before February 28, 2002 to secure any consents of its
lenders, landlords or joint venture partners which may be required for it to
enter into this Agreement with Manager (the "Third Party Consents"); provided,
however, in the event of the termination of this Agreement by Licensee pursuant
to this Section IV(b)(v), effective with the termination of this Agreement as to
the affected Facility, Licensee and Manager shall enter into an Accounting
Services Agreement with respect to such Facility unless prohibited by such
lender, landlord or joint venture partner; and provided, further, that Licensee
shall be solely responsible for any and all costs of securing such Third Party
Consents, including any consent fees or other consideration required by such
landlords, lenders or joint venture partners as a condition to granting their
consent; or
(vi) by either Licensee or Manager on thirty (30) days notice to the other
in the event that on or before February 28, 2002 they have not secured formal
approval of this Management Agreement from DSHS (the "State Approval"), it being
understood and agreed that this Agreement has been drafted in a manner
intended to address the concerns identified by DSHS in a letter dated December
10, 2001 from ▇▇▇ ▇▇▇▇▇▇ to ▇▇▇▇▇ ▇▇▇▇▇▇ and that the parties have agreed to
negotiate in good faith the terms of any reasonable amendments or modifications
hereto which may be required to secure the State Approval; or
(vii) by Licensee effective as of a date specified by DSHS if DSHS is able
to demonstrate to the satisfaction of Licensee and Manger that DSHS has the
authority to lawfully require Licensee to terminate this Management Agreement as
to any or all of the Facilities as a result of violations of law occurring
at any or all of the Facilities.
For the purposes of Sections IV, V, and VI of this Agreement, any
termination due to an Licensee Event of Default or a Manager Event of Default or
by Licensee pursuant to Section IV(b)(v) shall be a partial termination as if
there were a separate Agreement for each Facility if the Event of Default or
failure to secure the necessary Third Party Consent relates to less than all of
the Facilities. In such event, Licensee's or Manager's required termination
payments shall only be with respect to the Facilities covered by the partial
termination. Each of Licensee and Owner agrees to use good faith efforts to
give notice of the termination of this Agreement to DSHS at the DSHS Address
prior to the effective date thereof but neither shall be in default of its
obligations hereunder should it fail to do so.
(c) In the event of the termination of this Agreement prior to the
end of the third year of this Agreement, the following payments shall be due and
owing from Manager or Licensee, as applicable:
(i) In the event of the termination of this Agreement by Licensee as a
result of the occurrence of a Manager Event of Default, Manager shall pay to
Licensee an amount equal to one month's base management fee concurrently with
the termination of this Agreement.
(ii) In the event of the termination of this Agreement during the first
year either by Manager as a result of the occurrence of an Licensee Event of
Default of the Term or by Licensee pursuant to Section IV(b)(iii) other than
with respect to the ▇▇▇▇▇ Facility (as hereinafter defined), Licensee shall pay
to Manager an amount equal to the difference between the aggregate Base
Management Fee due during the first year of the Term and the Base Management Fee
actually paid to Manager to the date of such termination. For purposes hereof,
the ▇▇▇▇▇ Facility shall mean the Facility located in Redmond, Washington.
(iii) In the event of the termination of this Agreement at any time after
the first year of the Term either by Manager as a result of the occurrence of an
Licensee Event of Default or by Licensee pursuant to Section IV(b)(iii),
Licensee shall pay to Manager an amount equal to the then applicable Base
Management Fee multiplied by three.
(iv) In the event of the termination of this Agreement by Manager pursuant
to Section IV(b)(iii) no payment shall be due from Manager to Licensee upon
termination and in the event of the termination of this Agreement by Licensee
pursuant to Sections IV(b)(v), (vi) or (vii) no payment shall be due from
Licensee to Manager upon termination.
(v) Examples of the calculation of the termination fees due pursuant to this
Section IV(c) are set forth in Exhibit I.
(d) In the event of the termination of this Agreement by Licensee or
Manager in accordance with the terms hereof, (A) no such termination shall be
effective until all amounts due and owing from one party to the other in
accordance with the terms of this Agreement, including the monetary damages
specifically provided for in Sections VI(a) and (b), but specifically excluding
any other damages alleged to have been suffered by a party as a result of the
termination of this Agreement after the occurrence of an Event of Default, have
been paid in full and (B) Manager shall cooperate with Licensee or its designee,
at no cost to Manager and without the assumption of any further liability by
Manager other than the liability imposed on Manager under this Agreement, in an
orderly transition of operational responsibility for the affected Facility or
Facilities to Licensee or its designee (who the parties acknowledge and agree
may only assume operational responsibility in accordance with the requirements
of Washington law) subject to the limitation set forth in this Section IV with
respect to Licensee's obligation to remove Manager from any affected Facility's
license before such termination and transfer are effective.
(e) In the event of the termination of this Agreement for any reason,
Licensee shall continue to be responsible for the care of the residents of the
Facilities until the earlier to occur of (i) the transfer of the affected
Facility or Facilities to a new licensee or (ii) the transfer of the residents
another facility or facilities licensed under applicable state law or (iii)
management responsibility for the affected Facility or Facilities is assumed by
a manager operating under a management agreement which has been approved by
DSHS.
V. Default: Either party may terminate this Agreement, as specified in
-------
this Section V, in the event of a default ("Event of Default") by the other
party.
(a) With respect to Manager, it shall be an "Event of Default"
hereunder:
(i) 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 forty five (45) days (subject to the force majeure
provisions below) after notice thereof shall have been given to Manager by
Licensee, which notice shall specify in detail the event or events constituting
the default;
(ii) If Manager shall (A) apply for or consent to the
appointment of a receiver, trustee or liquidator of Manager of all or a
substantial part of its assets, (B) file a voluntary petition in bankruptcy, or
admit in writing its inability to pay its debts as they become due, (C) make a
general assignment for the benefit of creditors, or (D) 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;
(iii) If, at anytime after the Protected Period, (A) proceedings are
commenced which threaten to revoke, rescind, terminate or not renew the
licensure or certification of the Facilities and Manager is unable to develop a
plan of correction with respect thereto which is acceptable to the applicable
state or federal authorities within the applicable cure period provided by such
authorities or (B) a ban on admissions lasting more than ninety (90) days is
imposed against the Facilities; or
(iv) If at the end of any year, the actual "Net Operating
Income/Loss Before Property" less "Property Insurance" and "Liability Insurance"
for any Facility as reflected on the financial statements of the Facilities
prepared by Manager is more than ten percent (10%) less than the amount for "Net
Operating Income/Loss Before Property" less "Property Insurance" and "Liability
Insurance" as reflected in the annual approved operating budget for such
Facility the same shall be an Event of Default but only with respect to the
affected Facility .
(b) With respect to Licensee, it shall be an Event of Default
hereunder:
(i) If Licensee shall fail to make or cause to be made any
payment to Manager required to be made hereunder (other than its working capital
obligation which is addressed in clause (iii)) and such failure shall continue
for a period of thirty (30) days after notice, which notice shall specify the
payment or payments which Licensee has failed to make;
(ii) If Licensee 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 forty five (45) days after notice (subject to the force
majeure provisions below), which notice shall specify in detail the event or
events constituting the default thereof by Manager to Licensee;
(iii) If Licensee shall fail to provide necessary working
capital upon demand by Manager with respect to the payment of the Daily
Operating Expenses or the Base Management Fee due to Manager within the time
provided in Section I(h), and such failure continues uncured for five (5)
business days after Manager gives Licensee notice of such failure;
(iv) If Licensee shall fail to make payments, or keep any
covenants, owing to any third party which are beyond the control of Manager to
make or keep (which for purposes hereof shall include any covenants by which
Licensee may be bound as of the Commencement Date (the "Pre-Existing Covenants")
or to which Licensee may agree to be bound after the Commencement Date without
the prior approval of Manager (the "Unapproved Covenants")), and which would
cause Licensee to lose possession of the Facilities or any personal property
required to operate the Facilities in the normal course; provided that Manager
shall give Licensee prompt notice of any such payment and failure to pay of
which Manager has knowledge;
(v) If Licensee shall be dissolved or shall apply for or
consent to the appointment of a receiver, trustee or liquidator of Licensee 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 of creditors, file a petition or
an answer seeking reorganization of 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 Licensee a bankrupt or insolvent or approving a petition seeking
reorganization of Licensee or appointing a receiver, trustee or liquidator of
Licensee of all or a substantial part of its assets; or
(vi) If Licensee or any of its principal officers is
convicted or a crime that materially affects the operation or regulation of the
Facilities.
(c) Licensee and Manager shall use good faith efforts to provide
DSHS at the DSHS Address with copies of any written notices of default issued
under the terms of this Section V but neither Licensee nor Manager shall be in
default of its obligations hereunder should it fail to do so.
VI. Remedies and Obligations Upon Default:
-----------------------------------------
(a) If any Event of Default by Licensee shall occur, Manager may,
in addition to any other remedy available to it in law or equity on account of
such Event of Default, forthwith terminate this Agreement, and neither party
shall have any further obligations whatsoever under this Agreement except for
Manager's right to receive damages from Licensee in the amount specified in
Section IV and except any settlement and payment obligations and other
obligations that by their nature survive termination of this Agreement.
(b) If any Event of Default by Manager shall occur, Licensee may,
in addition to any other remedy available to it in law or equity on account of
such Event of Default, forthwith terminate this Agreement and the right to
possession of the Facilities granted to Manager hereunder, and neither party
shall have any further obligation whatsoever under this Agreement; except for
Licensee's right to receive payment of liquidated damages from Manager in an
amount specified in Section IV.
1. Licensee's Inspection: Manager acknowledges and agrees that during
----------------------
the term of this Agreement, Licensee is ultimately responsible for the care
provided to the residents of the Facilities and for the compliance of the
Facilities with applicable law. Accordingly, during the term hereof, Licensee
may enter and inspect the Facilities at any time provided Licensee coordinates
such inspections with the on site administrative personnel at the Facilities in
order to minimize any disruption of Manager's day to day operations of the
Facilities and to ensure that such inspections do not violate resident rights to
privacy under state or federal resident rights laws. During such inspections,
Licensee may inspect and/or audit all books and records pertaining to the
operation of the Facilities. In addition, Licensee shall have the right to
conduct telephonic or personal interviews with the Community Directors and/or
with any of Manager's regional personnel involved in the operation of the
Facilities with respect to any matters related to the operation thereof subject
to the same duty to minimize the disruption to Manager's operations resulting
from such interviews. Licensee and Manager acknowledge and agree that the
efficient and effective operation of the Facility requires that the employees of
the Facility obtain direction from only one party. Accordingly, Licensee and
Manager further acknowledge and agree that prior to the occurrence of a Manager
Event of Default, if Licensee has any concerns with respect to the day to day
operations of the Facility rather than communicating those concerns to the
employees of the Facility and/or overriding directions given by Manager to the
employees of the Facility, Licensee shall advise Manager of its concerns and
shall attempt to resolve the same directly with Manager; provided, however, if
Licensee and Manager are unable within a reasonable period of time to resolve
Licensee's concerns to Licensee's reasonable satisfaction then, in recognition
that Licensee is ultimately responsible for the operational decisions and care
of the residents at the Facility, Licensee shall have the right to take such
action and provide such directions to the employees at it deems to be necessary
to ensure the ongoing operation of the Facility in compliance with applicable
laws and in a manner which protects the residents of the Facility; and provided,
further, that from and after and during the continuance of a Manager Event of
Default, Licensee shall have the right to provide such directions to the
employees of the Facility as it deems to be necessary to ensure the ongoing
operation of the Facility in compliance with applicable laws and in a manner
which protects the residents of the Facility with prior consultation with
Manager. Nothing in this Section or elsewhere in this Agreement shall be
construed as limiting in any manner Manager's or Licensee's obligation to
retain, disclose or produce appropriate documentation and records to any
governmental agency having authority over the Facilities pursuant to applicable
laws and regulations or as limiting the rights of the residents of the
Facilities to address to Licensee any concerns, questions or complaints which
they may have with respect to the operation of the facilities.
VII. Operations of the Facilities:
-------------------------------
(a) Standard of Performance: In performing its obligations under
------------------------
this Agreement, Manager shall manage the Facilities as assisted living
facilities licensed under Washington law as boarding homes in accordance with
the terms of this Agreement, including, but not limited to, the limitations set
forth herein on operating and capital expenditures, and the policies adopted by,
and resources available to, the Facilities; provided, however, that regardless
of the standard of performance imposed by this Section VIII(a), Manager shall
have no liability in the event the operation of the Facilities fail to comply
with the Pre-Existing Covenants or the Unapproved Covenants; and provided,
further, that nothing in this Agreement shall relieve Licensee as the licensed
operator of the Facilities from its ultimate responsibility under State law for
the care provided at the Facilities.
(b) Force Majeure: Neither party will be deemed to be in
--------------
violation of this Management Agreement if it is prevented from performing any of
its obligations hereunder for any reason beyond its control, including, without
limitation, strikes, shortages, acts of terrorism, war, acts of God, (but
excluding lack of the party's own financial resources), or any statute,
regulation or rule of federal, state or local government or agency thereof or,
in the case of Manager, unreasonable interference by Licensee with Manager's
performance of its duties hereunder or in the case of Licensee, unreasonable
interference by Manager with Licensee's performance of its duties hereunder.
(c) Minimum Bank Balances: During the Term hereof, Licensee
-----------------------
and Manager shall attempt to agree on the necessary minimum cash balance to be
maintained in the Depository Account for each Facility but if they are unable to
so agree such minimum cash balance shall upon demand of Manager be required to
be equal to the amount reflected in Exhibit J opposite the name of such Facility
and Licensee shall upon demand in accordance with Section I(h) provide Manager
with any working capital which may be needed to enable Manager to maintain such
minimum cash balances. In addition, during the Term hereof, Licensee shall at
all times maintain a minimum balance in the Regent Account of $80,000.
(d) Facility Records. All of the records of the Facilities shall
-----------------
be and remain the property of Licensee and Manager shall at all times maintain
the confidentiality of all resident records, including, without limitation, all
medical records and shall only disclose the same as required by law and/or as
authorized by the resident to whom such record relates; provided, however, that
Manager's failure to maintain the confidentiality of resident records in
accordance with the requirements of this Section VIII(d) shall not relieve
Licensee of liability should any such resident records be improperly disclosed
in whole or in part.
(e) Notice to Residents. Within a reasonable period of time after
-------------------
the Commencement Date, Manager shall provide written notice to all of the
residents of the Facilities that it has assumed management responsibility for
the Facilities and confirming the address at which they can reach Licensee
should they elect to do so for any reason.
VIII. Management Fee:
---------------
(a) In consideration for the provision of the services contemplated in
this Agreement, Manager shall receive a management fee of $8,000 per month (the
"Base Management Fee") payable in advance on the first day of each month during
the term of this Agreement except for the month of January 2002, one third of
which shall be paid on the earlier to occur of the first day of February, March
and April of 2002 or the date of the termination of this Agreement. The Base
Management Fee payable with respect to all of the Facilities shall be increased
by 5% on the second anniversary of the Commencement Date.
(b) If the services of Manager commence or terminate (for any reason,
including those set forth in Paragraph V) other than on the first day of the
month, the revenues upon which the fee is calculated shall be prorated in
proportion to the number of days for which services are actually rendered.
(c) The Base Management Fee provided for herein shall be disbursed by
Manager to itself out of the Regent Account in accordance with the provisions of
I(H).
(d) Any amounts due from Licensee to Manager or Manager to Licensee
pursuant to this Section IX which are not paid when due shall bear interest at
the annual rate equal to the Prime Rate as set forth in the Money Rates Section
of The Wall Street Journal (as the same may change from time to time) plus 5%
from the date due to the date paid in full.
X. Assignment: Except as otherwise provided in Section I(f), this
----------
Agreement shall not be assigned by either party without the prior written
consent of the other party; provided, however, Manager shall have the right upon
notice to Licensee to assign this Agreement to an entity which is owned or
controlled by Manager or its principal shareholder, ▇▇▇▇▇▇ ▇. ▇▇▇▇, without the
prior written consent of Licensee; provided, however, no assignment of this
Agreement shall be effective unless the assignee, in the case of an assignment
by Licensee, has first been duly licensed by DSHS, or unless the Management
Agreement between Licensee and the assignee, in the case of an assignment by
Manager, has been approved by DSHS.
XI. Notices: All notices required or permitted hereunder shall be
-------
given in writing by hand delivery, by registered or certified mail, postage
prepaid, by overnight delivery or by facsimile transmission (with receipt
confirmed with the recipient). Notice shall be delivered or mailed to the
parties at the following addresses or at such other places as either party shall
designate in writing. The parties agree to use their good faith efforts to give
notice of any change of address to DSHS at the DSHS Address but neither shall be
in default of its obligations hereunder should it fail to do so. All notices
shall be deemed duly given when delivery is received or refused by a party if
delivered by hand, three (3) business days after being deposited in the mails if
sent by registered or certified mail, on the next business day if sent by
overnight delivery and on confirmed receipt, if sent by facsimile transmission.
To Manager: Emeritus Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President-Finance
To Licensee: Regent Assisted Living, Inc.
Bank of America Building
▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, President
XII. Relationship of the Parties: The relationship of the parties
------------------------------
shall be that of principal and independent contractor and all acts performed by
Manager during the term hereof as Manager of the Facilities shall be deemed to
be performed in its capacity as an independent contractor. Nothing contained in
this Agreement is intended to or shall be construed to give rise to or create a
partnership or joint venture or lease between Licensee, its successors and
assigns on the one hand, and Manager, its successors and assigns on the other
hand. Notwithstanding the foregoing, Manager shall be authorized to execute
certain documents in the course of the day to day operation of the Facilities as
the agent of Licensee, such as credit applications for supplies, banking
resolutions for the Depository Account, utility deposit forms, etc.
XIII. Indemnification: Manager shall indemnify, defend and hold
---------------
harmless Licensee from any loss incurred by or damage to Licensee where such
loss or damage results from the negligence or willful misconduct of Manager in
performing its obligations under this Agreement or from a breach of this
Agreement by Manager; provided, however, Licensee specifically acknowledges and
agrees that nothing in this Section XIII shall be construed as imposing any
liability on Manager for any insurance deductibles for which Licensee shall be
solely responsible under Section II hereof. Licensee shall indemnify, defend and
hold Manager harmless from any loss incurred by or damage to Manager where such
loss or damage results from the negligence or willful misconduct of Licensee in
performing its obligations under the Agreement, from a breach of this Agreement
by Licensee, from Licensee's lack of authority to enter into this Agreement or
in the event any lease, loan, limited liability company operating agreement or
other document or instrument to which Licensee (or, in the case of third party
management agreements, Licensee's principal) may be a party prohibits Manager
from fulfilling any of the obligations imposed on Manager or from exercising any
of the rights granted to Manager hereunder.
XIV. Entire Agreement: This Agreement contains the entire agreement
-----------------
between the parties relating to the operation of the Facilities and shall be
binding upon and inure to the benefit of their successors and assigns. This
Agreement may not be modified or amended except by written instrument signed by
both of the parties hereto. Licensee and Manager agree to use their good faith
efforts to give DSHS at the DSHS Address copies of any amendments to this
Agreement but neither shall be in default of its obligations hereunder should it
fail to do so.
XV. Captions: The captions used herein are for convenience of
--------
reference only and shall not be construed in any manner to limit or modify any
of the terms hereof.
XVI. Arbitration: In the event of any dispute among the parties
-----------
regarding the Facilities or this Agreement, the parties agree to submit the same
to resolution before an arbitrator, in the case of disputes alleged to involve
less than $250,000, and before a panel of three arbitrators, in the case of
disputes alleged to involve $250,000 or more, selected by mutual agreement of
the parties or, if the parties are unable to agree on an arbitrator or panel of
arbitrators within a period of twenty (20) days, selected by a court of
competent jurisdiction. Such arbitration shall be held in accordance with the
rules of the American Arbitration Association and the decision of the arbitrator
shall be final and binding on the parties and may be enforced by a court of
competent jurisdiction. The party requesting arbitration shall do so by giving
notice to that effect to the other party, specifying in reasonable detail in
said notice the nature of the dispute; provided, however, in the event that
notwithstanding the terms hereof, a party commences legal proceedings, rather
than arbitration proceedings, before a court of competent jurisdiction, the
other party shall be deemed to have forfeited its right to have such dispute
determined by binding arbitration in accordance with this Section XVI unless
within thirty (30) days after being served with the first pleading in such legal
proceedings, it files a motion to dismiss such legal proceedings and serves on
the other party notice of its intent to submit such dispute to arbitration. Any
party who fails to submit to binding arbitration following a lawful demand by
the other party shall bear all costs and expenses, including reasonable
attorneys fees (including those incurred in any trial, bankruptcy proceeding,
appeal or review) incurred by the other party in obtaining a stay of any pending
judicial proceeding concerning a dispute which by the terms of this Agreement
has been properly submitted to mandatory arbitration and/or in compelling
arbitration of any dispute. All disputes under this Section XVI shall be
determined in the City of Portland, Oregon, if the arbitration is initiated by
Licensee and in the City of Seattle, Washington, if the arbitration is initiated
by Manager, by a single arbitrator. All arbitrators shall be a licensed
attorneys having at least ten (10) years experience, with at least five (5)
years experience with assisted living facility sale, lease or management
transactions. The award in such arbitration may be enforced on the application
of either party by the order of judgment of a court of competent jurisdiction.
The prevailing party shall be entitled to recover the reasonable fees and
expenses of its attorneys and experts. The arbitrator(s) shall resolve all
disputes in accordance with the substantive law of the state of Oregon. The
arbitrator(s) shall have no authority or jurisdiction to award any damages or
any other remedies beyond those which could have been awarded in a court of law
if the parties had litigated the claims instead of arbitrating them. The
parties shall not assert any claim for punitive damages. The Federal
Arbitration Act, Title 9 of the United States Code, is applicable to this
transaction and shall be controlling in any judicial proceedings and in the
arbitration itself as to issues of arbitrability and procedure. Nothing herein
shall preclude a party from curing either their own or the other party's alleged
default which is, or could be, the subject of an arbitration proceeding under
this Section XVI or from seeking equitable relief which the arbitrator or panel
of arbitrators is not empowered to award, such as an injunction, receivership,
attachment or garnishment.
XVII. 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.
XVIII. Cumulative; No Waiver: No right or remedy herein conferred upon
---------------------
or reserved to either of the parties hereto is intended to be exclusive of any
other right or remedy, and each and every right and remedy shall be cumulative
and in addition to any other right or remedy given hereunder, or now or
hereafter legally existing upon the occurrence of an Event of Default hereunder.
The failure of either party hereto to insist at any time upon the strict
observance or performance of any of the provisions of this Agreement or to
exercise any right or remedy as provided in this Agreement shall not impair any
such right or remedy or be construed as a waiver or relinquishment thereof with
respect to subsequent defaults. Every right and remedy given by this Agreement
to the parties hereof may be exercised from time to time and as often as may be
deemed expedient by the parties thereto, as the case may be.
XIX. Authorization for Agreement: The execution and performance of
-----------------------------
this Agreement by Licensee and Manager have been duly authorized by all
necessary laws, resolutions or corporate action, and this Agreement constitutes
the valid and enforceable obligations of Licensee and Manager in accordance with
its terms.
XX. Counterparts: This Agreement may be executed in any number of
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counterparts, each of which shall be an original, and each such counterpart
shall together constitute but one and the same Agreement.
XXI. Confidentiality: Throughout the Term of this Agreement and for a
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period of one (1) year after the expiration or earlier termination of this
Agreement, each of Manager and Licensee agrees to maintain the confidentiality
of any proprietary information concerning the other or the Facilities to which
they may gain access during the term of this Agreement and shall only disclose
the same with the consent of the other party or as required by an order of a
court of competent jurisdiction.
XXII. Construction: Each of the parties acknowledges and agrees that it
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has participated in the drafting and negotiation of this Agreement.
Accordingly, in the event of a dispute with respect to the interpretation or
enforcement of the terms hereof, no provision shall be construed so as to favor
or disfavor either party hereto.
IN WITNESS WHEREOF, the parties have hereto caused this Agreement to
be duly executed, as of the day and year first above written.
REGENT ASSISTED LIVING, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
Its: _____________________________________
EMERITUS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its: _____________________________________
EXHIBIT A
DESCRIPTION OF THE FACILITIES, INCLUDING
WHETHER OWNED, LEASED OR MANAGED BY REGENT
EXHIBIT B
ACCOUNTING TRANSITION SERVICES
EXHIBIT C
ADDITIONAL SPECIFIC REPORTING OBLIGATIONS BY FACILITY
EXHIBIT D
FORM OF FINANCIAL STATEMENTS
EXHIBIT E
FACILITY BANK ACCOUNT INFORMATION
EXHIBIT F
REGENT MANAGEMENT FEES BY FACILITY
EXHIBIT G
RENT AND DEBT SERVICE PAYMENTS BY FACILITY
EXHIBIT H
FORM OF BUDGET
EXHIBIT I
TERMINATION FEE CALCULATION EXAMPLES
EXHIBIT J
MINIMUM BANK BALANCES