AGREEMENT TO PROVIDE MANAGEMENT SERVICES
TO
AN ASSISTED LIVING AND INDEPENDENT LIVING FACILITY
This Agreement to Provide Management Services
to an Assisted Living and Independent Living
Facility ("Agreement") dated as of June 1,1997, is
made and entered into by and between COLUMBIA
HOUSE, L.L.C., a Washington limited liability
company ("Owner") and Emeritus Corporation, a
Washington corporation ("Manager").
RECITALS
A. Owner is the owner of that certain real
property located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "Real Property")
including the improvements on the Real Property
that constitute the 94 unit congregate care and
assisted living facility commonly known as "Autumn
Ridge Retirement Home" or "Autumn Ridge
Residential Care Apartments" and located in
Herculaneum, Missouri (the "Facility");
B. Owner desires to engage the services of a
person or entity to manage the Facility on Owner's
behalf and to provide certain consulting services
to Owner in connection therewith'
,
C. Manager is experienced and qualified in
the field of assisted living and congregate care
facility management;
D. Owner has determined that Manager's fee is
economical in light of the range of services which
Manager is willing to provide to Owner; and
E. Manager is willing to operate the Facility
on Owner's behalf and provide consulting services
to Owner in connection therewith, 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:
l. MANAGEMENT AND CONSULTING RESPONSIBILITIES OF
MANAGER.
Owner hereby engages Manager to provide, and
Manager hereby accepts such engagement and agrees
to provide, management, consulting, advisory and
supervisory services to Owner in connection with
the operation of the Facility, upon the terms and
conditions set forth in this Agreement. By
entering into this Agreement, Owner does not
delegate to Manager any powers, duties, or
responsibilities which Owner is prohibited by law
from delegating. Owner also retains such other
authority as shall not have been expressly
delegated to Manager pursuant to this Agreement.
Subject to the foregoing, Manager shall provide
the following services to, or on behalf of, Owner:
1.1 OPERATIONAL POLICIES AND FORMS. Manager
shall implement operational policies and
procedures and develop such new policies and
procedures as Manager deems necessary to insure
the establishment and maintenance of operational
standards appropriate for the nature of the
Facility.
1.2 CHARGES. Manager shall establish the
schedules of recommended charges, including any
and all special charges for services rendered to
residents at the Facility. Owner shall have the
right to review and approve the charge schedules
established by Manager.
1.3 INFORMATION. Manager shall develop any
informational material, mass media releases, and
other related publicity materials, which Manager
deems necessary for the operation of the Facility.
1.4 REGULATORY COMPLIANCE. Manager, with the
assistance of Owner if requested by Manager, shall
use its best efforts to obtain and maintain all
licenses, permits, qualifications, and approvals
from any applicable governmental or regulatory
authority for the operation of the Facility and to
manage the operations of the Facility in full
compliance with all applicable laws and
regulations, and in accordance with all such
licenses, permits, qualifications, and approvals.
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1.5 EQUIPMENT AND IMPROVEMENTS. Manager
shall advise Owner as to equipment and
improvements which are needed to maintain or
upgrade the quality of the Facility, to replace
obsolete or run-down equipment, or to correct any
deficiencies (including, without limitation, any
survey deficiencies) which may be observed or
cited during the term of this Agreement. Owner
shall review and act upon Manager's
recommendations as expeditiously as possible.
Manager shall not be liable for any cost or
liability which Owner may incur in the event Owner
disregards Manager's recommendations. Manager
shall, as a Facility Expense, make all necessary
and approved repairs, replacements and maintenance
within the budgetary limits set forth in the
annual capital expenditure budget prepared by
Manager pursuant to Paragraph 1.12. hereof and in
a workmanlike and lien-free manner.
1.6 ACCOUNTING. Manager shall provide home
office and accounting support to the Facility. 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 and shall
not materially distort income or loss. In
addition, if Owner so elects by notice to Manager,
Manager shall prepare or cause to be prepared all
tax returns required in connection with operation
of the Facility, including payroll tax returns
(but excluding Owner's income tax returns) and, at
Owner's sole cost and expense, Manager shall cause
all local, state and federal taxes to be timely
paid or contested, as appropriate. If Owner elects
to have Manager prepare such non-income tax
returns, the costs incurred by Manager in
preparing such non-income tax returns shall not be
included in the Base Management Fee (as that term
is defined in Subparagraph 9.3(a), below), but
shall be separately reimbursed by Owner as a
Facility Expense. Such taxes shall be deemed to be
Facility Expenses (as that term is defined in
Paragraph 8.2, below) and shall be paid out of the
revenues of the Facility or the working capital
for the Facility provided by Owner. Nothing herein
shall preclude Manager from delegating to a third
party a portion of the accounting duties provided
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for in this section; provided, that such
delegation shall not relieve Manager from
Manager's ultimate liability for the timely and
complete performance of the obligations provided
for herein.
1.7 REPORTS. Manager shall prepare and
provide to the Owner any reasonable operational
information which may from time to time be
specifically requested by Owner, including any
information needed to assist Owner in completing
its tax returns and in complying with any
reporting obligations imposed by any mortgagees of
the Facility. In addition: (i) within thirty (30)
days after the end of each calendar month, Manager
shall provide Owner with an unaudited balance
sheet of the Facility, dated the last day of such
month, and an unaudited statement of income and
expenses for such month relating to the operation
of the Facility; and (ii) within ninety (90) days
after the end of the fiscal year of the Facility,
Manager shall provide Owner with unaudited
financial statements including a balance sheet of
the Facility, dated the last day of said fiscal
year, and an unaudited statement of income and
expense for the fiscal year then-ended relating to
the operation of the Facility.
1.8 BANK ACCOUNTS. Manager shall open a new
checking account in the name of the facility
("Facility Checking Account") and shall deposit in
the Facility Checking Account a11 money received
during the term of this Agreement in the course of
the operation of the Facility; provided, however,
that during the term hereof, withdrawals and
payments from the Facility Checking Account shall
be made only on checks signed by a person or
persons authorized by Manager. Owner shall be
given notice as to the identity of said authorized
signatories. All Facility Expenses (as that term
is defined in Paragraph 8.2, below) incurred in
the operation of the Facility in accordance with
the terms of the Budgets submitted to Owner under
Paragraph 1.12 hereof, shall be paid by check
drawn on the Facility Checking Account.
Withdrawals from the Facility Checking Account
shall be made first to pay the Base Management Fee
(as that term is defined in Subparagraph 9.3(a),
below, and, thereafter, to pay Facility Expenses
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(as that term is defined in Paragraph 8.2, below)
in such order of priority as Manager deems
appropriate to the operation of the Facility, and
thereafter to pay the Supplemental Management Fee
and the Residual Management Fee (as those terms
are defined in Paragraph 9.3, below). In the event
the Gross Revenues (as defined in Subparagraph
9.3(a), below) generated by the Facility are at
any time insufficient to pay all of the Facility
Expenses, Owner shall, within five (5) days of
Owner's receipt of a written demand by Manager,
deposit in the Facility Checking Account
sufficient funds to satisfy the then working
capital needs of the Facility.
1.9 PERSONNEL. Manager shall: (i) recruit,
employ, train, promote, direct, discipline,
suspend, and discharge Facility personnel; (ii)
establish salary levels, personnel policies, and
employee benefits; and (iii) establish employee
performance standards, all as needed during the
term Management Fee (as that term is defined in
Subparagraph 9.3(a), below), but shall be
separately reimbursed by Owner as a Facility
Expense (as that term is defined in Paragraph 8.2,
below).
1.10 SUPPLIES AND EQUIPMENT. Manager shall
purchase, as a Facility Expense, supplies and non-
capital equipment needed to operate the Facility
within the budgetary limits set forth in the
annual operating budget prepared by Manager
pursuant to Paragraph 1.12 hereof. In purchasing
said supplies and equipment Manager shall, if
possible, take advantage of any national or group
purchasing agreements to which Manager may be a
party.
1.11 LEGAL PROCEEDINGS. Manager shall, as a
Facility Expense and through its legal counsel,
coordinate all legal matters and proceedings with
Owner's counsel.
1.12 BUDGETS. The Facility shall be operated
on a fiscal year of January 1 through December 31.
Within forty-five (45) days prior to the start of
each fiscal year, Manager shall prepare and submit
to Owner for Owner's review and agreement, which
agreement shall not be unreasonably withheld (i)
an annual operating budget, (ii) an annual capital
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expenditure budget, and (iii) an annual cash flow
projection. In the event the operating budget or
the capital expenditure budget (or both) have not
been agreed upon prior to the first day of the
then-current fiscal year, beginning in fiscal year
I 998, the operating budget or capital expenditure
budget in effect for the prior fiscal year, as
appropriate, shall continue in effect until the
new operating budget or capital expenditure
budget, as appropriate, is agreed upon by Owner
and Manager. Thereafter, any expenditures made
during the year pursuant to said agreed-upon
budgets and/or any expenditures on an item-by-item
basis exceeding by no more than 10"% the amounts
set forth therein for the applicable expense item
(the "Budget Threshold") may be made without
Owner's prior approval. Any unbudgeted
expenditures and/or any expenditures in excess of
the Budget Threshold shall be subject to Owner's
prior approval, which approval shall not be
unreasonably withheld.
1.13 COLLECTION OF ACCOUNTS. Manager shall
issue bills and collect accounts and monies owed
for goods and services furnished by the Facility,
including, but not limited to, enforcing the
rights of Owner and the Facility as creditor under
any contract or in connection with the rendering
of any services; provided, however, that any
expenses incurred by Manager shall not be included
in the Base Management Fee (as that term is
defined in Subparagraph 9.3(a), below), but shall
be separately reimbursed by Owner as a Facility
Expense (as that term is defined in Paragraph 8.2,
below). Notwithstanding any other provision of
this Agreement to the contrary, Manager does not
guaranty the collectability of such accounts or
monies and shall have no liability to Owner for
Manager's inability to so collect such accounts or
monies.
1.14 CONSTRUCTION SUPERVISION. Owner and
Manager may agree that Manager shall act as
construction supervisor with respect to any
construction work for the Facility or on the Real
Property after the Commencement Date (as defined
in Paragraph 3, below), in which event Manager
will supervise, oversee and administer each and
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every aspect of any such improvements and
construction work. For the purposes of this
Agreement, "construction work" shall include any
construction, reconstruction or alteration of any
improvements constituting part of the Real
Property, but shall not include usual maintenance
and repairs made to the Facility or the Real
Property. Without limitation of the foregoing, if
Owner and Manager agree that Manager shall act as
construction supervisor, and subject to Owner's
approval in each instance, Manager will: (a)
negotiate contracts for architectural, design,
engineering and construction services; (b) secure
any and all necessary consents and approvals; (c)
oversee the administration of construction
contracts; and (d) act as project manager with
respect to the construction work.
2. INSURANCE.
Upon request, Manager, at Owner's sole cost
and expense, shall arrange for and maintain all
necessary and proper hazard insurance covering the
Facility, the furniture, fixtures, and equipment
situated thereon, and all necessary and proper
malpractice and public liability insurance for
Owner's protection and for the protection of
Owner's officers, agents and employees. Until such
a request is made and/or in the event Manager is
unable to secure insurance coverage for the
Facility for any reason whatsoever, Owner shall be
responsible for obtaining and maintaining said
insurance. In addition, Manager shall provide
employee health and worker's compensation
insurance for all Manager employees at the
Facility in accordance with Manager's policies
therefor, and the costs thereof shall not be
included in the Base Management Fee (as that term
is defined in Subparagraph 9.3(a), below), but
shall be separately reimbursed by Owner as a
Facility Expense (as that term is defined in
Paragraph 8.2, below). Manager shall, at Manager's
sole cost and expense, arrange for and maintain
all necessary and proper malpractice and public
liability insurance for the protection of Manager,
and Manager's officers, agents, and employees. Any
insurance provided by Owner pursuant to this
Paragraph 2 shall comply with the requirements of
any mortgage or deed of trust encumbering the
Facility, and any insurance provided by Manager
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pursuant to this Paragraph 2 shall comply with
such requirements provided that Owner shall have
provided Manager with a copy of such mortgage or
deed of trust.
3. PROPRIETARY INTEREST.
The systems, methods, procedures, and
controls employed by Manager and any written
materials or brochures developed by Manager to
document the same are, and shall remain, the
property of Manager and are not, at any time
during or after the term of this Agreement, to be
utilized, distributed, copied, or otherwise
employed or acquired by Owner, except as
authorized by Manager.
4. TERM AND TERMINATION OF AGREEMENT.
4.1 TERM. The term of this Agreement ("Term")
shall commence on June I,1997 (the "Commencement
Date") and expire on May 3 I,1999; provided,
however, that the Term shall be extended
automatically for successive two (2) year periods,
ending on the 31st day of May thereafter, unless
terminated prior to such date (as the same may
have be extended) pursuant to this Paragraph 4.
4.2 TERMINATION. The Term (as the same may be
have been extended ) may be terminated by either
Manager or Owner
(a) at any time, with or without cause, by
giving notice of termination not less
than thirty (30) days prior to the
effective date of such termination;
(b) if fifty percent (50%) or more of the
Facility is either (i) damaged or
destroyed or (ii) taken by condemnation
proceedings or otherwise, whether or not
Owner elects to rebuild or repair the
Facility, by giving notice of
termination not less than ten (10) days
prior to the effective date of such
termination;
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(c) immediately upon the occurrence of an
Event of Default by the other party (as
defined in Paragraph 5, below), by
giving notice of termination, effective
the date of receipt (or deemed receipt)
by the defaulting party of such notice
of termination.
4.3 EFFECT OF TERMINATION. In the event of a
termination of Term pursuant to Subparagraphs
4.2(a) or 4.2(b), above, upon the effective date
of such termination, neither party shall have any
further obligations whatsoever under this
Agreement; provided, however, that Manager shall
be entitled to receive immediate payment of all
amounts theretofore unpaid by Owner but earned by
Manager as of the effective date of such
termination. In the event of a termination of the
Term pursuant to Subparagraph 4.2(c), above,
except as expressly provided in Paragraph 5.3,
below, neither party shall have any further
obligation whatsoever under this Agreement;
provided, however, that Manager shall be entitled
to receive immediate payment of all amounts
theretofore unpaid by Owner but earned by Manager
as of the effective date of such termination. In
the event that Owner desires Manager to leave any
equipment owned by Manager at the Facility upon
such termination, Owner shall pay to Manager the
fair market value of such equipment to be left at
the Facility and Manager shall transfer title
thereto to Owner upon such payment.
5. DEFAULT, REMEDIES UPON DEFAULT.
5.1 MANAGER'S EVENTS OF DEFAULT. With respect
to Manager, it shall be an "Event of Default"
under this Agreement:
(a) 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
thirty (30) days after Manager' s
receipt of notice of such default
from Owner, which notice shall
specify the event or events
constituting the default; or
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(b) If (i) 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 Manager's assets, (B) file a
voluntary petition in bankruptcy, or admit in
writing Manager's inability to pay Manager's debts
as they become due,
(c) (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 (ii) an order, judgment or decree shall be
entered by a court of competent jurisdiction, on
the application of a creditor (A) adjudicating
Manager as bankrupt or insolvent, (B) approving a
petition seeking reorganization of Manager, or (C)
appointing a receiver, trustee, or liquidator for
Manager or for all or a substantial part of
Manager's assets.
5.2 OWNER'S EVENTS OF DEFAULT. With respect
to Owner, it shall be an Event of Default under
this Agreement:
(a) If Owner shall fail to make or
cause to be made any payment to
Manager required to be made
hereunder (other than Owner's
obligation, pursuant to Paragraph
1.8, above, to deposit working
capital into the Facility Checking
Account, which circumstance shall
be handled in accordance with
Subparagraph 5.2(b), below), and
such failure shall continue for a
period of thirty (30) days;
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(b) If Owner shall fail to keep,
observe, or perform any material
agreement, term, or provision of
this Agreement and such default
shall continue for a period of
thirty (30) days after Owner' s
receipt of notice of such default
from Manager, which notice shall
specify an event or events
constituting the default; provided,
however, that in the case of
Owner's failure to provide,
pursuant to Paragraph I.8, above,
necessary working capital upon
demand by Manager, it shall be
deemed to be an Event of Default
hereunder if the such necessary
working capital is not deposited in
the Facility Checking Account
within ten ( 10) days of Manager's
initial demand therefor without any
further notice from Manager being
required;
(c) If Owner 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, and which would cause
Owner to lose possession of the
Facility or any personal property
required to operate the Facility in
the normal course of operation; or
(d) If: (i) Owner shall (A) be dissolved, (B)
apply for or consent to the appointment of a
receiver, trustee or liquidator for Owner or for
all or a substantial part of Owner's assets, (C)
file a voluntary petition in bankruptcy or admit
in writing its inability to pay Owner's debts as
they become due, (D) make a general assignment for
the benefit or creditors, or (E) file a petition
or an answer seeking reorganization or arrangement
with creditors or taking advantage of any
insolvency law; or (ii) an order,
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judgment or decree shall be entered
by a court of competent
jurisdiction, on the application of
a creditor (A) adjudicating Owner
as bankrupt or insolvent, (B)
approving a petition seeking
reorganization of Owner, or (C)
appointing a receiver, trustee or
liquidator for Owner or of all or a
substantial part of Owner's assets.
5.3 REMEDIES UPON DEFAULT BY OWNER. In
the event of an Event of Default by a party, the
non-defaulting party shall have, in addition to
the right to terminate the Term pursuant to
Subparagraph 4.2(c), above, all rights and
remedies available to such non-defaulting party at
law or in equity.
6. OWNER'S RIGHT TO INSPECT FACILITY/BOOKS AND
RECORDS.
During the Term, Owner shall have the right,
upon not less than forty-eight (48) hours prior
notice to Manager and at reasonable times during
normal business hours, to inspect the Facility and
to inspect and/or audit all books and records
pertaining to the operation thereof.
7. FACILITY OPERATIONS.
7.1 NO GUARANTEE OF PROFITABILITY. Manager
does not guarantee, and shall not be construed to
have guaranteed, to Owner or any third party
(including any mortgagee) that operation of the
Facility will be profitable, but Manager shall use
Manager's commercially reasonable, diligent, and
good faith efforts to operate the Facility in as
cost-efficient and profitable a manner as possible
in light of all of the circumstances then-
existing.
7.2 STANDARD OF PERFORMANCE. In performing
Manager's obligations under this Agreement,
Manager shall use Manager's commercially
reasonable, diligent, and good faith efforts, and
act with professionalism, in undertaking
management of the Facility, all in accordance with
accepted and prevailing standards of health care
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in the general location of the Facility and with
the policies adopted by, and resources available
to, the Facility.
7.3 FORCE MAJEURE. Manager will not be deemed
to be in violation of this Management Agreement if
Manager is prevented from performing any of
Manager's obligations hereunder for any reason
beyond Manager's reasonable control, including,
without limitation: strikes, sick-outs, or labor
disputes; material or supply shortages; war,
insurrection or civil unrest; fire, earthquakes,
severe weather, flooding; acts of God; Owner's
failure to perform Owner obligations under this
Agreement; or any law, statute, regulation,
ordinance, or rule of any federal, state or local
government or agency thereof, or any order,
decree, or judgment of any court with
jurisdiction.
8. WITHDRAWAL OF FUNDS BY OWNER; MINIMUM BANK
BALANCE.
8.1 WITHDRAWAL BY OWNER. From time to time,
Owner may withdraw the then accumulated operating
cash surplus (as determined by Manager) from the
Facility Checking Account subject to the right of
Manager to restrict withdrawal by Owner of any
Facility funds in accordance with the provisions
of Paragraph 8.2, below.
8.2. MINIMUM CASH BALANCE. At all times
(subject to Manager's right, pursuant to Paragraph
1.8, above, to demand working capital from Owner
in the event of a shortfall), Manager shall
maintain a minimum cash balance in the Facility
Checking Account equal to the sum of:
(a) All costs and expenses associated
with the ownership or operation of
the Facility, including, without
limitation, any principal and
interest payments due in connection
with any loan secured by a mortgage
on the Facility, payroll,
insurance, supplies, services,
taxes, the Base Management Fee, but
excluding all federal, state, and
local income taxes assessed against
Owner, and
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the Supplemental Management Fee and
the Residual Management Fee
("Facility Expenses"), all of which
Facility Expenses are unpaid but
will become due and payable within
the ensuing forty-five (45) days;
plus
(b) An amount deemed necessary by
Manager to be adequate for
unanticipated contingencies, which
amount initially shall be $5,000
and which amount shall be adjusted
as reasonably determined by
Manager.
9. MANAGEMENT FEES.
9.1 PRE-COMMENCEMENT DATE SERVICES FEE.
Manager shall be reimbursed for all of Manager's
out-of pocket expenses (including, without
limitation, attorneys' fees, professional
services) incurred in connection with any services
rendered or tasks performed by Manager with
respect to the Facility prior to the Commencement
Date, and in addition Manager shall receive a fee
in the amount of Five Thousand and No/Hundredths
Dollars ($5,000) with respect to such pre-
Commencement Date services. Such reimbursement and
fee shall be paid to Manager at the same time as
the first Base Management Fee payment, as defined
in Subparagraph 9.3(a), below.
9.2 CONSTRUCTION SUPERVISION FEE. For any
services performed by Manager pursuant to
Paragraph 1.14, above, Manager shall receive a
construction supervision fee equal to five percent
(5%)of the total amount of construction costs
approved by Owner, due payable concurrently with
the applicable payments to the construction
contractor(s) and materialmen.
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9.3 MANAGEMENT FEES. Throughout the Term,
Manager shall receive:
(a) a base management fee ("Base Management
Fee") equal to four percent (4%) of all
the revenues generated by or from the
Facility other than the proceeds from
the sale of any Facility equipment or
any insurance and condemnation proceeds
("Gross Revenues") generated each
calendar month by the Facility, which
Base Management Fee shall be due any
payable on or before the 10th day of
each calendar month with respect to the
prior calendar month's Gross Revenues;
(b) an additional management fee
("Supplemental Management Fee") equal to
two percent (2%) of Gross Revenues
generated each calendar month by the
Facility, which Supplemental Management
Fee shall be due and payable on or
before the 10th day of each calendar
month with respect to the prior calendar
month's Gross Revenues to the extent,
and only to the extent, that Gross
Revenues for such prior calendar month
exceed Facility Expenses for such prior
calendar month.
(c) a residual management fee ("Residual
Management Fee") equal to twenty-five
percent (25%) of the difference between
(x) Gross Revenues generated in a
calendar month and (y) all Facility
Expenses for such calendar month, which
Residual Management Fee shall be due and
payable on or before the 10th day of
each calendar month with respect to the
prior calendar month's Gross Revenues to
the extent, and only to the extent, that
Gross Revenues for such prior calendar
month exceed Facility Expenses plus the
Supplemental Management Fee, if any,
plus working capital repayment for such
prior calendar month; and
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(d) an incentive management fee ("Incentive
Management Fee") equal to twenty-five
percent (25%) of the difference between
(x) the greater of (1) the Sale Price
(as defined below) or (2) the Appraised
Value (as defined below), and (y) the
initial acquisition cost for the
Facility (which Owner and Manager hereby
agree is $2,330,000),plus (1) all
capital costs associated with the
initial acquisition of the Facility, (2)
the cost of all capital improvements
made to the Facility after its initial
acquisition (to the extent such costs
were capitalized in accordance with
generally accepted accounting principles
consistently applied), and (3) any
working capital deposits remaining to be
repaid to Owner at the time of the Sale
(as defined below), which Incentive
Management Fee shall be paid, if at all,
when Owner sells, transfers, conveys, or
leases ("Transfer") the Facility to
Manager or to a third party, or finances
or refinances the Facility, to Manager
or otherwise.
For the purposes of Subparagraph 9.3(d),
above, "Sale Price" shall mean the total amount to
be received by or on behalf of Owner in connection
with Owner's Transfer, financing or refinancing of
the Facility ("Sale"), and "Appraised Value" shall
mean the appraised value of the Facility at the
time of any Sale as determined by an appraiser
mutually acceptable to Owner and Manager.
9.4 PRORATION OF FEES. If the services of
Manager commence or terminate for any reason
(including, without limitation, those set forth in
Paragraph 5, hereof other than on the first day of
any calendar month, the Base Management Fee, the
Supplemental Management Fee (if any), and the
Residual Management Fee (if any) for such partial
month shall be prorated based upon the number of
days for which services are actually rendered by
Manager during such partial month.
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9.5 PAYMENT OF FEES. Notwithstanding any
other provision of this Agreement to the contrary:
(a) the Base Management Fee shall be
disbursed by Manager to itself out of
the Facility Checking Account prior to
the payment of any other Facility
Expenses and prior to the repayment to
Owner of any working capital deposits
made by Owner pursuant to the terms
hereof (without limiting the generality
of the foregoing, the Base Management
Fee shall be paid to Manager on a
priority basis, and Manager may disburse
the Base Management Fee to itself
without regard for the Minimum Cash
Balance requirement, or the need to
demand additional working capital from
Owner, pursuant to Paragraph 8.2,
above).
(b) the Supplemental Management Fee, if any,
shall be disbursed by Manager to itself
out of the Facility Checking Account
after payment of all Facility Expenses
but prior to the repayment to Owner of
any working capital deposits made by
Owner pursuant to the terms hereof.
(c) the Residual Management Fee, if any,
shall be disbursed by Manager to itself
out of the Facility Checking Account
after payment of all Facility Expenses
and after the repayment to Owner of any
working capital deposits made by Owner
pursuant to the terms hereof.
(d) the Incentive Management Fee, if any,
shall be disbursed to Manager out of the
proceeds of the closing of any Sale.
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10. INDEMNIFICATION.
10.1 BY MANAGER. Manager shall indemnify,
defend, and hold harmless Owner from and against
any loss incurred by or damage to Owner where such
loss or damage results from the negligent acts or
omissions or the willful misconduct of Manager in
performing Manager's obligations under this
Agreement.
10.2 BY OWNER. Owner shall indemnify, defend
and hold harmless Manager from and against any
loss incurred by or damage to Manager where such
loss or damage results from the negligent act or
omissions or the willful misconduct of Owner in
performing Owner's obligations under the
Agreement.
10.3 SURVIVAL OF INDEMNIFICATION OBLIGATIONS.
Notwithstanding any other provision of this
Agreement to the contrary (including, without
limitation, Paragraph 4.3, above), each party's
obligation to indemnify, defend and hold harmless
the other party shall survive the termination of
the Term and this Agreement with respect to the
negligent acts or omissions or willful misconduct
of the indemnifying party prior to the effective
date of such termination.
11. RIGHT OF FIRST REFUSAL
In the event Owner desires to Transfer the
Facility prior to the expiration of the Term, and
Owner receives a bona fide offer to effect a
Transfer of the Facility from a third party
capable of performing such offer ("Transfer
Offer") which Owner desires to accept, Owner shall
first give written notice of such Transfer Offer
to Manager. Such notice shall include all of the
material terms and conditions of the Transfer
Offer (e.g., purchase price or lease rate, terms
of payments, closing date, ▇▇▇▇▇▇▇ money or other
deposits, documents required for Closing, options
to purchase). For a period of thirty (30) days
after Manager's receipt of such notice, Manager
shall have the right to elect to effect a Transfer
of the Facility upon the same terms and conditions
as are contained in the Transfer Offer, which
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election shall be made by giving written notice
thereof to Owner within such thirty (30) day
period. If Owner does not timely receive Manager's
written notice of Manager's election to effect a
Transfer on the terms and conditions of the
Transfer Offer, Owner shall have the right to
accept such Transfer Offer and Transfer the
Facility to such third party in accordance with
the terms of the Transfer Offer free and clear of
Manager' s right of first refusal hereunder.
Notwithstanding any other provision of this
Paragraph 11, in no event shall Owner be entitled
to Transfer the Facility to any third party on
terms or conditions materially different from
those set out in the notice of Transfer Offer
provided by Owner to Manager, unless Owner has
given Manager written notice of such materially
different terms and conditions and provided
Manager an additional thirty (30) days in which to
elect to effect a Transfer on such materially
different terms and conditions.
12. MISCELLANEOUS
12.1 NOTICES. All notices required or
permitted pursuant to this Agreement: (a) shall be
given in writing; and (b) delivered by (i) hand
delivery, (ii) registered or certified mail,
postage prepaid, (iii) nationally recognized
courier guaranteeing next-business day delivery),
or (iv) facsimile transmission (with receipt
confirmed telephonically by 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 by giving notice in
accordance with this Paragraph 12.1.
To Manager: Emeritus Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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To Owner: Columbia House, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: 206-30l -4546
Fax: 206-30l-4545
Attn: ▇▇▇▇ ▇▇▇▇
12.2 ASSIGNMENT. Except as otherwise
provided in Paragraph 1.6, above, this rent shall
not be assigned by either party without the prior
written consent of the non party, which consent
shall not be unreasonably withheld, conditioned,
delayed.
12.3 RELATIONSHIP OF THE PARTIES, The
relationship of the parties shall be that of and
independent contractor and a11 acts performed by
Manager during the term hereof as Owner of the
Facility shall be deemed to be performed by
Manager in Manager's capacity as a prudent
contractor. Nothing contained in this Agreement is
intended to, or shall be deemed to, give rise to
or create a partnership or joint venture or lease
between Owner, and it's successors and assigns on
the one hand, and Manager, and Manager's
successors and on the other hand.
12.4 ENTIRE AGREEMENT. This Agreement
contains the entire agreement between the and
shall be binding upon and inure to the benefit of
their successors and, to the extent hereby, their
assigns, and shall be construed in accordance with
the laws of the State of Washington. This
Agreement may not be modified or amended except by
written instrument by both of the parties hereto.
12.5 HEADINGS/CAPTIONS. The headings and
captions used in this Agreement are for of
reference only and shall not be construed in any
manner to limit or modify any of provisions hereof
12.6 ATTORNEYS' FEES. In the event either party
brings an action to enforce or interpret agreement
the prevailing party in such action shall be
entitled to recover from the other party costs
incurred in connection therewith, including
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reasonable attorneys' fees incurred in conduct,
and/or settlement thereof.
12.7 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, legality, and
enforceability of the remaining provisions hereof
shall not in any way thereby.
12.8 CUMULATIVE; NO WAIVER. No right or
remedy herein conferred upon or reserved party is
intended to be exclusive of any other right or
remedy, and each and every right remedy shall be
cumulative and in addition to any other right or
remedy given hereunder, or hereafter legally
existing upon the occurrence of an Event of
Default. The failure of either party 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
Event of Default. Each and every right and remedy
given by this Agreement to a party may be
exercised from time to time and as often as may be
deemed expedient by such party.
12.9 AUTHORIZATION FOR AGREEMENT. The
execution and performance of this Agreement by
Owner and Manager have been duly authorized by all
necessary laws, resolutions or corporate action,
and this Agreement constitutes the valid, binding
and enforceable obligations of Owner and Manager,
respectively, in accordance with its terms.
12.10 COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of
which shall be an original but collectively shall
constitute but one and the same Agreement.
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IN WITNESS WHEREOF, the parties have hereto
caused this Agreement to be duly executed, as of
the day and year first above written.
Owner: Columbia House, L.L.C.,
a Washington limited
liability company
By: /s/ ▇▇▇▇ ▇▇▇▇
---------------------
Its: Manager
Manager: Emeritus Corporation
a Washington corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------
Its: President
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