VAN VISTA FACILITY
AND
COLUMBIA HOUSE FACILITY
VANCOUVER, WASHINGTON
AGREEMENT TO PROVIDE ACCOUNTING AND
ADMINISTRATIVE SERVICES TO AN ASSISTED LIVING
FACILITY
This Agreement made as of October 1, 1997 by
and between ACORN SERVICE CORPORATION, a
Washington corporation (hereinafter referred to as
"Administrator"), and VANCOUVER HOUSING, L.L.C., a
Washington limited liability company (hereinafter
referred to as "Manager").
WHEREAS, Manager is the Manager of properties
located at 410 West l3th Street and 130 West 24th
Street, Vancouver, Washington which properties
include assisted living facilities (the
"Facilities"), pursuant to the terms of that
certain Management Agreement dated April 28,1997,
I 997 between the Vancouver Housing Authority and
Manager (the "Management Agreement");
WHEREAS, Manager is interested in retaining
Administrator to assist it with certain
administrative and accounting functions (the
"Administrative Responsibilities");
WHEREAS, Administrator is experienced and
qualified in the field of health care management
and is qualified to provide Manager with
assistance with the Administrative
Responsibilities; and
WHEREAS, Manager and Administrator are
interested in documenting the terms and conditions
under which said assistance will be provided.
NOW THEREFORE, in consideration of the
foregoing premises and the mutual covenants herein
contained, IT IS AGREED AS FOLLOWS:
I. RESPONSIBILITIES OF ADMINISTRATOR:
Manager hereby engages Administrator and
Administrator hereby accepts such engagement and
agrees to assist Manager with respect to the
performance by Manager of the Administrative
Responsibilities. By entering into this Agreement,
Manager does not delegate to Administrator any
powers, duties or responsibilities which it is
prohibited by law from delegating. Manager also
retains such other authority as shall not have
been expressly delegated to Administrator pursuant
to this Agreement. Subject to the foregoing,
Administrator shall provide the following
services:
A. CHARGES: Administrator shall assist
Manager in establishing the schedules of
recommended charges, including any and all special
charges for services rendered to the residents at
the Facilities.
B. ACCOUNTING: Administrator shall
provide administrative and accounting support to
the Facilities. All accounting procedures and
systems utilized in providing said support shall
be in accordance with the operating capital and
cash programs developed by Administrator, which
programs shall conform to generally accepted
accounting principles and shall not materially
distort income or loss. If Manager so elects by
notice to Administrator, Administrator shall
prepare or cause to be prepared all tax returns
required in connection with the operation of the
Facilities, including payroll tax returns (but
excluding Manager's income tax returns, which
Administrator shall prepare only if Manager and
Administrator agree upon separate compensation to
be paid to Administrator for preparing such income
tax returns) and, at Manager's sole cost and
expense, Administrator shall cause all local,
state and federal taxes to be timely paid
or contested, as appropriate.
C. REPORTS: Within thirty (30) days
after the end of each calendar month,
Administrator shall provide Manager 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
relating to the operation of the Facilities.
Within ninety (90) days after the end of the
fiscal year of the Facilities, Administrator shall
provide Manager with unaudited financial
statements including a balance sheet of the
Facilities, dated the last day of said fiscal
year, and a statement of income and expense for
the year then ended relating to the operation of
the Facilities.
D. BANK ACCOUNTS: Administrator shall
open a new checking account in the name of the
Facilities ("Facility Checking Account") and shall
deposit in the Facility Checking Account all money
received during the term of this Agreement in the
course of the operation of the Facilities;
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
Administrator. Manager shall be given notice as to
the identity of said authorized signatories. All
facility expenses incurred in the operation of the
Facilities shall be paid by check drawn on the
Facility Checking Account. Withdrawals from the
Facility Checking Account shall be made to pay
facility expenses in such order of priority as
Administrator deems appropriate to the operation
of the Facility. In the event the revenues
generated by the Facility ate at any time
insufficient to pay all of the facility expenses,
Manager shall, within five (5) days of Manager's
receipt of a written demand by Administrator,
deposit in the Facility Checking Account
sufficient funds to satisfy the then working
capital needs of the Facilities.
E. PERSONNEL:
1. All employees shall remain the
employees of Manager. Administrator shall
administer payroll, including payroll tax
reporting, and Manager shall fund payroll twice
monthly, in accordance with all applicable federal
and state laws and regulations. Manager shall
promptly reimburse Administrator for all amounts
expended by Administrator in connection therewith.
2. Manager shall hire, train,
promote, direct, discipline, suspend and discharge
personnel at the Facilities; establish salary
levels and personnel policies; and establish
employee performance standards, all as needed
during the term of this Agreement to ensure the
ef3Ccient operation of all departments within and
services offered by the Facilities. Manager shall,
as a matter which shall survive any termination of
this Agreement, indemnify, defend and hold
harmless Administrator from and against any and
all costs, expenses, liabilities, suits or other
causes of action arising from or relating to the
employment of employees at the Facilities.
F. INSURANCE: During the term hereof,
Manager, at its sole cost and expense, shall
arrange for and maintain:
1. All necessary and proper hazard
insurance covering the Facilities, the furniture,
fixtures, and equipment situated thereon,
2. All employee health and worker's
compensation insurance for so long as it is the
employer of the employees of the Facilities under
the terms hereof, which insurance shall be
administered by Manager, and
2
3. All necessary and proper
malpractice and public liability insurance for the
protection of itself, its officers, agents and
employees. Any insurance provided pursuant to this
paragraph shall comply with the requirements of
the Management Agreement.
III. PROPRIETARY INTEREST: The systems,
methods, procedures and controls employed by
Administrator and any written materials or
brochures developed by Administrator to document
the same are to remain the properly of
Administrator 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 Manager, except as authorized by
Administrator.
IV. TERM: The Term of this Agreement shall
commence as of October l,1997 (the "Commencement
Date") and shall terminate September 30, 2001
unless earlier terminated as provided herein. This
Agreement may be terminated on thirty (30) days
prior written notice, with or without cause, by
either Manager or Administrator, by giving notice
of termination to the other party hereto not less
than thirty (30) days prior to the effective date
specified in such notice of termination.
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 Administrator, it
shall be an "Event of Default"
hereunder:
1. If Administrator 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 notice thereof shall have been given to
Administrator by Manager, which notice shall
specify the event or events constituting the
default; or
2. If Administrator shall apply for
or consent to the appointment of a receiver,
trustee or liquidator of Administrator of all or a
substantial part of its assets, file a voluntary
petition in bankruptcy, or admit in writing its
inability to pay its debts as they become due,
make a general assignment for the benefit of
creditors, file a petition or an answer seeking
reorganization or arrangement with creditors or
taking advantage of any insolvency law, or if an
order judgment or decree shall be entered by a
court of competent jurisdiction, on the
application of a creditor, adjudicating
Administrator, a bankrupt or insolvent or
approving a petition seeking reorganization of
Administrator, or appointing a receiver, trustee
or liquidator of Administrator, of all or a
substantial part of its assets.
B. With respect to Manager, it shall be
an Event of Default hereunder:
I. If Manager shall fail to make or
cause to be made any payment to Administrator
required to be made hereunder (other than its
working capital obligation), and such failure
shall continue for a period of thirty (30) days;
2. 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
notice, which notice shall specify an event or
events constituting the default thereof by
Administrator to Manager; provided, however, that
in the case of Manager's failure to provide
necessary working capital upon demand by
3
Administrator, it shall be deemed to be an Event
of Default hereunder if the same is not paid
within ten (10) days of Administrator's initial
demand therefor without any further notice from
Administrator being required;
3. If Manager shall fail to make
payments, or keep any covenants, owing to any
third party which are beyond the control of
Administrator to make or keep, and which would
cause Manager to lose possession of the Facilities
or any personal property which would be required
to operate the Facilities in the normal course; or
4. If Manager shall be dissolved or
shall apply for or consent to the appointment of a
receiver, trustee or liquidator of Manager or of
all or a substantial part of its assets, file a
voluntary petition in bankruptcy, or admit in
writing its inability to pay its debts as they
become due, make a general assignment for the
benefit or creditors, file a petition or an answer
seeking reorganization or arrangement with
creditors or taking advantage of any insolvency
law, or if an order, judgment or decree shall be
entered by a court of competent jurisdiction, on
the application of a creditor, adjudicating
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.
VI. REMEDIES UPON DEFAULT:
A. If any Event of Default by Manager
shall occur, Administrator 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, but Administrator shall immediately be
entitled to receive payment of all amounts
theretofore unpaid but earned to the date of
termination.
B. If any Event of Default by
Administrator 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 obligation whatsoever
under this Agreement; provided, however, that
Administrator shall immediately be entitled to
receive payment of all amounts theretofore unpaid
but earned to date of termination, subject to
Manager's right to receive payment of damages from
Administrator.
VII. MANAGER'S INSPECTION: During the term
hereof, Manager shall have the right, upon request
and at reasonable times, to inspect and/or audit
all books and records pertaining to the operation
of the Facilities prepared or maintained by
Administrator.
VIII. ADMINISTRATIVE SERVICES FEE: Throughout
the term of this Agreement, Administrator shall
receive a monthly fee equal to $3,000.00 per month
for the first 12 months, and $4,000.00 per month
thereafter.
A. PRORATION OF FEE. If the services of
Administrator commence or terminate (for any
reason, including those set forth in Paragraph V)
other than on the first day of the month, the fee
shall be prorated in proportion to the number of
days for which services are actually rendered.
4
B. PAYMENT OF FEE. The Management fee
provided for herein shall be payable to
Administrator on the first day of each month, with
the first such payment due on the Commencement
Date.
IX. ASSIGNMENT: This Agreement shall not be
assigned by either party without the prior written
consent of the other party, which consent shall
not be unreasonably withheld.
X. 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.
To Administrator: Acorn
Service Corporation
3131 Elliott Avenue, Suite
500
Seattle, Washington 98121
Telephone No.: (206) 298-
2909
Facsimile No.: (206) 301-
4500
Attn: Jeff Mikus
To Manager: Vancouver Housing, L.L.C.
3131 Elliott Avenue
Seattle, Washington 98121
Telephone No.: (206) 298-
1201
Facsimile No.: (206) 301-
4545
Attn: Keith James
XI. RELATIONSHIP OF THE PARTIES: The
relationship of the parties shall be that of
Manager and Independent Contractor and all acts
performed by Administrator during the term hereof
as Administrator 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 Manager, its successors and assigns on the
one hand, and Administrator, its successors and
assigns on the other hand.
XII. INDEMNIFICATION: Administrator 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 acts or omissions or the willful
misconduct of Administrator in performing
Administrator's obligations under this Agreement.
Manager shall indemnify, defend and hold harmless
Administrator from and against any loss incurred
by or damage to Administrator where such loss or
damage results from the negligent act or omissions
or the willful misconduct of Manager in performing
Manager's obligations under the Agreement.
XIII. ENTIRE AGREEMENT: This Agreement
contains the entire agreement between the parties
and shall be binding upon and inure to the benefit
of their successors and 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 signed by
both of the parties hereto.
5
XIV. 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.
XV. ATTORNEY'S FEES: In the event either
party brings an action to enforce this Agreement,
the prevailing party in such action shall be
entitled to recover from the other all costs
incurred in connection therewith, including
reasonable attorney's fees.
XVI. 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.
XVII. CUMULATIVE; NO WAIVER: A 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.
XVIII. AUTHORIZATION FOR AGREEMENT: The
execution and performance of this Agreement by
Manager and Administrator have been duly
authorized by all necessary laws, resolutions or
corporate action, and this Agreement constitutes
the valid and enforceable obligations of Manager
and Administrator in accordance with its terms.
XIX. COUNTERPARTS: This Agreement may be
executed in any number of counterparts, each of
which shall be an original, and each such
counterpart shall together constitute but one and
the same Agreement.
[SIGNATURE PAGE FOLLOWS.]
6
IN WITNESS WHEREOF, the parties have hereto
caused this Agreement to be duly executed, as of
the day and year first above written.
VANCOUVER HOUSING, L.L.C.
a Washington limited liability company
By: /s/ Daniel R. Baty
----------------------------
Its: Manager
ACORN SERVICE CORPORATION
a Washington corporation
By: /s/ Michelle a. Bickford
----------------------------
Its: V.P. - New Business Development
7