\\ORION\SHARE\Amanda\AcqAmin\Marketing Agmt-Richland WA.doc - 6 -
MARKETING AGREEMENT
THIS AGREEMENT is made and entered into as of the 2nd day of
February, 1998 by and between Acorn Service Corporation, a
Washington corporation ("Acorn") and Richland Assisted,
L.L.C. ("RALLC"), a Washington limited liability company.
RECITALS
A. RALLC is the owner of a 100 unit assisted living
facility commonly known as Richland Gardens and located at
170 West Gage Boulevard, Richland, Washington (the
"Facility").
B. At the time of this Agreement, the facility was under
construction and had no census.
C. In order to market and open the Facility, RALLC is
interested in engaging a qualified marketing agent.
D. Acorn is qualified in the marketing of facilities such
as the Facility.
E. RALLC and Acorn are interested in documenting the terms
and conditions under which Acorn will provide marketing
services to RALLC with respect to the Facility.
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual covenants of the parties set forth herein, IT
IS HEREBY AGREED TO AS FOLLOWS:
AGREEMENT
1. ENGAGEMENT OF ACORN. RALLC does hereby retain Acorn to
provide the Marketing Services (as hereinafter defined) to
the Facility and Acorn does hereby agree to provide the
Marketing Services to the Facility.
2. MARKETING SERVICES. For purposes of this Agreement,
the "Marketing Services" to be provided by Acorn shall
include the following:
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a. ON SITE MARKETING MANAGERS. Acorn shall provide onsite
marketing director(s) for the Facility as set forth in the
marketing plan. Acorn and RALLC acknowledge and agree that
the initial onsite marketing director(s) will be hired by
Acorn but that RALLC shall have the right to request that
Acorn replace the onsite marketing director(s) in the event
RALLC is not reasonably satisfied with the performance of
said director(s). The onsite marketing director(s) will be
and remain the employee(s) of Acorn and his or her
compensation shall be reimbursed to Acorn by RALLC.
Compensation shall include the monthly salary (plus
applicable federal, state and local withholding taxes),
payable within ten (10) days of receipt of the Monthly
Invoice. In addition, RALLC shall reimburse Acorn within
ten (10) days after receipt of the Monthly Invoice therefor
for the cost of employee benefits (i.e., health insurance,
dental insurance, and such other benefits as may be approved
by RALLC) provided by Acorn to the onsite marketing
director(s) as an employee of Acorn. The onsite marketing
director(s) will be responsible for the day to day marketing
of the Facility in accordance with the terms of this
Agreement.
b. MARKETING PLAN AND BUDGET. Within fifteen (15) days
after the execution of this Agreement, Acorn shall provide
to RALLC a marketing plan and budget (the "Marketing Plan
and Budget") which shall set forth in detail the activities
which Acorn proposes to undertake to market the facility
during the first twelve months of this Agreement and the
anticipated cost of such activities. RALLC shall have the
right to review and approve the Marketing Plan and Budget.
RALLC agrees that it shall not unreasonably withhold its
approval of the Marketing Plan and Budget provided that same
does not provide for start up expenditures more than
approved for in the budget, or monthly expenditures of more
than approved in the budget. Acorn shall provide RALLC with
an updated Marketing Plan and Budget prior to the expiration
of the initial Marketing Plan and Budget or the then
effective updated Marketing Plan and Budget. Each updated
Marketing Plan and Budget shall cover a twelve month
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period (or such shorter period as may then be remaining
under the terms of this Agreement) immediately
subsequent to the end of the period covered by the then
effective Marketing Plan and Budget; provided, however,
that no provision shall be permitted to be made in any
updated Marketing Plan and Budget for start up
expenditures. Once approved, Acorn shall market the
Facility in accordance with the terms of the Marketing
Plan and Budget. In the event Acorn intends to expend
any amounts in excess of the amounts reflected in the
initial or in any updated Marketing Plan and Budget,
Acorn shall be required to secure the prior written
approval of RALLC, which approval shall not be
unreasonably withheld provided the anticipated cost
thereof will not exceed $1,000 individually or $10,000
in the aggregate when taken in conjunction with prior
unbudgeted expenditures for which approval was not
required (the "Approved Unbudgeted Expenditures").
c. WEEKLY MARKETING UPDATE; MONTHLY MARKETING REPORTS. As
and when requested by RALLC, Acorn shall provide to the
Divisional or Regional Director for RALLC such information
which he or she shall require in order to prepare a weekly
Facility census report. In addition, on or before the 15th
day of each month, Acorn shall provide RALLC with a monthly
marketing report which summarizes the marketing activities
undertaken during the immediately preceding month, the
amount expended by Acorn in connection therewith and the
impact which the same had on the Facility's census. The
onsite marketing director(s) shall be available to review
the monthly marketing report with RALLC and to respond to
any comments or questions concerning the same which RALLC
may have.
3. COMPENSATION. In addition to reimbursing Acorn for the
salary and benefit of the onsite marketing director(s) as
provided in Section 2(a), RALLC shall pay Acorn the
following amounts in connection with the provision of the
Marketing Services (all such reimbursement and payment
obligations shall be reflected in a "Monthly Invoice"):
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a. REIMBURSEMENT OF MARKETING EXPENSES. RALLC shall
reimburse Acorn for all amounts reflected in the Monthly
Invoice which were expended by Acorn in accordance with the
Marketing Plan and all Approved Unbudgeted Expenditures.
Reimbursement shall be made within ten (10) days of receipt
of the Monthly Invoice.
b. ACCOUNTING SERVICE FEE. From the date the first
employee is hired by Acorn until the commencement of a
management agreement, RALLC shall pay a service fee to Acorn
in the amount of $5,000 per month, which fee shall be
prorated for any partial month.
c. FILL-UP FEE. Due to the fact that the Facility has
only recently opened, has no current residents and,
therefore, no gross revenues, and as Acorn will expend
unusual effort and expense to attract and retain new
residents while the Facility is in its fill-up stage, RALLC
shall pay to Acorn, upon achievement of three consecutive
months of Positive Cash Flow, a one-time lump-sum cash fee
of $50,000. Positive Cash Flow shall mean an excess of
funds after deducting from gross monthly facility revenues,
all facility operating expenses (on an accrual basis), the
management fee and debt service. In addition, RALLC will be
responsible for any fill-up bonuses paid to employees under
the incentive plan outlined in the attached Marketing Plan
and Budget.
4. TERM. The term of this Agreement shall commence upon
the date of this Agreement and shall continue for a period
of 24 months from when the Facility opens or until
terminated by either party with or without cause on thirty
(30) days written notice to the other party. In the event
of the termination of this Agreement, all fees and other
compensation due and owing Acorn for services rendered prior
to the date of termination shall be immediately due and
payable on the effective date of such termination, subject
to RALLCs' right to offset against such payment any damage
which it has suffered in the event the Agreement has been
terminated as a result of a breach by Acorn of its
obligations under this Agreement.
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5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Washington.
6. ENTIRETY. This Agreement represents the entire and
final agreement of the parties hereto with respect to the
subject matter hereof and may not be amended or modified by
written instrument signed by the parties hereto.
7. CONSTRUCTION. Both parties acknowledge and agree that
they have participated in the drafting and negotiation of
this Agreement and accordingly that no provision hereof
shall be construed so as to favor or disfavor either party
hereto.
8. ATTORNEYS FEES. In the event of a dispute between the
parties with respect to the interpretation or enforcement of
the terms hereof, the prevailing party shall be entitled to
collect from the other its reasonable costs and attorneys
fees, including its costs and fees on appeal.
9. SEVERABILITY. In the event any provision of this
Agreement is deemed to be invalid or unenforceable, said
determination shall not affect the validity or
enforceability of the remaining provisions hereof.
10. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereby execute this
Agreement as of the day and year first set forth above.
Richland Assisted, L.L.C.
By: Daniel R. Baty
Its: Manager
Acorn Service Corporation
By: Kelly J. Price
Its: Vice President of Finance
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