Exhibit 10.38
AMENDED AND RESTATED
AGREEMENT TO PROVIDE ACCOUNTING
AND CONSULTING SERVICES TO CALIFORNIA
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 "Owner") and Emeritus Corporation, a Washington corporation
(hereinafter referred to as "Emeritus").
WHEREAS, as set forth more fully in Exhibit A, Owner either
owns, leases or manages under contract or in its capacity as the managing member
of the owner or lessee of, the assisted living facilities described in Exhibit A
(the "Facilities" and, where the context requires, individually, a "Facility")
and is, in each instance, authorized to engage a Emeritus or submanager in
connection with its operation of the Facilities;
WHEREAS, Owner wants someone to manage the Facilities on its
behalf;
WHEREAS, Emeritus is experienced and qualified in the field of
assisted living facility management and has agreed to manage the Facilities on
behalf of Owner, pursuant to the terms and conditions set forth herein;
WHEREAS, Emeritus is required as a matter of law to be
licensed to operate the Facilities;
WHEREAS, pending issuance of a license to Emeritus to operate
the Facilities, Owner is interested in engaging Emeritus to provide certain
accounting, reporting and consulting services to Owner with respect to the
Facilities; and
WHEREAS, Owner and Emeritus are interested in documenting the
terms and conditions under which such services will be provided.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, IT IS AGREED AS FOLLOWS:
I. Accounting Services:
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(i) Emeritus shall, at its expense, provide accounting support to
the Facilities. Owner acknowledges and agrees that such accounting support shall
not include the preparation of Owner's corporate financial statements or
securities filings, but only the individual financial statements for the
Facilities, in each case meeting the requirements of Section II. Emeritus shall
not be required to reflect in the financial statements for the Facilities any
corporate accounting adjustments provided to Emeritus by Owner until such time
as Emeritus fully understands the rationale for such adjustment.
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(ii) All accounting procedures and systems utilized in providing
said support shall be in accordance with the operating capital and cash programs
developed by Emeritus, which programs shall conform to generally accepted
accounting principles ("GAAP") and shall not materially distort income or loss;
provided, however, Emeritus 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 Owner to Emeritus pursuant to Section
I(v).
(iii) In addition, as a cost of operating the Facilities, Emeritus
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 Emeritus 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 Owner under the terms of this
Agreement. All other tax returns, including Owner's local, state or federal
income tax returns and state corporate franchise tax returns and third party
payor cost reports, shall be prepared by Owner or its designee and the taxes and
other payments due thereunder shall be the sole responsibility of Owner.
(iv) Nothing herein shall preclude Emeritus from delegating to a
third party a portion of the accounting duties provided for in this section;
provided, that such delegation shall not relieve Emeritus 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 Emeritus. Owner acknowledges and agrees that in the event Emeritus
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 Owner under the terms of this Agreement.
(v) In order to enable Emeritus to provide the accounting support
services described in this Section, prior to the Commencement Date, Owner shall
provide to Emeritus the information and shall take the transition actions
described in Exhibit B hereto (the "Accounting Transition Services"), it being
understood and agreed that Emeritus will not be able to fully perform its
obligations under this Section I unless and until Owner has fully complied with
its obligations with respect to the Accounting Transition Services.
II. Reports: Emeritus shall prepare and provide to Owner any
reasonable operational information with respect to the Facility which may from
time to time be specifically requested by Owner, including any information
needed to assist Owner in completing the tax returns for which it is responsible
under Section I , in complying with any reporting obligations imposed on Owner
or Owner'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, Emeritus
shall provide Owner with an unaudited balance sheet of the Facilities, dated the
last day
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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 Emeritus shall cooperate
with Owner or Owner's certified public accountant in the event Owner elects, or
is required, to have audited annual financial statements prepared. The financial
statements prepared by Emeritus shall be prepared in accordance with (i) GAAP,
consistently applied, (ii) this Agreement, and (iii) the procedures and
practices provided for in this Agreement.
III. Bank Accounts:
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(i) With respect to each of the Facilities, Emeritus 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 Emeritus but Emeritus 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 Owner 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 Owner the fee due with respect to such Facility as set
forth in Exhibit F (the "Regent Fees"), which Regent Fees shall be deposited in
an account established by Owner 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 Owner to Emeritus in writing
from time to time (the "Property Expenses"). 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 Emeritus in such order of priority as
Emeritus 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
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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 Owner to provide the Working Capital Funds (as
defined in Section II(v) below) or Service Fee Funds (as defined in Section
II(v) below) as and when due in accordance with Section II(v) below. Emeritus
shall make any rent and debt service payments which are made by it by wire
transfer in accordance with wiring instructions provided by Owner to Emeritus.
(iv) Any excess funds in the Depository Account for a Facility, after
establishing the working capital reserves required by Section II(vii), shall be
distributed by Emeritus to Owner.
(v) In the event (A) at any time Emeritus 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 II(vii) 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 Emeritus's Service Fee
(as defined below) (the "Service Fee Funds"), no less than three (3) days prior
to the date on which Emeritus determines that Working Capital Funds or Service
Fee Funds, as applicable, are required, Emeritus shall provide Owner 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, Owner shall, within five (5) business days of its
receipt of such written demand by Emeritus, deposit in the applicable Depository
Account or the Regent Account, as applicable, the amount so demanded by
Emeritus. For purposes hereof, the Other Authorized Accounts shall be defined as
those accounts designated in writing by Owner to Emeritus from which Emeritus is
authorized to draw funds in order to meet the working capital needs of certain
other Facilities designated in writing by Owner to Emeritus (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 Owner's outside legal counsel confirming that it has reviewed all necessary
legal documents and determined that Owner 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 Emeritus signed by
Owner's Representative to the effect that Owner 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 Emeritus in the exercise of its reasonable discretion.
Owner acknowledges and agrees that in no event will Emeritus have any obligation
to pay any Daily Operating Expenses or the Regent Fee other than from funds
available in the applicable Depository Account, including funds deposited
therein by Emeritus 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 Service Fee and
that (i) such working capital is to be provided solely from the cash receipt of
the Facilities, if applicable,
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withdrawals from the Other Authorized Accounts and the working capital provided
by Owner pursuant to this Section I(h) and (ii) such service fees are to be paid
from the funds deposited by Emeritus in payment of the Regent Fees and by Owner
pursuant to this Section II(v), if applicable, in the Regent Account.
(vi) Owner acknowledges and agrees that in the course of providing
the consulting services described in this Agreement Emeritus may incur common
expenses benefiting all of the facilities owned and/or operated by Emeritus,
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 Emeritus 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
Owner, which approval shall not be unreasonably withheld, after Emeritus has
provided Owner with a specification setting forth in reasonable detail the
nature of such Other Common Expenses.
(vii) During the Term hereof, Owner and Emeritus 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 Emeritus be required to be equal to the amount
reflected in Exhibit H opposite the name of such Facility and Owner shall upon
demand in accordance with Section II(v) provide Emeritus with any working
capital which may be needed to enable Emeritus to maintain such minimum cash
balances. In addition, during the Term hereof, Owner shall at all times maintain
a minimum balance in the Regent Account of $80,000.
IV. Consulting Services. During the term of this Agreement, Emeritus
shall supervise the day to day operation and management of the Facility. In
furtherance of the foregoing, utilizing the resources provided or made available
by Owner in accordance with the terms of this Agreement, Emeritus shall be
responsible for the supervision and management of the operation of the
Facilities, in accordance with applicable laws and regulations, including the
supervision of employees, hiring and discharge of employees in consultation with
Owner, billings and collection, and regulatory compliance, including compliance
with the State Agreements (as hereinafter defined). Emeritus shall have no
authority to commit the expenditure of the Facilities' funds or the funds of
Owner during the terms of this Agreement unless it has secured the prior written
consent of Owner's Representative and Owner's Representative shall have no
obligation to approve any non-routine expenditures of the Facilities' funds or
Owner's funds during the term of this Agreement. For purposes hereof, the State
Agreement shall be defined as that Stipulation, Waiver and Order dated May 25,
2000 entered in Case No. 7099344003-C (the "2000 Order"), a true and correct
copy of which is attached hereto as Exhibit I, and that Stipulation and Waiver;
Decision and Order dated June 28, 2001 entered in Case Nos, 7400271001D,
7400271001E, 7400271001F, 7400271001G, 7400271001H, 7400271001K, 7400271001L and
7400271001M (the "2001 Order"), a true and correct
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copy of which is attached hereto as Exhibit J. In furtherance and not in
limitation of the foregoing, Emeritus shall designate an individual currently in
its employ who, subject to Owner's review and approval, which will not be
unreasonably withheld, shall be hired/engaged by Owner, to act as the training
officer required by the terms of Paragraph 6(O) of the 2001 Order (the "Training
Officer").
V. Emeritus' and Owner's Representative: Emeritus hereby appoints Frank
Ruffo (the "Emeritus' Representative") as the person employed by Emeritus with
whom Owner shall interact and upon whose decisions Owner shall be authorized to
rely, and Owner hereby appoints Walt Bowen (the "Owner's Representative") as the
person employed by Owner with whom Emeritus shall interact and upon whose
decisions Emeritus shall be authorized to rely, with respect to the performance
by Emeritus of its duties hereunder. Emeritus shall have the right from time to
time during the term of this Agreement to replace the Emeritus' Representative
upon written notice to Owner designating the replacement Emeritus'
Representative and Owner shall have the right from time to time during the term
of this Agreement to replace the Owner's Representative upon written notice to
Emeritus designating the replacement Owner's Representative. Nothing herein
shall be construed as imposing any personal liability on the Emeritus'
Representative or Owner's Representative with respect to the acts or omissions
of Emeritus or Owner, respectively, under this Agreement.
VI. Term of Agreement and Termination Payments:
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(i) The Term of this Agreement shall commence on January 1, 2002 (the
"Commencement Date").
(ii) The Term of this Agreement shall terminate upon the first to occur
of the following:
(A) the occurrence of an Event of Default hereunder and the exercise by
Emeritus or Owner, as applicable, of its right to terminate this
Agreement as a result thereof; or
(B) on written notice from Owner to Emeritus 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 Owner within the Termination Period, then this Agreement shall
automatically renew for successive one year terms, subject to Owner's
right to terminate the same on no less than ninety (90) days written
notice to Emeritus; or
(C) on no less than ninety (90) days written notice from either Owner
or Emeritus as to all, but not less than all, of the Facilities; or
(D) with respect to one or more Facilities, by Owner or Emeritus on no
less than ninety (90) days prior written notice in the event that at
any time
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during the term of this Agreement Owner will no longer own or control
such Facilities whether resulting from a sale or other reasons, whether
voluntary or involuntary; or
(E) with respect to one of more of the Facilities, by Owner 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 Emeritus (the
"Third Party Consents"); provided, however, that Owner 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
(F) on receipt by Emeritus of licensure approval from the State of
California, in which case Emeritus shall commence management of the
Facilities in accordance with the terms of the Agreement to Provide
Management Services between Owner and Emeritus of even date herewith;
or
(G) 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 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 but such termination right shall only apply
with respect to the affected Facility.
For the purposes of Sections VI, VII and VIII of this Agreement, any
termination due to an Owner Event of Default or a Emeritus Event of Default or
by Owner pursuant to Section VII 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, Owner's or Emeritus' required termination payments
shall only be with respect to the Facilities covered by the partial termination.
(iii) 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 Emeritus or Owner, as applicable:
(A) In the event of the termination of this Agreement by Owner as a
result of the occurrence of a Emeritus Event of Default, Emeritus shall
pay to Owner an amount equal to one month's Service Fee concurrently
with the termination of this Agreement.
(B) In the event of the termination of this Agreement during the first
year either by Emeritus as a result of the occurrence of an Owner Event
of Default of the Term or by Owner pursuant to Section VI(ii)(C) other
than
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with respect to the Bowen Facility (as hereinafter defined), Owner
shall pay to Emeritus an amount equal to the difference between the
aggregate Service Fee due during the first year of the Term and the
Service Fee actually paid to Emeritus to the date of such termination.
For purposes hereof, the Bowen Facility shall mean the Facility located
in Santa Cruz, California.
(C) In the event of the termination of this Agreement at any time after
the first year of the Term either by Emeritus as a result of the
occurrence of an Owner Event of Default or by Owner pursuant to Section
VI(ii)(C) Owner shall pay to Emeritus an amount equal to the then
applicable Service Fee multiplied by three.
(D) In the event of the termination of this Agreement by Emeritus
pursuant to SectionVI(ii)(C) no payment shall be due from Emeritus to
Owner upon termination and in the event of the termination of this
Agreement by Owner pursuant to Section VI(ii)(E) or (F) no payment
shall be due from Owner to Emeritus upon termination.
(iv) Examples of the calculation of the termination fees due pursuant
to this Section VI are set forth in Exhibit K.
(v) In the event of the termination of this Agreement by Owner or
Emeritus 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) Emeritus shall cooperate with Owner or its designee, at no cost to
Emeritus and without the assumption of any further liability by
Emeritus other than the liability imposed on Emeritus under this
Agreement, in an orderly transition of accounting responsibility for
the affected Facility or Facilities to Owner or its designee.
VII. 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 Emeritus, it shall be an "Event of Default"
hereunder:
(i) If Emeritus 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 Emeritus by Owner, which
notice shall specify in detail the event or events constituting the default; or
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(ii) If Emeritus shall (A) apply for or consent to the appointment of a
receiver, trustee or liquidator of Emeritus 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 Emeritus,
a bankrupt or insolvent or approving a petition seeking reorganization of
Emeritus, or appointing a receiver, trustee or liquidator of Emeritus, of all or
a substantial part of its assets.
(b) With respect to Owner, it shall be an Event of Default hereunder:
(i) If Owner shall fail to make or cause to be made any payment to
Emeritus 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 Owner has failed to make;
(ii) 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 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 Emeritus to Owner;
(iii) If Owner shall fail to provide necessary working capital upon
demand by Emeritus with respect to the payment of the Daily Operating Expenses
or the Service Fee due to Emeritus within the time provided in Section I(h), and
such failure continues uncured for five (5) business days after Emeritus gives
Owner notice of such failure;
(iv) If Owner shall fail to make payments, or keep any covenants, owing
to any third party which are beyond the control of Emeritus to make or keep
(which for purposes hereof shall include any covenants by which Owner may be
bound as of the Commencement Date (the "Pre-Existing Covenants") or to which
Owner may agree to be bound after the Commencement Date without the prior
approval of Emeritus (the "Unapproved Covenants")), and which would cause Owner
to lose possession of the Facilities or any personal property required to
operate the Facilities in the normal course; provided that Emeritus shall give
Owner prompt notice of any such payment and failure to pay of which Emeritus has
knowledge;
(v) If Owner shall be dissolved or shall apply for or consent to the
appointment of a receiver, trustee or liquidator of Owner 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 Owner
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a bankrupt or insolvent or approving a petition seeking reorganization of Owner
or appointing a receiver, trustee or liquidator of Owner of all or a substantial
part of its assets; or
(vi) If Owner or any of its principal officers is convicted or a crime
that materially affects the operation or regulation of the Facilities.
VIII. Remedies and Obligations Upon Default:
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(i) If any Event of Default by Owner shall occur, Emeritus 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
Emeritus's right to receive damages from Owner 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.
(ii) If any Event of Default by Emeritus shall occur, Owner 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 exclusive right to
possession of the Facilities granted to Emeritus hereunder, and neither party
shall have any further obligation whatsoever under this Agreement; except for
Owner's right to receive payment of liquidated damages from Emeritus in an
amount specified in Section IV.
IX. Accounting and Consulting Fee:
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(i) In consideration for the provision of the services contemplated in
this Agreement and the provision of the Training Officer, Emeritus shall receive
a fee of $8,000 per month for each of the Facilities other than the West Covina
and Merced Facilities as to which the fee shall be $2,000 per month per Facility
until Owner is licensed to operate the West Covina Facility, which is currently
anticipated to be on or about March 1, 2002, at which time the fee shall be
increased to $8,000 per month for the West Covina Facility and until Owner is
licensed to operate the Merced Facility, which is currently anticipated to be on
or about March 1, 2002, at which time the fee shall be increased to $8,000 per
month for the Merced Facility (the "Services Fee"). The Services Fee shall be
increased by 5% on the second anniversary of the Commencement Date.
(ii) If the services of Emeritus 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.
(iii) The Services Fee provided for herein shall be disbursed by
Emeritus to itself out of the Depository Account in accordance with the
provisions of Section III.
(iv) Any amounts due from Owner to Emeritus or Emeritus to Owner
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
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the same may change from time to time) plus 5% from the date due to the date
paid in full.
X. Assignment: This Agreement shall not be assigned by either party
without the prior written consent of the other party; provided, however,
Emeritus shall have the right to assign this Agreement to an entity which is
owned or controlled by Emeritus or its principal shareholder, Daniel R. Baty,
without the prior written consent of Owner.
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. 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 Emeritus: Emeritus Corporation
3131 Elliott Avenue
Suite 500
Seattle, WA 98121
Facsimile: 206-301-4500
Attn: Raymond R. Brandstrom, Vice President
-Finance
To Owner: Regent Assisted Living, Inc.
Bank of America Building
121 SW Morrison
Suite 100
Portland, OR 97201
Facsimile: 503-274-4685
Attn: Walt Bowen, President
XII. Relationship of the Parties: The relationship of the parties
shall be that of principal and independent contractor and all acts performed by
Emeritus during the term hereof as Emeritus of the Facility 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 Owner, its successors and assigns
on the one hand, and Emeritus, its successors and assigns on the other hand.
Notwithstanding the foregoing, Emeritus shall be authorized to execute certain
documents in the course of the day to day operation of the Facility as the agent
of Owner, such as credit applications for supplies, banking resolutions for the
Depository Account, utility deposit forms, etc.
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XIII. Indemnification: Emeritus shall indemnify, defend and hold
harmless Owner from any loss incurred by or damage to Owner where such loss or
damage results from the negligence or willful misconduct of Emeritus in
performing its obligations under this Agreement or from a breach of this
Agreement by Emeritus; provided, however, Owner specifically acknowledges and
agrees that nothing in this Section XIII shall be construed as imposing any
liability on Emeritus for any insurance deductibles for which Owner shall be
solely responsible. Owner shall indemnify, defend and hold Emeritus harmless
from any loss incurred by or damage to Emeritus where such loss or damage
results from the negligence or willful misconduct of Owner in performing its
obligations under the Agreement or from a breach of this Agreement by Owner.
XIV. Entire Agreement: This Agreement contains the entire agreement
between the parties relating to the operation of the Facility 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.
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
Owner and in the City of Seattle, Washington, if the arbitration is initiated by
Emeritus, 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.
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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 Owner and Emeritus have been duly authorized by all necessary
laws, resolutions or corporate action, and this Agreement constitutes the valid
and enforceable obligations of Owner and Emeritus in accordance with its terms.
XX. 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.
XXI. Confidentiality: Throughout the Term of this Agreement and for a
period of one (1) year after the expiration or earlier termination of this
Agreement, each of Emeritus and Owner agrees to maintain the confidentiality of
any proprietary information concerning the other or the Facility 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.
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XXII. Construction: Each of the parties acknowledges and agrees that
it 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.
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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.
REGENT ASSISTED LIVING, INC.
By: /s/ Walter C. Bowan
--------------------------------
Its: CEO
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EMERITUS CORPORATION
By: /s/ Raymond R. Brandstrom
--------------------------------
Its: Vice President of Finance
---------------------------------
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EXHIBIT A
DESCRIPTION OF THE FACILITY
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EXHIBIT B
ACCOUNTING TRANSITION SERVICES
17
EXHIBIT C
ADDITIONAL FACILITY SPECIFIC REPORTING OBLIGATIONS
18
EXHIBIT D
FORM OF FINANCIAL STATEMENTS
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EXHIBIT E
FACILITY BANK ACCOUNT INFORMATION
20
EXHIBIT F
REGENT FEES BY FACILITY
21
EXHIBIT G
RENT AND DEBT SERVICE PAYMENTS BY FACILITY
22
EXHIBIT H
MINIMUM BANK BALANCES
23
EXHIBIT I
2000 ORDER
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EXHIBIT J
2001 ORDER
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EXHIBIT K
CALCULATION OF TERMINATION FEES
26