AGREEMENT TO PROVIDE ADMINISTRATIVE SERVICES
TO ADULT HOMES
AGREEMENT TO PROVIDE ADMINISTRATIVE
SERVICES TO ADULT HOMES
This Agreement made this 2nd day of Sept., 1996, between Emeritus
Corporation, a Washington corporation (hereinafter referred to as
"Emeritus"), and Painted Post Partners, a Washington general partnership
(hereinafter collectively referred to as "Operator").
WHEREAS, Operator has agreed to lease those assisted living facilities
located in the State of New York and more fully described in Exhibit A (the
"Facilities");
WHEREAS, Operator wants someone to assist it with the day to day
operation of the Facilities once its lease of the Facilities is effective;
WHEREAS, Emeritus is experienced and qualified in the field of
operating assisted living
WHEREAS, Operator has determined that Emeritus's price is
economical in light of the range of services which it provides; and
WHEREAS, Emeritus is willing to assist Operator with its day to day
operation of the Facilities, pursuant to the terms and conditions set forth
herein.
NOW THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, IT IS AGREED AS FOLLOWS:
I. RESPONSIBILITIES OF EMERITUS: Operator hereby engages
Emeritus and Emeritus hereby accepts such engagement and agrees to
provide administrative and consulting services to Operator in connection
with the operation of the Facilities, upon the terms and conditions set forth
in this Agreement. By entering into this Agreement, Operator does not
delegate to Emeritus any powers, duties or responsibilities which it is
prohibited by law from delegating. Operator also retains such
other authority as shall not have been expressly delegated to Emeritus
pursuant to this Agreement. Subject to the foregoing, Emeritus shall
provide the following services all of which shall be subject
to the review and approval of Operator:
A. OPERATIONAL POLICIES AND FORMS: Emeritus shall
implement operational policies and procedures and develop such new
policies and procedures as it deems necessary to insure the establishment
and maintenance of operational standards appropriate for the nature of the
Facilities.
B. CHARGES: Emeritus shall establish the schedules of
recommended charges, including any and all special charges for services
rendered to the patients at the Facilities.
1
C. INFORMATION: Emeritus shall develop any informational
material, mass media releases, and other related publicity materials, which
it deems necessary for the operation of the Facilities.
D. REGULATORY COMPLIANCE: Emeritus, with the assistance
of Operator if requested by Emeritus, shall use its best efforts to assist
Operator to maintain all licenses, permits, qualifications and approvals from
any applicable governmental or regulatory authority for the operation of the
Facilities, shall assist Operator with respect to the operation of the
Facilities in full compliance with all applicable laws and regulations and shall
comply with all such laws and regulations in performing its obligations under
this Agreement; provided, however, that nothing herein shall be construed as
relieving Operator, as the licensed operator of the Facilities, from
liability in the event that the operations at the Facilities fail to comply with
applicable law.
E. EQUIPMENT AND IMPROVEMENTS: Emeritus shall advise
Operator as to equipment and improvements which are needed to maintain
or upgrade the quality of the Facilities and said equipment, to replace
obsolete or run-down equipment or to correct any other survey
deficiencies which may be cited during the term of this Agreement.
Operator shall review and act upon Emeritus's recommendations as
expeditiously as reasonably possible. Emeritus shall not be
liable for any cost or liability which Operator may incur in the event
Operator disregards Emeritus's recommendations. Emeritus shall make all
necessary and approved repairs, replacements and maintenance and shall
acquire all necessary equipment, including replacement equipment;
provided, however, that the same shall be within the budgetary limits set
forth in the annual capital budget prepared by Emeritus pursuant to
Paragraph L and, in the case of repairs and maintenance, shall be
undertaken in a workmanlike and lien free manner.
F. ACCOUNTING: Emeritus shall provide home office 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 Emeritus, which programs
shall conform to generally accepted accounting principles and shall not
materially distort income or loss. In addition, Emeritus shall prepare or
cause to be prepared all tax returns, including payroll tax returns and shall
cause all local, state and federal taxes to be timely paid or contested, as
appropriate. Any out of pocket costs incurred by Emeritus in preparing
such returns shall not be included in Emeritus's fee, but shall be separately
reimbursed from the revenues of the Facilities. The taxes shall
be deemed to be operating expenses of the Facilities and shall be paid out of
the revenues of the Facilities. 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
2
provided for herein. Nothing herein shall be construed as delegating to
Emeritus responsibility for the maintenance of the books and records of the
Facilities which is and shall remain the obligation of
Operator.
G. REPORTS: Emeritus shall prepare and provide to the Operator
any reasonable operational information which may from time to time be
specifically requested by Operator, including any information needed to
assist Operator in completing its tax returns and in complying with any
reporting obligations imposed by any mortgagees or lessors. In addition, (i)
within thirty (30) days after the end of each calendar month, Emeritus shall
provide Operator with an unaudited balance sheet of each 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 each of
the Facilities and (ii) within ninety (90) days after the end of the fiscal year
of the Facilities, Emeritus shall provide Operator with unaudited financial
statements including a balance sheet of each 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 each of the Facilities.
H. BANK ACCOUNTS: Emeritus shall establish a new checking
account in the name of each of the Facilities and shall deposit therein all
money received during the term of this Agreement in the course of the
operation of each such Facility. Withdrawals and payments from this
account shall be made only on checks signed by a person or persons
designated by Emeritus. Operator shall be given notice as to the identity of
said authorized signatories. All expenses incurred in the operation of the
Facilities in accordance with the terms of the Budgets submitted to Operator
under Paragraph I(L), including, but not limited to, Facilities' lease
payments for which Operator is responsible under the terms of the Facilities
Leases, payroll and employee benefits and payment of Emeritus' fee, shall
be paid by check drawn on these accounts. Withdrawals from these
accounts shall be made first to pay any debt service or rent due with respect
to the Facilities, next to pay the operating expenses of the Facilities in such
order of priority as Emeritus deems appropriate to the operation of the
Facilities (other than Emeritus's fee) and thereafter to pay Emeritus's fee.
Any fee due to Emeritus which is not paid when due as a result of an
insufficiency of revenues to cover the same shall accrue and shall be due
and payable at such time as there are sufficient revenues to pay
the same; provided, however, that all such accrued and unpaid fees shall be
due and payable in full upon termination of this Agreement unless
otherwise agreed by Operator and Emeritus or unless this Agreement is
terminated by Operator, as a result of an Event of Default, by Emeritus, in
which case the fees due shall be offset against any damages due to Operator
as a result of said Event of Default.
I. PERSONNEL: Except as otherwise provided herein, Emeritus
shall recruit, train, promote, direct and discipline personnel of the
Facilities; establish salary levels, personnel policies and employee benefits;
and establish employee performance standards, all as needed during the term
3
of this Agreement to ensure the efficient operation of all departments within
and services offered by the Facilities. All of the foregoing obligations shall
be undertaken in accordance with the operating budgets of the Facilities, the
policies and procedures of the Facilities and all applicable state and
federal laws. All of the personnel at the Facilities shall be the employees of
Operator. Accordingly, Operator shall retain full power and authority to
hire and fire the personnel at the Facilities.
J. SUPPLIES AND EQUIPMENT: Emeritus shall purchase
supplies and non-capital equipment needed to operate the Facilities within
the budgetary limits set forth in the annual operating budget prepared by
Emeritus pursuant to Paragraph I(L) and subject to the availability of
operating revenues from the Facilities. In purchasing said supplies and
equipment, if possible, Emeritus shall take advantage of any national or
group purchasing agreements to which Emeritus
may be a party.
K. LEGAL PROCEEDINGS: Emeritus shall, through its legal
counsel, coordinate all legal matters and proceedings with Operator's
counsel.
L. BUDGETS: The Facilities 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, Emeritus shall prepare and submit to Operator for
its review and approval, which approval shall not be unreasonably withheld,
an annual operating budget, an annual capital expenditure budget, and an
annual cash flow projection for each of the Facilities. In the event a budget
has not been agreed upon by the beginning of the fiscal year, the budget in
effect for the prior fiscal year shall continue in effect until the new budget
is agreed upon. Any expenditures made during the year pursuant to an
approved budget or the prior fiscal year's budget, as applicable, 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 Operator's prior approval. Any
budgeted expenditures and/or any expenditures in excess of the Budget
Threshold shall be subject to Operator's prior approval, which approval
shall not be unreasonably withheld. Furthermore, all such expenditures such
be subject to the availability of the Facilities' revenues.
M. COLLECTION OF ACCOUNTS: Emeritus shall issue bills and
collect accounts and monies owed for goods and services furnished by the
Facilities, including, but not limited to, enforcing the rights of Operator and
the Facilities as creditor under any contract or in connection with the
rendering of any services; provided, however, that any expenses incurred
by Emeritus in so doing shall be treated as operating expenses of the
Facilities, which shall be payable out of Facilities' funds deposited in the
bank account described in Section I(H). Any actions taken by
Emeritus to collect said accounts receivable shall be in accordance with the
applicable laws, rules and regulations governing the collection of accounts
receivable.
4
N. COMPLIANCE WITH FACILITIES LEASES. Emeritus shall
take such other actions as may be reasonably requested by Operator to
enable Operator to comply with its obligations under the Lease Agreements
of even date herewith between Xxxxxxx Xxxxxx, as lessor, and Operator, as
lessee (the "Facilities Leases").
II. INSURANCE: Emeritus shall arrange for and maintain all necessary
and proper hazard insurance covering the Facilities, the furniture, fixtures,
and equipment situated thereon, and all necessary and proper malpractice
and public liability insurance for Operator's protection and for the
protection of Operator's officers, partners, agents and employees. Operator
shall provide all employee health and worker's compensation insurance for
its employees, which insurance shall be administered by Emeritus. Emeritus
shall arrange for and maintain 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 any applicable Facilities mortgage or lease
and, with the exception of the insurance maintained by Emeritus for its own
protection, shall be paid from the revenues of the Facilities.
III. PROPRIETARY INTEREST: The systems, methods, procedures
and controls employed by Emeritus and any written materials or brochures
developed by Emeritus to document the same are to remain the property of
Emeritus 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 Operator, except as authorized by Emeritus.
IV. TERM OF AGREEMENT: The initial term of this Agreement
shall commence as to each of the Facilities on the applicable
Commencement Date (as defined in the applicable Facilities
Lease) (the "Commencement Date") and shall terminate as to each of the
Facilities at the end of the second year after the first Commencement Date
hereunder (the "Initial Term") unless sooner terminated upon the
occurrence of an Event of Default or unless extended by mutual agreement
of Operator and Emeritus. Operator and Emeritus acknowledge and agree
that it is the intent of the parties that the Commencement Date shall be the
same as to all of the Facilities other than Perinton Park Manor, which is
under construction and the term of which Lease may accordingly
commence later than the term of the other Facilities Leases commences but
that the Termination Date shall be the same as to all of the Facilities.
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 Emeritus, it shall be an "Event of Default"
hereunder:
5
(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 thirty (30) days after notice thereof shall have
been given to Emeritus by Operator, which notice shall specify the
event or events constituting the default; or
(ii) If Emeritus shall apply for or consent to the appointment
of a receiver, trustee or liquidator of Emeritus 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 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 Operator, it shall be an Event of Default
hereunder:
(i) If Operator shall take any action in exercising the rights
granted to it or performing the obligations imposed on it hereunder and, as
a result thereof, Emeritus incurs any liabilities, losses, damages, expenses,
costs, suits, legal or administrative proceedings in connection with its
provision of the services provided for herein or the operation of the
Facilities unless (i) such action was recommended, suggested or approved
by Emeritus, (ii) Emeritus, fails within ten ( 10) days after receiving written
notice of Operator's intention to take any such action, to notify Operator
in writing of Emeritus' objections thereto or (iii) Operator takes such action
as a result of Emeritus' failure to perform one or more of its obligations
under this Agreement as and when the same are to be performed pursuant
hereto or within any cure period provided herein; or
(ii) If Operator shall at anytime be a corporation or other legal
entity and shall be dissolved (other than as a result of a transfer of
ownership of the Facilities to a limited partnership in which Operator's
partners are general and/or limited partners) or shall apply for or
consent to the appointment of a receiver, trustee or liquidator of Operator 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 Operator a bankrupt or insolvent or approving a
petition seeking reorganization of Operator or appointing a receiver, trustee
or liquidator of Operator of all or a substantial part of its assets.
6
VI. REMEDIES UPON DEFAULT:
(a) If any Event of Default by Operator 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, but Emeritus 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 Emeritus shall occur, Operator 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 Emeritus' right to receive payment of
all amounts theretofore unpaid but earned to date of termination shall be
subject to Operator's right to receive payment of damages from Emeritus.
VII. FACILITIES OPERATIONS:
A. NO GUARANTEE OF PROFITABILITY: Emeritus does not
guarantee that operation of the Facilities will be profitable, but Emeritus
shall use its best efforts to operate the Facilities in as cost efficient and
profitable a manner as possible.
B. STANDARD OF PERFORMANCE: In performing its
obligations under this Agreement, Emeritus shall use its best efforts and act
in good faith and with professionalism in accordance with acceptable and
prevailing standards of health care and the policies adopted by, and
resources available to, the Facilities.
C. FORCE MAJEURE: Neither party will be deemed to be in
violation of this Agreement if it is prevented from performing any of its
obligations hereunder for any reason beyond its control, including, without
limitation, strikes, shortages, war, acts of God, or any statute, regulation or
rule of federal, state or local government or agency thereof.
VIII. WITHDRAWAL OF FUNDS BY OPERATOR:
Operator and Emeritus acknowledge and agree that the efficient
operation of the Facilities requires that Emeritus have ready access to the
capital required therefore. Accordingly, unless otherwise agreed by
Operator and Emeritus, Operator agrees not to withdraw any excess
funds from the Facilities' bank account.
IX. FEE: During the Initial Term of this Agreement, Emeritus shall
receive a monthly fee equal to $58,333.00; provided, however, that from
and after the date on which Emeritus begins to provide administrative
services to the Perinton Park Facility, the monthly fee hereunder shall be
equal to $60,000.00. In the event this Agreement is extended beyond the
7
expiration of the Initial Term, the fee shall be such amount as may be
agreed upon by Operator and Emeritus in conjunction with said extension,
and failing that shall be the fee payable during the Initial Term of this
Agreement increased, but not decreased, on each anniversary of the
Commencement Date (the "Adjustment Date") by the percentage change in
the Consumer Price Index All Cities (1984=100) (the "CPI") from the
Commencement Date to the Adjustment Date. In the event of a decrease in
the CPI from the Commencement Date to the Adjustment Date, the fee shall
remain fixed at the amount in effect on the Adjustment Date until the next
Adjustment Date on which an increase in the CPI occurs.
A. PRORATION OF FEE. 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 fee shall be prorated in proportion to
the number of days for which services are actually rendered.
B. PAYMENT OF FEE. The fee provided for herein shall be
disbursed by Emeritus to itself out of the applicable Facilities' bank account
and shall be subject to the accrual provisions of Section I(H) to the extent
there are not sufficient funds available to pay the fee in any month(s).
X. 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; provided, however, that nothing herein
shall be construed as precluding the assignment or delegation of duties
provided for in Section I(F).
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.
To Emeritus: Emeritus Corporation
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxxxxx Xxxxxxxx, Director
of Acquisitions
To Operator: Painted Post Partners
000 X Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx,
General Partner
8
XII. RELATIONSHIP OF THE PARTIES: The relationship of the
parties shall be that of a principal and independent contractor and all acts
performed by Emeritus during the term hereof 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 Operator, its
successors and assigns on the one hand, and Emeritus, its successors
and assigns on the other hand.
XIII. INDEMNIFICATION: Emeritus shall indemnify, defend and
hold harmless Operator from any loss incurred by or damage to Operator
resulting from a breach by Emeritus of its obligations hereunder. Operator
shall indemnify, defend and hold Emeritus harmless from any loss incurred
by or damage to Emeritus resulting from a breach by Operator its
obligations hereunder.
XIV. ENTIRE AGREEMENT: This Agreement and any documents
executed in connection herewith contain 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 New York. 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. 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.
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.
9
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 Operator and Emeritus have been duly
authorized by all necessary laws, resolutions or corporate action, and this
Agreement constitutes the valid and enforceable obligations of Operator
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.
IN WITNESS WHEREOF, the parties have hereto caused this
Agreement to be duly executed, as of the day and year first above written.
OPERATOR: PAINTED POST PARTNERS
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------------
Its: Partner
By: /s/ Xxxxxx X. Xxxx
--------------------------
Its: Partner
EMERITUS : EMERITUS CORPORATION
By: /s/ Xxxxxx X. Xxxx
--------------------------
Its: Chairman
10
