EX 10.78.1
THE FOLLOWING DOCUMENTS ARE SUBSTANTIALLY THE SAMEFOR THE TEXAS COMMUNITIES.
MANAGEMENT AND CONSULTING AGREEMENT
Assisted Living Facility
THIS AGREEMENT is by and between XL MANAGEMENT
COMPANY L.L.C., an Oregon limited liability company,
("XL") and ESC I, L.P., a Washington limited
partnership ("Owner"). XL is engaged in the management
and operation of assisted living care facilities, and
through its officers and agents is experienced in such
management and operation. Owner operates a 87 bed
assisted living care facility located at 0000 X. Xxxx
000 X, Xxxxxxx, Xxxxx known as Saddleridge Lodge ("the
Facility") and desires to avail itself of the services
of XL in management and operation of the Facility. As
parties hereto, XL and Owner agree:
1. MANAGEMENT AND CONSULTING RESPONSIBILITIES OF
XL: XL shall provide the following management,
consulting and advisory services as an independent
contractor to Owner in connection with the Facility,
upon the terms and conditions as set forth in the
agreement:
(a) ADMINISTRATOR: XL shall recruit, evaluate
and select the Administrator, who shall be responsible
for the functional operation of the Facility and
execution on a day-to-day basis of policies established
by XL and Owner in accordance with this agreement.
(b) PERSONNEL: XL shall establish all
necessary and desirable personnel policies, wage
structures and staff schedules for employment of
personnel at the Facility. Staffing shall be maintained
in compliance with applicable state regulations. All
personnel shall be employees of the Owner. It is the
intention of both Owner and XL to control costs of
operation by staffing at the level necessary to
maintain quality service without waste. However, Owner
understands and agrees that, during the initial fill-up
period and during times of unusual conditions of
competition or other economic pressures, additional
costs may be incurred for staff and promotion in order
to achieve and maintain essential occupancy levels.
(c) OPERATIONAL POLICIES: XL shall develop
all operational policies and procedures necessary to
insure establishment and maintenance of the standards
of resident care/services and licensure appropriate for
the nature of the Facility.
(d) FORMS: XL shall develop and adopt all
invoices and other such forms necessary and desirable
for effective, efficient and professional operation of
the Facility. Such forms and invoices shall be sold to
the Facility at a cost not to exceed that charged to
other facilities managed by XL and in no event at a
cost which exceeds a comparable retail price for such
forms and invoices in the market.
(e) CHARGES: Subject to the approval of
Owner, XL shall establish the schedules of recommended
charges for services, including any and all special
charges to the residents of the Facility. XL shall
periodically review and adjust any and all such charges
as necessary. XL shall not make material adjustments to
rates without Owner consent.
(f) INFORMATION: XL shall develop all initial
and continuing informational material, mass media
releases and other such publicity. XL shall also be
responsible for matters related to customer relations.
(g) EQUIPMENT AND IMPROVEMENTS: XL shall
advise Owner as to equipment and improvements to the
Facility which are needed to maintain certification and
accreditation, to maintain or upgrade quality, or which
are necessary to replace obsolete or run-down
equipment. Owner consent shall be required for any
capital improvement or equipment purchase greater that
$52,500.00.
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(h) BOOKKEEPING AND ACCOUNTING: XL shall
provide bookkeeping and accounting procedures necessary
for the preparation of proper financial records.
Bookkeeping and accounting procedures and systems shall
be according to generally accepted accounting
principles which shall not distort income or loss.
Owner shall be responsible for preparing all federal
and state income tax returns due from operation of the
Facility.
(i) REPORTS: XL shall prepare and provide to
the Owner profit and loss statements with balance
sheets and any census data or other reasonable
information which may, from time to time, be
specifically requested by Owner. Cost for these reports
will be included in the management fee to be paid to XL
Management Company L.L.C., except for services required
of outside vendors which will be in addition to
management fees.
(j) BUDGETS: XL shall prepare and shall
submit to Owner, for Owner's review and approval, an
annual budget for the Facility for each calendar year
during the Term setting forth the estimated receipts
and expenditures (capital, operating and other) for the
Facility on a monthly and an annual basis (the
"Operating Budget") and attempt to submit the Operating
Budget to Owner for approval prior to the commencement
of the period covered thereby. XL shall implement the
Operating Budget when it is approved by Owner (the
"Approved Operating Budget"), and XL shall use its
reasonable efforts not to incur expenses in connection
with the maintenance and operation of the Facility in
excess of the amounts allocated to the various
classifications of expenses in the Approved Operating
Budget without Owner's prior consent.
2. OPERATING RESPONSIBILITIES AND BANK ACCOUNT:
(a) OPERATING COSTS: Owner shall be
responsible for and shall pay all operating costs,
wages, salaries, expenses and fees incident to the
operation of the Facility, including all authorized
costs incurred by XL on behalf of Owner, when due.
(b) BANK ACCOUNT: XL shall establish and
maintain a bank account with regard to the operations
of the Facility, under which XL shall be authorized to
withdraw funds, execute checks, and make disbursements.
All funds received in the operation of the Facility
shall be deposited in this bank account, and Owner
shall maintain in such account adequate funds to permit
the prompt payment when due of the salaries of the
Administrator and all other employees, taxes, insurance
premiums, accounts payable incurred in the operation of
the Facility, and all other expenses related to the
operation of the Facility. XL shall disburse to Owner,
upon request, any surplus funds in such bank account
which in XL's opinion are not necessary for operation
of the Facility. Such bank account shall be established
in the bank or branch of such banks as shall be
designated by XL. Notwithstanding the foregoing, no
single expenditure exceeding Five Thousand Dollars
($55,000.00) shall be made by XL without the consent of
Owner for other than normal operating costs. Owner
shall be a signatory on the Facility account.
(c) GENERAL XL AUTHORITY AND RESPONSIBILITY:
XL shall supervise the Administrator and all other
personnel in the execution of policies established in
Paragraph 1 of this agreement, and shall (i) prepare
the payroll and prepare and file all payroll tax
returns and reports, /ii) prepare and sign checks,
(iii) pay all accounts payable as they become due, so
long as sufficient funds are available in the bank
account, (iv) prepare and file such cost reports as
required to establish reimbursement rates for all
federal programs, and (v) arrange for the purchase and
installation of any new equipment in accordance with
Paragraph 1 of this agreement. It is specifically
agreed that XL has sole power and authority for the
preparation, filing and payment of all payrolls and
payroll taxes of every nature, which duty may not be
delegated to Owner. XL shall have authority as agent of
Owner to perform all the foregoing tasks, and Owner
shall not interfere with the management and operation
of the Facility except in accordance with this
agreement.
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3. LIABILITY AND INDEMNIFICATION: Except for XL's
own negligent acts or omissions, gross mismanagement,
breach of terms of this Agreement or deliberate acts
detrimental to Owner's interest, XL does not assume any
liabilities associated with or incident to the
operation of the Facility, but all such liabilities
shall be assumed by Owner as principal. XL acts as an
independent contractor with regard to some services and
as agent or Owner with regard to other services as
described in this agreement, and does not act in any
other capacities for Owner and does not act as
principal in the operation of the Facility. XL does not
guarantee that operation of the Facility will be
profitable.
Owner shall indemnify and hold XL harmless against
any loss, claim or damage which XL may suffer or
sustain by reason of failure by Owner to pay any and
all operating expenses as they become due, assume any
and all liabilities incident to operation of the
Facility, maintain sufficient funds in the bank
account, failure to maintain required insurance, or any
other cost, expense, loss or claim suffered by XL for
which it is not responsible according to the terms of
this agreement.
4. INSURANCE: Owner shall obtain on behalf of
Owner all necessary and proper hazard insurance
covering the premises occupied by the Facility, the
furniture, fixtures and equipment situated thereon, and
all necessary and proper liability insurance for the
protection of Owner, XL, and the Administrator,
employees and volunteers of the Facility and XL shall
be named an additional insured with respect to
liability. Such insurance shall be an expense of
operation. The Facility shall utilize the risk
management and insurance forms of Owner.
5. PAYMENT: As consideration for the services
rendered by XL in accordance with this agreement, Owner
shall pay to XL a fee equal to 6% of the gross
revenues, determined on an accrual basis.
(a) If the services of XL commence or
terminate other than on the first day of the month, the
fee shall be pro-rated proportionate to the number of
days for which services are actually rendered.
(b) Owner shall pay the fee to XL on a
monthly basis, and such fee may be disbursed by XL to
itself out of the account provided for above in
Paragraph 2 /b).
6. BONUS FEE. XL shall be paid a bonus fee one
year from the date of this Agreement based on the
following schedule. If the Facility occupancy is
between 75% and 89% at that date, XL shall be paid a
$25,000 bonus fee. If the Facility occupancy is greater
than or equal to 90% at that date, XL shall be paid a
$50,000 bonus fee.
7. TERMINATION.
(a) In the event that Owner fails to maintain
funds in the bank account sufficient to continue the
operation of the Facility, materially interferes in the
management and operation of the Facility to be
performed by XL under this agreement, or in any other
way materially violates or materially breaches this
agreement or any covenant thereof XL may at its option,
in addition and without prejudice to any other remedy
it may have, terminate this agreement upon 30 days
notice to Owner. If Owner operates the Facility under a
lease, XL shall give written notice of any default
hereunder to the Facility lessor and shall allow the
Facility lessor to cure such default. If Owner cures
the breach to XL's satisfaction during said period, the
Agreement shall be reinstated on the original terms and
conditions.
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(b) In the event of a final decree against
the Owner under any bankruptcy, insolvency, or
reorganization law, or the appointment of any receiver
for Owner, or any assignment for the benefit of
creditors of the Owner, XL may, at its option, in
addition and without prejudice to any other remedy it
may have, forthwith terminate this agreement without
further obligation.
Owner reserves the right to terminate the services
of XL in the event that XL fails to manage the Facility
with due diligence and pursuant to the standards of
similar facilities. Owner shall also retain the right
to terminate with XL in the event that Owner determines
it would be in Owner's interest to sell the Facility to
a third-party purchaser or Owner's license to operate
the Facility is suspended or revoked or the licensing
agency threatens to take such action. In the event of
termination of XL by Owner for these reasons, Owner
agrees to give XL not less than sixty (60) days' notice
prior to the effective date of termination.
In the event that Owner terminates with XL for
cause, as hereinabove stated with the exception of
selling the Facility, and in the event that a
controversy develops between the parties pertaining to
whether or not Owner is justified in so terminating XL,
then, and in such event, such controversy shall be
submitted to arbitration. Each of the parties shall be
required to choose one arbitrator, and the two
arbitrators shall then choose a third arbitrator to
determine whether or not Owner may justifiably
terminate its contract with XL for cause as stated
herein. The parties agree to be bound by the decision
of their arbitrators, and the arbitration proceeding
must be carried out within thirty (30) days of the
notice from Owner to XL of its wish to terminate XL's
management contract.
8. TERM: The term of this agreement shall commence
on the date hereof and, unless earlier terminated in
accordance with the provisions hereof, shall continue
for a period of 30 months to and including the 20th day
of July, 2000.
9. PROPRIETARY MATERIALS: Various forms, operating
procedures and controls employed by XL in the
performance of the agreement are proprietary in nature
and shall remain the property of XL and shall at no
time be utilized, distributed, copied or otherwise used
or employed by the Owner except with the consent of XL
or in accordance with the terms and objectives of this
agreement.
10. ASSIGNMENT: This agreement may not be assigned
by XL or the Owner to any party or parties without the
written consent of the other, except that XL may assign
the same to any corporation which controls it directly
or indirectly, or which is controlled by it directly or
indirectly.
11. 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
receive costs and reasonable attorney's fees incurred
by it in such amount as a court may deem reasonable,
whether at trial or xxxxxxxxx xxxxx xxxxx.
00. NOTICES: All notices, demands and other
communications which may be or are required to be given
hereunder or with respect hereto shall be in writing
directed to the respective parties as follows, or to
such other address as either party may, from time to
time, designate by notice:
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XL Owner
Attn: Xxxxx X. Xxxxx
Attn: Xxxxxxxx Xxxxxxxx
XL Management Company LLC
ESC I, L.P.
0000 XxXxxxxxxxx Xx. XX
c/o Emeritus Corporation
P.O. Box 14111
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000-0000
Xxxxxxx, XX 00000
13. ENTIRE AGREEMENT: This agreement constitutes
the entire agreement between the parties and supersedes
and cancels any and all other agreements between the
parties relating to the subject hereof.
Executed effective the 1st day of February, 1998.
XL
Owner
XL Management Company L.L.C.,
ESC I, L.P.,
an Oregon limited liability company
a Washington limited partnership
By: /s/ Xxxxxx X. Xxxxxxx
By: ESC G.P.I., INC.,
------------------------------
A Washington corporation
Xxxxxx X. Xxxxxxx
Manager
By: /s/ Xxxxxxxx X. Xxxxxxxx
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Xxxxxxxx X. Xxxxxxxx
Vice President New Business
Development
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