Exhibit 10.12
MANAGEMENT. AND MARKETING
AGREEMENT
THIS MANAGEMENT
AND MARKETING AGREEMENT is made effective the 1 day of April,
1998, by and between Southern Senior Services. of Bethany, Oklahoma
(hereinafter referred to as “Operator”), and CGI
Management, Inc., a Delaware corporation, Fort Worth, Texas
(hereinafter, referred to as “Manager”).
WHEREAS, Southern
Nazarene University (hereinafter referred to as
“Owner”) doing business as Southern Senior Services is
building a certain Retirement Housing Community (hereinafter
referred to as “Community”) located in Bethany,
Oklahoma, and
WHEREAS, the
Community will be operated by Operator, and
WHEREAS, Manager
is engaged in the business of consulting, developing, constructing,
managing, and marketing retirement housing communities,
and
WHEREAS, Operator
desires to engage Manager, by this Agreement, to provide management
services to operate the Community.
NOW, THEREFORE, in
consideration of the mutual covenants herein contained, Operator
hereby engages Manager to perform the duties and to provide the
services hereinafter described, and Manager does hereby accept such
engagement on the terms and conditions hereinafter set
forth.
SECTION ONE
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1.1
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Control . Operator shall be the holder of
all leases, licenses, permits, occupancy agreements, and contracts
in connection with the Community. Operator shall at all time
exercise control over the assets and, the affairs of the Community,
and Manage shall perform the duties herein required to be performed
by it as Independent Contractor of Operator and with the policies
and directives from time to time adopted by Operator. Operator
shall, at all times, be responsible for the direction of the
Community and for general supervision over activities of Manager
and Manager will be certain that operational philosophies and
practices reflect the desired influence of the Operator.
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1.2
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Financial
Requirements . Manager shall prepare recommended
operating and capital budgets for the Community for each fiscal
year of Community operations during the term of the Agreement. Such
budgets will be submitted to Operator at least thirty
(30) days before the beginning of the fiscal year, unless
instructed otherwise by the Operator. Operator will inform Manager
of changes, if any, to the proposed budgets prior to the beginning
of the fiscal year. Once all changes have bee made, Operator will
sign off on the face sheet of the proposed budget indicating its
approval. Manager is authorized to operate and manage the Community
pursuant to the approved budgets, to the extent funds are made
available by Operator without further authorization of Operator.
The accrual method accounting is hereby adopted, less instructed
otherwise by the Operator in writing. Manager will have the right
to negotiate and enter into contracts for amounts less than $5,000
and for services that have been in the Operator-approved budget in
the
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1
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name of and for the benefit of the
Operator, as required in the ordinary course of business for the
operations of the Community. Contracts in excess of $5,000 or for
services that have not been included in the Operator-approved
budget require prior written approval of the Operator.
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1.3
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Report . Manager shall establish and
maintain a comprehensive system of records and books satisfactory
to the Operator and/or its Lender. All records, books and accounts
at the Community or the Manager’s office will be subject to
examination by an authorized representative of the Operator at all
reasonable times. Manager will prepare monthly financial reports
detailing the current performance of the Community. Such reports
shall include, but not be limited to, Balance Sheet, Comparative
Statement of Revenues & Expenses (comparing actual and budget
for current month and year-to-date), Community Rent Roll for the
current month, Occupancy Census Report and a detailed General
Ledger reflecting all the current month’s activity.
Additionally, each month will include an Executive Report providing
a detailed narrative of the performance of the Community for the
current month. Additional reports and information will be provide
as requested by Operator and/or Lender. All reports will be
submitted to Operator within fifteen (15) days after the end
of the preceding month.
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1.4
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Ownership of Books and
Records .
Ownership of all books and records shall be the property of the
Community and Operator. Upon termination of this Agreement, all
records, books, computer software, files, and other similar items
shall remain or be delivered to the Community for the benefit of
Operator.
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1.5
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General Management.
Subject to the
foregoing, Manager is hereby given general authority to supervise
and manage the day-to-day operation of the Community and to perform
the specific duties hereinafter set out.
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SECTION TWO
MANAGEMENT SERVICES
Management Services to be
provided shall include the following specific activities which
shall be performed by Manager within the guidelines established by
Operator.
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2.1
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Inventory
. Preparation of
specifications of quality and quantity of supplies necessary for
the continuity of operation.
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2.2
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Operating
Qualification . Manager will obtain and/or
maintain appropriate License and Permits for the operation of the
Community.
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2.3
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Maintenance or
Qualification . Manager will provide assistance in
qualifying the Community to receive maximum benefits from federal,
state, and local agencies, when and if available.
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2.4
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Personnel
. Manager shall
interview, hire, train, pay, supervise, and discharge the personnel
necessary to be employed in order to properly maintain and operate
the Community, including, without limitation, Administrator or
Supervisory Personnel. Such personnel shall have proper
certification in accordance with governing regulations.
Such
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2
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personnel shall in every’
instance be deemed employees of Manager and not of Operator, and
Operator shall have no right to supervise or direct such employees.
All reasonable salaries, wages, and other compensation of personnel
employed by Manager hereunder, including so-called fringe benefits,
medical and health insurance, pension plans, social security,
taxes, workmen’s compensation, insurance, and the like, shall
be deemed to be reimbursable expenses of Manager. In this
connection, Manager shall provide Operator with schedules listing
all employees utilized at Community including their number, titles,
salary, fringe benefits, and evidence of bonding or coverage under
Manager’s crime insurance policy.
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2.5
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Accounting Reports
. Manager shall
institute adequate procedures and forms for furnishing to Operator
monthly operating statements.
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2.6
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Tax Statements
. Manager shall obtain
and verify for Operator all tax statements in connection with the
Community.
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2.7
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Standard of Services
. Manager shall monitor
the quality of services provided by the Community on a continuing
basis and make every effort to maintain the highest level of
service possible within budget limitations.
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2.8
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Prices . Manager shall endeavor to obtain
the best pricing possible for goods or services which can reduce
expenses of the operation.
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2.9
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Vendors . Manager shall make available to
the Community such supply and equipment Purchasing Contracts that
are or may become available which could reduce expenses of
operation. Manager shall, subject to limitations in Paragraph,
enter into such contracts on behalf of and in Operator’s
name.
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2.10
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Business Systems
. Manager shall develop,
implement, and supervise business office systems, including
accounting, bookkeeping, payroll and the timely payment of all
appropriate taxes.
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2.11
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Marketing Plan and Marketing
Supervision . Manager shall prepare a
comprehensive marketing plan for the full rent-up of the Community.
Said plan shall cover the construction period through fill-up and
ongoing operations thereafter. The Community Budget will include
the Marketing Budget and all related staffing, advertising and
promotional events. The Marketing Plan will include occupancy
projections, planned media events, conceptu
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