Document:

exv10w11w2

 

Exhibit 10.11.2

AMENDMENT TO

MANAGEMENT AGREEMENT

     THIS AMENDMENT to the Management Agreement is made and entered into and
effective as of the 1st day of August, 2001, by and between Tealridge Manor
Corporation, .n Oklahoma not-for-profit corporation (the “Owner”), and CGI
Management, Inc., a Delaware Corporation, a wholly-owned subsidiary of The
Covenant Group, Inc., of Fort Worth, Texas, (the “Manager”).

WITNESSETH

     WHEREAS, Owner and Manager did enter into that certain Management
Agreement dared September 1, 1991 (the “Management Agreement”), a copy of which
is attached hereto as Exhibit A and fully incorporated herein by reference, and
wherein Owner does engage Manager to provide management services to the
Facility; and

     WHEREAS, Owner and Manager now desire to make certain amendments to the
provisions of the Management Agreement as set forth below.

     NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and conditions contained herein, IT IS HEREBY AGREED:

1. Amendment to Management Fee. Subsection 3.1 of the Management Agreement is
ereby stricken in its entirety and the following language substituted in its
place:

     3.1 Management Fee. Owner shall pay Manager a management fee
of $5,000 per month, plus related out-of-pocket expenses (the
“fixed Management Fee”). In addition to the Fixed Management Fee,
Owner shall pay a variable management fee equal to four and
one-half percent (4 1/2%) of Monthly Gross Revenues in excess of
One Hundred Eleven Thousand One Hundred Eleven and no/100 Dollars
($111,111) but less than Two Hundred Sixteen Thousand Six Hundred
Sixty-Seven and no/100 Dollars ($216,667) (the “Variable
Management Fee”); provided, however, in no event shall the sum of
the Fixed Management Fee and the Variable Management Fee exceed
the sum of $9,750 per month. Such fee shall be paid each month,
payable on or before the 10th day of each month for the preceding
month. Out-of-pocket expenses shall not exceed the amount in the
approved budget without the prior written consent of the Owner.
For the purposes of this Section, the term “Monthly Gross
Revenues” shall be defined as “all operating income generated by
the facility including unit rental, storage rental, beauty shop,
concessions revenue, meals revenue, laundry revenue, etc. It shall
not include any non-operating revenue such as interest on
deposited funds, insurance proceeds and gains from capital
transactions. It also will not include any revenue generated from
the sale of any telephone or long distance services provided to
Tealridge Manor residents.”

     2. Remainder of the Management Agreement. The rest, residue and remainder
of the Management Agreement shall remain in full force and effect. The parties
signatory represent and warrant that they are authorized to sign, deliver and
perform the Management Agreement on behalf of the parties.

 

 

     IN WITNESS WHEREOF, the parties hereto have signed and delivered this
Agreement as of the date and year first written above.

	 	 	 
	

	 	OWNER
	 
	 	 
	

	 	Tealridge Manor Corporation, an Oklahoma

Not-for-Profit Corporation
	 
	 	 
	

	 	/s/ James W. Jones
	

	 	
 
	

	 	James W. Jones, Vice President
	 
	 	 
	

	 	MANAGER
	 
	 	 
	

	 	CGI Management, Inc., a Delaware Corporation
	 
	 	 
	

	 	/s/ Robert L. Bullock
	

	 	
 
	

	 	Robert L. Bullock, Secretaryexv10w12

 

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

	1.1	 	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.
	 
	1.2	 	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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	 	 	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.
	 
	1.3	 	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.
	 
	1.4	 	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.
	 
	1.5	 	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.

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.

	2.1	 	Inventory. Preparation of specifications of quality and quantity of
supplies necessary for the continuity of operation.
	 
	2.2	 	Operating Qualification. Manager will obtain and/or maintain appropriate
License and Permits for the operation of the Community.
	 
	2.3	 	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.
	 
	2.4	 	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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	 	 	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.
	 
	2.5	 	Accounting Reports. Manager shall institute adequate procedures and
forms for furnishing to Operator monthly operating statements.
	 
	2.6	 	Tax Statements. Manager shall obtain and verify for Operator all tax
statements in connection with the Community.
	 
	2.7	 	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.
	 
	2.8	 	Prices. Manager shall endeavor to obtain the best pricing possible for
goods or services which can reduce expenses of the operation.
	 
	2.9	 	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.
	 
	2.10	 	Business Systems. Manager shall develop, implement, and supervise
business office systems, including accounting, bookkeeping, payroll and
the timely payment of all appropriate taxes.
	 
	2.11	 	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,
conceptual advertising copy method for creating all necessary collateral
pieces, including brochures, on agreements, rental agreements and other
materials generally required in a marketing effort. CGI shall further
direct and supervise all marketing staff for the Community.
	 
	2.12	 	Staffing and Operation Systems. Manager shall monitor and supervise
staffing levels,. materials handling, equipment utilization, scheduling
systems, and inventory controls throughout the Community, and on a regular
basis, report on the effectiveness of such activities.
	 
	2.13	 	Insurance. Owner is responsible for all insurance needs related to the
Community, as these may vary based upon loan requirements and covenants
associated with the

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	 	 	Community’s financing. Manager shall review all insurance policies and
make comments to the Owner and Operator based upon Manager’s experience
and knowledge. All such insurance expense is an expense of the Community.
Owner shall carry, at a minimum, complete commercial building property
package insurance, including but not limited to, general liability,
professional liability (if applicable), fire and casualty, automobile,
rents and business income, loss of rents, business interruption, and
boiler and machinery insurance. All Community insurance policies will be
in the name of the Owner with the Operator and Manager listed as
additional insureds on all applicable policies.
	 
	 	 	Manager shall maintain general liability, professional liability (if
applicable) in an amount not less than $1,000,000 single claim,
$3,000,000 aggregate limit, and worker’s compensation and employee
dishonesty insurance naming Owner and Operator as additional insureds as
evidenced by a certificate of insurance provided to same. Since all
personnel are employees of Manager (see Section 2.4), such insurance will
be reimbursed to Manager by the Community based upon appropriate to
insurance documentation and invoices.
	 
	 	 	NOTE: Since the Community personnel are employees of Manager, Owner’s
general and professional liability insurance policies cover only the
exposure related to owning the commercial building and do not reflect the
exposure and risk of the operations of such a community for which the
Owner receives the economic, benefit. Therefore, the need to reimburse
Manager for insurance related to the purpose of the facility is required.
	 
	2.14	 	Government Regulation. Manager shall, within financial limits, use its
best efforts o cause all things to be done in and about the Community
necessary to comply with the requirements of all applicable statutes,
ordinances, laws, rules, regulations, or order of any governmental or
regulatory body having jurisdiction in the premises, respecting the use of
the Community, maintenance, or operation thereof, including federal,
state, or local regulation.
	 
	2.15	 	Deposit and Disbursement of Funds. All income or other monies received
from the operation of the Community, together with all accounts and all
other assets or property generated, created or which shall accrue from the
operation of the Community shall belong to Operator and shall be its
property absolutely. Payment of all operating costs, wages, salaries,
expenses, and fees incurred or sustained in the operation of the Community
is solely the obligation of Operator. Operator shall designate the
depository to be used by Manager in connection with the operation of the
Community. All monies received from the property shall be deposited in a
control account accessible only by Operator. A separate account also
belonging to Operator but accessible by Manager shall be used to pay
operating expenses. In all events, appropriate accounting safeguards to
ensure the integrity of the accounts will be instituted by Operator and
complied with by Manager.
	 
	2.16	 	Collection of Accounts. Manager shall supervise and direct the
collection of all account due Operator and shall take all reasonable steps
necessary’ to minimize the amount of bad debts.
	 
	2.17	 	Legal Actions. Manager shall, with prior written approval of Operator,
institute in the same and at the expense of Operator, any and all legal
actions or proceedings necessary

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	 	 	to collect charges, rent or other sums due the Community or to evict or
dispossess tenants or other persons unlawfully in possession under any
Lease, Rental Agreement, License, or Concessionaire.
	 
	2.18	 	Rates. Manager and Operator recognize the importance of maintaining
rates which enable the Community to pay its obligations while minimizing
cost to tenants. From time to time, Manager will recommend to Operator,
for approval, rate structures which take into account the financial
obligations of the Community and the level or rates at other comparable
facilities nearby.
	 
	2.19	 	Shortfall or Excess Revenue. Any shortfall in the operations of the
Community shall be funded by Operator on or before the 15th of each month
following the month such shortfall occurs.
	 
	2.20	 	Indemnification to Owner and Operator. Manager shall indemnify, defend
and hold the Owner and Operator free and harmless from any loss,
liability, or cost (including reasonable attorneys’ fees) not covered by
insurance proceeds that the Owner or Operator may sustain, incur, or
assume as a result of any claims that may be alleged, made, instituted or
maintained against Manager or the Owner or Operator, jointly or severally,
determined to have resulted from the negligence or willful misconduct of
Manager, or its agents or employees, in connection with the management or
operation of the Community. If Manager is expressly directed by Operator
to perform or not perform some duty or action that Manager would have
otherwise taken, Manager may request that Operator provide certain
indemnities or other assurances that Manager will be relieved of any
liability in said performance or non-performance of such duty or action.
	 
	2.21	 	Indemnification to Manager. Owner and Operator will indemnify, defend and
hold Manager free and harmless from any loss, liability, or cost
(including reasonable attorney’s fees) not covered by insurance proceeds
and that Manager may sustain, incur, or assume as a result of any claims
that may be alleged, made, instituted, or maintained against Manager or
Operator, jointly or severally, determined to have resulted from the
negligence or willful misconduct of the Operator, or its agents (other
than Manager) or employees, in connection with the ownership, condition or
use of the Community.
	 
	2.22	 	Obligations of Operator. Nothing contained in this Agreement shall be
deemed or construed to create a partnership or joint venture between
Operator and Manager or to cause Manager to be responsible in any way for
the debts or obligations of Operator or any other party (but nothing
contained herein shall affect Manager’s responsibility to transmit
payments for the account of Operator as provided herein), it being the
intention of the parties that the only relationship hereunder is that of
Manager and Operator, and Manager will not represent to anyone that its
relationship to Operator is other than that set forth herein.

SECTION THREE

	3.1	 	Management and Marketing Fee. Operator shall pay Manager a management fee
here rider an amount equal to $4,000 per month plus related out-of-pocket
expenses for ongoing pre-marketing and management efforts during the
construction period, beginning the first month after the closing of the
financing. Thereafter, beginning ninety (90) days

5

 

	 	 	prior to the anticipated grand opening, the base fee will escalate to
$4,500 per month plus related out-of-pocket expenses. Upon achieving
seventy percent (70%) occupancy of the Retirement Housing Community for
two consecutive months, the fee will escalate to $5,500 per month or five
percent (5%) of Monthly Gross Revenue plus out-of-pocket expenses,
whichever is greater. The monthly management fee will not exceed $8,500
plus out-of pocket expenses at any time during the term of this
Agreement. Such fee shall be paid each month, payable on or before the
10th day of each month for the preceding month. Out-of-pocket expenses
shall not exceed the amount in the approve budget without prior consent
of the Operator.
	 
	3.2	 	Inadvertent Non-Performance. Manager shall not 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, acts of God, fire, the elements, flood, strikes, limitations
of Community’s financial resources, or statutory regulations or rules of
the federal, state, or local government or any agency thereof.

SECTION FOUR

MISCELLANEOUS

	4.1	 	Term.

	 	A.	 	The primary Term of this Agreement shall be for a period of
three (3) years commencing on the date of the closing and funding of
the financing or the Community and shall automatically be extended
for successive additional terms of one (1) year unless terminated as
is hereinafter provided.
	 
	 	B.	 	This Agreement may be terminated with cause upon thirty (30)
days’ prior written notice by either party. If termination is
initiated by Operator during the first twelve months of the
Agreement and determined to be without cause, the balance of the
first year of the Term will be fully paid in accordance with
Paragraph 3.1 of this Agreement and at the fee level being aid at
the time of termination.

	4.2	 	Notices. Any notice or other communications by either party shall be in
writing and shall be given and deemed to have been given, if either
delivered personally or mailed postage prepaid, registered or certified
mail addressed as follows:

	 	 	 	 	 
	

	 	To Operator:
	 	 Robert L. Parker, Chairman
	

	 	 	 	Southern Senior Services
	

	 	 	 	6729 Northwest 39th Expressway
	

	 	 	 	Bethany, OK 73008
	 
	 	 	 	 
	

	 	To Manager:
	 	Gary D. Staats, President
	

	 	 	 	CGI Management, Inc.
	

	 	 	 	5601 Bridge Street, Suite 250
	

	 	 	 	Fort Worth, Texas 76112

	 	 	Either party may designate in writing any new party to whom notices
should be mailed.

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	4.3	 	Modification and Changes. This Agreement cannot be changed or modified
except by other Agreement in writing and duly executed by both parties.
	 
	4.4	 	Manager as Independent Contractor. It is expressly agreed by both
parties hereto that Manager is at all times hereunder . acting and
performing as an Independent Contractor and that no act, commission or
omission of either party hereto shall be construed to make or render the
other party its agent, joint venturer, or associate, except to the extent
specified herein.
	 
	4.5	 	Authority of Manager. Manager represents to Operator that Manager is
fully qualified to manage and perform all obligations under this
Agreement. Manager further represents that any on-site Director or
Supervisory Personnel will have and maintain any required certifications
and licensure.
	 
	4.6	 	Construction of Agreement. In. the event one or more of the provisions
contained in the Agreement shall 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.
	 
	4.7	 	Complete Agreement. This Agreement contains the complete agreement
between the Operator and Manager, and no verbal agreements or
representations not include herein will be binding or enforceable.
	 
	4.8	 	Headings. The headings contained herein are for reference only and are
not intended to define, limit, or describe the scope or intent of any
provision of the Agreement.
	 
	4.9	 	Governing Law. This Agreement shall be deemed to have been made and shall
trued and interpreted in accordance with the laws of the State of Oklahoma
without regard to conflict of law provisions.
	 
	4.10	 	Successors and Assigns. This Agreement may not be assigned by Manager
without the prior written consent of Operator.
	 
	4.11	 	Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the respective; successors and assigns of the parties
hereto.

	 	 	 	 	 
	 	SOUTHERN SENIOR SERVICES

 	 
	 	By:  	/s/ A. Donald Billings
 	 
	 	 	A. Donald Billings 	 
	 	 	V.P. Financial Affairs 	 
	 
	Attest:
 	
 	 
	/s/  Lynette J. Johnson	
 	 
	 	 	 
	 	 	 
	 

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	 	CGI MANAGEMENT, INC.

 	 
	 	By:  	           /s/ Gary D. Staats
 	 
	 	 	Gary D. Staats, President 	 
	 	 	 	 
	 
	Attest:
 	
 	 
	/s/  Robert Bullock 	
 	 
	 	 	 
	 	 	 
	 

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