Document:

exv10w7w1

 

Exhibit 10.7.1

CGI MANAGEMENT, INC.

SENIOR LIVING S SPECIALISTS

      

      

      

      

      

      

Sunnybrook Estates Retirement Community

Management and Marketing Agreement

 

 

			
	
 
	5601 Bridge Street, Suite 504

Fort Worth, Texas 76112

817/446-4792
	 	August 1998

 

 

MANAGEMENT AND MARKETING AGREEMENT

     THIS MANAGEMENT AND MARKETING AGREEMENT is made and entered into this 30th
day of August, 1995 by and between Sunnybrook Estates, Inc. and/or Assigns
(hereinafter referred to as “Owner” ), and CGI Management, Inc., a Delaware
corporation, Fort Worth, Texas, (hereinafter referred to as “Manager”).

     WHEREAS, Owner is building a certain retirement housing community,
hereinafter referred to as “Community’’ at Madison, Mississippi, and

     WHEREAS, Owner desires to engage Manager, by this Agreement, to provide
management services to operate the Community, and

     WHEREAS, Manager is engaged in the business of developing, constructing,
managing, and marketing retirement housing communities and in providing the
related management services for retirement housing communities.

     NOW, THEREFORE, in consideration of their mutual covenants herein
contained, Owner 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. Owner shall be the Owner and holder of all leases, licenses,
permits, occupancy agreements, and contracts in connection with the
Community. Owner shall at all times exercise control over the assets and
the affairs of the Community, and Manager shall perform the duties herein
required to be performed by it as Independent Contractor of Owner and with
the policies and directives from time to time adopted by Owner. Owner
shall, at all times, be responsible for the direction of the Community and
for general supervision over activities of Manager.
	 
	1.2	 	Financial Requirements. Manager will present to Owner for its approval
annual fiscal year Operating Budgets, Capital Budgets, and Cash Budgets
necessary for the operation of the Community. Upon receiving approval of
the proposed budgets and capital program, Manager will carry out the
Operating and Capital Programs of the Community as proposed and approved,
to the extent that funds are made available by Owner. Manager will not
enter into any contracts in excess of $5,000 without prior written consent
of Owner.
	 
	1.3	 	Reports. Manager shall furnish Owner with a monthly report detailing the
performance of the Community during the preceding month. The report shall
contain, among other things, statistics regarding occupancy, expenses
incurred, revenues, a profit and loss statement and similar matters, along
with supporting documentation. Additionally, narrative explanation will be
provided as an addendum to said report as Manager deems reasonably
necessary or as requested by Owner to make the report informative. Monthly

 

 

reports shall be furnished to Owner no later than the close of business
on the 15th day of the calendar month next following the month for which
the report is being made. Owner shall at all times be entitled to audit
all books and records pertaining to the Community.

	1.4	 	Ownership of Books and Records. All books and records shall be the
property of the Community and Owner. 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 Owner.
	 
	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 Owner.

	 	2.1	 	Inventory. Preparation of specifications of quality and
quantity of supplies necessary for the continuity of operation.
	 
	 	2.2	 	Operating Qualification. Assistance in obtaining and/or
maintaining appropriate Licenses and Permits for the operation of
the Community.
	 
	 	2.3	 	Maintenance or Qualification. Assistance in qualifying the
Community to receive maximum benefits from federal, state, and local
agencies, when and if available.
	 
	 	2.4	 	Personnel. Supervision and employment of all 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 who shall reside at the
Community. Such personnel shall in every instance be deemed
employees of Manager and not of Owner, and Owner 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 pursuant to Paragraph 2.14. In this
connection, Manager shall provide Owner with schedules listing all
employees utilized at Community including their number, titles,
salary, fringe ben fits, and evidence of bonding or coverage under
Manager’s crime insurance policy.
	 
	 	 	 	Nothing contained in this Agreement shall be deemed or construed to
create a partnership or joint venture between Owner and Manager or
to cause Manager to be responsible in any way for the debts or
obligations of Owner or any other party (but nothing contained
herein shall affect Manager’s responsibility to transmit

 

 

	 	 	 	payments for the account of Owner as provided herein), it being the
intention of the parties that the only relationship hereunder is
that of Manager and Owner, and Manager will not represent to anyone
that its relationship to Owner is other than that set forth herein.

	 	2.5	 	Accounting Reports. Institute adequate procedures and forms
for furnishing to Owner monthly operating statements.
	 
	 	2.6	 	Tax Statements. Obtain and verify for Owner all tax
statements in connection with the Community.
	 
	 	2.7	 	Standard of Services. 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. Recommend participating in or contracting for goods
or services which can reduce expenses of the operation.
	 
	 	2.9	 	Vendors. 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 1.2 hereof, enter into such contracts on
behalf of and in Owner’s name.
	 
	 	2.10	 	Business Systems. Develop, implement, and supervise business
office systems, including accounting, bookkeeping, payroll and the
timely payment of appropriate taxes on behalf of Owner.
	 
	 	2.11	 	Marketing Plan. Develop and implement a marketing plan based
on existing and/or projected marketing needs of the Community. Owner
shall have prior approval of the annual budget for said marketing
activities.
	 
	 	2.12	 	Staffing and Operation Systems. Monitor and supervise
staffing levels, materials handling, equipment utilization,
scheduling systems, and inventory controls throughout the Community
and on a quarterly basis, report on the effectiveness of such
activities.
	 
	 	2.13	 	Insurance. Manager shall review the Community’s insurance
needs and make recommendations with respect thereto to Owner. With
prior written approval of Owner, Manager shall enter into Insurance
Contracts of behalf of Owner.
	 
	 	2.14	 	Government Regulation. Manager shall, within financial
limits, use its best efforts to cause all things t 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 Owner 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 Owner. Owner 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 Owner. A separate account also belonging to Owner
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 Owner and complied
with by Manager.
	 
	 	2.16	 	Collection of Accounts. Manager shall supervise and direct
the collection of all accounts due Owner 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
Owner, institute in the name and at the expense of Owner, any and
all legal actions or proceedings necessary to collect charges, rent
or other sums due the Community or to evict or dispossess tenants or
other persons lawfully in possession under any Lease, Rental
Agreement, License, or Concessionaire.
	 
	 	2.18	 	Rates. Manager and Owner 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 Owner, 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 to Manager by Owner on or before
the 15th of each month following the month such shortfall occurs.
	 
	 	2.20	 	Indemnity. Manager shall indemnify and hold harmless Owner
for any loss, damage, liability, casts, or expenses (including
reasonable attorney’s fees) arising from the performance or
non-performance of contractual and customary responsibilities
undertaken as Manage of Community. If Manager is expressly directed
by Owner to perform or not perform some duty or action that Manager
would have otherwise taken, Manager may request that Owner 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.

SECTION THREE

            3.1   Management and Marketing Fee. Owner shall pay Manager a management fee
hereunder an amount equal to $3,000 per month plus 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 or the onset of construction, whichever
occurs first. Thereafter, beginning ninety (90) days prior to the anticipated
grand opening, the base fee will escalate to $4,500 per month plus
out-of-pocket expenses. Upon achieving eighty percent (80%) occupancy of the
Retirement Housing Community for two consecutive months, the fee will escalate
to $6,000 per month or five and one-half percent (5 1/2%) of Monthly Gross
Revenue, whichever is greater, plus out-of-pocket expenses. Such fee shall be
paid each month, payable on or before the 10th day of each month for the
preceding month.

     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 it 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 five (5)
years commencing on the date the Agreement is executed and shall automatically
be extended for successive additional terms of five (5) years unless terminated
as is hereinafter provided.

     B. This Agreement may be terminated with or without cause upon thirty (30)
days’ prior written notice by either party. If termination is initiated by
Owner and determined to be without cause, the balance of the Term will be fully
paid in accordance with Paragraph 3.1 of this Agreement and at the fee level
being paid at the time of termination.

     4.2 Notices. Any notice or other communications by either party to the
other 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 follow:

	 	 	 
	To Owner:

	 	Darrell Blaylock, M.D.
	

	 	Sunnybrook Estates
	

	 	130 E. Walker
	

	 	Greenville, Mississippi 38701
	 
	 	 
	To Manager:

	 	Gary D. Staats, President
	

	 	CGI Management, Inc.
	

	 	5601 Bridge Street, Suite 250
	

	 	Fort Worth, Texas 76112

     4.3 Modification and Changes. This Agreement cannot be changed or modified
except by other Agreements in writing and duly executed by both parties.

     4.4 Manager as Independent Contractor. It is expressly agreed by both
parties hereto that Manager’s 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 Owner that Manager is
fully qualified to manage and perform all obligations under this Agreement.

     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 Owner and TCG, and no verbal agreements or representations not
included 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 be construed and interpreted in accordance with the laws of the State of
Mississippi.

     4.10 Successors and Assigns. This Agreement may not be assigned by Manager
without the expressed written consent of Owner.

     4.11 Binding Effect This Agreement shall be binding upon and shall inure
to the benefit off the respective heirs, successors, and assigns of the parties
hereto.

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the 20th day of August, 1995.

	 	 	 	 	 
	 	SUNNYBROOK ESTATES, INC., OWNER

 	 
	 	By:  	/s/ Darrell Blaylock
 	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 
	Attest:

	/s/ Alonzo D. Welch
	 	 

	 	 	 	 	 
	 	CGI MANAGEMENT, INC., MANAGER

 	 
	 	By:  	/s/ Gary D. Staats
 	 
	 	 	Gary D. Staats, President 	 
	 	 	 	 
	 

	 	 	 
	Attest:

	 	 
	/s/ Jimmy F. Rogersexv10w7w2

 

Exhibit 10.7.2

FIRST AMENDMENT & EXTENSION

TO

MANAGEMENT AND MARKETING AGREEMENT

SUNNYBROOK ESTATES

This First Amendment and Extension to the Management and Marketing Agreement
(the “First Amendment and Extension”) is made and entered into by and between
Sunnybrook Estates, Inc., a Mississippi, non-profit
corporation (the “Owner”)
and CGI Management, Inc. a corporation organized under the laws of the State of
Delaware (the “Manager”).

RECITALS

WHEREAS, the Owner owns a 112 unit Independent Living Community known as
Sunnybrook Estates, located in Madison, Mississippi (the “Community”); and

WHEREAS, the Owner and Manager have previously entered into a Management and
Marketing Agreement (the “Agreement”), dated August. 20, 1998 whereby Manager
agreed to provide certain services related to management, consulting and
marketing with respect to the Community during the construction and ongoing
operations thereof; and

WHEREAS, the Owner has agreed to pay to the Manager certain fees in
consideration for such services computed in the manner stated in the Agreement;
and

WHEREAS, the Owner and Manager desire to extend and amend the Agreement as more
particularly described below.

NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree to amend the
Agreement as follows:

	 	1.	 	Page 6, Section 4.1 paragraph (A) of the Agreement, under the
caption Term, shall be deleted in its entirety and replaced with the
following paragraph (A);
	 
	 	 	 	(A) The Term of this Agreement shall be for a period of three (3)
years commencing on August 21, 2003 and, shall automatically be
extended for successive additional terms of three (3) years unless
terminated as is hereinafter provided.
	 
	 	2.	 	Except as a ended herein, the Agreement is hereby ratified
and shall remain in full force and effect according to is terms.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date indicated below.

	 	 	 	 	 	 	 	 	 	 	 
	OWNER:
	 	Sunnybrook Estates, Inc.	 	 	 	 	 	 
	

	 	By:
	 	/s/ Darrell Blaylock
	 	Date:
	 	6/18/03	 	 
	

	 	 	 	
 
	 	 	 	
 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MANAGER:
	 	CGI MANAGEMENT, INC.
	

	 	By:
	 	/s/ Gary Staats
	 	Date:
	 	6/18/03

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