1
EXHIBIT 10.54
FORM OF DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT ("Agreement") is made effective the ____ day of____,
____, by and between Triad Senior Living ____, L.P., a Delaware Limited
Partnership (the "Owner") and Capital Senior Development, Inc., a Texas
corporation ("Capital Senior").
A. WHEREAS Capital Senior is a firm specializing in the planning and
development, arranging for financing, occupancy development, arranging for
design and construction, and operation of retirement communities; and
B. WHEREAS the Owner desires to develop and construct an expansion of
the existing retirement community in (the "Facility") to be located on a
parcel of land described on Exhibit "A" (the "Land") (the Facility and the Land
are collectively referred to herein as the "Project"); and
C. WHEREAS the Owner understands the concept and plan of Capital
Senior for the development and operation of retirement communities; and
D. WHEREAS the Owner believes that utilizing such concept and plan of
Capital Senior will enable it to economically provide the Project to its
residents; and
E. WHEREAS the Owner wishes to engage Capital Senior as developers in
connection with the Project, and Capital Senior is willing to serve in such
capacity.
NOW THEREFORE, the parties do hereby agree as follows:
I. SERVICES TO BE PERFORMED BY CAPITAL SENIOR
1.1 For the consideration herein stipulated, Capital Senior will direct the
Project for the Owner, as stated below. Capital Senior will expedite and
coordinate planning and development, arrange for financing, supervise initial
occupancy development, arrange for design and construction services, and handle
certain bookkeeping functions, all as hereinafter set forth.
1.2 The scope of the Project will be essentially the development, construction
and occupancy of assisted living units, and related common areas, pursuant to
the budgets approved by the Owner.
1
2
II. PLANNING AND DEVELOPMENT
2.1 Capital Senior will coordinate, prepare, and recommend to the Owner, for
its approval, a basic plan for the Project, including: a site plan, mix, size
and shape of living units, and types of common areas.
2.2 Capital Senior will recommend to the Owner, for its approval, the initial
rates for the monthly service fees to residents in connection with the Project.
2.3 Capital Senior will prepare, for Owner's approval, projections of capital
cost in form similar to that attached hereto as Exhibit "B" (the "Capital Cost
Budget"), as well as operating expenses and cash flow projections.
2.4 Capital Senior will prepare, for Owner's approval, the form of residency
agreement (the "Residency Agreement") to be executed by the residents. The
Residency Agreement describes the program of services to be offered to the
resident by the Owner. The Owner shall provide, at Owner's cost, legal counsel
acceptable to Capital Senior, to determine the legality, effect and
enforceability of the Residency Agreement. During the term of this Agreement,
the Owner agrees not to change the terms of the Residency Agreement except with
the consent of Capital Senior.
2.5 To the extent that unforeseen circumstances require changes from time to
time in the basic plan, fee schedules, financial projections or the form of the
Residency Agreement, Capital Senior will recommend said changes to the Owner.
2.6 Capital Senior will determine municipal, state and federal requirements
affecting the planning for the Project. Capital Senior will prepare or cause to
be prepared the documents to obtain approval of governmental authorities having
jurisdiction over the Project, and no such documents shall be submitted by the
Owner without prior approval of Capital Senior.
2.7 Capital Senior will prepare for the Owner a schedule of all Project
activities and will update the schedule from time to time as may be necessary
due to changing circumstances.
III. ARRANGEMENT FOR PERMANENT AND INTERIM FINANCING
3.1. Capital Senior will, if requested by the Owner, prepare loan application
documents required by the Owner for the project, including brochures,
feasibility reports, financial projections, information regarding the community
need for the Project and other material necessary to make application for
permanent and interim financing for the Owner.
3.2. Capital Senior will, on behalf of the Owner, present the loan application
to interested lenders and negotiate the terms of any interim land acquisition
and construction financing and permanent financing required by the Owner for
the project. Capital Senior will, if it is successful in negotiating such
financing, recommend to the Owner for its approval and acceptance the interim
and permanent financing so obtained on the Owner's behalf.
2
3
3.3. The Owner will not unilaterally negotiate for, or attempt to
obtain on its own, construction financing or permanent financing. Capital
Senior agrees to solicit any lending sources recommended by the Owner upon its
written request.
IV. [INTENTIONALLY OMITTED]
V. ARRANGEMENTS FOR DESIGN AND CONSTRUCTION MANAGEMENT SERVICES
5.1 Capital Senior will furnish the Owner its expertise and knowledge
in arranging for design and construction management services in connection with
the design and construction phases of the development of the Project.
5.2 Capital Senior will recommend an architect to the Owner to perform
and coordinate all engineering design and inspection services for the Project.
The Owner will enter into a contract with the architect. Without assuming any
design or engineering liabilities of the architect, Capital Senior, on behalf
of the Owner, shall oversee the activities of Owner's architect. At appropriate
times, as the architect proceeds with the design, Capital Senior will require
the architect to submit the plans and specifications directly to the Owner for
the Owner's approval.
5.3 Capital Senior will recommend a general contractor to the Owner to
perform all general contractor services for the Project. The Owner will enter
into the contract with the selected general contractor. Without assuming any
liabilities of the general contractor, Capital Senior, on behalf of the Owner,
shall oversee the activities of the Owner's general contractor. At appropriate
times, Capital Senior will submit to the Owner a statement of probable
construction costs based on square footage, volume, and other unit costs. As
the architect proceeds to refine and complete the plans and specifications,
Capital Senior shall keep the Owner informed of any adjustments to previous
statements of probable Project construction costs, indicated by changes in
scope, changes in costs of labor or materials, changes in local requirements,
or changes in Project needs.
5.4 Capital Senior will recommend an interior designer to perform and
coordinate all interior design services for the Project. The Owner will enter
into a contract with the interior designer. Without assuming any interior
design liabilities of the interior designer, Capital Senior, on behalf of the
Owner, shall oversee the activities of the Owner's interior designer. At
appropriate times, as the interior designer proceeds with the design, Capital
Senior will require the interior designer to submit plans and color boards to
the Owner for the Owner's approval.
5.5 Except to the extent to be obtained by the architect or the Owner,
Capital Senior shall file the required documents with and use its best efforts
to secure the approval of governmental authorities having jurisdiction over the
design of the Project.
5.6 Capital Senior does not assume any design or engineering or any
other liabilities of the architect nor any liabilities of the general
contractor and interior designer, and the Owner agrees to look solely to the
architect, to the general contractor, and to the interior designer for such
liabilities, respectively.
3
4
VI. BOOKKEEPING FUNCTIONS
6.1 Unless this Agreement is sooner terminated under Article IX, from
the date of this Agreement and until initial occupancy of the Project, Capital
Senior shall perform all bookkeeping services for the Project contemplated by
this Agreement. Such services do not include the preparation of tax returns or
other filings required of the Owner.
6.2 The Owner shall open an account in the Owner's name at a bank, the
location of which shall be mutually agreed upon by the Owner and Capital
Senior. Capital Senior shall prepare and present to Owner requests for payments
supported by appropriate invoices on a monthly basis. Owner shall authorize
payment of such requests upon receipt and cause the expenses related to the
Project to be paid when they become due. All employees of Capital Senior and
the Owner engaged in handling the Owner's funds shall be bonded in accordance
with the standard practices of Capital Senior.
VII. OWNER RESPONSIBILITIES
7.1 Capital Senior shall not perform or have the responsibility for
the performance of legal services in connection with the activities arising
hereunder. The Owner shall retain the services of legal counsel acceptable to
Capital Senior, at Owner's cost, to perform legal services relating to the
Project. While the legal counsel retained by the Owner shall be directly
responsible to the Owner, he or she shall be directed to cooperate with and
assist Capital Senior.
7.2 Capital Senior shall not perform or have the responsibility for
the performance of accounting services in connection with the activities
arising hereunder, except as otherwise provided under Article VI above. At
Owner's discretion, the Owner may retain the services of a nationally
recognized certified public accounting firm acceptable to Capital Senior, at
Owner's cost, to perform annual audits, to prepare tax returns, to prepare any
other reports required for state or federal bureaus which require certification
and/or licensure, and to perform other necessary accounting services relating
to the Project.
7.3 The Owner shall designate, when requested by Capital Senior,
representatives authorized to act on its behalf. The Owner shall examine
documents submitted by Capital Senior and render decisions pertaining thereto
promptly to avoid delay.
7.4 The Owner agrees that it will fulfill in a timely manner all of
the terms of the loans obtained for the Project with its approval. The Owner
also agrees that it will fulfill in a timely manner all of the terms of the
architect contract and construction contract for the Project.
7.5 The Owner shall pay all costs of the Project, including but not
limited to legal and accounting fees, all forms of taxes, licenses, closing
costs, marketing costs, occupancy development costs (initial and re-occupancy),
design costs, construction costs, the cost of all furnishings, subsurface soil
tests and analyses, site surveys prepared by a registered surveyor, and other
costs as described on the capital cost budget for the Project, as updated from
time to time.
4
5
7.6 The Owner shall have the responsibility of approving applications
for occupancy and in connection therewith shall be responsible for assuring
compliance with all non-discrimination and other laws relating to such
decisions.
7.7 The Owner agrees to apply for and maintain, at its expense, with
reputable and financially sound insurance firms, policies of insurance to
insure itself and Capital Senior against public liability (including
contractual liability insurance as applicable to Owner's obligations under
paragraph 10.7), and such other policies in amounts as necessary and proper for
the type of activities required of Capital Senior hereunder and the type of
activities in which the Owner is engaged. The Owner may obtain any additional
insurance coverage that it deems advisable. The Owner agrees to include Capital
Senior and any lender as named insureds on any such policies as may be
requested by Capital Senior from time to time, and to provide Capital Senior
with complete copies of such policies and certificates of insurance which
evidence such coverage. Such policies shall be endorsed to provide that such
insurance is primary to any insurance purchased directly by Capital Senior, and
is not excess or contributing insurance.
7.8 The Owner shall cooperate with Capital Senior in every respect and
shall furnish Capital Senior all information required by Capital Senior for the
performance of its services and shall permit Capital Senior to examine and copy
any data in possession and control of the Owner affecting the development of
the Project and shall in every way cooperate to enable Capital Senior to
perform its services satisfactorily.
VIII. COMPENSATION
8.1 In consideration of the performance of the planning, development,
arranging for financing, initial occupancy development, arranging for design
and construction, bookkeeping services and other services as contemplated in
Articles II, III, IV, V and VI in connection with the initial development and
other services of the Project, the Owner agrees to pay Capital Senior a
Development Fee equal to four percent (4%) of all line items on the Capital
Cost Budget (Exhibit B) excluding project contingency. In addition, Owner
agrees to pay Capital Senior an overhead reimbursement fee equal to four (4%)
percent of all items on the capital cost budget.
The Development Fee will be paid as follows:
8.1.1 Thirty-five percent (35%) of the estimated total
Development Fee as stated in the Capital Cost Budget shall be paid on
a monthly basis commencing on the date of this Agreement and amortized
over a period of six (6) months with the total amount due and payable
prior to commencement of construction.
8.1.2 Sixty Five percent (65%) of the estimated total
Development Fee shall be paid monthly during construction payable with
said fee amortized over ten (10) months with the total amount (if
completed sooner than ten (10) months) due and payable upon completion
of construction. Progress construction is a condition precedent to
Capital Senior's right to receipt of such fee.
5
6
8.2 In addition to the above, Capital Senior will invoice Owner on a
monthly basis for all reimbursable costs accrued under this Agreement on behalf
of the Project, and Owner shall authorize payment within 15 days of receipt of
said invoices.
IX. TERMINATION
9.1 Unless terminated sooner as hereinafter provided, this Agreement
shall continue until the earlier of sixty (60) months or ninety percent
occupancy of all phases of this Project.
9.2 Notwithstanding the foregoing, this Agreement may be terminated by
Owner for Cause as defined in Sections 9.2.1 through 9.2.3, or by Capital
Senior for Cause as defined in Section 9.2.4 as hereinafter provided:
9.2.1 In the even of material breach by Capital Senior of a
material term hereof, which breach is not cured within sixty (60) days
after written notice by Owner and such failure is the result of
Capital Senior's willful misconduct, gross negligence, or unlawful
act;
9.2.2 In the event that a petition in bankruptcy is filed by
Capital Senior or its permitted assignee, or in the event Capital
Senior or its permitted assignee makes an assignment for the benefit
of creditors or takes advantage of an insolvency act, by notice to
Capital Senior or assignee;
9.2.3 In the event that (i) Capital Senior's or any permitted
assignee's corporate existence is dissolved and the duties under this
Agreement are not assumed by Capital or an affiliate of Capital Senior
(ii) Capital Senior or any permitted assignee ceases to do business
for any reason, by notice to Capital Senior or such assignee, and the
duties under this Agreement are not assumed by Capital Senior or
Capital Senior's Affiliate.
9.2.4 This Agreement may be terminated by Capital Senior in
the event that Capital Senior fails to receive reimbursement of
reimbursable expenses or any compensation due Capital Senior pursuant
to the terms of this Agreement, or any other compensation due Capital
Senior, and such failure continues for a period of thirty (30) days
after Capital Senior's written notice thereof to Owner.
9.2.5 No termination of this Agreement shall affect any
obligation owing by either party hereto to the other which accrued
prior to the effective date of such termination.
9.3 If either party elects to terminate this Agreement as a result of
the occurrence of an event specified in paragraph 9.2, it shall give written
notice to the other party and such termination shall be effective thirty (30)
days after the mailing thereof and the applicable cure periods, if any, unless
the grounds for termination have been remedied prior to such effective date of
termination. If this Agreement is so terminated for Cause, as provided in
Sections 9.2.1
6
7
to 9.2.3, Capital Senior shall be entitled to an amount equal to its earned
compensation and shall be entitled to reimbursement for all advances made
payable immediately, and neither party shall have any further obligations to
the other. However, if Capital Senior terminates this Agreement for Cause, as
provided in Section 9.2.4, or this Agreement is terminated without Cause by
Owner, in addition to the amount of earned compensation and reimbursement for
all advances made to the date of termination, Capital Senior shall be entitled
to unearned compensation it would have been entitled to receive had this
Agreement not been terminated, including the compensation provided in Section
8.1.
X. GENERAL
10.1 So long as the Agreement is in force, Capital Senior agrees that
the Owner may represent to the public that the planning and development is
being done by Capital Senior, and the Owner agrees that the Capital Senior name
will be identified, in an appropriate way, as the Owner's development company,
on the construction marquee and related materials.
10.2 Except as stated in this Section 10.2, the ownership of trade
names, trademarks, ideas, documents, forms, occupancy development material and
other materials created by Capital Senior either prior to this Agreement or as
a result of this Agreement is to be considered proprietary and will remain the
property of Capital Senior whether the proposed Project is constructed or not.
They are not to be used by the Owner except in connection with the Project.
Upon the expiration of this Agreement, all materials created by Capital Senior
for the Project, in accordance with this Agreement, shall belong to Capital
Senior and all rights of the Owner therein shall automatically cease and
terminate. Notwithstanding the above, the name selected for this Project shall
become property of the Owner.
10.3 In order to carry out the intent and spirit of this Agreement,
the Owner and Capital Senior will do all acts or things necessary, including
the execution of other agreements, documents and instruments.
10.4 Whenever in this Agreement or otherwise in order to carry out its
spirit and intent, the consent, approval, or agreement of the Owner or Capital
Senior is required, it is agreed that it will not be unreasonably withheld.
Measure of reasonableness shall include the degree to which the recommendations
are consistent with other projects planned by Capital Senior, the degree to
which the recommendations will result in a financially sound Project, and the
degree to which the recommendations are consistent with earlier recommendations
previously approved.
10.5 Once its approval is granted at each phase of the planning and
development, financing, occupancy development, design, construction and
operation, the Owner shall not subsequently alter or change the plan, budget or
program without the written consent of Capital Senior.
10.6 This Agreement sets forth the entire agreement between Capital
Senior and the Owner. Any change or modification of this Agreement must be in
writing and signed by all parties hereto.
7
8
10.7 The Owner will indemnify and hold harmless Capital Senior from
any and all liability arising incident to the Owner's performance of its duties
under this Agreement. Capital will indemnify and hold harmless the Owner from
any and all liabilities arising incident to Capital's performance of its duties
under this Agreement. The Owner shall also indemnify and hold Capital Senior
harmless against any and all losses, costs or expenses incurred by Capital
Senior by reason of, arising out of or in any way related to noncompliance by
the Facility with all applicable state, federal and local laws, ordinances,
rules and regulations relating to the physical condition of the property of the
Facility, provided Capital Senior shall promptly notify the Owner of Capital's
knowledge of any such noncompliance.
10.8 This Agreement and its interpretation, validity and performance
shall be governed by the laws of the State of Texas.
10.9 This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their successors and assigns. Notwithstanding
the foregoing, neither party may assign this Agreement or any rights hereunder
without the consent of the other.
10.10 Any dispute, claim or controversy of any kind between the
parties arising out of this Agreement or involving the interpretation or
application of any provision of this Agreement shall be submitted to
arbitration in Dallas, Texas, in accordance with the commercial arbitration
rules of the American Arbitration Association; provided, that each party shall
be required to submit its proposed resolution of such dispute, claim or
controversy to the arbitrator and the arbitrator shall be required to render a
decision adopting in full one or the other of such proposed resolutions, and no
compromises or alternative resolutions shall be allowed or considered by the
arbitrator. The parties jointly shall agree on an arbitrator. If the parties
are unable to agree in good faith within a reasonable time on the selection of
an arbitrator, either party may request appointment of an arbitrator by the
American Arbitration Association. The arbitration decision shall be final and
binding on both parties unless the arbitration is fraudulent or so grossly
erroneous as to necessarily imply bad faith. General costs of arbitration are
to be shared by both parties equally, provided that the arbitrator may choose
to award general costs of arbitration against the losing party if he or she
determines that the final position urged by the losing party was not
reasonable.
10.11 Any sums due but unpaid hereunder shall bear interest at a rate
equal to 1% per annum plus the reference rate as announced from time to time
and charged by national banks to its most credit worthy customers (generally
referred to as prime rate of interest), from the due date until paid.
10.12 The Owner agrees to pay any sales tax or similar charges which
may be imposed on any payments required to be made by the Owner hereunder.
10.13 No provision of this Agreement shall be disclosed by the Owner
to any person, firm or corporation without the prior written approval of
Capital Senior, except that Owner may disclose any provision hereof without the
consent of Capital Senior to the extent necessary to comply with any statute,
governmental rule or regulation or court order to which Owner may be subject.
No provision of this Agreement shall be disclosed by Capital Senior to any
person, firm
8
9
or corporation without the prior written approval of the Owner to the
extent necessary to comply with any statute, governmental rule or regulation or
court order to which Capital Senior may be subject.
9
10
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement effective on the day and year first above written, on
this _____ day of __________, _____.
TRIAD SENIOR LIVING __, L.P. CAPITAL SENIOR DEVELOPMENT, INC.
BY ITS GENERAL PARTNER
TRIAD SENIOR LIVING, INC.
By: By:
-------------------------- --------------------------
Name Name
-------------------------- --------------------------
Title Title
cc: Xxxxx Xxxxxx - Capital Senior Living
Xxxxx X. Xxxxxxxx, Esq. - Capital Senior Living
10
