MANAGEMENT AND MARKETING AGREEMENT
THIS MANAGEMENT AND MARKETING AGREEMENT is made effective the 11 day
of September, 2000 by and between Village at Oakwood L.L.C. of Oklahoma
City, OK. (hereinafter referred to as "Owner"), and PrimeLife Management
Company, LLC an Oklahoma corporation, Oklahoma City, Oklahoma, (hereinafter
referred to as 'Manager").
WHEREAS, Owner is building a certain assisted living connnunity
(hereinafter referred to as "Community") located in Midwest City, Oklahoma,
and in Oakwood East Add.
WHEREAS, Manager is engaged in the business of consulting, developing,
managing and marketing retirement housing communities, and
WHEREAS, Owner desired to engage Manager, by this Agreement, to provide
management services to operate the Community:
NOW, THEREFORE, in consideration of the 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 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 Connnunity, 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, and
Manager will be certain that operational philosophies and practices
reflect the desired influence of the Owner.
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 Owner at least thirty (30) days before the beginning of
the fiscal year, unless instructed otherwise by the Owner. Owner
will inform Manager of changes, if any, to the proposed budgets prior
to the beginning of the fiscal year. Once all changes have been
made, Owner will sign off on the face sheet of the proposed budget
indicating its approval. Manager is authorized to operate and manage
the Conununity pursuant to the approved budgets, to the extent funds
are made available by Owner without further authorization by Owner.
The accrual method of accounting is hereby adopted, unless instructed
otherwise by the Owner in writing. Manager will have the right to
negotiate and
enter into service contracts for amounts less than $5,000 and for
services that have been included in the Owner-approved budget in the
name of and for the benefit of the Owner, as required in the ordinary
course of business for the operations fo the Community. Contracts in
excess of $5,000 or for services that have not been included in the
Owner-approved budget require prior written approval of the Owner.
1.3 Reports. Manager shall establish and maintain a comprehensive system
of books and records satisfactory to the Owner and/or its Lender.
All records, books, and accounts of the Community or the Manager's
office will be subject to examination by an authorized representative
ofthe Owner at all reasonable times. Manager will prepare monthly and
annual financial reports detailing the performance of the Community.
Such reports shall include, but not be limited to, Balance Sheet,
Comparative Statement of Revenues and 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 provided as requested by
Owner and/or Lender. All reports will be submitted to Owner within
fifteen (15) days after the end of the preceding month.
1.4 Ownership of Books and Records. All books and records shall be the
property of the Owner. Upon termination ofthis Agreement, all
records, books, files, and other similar items shall remain or be
delivered to the Owner. It is expressly understood that any
proprietary computer software of the Manager will remain the property
of the Manager and will be removed upon termination fo this Agreement.
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. Manager will obtain and/or maintain
appropriate Licenses 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
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 fiinge benefits, medical and health insurance, pension
plans, social security, payroll taxes, workmen's compensation,
insurance, and the like, shall be deemed to be reimbursable expenses
of manager. Owner may request Manager from time to time to provide
Owner 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 Owner monthly operating statements.
2.6 Tax Statements. Manager shall obtain and verify for Owner all tax
statements in connection with the Community.
2.7 Standard of Services. Manager shall monitor the quality fo 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 1.2 hereof, enter into such contracts on
behalf of in Owner'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 and a method for creating all
necessary collateral pieces , including brochures, reservation
agreements, rental agreements and other materials generally required
in a marketing effort. Manager shall further direct and supervise all
marketing staff for the
Community.
2.12 Staffing and Operation Systems. Manger 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 Community's financing. Manager shall
review all insurance policies and make comments tot he Owner based
upon Manager's experience and knowledge. All such insurance expense
is an expense of the Community. Owner shall carry, at minimum,
complete commercial building property package insurance, including,
but not linfited 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 Conununity insurance policies will be in the name of the
Owner with the 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 Community as additional insureds
as evidenced by a certificate of insurance provided to same. Since
all personnel are employees fo Manager (see Section 2.4), such
insurance will be reimbursed to Manager by the Owner based upon
appropriate insurance documentation and invoices.
NOTE: Since the Community personnel are employees of Manager,
Owner's general and professional liability 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 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 to 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 fo 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 fo Owner, Owner shall designate the
depository to be used by Manger in connection with the operation fo 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 bu 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 unlawfully 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 fo
the Community shall be funded by Owner on or before the 15th of each
month following the month in which such shortfall occurs.
2.20 Indemnification to Owner. Manager shall indemnify, defend and hold
the Owner free and harmless from any loss, liability, or cost
(including reasonable attorneys' fees) not covered by insurance
proceeds that the Owner may sustain, incur, or assume as a result of
any claims that may be alleged, made, instituted or maintained
against Manager or the Owner, 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
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.
2.21 Indemnif'ication to Manager. Owner 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 Owner, jointly or severally, determined to have
resulted from the negligence or willful misconduct of the Owner, or
its agents (other than Manager) or employees, in connection with
the ownership, condition or use of the Community.
2.22 Obligations of Owner. Nothing contained in this Agreement shall
be deemed or construed to create a partnership orjoint 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 only the 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.
SECTION THREE
3.1 Consulting Fee. Owner shall pay Manager a consulting fee hereunder
in an amount equal to
3.2 Management and Marketing Fee. Owner shall pay Manager a management
fee hereunder an amount equal to below 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 be reimbursed, but
shall not exceed the amount in the approved budget without prior
written consent of the owner 1,500. per month or .03% of the Gross
per month which ever is greater
3.3 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 ofthe 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
Ten (10) years commencing on the date of the closing and
funding of the financing for the Community and shall
automatically be extended for successive additional terms of
one (1) year unless terminated by either party at least ninety
(90) days prior to the expiration fo the agreement.
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 Owner Village at Oakwood LLC, Xxxxxxx Xxxxxxxx Xx.,Manager
00000 X. Xxxxxx Xxxx Xx. Xxxxxxxx xxxx, XX. 00000
To Manager PrimeLife Management LLC.,Xxxxxx Xxxxxxxx, Manager
0000 XX Xxxxxxxxxx Xxxxxxxx Xxxx, XX. 00000
Either party may designate in writing any new party to whom notices
should be mailed.
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 Owner 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 of 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 Owner and Manager, and no verbal agreements or representation
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 Oklahoma without regard to conflict of law provisions.
4.10 Successors and Assigns. This Agreement may not be assigned by
Manager without prior written consent of Owner.
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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the 11 day of September, 2000
OWNER
Village at Oakwood LLC.
By: /S/Xxxxxxx Xxxxxxxx Xx
-------------------------
Xxxxxxx Xxxxxxxx Xx.
Its: Manager of LLC.
------------------------
MANAGER
PrimeLife Management LLC.
By: /S/Xxxxxx Xxxxxxxx
-------------------------
Xxxxxx Xxxxxxxx
Its: Manager of LLC.
------------------------
