1
EXHIBIT 10.38
Shreveport, LA
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement") entered into this 3rd day
of February 1998, by and between TRI POINT COMMUNITIES, L.P., ("Owner"), a
limited partnership organized under the laws of the State of Texas, and CAPITAL
SENIOR LIVING, INC. ("Capital"), a corporation organized under the laws of the
State of Texas.
PREAMBLE
OWNER by this Agreement is engaging Capital to provide management
services relating to the operation of a senior living community to be located in
Shreveport, Louisiana on the land identified in Exhibit A.
This Agreement is founded on the following assumptions:
Owner retains primary responsibility to:
(a) Establish the policies of the Facility and to plan for its
short-range and long-range goals.
(b) Review and evaluate the performance of Capital in carrying out
the established policies and in attaining the goals established
by Owner.
(c) Annually review and approve the budget.
(d) Annually review the policies and goals which have been
established.
Capital assumes primary responsibility to:
(a) Implement the policies established by Owner.
(b) Supervise the day-to-day management of the Facility, including
all resident activities.
(c) Provide to Owner full, timely and accurate information as to past
operations.
(d) Provide to Owner projections and recommendations relating to the
future operations of the Facility.
The parties therefore agree as follows:
2
I. RESPONSIBILITIES OF CAPITAL
A. RECOMMENDED POLICIES. Capital shall recommend policies and goals to be
established by Owner and shall evaluate such policies and goals on an
ongoing basis.
B. MANAGEMENT DUTIES. Capital shall supervise the operation of the Facility,
provide management services, install operating procedures and oversee
day-to-day operations, all subject to and in accordance with the budgets
approved by and policies established by Owner.
C. MARKETING DUTIES. Capital shall manage and supervise the marketing program.
Capital shall establish and periodically review the residency agreement and
if required, recommend changes thereof.
D. EMPLOYEES. All Facility-based Employees, including the administrative
employees, shall be employees of Capital. Capital shall have sole authority
over Facility-based Employees and Non-Facility-based Employees who are
directly responsible for the Facility and all matters pertaining thereto
and shall be responsible for all actions and omissions of such employees.
All costs of hiring, equipping and providing the services of Facility-based
Employees, including, but not limited to, compensation, health insurance,
employer liability insurance, payroll taxes, bonding, workers compensation
insurance, benefits and vacations shall be an expense of Capital. To the
extent the above-stated expenses are incurred in accordance with the
Facility Budget or approved by Owner, they shall be reimbursed from the
Facility operations or Owner as the case may be.
E. OPERATING PROCEDURES. Capital shall develop, install and maintain operating
procedures, systems and controls.
F. FACILITY EXPANSION. Capital shall make recommendations regarding remodeling
or expansion of the Facility.
G. BUDGETS. Capital shall prepare for review and approval by Owner based on
reasonable standards annual operating budgets for revenue, expense and cash
flow of the Facility and a capital expenditures budget. Budgets shall be
prepared in advance of each fiscal year. Cash flow projections shall
accompany each operating budget. Any changes to the budgets must be
approved by Owner.
H. FINANCIAL CONTROLS. Capital shall establish and maintain a system of
financial controls for the Facility.
I. MONTHLY FINANCIAL STATEMENTS. Capital shall provide to Owner, on a monthly
basis, financial statements and related financial reports. Such statements
and reports shall be provided by the 20th day after the end of the month.
These reports shall be in the form attached as Exhibit "B."
2
3
J. MARKETING REPORTS. Capital shall, on a weekly and monthly basis, provide
sales and occupancy reports to Owner, as well as the results of the annual
resident satisfaction survey.
K. LEGAL COUNSEL. Capital, at Facility expense, shall coordinate with Owner
the utilization of legal counsel relating to Facility operations.
L. RENTAL COLLECTIONS AND DISBURSEMENTS. Capital shall collect the revenues
from the residents and, on behalf of Owner, deposit all such funds in a
residential depository account at a FDIC insured bank approved by Owner.
The style of the account shall be in the name of the Facility with
designated representatives from Owner and Capital being the only parties
authorized to draw from said account. On an as needed basis, Capital shall
transfer the funds from the above stated account into an Operating Expense
Account in the name of the Facility. The account shall be in a FDIC insured
bank approved by Owner. The style of the account shall be in the name of
the Facility with designated representatives from Owner and Capital being
the only parties authorized to draw from said account. Capital shall pay
out of such Operating Expense Account all operating expenses for which
payment has been approved in accordance with the budget or approved by
Owner (including Capital's Management Fee and any other sums due to Capital
from Owner), and all other sums properly payable pursuant to any of the
provisions of this Agreement. Capital shall hold, remit or expend the
balance of such funds, if any, as Owner may direct. These funds shall not
be co-mingled with funds from any other projects and/or facilities managed
and/or operated by Capital.
M. ACCOUNTING SYSTEMS AND SOFTWARE. Capital shall provide to Owner, during the
term of this Agreement, appropriate on-site accounting systems and
software, which shall include complete accounting, bookkeeping and record
keeping services for the Facility, specifically including, but not limited
to, resident xxxxxxxx, accounts payable, accounts receivable, general
ledger and inventory records and maintain demographic information on the
residents. Acquisition of software for Facility based operations, software
maintenance and update charges will be budgeted expenses of the Facility.
Payroll processing may be delegated to a third party, the cost of which
will be the responsibility of the Facility.
II. OWNER'S RESPONSIBILITIES
A. POLICIES. Owner shall establish the policies for the Facility.
B. GOALS. Owner shall establish the short range and long range goals of
the Facility.
C. BUDGETS. Owner shall review and approve budgets for the operation of
the Facility.
D. CAPITAL'S PERFORMANCE. Owner shall review and evaluate the performance
of Capital in carrying out the policies for the Facility.
3
4
E. LEGAL COUNSEL. Owner shall obtain legal counsel to perform all necessary
legal services relating to Owner's ownership of the Facility.
F. AUDITS. Owner, at its discretion, may engage certified public accountants
to perform annual audits of the Facility as well as prepare any other
reports required for federal or state regulatory agencies which require
licensure and/or certification. Every quarter, upon receipt of reasonable
notice to Capital, all financial records pertaining to the Facility will be
open for inspection and review by Owner's representatives. All labor and
expense associated with such review shall be borne by Owner.
G. DIRECTIVES. In order to assure proper coordination, Owner shall issue any
directions concerning the operations of the Facility only through the
President or Vice President of Capital.
H. OPERATING REPORTS. During the term of this Agreement, Owner shall, within
fourteen (14) days of issuance, furnish to Capital copies of any and all
Facility-related reports, including the annual audit (if any).
I. CHANGE OF RESIDENCY AGREEMENT. Owner shall not change the Residency
Agreement without consulting with and seeking approval of Capital unless
required to do so to comply with any applicable law or regulation.
J. DECISIONS. Owner shall examine documents submitted by Capital and render
decisions pertaining thereto promptly to avoid unreasonable delay.
K. UNIFORM ACCOUNTS. Facility shall use the uniform chart of accounts
recommended by Capital.
L. FURNISHING INFORMATION. Owner agrees at its expense to install and maintain
a computer terminal at the Facility compatible with the mainframe computer
currently in use by Capital and to transmit data to Capital via telephone
lines.
M. PURCHASE OF THE FACILITY.
1. The Owner hereby agrees that so long as Capital is not in default in
the performance of any duty or any obligation hereunder, Capital shall
have the option exercisable on not less than two (2) months nor more
than four (4) months notice to purchase the Facility at a purchase
price equal to the Fair Market Value of the Facility. In the event
Capital purchases the Facility pursuant to this option, the Owner
shall, upon receipt from Capital of the applicable purchase price,
deliver to Capital a deed with covenants only against acts of the
Owner conveying the entire interest of the Owner in and to the
Facility to Capital subject to all Legal Requirements, permitted
encumbrances, the claims of all persons claiming by, through or under
Capital,
4
5
any other matters assented to by Capital and all matters for which
Capital has responsibility under this Agreement, and any encumbrance
which Capital elects to assume. The applicable purchase price shall be
paid in cash to the Owner, or as the Owner may direct, in federal or
other immediately available funds except as otherwise mutually agreed
by the Owner and Capital. All expenses of such conveyance, including,
without limitation, title examination costs, standard (and extended)
coverage title insurance premiums, attorneys, fees incurred by the
Owner in connection with such conveyance, recording and transfer taxes
and recording fees and other similar charges shall be paid by Capital.
2. The Owner agrees that Owner shall give written notice to Capital of
receipt by Owner of an offer to purchase the Facility at least ninety
(90) days before closing the sale related to such offer. Such notice
shall specify all of the terms and conditions of such offer.
3. In the event that it becomes necessary to determine the Fair Market
Value of the Facility for any purpose of this Agreement, the party
required or permitted to give notice of such required determination
shall include in the notice the name of a person selected to act as
appraiser on its behalf. Within ten (10) days after receipt of any
such notice, the Owner (or Capital, as the case may be) shall by
notice to Capital (or the Owner, as the case may be) appoint a second
person as appraiser on its behalf.
4. The appraisers thus appointed, each of whom must be a member of the
American Institute of Real Estate Appraisers (or any successor
organization thereto), shall, within forty-five (45) days after the
date of the notice appointing the first appraiser, proceed to appraise
the Facility to determine the Fair Market Value of the Facility as of
the relevant date (giving effect to the impact, if any, of inflation
from the date of their decision to the relevant date); provided,
however, that if only one appraiser shall have been so appointed, or
if two appraisers shall have been so appointed but only one such
appraiser shall have made such determination within fifty (50) days
after the making of Capital's or the Owner's request, then the
determination of such appraiser shall be final and binding upon the
parties. If two appraisers shall have been appointed and shall have
made their determinations within the respective requisite periods set
forth above and if the difference between the amounts so determined
shall not exceed ten percent (10%) of the lesser of such amounts, then
the Fair Market Value of the Facility shall be an amount equal to
fifty percent (50%) of the sum of the amounts so determined. If the
difference between the amounts so determined shall exceed ten percent
(10%) of the lesser of such amounts, then such two appraisers shall
have twenty (20) days to appoint a third appraiser, but if such
appraisers fail to do so, then either party may request the American
Arbitration Association or any successor
5
6
organization thereto to appoint an appraiser within twenty (20) days
of such request, and both parties shall be bound by any appointment so
made within such twenty (20) day period. If no such appraiser shall
have been appointed within such twenty (20) days or within ninety (90)
days of the original request for a determination of Fair Market Value
of the Facility, whichever is earlier, either the Owner or Capital may
apply to any court having jurisdiction to have such appointment made
by such court. Any appraiser appointed by the original appraisers, by
the American Arbitration Association or by such court shall be
instructed to determine the Fair Market Value of the Facility within
thirty (30) days after appointment of such Appraiser. The
determination of the appraiser which differs most in terms of dollar
amount from the determinations of the other two appraisers shall be
excluded, and fifty percent (50%) of the sum of the remaining two
determinations shall be final and binding upon the Owner and Capital
as the Fair Market Value of the Facility.
5. This provision for determination by appraisal shall be specifically
enforceable to the extent such remedy is available under applicable
law, and any determination hereunder shall be final and binding upon
the parties except as otherwise provided by applicable law. The Owner
and Capital shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses
of the third appraiser and one-half of all other cost and expenses
incurred in connection with each appraisal.
6. Capital shall agree to enter into a Subordination Agreement on
reasonable terms and conditions with any lender from whom Owner
obtains a loan secured by the Facility.
7. For purposes of this Paragraph II.M., except as otherwise expressly
provided in this Agreement, the terms defined in this Paragraph II.M.
shall have the following meanings assigned to them:
Fair Market Value: The fair market value of the Facility shall not be
less than Owner's cost basis (to include all hard and soft costs) plus
lease-up costs in the Facility, including all capital additions, and
including the land and all other portions of the Facility, and (a)
determined in accordance with the appraisal procedures set forth in
Paragraphs II.M. 2. and 3. or in such other manner as shall be
mutually acceptable to Owner and Capital (including, without
limitations as a negotiated percentage of total project costs) and (b)
not taking into account any reduction in value resulting from any lien
to which the Facility, the Owner or Capital is otherwise required to
remove of the transaction. However, the positive or negative effect on
the value of the Facility attributable to the interest rate,
amortization schedule, maturity date, prepayment provisions and other
terms and conditions of any lien on the Facility which is not so
required or agreed to be removed shall be taken into
6
7
account in determining the Fair Market Value of the Facility. The Fair
Market Value shall be determined as the overall value based on due
consideration of the "income" approach, the "comparable sales"
approach, and the "replacement cost" approach.
Legal Requirements: Collectively, all statues, ordinances, by-laws,
codes, rules, regulations, restrictions, orders, judgments, decrees
and injunctions (including, without limitation, all applicable
building, environmental, health code, zoning, subdivision, and other
land use and health-care licensing statutes, ordinances, by-laws,
codes, rules and regulations), whether now or hereafter enacted,
promulgated or issued by any governmental authority or accreditation
body.
III. INSURANCE.
A. Capital shall maintain, in full force and effect, at the Facility's
expense, the following insurance protecting Owner and Capital and
their officers and employees:
1. Employee's fidelity insurance;
2. Workers compensation and employers liability insurance;
3. Professional liability insurance; and
4. Comprehensive general public liability insurance and overlying
umbrella liability coverage against loss or liability for damages
for personal injury or death occurring on, in or about the
Facility.
Such policy or policies shall be written by a responsible insurance
company or companies satisfactory to Owner and in kind and amounts
satisfactory to Owner. Certificates of insurance showing compliance
with the foregoing requirements shall be furnished by Capital to
Owner. Certificates shall state that the policy or policies will not
be canceled or altered without at least 30 days prior written notice
to Owner.
B. Owner shall procure and maintain, in full force and effect, at Owner's
expense the following insurance protecting Owner and Capital and their
officers and employees:
1. Property Insurance for loss or damage by fire and other perils
insurable under the broad form of extended coverage insurance
available in the area where the Facility is located, and
improvements, and contents thereof, constituting all or any
portion of the Facility.
2. Insurance for automobiles owned or hired by Owner and used in
connection with the Facility.
7
8
Such policy or policies shall be written by a responsible
insurance company or companies satisfactory to Capital in kind
and amounts satisfactory to Capital. Certificates of insurance
showing compliance with the foregoing requirements shall be
furnished by Owner to Capital. Certificates shall state that the
policy or policies will not be canceled or altered without at
lease thirty (30) days prior written notice to Capital.
IV. TERM AND TERMINATION OF THIS AGREEMENT.
A. TERM AND TERMINATION WITHOUT CAUSE. This Agreement shall commence on
the date set forth on the first page hereof. Payment under Section V
shall commence on the date of the first resident move-in. The term of
this Agreement shall continue for a period of ten (10) years from the
date of the first resident move-in (the "Initial Term") and continue
for the Initial Term unless terminated by law or otherwise according
to its terms. Capital shall have the option to extend the term of this
Agreement for an additional five (5) year renewal option on the same
terms and conditions as herein provided (the "Extended Term").
B. If Owner terminates the Agreement prior to the expiration of the
Initial Term without cause or if Capital terminates this Agreement
during the Initial Term for cause as provided in Paragraph IV. B.
below, severance compensation in an amount equal to the then-current
monthly management fee times the number of months remaining in the
Initial Term shall be paid to Capital upon the effective date of
termination. Any such termination shall be effective upon the
expiration of the ninety (90) day period following the giving of the
notice or on such later date as may be specified in the notice.
C. TERMINATION FOR CAUSE.
1. This Agreement may be terminated by Owner for cause for the
following reasons:
a. In the event of material breach by Capital of a material
term hereof, which breach is not cured within sixty (60)
days after notice by Owner.
b. In the event that a petition in bankruptcy is filed by
Capital or its permitted assignee, or in the event Capital
or its permitted assignee makes an assignment for the
benefit of creditors or takes advantage of an insolvency
act, by notice to Capital or assignee.
c. In the event that (i) Capital's or any permitted assignee's
corporate existence is dissolved and the duties under this
Agreement are not
8
9
assumed by Capital or an affiliate of Capital (ii), Capital
or any permitted assignee ceases to do business for any
reason, by notice to Capital or such assignee and the duties
under this Agreement are not assumed by Capital or Capital's
Affiliate.
d. At any time after the Initial Term, with or without cause.
e. In the event that the Facility is sold or otherwise
transferred to any third party which is not an affiliate of
Owner.
2. This Agreement may be terminated for cause by Capital in the
event that Capital fails to receive reimbursement of reimbursable
expenses or any compensation due Capital pursuant to the terms of
this Agreement or any other compensation due Capital, and such
failure continues for a period of sixty (60) days after Capital's
written notice thereof to Owner; provided however, that this
Agreement shall not be so terminated if Owner pays Capital all
such expenses and compensation then due and payable on or before
the expiration of said sixty (60) day period.
Capital shall have the right to terminate this Agreement if
Capital fails to receive reimbursements or compensation as a
result of a subordination agreement by Capital in favor of a
lender of Owner, but such termination shall not be considered for
cause and shall not entitle Capital to the severance compensation
provided for in Section IV.B. hereof.
3. 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.
C. COVENANTS SURVIVING TERMINATION. The termination of this Agreement
shall not terminate the right of Owner or Capital to indemnification
relating to events occurring during the term of this Agreement under
Article VI. K. and to protection of Owner's or Capital's property
rights under Article VI.B.
V. COMPENSATION
A. OPERATIONS MANAGEMENT FEES. Owner shall pay to Capital a fee in the
amount set forth below, payable by the fifteenth day of each month.
Payment shall commence on the date of the first resident move-in.
1. The amount to be paid monthly shall be 5% of Gross Revenues
generated during the immediately proceeding month provided that
the monthly management fee shall not be less than Five Thousand
Dollars ($5,000.00)
9
10
("Monthly Management Fee"). "Gross Revenues" shall be as defined
in Section V.B. The Monthly Management Fee for the Facility shall
be payable monthly in arrears following calculations thereof upon
submission of a monthly statement for such Facility from Capital.
It is agreed between Owner and Capital that if the Gross Revenues
of the Facility are insufficient to pay all disbursements,
including the Monthly Management Fee or any portion thereof, then
Owner shall remain responsible for such disbursements. It is
further agreed between Owner and Capital that in no event will
any disbursement be made to Owner from any Facility Account until
all accrued and unpaid fees to Capital and repayments, if any, to
Capital for Capital's advancement of funds to cover any
insufficiencies in such Facility's Rental or Payroll Account have
been paid in full.
2. In addition to the Monthly Management Fee stated above, Owner
shall also pay Capital a marketing lease-up fee of $500.00 for
each unit leased at the time the unit is initially occupied.
B. INCENTIVE MANAGEMENT FEE. In addition to the Monthly Management Fee
stated above, as additional compensation for the services to be
rendered by Capital during the Term, Capital shall be paid a fee (the
"Incentive Management Fee") based upon performance standards which
shall be mutually agreed upon by Owner and Capital. Unless otherwise
mutually agreed upon by Owner and Capital, the Incentive Management
Fee shall equal 25% of the amount, if any, by which Net Cash Flow for
any annual or shorter period during the Term ending December 31 of any
year or for the last period in the Term ending on the last day of the
Term exceeds the agreed upon performance standards.
For purposes of this Section V.B., "Net Cash Flow" shall mean, for any
period for which such sum is being computed, the excess of (a) Gross
Revenues for the Facility during such period over (b) Operating
Expenses for the Facility during such period. "Gross Revenues" shall
mean and refer, for any period for which such Gross Revenues are being
determined, the sum of the total gross revenues of the Facility from
operations received during such period, including all receipts from
(i) rent of units at the Facility, (ii) rent or business interruption
insurance, if any, (iii) revenue of the Facility for or on account of
any and all goods provided and services rendered or activities during
such period, (iv) reimbursements of expenses paid by the Facility
which are to be borne by others, (v) deposits in the event of
forfeiture thereof to the Facility and (vi) other revenues and
receipts realized by the Facility from operations and customarily
included in Net Cash Flow; Gross Revenues shall not include (i)
security deposits received from residents and, if applicable, interest
accrued thereon for the benefit of the residents until such deposits
or interest are applied for rental payments; (ii) proceeds from the
sale or dispositions of all or any part of such Facility; (iii)
insurance proceeds
10
11
received by Owner as a result of any insured loss (except proceeds for
rent loss insurance) and proceeds from any condemnation action; (iv)
capital contributions made by any partner of Owner; (v) loans by Owner
or its partners; (vi) proceeds from capital, financing and any other
transactions not in the ordinary course of operation of such Facility
and (vii) advance rentals paid (until such time as they are earned).
"Operating Expenses" shall mean, for any period for which such
Operating Expenses are being determined, the sum of the total gross
expenditures of the Facility for operations during such period,
including (A) all cash operating expenses (including the Monthly
Management Fee, any Incentive Management Fee, all commissions and
other fees, expenses and allowances paid to Capital), (B) any other
expenditures of the Facility which are not treated as capital
expenditures under generally accepted accounting practices, and (C)
real estate taxes, personal property taxes and sales taxes; provided
however, that Operating Expenses shall not include any payments or
expenditures to the extent the sources or funds used for such payments
or expenditures are not included in Gross Revenues.
C. CERTAIN EXPENSES. In accordance with the Annual Budgets, the Facility
will reimburse Capital for the cost of reasonable transportation,
lodging and meal expenses for non-Facility-based employees of Capital
or its outside consultants when traveling in connection with the
performance of the services being performed pursuant to this
Agreement, together with any reasonable long distance telephone
expenses, copying, mailing or express shipments and other
miscellaneous out of pocket expenses that relate to the marketing and
management of the Facility. Relocation, education, professional
memberships and licensing expenses of the Facility-based
administrative employees shall also be an expense of the Facility
subject to Owner's prior approval.
VI. MISCELLANEOUS
A. INSURANCE-SUBROGATION. No indemnity shall be paid to the other party
under this Agreement where the claim, damage, liability, loss or
expense incurred was required to be insured against by such other
party. Any insurance policies obtained by the parties pursuant to this
Agreement shall contain provisions or have the effect of waiving any
right of subrogation by the insurer of one party against the other
party or its insurer.
B. PROPERTY OF CAPITAL. Trade names, including the name "The Waterford,"
architectural and design concepts and plans, ideas and documents,
forms, occupancy development material, specifically for and related to
Owner and/or its Facility shall be the exclusive property of Owner.
Trade names, ideas and documents, forms and occupancy development
material, not directly related to the Facility and supplied by Capital
are to be considered proprietary and will remain the property of
Capital. Either party may only use such materials which are the
property of the other and information in the operation and management
of the Facility, and may not use such materials or information after
termination of this Agreement for the development or
11
12
expansion of the Facility or for new projects for itself or others
without the written consent of the party owning such material or
information.
C. STATUS OF PARTIES. It is expressly understood and agreed that Capital
shall act as an independent contractor in the performance of this
Agreement. No provision hereof shall be deemed or construed to create
a partnership or a joint venture between Owner with respect to the
Facility or otherwise.
D. ADDITIONAL ACTION. In order to carry out the intent and spirit of this
Agreement, Owner and Capital will do all acts and things necessary
including the execution of other agreements.
E. ENTIRE AGREEMENT. This Agreement sets forth the entire Agreement
between Capital and Owner. Any change or modification of this
Agreement must be in writing and signed by all parties hereto.
F. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto, their successors and assigns.
G. ASSIGNMENT, ETC. Except for an assignment by Capital to an affiliate,
Capital shall not, without Owner's prior written approval (which
approval shall not be unreasonably withheld), assign any of its rights
or obligations under this Agreement.
H. GOVERNING LAW. This Agreement, its interpretation, validity and
performance shall be governed by the laws of the State of Texas.
I. NON-COMPETE. Without the prior written consent of Capital, for a
period of three years following termination of this Agreement, Owner
will not employ or engage any person who was a Capital employee
assigned to the administrative staff of the Facility at any time
during the last twelve (12) months of the term of this Agreement. This
section shall not apply to Owner upon sale of the Facility or
termination of the Agreement by Owner for cause and shall not apply to
any lender of Owner which takes over control of the Facility.
J. CONDITIONS BEYOND CONTROL OF PARTIES. Neither party shall be held
liable for failure to comply with any of the terms of this Agreement
when such failure has been caused solely by fire, labor dispute,
strike, war, insurrection, government restrictions, force majeure, or
act of God beyond the control and without fault on the part of the
party involved, provided such party uses due diligence to remedy such
default. Circumstances are likely to arise from time to time which may
require that budgets be exceeded, and Capital shall not be liable for
budget overruns.
K. INDEMNIFICATION. Owner will indemnify and hold harmless Capital from
any and all liability arising incident to Owner's performance of its
duties under this Agreement.
12
13
Capital will indemnify and hold harmless Owner from any and all
liabilities arising incident to Capital's performance of its duties
under this Agreement. Owner shall also indemnify and hold Capital
harmless against any and all losses, costs or expenses incurred by
Capital 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 shall
promptly notify Owner of Capital's knowledge of any such
noncompliance.
L. ARBITRATION. In the event of any dispute, claim or controversy of any
kind between the parties, concerning this Agreement or the termination
of this Agreement, the matter shall be submitted to arbitration in
accordance with rules of the American Arbitration Association. 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 chosen by the American Arbitration Association who shall be
the Selected Arbitrator. Such arbitrator shall be limited in his
decision to a choice between the final position as requested by each
party. Said arbitration shall be held in Dallas/Ft. Worth, Texas or
such other place as is mutually agreeable. 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.
Costs of arbitration are to be shared by both parties equally,
provided that the arbitrator may choose to award the costs of
arbitration against the losing party if the arbitrator determined that
the final position urged by the losing party was not reasonable.
M. CONTROL OVER OTHER AGREEMENT. In the event that any of the terms or
conditions set forth herein are inconsistent with or contrary to any
of the terms and conditions set forth in the Development and Turnkey
Services Agreement dated September 16, 1997, between Owner and Capital
Senior Living Corporation, then the terms and conditions set forth
herein shall control.
TRI POINT COMMUNITIES, L.P. CAPITAL SENIOR LIVING, INC.
By: Capital Retirement Group, Inc.
Its General Partner
By: /s/ XXXXX X. XXXXXXXX By: /s/ XXXXXXX XXXXXXX
---------------------------- --------------------------
Name: Xxxxx X. Xxxxxxxx Name: Xxxxxxx Xxxxxxx
--------------------- ---------------------
Title: Vice President Title: Vice President
--------------------- --------------------
13
