Common use of Yearly Budgets Clause in Contracts

Yearly Budgets. (a) Not less than sixty (60) days prior to the first day of each Fiscal Year after the Effective Date, Manager shall submit to Owner for Owner’s approval a proposed Yearly Budget including a proposed Capital Replacements Budget for the ensuing full or partial Fiscal Year, as the case may be. Owner’s approval of the Yearly Budget and the Capital Replacements Budget shall not be unreasonably withheld or delayed and shall be deemed given unless a specific written disapproval thereof (as provided below) is delivered by Owner to Manager within thirty (30) days after submission of such budgets. Manager will, on a monthly basis, issue periodic forecasts of operating performance to Owner reflecting any significant unanticipated changes, variables or events or describing significant additional unanticipated items of income or expense. Manager will provide Owner with the material data and information utilized in preparing the Yearly Budget and the Capital Replacements Budget or any revisions thereof. Manager will not be deemed to have made any guaranty, warranty or representation whatsoever in connection with the Yearly Budget and the Capital Replacements Budget, and Owner acknowledges that the Yearly Budget, including the Capital Replacements Budget are intended only as reasonable estimates of the matters they describe. In administering the Yearly Budget, Manager may, without Owner’s approval, reallocate, without restriction, budget line items within the same general divisional classification of budget items shown in the Yearly Budget (e.g., rooms, food and other similar or dissimilar categories, as determined in accordance with the Accounting Principles, and shall not mean the sub-categories such as, for example, linen replacement and uniforms, appearing under a general divisional category) so long as such reallocation does not materially and adversely affect the purposes for which the original budget line items were intended and so long as Manager provides notice of such reallocation to Owner. Manager is always authorized to make expenditures for taxes, insurance and utilities to reflect actual costs thereof. With respect to other items, in the event that Manager encounters circumstances which require unbudgeted and unanticipated expenditures not foreseen at the time of preparation of the Yearly Budget and which Manager deems reasonably necessary, Manager may submit such matters for Owner’s approval, which approval will not be unreasonably withheld or delayed. Expenditures required to complete, or correct deficiencies, in construction, reconstruction or refurbishment of the Hotel, if undertaken, are Ownership Costs and will not be reflected in the Yearly Budget or the Capital Replacements Budget or paid from the Reserve Account. (b) In the event Owner disapproves or raises any objections to the proposed Yearly Budget, or any portion thereof, or any revisions thereto, Owner and Manager shall cooperate with each other in good faith to resolve the disputed or objectionable items. Any objectionable items in the proposed Yearly Budget or Capital Replacements Budget, or revisions thereto, which Owner disapproves must be disapproved on a specific line-by-line basis in order to establish which, if any, line items are not acceptable to Owner. In the event Owner and Manager are not able to negotiate and resolve the disputed or objectionable items within a period of thirty (30) days after the date on which Owner provides written notice of its disapprovals to Manager, either party may submit the disputed items to arbitration before a panel of three (3) arbitrators who will conduct the arbitration proceedings in accordance with the provisions of this Agreement and the rules of the American Arbitration Association. Unless otherwise mutually agreed by Owner and Manager, the arbitration proceedings will be conducted at the Hotel. All arbitrators appointed by or on behalf of either party shall be persons with recognized expertise in the operation of hotels of similar size and class as the Hotel. The party desiring arbitration will give written notice to that effect to the other party, specifying in such notice the name, address and professional qualifications of the person designated to act as arbitrator on its behalf. Within fifteen (15) days after service of such notice, the other party will give written notice to the party desiring such arbitration specifying the name, address and professional qualifications of the person designated to act as arbitrator on its behalf. The two arbitrators will, within fifteen (15) days thereafter, select a third, neutral arbitrator. As soon as possible after the selection of the third arbitrator, and no later than fifteen (15) days thereafter, the parties will submit their positions on each disputed item in writing to the three arbitrators. In so submitting their positions, each party shall state only one substantive proposal as a resolution for each disputed item. The arbitrators may not consider multiple or alternative positions from either party with respect to any disputed budget item. The decision of the arbitrators so chosen shall be given within a period of twenty (20) days after the appointment of such third arbitrator. The arbitrators must, by majority vote, agree upon and approve the substantive position of either Owner or Manager with respect to each disputed item, and are not authorized to agree upon or impose any other substantive position which has not been presented to the arbitrators by Manager or Owner. A decision in which any two (2) arbitrators so appointed and acting hereunder concur in writing with respect to each disputed item shall in all cases be binding and conclusive upon Owner and Manager and a copy of said decision shall be forwarded to the parties. The fees and expenses of the arbitration will be paid by the non-prevailing party. If the party receiving a request for arbitration fails to appoint its arbitrator within the time above specified, or if the two arbitrators so selected cannot agree on the selection of the third arbitrator within the time above specified, then either party, on behalf of both parties, may request such appointment of such second or third arbitrator, as the case may be, by application to any judge of any court in the jurisdiction where the Hotel is located which has original jurisdictional authority over contractual disputes involving a claim equal to the disputed budget item upon ten (10) days prior written notice to the other party of such intent. In the event Owner and Manager are not able to resolve the disputed or objectionable matters raised by Owner in regard to a Yearly Budget prior to the commencement of the applicable Fiscal Year, either voluntarily or by means of arbitration, Manager is authorized to operate the Hotel in accordance with the proposed Yearly Budget; provided, however, that as for disputed budget items, Manager may not expend more than the previous year’s budgeted amount for such item (if any), increased by a percentage equal to the increase in the Consumer Price Index during the last year. For purposes of this section, “increase in the Consumer Price Index during the last year” shall mean the percentage increase in the Consumer Price Index for the 12-month period ending immediately prior to the date of submission of the Yearly Budget during the calendar year which began during the Fiscal Year which is in dispute.

Yearly Budgets. (a) Not less than sixty (60) days prior to the first day of each Fiscal Year after the Effective Date2004 Fiscal Year, Manager shall submit to Owner for Owner’s 's approval a proposed Yearly Budget for each Hotel including a proposed Capital Replacements Budget for each Hotel for the ensuing full or partial Fiscal Year, as the case may be. Owner’s 's approval of the Yearly Budget Budgets and the Capital Replacements Budget Budgets shall not be unreasonably withheld or delayed and shall be deemed given unless delayed. If Owner fails to disapprove of a specific written disapproval thereof (as provided below) is delivered by Owner to Manager proposed Yearly Budget within thirty (30) days after the submission of such budgetsthereof to Owner for its approval, the same shall be deemed approved. Manager will, on a monthly basisfrom time to time not less often than quarterly, issue periodic forecasts of operating performance to Owner reflecting any significant unanticipated changes, variables or events or describing significant additional unanticipated items of income or expense. Manager will provide Owner with the material data and information utilized in preparing the Yearly Budget Budgets and the Capital Replacements Budget Budgets or any revisions thereof. Manager will not be deemed to have made any guaranty, warranty or representation whatsoever in connection with the Yearly Budget Budgets and the Capital Replacements BudgetBudgets, and Owner acknowledges except that the proposed Yearly BudgetBudgets, including the Capital Replacements Budget are intended only as reasonable Budgets, reflect Manager's best professional estimates of the matters they describe. In administering Manager shall use its reasonable efforts, subject to the Yearly BudgetOperating Standards, Manager may, without Owner’s approval, reallocate, without restriction, budget line items within to operate and manage the same general divisional classification of budget items shown in the Yearly Budget (e.g., rooms, food and other similar or dissimilar categories, as determined Hotels in accordance with the Accounting Principles, and shall not mean the sub-categories such as, for example, linen replacement and uniforms, appearing under a general divisional category) so long as such reallocation does not materially and adversely affect the purposes for which the original budget line items were intended and so long as Manager provides notice of such reallocation to Owner. Manager is always authorized to make expenditures for taxes, insurance and utilities to reflect actual costs thereof. With respect to other items, in the event that Manager encounters circumstances which require unbudgeted and unanticipated expenditures not foreseen at the time of preparation of the their Yearly Budget and which Manager deems reasonably necessary, Manager may submit such matters for Owner’s approval, which approval will not be unreasonably withheld or delayed. Expenditures required to complete, or correct deficiencies, in construction, reconstruction or refurbishment of the Hotel, if undertaken, are Ownership Costs and will not be reflected in the Yearly Budget or the Capital Replacements Budget or paid from the Reserve AccountBudgets. (b) In the event Owner disapproves or raises any objections to the proposed Yearly Budget, or any portion thereof, or any revisions thereto, Owner and Manager shall cooperate with each other in good faith to resolve the disputed or objectionable items. Any objectionable items in the If Owner disapproves of a proposed Yearly Budget or Capital Replacements Budget, or revisions thereto, which Owner disapproves must be disapproved will disapprove on a specific line-by-line basis in order to establish which, if any, line items are the extent reasonably practical. Any dispute with respect to a proposed Yearly Budget which is not acceptable to Owner. In resolved by the event Owner and Manager are not able to negotiate and resolve the disputed or objectionable items parties within a period of thirty (30) days after the date on which submission thereof to Owner provides written notice of its disapprovals to Manager, either party may submit the disputed items to arbitration before a panel of three (3) arbitrators who will conduct the arbitration proceedings in accordance with the provisions of this Agreement and the rules of the American Arbitration Association. Unless otherwise mutually agreed by Owner and Manager, the arbitration proceedings will be conducted at the Hotel. All arbitrators appointed by or on behalf of either party shall be persons with recognized expertise in the operation of hotels of similar size and class as the Hotel. The party desiring arbitration will give written notice to that effect to the other party, specifying in such notice the name, address and professional qualifications of the person designated to act as arbitrator on its behalf. Within fifteen resolved by Arbitration. (15c) days after service of such notice, the other party will give written notice to the party desiring such arbitration specifying the name, address and professional qualifications of the person designated to act as arbitrator on its behalf. The two arbitrators will, within fifteen (15) days thereafter, select a third, neutral arbitrator. As soon as possible after the selection of the third arbitrator, and no later than fifteen (15) days thereafter, the parties will submit their positions on each disputed item in writing to the three arbitrators. In so submitting their positions, each party shall state only one substantive proposal as a resolution for each disputed item. The arbitrators may not consider multiple or alternative positions from either party with respect to any disputed budget item. The decision of the arbitrators so chosen shall be given within a period of twenty (20) days after the appointment of such third arbitrator. The arbitrators must, by majority vote, agree upon and approve the substantive position of either Owner or Manager with respect to each disputed item, and are not authorized to agree upon or impose any other substantive position which has not been presented to the arbitrators by Manager or Owner. A decision in which any two (2) arbitrators so appointed and acting hereunder concur in writing with respect to each disputed item shall in all cases be binding and conclusive upon Owner and Manager and a copy of said decision shall be forwarded to the parties. The fees and expenses of the arbitration will be paid by the non-prevailing party. If the party receiving a request for arbitration fails to appoint its arbitrator within the time above specified, or if the two arbitrators so selected cannot agree on the selection of the third arbitrator within the time above specified, then either party, on behalf of both parties, may request such appointment of such second or third arbitrator, as the case may be, by application to any judge of any court in the jurisdiction where the Hotel is located which has original jurisdictional authority over contractual disputes involving a claim equal to the disputed budget item upon ten (10) days prior written notice to the other party of such intent. In the event Owner and Manager are not able to resolve the disputed or objectionable matters raised by Owner in regard to a Yearly Budget prior to the commencement of the applicable Fiscal Year, either voluntarily or by means of arbitrationArbitration, Manager is authorized to operate the Hotel in accordance with the proposed Yearly Budget; provided, however, that as for disputed budget items, Manager may not expend more than the previous year’s 's budgeted amount for such item (if any), increased by a percentage equal to the increase in the Consumer Price Index during the last yearyear unless such expenditure is of the type contemplated under Section 7.7(b) or is for an expense (such as real estate taxes, insurance premiums or utilities) which are beyond the Manager's reasonable control. For purposes of this section, “"increase in the Consumer Price Index during the last year” " shall mean the percentage increase in the Consumer Price Index for the twelve (12-) month period ending immediately prior to the date of submission of the disputed proposed Yearly Budget Budget. (d) Manager shall deliver to Owner, each month until January, 2005, Manager's then most current financial forecast for the Hotels for the next 12 months, which forecasts shall be in Manager's and its Affiliates' customary form. On or before March 31, 2004 Manager shall provide to Owner a month-by-month schedule of the draws from the Reserve Account which Manager anticipates to make during the calendar year which began during the 2004 and 2005 Fiscal Year which is in disputeconnection with the Hotels. Manager shall periodically provide Owner with updates to such schedule consistent with good management and construction practices.

Yearly Budgets. (a) Not less than sixty (60) days prior to the first day of each Fiscal Year after the Effective Date2005 Fiscal Year for all Hotels except the Baltimore Hotel, and not less than sixty (60) days prior to the first day of each Fiscal Year after the 2006 Fiscal Year for the Baltimore Hotel, Manager shall submit to Owner for Owner’s approval a proposed Yearly Budget for each Hotel including a proposed Capital Replacements Budget for each Hotel for the ensuing full or partial Fiscal Year, as the case may be. Owner’s approval If Owner fails to disapprove of the a proposed Yearly Budget and the Capital Replacements Budget shall not be unreasonably withheld or delayed and shall be deemed given unless a specific written disapproval thereof (as provided below) is delivered by Owner to Manager within thirty (30) days after the submission of thereof to Owner for its approval, the same shall be deemed approved. Together with each such budgetsCapital Replacements Budget, Manager shall provide to Owner a proposed three-year capital forecast for such Hotel for Owner’s review and approval. Manager will, on a monthly basisfrom time to time not less often than quarterly, issue periodic forecasts of operating performance to Owner reflecting any significant unanticipated changes, variables or events or describing significant additional unanticipated items of income or expense. Manager will provide Owner with the material data and information utilized in preparing the Yearly Budget Budgets and the Capital Replacements Budget Budgets or any revisions thereof. Manager will not be deemed to have made any guaranty, warranty or representation whatsoever in connection with the Yearly Budget Budgets and the Capital Replacements BudgetBudgets, and Owner acknowledges except that the proposed Yearly BudgetBudgets, including the Capital Replacements Budget are intended only as reasonable Budgets, reflect Manager’s best professional estimates of the matters they describe. In administering Manager shall use its reasonable efforts, subject to the Yearly BudgetOperating Standards, Manager may, without Owner’s approval, reallocate, without restriction, budget line items within to operate and manage the same general divisional classification of budget items shown in the Yearly Budget (e.g., rooms, food and other similar or dissimilar categories, as determined Hotels in accordance with their respective Yearly Budgets. The Yearly Budgets for the Accounting PrinciplesHotels (other than the Baltimore Hotel) for the 2005 Fiscal Year shall be those most recently delivered by Manager to Owner on or before the Effective Date. The Yearly Budget for the Baltimore Hotel for the 2006 Fiscal Year shall be delivered by Manager to Owner on or before February 28, and shall not mean the sub-categories such as, for example, linen replacement and uniforms, appearing under a general divisional category) so long as such reallocation does not materially and adversely affect the purposes for which the original budget line items were intended and so long as Manager provides notice of such reallocation to Owner. Manager is always authorized to make expenditures for taxes, insurance and utilities to reflect actual costs thereof. With respect to other items2006 and, in the event that Manager encounters circumstances which require unbudgeted interim period between the Effective Date and unanticipated expenditures not foreseen at February 28, 2006, the time of preparation of applicable budget shall be based on the Yearly Budget and which Manager deems reasonably necessary, Manager may submit such matters actual amounts incurred by the prior owner while operating the Baltimore Hotel for Owner’s approval, which approval will not be unreasonably withheld or delayed. Expenditures required to complete, or correct deficiencies, the corresponding period in construction, reconstruction or refurbishment of the Hotel, if undertaken, are Ownership Costs and will not be reflected in the Yearly Budget or the Capital Replacements Budget or paid from the Reserve Accountcalendar year 2005. (b) In the event Owner disapproves or raises any objections to the proposed Yearly Budget, or any portion thereof, or any revisions thereto, Owner and Manager shall cooperate with each other in good faith to resolve the disputed or objectionable items. Any objectionable items in the If Owner disapproves of a proposed Yearly Budget or Capital Replacements Budget, or revisions thereto, which Owner disapproves must be disapproved will disapprove on a specific line-by-line basis in order to establish which, if any, line items are the extent reasonably practical. Any dispute with respect to a proposed Yearly Budget which is not acceptable to Owner. In resolved by the event Owner and Manager are not able to negotiate and resolve the disputed or objectionable items parties within a period of thirty (30) days after the date on which submission thereof to Owner provides written notice of its disapprovals to Manager, either party may submit the disputed items to arbitration before a panel of three (3) arbitrators who will conduct the arbitration proceedings in accordance with the provisions of this Agreement and the rules of the American Arbitration Association. Unless otherwise mutually agreed by Owner and Manager, the arbitration proceedings will be conducted at the Hotel. All arbitrators appointed by or on behalf of either party shall be persons with recognized expertise in the operation of hotels of similar size and class as the Hotel. The party desiring arbitration will give written notice to that effect to the other party, specifying in such notice the name, address and professional qualifications of the person designated to act as arbitrator on its behalf. Within fifteen resolved by Arbitration. (15c) days after service of such notice, the other party will give written notice to the party desiring such arbitration specifying the name, address and professional qualifications of the person designated to act as arbitrator on its behalf. The two arbitrators will, within fifteen (15) days thereafter, select a third, neutral arbitrator. As soon as possible after the selection of the third arbitrator, and no later than fifteen (15) days thereafter, the parties will submit their positions on each disputed item in writing to the three arbitrators. In so submitting their positions, each party shall state only one substantive proposal as a resolution for each disputed item. The arbitrators may not consider multiple or alternative positions from either party with respect to any disputed budget item. The decision of the arbitrators so chosen shall be given within a period of twenty (20) days after the appointment of such third arbitrator. The arbitrators must, by majority vote, agree upon and approve the substantive position of either Owner or Manager with respect to each disputed item, and are not authorized to agree upon or impose any other substantive position which has not been presented to the arbitrators by Manager or Owner. A decision in which any two (2) arbitrators so appointed and acting hereunder concur in writing with respect to each disputed item shall in all cases be binding and conclusive upon Owner and Manager and a copy of said decision shall be forwarded to the parties. The fees and expenses of the arbitration will be paid by the non-prevailing party. If the party receiving a request for arbitration fails to appoint its arbitrator within the time above specified, or if the two arbitrators so selected cannot agree on the selection of the third arbitrator within the time above specified, then either party, on behalf of both parties, may request such appointment of such second or third arbitrator, as the case may be, by application to any judge of any court in the jurisdiction where the Hotel is located which has original jurisdictional authority over contractual disputes involving a claim equal to the disputed budget item upon ten (10) days prior written notice to the other party of such intent. In the event Owner and Manager are not able to resolve the disputed or objectionable matters raised by Owner in regard to a Yearly Budget prior to the commencement of the applicable Fiscal Year, either voluntarily or by means of arbitrationArbitration, Manager is authorized to operate the Hotel in accordance with the proposed Yearly Budget; provided, however, that as for disputed budget items, Manager may not expend more than the previous year’s budgeted amount for such item (if any), increased by a percentage equal to the increase in (i) the Consumer Price Index during the last year, with respect to the non-Canadian Hotels and (ii) the Canadian Consumer Price Index during the last year, with respect to the Canadian Hotels, unless such expenditure is of the type contemplated under Section 7.7(b) or is for an expense (such as real estate taxes, insurance premiums or utilities) which is beyond the Manager’s reasonable control; provided further, however, Manager shall not expend on account of Capital Replacements in any period for any Hotel an amount in excess of five percent (5%) of such Hotel’s Gross Revenues for such period other than pursuant to an approved Capital Replacements Budget or in connection with amounts deposited in the Reserve pursuant to Section 5.2(h) or with the prior written consent of Owner or in connection with the up to $25,000,000 required to be expended by Manager’s Affiliates pursuant to Section 5.2.1 of the Purchase Agreement. For purposes of this section, “increase in the Consumer Price Index during the last year” shall mean the percentage increase in the Consumer Price Index for the twelve (12-) month period ending immediately prior to the date of submission of the disputed proposed Yearly Budget Budget, and “increase in the Canadian Consumer Price Index during the calendar year which began during last year” shall mean the Fiscal Year which is percentage increase in disputethe Canadian Consumer Price Index for the twelve (12) month period ending immediately prior to the date of submission of the disputed proposed Yearly Budget.