EXHIBIT 10.13
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MANAGEMENT AGREEMENT
(Xxxxx Airport)
between
XXXXX HARBORSIDE ASSOCIATES II LIMITED PARTNERSHIP,
a Massachusetts limited partnership
and
HYATT CORPORATION,
a Delaware corporation
DATED: March 15, 0000
XXXXX XXXXXXXXXX ASSOCIATES II LIMITED PARTNERSHIP
CERTIFICATE
-----------
Attached hereto is a true and correct copy of the Management
Agreement dated March 15, 1990, between Xxxxx Harborside Associates II
Limited Partnership and Hyatt Corporation, as modified by a March 15, 1990
letter agreement.
The foregoing has not been amended or rescinded and is in full force
and effect as of the date hereof.
December 31, 0000 XXXXX XXXXXXXXXX ASSOCIATES II
LIMITED PARTNERSHIP
by LHA-II, INC.
Its General Partner
By: /s/ Xxxxxxx Xxxxxxx
__________________________
XXXXXXX XXXXXXX, PRESIDENT
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. CONSTRUCTION, FURNISHING AND EQUIPPING,
PRE-OPENING AND OPENING OF HOTEL . . . . . . . . . . . . . 2
1.1 Construction. . . . . . . . . . . . . . . . . . . . 2
1.2 Furnishings and Equipment and Operating
Equipment . . . . . . . . . . . . . . . . . . . . . 2
1.3 "Hotel" and "First-class Hotel Standard" Defined. . 3
1.4 Plans and Specifications. . . . . . . . . . . . . . 4
1.5 Certain Hyatt Approvals . . . . . . . . . . . . . . 4
1.6 Technical Assistance Services Respecting
Improvements. . . . . . . . . . . . . . . . . . . . 5
1.7 Pre-opening Budget. . . . . . . . . . . . . . . . . 6
1.8 Constructions Commencement Date and Opening Date. . 8
1.9 Termination by Owner for Failure to Obtain
Financing Commitments . . . . . . . . . . . . . . . 10
1.10 Termination by Hyatt. . . . . . . . . . . . . . . . 10
1.11 Mutual Right of Termination . . . . . . . . . . . . 11
2. TERM OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . 13
3. USE AND OPERATION OF THE HOTEL . . . . . . . . . . . . . . 15
3.1 Use and Standard of Operation . . . . . . . . . . . 15
3.2 Leases and Concessions. . . . . . . . . . . . . . . 21
3.3 Bank Accounts . . . . . . . . . . . . . . . . . . . 21
3.4 Negation of Partnership or Joint Venture. . . . . . 22
3.5 Budgets . . . . . . . . . . . . . . . . . . . . . . 22
4. MANAGEMENT FEES AND REMITTANCES TO OWNER . . . . . . . . . 25
4.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . 25
4.2 Hyatt's Management Fee. . . . . . . . . . . . . . . 26
4.2.1 Annual Management Fee . . . . . . . . . . . . . . . 26
4.2.2 Time and Manner of Payment. . . . . . . . . . . . . 27
4.3 Remittances to Owner. . . . . . . . . . . . . . . . 29
4.4 Supplemental Payment. . . . . . . . . . . . . . . . 30
5. DETERMINATION OF AVAILABLE CASH FLOW
AND GROSS RECEIPTS. . . . . . . . . . . . . . . . . . . . 31
5.1 Books and Records . . . . . . . . . . . . . . . . . 31
5.2 "Available Cash Flow" Defined . . . . . . . . . . . 31
5.3 Definition of Gross Receipts. . . . . . . . . . . . 33
5.4 Fund for Replacement of and Additions to
Furnishings and Equipment . . . . . . . . . . . . . 34
6. REPAIRS AND CHANGES; LEGAL REQUIREMENTS. . . . . . . . . . 36
6.1 Repairs and Maintenance . . . . . . . . . . . . . . 36
6.2 Compliance with Legal Requirements. . . . . . . . . 37
6.3 Alterations and Additions . . . . . . . . . . . . . 39
7. GENERAL COVENANTS OF HYATT AND OWNER . . . . . . . . . . . 40
7.1 Working Capital . . . . . . . . . . . . . . . . . . 40
7.2 Chain Services. . . . . . . . . . . . . . . . . . . 41
7.3 Right of Inspection and Review. . . . . . . . . . . 42
7.4 Financial Reports . . . . . . . . . . . . . . . . . 43
7.5 Owner's Covenants as to Title . . . . . . . . . . . 45
7.6 Payment of Taxes. . . . . . . . . . . . . . . . . . 46
8. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . 47
8.1 Insurance to be Maintained Prior to the
Commencement of Term. . . . . . . . . . . . . . . . 47
8.2 Insurance to be Maintained During Term. . . . . . . 48
8.3 Notice of Cancellation or Change. . . . . . . . . . 50
8.4 Evidence of Insurance Coverage. . . . . . . . . . . 50
8.5 Self-Insurance. . . . . . . . . . . . . . . . . . . 50
8.6 Waiver of Right of Subrogation. . . . . . . . . . . 51
9. INDEMNIFICATION OF OWNER . . . . . . . . . . . . . . . . . 51
10. DAMAGE TO AND DESTRUCTION OF HOTEL . . . . . . . . . . . . 53
10.1 Owner's Duty of Restoration . . . . . . . . . . . . 53
10.2 Owner's Election Not to Restore . . . . . . . . . . 53
11. INTEREST ON OVERDUE SUMS . . . . . . . . . . . . . . . . . 54
12. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 55
13. TRADE NAME . . . . . . . . . . . . . . . . . . . . . . . . 56
14. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . 57
14.1 Assignment by Hyatt . . . . . . . . . . . . . . . . 57
14.2 Assignment by Owner . . . . . . . . . . . . . . . . 59
14.3 Binding on Successors . . . . . . . . . . . . . . . 60
15. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . 61
16. APPROVALS. . . . . . . . . . . . . . . . . . . . . . . . . 62
17. FURTHER INSTRUMENTS. . . . . . . . . . . . . . . . . . . . 62
18. INDEMNIFICATION OF HYATT . . . . . . . . . . . . . . . . . 63
19. APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . 64
20. PAYMENT OF AMOUNTS DUE TO HYATT. . . . . . . . . . . . . . 64
21. SURVIVAL AND CONTINUATION. . . . . . . . . . . . . . . . . 65
22. HYATT APPROVALS. . . . . . . . . . . . . . . . . . . . . . 65
23. SALE OF SECURITIES . . . . . . . . . . . . . . . . . . . . 66
24. CONFIDENTIALITY; COOPERATION . . . . . . . . . . . . . . . 67
25. LIMITED RIGHT OF OWNER TO TERMINATE. . . . . . . . . . . . 68
25.1 Certain Definitions . . . . . . . . . . . . . . . . 68
25.2 Termination Right . . . . . . . . . . . . . . . . . 70
25.3 Request for Determination . . . . . . . . . . . . . 71
25.4 Hyatt Cure Loans. . . . . . . . . . . . . . . . . . 73
26. RESTRICTIVE COVENANT . . . . . . . . . . . . . . . . . . . 77
27. FUTURE HOTEL EXPANSION . . . . . . . . . . . . . . . . . . 82
28. LIMITATION ON OWNER'S LIABILITY. . . . . . . . . . . . . . 83
INDEX
Achieved Room Factor. . . . . . . . . . . . . . . . . . . . . . 68
Actual GOP. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Additional Insured Endorsement. . . . . . . . . . . . . . . . . 48
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Affiliated group. . . . . . . . . . . . . . . . . . . . . . . . 59
Allocable Chain Expense . . . . . . . . . . . . . . . . . . . . 42
Annual Management Fee . . . . . . . . . . . . . . . . . . . . . 27
Assignee affiliate. . . . . . . . . . . . . . . . . . . . . . . 58
Assumed GOP . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Assumed Gross Receipts. . . . . . . . . . . . . . . . . . . . . 69
Available Cash Flow . . . . . . . . . . . . . . . . . . . . . . 31
Budgetary limit . . . . . . . . . . . . . . . . . . . . . . . . 6
Building. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certified Financial Statement . . . . . . . . . . . . . . . . . 43
Chain Expense . . . . . . . . . . . . . . . . . . . . . . . . . 42
Chain Services. . . . . . . . . . . . . . . . . . . . . . . . . 41
COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Commencement of construction of the Building. . . . . . . . . . 8
Comparable Hotels . . . . . . . . . . . . . . . . . . . . . . . 69
Construction commencement date. . . . . . . . . . . . . . . . . 6, 9
Construction commencement notice. . . . . . . . . . . . . . . . 6, 8
Contesting Party. . . . . . . . . . . . . . . . . . . . . . . . 44
Controlling interest. . . . . . . . . . . . . . . . . . . . . . 58
Convention Hotel. . . . . . . . . . . . . . . . . . . . . . . . 78
CPI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cumulative Period . . . . . . . . . . . . . . . . . . . . . . . 26
Defaulting party. . . . . . . . . . . . . . . . . . . . . . . . 54
Environmental Condition . . . . . . . . . . . . . . . . . . . . 11
Environmental Report. . . . . . . . . . . . . . . . . . . . . . 11
Exclusive Area. . . . . . . . . . . . . . . . . . . . . . . . . 77
Existing Owner. . . . . . . . . . . . . . . . . . . . . . . . . 60
FFE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
First-class hotel standard. . . . . . . . . . . . . . . . . . . 3
Fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Force Majeure Causes. . . . . . . . . . . . . . . . . . . . . . 20
Fringe benefits . . . . . . . . . . . . . . . . . . . . . . . . 16
Furnishing and Equipment. . . . . . . . . . . . . . . . . . . . 2
GOP Deficiency. . . . . . . . . . . . . . . . . . . . . . . . . 70
Gross Operating Profit. . . . . . . . . . . . . . . . . . . . . 31
Gross Receipts. . . . . . . . . . . . . . . . . . . . . . . . . 33
Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Hyatt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Hyatt bid . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Information Source. . . . . . . . . . . . . . . . . . . . . . . 70
Legal Requirements. . . . . . . . . . . . . . . . . . . . . . . 37
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Marketing Plan. . . . . . . . . . . . . . . . . . . . . . . . . 22
MCP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
MDEP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
MEPPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Non-Contesting Party. . . . . . . . . . . . . . . . . . . . . . 44
Non-Defaulting Party. . . . . . . . . . . . . . . . . . . . . . 54
Opening Date. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Operating accounts. . . . . . . . . . . . . . . . . . . . . . . 21
Operating Equipment . . . . . . . . . . . . . . . . . . . . . . 3
Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Owner's Remittance Amount . . . . . . . . . . . . . . . . . . . 29
Pre-opening expenses. . . . . . . . . . . . . . . . . . . . . . 6
Preopening period . . . . . . . . . . . . . . . . . . . . . . . 6
Prime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Protected names . . . . . . . . . . . . . . . . . . . . . . . . 56
Renewal terms . . . . . . . . . . . . . . . . . . . . . . . . . 13
Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Restricted Area . . . . . . . . . . . . . . . . . . . . . . . . 77
Rosemont. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Site. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sixth Edition . . . . . . . . . . . . . . . . . . . . . . . . . 31
Target Amount . . . . . . . . . . . . . . . . . . . . . . . . . 27
Target Room Factor. . . . . . . . . . . . . . . . . . . . . . . 70
Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Uniform System. . . . . . . . . . . . . . . . . . . . . . . . . 31
Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
MANAGEMENT AGREEMENT
THIS AGREEMENT is executed in several counterparts as of the 1st day
of February, 1990, by and between Xxxxx Harborside Associates II Limited
Partnership (hereinafter called "Owner"), and HYATT CORPORATION, a Delaware
corporation (hereinafter called "Hyatt").
RECITALS
An affiliate of Owner is the ground lessee of that certain real
property (the "Site") located at the General Xxxxxx Xxxxxxxx Xxxxx
International Airport in East Boston, The Commonwealth of Massachusetts,
more particularly described in Exhibit A attached hereto and hereby made a
part hereof and has the right, which it intends to exercise, to assign to
Owner its rights and obligations under said ground lease relating to the
Site.
Owner desires to build, furnish and equip a first-class hotel upon
the Site and to have the same managed by Hyatt for the account of Owner.
Owner and Hyatt desire to enter into this Agreement respecting the
construction and furnishing of a first-class hotel on the Site and the
management thereof by Hyatt upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. CONSTRUCTION, FURNISHING AND EQUIPPING, PRE-OPENING AND OPENING
OF HOTEL.
1.1 CONSTRUCTION
Owner shall, in accordance with plans, specifications, budgets and
financing approved by Hyatt (which approval shall not be unreasonably
withheld), and with reasonable diligence, cause such Hotel Improvements
(the "Improvements") to be constructed upon the Site as may be necessary to
meet a first-class hotel standard. The Improvements shall include a
building containing approximately 270 guest rooms (the "Building"), 270
parking space (which may be used by hotel guests and employees on a non-
exclusive basis) and appropriate landscaping.
1.2 FURNISHINGS AND EQUIPMENT AND OPERATING EQUIPMENT.
Owner shall, in accordance with plans, specifications, budgets and
financing to be approved by Hyatt (which approval shall not be unreasonably
withheld and is subject to the provisions of Section 1.5 hereof), cause to
be purchased and installed in or about the Building all of the following to
the extent necessary to meet a first-class hotel standard: (1) furniture
and furnishings; (2) hotel equipment (including office equipment and
property management equipment as necessary); (3) uniforms, tools and
utensils, and (4) china, glassware, linens, silverware and the like (all of
the foregoing being hereinafter referred to as "FFE," the items referred to
under (1) and (2) above being hereinafter collectively referred to as
"Furnishings and Equipment," and the
items referred to under (3) and (4) above being hereinafter collectively
referred to as "Operating Equipment").
1.3 "HOTEL" AND "FIRST-CLASS HOTEL STANDARD" DEFINED.
The Site, the Improvements and the FFE are herein collectively
referred to as the "Hotel."
As respects Hyatt's approval rights as set forth in Section 1 of this
Agreement, a "first-class hotel standard" refers to the highest overall
standard of constructions, furnishing and equipping applicable to such
other hotels comparable in size to the Hotel and operated by Hyatt and
named below.
As respects operational standards, a "first-class hotel standard"
refers, at any given time, to the standard of operation of such other
hotels comparable in size to the Hotel and operated by Hyatt which then
represent the highest quality of hotels of such size in the Hyatt chain of
hotels. The first-class hotel standard includes, without limitation,
operations of the Hotel on a seven day a week, twenty-four hour a day
basis, with adequate staffing to provide first-class staffing, and food,
beverage, housekeeping, banquet, parking, bellmen and xxxxxx services;
provided that such standard of operation shall never be lower than the
standard of operation existing at the date hereof with respect to the
hotels named below, as long as such hotels are being operated by Hyatt.
For purposes of the "first-class hotel standard" as used in this
Section 1.3, the hotels known as the Hyatt Regency Westshore, Tampa,
Florida, Hyatt Regency Ravinia, Atlanta, Georgia, Hyatt Regency Greenwich,
Connecticut and the Hyatt hotel in
Charlotte, North Carolina would be deemed comparable hotels; provided,
however, that with respect to the purchase and installation of FFE, the
Hyatt hotel in Charlotte, North Carolina shall be deemed the comparable
hotel.
1.4 PLANS AND SPECIFICATIONS.
Owner shall engage and retain, at no expense to Hyatt, such
architects, designers, specialists and contractors (each of whom shall be
approved in advance by Hyatt) as shall be necessary and appropriate in
connection with the planning and completion of the Improvements and in
connection with the design, selection, purchase and installation of the
FFE. Owner shall, with reasonable diligence, cause to be prepared with
respect to the Hotel full and adequate plans and specifications meeting a
first-class hotel standard and shall furnish copies of each thereof to
Hyatt for its advance approval. Approvals required by this Section 1.4
shall not be unreasonably withheld.
1.5 CERTAIN HYATT APPROVALS.
Hyatt acknowledges that it has approved RTKL Associates as architects
and engineers and Xxxxxxxxx XxXxxxxxx and Xxxxxxx as interior designer for
the Hotel. Furthermore, though Hyatt has not yet approved the plans and
specifications (dated April 17, 1989) proposed by Owner, it acknowledges
them to be generally consistent with the "first class hotel standard"
prescribed herein. Hyatt hereby waives its right to approve the FFE budget
for the Hotel; provided, however, that such waiver shall not affect Owner's
obligations under Section 1.2 hereof to satisfy the first-class
hotel standard with respect to the purchase and installation of FFE.
1.6 TECHNICAL ASSISTANCE SERVICES RESPECTING IMPROVEMENTS.
Hyatt shall consult with Owner and its architect at such reasonable
times and places as Owner shall specify, to provide technical assistance in
connection with the planning and completion of the Improvements. Such
consultation shall include, but shall not be limited to, the matters set
forth in Annex 1 hereto. In consideration of such services, Owner shall
pay to Hyatt a fee of $235,000, payable as follows: Concurrently herewith,
Owner has paid Hyatt the sum of $60,000 the receipt whereof is hereby
acknowledged by Hyatt, and the balance of $175,000 shall be payable,
without interest, in ten (10) installments of $17,500 each, due on the
first day of each month commencing on the first day of the month next
succeeding the expiration of thirty (30) days from the date hereof with the
unpaid balance to be paid in full, in any event, on the date of the first
funding of the Hotel construction loan. Owner may, upon notice in writing
to Hyatt, extend payment of the installments required hereunder for up to
sixty (60) days if such extension is due to delays in construction, design
or commencement of construction; provided, however, such extension rights
may not be exercised more than twice.
In the event that this Agreement shall be terminated by Owner
pursuant to Section 1.8 hereof, Owner shall not be obligated to make
further payments under the first paragraph of this Section
1.5 but shall continue to be responsible for amounts due and payable
through the termination date.
1.7 PRE-OPENING BUDGET
As soon as practicable after the receipt by Hyatt of the
"construction commencement notice" (as provided in Section 1.8(a)), setting
forth the estimated Opening Date for the Hotel, Hyatt shall submit to
Owner, for its approval, (which approval shall not be unreasonable
withheld) a budget setting forth the costs and expenses (the "pre-opening
expenses") to be incurred during the "pre-opening period" (as hereinafter
defined) for the staffing of the Hotel, for pre-opening promotion and
advertising, and for the organization of the Hotel's operations and
services. Subject to the provisions of this Section 1.7, such budget shall
not exceed the sum determined by multiplying $4,000 by the number of guest
rooms to be included in the Building, which sum, as the same may be revised
by time to time as set forth below, is herein referred to as the "budgetary
limit." the "pre-opening period" shall be the period commencing on the
"construction commencement date" referred to in Section 1.7(a) and ending
on the day preceding the Opening Date referred to in Section 1.7(b). Such
budget shall, among other things, include the estimated cost of Chain
services as defined in Section 7.2 (without taking into account, however,
the cost of the centralized reservation services for which Owner is not
responsible during the pre-opening period) properly allocable to the Hotel
for the pre-opening period. Hyatt shall not, without Owner's approval,
incur aggregate pre-opening expenses in excess of the budgetary
limit. Subject to the foregoing restriction, Hyatt shall not be limited in
respect of the amounts to be incurred for the various categories of pre-
opening expenses as specified in such budget, except (i) that Hyatt shall
not enter into contracts, agreements or understandings involving a
commitment in excess of $100,000 without Owner's prior written approval and
(ii) that the total cost of Chain Services (without taking into account,
however, the cost of the centralized reservation services) shall not exceed
such amount as would properly be allocable to the Hotel if the same were in
operation during the pre-opening period.
Whenever it shall be reasonably apparent that the estimated Opening
Date theretofore specified is inappropriate, Owner shall promptly give
notice to Hyatt designating a revised estimated Opening Date. In any such
event, and whenever Hyatt reasonably anticipates that the budgetary limit
as then in effect is insufficient, Hyatt shall promptly submit to Owner for
its approval a revised budget (and revised budgetary limit) which shall, as
compared with the immediately preceding budgetary limit, reflect any
additional cost or expense.
The budgetary limits set forth above assume that the construction of
the Hotel shall commence no later than January 1, 1991 and that the Opening
Date shall not be later than September 1, 1992. Anything herein to the
contrary notwithstanding, in the event the Commencement of Construction or
the Opening Date shall be delayed for any reason beyond the dates set forth
in the preceding sentence, the budgetary limit shall be increased (but not
decreased) by a percentage equal to the amount, if any, by which the
Consumer Price Index for United States City Averages for All Urban
Consumers, All Items published from time to time by the United States
Bureau of Labor Statistics ("CPI") exceeds the CPI in effect as of the end
of the month preceding the date hereof, and by the amount of any other cost
increases (not otherwise taken into account pursuant to the CPI adjustment)
directly attributable to the delay. If the CPI is discontinued or is
unavailable or is substantially revised, a comparable index agreeable to
Owner and Hyatt reflecting the changes in the cost of living or the
purchasing power of the consumer dollar, published by any governmental
agency or recognized authority shall be used in place thereof.
Subject to the foregoing, Hyatt shall have the right, in the name of
Owner, to enter into contracts for pre-opening expenses and Owner shall be
liable for the payment of obligations incurred in connection with such
contracts. In the alternative, Hyatt may, in its own name, incur and pay
pre-opening expenses within the budgetary limit, in which case Owner shall
reimburse Hyatt for pre-opening expenses so paid by Hyatt within thirty
(30) days after receipt by Owner of Hyatt's statement in respect thereof.
1.8 CONSTRUCTION COMMENCEMENT DATE AND OPENING DATE.
(a) Owner shall give Hyatt at least thirty (30) days' notice (the
"construction commencement notice") of the date when construction of the
Building will commence (as used in this Agreement, "commencement of
construction of the Building" shall
mean the placing of foundations for the Building) and of the estimated
Opening Date. The date when construction of the Building shall actually
commence is herein referred to as the "construction commencement date."
(b) The "Opening Date" of the Hotel shall be the date specified by
Owner in a notice to Hyatt (given at least fifteen (15) days prior to the
Opening Date so specified), provided that the Opening Date shall not be
sooner than the day by which all of the following conditions shall have
been met: the Improvements shall have been substantially completed in
accordance with the plans and specifications theretofore approved by Hyatt
(except for inconsequential items), the applicable governmental authorities
shall have issued all certificates of occupancy and other required consents
and approvals (including a liquor license) with respect to the
Improvements, and the FFE conforming to the plans and specifications
theretofore approved by Hyatt shall (except for inconsequential items) have
been properly installed in the Building. Hyatt shall cooperate with Owner
in obtaining all required licenses and shall be responsible (at Owner's
expense) for obtaining all licenses which can be applied for by an
operator. The parties hereto agree to execute an Addendum to this
Agreement setting forth the Opening Date, and a counterpart of such
Addendum shall be attached to and become a part of each counterpart of this
Agreement. Within six (6) months from the Opening Date, Owner agrees to
provide to Hyatt a full set of "as-built" drawings of the
Hotel, as well as one set of microfilm reproductions of those documents.
1.9 TERMINATION BY OWNER FOR FAILURE TO OBTAIN FINANCING
COMMITMENTS.
In the event that Owner shall in good faith determine that it cannot
obtain (i) after diligent efforts, including engagement of a mortgage or
investment banker, reasonable financing commitments in respect to the
Hotel, (ii) approval by the Federal Aviation Administration of its plans
and specifications for the Hotel, or (iii) necessary approvals by the
Massachusetts Port Authority ("MPA"), then Owner may, at any time prior to
the commencement of construction of the Building, terminate this Agreement
by giving notice to such effect to Hyatt. Notwithstanding the foregoing,
in the event that Hyatt shall have the right (through unexercised) pursuant
to Section 1.10 hereof to terminate this Agreement for failure by Owner to
timely commence construction, then Owner's right to terminate pursuant to
this Section 1.9 shall be delayed until the fourth anniversary of the date
hereof.
1.10 TERMINATION BY HYATT.
Hyatt shall have the right to terminate this Agreement in the event
that (i) it does not approve financing or that commencement of construction
of the Building shall not occur by the second anniversary date of this
Agreement, or (ii) completion of construction has not occurred by the
earlier of (A) thirty (30) months after the date of commencement of
construction (such period
of time to be extended for an aggregate of not more than eighteen (18)
months in the event of delays caused by the occurrence of any event not
reasonably within the control of Owner, including acts of God, fire or
other casualty, orders of any governmental authority, strikes, lockouts,
war and insurrection) or (B) January 1, 1996. Such right shall be
exercisable by Hyatt giving Owner ninety (90) days' written notice of
termination, during which period Owner shall be entitled to cure the
failure, thereby avoiding a termination by Hyatt.
1.11 MUTUAL RIGHT OF TERMINATION
(a) Within six (6) months of the date hereof, Owner shall deliver
or cause to be delivered to Hyatt an environmental assessment of the Site
(the "Environmental Report") prepared by an independent firm having
expertise in such matters. The Environmental Report shall reflect an
investigation at least to a "Phase 1" standard (as such terms is used in
the Massachusetts Contingency Plan 310 CMR Section 40 et seq ("MCP")). If
the Environmental Report discloses the existence of "hazardous substances"
or "hazardous wastes" (as defined in Section 9 hereof) (an "Environmental
Condition"), then:
(i) Hyatt shall have the right to terminate this
Agreement (exercisable by written notice to Owner within ninety (90) days
of receipt of the Environmental Report), unless the Environmental Condition
is remedied or in the process of being remedied, as contemplated by
paragraph (b) below; and
(ii) Owner shall have the right to terminate this
Agreement (exercisable by written notice to Hyatt within ninety (90) days
of receipt of the Environmental Report), if Owner has determined in good
faith not to proceed with the construction and development of the Hotel as
a result of the Environmental Condition.
(b) Promptly after receipt by Owner of the Environmental Report,
Owner shall, if such report discloses the existence of an Environmental
Condition, file such report with the Massachusetts Department of
Environmental Protection ("MDEP") seeking a waiver by the MDEP pursuant to
the provisions of the MCP (the "Waiver") based on a classification of the
site as a "non-priority disposal site" within the meaning of MCP. If Owner
obtains the Waiver within nine (9) months of the presentation of the
Environmental Report to Hyatt, then Owner shall be entitled to advise Hyatt
in writing of its intention to cure the Environmental Condition and proceed
to remediate the Environmental Condition in such manner as may be permitted
by the MCP and thereby extinguish Hyatt's right of termination under this
Section 1.11. If Owner shall be unable to obtain a Waiver within said nine
(9) month period, then Owner may extinguish Hyatt's right of termination
under this Section 1.11 only by advising Hyatt, in writing, of its
intention to cure the Environmental Condition and proposing an outline of a
plan of remediation for Hyatt's approval and the approval under MCP, not
later than ten (10) months from the date of presentation of the
Environmental Report to Hyatt, diligently pursuing MDEP's approval
and thereafter remediation in accordance with such approved plan, and
completing such remediation pursuant to an approved plan. Owner shall,
whether the site is priority or non-priority, furnish Hyatt copies of
reports forwarded to MDEP pursuant to the provisions of MCP including those
required by the provisions of Section 40.537 of MCP.
The provisions of this Section 1.11 shall not affect Owner's
indemnification obligations for environmental matters under Section 9
hereof or Hyatt's or Owner's termination rights pursuant to Sections 1.9 or
1.10 hereof.
SECTION 2. TERM OF AGREEMENT.
(a) The original term of this Agreement shall commence on the
Opening Date provided in Section 1.7(b) and shall continue until July 1,
2013, unless this Agreement shall be sooner terminated as herein provided.
(b) Hyatt shall have the right (amounting to two (2) separate
renewal options) to extend such original term for two (2) successive
periods ("renewal terms"), the fist period consisting of ten (10) fiscal
years plus six months and ending on December 31, 2023 and the second period
consisting of ten (10) fiscal years and ending on december 31, 2033,
provided that, as to each renewal option, Hyatt shall give notice to Owner
of its election to extend such term at least eighteen (18) months prior to
the time when the term then in force would otherwise expire; that, at the
time when such notice is give, there shall not be an uncured event of
default on the part of Hyatt hereunder; and that the term of this Agreement
shall have been extended for the prior renewal term, if any. In the event
that Owner's ground lessor, MPA, shall then be in possession of the Site
due to a termination or expiration of Owner's ground lease with MPA (the
"Ground Lease"), MPA shall have the right to accept or reject Hyatt's
exercise of its election to extent the term hereof.
(c) If Hyatt shall elect to extend the term hereof, Owner shall
have the right at any time during any renewal term to terminate this
Agreement by giving Hyatt sixty (60) days prior notice and paying Hyatt any
and all amount then due Hyatt hereunder, including without limitation,
Hyatt Cure Loans with interest thereon, plus a termination fee equal to the
Annual Management Fee for the immediately preceding fiscal year multiplied
by the product of (y) ten and (z) a fraction, the numerator of which is the
number of months remaining between the termination date and December 31,
2033 and the denominator of which is 246. Any termination of Owner
hereunder shall be effective on the later to occur of (i) thirty (30) days
after payment of all amounts to be paid to Hyatt and (ii) sixty (60) days
after notice by Owner to Hyatt of exercise of this termination right.
(d) As used herein, the "Term" shall mean the original term and any
renewal term or terms.
SECTION 3. USE AND OPERATION OF THE HOTEL.
3.1 USE AND STANDARD OF OPERATION.
(a) Owner hereby grants to Hyatt the sole and exclusive right to
manage and operate the Hotel pursuant to the terms of this Agreement and
Hyatt agrees that, except to the extent excused as hereinafter provided,
Hyatt will, as the agent of Owner, operate the Hotel during the Term in
conformity with a first-class hotel standard and in a businesslike and
efficient manner; and Hyatt shall use the Hotel solely for the operation of
a hotel business conforming to a first-class hotel standard and for other
activities which are customary and usual in connection with such an
operation. Except as otherwise specifically limited under this Agreement,
Hyatt, as sole an exclusive agent of Owner, shall (subject to compliance
with the provision of Section 6.2 hereof) have absolute control and
discretion in the operation of the Hotel including, without limitation, the
right and power to negotiate and enter into such reasonable contracts
(including, without limitation, collective bargaining agreements or labor
contracts but subject to the provisions of sub-paragraph (c) below) in the
name and at the expense of Owner as may be reasonably necessary or
advisable in connection with the operation of the Hotel (subject, however,
to Owner's right to approve contracts with a corporation or a person or
persons controlling, controlled by, or under common control or affiliated
with Hyatt) and the right to determine the terms of admittance, charges for
rooms, charges for entertainment, food and beverages, labor policies
(including wage rates, the hiring and
discharging of employees, and the installation of employee retirement or
other benefit plans), and all phases of promotion and publicity relating to
the Hotel.
Anything herein to the contrary notwithstanding, Owner agrees that
Hyatt may retain its affiliate, Rosemont Purchasing Company ("Rosemont"),
to act as a purchase agent for Owner in connection with acquiring
replacements of and additions to Operating Equipment, FFE, or otherwise.
Owner also agrees that Rosemont will be paid a fee for its services, which
fee will be no greater than that charged by Rosemont to unaffiliated third
parties for comparable services and no greater than the fees charged by
other third parties offering comparable goods and services, said standard
to be applied on an overall and not on an "item-by-item" basis. In
addition, Hyatt shall have the right to acquire promotional and other
Hyatt-logoed items from its affiliate, Merchandising Associates Limited
Partnership (d/b/a Red Sail Merchandising), which is a sole source supplier
of Hyatt-logoed promotional items, at prices which are no greater than
those charged to owners of other hotels to whom Red Sail supplies such
items.
All employees of the Hotel shall be the employees of Hyatt and Hyatt
may reimburse itself out of operating accounts for the total aggregate
compensation, including, without limitation, fringe benefits and annual
bonuses paid or payable to the employees so assigned or, as the case may
be, to all employees of the Hotel. The term "fringe benefits" shall,
without limitation, include the
cost of pension or profit sharing plans, workers' compensation benefits,
group life and accident and health insurance or equivalent benefits and
similar benefits available to such employees by virtue of their employment
by Hyatt.
In the event and whenever Hyatt shall be subject to any tax,
irrespective of its designation (including a fee, charge or other
imposition for the issuance of a license, permit or the privilege to
conduct a business or occupation), imposed, levied or assessed by the
United States, the Commonwealth of Massachusetts, the County of Suffolk,
the City of Boston any subdivision or agency of the foregoing or any other
government body, which tax is measured, in whole or in part, by reference
to reimbursements to Hyatt for compensation, employment taxes or any fringe
benefits paid or payable to or in respect of employees of the Hotel, then,
and in any such event, Owner will indemnify and hold Hyatt harmless from
and against any and all liability for such tax or taxes to the extent so
measured. Any payments made by Owner in this connection shall be deducted
in computing Available Cash Flow (as defined in Section 5.2 hereof) here
under for any period. At Owner's request, Hyatt will resist, by
appropriate proceedings, any liability for any tax which is the subject of
the foregoing indemnification, in which case all costs and expenses
(including, without limitation, attorneys' fees) incurred by Hyatt in
resisting or defending itself against such liability shall be borne and
paid for by Owner.
(b) Prior to the assignment of any general manager to the Hotel,
Hyatt will arrange an appointment between the proposed
general manager and Owner. Hyatt shall enable Owner to provide its
comments and considerations to Hyatt concerning same. In no event shall
Owner have the right to approve or disapprove the assignment of any general
manager of the Hotel. If, at any time during the term, Owner shall become
dissatisfied with the performance of the general manager, Owner shall have
the right to recommend the replacement of the general manager, and Hyatt
shall in good faith consider Owner's recommendation. Hyatt shall give
Owner reasonable notice of any Hyatt decision to replace or transfer any
general manager and shall in good fait consider Owner's recommendation
relating to any such decision, but Hyatt shall not be bound by Owner's
recommendation.
During the first two (2) years following the Opening Date of the
Hotel, Hyatt intends to leave the members of the Executive Committee
(meaning the persons holding the position of, regardless of title, General
Manager, Rooms Manager, Food & Beverage Manager, Controller, and Sales
Manager) intact in their positions at the Hotel. Hyatt shall endeavor not
to relocate any member of the Executive Committee during the first two
years following the Opening Date, but Hyatt shall not be in default
hereunder in the event Hyatt elects to relocate one or more members of the
Executive Committee prior to the expiration of such two year period.
Following the commencement of the Term, the expenses pertaining to
not more than (i) two (2) moves of members of the Hotel's Executive
Committee during the first two years following the Opening Date, (ii) five
(5) moves of members of the Hotel's
Executive Committee during any period of two consecutive fiscal years after
the expiration of the period in (i) above, or (iii) two (2) moves of
members of the Hotel's Executive Committee during any three (3) month
period, shall be paid by the Hotel and be a deduction in the calculation of
Available Cash Flow. Notwithstanding the foregoing, the expenses of moves
of members of the Hotel's Executive Committee pertaining to or arising from
the replacement of any such members who shall have died, become disabled,
resigned from Hyatt or requested a transfer out of the Hotel or as to whom
Owner shall have recommended such transfer to Hyatt, shall not be counted
toward the above-stated limits on reimbursable moves.
(c) Hyatt shall have the right to negotiate with and recognize a
union as collective bargaining agent for its employees, subject, however,
to Owner's right to approve or reject any proposed agreement resulting from
such negotiations. Owner shall indemnify Hyatt from and against any
liability, cost, penalty, or other similar assessment (including back pay,
but not including loss of income, consequential damages or other similar
costs attributable to strikes, work stoppages or slow downs, or to actions
during such strikes, stoppages or slow downs) which results from Owner's
rejection of any such contract if such rejection is found by the National
Labor Relations Board to constitute bad faith bargaining. Any legal fees
or disbursements or other fees or costs incurred by Hyatt in connection
with any such proceedings brought by the union before the NLRB alleging bad
faith bargaining as a
result of the rejection by Owner of any labor contract proposed by Hyatt
shall be paid by Owner.
(d) Notwithstanding anything in this Section 3.1 or elsewhere in
this Agreement contained, Hyatt shall be excused from its obligation to
operate the Hotel in conformity with a first-class hotel standard (i) to
the extent and whenever Hyatt shall be prevented from compliance with such
standard by "Force Majeure Causes," (ii) to the extent that its failure to
fulfill such obligation is caused by any breach by Owner of any provision
hereof, including, without limitation, a breach of Owner's obligations
under Section 7.1 and 5.4(c) hereof and (iii) to the extent and whenever
there is herein provided a limitation upon Hyatt's ability to expend funds
in respect of the Hotel (for example, the limitations contained in Section
5.4 hereof respecting monies available for the replacement of, and
additions to, Furnishings and Equipment), provided that the failure to
expend funds by reason of the operation of such limitation shall reasonably
prevent Hyatt from meeting such standard. For the purpose hereof, "Force
Majeure Causes" shall mean causes beyond the reasonable control of Hyatt,
including casualties, war, insurrection, strikes, lockouts and governmental
actions (but excluding causes which can be controlled by the expenditure of
money in accordance with good business practices).
It is expressly agreed and understood that each and every provision
contained in this Agreement pursuant to which Hyatt is excused from its
obligation to operate the Hotel in conformity with
a first-class hotel standard shall operate without prejudice to any other
remedy (including, without limiting the generality of the foregoing, the
right to terminate this Agreement) which Hyatt shall have under the terms
of this Agreement.
3.2 LEASES AND CONCESSIONS.
(a) Hyatt shall not, without the approval of Owner, arrange leases
or concessions for any hotel operations, any restaurant or food service
operations or for any other commercial operation in or about the Hotel.
Any such lease or concession so approved shall be entered into in Owner's
name and shall be executed by Owner (or Hyatt, as agent).
(b) Hyatt shall, during the Term, use best efforts (at Owner's sole
expense) to perform, as agent for Owner, all of the obligations of Owner as
landlord or concessionaire under all present or future leases and
concessions made or granted with respect to the Hotel.
(c) Hyatt shall collect all rents and other sums falling due during
the Term under any present or future lease or concession, and shall deposit
the same in the operating accounts.
3.3 BANK ACCOUNTS.
There shall be deposited in a bank or banks designated by Owner and
in accounts established in Owner's name all monies advanced to the Hotel as
working capital by Owner, as provided in Section 7.1 hereof, and all monies
received by Hyatt from the operations of the Hotel ("operating accounts"),
and Hyatt shall pay out of the operating accounts, to the extent of the
funds from
time to time therein, all costs and expenses incurred in connection with
the operation of the Hotel, all other items entering into the calculation
of Available Cash Flow hereunder and all other amounts required to perform
its obligations hereunder; provided, however, Hyatt shall not be
responsible for making payments in respect of Owner's Ground Lease or debt
service obligations. Checks or other documents of withdrawal drawn upon
the operating accounts shall be signed by representatives of Hyatt or Hotel
employees designated by Hyatt, as agent for Owner, which persons drawing on
such accounts shall be bonded or otherwise insured.
3.4 NEGATION OF PARTNERSHIP OR JOINT VENTURE.
Nothing in this Agreement contained shall constitute, or be construed
to be or to create, a partnership, joint venture or lease between Owner and
Hyatt with respect to the Hotel.
3.5 BUDGETS.
(a) Hyatt will provide the Owner before December 1 (or such earlier
date as they become available) of each year during the term (i) Hyatt's
proposed preliminary forecast for the succeeding fiscal year of hotel
operations, including estimates of revenues and operating expenses and the
assumptions underlying same, (ii) a proposed budget for major expenditures
for the succeeding fiscal year, including all capital and FF&E
expenditures, and (iii) Hyatt's proposed marketing plan, including the
related marketing budget ("Marketing Plan") for the succeeding calendar
year (collectively, the materials in (i), (ii) and (iii) shall be the
"Forecasts"). Thereafter, Hyatt shall meet with Owner to discuss
the Forecasts and shall take into account Owner's views regarding the
Forecasts in an attempt to achieve a consensus on, and Owner's approval of,
the Forecasts. After Hyatt has made revisions to the Forecasts, if any,
following its meetings with Owner, Hyatt shall present to Owner Hyatt's
final Forecasts. However, except as set forth in the following sentence,
Hyatt shall not be obligated to obtain Owner's approval of the Forecasts.
The Marketing Plan shall be subject to Owner's approval, which shall not be
unreasonably withheld.
(b) Owner acknowledges that the Forecasts shall be prepared by
Hyatt for internal management purposes and are necessarily based upon
estimates of uncertain future events and conditions and that Hyatt shall
have no liability to Owner, and shall not be deemed in default under this
Agreement, if actual operating results vary to any extent from the
Forecasts. Nothing in this Section 3.5 is intended to limit or negate (i)
the authority conferred upon Hyatt elsewhere in this Agreement including,
without limitation, Section 3.1 or Section 5.4 hereof, (ii) the obligations
of Owner under Section 5.4(c) or Section 7.1 hereof, or (iii) any other
term or condition of this Agreement.
(c) The Marketing Plan shall be deemed approved if Owner fails to
object within twenty (20) business days of receipt thereof. Any such
objection shall be in writing and shall specifically state the nature of
Owner's objections. In the event that Owner does not approve the Marketing
Plan, pending resolution between Owner and Hyatt with respect thereto,
Hyatt shall undertake
a marketing program based on the approved Marketing Plan, as implemented,
for the previous fiscal year. Owner's right to approve the Marketing Plan
is subject to Owner's obligation to approve a plan to enable Hyatt to
properly market a hotel operated in accordance with the first-class hotel
standard, and nothing herein shall permit Owner to disapprove any plan
necessary to market and operate the hotel in accordance with the first-
class hotel standard. Owner shall not have the right to approve any
portion of the Marketing Plan which relates to Chain Services, the "Gold
Passport" system or other similar services or arrangements offered on a
chain-wide basis. Furthermore, if Owner does not approve Hyatt's Marketing
Plan for any fiscal year, not later than ninety (90) days after the
commencement of such fiscal year Owner shall not be entitled to utilize
said fiscal year in order to exercise any termination rights which may be
otherwise available to Owner under Section 25 hereof.
(d) Notwithstanding the provisions of Section 5.4 hereof, Hyatt
shall not have the right to make expenditures from the Fund for Replacement
of and Additions to Furnishings and Equipment for any "Major Program" (as
hereinafter defined) without the prior consent of Owner. Owner shall not
unreasonably withhold its consent of, and will at all times consent to, any
such Major Program, such that the hotel will at all times be maintained in
accordance with the first class hotel standard. The following activities
shall constitute a "Major Program":
(i) Any comprehensive plan or program for FF&E replacement,
rehabilitation, restoration or redecoration of any block of at least fifty
(50) guest rooms;
(ii) Any program for significant FF&E replacement,
rehabilitation, restoration or redecoration of Hotel public areas,
meeting/banquet/prefunction areas or any one or more of them;
(iii) Any major change in the concept or theme of any hotel
restaurant or lounge or of the Hotel kitchen or laundry; and
(iv) Any modification to a previously approved Major Program
as shell be proposed by Hyatt in accordance with the annual budgeting
process, as provided above.
Nothing in this Paragraph 3.5(d) shall be deemed to limit the right of
Hyatt to make expenditures of any nature which it reasonably deems
necessary or appropriate (i) to minimize risk of personal injury and
property damage, (ii) in case of casualty or other emergency, or (iii) to
comply with applicable Legal Requirements.
SECTION 4. MANAGEMENT FEES AND REMITTANCES TO OWNER.
4.1 FISCAL YEAR.
(a) A "fiscal year" hereunder shall mean a period of twelve (12)
consecutive months included in the Term and ending on December 31st, except
that the first fiscal year hereunder shall commence on the date the Hotel
commences hotel operations (which date may be prior to the Opening Date)
and end on December 31st of
the calendar year in which the Opening Date falls; provided, however, that
if such period consists of less than eight (8) full calendar months, then
the first fiscal year for all purposes of this Agreement shall be deemed to
commence on January 1 of the immediately succeeding fiscal year. In the
event that there shall be an early termination of the Term on a date other
than December 31st or in the event the Term is not extended as provided in
Section 2(b) hereof, the last fiscal year hereunder shall end on such date
of termination and shall commence on the preceding January 1st.
(b) The "Cumulative Period" in respect of any month included in a
fiscal year shall mean the period commencing on the first day of such
fiscal year and ending on the last day of such calendar month.
The Gross Receipts for any Cumulative Period shall mean the sum of
the Gross Receipts (as defined in Section 5.3 hereof) for each calendar
month included in such Cumulative Period. The Available Cash Flow for any
Cumulative Period shall mean the sum of the amounts of Available Cash Flow
for each calendar month included in such Cumulative Period, such sum to be
determined after taking into account any deficit in Available Cash Flow for
any such calendar month.
4.2 HYATT'S MANAGEMENT FEE.
4.2.1 ANNUAL MANAGEMENT FEE.
For each fiscal year Hyatt shall receive, in respect of its
management services hereunder, an amount (the "Annual
Management Fee") equal to the sum of the Basic Fee and Incentive Fee, as
provided in the ensuing clauses (a) and (b):
(a) For each fiscal year, Hyatt shall receive a Basic Fee
equal to three percent (3%) until the end of the first fiscal year, three
and one-half percent (3.5%) until the end of the second fiscal year, and
for each fiscal year thereafter, four percent (4%), of the Gross Receipts;
and
(b) For any fiscal year for which there is Available Cash
Flow in excess of $4,200,000 (the "Target Amount"), Hyatt shall receive, in
addition to the Basic Fee, an Incentive Fee equal to fifteen percent (15%)
of the amount by which Available Cash Flow exceeds the Target Amount.
4.2.2 TIME AND MANNER OF PAYMENT.
Except as provided hereafter, with respect to any fiscal year and
each calendar month included therein, the Basic Fee and the Incentive Fee
shall each be payable in tentative monthly installments of the respective
amounts hereinafter provided, which tentative monthly installments on
account of such Basic Fee and Incentive Fee for any such calendar month
shall be paid by Hyatt withdrawing the same from the operating accounts at
any time after Hyatt shall furnish to Owner the unaudited financial
statement for such calendar month, pursuant to Section 7.4 hereof.
With respect to each calendar month included in any fiscal year:
(a) The tentative monthly installment on account of the Basic Fee
shall equal four percent (4%) (or such other
percentage as may be then applicable) of the Gross Receipts for the
Cumulative Period in respect of such calendar month, less the aggregate
amount of the tentative monthly installments having theretofore become
payable for such fiscal year on account of such Basic Fee; and
(b) The tentative monthly installment on account of the
Incentive Fee shall equal the applicable percentage of the excess of
Available Cash Flow over the Target Amount for the Cumulative Period in
respect of such calendar month, less the aggregate amount of the tentative
monthly installments having theretofore become payable for such fiscal year
on account of such Incentive Fee. Notwithstanding the foregoing, the
Incentive Fee shall only be paid on a monthly basis to the extent the
Forecasts submitted to Owner pursuant to Section 3.5 indicate that an
Incentive Fee is anticipated to be earned.
If, for any fiscal year, the aggregate amount of the tentative
monthly installments paid to Hyatt on account of the Basic Fee and
Incentive Fee shall be more or less than the Annual Management Fee payable
for such fiscal year based upon the final determination of Gross Receipts
and Available Cash Flow for such fiscal year as reflected in the Certified
Financial Statement for such fiscal year referred to in Section 7.4 hereof,
then, by way of year-end adjustment, within fifteen (15) days after the
delivery of such Certified Financial Statement to Owner, Hyatt shall pay
into the operating accounts the amount of any such overpayment or
withdraw from the operating accounts the amount of any such underpayment.
4.3 REMITTANCE TO OWNER.
Contemporaneously with furnishing the monthly statement for each
calendar month pursuant to Section 7.4 hereof, Hyatt shall remit to Owner
out of the operating accounts an amount (the "Owner's Remittance Amount")
by which the total funds then in the operating accounts as of the date of
distribution exceed $300,000 (said amount to be adjusted on an annual basis
by increases in CPI from the date hereof). At such time Hyatt, if Owner
shall so request, shall also provide Owner with Hyatt's good faith estimate
of the approximate amount of the next monthly distribution of Owner's
Remittance Amount. Hyatt shall not be deemed to have made any
representation, warranty or covenant with respect to its estimate of the
amount of funds to be available for distribution to Owner, nor shall Hyatt
be liable to Owner (or deemed in breach hereunder) if the actual amount
available for distribution is materially more or less than the estimated
amount. In no event shall Hyatt be required to make a distribution of
Owner's Remittance Amount which would reduce the balance in the operating
accounts below $300,000 (as adjusted). However, if Hyatt shall determine
it is unable to distribute all amounts in excess of $300,000 (as adjusted)
on any distribution date, it may retain additional amounts if it shall
provide to Owner a written explanation, in reasonable detail, as to the
reasons for such lesser distribution and Owner shall approve such
retention, which
approval shall not be unreasonably withhold. (Notwithstanding the
foregoing, during the initial twelve months of the Term, Hyatt shall be
obligated to distribute on a monthly basis all funds in the operating
accounts except those which Hyatt reasonably determines shall be required
to operate the Hotel in accordance with the terms and conditions of this
Agreement, and Owner's approval shall not be required if the amount of such
distribution is less than the amount of the excess over $300,000 of the
funds in the operating accounts.) Each remittance shall be paid to Owner
at Owner's address then in effect hereunder for receipt of notices
hereunder by Owner, or at such other place as Owner may, from time to time,
designate in a notice to Hyatt.
4.4 SUPPLEMENTAL PAYMENT.
In addition to the Owner's Remittance Amount to be paid by Hyatt
under Section 4.3, Hyatt shall deposit, in respect of each calendar month
during the Term as a supplemental payment to Owner, the amount specified in
Section 5.4(a) hereof in respect of such calendar month and payable under
Section 5.4 into the Fund for Replacements of and Additions to Furnishings
and Equipment referred to therein, such amount to be deposited by Hyatt
into such Fund for the account of Owner.
SECTION 5. DETERMINATION OF AVAILABLE CASH FLOW AND GROSS RECEIPTS.
5.1 BOOKS AND RECORDS.
Hyatt shall keep full and adequate books of account and other records
reflecting the results of the operation of the Hotel. Such books and
records shall, at all times, be kept in all material respects, in
accordance with the then latest edition of the Uniform System of Accounts
for Hotels (the "Uniform System"), as adopted by the American Hotel
Association, except as otherwise specified in this Agreement.
5.2 "AVAILABLE CASH FLOW" DEFINED.
There is attached hereto as Exhibit B, and hereby made a part hereof,
a copy of page 12 of the Uniform System, Sixth Revised Edition (the "Sixed
Edition"), showing the items of income and expense which are taken into
account in determining "Gross Operating Profit."
The "Available Cash Flow" derived from the Hotel for any period shall
mean the Gross Operating Profit of the Hotel for such period, determined in
accordance with the Sixth Edition, without regard to any supplements or
amendments thereto heretofore or hereafter adopted, less deductions for the
following amounts (but only to the extent that such amounts are not
otherwise deducted under the Sixth Edition in computing Gross Operating
Profit):
(a) An amount equal to the costs incurred during such period
in replacing, or adding to, the Operating Equipment;
(b) An amount equal to the aggregate deductions made under
Section 5.4(a) for such period;
(c) The Hotel's pro rata share of Allocable Chain Expense for
such period, in accordance with Section 7.2;
(d) The cost of insurance maintained in accordance with
Section 8.2 and properly allocable to such period;
(e) All real and personal property taxes referred to in
Section 7.6 and properly allocable to such period;
(f) All costs and expenses incurred during such period in
respect of items described in Section 6.1 and 6.2 hereof;
(g) The amount of rent and other amounts payable during such
period to MPA pursuant to the terms of the Ground Lease;
(h) The amount of Basic Fees payable during such period;
(i) The amount of leasing and rental costs with respect to
telephones, televisions, computers, cash register systems, mini-bars and
hotel vans (deducted solely for purposes of computation of Hyatt's
Incentive Fee and not for purposes of Section 25 hereof) which amounts
shall not be charged against the Fund established pursuant to Section 5.4;
provided, however, that any such amounts which would not otherwise be
deductible under the Uniform System and which exceed $37,500 per annum
shall not be so deducted unless they relate to mini-bars and hotel vans;
(j) All other amounts deductible in respect of such period
under the terms of this Agreement.
Notwithstanding any of the foregoing, the actual cost of leasing or
renting or other similar charges incurred after the Opening Date for the
replacement of or addition to Furnishings and Equipment shall not (except
as expressly provided in sub-paragraph (i) above) be deductions in
determining Available Cash Flow. such payments or costs incurred after the
Opening Date shall be paid from the Fund for Replacement of and Additions
to Furnishings and Equipment or shall otherwise be paid by Owner, as agreed
upon between Hyatt and Owner. Furthermore, the expense attributable to any
item of revenue which is excluded in the calculation of Gross Receipts
shall not be deducted in the calculation of Available Cash Flow.
5.3 DEFINITION OF GROSS RECEIPTS.
"Gross Receipts" during any period shall mean all revenues and income
of any kind properly accrued during such period and derived, directly or
indirectly, from the Hotel during such period including, without
limitation, all revenues derived from the sale during such period of rooms
and food and beverages (without taking into account any costs incurred in
respect of such sales) and all rents or fees payable by subtenants and
concessionaires in respect of such period (but not the gross receipts of
subtenants or concessionaires) provided that the net proceeds (after
deduction of the expenses of adjustment and collection) of use and
occupancy or other similar insurance in respect of the Hotel shall be
included only to the extent actually received during such period, as well
as all of the other items listed under "Departmental Profit (Loss)" on
Exhibit B hereto. There shall be excluded in determining Gross Receipts
for any period (i) any sales or other excise taxes required by law to be
collected from customers of the Hotel and remitted to the appropriate
taxing authorities, (ii) ninety percent (90%) of any parking revenues
collected by the Hotel or other revenues collected for payment to third
parties as may be mutually agreed, such as security services
reimbursements, or (iii) any interest earned on funds held in the operating
accounts when not required (a) for the operation of the Hotel or (b) to be
paid to Owner as Owner's Remittances.
5.4 FUND FOR REPLACEMENT OF AND ADDITIONS TO FURNISHINGS AND
EQUIPMENT.
(a) During each fiscal year Hyatt shall deposit, for each calendar
month included in such fiscal year, an amount equal to two percent (2%)
until the end of the second fiscal year, three percent (3%) until the end
of the fourth fiscal year, four percent (4%) until the end of the
fourteenth fiscal year, and five percent (5%) thereafter, of the Gross
Receipts for such calendar month into a fund to be entitled "Fund for
Replacement of and Additions to Furnishings and Equipment," which Fund
shall be maintained on deposit by Hyatt in trust for Owner in an interest-
bearing bank account. The monies in such Fund shall be the property of
Owner. Interest earned during any period from the amounts in such Fund
shall be excluded from the Gross Receipts for such period and in
computing Available Cash Flow for such period and shall remain part of such
Fund. To the extent that Hyatt shall be required to pay any income taxes
on such interest as a fiduciary, the same shall be payable out of such
Fund. In addition to such payments into such Fund, all proceeds from the
sale of Furnishings and Equipment no longer needed for the operation of the
Hotel shall also be paid into such Fund. Hyatt shall be entitled to
withdraw from such Fund any amounts required to make contributions to the
cost of replacements of, and additions to, the Furnishings and Equipment
reasonably deemed by Hyatt to be necessary or desirable, and the items of
Furnishings and Equipment so replaced or added shall be and become,
forthwith upon acquisition and installation and without further act or
action, the property of Owner and part of the Hotel. All such replacements
and additions may be purchased by Hyatt at competitive prices from
Rosemont. Any amounts remaining in such Fund at the termination or
expiration of the Term shall be returned by Hyatt to Owner.
(b) Hyatt shall not, without the approval of Owner, expend any
monies for replacements of, or additions to, the Furnishings and Equipment
in excess of the amount then existing in the Fund and, notwithstanding
anything else to the contrary in this Agreement contained, Hyatt's
obligations with respect to additions to, or replacements of, Furnishings
and Equipment shall be excused to the extent that the amount in such Fund
is inadequate to meet such obligations.
(c) Anything in this Agreement to the contrary notwithstanding,
Owner shall be obligated to make sufficient funds available to Hyatt so
that the Hotel can be maintained at all times during the Term in accordance
with the first-class hotel standard. In the event Owner makes funds
available to Hyatt pursuant to this sub-section (i.e., to the extent the
Fund is insufficient therefor) such sums ("Excess FFE Costs") shall be
deducted in the year paid in the calculation of Available Cash Flow for
purposes of determining the amount of Hyatt's Incentive Fee, but shall not
be deducted in the calculation of Available Cash Flow for purposes of
Section 25 hereof.
SECTION 6. REPAIRS AND CHANGES; LEGAL REQUIREMENTS.
6.1 REPAIRS AND MAINTENANCE.
Except to the extent prevented by causes beyond its reasonable
control (including Force Majeure Causes and the unavailability of funds
from Owner), Hyatt shall, throughout the Term, take good care of the Hotel
(other than such portions thereof as are leased to tenants who undertake a
duty of repair and maintenance) and maintain the same in good order and
condition and make all repairs thereto as may be necessary to maintain the
first-class hotel standard. Provided, however, that Hyatt's
responsibilities, as hereinabove stated in this Section, shall not include
any matters relating to the structural integrity of the Hotel, any matters
arising under any Environmental Laws (as defined in Section 9(b)), or other
matters relating to defects in design,
materials or workmanship in the construction of the Improvements (other
than alterations or additions made by Hyatt pursuant to Section 6.3) which
shall be the responsibility of Owner throughout the term of this Agreement.
6.2 COMPLIANCE WITH LEGAL REQUIREMENTS.
Except as herein limited or excused by the provisions of Section
3.1(d) hereof, Hyatt shall, throughout the Term, comply with all applicable
requirements (the "Legal Requirements") of which Hyatt has knowledge under
all laws, ordinances, orders, rules and regulations of governmental
authorities having jurisdiction over the Hotel and Hyatt may, at its
option, defend any actions, suits or other proceedings alleging non-
compliance. Hyatt may, but only after approval by Owner (which approval
shall not be unreasonably withheld), contest, by appropriate legal
proceedings conducted in good faith, in the name of Hyatt or Owner, or
both, the validity or application of any Legal Requirements. If Owner
shall approve any such contest, Owner shall execute and deliver any
appropriate documents which may be necessary or proper to permit Hyatt to
prosecute such contest. Owner may, by notice to Hyatt, direct Hyatt to
contest, or Owner may contest directly, any Legal Requirements which Hyatt
may otherwise desire not to contest.
Hyatt agrees to comply with the provisions of the so-called "Hilton
Estoppel Certificate" dated June 16, 1988, as in effect as of the date
hereof, and of the Ground Lease, to the extent such agreements and
instruments relate to restrictions or conditions of operation of the Hotel,
and any expense of compliance
shall be deemed an ordinary operating expense of the Hotel. This sentence
shall not create any direct right of enforcement against Hyatt (under any
third party beneficiary theory or otherwise) by any party to such
instrument or agreement. In the event Owner shall enter into a new ground
lease with the MPA with respect to the Site, Hyatt shall have the right to
approve any material changes in the obligations of Hyatt hereunder
contained in said ground lease (which approval shall not be unreasonably
withheld) and upon such approval, said instrument shall be deemed the
Ground Lease hereunder.
In connection with the operation of the Hotel, Hyatt shall exercise
best efforts to achieve a workforce consisting of not less than twenty
percent (20%) "Minority" employees (as hereinafter defined) in each job
category. For purposes of this Section "Minority" employee shall mean a
person with permanent residence in the United States who is Alaskan Native,
Asian (including the subcontinent of India), Black, Cape Verdean, North
American Indian, Pacific Island or Western Hemisphere Hispanic, as further
defined hereinafter.
CATEGORY DEFINITION
North American Indian or
Alaskan Native All persons having origins in any of
the original peoples of North American, and who maintained cultural
identification through tribal affiliations or community recognition.
Black All persons having origins in any of
the Black racial groups of Africa.
Asian or Pacific Islander All persons having origins in any of
the original peoples of the Far East, Southeast Asia, the Indian
Subcontinent, or the Pacific Islands. This area includes, for example,
China, India, Japan, Korea, the Philippine Islands and Samoa.
Western Hemisphere
Hispanic All persons of Mexican, Puerto Rican,
Cuban, Central or South American origin.
Cape Verdean All persons having origins in the Cape
Verde Islands.
To the extent feasible and consistent with law, the Hotel's workforce
shall also be structured to recognize preference to residents of
communities impacted by the operation of the airport, to include East
Boston, Chelsea, and Winthrop, Massachusetts. In accordance with the
foregoing, Hyatt agrees to engage in the recruitment and training of
personnel in a manner determined by Hyatt to be appropriate to achieve the
best efforts goals of this paragraph.
6.3 ALTERATIONS AND ADDITIONS.
Except in order to comply with the Legal Requirements and except as
hereinafter provided, Hyatt shall make no alterations, additions or
improvements in or to the Improvements without the approval of Owner (which
approval may be arbitrarily withheld). Notwithstanding the preceding
sentence, (i) in the event any alterations, additions or improvements,
structural or non-structural, shall be required in order that the Building
be in compliance with applicable Legal Requirements, the same shall be
the responsibility of Owner, and (ii) Hyatt shall have the right (without
obtaining the approval of Owner, except as set forth in Section 3.5(d)),
from time to time during the Term, to make voluntary alterations, additions
or improvements in or to the Improvements (which shall become part thereof
for the purposes of this Agreement) in order to improve the operation of
the Hotel, provided that the aggregate amount which may be incurred in
respect thereof during any fiscal year shall not exceed ten percent (10%)
of the aggregate amount deductible under Section 5.4 for each of the
calendar months included in such fiscal year.
SECTION 7. GENERAL COVENANTS OF HYATT AND OWNER.
7.1 WORKING CAPITAL.
Except as otherwise in this Agreement specifically provided, Owner
shall, at all times during the Term, cause sufficient working capital funds
to be on hand in the operating accounts to assure the timely payment of all
current liabilities of the Hotel (including Hyatt's fees and the
installments thereof payable under Section 4.2 hereof) and all other items
entering into the calculation of Available Cash Flow (except for those
items for which Hyatt is not responsible for making payment under Section
3.3 or otherwise), the uninterrupted and efficient operation of the Hotel
at all times during the Term in accordance with the first-class hotel
standard, and the performance by Hyatt of its other obligations hereunder.
To the extent that additional funds are required such funds shall be
provided by Owner within sixty (60)
days after Hyatt has given Owner notice of such requirement. On the
commencement of the Term, Owner shall have adequate funds in the operating
accounts and there shall be on hand all necessary inventories of food,
beverages and operating supplies; further, Owner shall have met all
applicable Legal Requirements including, without limitation, the
procurement of all liquor and other licenses required to meet such Legal
Requirements.
7.2 CHAIN SERVICES.
Hyatt shall provide, or shall cause its affiliate to provide, in
connection with the operation and for the benefit of the Hotel, those group
benefits, services and facilities (hereinafter referred to collectively as
"Chain Services") generally made available by Hyatt from time to time
during the Term to hotels (which term, as used herein, does not include
Hyatt Lodges or any hotel not operated under a name which includes the word
"Hyatt") operated by Hyatt or its affiliates. Chain Services presently
consists of (i) convention, business and sales promotion services
(including the maintenance and staffing of Hyatt's home office sales force
and of regional sales offices in various parts of the United States and the
world), (ii) advertising, publicity and public relations services, (iii)
food and beverage, personnel and other operational departmental supervision
and control services, (iv) centralized reservations services currently
located in Omaha, Nebraska, and (v) the making available of qualified
personnel through the Hyatt employee training program. Neither Hyatt nor
any of its affiliates shall charge or receive any profit
in respect of any such Chain Services. Hyatt shall, however, be entitled
to charge the operation of the Hotel and to be reimbursed for the Hotel's
pro rata share of "Allocable Chain Expense." "Chain Expense" for any
period shall include all costs incurred during such period by Hyatt or by
any of its affiliates in respect of Chain Services other than the costs of
food and beverage, personnel and other operational departmental supervision
and control services. "Allocable Chain Expense" for any period shall mean
all Chain Expense incurred during such period, reduced by any amounts which
Hyatt or any of its affiliates shall be entitled to be paid in respect of
Chain Services furnished during such period to hotels which are situated
outside of the United States (whether or not opened to the public) or which
are situated in the United States but are not opened to the public (for the
reason that they are under construction or are otherwise being prepared for
opening). The Hotel's pro rata share of Allocable Chain Expense for any
period shall bear the same ratio of the Allocable Chain Expense for such
period as the number of guest rooms in the Building bears to the average
number of guest rooms in all hotels in the United States opened to the
public and operated during such period by Hyatt or its affiliates.
7.3 RIGHT OF INSPECTION AND REVIEW
Owner and its duly authorized agents have the right to enter upon any
part of the Hotel at all reasonable times during the Term for any purpose,
including, without limitation, for the purpose of examining or inspecting
the Hotel or examining or making
extracts form the books and records of the Hotel operation, or for any
other purpose which Owner, in its discretion, shall deem necessary or
advisable, but the same shall be done in a manner reasonably fashioned to
minimize interference and disruption of the Hotel's operations and to
permit the discharge by Hotel personnel of their normal duties.
7.4 FINANCIAL REPORTS.
Hyatt shall deliver to Owner, within thirty (30) days after the end
of each calendar month, an unaudited financial statement prepared from the
books of account maintained by Hyatt and containing (i) a statement of
current assets and current liabilities of the Hotel as of the end of such
calendar month, (ii) a profit and loss statement showing the results of
operation of the Hotel for such calendar month and for the Cumulative
Period in respect of such calendar month and (iii) a statement of the Gross
Receipts for such calendar month and such Cumulative Period. Within ninety
(90) days after the end of such fiscal year Hyatt shall deliver to Owner a
financial statement for such fiscal year (herein referred to as the
"Certified Financial Statement"), containing a statement of the current
assets and current liabilities of the Hotel as of the end of such fiscal
year, and a profit and loss statement showing the results of operation of
the Hotel (including store rentals) for such fiscal year, with an opinion
thereon after an audit by a duly licensed independent certified public
accounting firm retained by Hyatt and approved by Owner. (Owner hereby
gives approval to the firm of Laventhol &
Xxxxxxx if such firm is properly licensed to make such audit and give such
opinion.) Such Certified Financial Statement shall set forth the Gross
Receipts, the Available Cash Flow and the Annual Management Fee (broken
down between the Basic Fee and the Incentive Fee) for such fiscal year.
The cost of such audit in respect of such Certified Financial Statement for
a fiscal year shall be charged as an expense of the operation of the Hotel
for the succeeding fiscal year. If the opinion of such independent
certified public accounting firm with respect to the matters set forth in
such Certified Financial Statement for a fiscal year shall be an
unqualified opinion, then such Certified Financial Statement shall be
conclusive upon the parties hereto with respect to such matters and shall
be deemed to be a final determination of the Gross Receipts, the Available
Cash Flow and the Annual Management Fee for such fiscal year, unless either
party (the "Contesting Party") shall deliver notice to the other party (the
"Non-Contesting Party") contesting such statement within a period of one
year from the date of delivery of the statement. Upon receipt of any such
notice the parties shall negotiate in good faith to resolve any such
objection. If such matter remains unresolved sixty (60) days after the
date of notice of objection the Contesting Party shall propose three
independent certified public accounting firms of nationally recognized
standing to resolve the matter and the Non-Contesting Party shall select
one of the three firms proposed, whose decision shall be binding on both
parties. Any fees charged by such accounting firm shall be paid by the
Contesting Party, unless the matter shall result in a net change of more
than 5% from the amount of the Annual Management Fee as stated in the
financial statements delivered pursuant to this Section 7.4, in which case
the fees shall be paid by the Hotel and deducted in the computation of
Available Cash Flow.
7.5 OWNER'S COVENANTS AS TO TITLE.
Owner covenants that the interest of Hyatt under this Agreement shall
not be subject or subordinate to any ground or underlying leases,
mortgages, deeds of trust, security agreements or other encumbrances
affecting the Hotel except those which contain, or are subject to, a non-
disturbance agreement, so-called, to the effect that this Agreement shall
not be subject to forfeiture or termination except in accordance with the
provisions hereof, notwithstanding a default, termination, foreclosure or
exercise of a power of sale under such lease, mortgage, deed of trust,
security agreement or other encumbrance or any obligation secured thereby,
or to any other matters affecting title to the Hotel, except for non-
delinquent real and personal property taxes and such other matters or
encumbrances as may be shown as exceptions to title in that certain
commitment for title insurance dated April 3, 1989, issued by Ticor Title
Insurance, Policy No. 617963, and other matters not materially affecting
the operation of the Hotel by Hyatt. Owner further covenants that, so long
as Hyatt shall not be in default hereunder, Hyatt shall be entitled to
operate the Hotel for the Term, and Owner shall, at no expense to Hyatt,
undertake and prosecute all reasonable and appropriate
actions, judicial or otherwise, required to assure such right of operation
to Hyatt.
Owner agrees that it shall, throughout the Term:
(a) Keep and maintain, or cause to be kept and maintained,
any leases covering real or personal property or other agreements necessary
to the ownership or control of the Hotel, or any part thereof, in full
force and effect and free from material default, and in this connection
Owner shall pay and discharge, or cause to be paid and discharged, any
ground rents or other rental payments or other charges payable by Owner in
respect of the Hotel;
(b) Maintain, or cause to be maintained, in good standing and
free from any material default, any and all mortgages affecting the Hotel
(but no additional rights against Owner are hereby created in favor of any
mortgagee under such mortgage); and
(c) Observe, or cause to be observed, and comply with, or
cause to be complied with, any and all other liens, encumbrances,
covenants, charges, burdens or restrictions pertaining to the Hotel or any
part thereof, none of which shall, however, materially and adversely affect
the operation of the Hotel by Hyatt.
7.6 PAYMENT OF TAXES.
During the Term, Owner shall, prior to delinquency, pay to the
appropriate municipal authorities all real and personal property taxes
assessed against the Hotel (or other payments in
lieu thereof) to the extent that the same are properly allocable to the
Term. Such property taxes or payments for any period which includes the
Opening Date or the date on which the Term shall expire or otherwise
terminate shall be prorated and only the portion of such payments or
property taxes applicable to the Term shall be deductible under Section
5.2(e).
SECTION 8. INSURANCE
8.1 INSURANCE TO BE MAINTAINED PRIOR TO THE COMMENCEMENT OF TERM.
Owner shall, at all times prior to the Opening Date and at no cost to
Hyatt, procure and maintain with responsible and properly licensed
companies (i) public liability and indemnity and property insurance in
respect of the Hotel fully protecting both Owner and Hyatt against loss or
damage arising in connection with the construction, furnishing and
equipping of the Hotel and the pre-opening activities of Hyatt hereunder
and (ii) adequate insurance for the full insurable value of the Hotel
against all risk of direct physical damage, including but not limited to
fire and extended coverage, boiler and machinery, and builder's risk
insurance, and such other risks and perils for which insurance is
customarily provided for hotels of similar character during the period of
construction and completion. Prior to the Opening Date Hyatt shall
maintain workers' compensation insurance (at Owner's sole cost and expense,
which expense shall not be deemed included within the pre-opening budget).
All liability and indemnity
policies evidencing such insurance shall name Hyatt as an additional
insured thereunder by means of the following endorsement:
"Additional Insured Endorsement:
Hyatt Corporation and all affiliated, associated, proprietary,
or subsidiary companies, partnerships, and trusts as they may now exist or
exist hereafter and any firm name, trade name, or style under which they
may operate: EXCEPT Hyatt Medical Enterprises, Inc., Hyatt Management
Corporation and HMC Management Corporation."
8.2 INSURANCE TO BE MAINTAINED DURING TERM.
Owner shall maintain, at all times during the Term, the following
insurance respecting the Hotel in amounts and with responsible and properly
licensed companies as approved by Hyatt (such amounts shall in no event be
less than the amounts required under any mortgage, deed of trust or
security agreement affecting the Hotel):
(a) Public liability insurance for injury to or death of
persons and damage to or loss of property, with endorsements including
coverage for those risks listed in Exhibit C attached hereto and hereby
made a part hereof;
(b) Insurance against all risk of direct physical loss,
including but not limited to, fire and extended coverage including business
interruption, boiler and machinery coverage including use and occupancy,
and such other risks and perils with respect to which insurance is
customarily carried by Hyatt for hotels of similar character; and
(c) Such other insurance as Hyatt shall deem necessary for
protection against claims, liabilities and losses arising from the
operation of the Hotel.
Hyatt shall maintain, at all times during the Term (but at Owner's
sole cost and expense), workers' compensation insurance, including
employers' liability and a broad form "all states" endorsement or similar
insurance as may be required by law, and crime and fidelity insurance
against dishonest acts by employees and others, in amounts and with such
responsible and properly licensed companies as shall be determined by
Hyatt.
All policies evidencing the foregoing insurance shall name Owner as
the principal insured and shall name Hyatt, its directors, officers,
employees and agents and (if required by Owner) any mortgagee of the Hotel
as additional insureds thereunder.
Whenever Owner is about, or proposes, to purchase any insurance
policy or policies required under this Section 8.2, Owner shall invite a
bid from Hyatt (the "Hyatt bid") covering such policy or policies and
prepared by Hyatt's insurance broker or adviser. The Hyatt bid may be
based upon self-insurance (as described in Section 8.5) or providing all or
part of the insurance in question under a blanket policy insuring, in
addition to the Hotel, other hotels operated by Hyatt or its affiliates, in
which event the insurance premiums to be included in the Hyatt bid shall be
those properly allocable to the Hotel, as determined in good
faith by the insurance carrier or carriers involved. Owner shall have no
obligation to accept the Hyatt bid.
8.3 NOTICE OF CANCELLATION OR CHANGE.
All insurance policies required to be carried hereunder shall, to the
extent obtainable, have attached thereto an endorsement that the same shall
not be cancelled or changed without at least thirty (30) days' prior
written notice to all named insureds and additional insureds.
8.4 EVIDENCE OF INSURANCE COVERAGE.
For the purpose of evidencing compliance with the provisions of this
Section 8, Owner shall from time to time furnish to Hyatt certified
duplicate policies of all insurance required to be maintained by Owner
pursuant to this Section 8.
8.5 SELF-INSURANCE.
Owner understands that Hyatt customarily and in the course of
managing the hotels in its chain, self-insures and assumes the risk of
certain losses and liabilities and places certain coverage with an
affiliated insurance carrier. Subject to the next succeeding paragraph,
Owner agrees that Hyatt may, in submitting the Hyatt bid, be a self-insurer
of all or any of the risks described in this Section 8, or may place
coverage with such affiliated carrier, so long as such self-insurance or
coverage is consistent in type and amount with Hyatt's self-insurance or
coverage practices at other hotels, and is satisfactory to Owner's mortgage
lender and any other party which is required, under the terms of any
agreement with Owner, to approve such coverage.
In the event that Hyatt self-insures, it will carry insurance, in
customary amounts, above the self-insured deductibles protecting Owner and
Hyatt. Owner shall be named as an additional insured in said policies.
8.6 WAIVER OF RIGHT OF SUBROGATION.
Whether Owner or Hyatt shall provide the insurance required by this
Section 8, any such policies will provide that the insurer's right of
subrogation shall be waived in favor of the party not providing the
insurance.
SECTION 9. INDEMNIFICATION OF OWNER.
To the extent that Owner shall not be fully covered by insurance,
Hyatt will indemnify Owner and hold it harmless from any damages,
liability, cost, claim or expense, including attorneys' fees, arising out
of or in connection with the operation of the Hotel or Hyatt's operations
other than at the Hotel. The costs of such indemnity shall be borne as
follows:
(a) If the damage, liability, cost, claim or expense is
attributable to Hyatt's gross negligence, willful misconduct, willful
violation of any Legal Requirements or breach of this Agreement (other than
Hyatt's covenant to comply with the Legal Requirements), the cost of such
indemnification shall be borne solely by Hyatt and shall not be paid from
the operating accounts;
(b) If the damage, liability, cost, claim or expense is
attributable to any other reason or cause, the cost of such
indemnification shall be paid by Hyatt out of the operating accounts
and may be charged against the Available Cash Flow.
Hyatt's obligations under this Section 9 shall not include any
losses, expenses or damages arising from any matters relating to the
structural integrity of the Hotel or other matters relating to defects in
design, materials or workmanship in the construction of the Hotel (other
than alterations or additions made by Hyatt pursuant to Section 6.3) or the
existence (prior to the Opening Date) of "hazardous substances" or
"hazardous wastes" as defined in Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42USC Section 9601, et seq., or
The Resource Conservation and Recovery Act, as amended, 42USC Section 6901
et seq., or similar state environmental laws or subsequent federal or state
legislation of a similar nature which may be enacted form time to time
("Environmental Laws"), all of the foregoing being Owner's sole respon-
sibility. Hyatt shall notify Owner of the existence of any violation of
Environmental Laws of which it has actual knowledge and shall, except in
the case of any emergency, not take any remedial action or incur any cost
or expense unless Owner shall after notice fail to commence and proceed
with reasonable diligence to remedy same. Nothing herein, however, shall
be deemed to impose or create an obligation on Hyatt's part to take any
such remedial action. Owner shall provide Hyatt with copies of any and all
reports received by Owner with respect to any such matters. Owner shall
fully indemnify Hyatt from and against any loss, cost, expense or
liability, including attorney's fees arising from any of the foregoing
matters in this grammatical paragraph, which expense of indemnification
shall not be deducted in computing Available Cash Flow. The provisions of
this Section 9 shall
survive the expiration or earlier termination of this Management Agreement.
SECTION 10. DAMAGE TO AND DESTRUCTION OF HOTEL.
10.1 OWNER'S DUTY OF RESTORATION.
If the Hotel, or any portion thereof, shall be damaged or destroyed
at any time or times during the Term by fire or any other casualty Owner,
at no expense or risk to Hyatt, shall (provided the Owner's lenders or MPA,
as the case may be, allows the proceeds of insurance to be used for
restoration) using due diligence and dispatch, repair, rebuild or replace
the same (such repairing, rebuilding or replacing being herein called
"restoration") so that after such restoration the Hotel shall be
substantially the same as prior to such damage or destruction, and all
proceeds of insurance shall be made available to Owner for this purpose;
provided that Hyatt shall have the right to ensure that such proceeds of
insurance shall be applied to such restoration, subject to the rights of
any lender or MPA, its successors or assigns under the terms of any third
party mortgage loan of Owner or the Ground Lease (the relevant provisions
of which are attached hereto as Exhibit D).
10.2 OWNER'S ELECTION NOT TO RESTORE.
Anything in Section 10.1 to the contrary contained notwithstanding,
if in connection with any casualty, the cost of restoring the Hotel shall
equal to exceed (x) twenty-five percent (25%) of the replacement cost
thereof immediately prior to such casualty if such casualty shall be
covered by insurance or (y) ten percent (10%) of such replacement cost if
such casualty shall not be covered by insurance, or (ii) Owner elects to
terminate the
Ground Lease pursuant to the provisions thereof with respect to casualty or
condemnation, then, and in either event, Owner shall have an election
exercisable by notice to Hyatt, given within ninety (90) days from the
occurrence of such casualty, not to restore the Hotel and to terminate this
Agreement; provided, however, if at any time after any termination pursuant
to this Section 10.2, Owner shall elect to rebuild or restore a first-class
hotel on the Site, it shall so notify Hyatt in writing, and Hyatt shall
have the right exercisable by written notice to Owner delivered at any time
within thirty (30) days following receipt of such notice (but shall not be
obligated) to elect to manage and operate the said hotel. In the event
Hyatt elects to exercise its right to manage or restore or rebuild any
hotel on the Site as provided in the proceeding sentence, then,
notwithstanding any previous termination of this Agreement, this Agreement,
and the rights and obligations of the parties hereto, shall continue in
full force and effect with respect to the restored or rebuilt hotel for all
the rest and remainder of the Term (computed from the opening date of the
rebuilt or restored hotel).
SECTION 11. INTEREST ON OVERDUE SUMS.
If either party (the "defaulting party") shall fail to pay, when due,
to the other party (the "non-defaulting party") any sum payable to the
latter hereunder, then the defaulting party shall, without notice to or
demand upon it, be liable to the non-defaulting party for the payment of
such sum together with interest
thereon at the rate of (1) "Prime" plus 1% per annum or (ii) the maximum
rate of interest allowed by law, whichever shall be less, from the date
when such sum shall become due to the date of actual payment. For the
purposes hereof, "Prime" shall mean the rate per annum announced from time
to time by The First National Bank of Chicago as its prime or equivalent
rate of interest.
SECTION 12. EVENTS OF DEFAULT.
The following shall constitute events of default hereunder:
(1) The failure of either party (the "defaulting party") to
pay to the other party (the "non-defaulting party") any sum which may
become due hereunder within thirty (30) days after receipt by the
defaulting party of a notice from the non-defaulting party specifying such
failure; or
(2) The failure by either party (the "defaulting party") to
perform, keep or fulfill any of the terms, covenants, undertakings,
obligations or conditions set forth in this Agreement other than those
referred to in the foregoing paragraph (1), and the continuance of such
failure for a period of thirty (30) days after receipt by the defaulting
party of notice thereof from the other party hereto (the "non-defaulting
party") specifying such failure; or, in the event such failure is of a
nature that it cannot, with due diligence and in good faith, be cured
within thirty (30) days and such defaulting party fails to proceed promptly
and with due
diligence and in good faith to cure the same and thereafter to
prosecute the curing of such failure with due diligence and in good faith
(it being intended that, in connection with a failure not susceptible of
being cured with diligence and in good faith within thirty (30) days, the
time of such defaulting party within which to cure the same shall be
extended for such period as may be necessary for the curing thereof with
due diligence and in good faith).
If an event of default shall occur, the non-defaulting party may give
to the defaulting party notice of intention to terminate the Term after the
expiration of a period of sixty (60) days from the date of such notice and,
upon the expiration of such period, the Term shall expire. Such
termination shall be without prejudice to any right to damages which the
non-defaulting party may have against the defaulting party under applicable
law.
SECTION 13. TRADE NAME.
During the Term that Hotel shall at all times be known and designated
as "Harborside - A Hyatt Conference Center and Hotel", except as may
otherwise be mutually agreed upon by Owner and Hyatt. Hyatt represents and
warrants to Owner that Hyatt has the legal right to use each of the names
"Hyatt" and "Regency" (herein called the "protected names") either alone or
in conjunction with another word or words. Owner acknowledges that each of
the protected names, when used either alone or in conjunction with any
other word or words, is the exclusive property
of Hyatt. Furthermore, Owner agrees that no right or remedy of Owner for
any default of Hyatt hereunder, nor the delivery of possession of the Hotel
to Owner upon the expiration or sooner termination of the Term, nor any
provision of this Agreement, shall confer upon Owner, or any transferee,
assignee or successor of Owner, or any person, firm or corporation claiming
by or through Owner, the right to use either of the protected names, either
alone or in conjunction with any other word or words, in connection with
the use or operation of the Hotel or otherwise (except in accordance with
the express terms of this Agreement), and Owner hereby covenants and agrees
on its own behalf and on behalf of any such transferee, assignee or
successor, not to use any of the protected names, either alone or in
conjunction with any other word or words, in connection with the use or
operation of the Hotel, or otherwise. In the event of any breach of this
covenant by Owner, Hyatt shall be entitled to damages, to relief by
injunction, and to all other available legal rights or remedies, and this
provision shall be deemed to survive the expiration or sooner termination
of the Term.
SECTION 14. SUCCESSORS AND ASSIGNS.
14.1 ASSIGNMENT BY HYATT.
Hyatt shall have the right to assign its rights and obligations under
this Agreement, without the consent of Owner, to any affiliate or to any
assignee who also acquires all, or substantially all, of the assets of
Hyatt and assumes its
obligations, including those hereunder. In such latter event, Hyatt's
liability hereunder shall terminate upon such assignment, but in the event
of such an assignment to an affiliate Hyatt shall continue to be liable
under this Agreement to the same extent as though such assignment had not
been made. Except as hereinabove provided, Hyatt shall not assign its
rights and obligations under this Agreement without the approval of Owner.
In the event that Hyatt shall assign its rights and obligations under this
Agreement to any affiliate (the "assignee affiliate"), as hereinbefore
provided, then the sale by Hyatt or by an affiliate of controlling interest
in such assignee shall constitute an assignment of Hyatt's interest
requiring Owner's approval, as provided in the immediately preceding
sentence, except for a sale which is part of a sale of all, or
substantially all, of the assets of Hyatt to an assignee who assumes its
obligations, including those hereunder (in which case, any contingent
liability of Hyatt hereunder shall terminate upon such sale). A
"controlling interest" in an affiliate refers to shares of capital stock
representing more than fifty percent (50%) of the voting power of such
affiliate.
It is understood and agreed that any approval given by Owner to any
assignment shall not be deemed a waiver of the covenant herein contained
against assignment in any subsequent case. Any assignee who succeeds to
the interest of Hyatt hereunder (or to the interest of any assignee of
Hyatt hereunder) shall be deemed to be Hyatt hereunder for all purposes.
The term "affiliate", as used herein, shall mean a corporation included in
an "affiliated group" as that term is defined in Section 1504(a) of the
Internal Revenue Code as presently in effect and of which Hyatt, or its
direct or indirect parent corporation, is the common parent corporation.
14.2 ASSIGNMENT BY OWNER.
Owner shall have the right to sell, hypothecate or convey the Hotel
or any portion thereof, or to assign or pledge its interest in this
Agreement, without the prior approval of Hyatt; provided that such sale,
conveyance, hypothecation, pledge or assignment shall (i) be to a person or
entity which has the financial ability to perform the obligations of Owner
hereunder and enjoys a reputation for honesty and integrity in business
dealings and is generally held in high esteem in the business community,
and (ii) not be to any person or entity who is in the business of, or who
is controlled by or under common control with any person or entity who is
in the business of hotel management or is a franchisor of hotel management
and related services (not, for these purposes, including any person or
entity which engages solely in hotel ownership or investment). Any sale,
hypothecation, conveyance, pledge assignment not satisfying the aforesaid
criteria shall require Hyatt's approval unless the transaction includes the
pledge of this Agreement for collateral purposes to any mortgage lender
which has satisfied the requirements of Section 7.5 hereof or to MPA, its
successors or assigns, which assignment or pledges do not in either
instance require Hyatt approval. Any approved
assignee shall expressly assume in writing the obligations of Owner
hereunder.
For the purposes of this Agreement, an assignment of this Agreement
shall be deemed to have occurred, if, within any twelve-month period, there
is a transfer of more than ten percent (10%) of the beneficial ownership of
Owner other than by bequests, devise or transfers under laws of intestacy.
Notwithstanding the foregoing, a transfer to any of the following persons
or entities shall not be deemed an assignment for purposes of this Section
14.2: (i) any current partner of Owner and any partner or shareholder in
such partner (the "Existing Owner") (as listed on Schedule A hereto); (ii)
an affiliate of any Existing Owner or any trust for the primary benefit of
such Existing Owner or members of the family of such Existing Owner; or
(iii) any transfer pursuant to certain agreements and any amendments,
modifications or extensions thereof with Xxxxxxxx Properties Limited L.P.
for the benefit of certain trusts currently represented by Xxxxxxx, Xxxxxxx
& Waltch, Inc. wherein the trusts have the right, under certain
circumstances, to become beneficial owners of a majority of limited
partnership interests in Owner and all of the stock of one of Owner's
general partners or to become a 50% partner of Xxxxxxxx Properties Limited
L.P.
14.3 BINDING ON SUCCESSORS.
The terms, provisions, covenants, undertakings, agreements,
obligations and conditions of this Agreement shall be binding upon and
shall inure to the benefit of the successors in
Interest and the assigns of the parties hereto with the same effect as if
mentioned in each instance where the party thereto is named or referred to.
SECTION 15. NOTICES.
All notices to be given hereunder shall be given in writing and shall
be deemed given when delivered by messenger or by the U.S. mails (and, if
mailed, shall be deemed received two (2) business days after the postmarked
date thereof), with postage prepaid, registered or certified, and, if
intended for Owner, delivered or addressed to:
Xxxxx Harborside Associates II
Limited Partnership
c/x Xxxxxxxx Development Associates
Xxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
and
Bowditch & Xxxxx
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxx, Esq.
and if intended for Hyatt, delivered or addressed to:
Hyatt Corporation
Madison Plaza
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Either party hereto may change the address for notices hereunder by such
party giving notice of such change to the other party hereto in the manner
hereinabove provided. If Hyatt is given the name and address of any
mortgagees, it will give copies of all
notices given to Owner to such mortgagees, in the manner set forth in this
Section 16.
SECTION 16. APPROVALS.
If a party shall desire the approval of the other party hereto to any
matter, such party may give notice to such other party that it requests
such approval, specifying in such notice the matter as to which such
approval is requested and reasonable detail respecting such matter. If
such other party shall not respond negatively in writing (any disapproval
shall contain the reasons for such disapproval and the manner in which
approval may be obtained) to such notice within fourteen (14) days after
receipt thereof, such other party shall be deemed to have approved the
matter referred to in such notice.
SECTION 17. FURTHER INSTRUMENTS.
Each party hereto shall execute and deliver all such appropriate
supplemental agreements and other instruments (including estoppel
certificates) and take such other action as may be necessary to make this
Agreement fully and legally effective, binding and enforceable as between
the parties hereto and as against third parties, or as the other party may
reasonably request.
SECTION 18. INDEMNIFICATION OF HYATT.
(a) During the Term and upon termination of this Agreement, whether
by lapse of time or otherwise, Owner shall indemnify and hold harmless
Hyatt and its directors, officers, employees and agents from and against
any and all liability, loss, damages, costs and expenses ("Liabilities")
arising out of, or incurred in connection with the management and operation
of the Hotel, except those caused by the gross negligence, willful
misconduct or willful violations of Legal Requirements by Hyatt or its
employees or agents occurring during the Term.
(b) With regard to Liabilities arising out of, or relating to, the
provisions of the Employee Retirement Income Security Act of 1974 and/or
the Multi-Employer Pension Plan Amendments Act of 1980 (MEPPA) or the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), Owner shall
indemnify and hold harmless Hyatt and its directors, officers, employees
and agents from and against (i) any withdrawal liability (as described in
Section 4201 of MEPPA) incurred in connection with the discontinuance of
contributions to any Multi-Employer Pension Plan to which Hyatt may make
contributions on behalf of persons employed at the Hotel pursuant to the
provisions of an applicable collective bargaining agreement, but only to
the extent that such withdrawal liability is attributable to benefits
accrued by employees of Hyatt in respect to services performed on behalf of
the Hotel, (ii) any other Liabilities arising out of, or relating to, any
other funding provisions of said Statutes unless such Liabilities are due
to the
gross negligence or willful misconduct of Hyatt, (iii) any costs, expenses,
liabilities or losses incurred by Hyatt in connection with compliance,
after the date of any expiration or termination of the Management Agreement
of obligations imposed under COBRA in respect of the Hotel, and (iv) any
fines, interest, excise taxes or penalties which may be assessed against
Hyatt in respect of the operation and administration of any employee
benefit plan to the extent attributable to such plans made available to
employees of the Hotel unless such fines, interest, exise taxes or
penalties are due to the gross negligence or willful misconduct of Hyatt.
SECTION 19. APPLICABLE LAW.
This Agreement shall be governed in all respects by the internal laws
of The Commonwealth of Massachusetts.
SECTION 20. PAYMENT OF AMOUNTS DUE TO HYATT.
If, pursuant to the terms of this Agreement, the Term and Hyatt's
management of the Hotel are terminated, Owner's obligations to pay to Hyatt
any other amounts due to Hyatt hereunder, shall survive such termination
and shall continue until all such amounts, with interest, are paid in full.
If such termination is the result of condemnation of, or a casualty to the
Hotel, these amounts due to Hyatt shall be paid out of any condemnation
award or insurance proceeds available to Owner after satisfaction of the
holder of any mortgage, except as may be otherwise required by the Ground
Lease.
If the condemnation award or any insurance proceeds are insufficient,
Owner shall be obligated to pay all such amounts to Hyatt from other funds
of Owner.
SECTION 21. SURVIVAL AND CONTINUATION.
Notwithstanding the termination of the Term or Hyatt's management of
the Hotel in accordance with this Agreement, all terms, provisions and
obligations of either party contained herein, which in order to give them
effect and accomplish their intent and purpose need to survive such
termination (e.g., Sections 18 and 20) shall, by agreement between Owner
and Hyatt, survive and continue until they have been fully satisfied or
performed.
SECTION 22. HYATT APPROVALS.
Owner and Hyatt agree that in each instance in this Agreement or
elsewhere wherein Hyatt is required to give its approval of plans,
specifications, budgets and/or financing, no such approval shall imply or
be deemed to constitute an opinion by Hyatt, nor impose upon Hyatt any
responsibility for the design or construction of building elements,
including but not limited to structural integrity or life/safety
requirements or adequacy of budgets and/or financing or the compliance with
Environmental Laws. The scope of Hyatt's review and approval of plans and
specifications is limited solely to the adequacy and relationship of spaces
and esthetics of the Improvements for use as a hotel.
All review and approvals by Hyatt under the terms of the Management
Agreement are for the sole and exclusive benefit of Hyatt and no other
person or party shall have the right to rely on any such reviews or
approvals by Hyatt. Hyatt shall have the absolute right, in its sole
discretion, to waive any such reviews or approvals as a condition to its
performance under the Management Agreement.
SECTION 23. SALE OF SECURITIES.
In the event Owner, or any person controlling Owner, shall, at any
time, sell or offer to sell any securities issued by Owner through the
medium of any prospectus or otherwise, it shall do so only in compliance
with all applicable federal and state securities laws, and shall clearly
disclose to all purchasers and offerees that (i) neither Hyatt nor any of
its officers, directors, agents or employees shall in any way be deemed an
issuer or underwriter of said securities, and that (ii) Hyatt and said
officers, directors, agents and employees have not assumed and shall not
have any liability arising out of or related to the sale or offer of said
securities, including, without limitation, any liability or responsibility
for any financial statements, projections or other financial information
contained in any prospectus or similar written or oral communication.
Hyatt shall have the right to approve any description of Hyatt, or any
description of this Agreement or of Owner's relationship with Hyatt
hereunder, which may be contained in any prospectus or other
communication, and Owner agrees to furnish copies of all such materials to
Hyatt for such purpose not less than twenty (20) days prior to the delivery
thereof to any prospective purchaser. Owner agrees to indemnify, defend
and hold Hyatt, and its officers, directors, agents and employees, free and
harmless of and from any and all liabilities, costs, damages, claims or
expenses arising out of or related to the sale or offer of any securities
of Owner.
SECTION 24. CONFIDENTIALITY; COOPERATION.
All information regarding the Hotel not otherwise in the public
domain by publication or otherwise shall be received and maintained by
Hyatt in a confidential manner and shall not be disclosed to any third
party without the prior written consent of Owner. Owner agrees that it
will hold confidential all information relating to Hyatt and its operating
procedures and policies. Further, Owner agrees that it will not, without
the prior written consent of Hyatt, disclose any of the terms or provisions
of this Agreement, except pursuant to court order or to MPA, potential
lenders or equity investors with whom Owner is engaged in negotiations, or
to Owner's lawyers, accountants or other similar consultants or
professionals on an "as needed" basis. The foregoing obligations shall
survive the termination of the Term of this Agreement by expiration or
otherwise. Notwithstanding the foregoing, nothing contained herein shall
be deemed to prohibit Hyatt from disclosing any such information to
reputable statistical computation firms who agree not to disclose the
identity of the
Hotel with respect to such confidential information or to other persons
when such disclosure is necessary in order to perform Hyatt's obligations
hereunder.
Upon any termination of the Term hereof by expiration or otherwise,
the parties shall cooperate with one another in good faith so as to promote
an orderly transition of the management and operations of the Hotel;
provided, however, that nothing contained herein shall be deemed to vest in
Owner any rights to continue to use the name "Hyatt" or any supplies
incorporating such name or other proprietary materials of Hyatt post-
termination.
SECTION 25. LIMITED RIGHT OF OWNER TO TERMINATE.
25.1 CERTAIN DEFINITIONS.
For proposes of this Section 25 (or any other Section of this
Agreement which makes reference to the definitions contained in this
Section 25), the following terms shall have the meanings indicated below:
"ACHIEVED ROOM FACTOR" shall mean the product of (i) the
average daily occupancy rate for the hotel in question by (ii) the average
daily room rate achieved by such hotel during the fiscal year in question,
as determined (with respect to the Hotel) by Hyatt's regular monthly
statements.
"ACTUAL GOP" shall mean the Gross Operating Profit for the
Hotel determined in accordance with the Sixth
Edition as provided in 5.2 hereof for each fiscal year in question.
"ASSUMED GOP" shall mean the product of Assumed Gross Receipts
and the fraction whose numerator is Actual GOP and whose denominator is
Gross Receipts.
"ASSUMED GROSS RECEIPTS" shall mean the product of (i) Target
Room Factor, (ii) 365 (days in a year), (iii) number of rooms in the Hotel,
and (iv) the fraction whose numerator is Gross Receipts and whose
denominator is the Hotel's actual Room Revenue as shown on the Hotel's
certified financial statements.
"COMPARABLE HOTELS" shall mean the Airport Hilton (Xxxxx
International Airport), the Ramada on Xxxxx 0, Xxxxxx, Xxxxxxxxxxxxx and
the Meridien in Boston or such other hotels as Owner and Hyatt shall
mutually designate during the Term as being comparable to the Hotel, it
being acknowledged by the parties that a hotel would be a "Comparable
Hotel" to the Hotel if it met the first-class hotel standard, was of a
comparable size as to number, size and quality of guest rooms and public
spaces and facilities and finishes and furnishings thereof, and was
operated by a manager in the business of operating first-class hotels;
provided, however, it is acknowledged that no hotel could be a Comparable
Hotel to the Hotel unless it were located in either the Restricted Area or
the Exclusive Area (as defined in Section 26), and was
subject to the same general market conditions as is the Hotel and was
of approximately the same age as the Hotel. In determining which hotels
are most Comparable Hotels to the Hotel, such factors shall be taken in
account as shall be necessary to effectuate the intended purpose of the
foregoing provisions. In the event the parties shall be unable to mutually
agree as to the identity of the Comparable Hotels from time to time, such
dispute shall be resolved by the Information Source, taking into account
the foregoing factors.
"GOP DEFICIENCY" shall mean "Assumed GOP" less the Actual GOP
for each fiscal year in question.
"INFORMATION SOURCE" shall mean any one of Laventhol & Xxxxxxx,
Xxxxxxx Xxxx & Forester, Xxxxxxx Xxxxxxxxx & Co., Xxxxx Xxxxxx & Co., as
Owner shall choose (and upon choosing, Owner shall notify Hyatt) or any
other hotel consulting group or firm of that caliber which is mutually
acceptable to Hyatt and Owner.
"TARGET ROOM FACTOR" shall be 95% of the weighted average (by
number of rooms) of the Achieved Room Factor for each of the Comparable
Hotels.
25.2 TERMINATION RIGHT.
Owner will have the right to terminate this Agreement if for any two
(2) consecutive fiscal years, the first of which shall be not earlier than
the sixth (6th) fiscal year following the Opening Date, (i) the Achieved
Room Factor for the Hotel for each
such two (2) consecutive fiscal years is less than the Target Room Factor
in each of those years, and (ii) Available Cash Flow (determined for
purposes of this Section 25 without deduction of (i) lease and rental
charges referred to in the last paragraph of Section 5.2 hereof of (ii)
Excess FF&E Costs) for each of such two (2) consecutive fiscal years shall
be less than the Target Amount. Any fiscal year in which Owner has failed
to approve Hyatt's Marketing Plan not later than ninety (90) days after
commencement of such fiscal year shall be deemed a year in which actual
Achieved Room Factor for the Hotel was equal to the Target Room Factor.
25.3 REQUEST FOR DETERMINATION.
Within ninety (90) days after the end of the seventh (7th) fiscal
year, and each fiscal year thereafter, Hyatt shall deliver to Owner
financial reports in accordance with Section 7 of this Agreement which will
be used as a basis for the application of this Section. Owner shall have a
forty-five (45) day period following the delivery of the financial
statements in which to request, by notice to Hyatt (the "Request Notice"),
a determination of the Achieved Room Factor and the Target Room Factor for
the Comparable Hotels if the Available Cash Flow (as stated in the
financial reports delivered pursuant to said Section 7) was less than the
Target Amount for the two (2) immediately preceding consecutive fiscal
years. If the Request Notice is not delivered within forty-five (45) days
such right to request a determination and to terminate shall expire until
the same conditions occur in two (2) consecutive fiscal years, the first of
which years may
include such immediately preceding year for which the Request Notice was
not delivered. Any fiscal year in which the operation of the Hotel was
materially and adversely affected by one or more Force Majeure Causes (it
being conclusively deemed to be a material effect if more than 20% of the
Hotel is not usable for more than thirty (30) days as a result of one or
more Force Majeure Causes) shall for the purpose of this Section 25 be
deemed a year in which Available Cash Flow equalled the Target Amount.
After receipt of a Request Notice from Owner, Owner shall notify the
selected Information Source which shall then proceed to determine the
Achieved Room Factor and the Target Room Factor for the Comparable Hotels,
all in accordance with the provisions hereof and shall report the results
thereof to Owner and Hyatt simultaneously. All costs and expenses incurred
in connection with such determination shall be deemed a Hotel expense and
paid from the operating accounts. Absent fraud or manifest error, the
decision of the Information Source as to such matters shall be binding and
conclusive on Hyatt and Owner.
If Owner shall send a Request Notice on a timely basis, it shall,
upon receipt of the report from the Information Source, have the right, if
the conditions set forth above in the first grammatical paragraph of
subsection 25.2 shall have been satisfied, to give written notice (a
"Termination Notice") to Hyatt of its irrevocable intent to terminate this
Agreement upon not less than 60 days notice. If such Termination Notice is
not received by Hyatt within sixty (60) days after receipt of the report
from the
Information Source, Owner's right to terminate the Agreement pursuant to
this Section shall lapse until the same conditions occur in two subsequent
consecutive fiscal years, the first of which years may include the
immediately preceding fiscal year for which the Termination Notice was not
so received.
25.4 HYATT CURE LOANS.
Following receipt of Owner's Termination Notice, Hyatt shall have the
right to "cure" such deficiency and extinguish Owner's right of termination
for such two (2) consecutive fiscal years by advancing to the Owner in the
form of a loan (on or before the sixtieth (60th) day following receipt of
the Termination Notice) an amount (the "Hyatt Cure Loan") equal to the GOP
Deficiency for either of the two (2) fiscal years in question. An example
of the calculation of GOP Deficiency is set forth in Schedule B hereto. If
Hyatt has so "cured" such deficiency, the year which has been cured shall,
for all purposes under this Section 25, be deemed a year in which Achieved
Room Factor for the Hotel was equal to the Target Room Factor.
Hyatt Cure Loans shall accrue interest on an annual compounded basis
equal to Prime and such interest and principal shall be payable (first as
to interest and then as to principal) out of a percentage (as determined in
the next sentence) of Owner's share of Available Cash Flow, in any fiscal
year in which Available Cash Flow exceeds the Target Amount, and, if not
sooner paid shall, at the option of Hyatt, become immediately due and
payable as provided in Section 25.5. The percentage of Owner's share of
Available Cash Flow which shall be utilized for payment of Hyatt Cure Loans
(with interest) shall equal the percentage of the aggregate GOP Deficiency
for all fiscal years in question "cured" by Hyatt.
Hyatt's right to extinguish Owner's termination rights hereunder by
advancement of Hyatt Cure Loans shall be exercisable on only two (2)
occasions. Thereafter, Hyatt shall be entitled to extinguish Owner's
termination rights hereunder only by contributing to Owner the amount of
the GOP Deficiency for either of the two (2) consecutive fiscal years in
question. Hyatt shall have no right to repayment of any such contribution,
nor shall any such contribution entitle Hyatt to any equity interest in
Owner. However, any year as to which such contribution is made shall, for
all purposes under this Section 25, be deemed a year in which the Achieved
Room Factor for the Hotel was equal to the Target Room Factor.
25.5 IMMEDIATE PAYMENT OF ALL HYATT CURE LOANS.
The Hyatt Cure Loans, together with accrued interest thereon, and all
other amounts due to Hyatt hereunder shall, at the option of Hyatt, become
immediately due and payable in full upon the following:
(a) either (i) within one hundred twenty (120) days if Hyatt
is the terminating party or (ii) within sixty (60) days if Owner is the
terminating party, after notice of any impending termination or
cancellation of this Agreement (as distinguished from the expiration of the
Term hereof in the
ordinary course in which case all such payments shall be due
immediately) upon exercise by a party of a right of termination herein
provided or otherwise, regardless of cause or reason; provided, however,
that payment thereof not less than thirty (30) days prior to the effective
date of termination shall be a condition precedent to any termination of
this Agreement by Owner;
(b) a default by Owner under any mortgage resulting in the
acceleration of the mortgage debt or the commencement of any proceedings by
mortgagee to foreclose upon the Hotel;
(c) a default under any ground lease affecting the Hotel
which results in the ground lessor's commencing any proceedings to
terminate the ground lease and take possession of the Hotel;
(d) upon any sale, transfer, assignment or conveyance by the
Owner (or other person specified below) of (i) any of its interest in the
Management Agreement (except for collateral assignments resulting from
mortgage financing of the Hotel approved by Hyatt under Section 1.9 hereof
and subsequent refinancings thereof from time to time approved by Hyatt,
subject to the provisions of Section 25.5(f) below), or a collateral
assignment to MPA, (ii) all or any part of the Hotel (excluding the sale of
items of FFE made in the normal course of adding to or replacing FFE) in
any manner whatsoever, voluntary or involuntary, to a third party, except
to a mortgage lender as set forth above, or (iii) the interest
of any individual principal of Owner or the controlling interest in
the stock of any corporate principal of Owner (including any partner or
other entity comprising Owner), exclusive of transfers between the current
partners of Owner of any equity interest in Owner or transfers by bequests,
devise or transfers under laws of intestacy, or transfers which do not, in
the aggregate, (A) exceed 25% of the equity interests in Owner or (B)
result in a change of control of Owner (unless such transfers are between
the current partners of Owner and their immediate descendants or trusts for
the benefit of such persons or are otherwise not deemed to constitute an
"assignment" by reason of the provisions of the second grammatical
paragraph of Section 14.2 hereof;
(e) condemnation of or casualty to the Hotel involving losses
in excess of $250,000 which results in insurance or condemnation proceeds
being used for purposes other than repair or reconstruction of the Hotel or
to pay Hotel operating expenses and establish reasonable operating
reserves, and only to the extent of such excess proceeds; or
(f) a refinancing of the Hotel in which loan proceeds are
used for any purpose other than the payment of existing debt relating to
the Hotel or making improvements to the Hotel or replacing or upgrading FFE
in the Hotel, or to pay Hotel operating expenses and establish reasonable
operating reserves, and only to the extent of such excess proceeds.
25.6 EFFECTIVE DATE OF TERMINATION.
If Owner terminates in accordance with the provisions of this Section
25, the Term of the Agreement and Hyatt's management of the Hotel shall
terminate after the later to occur of the following events:
(a) the expiration of sixty (60) days following Owner's
delivery of a Termination Notice if Hyatt has not exercised its cure rights
as provided above; or
(b) thirty (30) days following the payment in full to Hyatt
of all Hyatt Cure Loans, with accrued interest, and any and all other
amounts due Hyatt under the terms of this Agreement.
SECTION 26. RESTRICTIVE COVENANT.
For purposes of this Section 27, the following terms shall have the
following meaning:
"Exclusive Area" shall mean the areas of Boston known as East
Boston, Revere, Winthrop and Chelsea.
"Restricted Area" shall mean the area indicated in the map
attached hereto as Exhibit E, more specifically described as follows: the
Atlantic Ocean (Dorchester Bay) northerly across Xxxxxxx X. Day Boulevard
to the western side of Summer Street, continuing along Summer Street south
to the eastern side of Dorchester Avenue across the railroad yard to the
southerly side of Xxxxxxxx Street, north on to the western side of Xxxxxxx
Street to the
Xxxxxxx Road Dam Bridge and east along the Xxxxxxx River to the New
Xxxxxxx River Dam, then northerly along the county line between Suffolk and
Middlesex counties to the Mystic River, east along the south side of the
Mystic River to the Boston Harbor. The Restricted Area shall include
Charleston.
"Convention Hotel" shall mean any hotel bearing the "Hyatt" or
"Hyatt Regency" tradenames and (i) containing at least 450 guest room keys
or (ii) containing at least 400 guest room keys and as to which the
projected FFE cost per room (as determined based on guidelines set forth in
Hyatt's internally prepared differentiation and cost allocation documents
dated as of May 1, 1987) (or any subsequent guidelines made available prior
to the Opening Date and which were used in the construction of the Hotel)
is at least equal to the lesser of (A) $40,000, or (B) $27,000 increased
(but not decreased) by a percentage equal to the amount, if any, by which
the CPI as of the date of determination exceeds the CPI as of the end of
the month preceding the date hereof.
A "Hyatt (or Hyatt Regency) Suites Hotel" shall mean any hotel
which contains both the names "Hyatt" and "Suites" in its tradename, the
guest rooms of which are predominately suites, and which Hyatt markets as
an "all-suites" hotel.
A "Park Hyatt Hotel" shall mean a hotel which (i) bears the
name "Park Hyatt" (or such other tradename as shall denote a level of
finish and quality superior to that of a hotel bearing the name "Hyatt" or
"Hyatt Regency"), and (ii) as to which the projected FFE Cost per room (as
determined based on guidelines set forth in Hyatt's most recent internally
prepared differentiation and cost allocation documents) is at least equal
to the lesser of (A) $49,000 or (B) $33,000 increased (but not decreased)
by a percentage equal to the amount, if any, by which the CPI as of the
date of determination exceeds the CPI as of the end of the month preceding
the date hereof.
(a) Neither Hyatt nor its affiliates will own, operate or
manage or license or permit to be licensed any hotel containing the
tradename "Hyatt" within the Exclusive Area during the Term hereof.
(b) During the periods set forth below in this subparagraph
(b), neither Hyatt nor its affiliates will license, own, operate or manage
any hotel containing the tradename "Hyatt" within the "Restricted Area",
except as follows:
(i) for the period commencing on the Opening Date and
ending on the seventh (7th) year following the Opening Date (but in no
event later than ten (10) years from the date hereof), neither Hyatt nor
its affiliates will license, own, operate or manage any hotel containing
the tradename "Hyatt", except for one Convention Hotel, one
Park Hyatt Hotel, and one Hyatt (or Hyatt Regency) Suites Hotel;
(ii) for the period commencing immediately after the
expiration of the period described in (i) and continuing for six (6)
additional years Hyatt or its affiliates may own, operate or manage any
hotel permitted under (i) above and any other hotel to be operated or
managed under the tradename "Hyatt" (the "Other Hotel"), provided that,
with respect to such Other Hotel, immediately prior to the execution of the
management agreement pursuant to which Hyatt will operate or manage the
Other Hotel, Hyatt shall reasonably demonstrate that its management of such
hotel will not have a material adverse impact on the financial performance
of the Hotel; provided, further, that the absence of such material adverse
impact shall be conclusively demonstrated by a market study prepared by any
firm which would qualify as an Information Source which concludes that, for
the third year of operation following the projected opening of the Other
Hotel, either (i) (A) the projected occupancy rate of the Hotel shall not
be more than 3.75 percentage points lower than the occupancies, and (B) the
projected average daily rates of the Hotel shall not be more than 3.75%
lower than the average daily rates, or (ii) the projected Rooms Revenue for
the Hotel shall not be more then 7% lower
than the Rooms Revenue, in each case as projected for the Hotel
should such Other Hotel not be managed by Hyatt, but instead by managed by
another qualified operator.
(c) The aforesaid restrictive covenants shall not limit the
right of Hyatt or any affiliate to (A) engage in the ownership or
management of a hotel, doing business under a name other than Hyatt, in
connection with Hyatt's (or any affiliate's) acquisition of an existing
hotel chain (including for these purposes, acquisitions of a group of hotel
management contracts) doing business in either the Exclusive Area or the
Restricted Area, (B) engage in the ownership, franchising or management of
all suite hotels under the name of Hawthorn Suites, or (C) plan, negotiate
or commence development or construction activities or enter into a
management agreement with respect to any other hotel, or any other similar
activities which occur prior to the opening date of such hotel, it being
acknowledged that the restrictive covenants of this Section 26 shall apply
solely to hotels open to the public.
Furthermore, except to the extent and during the periods
specifically set forth in this Section 26, neither the execution and
delivery of this Agreement, nor any of the provisions hereof, shall be
deemed to limit, restrict, impair or otherwise affect the right of Hyatt,
or any affiliate of Hyatt, to own, manage or operate, or agree to own,
manage or operate, any other real or personal property (or interests
therein), of any kind or nature whatsoever, wherever located.
SECTION 27. FUTURE HOTEL EXPANSION.
In the event Owner shall determine after the Opening Date to build
additional improvements to the Hotel to expand the number of guest rooms,
such additional improvements and guest rooms ("Expansion Space") shall be
deemed included within the definition of the Hotel hereunder. Any such
expansion shall be effected in accordance with plans, specifications,
budgets and financing approved by Hyatt (which approval shall not be
unreasonably withheld), and shall be consistent with the first-class hotel
standard. Hyatt and Owner shall cooperate to assure the minimal risk and
disruption to Hotel operations during the construction of the Expansion
Space and shall also agree as to the terms and conditions of payment to
Hyatt of additional technical assistance service fees in connection with
consulting services rendered by Hyatt with respect to the Expansion Space.
For the period commencing with the date the Expansion Space is open
to the public ("Expansion Opening Date"), and for a period of three (3)
fiscal years thereafter, Hyatt's Basic Fee shall be reduced to 3.5% of
Gross Receipts. Furthermore, from and after the Expansion Opening Date the
Target Amount (as defined in Section 4.2.1(b) hereof) shall be increased by
an amount equal to the cost of construction of the Expansion Space (as
hereinafter determined) multiplied by the actual annual interest rate on
the first mortgage loan secured by the Expansion Space (such interest for
the purpose of this calculation to be no less than 10.5% and no greater
than 12.5%). For purposes hereof, the cost of
construction of the Expansion Space shall be defined as hard construction
costs, fees for architects and other similar professionals, cost of
original FF&E, construction period interest and third party financing fees,
legal and accounting fees, pre-opening expenses and initial working
capital. A developer's fee not exceeding 4% of hard construction costs
shall be included in such costs and any other amounts paid to Owner or an
affiliate of Owner shall be excluded from such costs.
Notwithstanding the aforesaid adjustment to the Target Amount, in no
event shall the Annual Management Fee for any fiscal year following the
Expansion Opening Date be less than the greater of (i) the Annual
Management Fee paid to Hyatt during the fiscal year immediately preceding
the date of commencement of construction of the Expansion Space, or (ii)
the Annual Management Fee paid to Hyatt during the fiscal year immediately
preceding the Expansion Opening Date.
Any year during which Expansion Space is under construction and any
year during which the Basic Fee is subject to reduction as provided in this
Section 27, shall for all purposes under Section 25 hereof, be deemed a
year in which the Achieved Room Factor for the Hotel was equal to the
Target Room Factor.
SECTION 28. LIMITATION OF OWNER'S LIABILITY.
Hyatt shall look only to Owner, the Hotel, as the same may from time
to time be encumbered, and the revenues therefrom, including any funds on
deposit at any given time in the operating
accounts, for the payment and performance and observance of any amount,
obligation, indemnity or provision to be paid, performed or observed under
this Agreement, or any covenant or undertaking of Owner hereunder. No
partner of Owner, if Owner is or shall at any time be a partnership, nor
any of their respective heirs, administrators, executors, personal
representatives, successors and assigns, shall have any personal liability
or other personal obligation with respect to any payment, performance or
observance of any amount, obligation or liability to be paid, performed or
observed under this Agreement, and Hyatt agrees not to seek or to obtain a
money judgement against Owner, or against any partner of Owner if Owner is
a partnership, or against any of their respective heirs, administrators,
executors, personal representatives, successors or assigns.
IN WITNESS WHEREOF, Owner and Hyatt have executed this Agreement as
of the day and year first above set forth.
HYATT CORPORATION,
a Delaware corporation
By: [ executed signature ]
------------------------------
XXXXX HARBORSIDE ASSOCIATES II
LIMITED PARTNERSHIP
By: LHA-II, Inc., General Partner
By: /s/ XXXXXXX XXXXXXX
-------------------------
Xxxxxxx Xxxxxxx,
Its President
FIRST AMENDMENT TO MANAGEMENT AGREEMENT
AGREEMENT made this 27th day of June, 1991 by and between Xxxxx
Harborside Associates II Limited Partnership, ("Owner") a Massachusetts
limited partnership having an address c/x Xxxxxxxx Development Associates,
Xxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 and Hyatt Corporation,
("Hyatt") a Delaware corporation having an address of Two Madison Plaza,
000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, XX 00000.
WHEREAS, the parties entered into a Management Agreement (the
"Agreement") dated as of March 15, 1990 pertaining to a proposed hotel
located at the General Xxxxxx Xxxxxxxx Xxxxx International Airport in East
Boston, Massachusetts; and
WHEREAS, the parties wish to amend the Agreement to reflect changes
in the basic fee and term of the Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Section 2(a) of the Agreement shall be amended in its entirety to
read as follows:
"The Original Term of this Agreement shall commence on the Opening
Date provided in Section 1.7(d) and shall terminate on a date which is
thirty years after the date of the initial construction draw by Owner of
construction funds from a construction lender (or draw from the
construction fund established pursuant to the bond indenture in the event
the financing is from the proceeds of revenue bonds), unless this Agreement
shall be sooner terminated as herein provided."
2. Section 2(b) of the Agreement shall be amended by deleting the first
clause of the first sentence ending with "December 30, 2033" prior to the
PROVISO and inserting in its place the following:
"Hyatt shall have the right (amounting to two (2) separate renewal
options) to extend such original term for two (2) successive periods
("renewal terms"), each period consisting of ten fiscal years commencing on
the date after the termination of the initial term of the Agreement or the
prior renewal term, as the case may be,"
3. Section 2(c) shall be amended by deleting in Line 10 the phrase
"December 31, 2033 and the denominator of which is 246." and inserting in
place thereof "the end of the second renewal term and the denominator of
which is 240."
4. Section 4.2.1(a) of the Agreement shall be amended in its entirety to
read as follows:
"For each of the following fiscal years Hyatt shall receive a Basic
Fee equal to the respective percentage of Gross Receipts: for the first
two fiscal years and any period prior thereto (see Section 4.1 for
definition of first fiscal year) three percent (3%); for the third fiscal
year three and one-quarter percent (3.25%); for the fourth and fifth fiscal
years, inclusive, three and one-half percent (3.5%); for the sixth fiscal
year three and three-quarters percent (3.75%); and for the seventh fiscal
year and each fiscal year thereafter four percent (4%)."
5. Section 4.2.2(a) shall be amended as follows: Delete the reference
to "four percent (4%) (or such other percentage as may then be applicable)"
in line 2 and in its place insert "three percent (3%) (or such other
percentage as may then be applicable as provided in section 4.2.1(a)
hereof)."
Except as specifically amended hereby, the Agreement is hereby
ratified and confirmed.
IN WITNESS WHEREOF, Owner and Hyatt have executed this agreement as
of the day and year first above set forth.
HYATT CORPORATION
BY: [ executed signature ]
------------------------------
XXXXX HARBORSIDE ASSOCIATES II
LIMITED PARTNERSHIP
BY: LHA-II, INC., General Partner
BY: /s/ XXXXXXX XXXXXXX
-----------------------
Xxxxxxx Xxxxxxx,
its President
The undersigned, Shawmut Bank, N.A., as Trustee ("Shawmut") and
Massachusetts Port Authority ("MassPort"), as parties respectively to a
certain Subordination, Non-disturbance and Attornment Agreement between
Owner, Hyatt, Shawmut and MassPort dated as of December 15, 1990 and a
Subordination, Non-disturbance and Attornment Agreement between MassPort
and Hyatt dated as of December 15, 1990 (collectively the "Agreements")
hereby consent to the within amendment and agree that on and after the
effective date of this amendment, each respective reference to the
"Management Agreement" in each of the Agreements shall mean and be a
reference to the Management Agreement, as amended by this First Amendment
to Management Agreement. Each of the Agreements is and shall continue to
be in full force and effect and is hereby in all respects ratified and
confirmed.
SHAWMUT BANK, N.A., as Trustee
By: /S/ XXX XXX XXXXXX
----------------------------
Assistant Vice President
Massachusetts Port Authority
BY: /S/ XXXXXX X. X'XXXXX
-----------------------------
Its Secretary-Treasurer
