Exhibit 99.09
CORPORATE SERVICES AGREEMENT
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THIS AGREEMENT (this "Agreement") is made and entered into as of October
___, 1997, by and between CHOICE HOTELS INTERNATIONAL, INC. (to be renamed
Sunburst Hospitality Corporation), a Delaware corporation ("Sunburst"), and
CHOICE HOTELS FRANCHISING, INC. (to be renamed Choice Hotels International,
Inc.), a Delaware corporation ("Choice").
RECITALS
WHEREAS, pursuant to a Distribution Agreement (the "Distribution
Agreement") dated as of October, 1996, Sunburst and Choice agreed to enter into
a corporate services agreement with the terms and conditions set forth herein;
WHEREAS, Choice shall retain the personnel and systems formerly utilized in
the administration of certain services described herein and Sunburst shall
retain the personnel and systems formerly utilized in the administration of
certain other services described herein; and
WHEREAS, each party desires to retain the other as described herein, and
each party desires to render such assistance on an equitable, arms length basis
for a fee.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Sunburst and Choice agree as follows:
1. Definitions. As used in this Agreement, the following capitalized terms
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shall have the meanings indicated unless the context requires otherwise:
"Accounting Period" shall be a one month period.
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"Accounting Systems Support" shall mean data preparation and other
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related accounting procedures required to perform the Choice Functions or
Accounts Payable Services in a timely manner, consistent with current
policies and procedures, and in accordance with generally accepted
accounting principles.
"Accounts Payable Services" shall have the meaning described in
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Exhibit A.
"Additional Consulting Services" shall mean the additional services
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related to the Choice Functions, or any other services which Choice may
provide Sunburst from time to time (on a transitional basis and only where
such services shall not unreasonably interfere
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with Choice's business operations and will not cause Choice to incur
additional expense without reasonable compensation therefor).
"Ancillary Agreements" shall have the meaning described in the
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Distribution Agreement.
"Choice Corporate Services" shall mean Conversion Services; Support
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Services; Computer Services, the Choice Functions, and the Additional
Consulting Services.
"Choice Functions" shall mean Corporate Accounting Support and Property
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Accounting Services for Sunburst's Real Estate Business as listed on
Exhibit A.
"Computer Services"shall mean the Silver Spring Computer Services and
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certain other services listed on Exhibit A.
"Construction Accounting Services" shall have the meaning described on
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Exhibit A.
"Conversion Services" shall mean the initial conversion of Sunburst's
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business data from Choice to Sunburst and archiving Sunburst's business
accounting records for certain periods prior to the Distribution Date to
the extent not already performed prior to the execution of the Distribution
Agreement.
"Corporate Accounting Support" shall have the meaning described on
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Exhibit A.
"Distribution" means the distribution to the holders of Sunburst Common
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Stock all the outstanding shares of Choice Common Stock.
"Distribution Date" means the date determined by the Board of Directors
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of Sunburst as the date on which the Distribution shall be effected.
"Franchising Business" shall mean any business or operation of Sunburst
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or its subsidiaries which is, pursuant to the Distribution Agreement, to be
conducted, following the Distribution, by Choice.
"Fixed Asset Accounting Service" shall mean those services identified
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on Exhibit A.
"Payroll Services" shall mean those payroll services which are provided
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by a third-party vendor.
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"Payroll Support" shall mean the support services needed to maintain
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the Payroll Services, including any employees hired by Sunburst who are
dedicated to Payroll Services.
"PeopleSoft System" shall mean the PeopleSoft hardware and software,
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consisting of four modules: general ledger, accounts payable, purchasing
and asset management.
"Prime Rate" shall be the rate identified from time to time in the New
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York edition of the Wall Street Journal as being the Prime Rate of
interest; should such rate be shown as a spread of rates, then the highest
such rate shall be utilized.
"Property Accounting Services" shall have the meaning described on
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Exhibit A.
"Provider Party" shall mean the party providing the services under this
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Agreement (i.e., Choice with respect to the Choice Corporate Services and
Sunburst with respect to the Accounts Payable Services).
"Real Estate Business" shall mean any business or operation of
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Sunburst or the Real Estate Subsidiaries (as defined in the Distribution
Agreement) which is, pursuant to the Distribution Agreement, to be
conducted, following the Distribution, by Sunburst.
"Requesting Party" means the party requesting services under this
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Agreement (i.e., Choice with respect to the Accounts Payable Services and
Sunburst with respect to the Choice Corporate Services).
"Support Services" shall mean the support services needed to perform
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the Functions and Facilities Services, including but not limited to
Accounting Systems Support, PeopleSoft Systems and Systems Support.
"Systems Support" shall mean the computer hardware and software, but
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excluding the PeopleSoft System, and telecommunications, including data
transmission, data distribution, report generation, and data entry
capabilities needed to process Sunburst's information for each Choice
Function and Facilities Service.
Any capitalized terms defined in the Distribution Agreement and used herein
shall have the meanings ascribed to them in the Distribution Agreement unless
otherwise defined herein.
2. Choice Services. Upon the request of Sunburst, Choice shall provide
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the Choice Corporate Services provided herein:
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(a) Choice shall provide Sunburst with the Choice Corporate Services,
including Support Services for the Choice Functions and Facilities Services
in substantially the same manner as such services are being provided to the
Real Estate Business on the Distribution Date. Choice reserves the right
to change the manner in which it provides Accounting Systems Support and
Systems Support related to the Choice Functions and Facilities Services
described herein, provided such change is consistent with changes made for
Choice's own business units and provided Choice gives Sunburst notice of
such change (the same notice Choice will provide its own businesses).
(b) Choice shall also provide Sunburst with Conversion Services at the
cost of Choice to provide such Services.
(c) Sunburst may request that Choice provide Additional Consulting
Services from time to time. The parties will agree, at the time such
services are requested, upon the scope and final pricing for any Additional
Consulting Services. Whenever the parties deem necessary, Choice will
draft an arrangement letter outlining the scope of Additional Consulting
Services, deliverables, cost, and schedule for Sunburst's acceptance.
(d) Choice agrees to provide such services only if it reasonably believes
the service will not interfere with the conduct of the business of Choice
or pose an unreasonable burden.
3. Sunburst Services. Upon the request of Choice, Sunburst shall provide
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Choice with Accounts Payable Services and/or Fixed Asset Accounting Services in
substantially the same manner as such services are being provided to the
Franchising Business on the Distribution Date. Sunburst reserves the right to
change the manner in which it provides Accounts Payable Services or Fixed Asset
Accounting Services, provided such change is consistent with changes made for
Sunburst's own business units and provided Sunburst gives Choice notice of such
change (the same notice Sunburst will provide its own businesses). To the extent
necessary, Sunburst will provide Payroll Support.
4. Term. The term of this Agreement shall commence on the Distribution
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Date and shall remain in effect through December 31, 1998. Unless terminated
pursuant to the terms hereof, the Agreement shall automatically renew each
Fiscal Year thereafter for the extended term of said Fiscal Year and shall not
extend past the last day of the thirtieth (30th) month following the
Distribution; provided, however, that either party may terminate any services
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provided hereunder by the other party at any time for any reason or no reason
upon sixty (60) days' prior written notice to the other party. This Agreement
may also be terminated in the event of a default (past the expiration of any
applicable cure period provided herein) in accordance with the provisions of
this Agreement.
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5. Database Access. The Requesting Party will regularly enter all
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required information into the appropriate computer systems to enable the
Provider Party to provide the Choice Corporate Services or the Accounts Payable
Services, as contracted for hereunder. Choice will provide access to these
computer systems, including the PeopleSoft System, to enable Sunburst to
maintain its employee, vendor, property and general ledger databases. The
Requesting Party will provide access to information and employees necessary for
the Provider Party to provide such Choice Corporate Services, Accounts Payable
Services or Fixed Asset Accounting Services, as the case may be.
6. Price and Payment. The Requesting Party shall pay the Provider Party
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for services requested and rendered hereunder as follows:
(a) The charging mechanisms for rates or charges for each service shall
include (i) activity-based charges where the per unit price will be
multiplied by the variable number of units (for example, the number of
employees times the employee charge will determine the per Accounting
Period charge); (ii) fixed fee based charges, meaning a fixed amount per
Accounting Period for the Provider Party to perform the service; (iii)
usage based charges for which the Requesting Party will pay according to
actual use of the service; (iv) time and materials charges; or (v) a
variation or a combination of any of the foregoing methods as agreed to by
the parties. Charging mechanisms for each Choice Corporate Service, the
Accounts Payable Service and the Payroll Support are identified on Exhibit
B. If at any time during the term of the Agreement, either Sunburst or
Choice moves its office location from 10750 or 00000 Xxxxxxxx Xxxx, Xxxxxx
Xxxxxx, Xxxxxxxx, both the availability of certain services provided by
such party and their associated rates may be subject to change.
(b) Except as provided in any Ancillary Agreement, the Requesting Party
shall pay any and all additional costs and expenses which the Provider
Party may incur for the express purpose of providing services to the
Requesting Party.
(c) Sunburst shall pay Choice on a time and materials basis for all costs
incurred by Choice in converting Sunburst business information and records
from Choice's services systems to either a third party provider or to
Sunburst.
(d) With respect to Payroll Services, Sunburst and Choice shall divide
the total cost of the third party vendor for services provided to both
companies, including the cost of any software provided by the third party
vendor, pro rata based upon the number of employees of each company.
(e) Payment for all services hereunder shall be made within thirty (30)
days of receipt of invoice for payment (with appropriate supporting
documentation for any out-of-pocket
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expenses). Each party shall pay fixed charges in advance on the first
business day of the applicable Accounting Period. Any payments not made
when due shall bear interest, computed daily, from the date due to the date
of payment based on the annual percentage rate equal to the Prime Rate, as
same may vary from time to time, plus 200 basis points.
7. Duty of Care.
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(a) Provider Party's Obligations. All services provided hereunder by the
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Provider Party shall be administered in accordance with its standard
policies, procedures and practices in effect as of the date hereof and as
may be changed, and as more particularly described below, or as otherwise
specified in accordance with the terms thereof. In so doing, the Provider
Party shall follow commonly accepted standards of care in the industry and
exercise the same care and skill as it exercises in performing like
services for itself.
(b) Requesting Party's Obligations. The Requesting Party shall adopt
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reasonable measures to limit its exposure with respect to any potential
losses and damages, including, but not limited to, periodic examination and
confirmation of results, provision for identification and correction of
errors and omissions, preparation and storage of backup data, replacement
of lost or mutilated documents, and reconstruction of data.
8. Liaison. Sunburst and Choice shall each appoint two managerial level
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individuals (hereinafter "Representatives") to facilitate communications and
performance under this Agreement. Each party may treat an act of a
Representative of the other party as being authorized by such other party
without inquiring behind such act or ascertaining whether such Representative
had authority to so act. The initial Representatives are named on Exhibit C.
Each party shall have the right at any time and from time to time to replace
either or both of its Representatives by giving notice in writing to the other
party setting forth the name of (i) each Representative to be replaced and (ii)
the replacement, and certifying that the replacement Representative is
authorized to act for the party giving the notice in all matters relating to
this Agreement.
9. Confidentiality.
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(a) Choice and Sunburst agree that all information regarding the Choice
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Corporate Services and the Accounts Payable Services provided hereunder,
including, but not limited to, price, methods of operation, and software,
shall be maintained in confidence and not be released to any third party
for any reason whatsoever, excluding such parties' counsel, agents,
auditors or lenders. However, one party may release this Agreement or such
information to a third party upon the prior approval of the other party
(such approval not to be unreasonably withheld, conditioned or delayed),
upon court order, or as required by any rules, regulations or laws. All
confidential and proprietary information which either party has obtained
from
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the other shall be returned upon the expiration or earlier termination of
this Agreement. The provisions of this paragraph shall survive expiration
or earlier termination of this Agreement.
(b) Any Requesting Party information or other information provided by the
Requesting Party to Provider Party for use with the Choice Corporate
Services or Accounts Payable Services provided hereunder and identified in
writing as confidential shall remain the exclusive and confidential
property of the Requesting Party. The Provider Party shall treat such
information as confidential and will not disclose or otherwise make
available any Requesting Party information to any person other than
employees, consultants, or auditors of the Provider Party with a need-to-
know or except as required by law or court order. The Provider Party will
instruct its employees who have access to the Requesting Party information
to keep the same confidential by using the same care and discretion that
the Provider Party uses with respect to its own confidential property and
trade secret.
(c) The Provider Party will provide reasonable security provisions to
insure that third parties do not have access to Requesting Party
information. The Provider Party reserves the right to issue and change
regulations and procedures from time to time to improve file security.
(d) The Provider Party will take reasonable precautions to prevent the
loss or alteration of Requesting Party information. The Requesting Party
will, to the extent it deems necessary, keep copies of all source documents
delivered to the Provider Party and will maintain a procedure external to
Provider Party's systems for the reconstruction of lost or altered
Requesting Party data.
(e) The Provider Party will, to the extent applicable, retain Requesting
Party's information in accordance with and to the extent provided by the
Provider Party's then prevailing records retention policies for similar
activities. The Provider Party will, in conformity with its then
prevailing records retention policies, dispose of all Requesting Party
information in any manner deemed appropriate by the Provider Party unless
the Requesting Party, prior to such disposal, furnishes to the Provider
Party written instructions for the disposition of such Requesting Party
information, at the Requesting Party's expense. At Requesting Party's
request the Providing Party will provide the Requesting Party, in a
standard Provider Party format and at the Provider Party's then standard
rates for such format, any and all Requesting Party information requested
by the Requesting Party.
(f) The Provider Party's systems used to perform the Choice Corporate
Services or the Accounts Payable Services provided hereunder, are
confidential and proprietary to the Provider Party or third parties. The
Requesting Party shall treat these systems and all related procedures as
confidential and proprietary to the Provider Party or its third party
vendors.
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The Requesting Party agrees that all software systems, procedures, and
related materials provided to the Requesting Party are for the Requesting
Party's internal use exclusively and only as related to the Choice
Corporate Services or the Accounts Payable Services or any of the
underlying systems used to provide such services hereunder. The Requesting
Party may not sell, transfer, assign, or otherwise use the services
provided hereunder, in whole or in part, for the benefit of any other
party. The Requesting Party shall not copy, modify, reverse engineer, or in
any way alter these systems without the Provider Party's express written
consent. Title to all software systems used in performing the services
provided hereunder shall remain in the Provider Party or its third party
vendors.
10. Warranties and Limitations of Liability.
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(a) THE PROVIDER PARTY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE CHOICE CORPORATE
SERVICES OR THE ACCOUNTS PAYABLE SERVICES, AS THE CASE MAY BE, PROVIDED
HEREUNDER. The Provider Party will use reasonable efforts to perform the
services provided hereunder in a professional and workmanlike manner but
the results of such services are furnished "as is."
(b) The Provider Party's sole liability to the Requesting Party or any
third party for claims, notwithstanding the form of such claims (e.g.
contract, negligence or otherwise), arising out of errors or omissions in
the services provided or to be provided by the Provider Party hereunder
which are caused solely by the Provider Party shall be to furnish correct
information, payment, and/or adjustment in the services provided hereunder
provided that the Requesting Party promptly advises the Provider Party
thereof.
(c) The Provider Party's sole liability to the Requesting Party or any
third party for claims, notwithstanding the form of such claims (e. g.
contract, negligence or otherwise), arising out of the unavailability of
the services provided hereunder or the interruption in or delay in
performing the services provided hereunder for any reason beyond the
Provider Party's reasonable control shall be to use all reasonable efforts
to make such services available, and/or to resume performing such services,
as promptly as reasonably practicable. The Provider Party will maintain
the same back-up procedures for the Requesting Party's information that the
Provider Party has for its own information.
(d) THE PROVIDER PARTY SHALL NOT BE LIABLE FOR ANY ERRORS, OMISSIONS,
DELAYS, OR LOSSES UNLESS CAUSED SOLELY BY ITS CRIMINAL CONDUCT, FRAUD, BAD
FAITH OR NEGLIGENCE (WITH SUCH DUTY OF CARE AS SPECIFIED IN SECTION 7).
THE REQUESTING PARTY AGREES THAT IN NO
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EVENT WILL THE PROVIDER PARTY BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL,
OR CONSEQUENTIAL DAMAGES. THE REQUESTING PARTY FURTHER AGREES THAT IN NO
EVENT WILL THE TOTAL AGGREGATE LIABILITY OF THE PROVIDER PARTY FOR ANY AND
ALL CLAIMS, LOSSES, OR DAMAGES ARISING UNDER THIS AGREEMENT AND FOR THE
CORPORATE SERVICES PERFORMED HEREUNDER EXCEED THE VALUE OF THE REQUESTING
PARTY'S PAYMENT FOR SAID SPECIFIC SERVICE IN DISPUTE OVER ONE FOUR-WEEK
ACCOUNTING PERIOD'S TIME.
(e) The forgoing provisions of this Section 10 set forth the full extent
of the Provider Party's liability hereunder (monetary or otherwise) for any
claim or action, regardless of the form in which any such claim or action
may be asserted against the Provider Party (e.g. contract, negligence or
otherwise).
11. Default. If either party materially defaults hereunder, the non-
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defaulting party may terminate this Agreement effective immediately (subject to
the cure periods set forth herein below) upon written notice to the defaulting
party. The non-defaulting party shall be entitled to all remedies provided by
law or equity (including reasonable attorneys' fees and costs of suit incurred).
The following events shall be deemed to be material defaults hereunder:
(a) Failure by either party to make any payment required to be made to
the other hereunder, which failure is not remedied within five (5) days
after receipt of written notice thereof; or
(b) Except as otherwise provided herein, failure by either party
substantially to perform in accordance with the terms and conditions of
this Agreement, which failure is not remedied within thirty (30) days after
receipt of written notice from the other party specifying the nature of
such default; or
(c) (I) Filing of a voluntary bankruptcy petition by either party; (ii)
filing of an involuntary bankruptcy petition against either party which is
not withdrawn within sixty (60) days after filing; (iii) assignment for the
benefit of creditors made by either party; or (iv) appointment of a
receiver for either party.
12. Modification of Procedures. The Provider Party may make changes from
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time to time in its standards and procedures for performing the services
provided hereunder, but the Provider Party will not implement any substantial
changes, unless required by law affecting the Requesting Party until it has
furnished the Requesting Party notice (the same notice the Provider Party will
provide its own businesses) thereof and a reasonable opportunity to adapt its
operations to accommodate such changes or to reject the change. The Requesting
Party's decision whether or not
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to accept the proposed change must be made on or before the date the Provider
Party makes its decision. Otherwise, the default would be the Requesting Party's
acceptance. The Requesting Party agrees to pay any charges (a) resulting from
the Provider Party's need to maintain different versions of the same systems,
procedures, technologies, or services and (b) resulting from requirements of
third party vendors.
13. Laws and Governmental Regulations. Sunburst shall be responsible for
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(a) compliance with all laws and governmental regulations affecting its business
and (b) any use it may make of the Corporate Services to assist it in complying
with such laws and governmental regulations. While Choice shall not have any
responsibility for Sunburst's compliance with the laws and regulations referred
to above, Choice agrees to use reasonable efforts to cause the Choice Corporate
Services to be designed in such manner that they will be able to assist Sunburst
in complying with its applicable legal and regulatory responsibilities as
related to the Choice Corporate Services. Choice will implement these normal
procedures for Sunburst's benefit. In no event, however, shall Sunburst rely
solely on its use of the Choice Corporate Services in complying with any laws
and governmental regulations.
14. Indemnification.
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(a) The Requesting Party. The Requesting Party shall indemnify, defend
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and hold harmless the Provider Party and its directors, officers and
employees from Losses (as defined below), other than Losses directly and
proximately caused solely by the Provider Party's criminal conduct, fraud,
bad faith, or gross negligence. The term "Losses" shall include costs of
any claim, lawsuit, settlement, judgment, penalty, or reasonable attorneys'
fees.
(b) The Provider Party. The Provider Party shall indemnify, defend and
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hold harmless the Requesting Party and its directors, officers and
employees from Losses directly and proximately caused solely by the
Provider Party's criminal conduct, fraud, bad faith, or gross negligence,
unless the actions (or inaction) causing the Losses were taken (or not
taken) at the specific direction of the Requesting Party, its subsidiaries,
employees, or agents.
15. Force Majeure. Choice and Sunburst shall incur no liability to each
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other due to a failure to perform under the terms and conditions of this
Agreement resulting from fire, flood, war, strike, lock-out work stoppage or
slow-down, labor disturbances, power failure, major equipment breakdowns,
construction delays, accident, riots, acts of God, acts of United States'
enemies, laws, orders or at the insistence or result of any governmental
authority or any other event beyond each other's reasonable control. In
addition, the Provider Party shall not be liable or deemed to be in default for
any delay or failure to perform hereunder resulting, directly or indirectly,
from any cause beyond the Provider Party's reasonable control, including
limitations upon the availability of
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communications facilities or failures of other communications equipment or
failure of the Requesting Party to prepare data properly for input into the
Provider Party's corporate systems.
16. Relationship of Parties. Nothing in this Agreement shall be deemed or
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construed by the parties or any third party as creating the relationship of
principal and agent, partnership or joint venture between the parties, it being
understood and agreed that no provision contained herein, and no act of the
parties, shall be deemed to create any relationship between the parties other
than the relationship of buyer and seller.
17. Assignment. Neither party shall, without the prior written consent of
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the other, assign any rights or delegate any obligations under this Agreement,
such consent not to be unreasonably withheld, conditioned or delayed.
18. Headings. The headings used in this Agreement are inserted only for
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the purpose of convenience and reference, and in no way define or limit the
scope or intent of any provision or part hereof.
19. Severability of Provisions: Neither Choice nor Sunburst intend to
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violate statutory or common law by executing this Agreement. If any section,
sentence, paragraph, clause or combination of provisions in this Agreement is in
violation of any law, such sections, sentences, paragraphs, clauses or
combinations shall be inoperative and the remainder of this Agreement shall
remain in full force and effect and shall be binding upon the parties.
20. Parties Bound. This Agreement shall inure to the benefit of and be
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binding upon the parties hereto and their respective successors and permitted
assigns. Nothing herein, expressed or implied, shall be construed to give any
other person any legal or equitable rights hereunder.
21. Notices. All notices and other communications hereunder shall be in
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writing and shall be delivered by hand or shall be deemed to have been properly
made and given one (1) business day after being deposited with a reputable
overnight courier service such as Federal Express, Airborne Express or UPS Next
Day Air for next business day delivery or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other addresses for a party as shall be specified by like notice) and shall be
deemed given on the date on which such notice is received:
To Sunburst:
Sunburst Hospitality Corporation
00000 Xxxxxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
Attention: General Counsel
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To Choice:
Choice Hotels International, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxx Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
22. Further Action. Choice and Sunburst each shall cooperate in good
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faith and take such steps and execute such papers as may be reasonably requested
by the other party to implement the terms and provisions of this Agreement.
23. Waiver. Choice and Sunburst each agree that the waiver of any default
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under any term or condition of this Agreement shall not constitute any waiver of
any subsequent default or rights herein or nullify the effectiveness of that
term or condition.
24. Governing Law. All controversies and disputes arising out of or under
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this Agreement shall be determined pursuant to the laws of the State of
Maryland, United States of America, regardless of the laws that might be applied
under applicable principles of conflicts of laws.
25. Consent to Jurisdiction. The parties irrevocably submit to the
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exclusive jurisdiction of (a) the Courts of the State of Maryland in Xxxxxxxxxx
County, and (b) the United States District Court for the State of Maryland for
the purposes of any suit, action or other proceeding arising out of this
Agreement.
26. Entire Agreement; Amendment. This Agreement and the Distribution
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Agreement constitute the entire understanding between the parties hereto and
supersedes all prior written or oral communications, relating to the subject
matter covered in this Agreement. This Agreement shall not be amended except by
a writing executed by the parties hereto.
27. Commercially Reasonable Terms and Conditions. The terms and
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provisions of this Agreement are intended to reflect commercially reasonable
terms and conditions (including, but not limited to, pricing) that are at least
as favorable and as competitive to Sunburst as the terms and conditions Choice
would grant or require of third parties for substantially similar goods and
services.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CHOICE HOTELS INTERNATIONAL, INC.
(to be renamed Sunburst Hospitality Corporation)
Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
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Title: Senior Vice President
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CHOICE HOTELS FRANCHISING, INC.
(to be renamed Choice Hotels International, Inc.)
Delaware corporation
By: /s/ Xxxxxxx X. XxXxxxxx
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Name: Xxxxxxx X. XxXxxxxx
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Title: Senior Vice President
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EXHIBIT A
[ATTACHED]
15
ACCOUNTS PAYABLE SERVICES
Accounts Payable Service. The scope of Accounts Payable Services includes:
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. Choice will submit paper source documents in accordance with the
established Company policies and Sunburst will process them on a timely
basis.
. Sunburst will establish new vendors on the Vendor Master File and change
basic vendor information such as remittance address and payment terms.
. Accounts payable check stubs and other forms of remittance advice, and
accounts payable checks with authorized signature facsimile.
. A variety of management control and information reports in conventional
paper format using laser and impact printing technologies, such as:
1. Bi-weekly check register
2. Schedule of bills - this report is designed to list invoices paid or
invoices to be paid in vendor alphabetical order.
3. Vendor list - lists all active lodging vendors by facility number.
4. Such other reports as Choice may reasonably request which are
customary under an accounts payable reporting system.
. Standard system interface capabilities that may be modified at Choice's
expense and with Suburst's consent. These include general ledger for
accounting distribution, drafts for check reconciliation, and fixed assets.
SERVICES NOT INCLUDED IN THE BASELINE ACCOUNTS PAYABLE SERVICE CHARGE
. Choice will develop any computer software necessary to electronically
transmit invoice information from other Choice feeder systems into the
Accounts Payable System for subsequent processing and payment.
. Other services which are billed directly to Choice, such as:
- United States Postal Service, UPS, and other courier services to deliver
accounts payable envelopes and packages from the Silver Spring
Computer Center.
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. Any training or support requirements outside Sunburst Headquarters or any
support for Choice acquisitions and divestitures are outside the scope of
the fixed price. These services will be charged on a time and materials
basis.
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FIXED ASSET ACCOUNTING SERVICES
Fixed Asset Accounting Services. Beginning as of the Distribution Date,
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Sunburst shall provide Fixed Asset Accounting Services to Sunburst. These Fixed
Asset Accounting Services shall encompass functions to ensure system and
accounting control over capital assets belonging to Choice as may be agreed upon
by the parties on a time and materials basis.
COMPUTER SERVICES
Computer Services. Beginning as of the Distribution Date, Choice shall
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provide Computer Services to Sunburst.
Computer Services shall encompass network support and LAN administration.
CORPORATE ACCOUNTING SUPPORT
Beginning as of the Distribution Date, Choice shall provide certain
Corporate Accounting Support to Sunburst. This support shall encompass
functions associated with monthly and year-end closing and financial reporting
processes as may be agreed upon by the parties on a time and material basis.
Such functions shall include, but not necessarily be limited to:
. Maintenance of general ledger chart of accounts and company profile
information
. Consolidation of Sunburst financial information
. Monthly financial reporting
. Reconciliation of bank accounts
. Preparation and reconciliation of debt report
. Maintenance (including microfiche) of journal entries and other financial
records
. Assistance with year end closing
. Review of various financial reports
. Preparation of certain journal entries and allocations
. Cash management reports and processing
Any change required by Sunburst to the accounting software shall be determined
on a time and materials basis.
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EXHIBIT B
[ATTACHED]
19
CORPORATE SERVICES CHARGES
Attachment B
SERVICE CHARGE BASIS
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Accounts Payable Activity Based Charges
Property Accounting Activity Based Charges
Payroll Support Activity Based Charges; except that the
salary of Sunburst employees dedicate
Fixed Asset Accounting to Payroll Support shall be divided pro
rata based upon each company's number
Corporate Accounting Support of employees
Computer Services Activity Based Charges
Additional Consulting Services Time and Materials
Activity Based Charges
Additional Consulting Services Hourly
Billing Rates
--------------------------------------------------------------------------------
Support Services
----------------
--Accounting Systems Supports and System Support
Sunburst shall pay to Choice an annual fixed fee of $600,000 annually,
payable pro rata at the beginning of each quarter beginning on the
Distribution Date.
--PeopleSoft System
A.) Development Costs -- Sunburst shall pay to Choice $491,000 per year
for five years beginning on the Distribution Date, payable pro rata at
the beginning of each quarter. The obligation of Sunburst to pay the
Development Costs shall survive the termination of the Agreement
and/or the termination of any or all Choice Corporate Services.
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B.) Maintenance and upgrade costs -- Sunburst shall pay to Choice 50% of
any maintenance or upgrade costs incurred by Choice with respect to
the PeopleSoft System, except if upgrade or maintenance deals with
features used exclusively by Choice or Sunburst as the case may be.
Upgrade or maintenance deals to be used exclusively by either Choice
or Sunburst shall be paid 100% by the benefitting party.
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EXHIBIT C
REPRESENTATIVES
Xxxxxx Xxxxxx - Choice
Xxxxxxx XxXxxxxx - Choice
Xxxxxxx Xxxxxxx - Sunburst
Xxxxx XxxXxxxxxxx - Sunburst
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