HOTEL/MOTEL MANAGEMENT AGREEMENT
This Hotel/Motel Management Agreement (this "Agreement") is made on the
date specified on Schedule I by and between Owner (identified on Schedule I) and
HMGT MANAGEMENT CORPORATION (hereinafter referred to as "Manager"), a Delaware
corporation, having offices at 00000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000.
Preamble
Owner is the owner of that certain real property, improved by a hotel
facility (the "Hotel"), described on Schedule I. Owner and Manager have entered
into this Agreement to provide for the management and operation of the Hotel.
The definitions for the capitalized terms contained in this Agreement are found
in Article 14.
1. APPOINTMENT AND TERM.
1.01 Appointment. Owner hereby appoints Manager as manager of the Hotel
with the obligation to direct, supervise, manage and operate the Hotel.
Owner will not employ any other party to manage the Hotel during the
term(s) of this Agreement.
1.02 Operating Term. The initial operating term of this Agreement will
commence at 12:01 A.M. on the date identified on Schedule I (the
"Commencement Date") and terminate at 11:59 P.M. on the expiration date
identified on Schedule I (the "Expiration Date").
1.03 Management Procedures. Manager will consult with Owner on a periodic
and regular basis with respect to the management of the Hotel. Manager, on
behalf of Owner, may take all actions it deems appropriate for the
operation of the Hotel and will carry out all written directives of Owner,
excepting directives (i) contrary to law, (ii) inconsistent with the
contractual obligations of Owner or (iii) which will subject Manager to
liability above and beyond Manager's responsibilities contemplated by this
Agreement Owner's written directives will be delivered to Manager's
regional vice president of operations responsible for the Hotel and not the
general manager on site at the Hotel. For purposes of communications
between Manager and Owner, Owner's authorized representatives will be those
individuals identified in writing by Owner.
2. HOTEL OPERATIONS.
2.01 Hotel Management Services. Manager will manage the Hotel in accordance
with standards and policies appropriate for the operation of comparable
facilities, including the Standards and policies of Owner's Franchiser, if
any. Manager will perform the activities contained on Schedule I, but only
to the extent that sufficient funds are available to Manager to perform
those activities.
2.02 Employees.
A. Manager will select a general manager and the department heads for the
Hotel and all personnel, which Manager determines to be necessary for the
operation of the Hotel (collectively, the "Employees"). All Employees will
be employed at Owner's cost and expense, but will be employees of Manager.
However, at the sole option and discretion of Manager, Manager may procure
the Employees from a third party employee leasing company.
B. All decisions with regard to the terms of employment, including but limited
to compensation, bonuses, fringe benefits, discharge, and replacement of
all Employees, will be made and implemented directly by Manger or through
the general manager, department heads, or any of their designees under the
supervision of Manager.
C. Manager will administer necessary employee benefit programs, maintain all
necessary records, file all necessary reports, and pay, for the account of
Owner, out of the Hotel Accounts, all taxes that relate to the Employees.
D. Manager will assist Owner in responding to organizational efforts by unions
and in negotiating and implementing union agreements that relate to Owner's
employees. With respect to Manager's employees, only Manager will respond
to organizational efforts by unions and have contractual authority with
respect to the terms of any union contract. Additionally, Manager shall not
be required (by Owner) to take actions which will unreasonably increase
Manager's liabilities under any union contract. Upon termination of this
Agreement, Owner will assume Manager's obligations under any union contract
with respect to Employees hired by Owner at that time.
2.03 Capital Replacements.
A. An independent and segregated replacement reserve account will be created
in the name of Owner (the "Capital Replacement Reserve Account"). The
Capital Replacement Reserve Account will be funded by transferring on the
tenth (10th) of each month a sum equal to the percentage identified on
Schedule I of the Gross Revenue of the preceding month.
B. Proceeds (insurance or otherwise) received in reimbursement for
expenditures previously charged to the Capital Replacement Reserve Account
for Capital Replacements and all proceeds from the sale of any capital
items determined by Manager to no longer be needed or appropriate for the
operation of the Hotel or to be replaced, will be added to the Capital
Replacement Reserve Account.
C. Manager will administer the Capital Replacement Reserve Account on behalf
of Owner. The proceeds of the Capital Replacement Reserve Account will be
applied to Capital Replacements in accordance with the Annual Plan or with
the Owners approval.
3. ANNUAL PLAN.
3.01 Preparation and Submission. Owner and Manager acknowledge that the
budgeting process is a critical factor to the successful operation of the
Hotel and is also a key communication link between the parties. Not later
than thirty (30) days after the Commencement Date, Manger will submit to
Owner, for its approval, an operating budget for the initial Operating
Year. For purposes of this Article 3, the operating budget for the initial
Operating Year will be deemed to be the Annual Plan for that year.
Thereafter, Manager will submit to Owner, for its approval, not later than
thirty (30) days before the beginning of each Operating Year the proposed
annual plan for the Hotel (the "Annual Plan") comprised of the following:
(a) A statement of the estimated income and expenses for the
Operating Year, including assumptions as to payroll, room rates,
and occupancies, which will reflect the estimated results of
operations for each month of the Operating Year;
(b) Either as part of the statement of the estimated income and
expenses referred to in the preceding clause (a), or separately,
budgets covering proposed expenses for the coming Operating Year
for (i) Capital Replacements and (ii) Operating Equipment;
(c) A marketing plan; and
(d) A monthly cash flow forecast which presents the amount of funds
that must remain in the Hotel Accounts as of the end of each
month during the Operating Year to assure sufficient moneys for
working capital and expenditures authorized trader the Annual
Plan.
Owner acknowledges that Manager's budgets and forecasts are management
tools to be used solely for internal management purposes and does not represent
performance standards or warranties of performance by Manager. In preparing all
budgets and forecasts and the estimated profit and loss statements comprising
the Annual Plan, Manager will base its estimates upon the most recent and
reliable information available, taking into account the location of the Hotel
and Manager's experience in hotel operations. Manager expressly disclaims any
warranty of or representations as to results of operations of the Hotel.
3.02 Owner's Approval. Owner will review the Annual Plan within fifteen
(15) days after receiving such Annual Plan. Within fifteen (15) days after Owner
completes its review, Owner and Manger will meet at Manager's offices to discuss
Owners comments and to review Manager's financial and operational analysis. If
an agreement is not reached by the first day of the Operating Year, the Annual
Plan will be based on actual results of the previous Operating Year.
3.03 Compliance with Annual Plan. Manager will use reasonable efforts to
comply with the Annual Plan and will not incur any material additional expense
or change materially the manner of operation of the Hotel without the written
approval of Owner.
3.04 Agreement Limitation. Manager will not enter into any commitment on
behalf of Owner requiring payments of amounts in excess of the amount set forth
on Schedule I or requiring performance over a time period in excess of the
period set forth on Schedule I without the written approval of Owner.
3.05 Emergencies. The limitations of Sections 3.03 and 3.04 do not apply to
emergency repairs or emergency actions. For the purposes of this Section 3.05,
an emergency means an unforeseen circumstance that in the opinion of Manager
requires immediate action which cannot be delayed in order to minimize injury to
the Hotel or injury to any person or property.
4. HOTEL ACCOUNTS: MAINTENANCE OF MINIMUM BALANCE.
4.01 Hotel Bank Accounts. Manager will conduct its various banking affairs
required by this Agreement, subject, however, to Owner's approval. Manager will
have no liability for any loss to Owner as a result of any bank insolvency or
failure or as a result of any negligence or misconduct of any ank or its
employees. All funds received in the operation of the Hotel will be deposited
into one or more special accounts bearing the name of the Hotel (the "Hotel
Accounts"), or the Capital Replacement Reserve Accounts as appropriate, in the
banks so selected by Manager. Owner's funds will not be co-mingled with funds of
Manager or funds of other hotels managed by Manager. However, all of the Hotel's
disbursements will be made out of a common corporate disbursement account along
with disbursements for other hotels, which will be funded only at time of
payment from the Hotel Accounts or, as to Capital Replacements, from the Capital
Replacement Reserve Account.
4.02 Minimum Balance. Upon establishment of Hotel Accounts and at Manager's
direction, Owner will deliver to Manager for deposit in the Hotel Accounts the
sum set forth on Schedule I (the "Minimum Balance") and will advance additional
funds from time to time, within three (3) working days of receipt of a written
request from Manager, to maintain the Minimum Balance.
5. BOOKS AND RECORDS.
5.01 Maintenance of Books and Records. Manager will keep complete and
adequate books of account and such other records as are necessary to reflect the
results of the operation of the Hotel. Manager will keep the books and records
for the Hotel in all material respects in accordance with the Uniform System of
Accounts, on an accrual basis, in accordance with generally accepted accounting
principles consistently applied.
5.02 Location Examination and Inspection. Except for the books and records
which may be kept in Manager's home office or other suitable location, pursuant
to the adoption of a control billing system or other centralized service, the
books of account and all other records relating to or reflecting the operation
of the Hotel will be available to Owner and its representatives upon reasonable
request for examination, inspection and transcription.
5.03 Owner to Receive All Books and Records upon Termination. Upon any
termination of this Agreement, all original books and records not kept at the
Hotel, will be turned over to the Owner forthwith so as to ensure the orderly
continuance of the operation of the Hotel, provided, however, Manager will, at
its expense, be entitled to retain copies of all books and records wherever
located.
5.04 Reports to Owner.
A. Manager will deliver, not later than the twentieth (20th) day of the
month, a detailed (i) profit and loss statement showing the results of
operation of the Hotel for the prior month and the year to date, with
a comparison to the forecasts contained in the then Current Annual
Plan; (ii) market segmentation report; (iii) accounts receivable aging
report as of the end of the previous month; and (iv) report of cash
balances at month end.
B. Within ninety (90) days after the end of each Operating Year, Manager
will deliver a balance sheet, a profit and loss statement, and a
statement of cash flows. Costs of a certified audit or any other
reports by an independent certified public accountant, if and when
requested by Owner, will be an Operating Expense and will be directed
as to scope and content by Manager.
C. At Owner's request, Manager will further deliver financial reports
required by third parties. If Manager incurs substantial additional
costs in producing these reports, these additional costs will
constitute an Operating Expense.
5.05 Final Accounting. Upon termination of this Agreement, for any reason,
Manager will promptly deliver to Owner, but will be permitted to retain a copy
of, the following:
(a) A final accounting, reflecting the balance of income and expenses of
the Hotel as of the date of termination;
(b) Any balance of funds in the Hotel Accounts, or elsewhere, held by
Manager with respect to the Hotel (after payment or reservation with
respect to all committed obligations); and
(c) All books and records of the Hotel (including those stored on
computerized software), and all contracts, bookings, reservations,
leases, receipts for deposits, unpaid bills and other records, papers
or documents which pertain to the Hotel, and duplicate copies of the
personnel records of employees of the Hotel (provided, Manager will
not be required to turn over computer software, but will provide all
printouts from the software related to the Hotel).
5.06 Form of Reports. All reports will be in Manager's customary detail and
form for managed properties. A sample of a profit and loss statement is attached
as Schedule III.
6. MANAGEMENT FEE AND EXPENSES.
6.01 Management Fees.
A. Owner will pay to Manager a base management fee (the "Base Management
Fee") and an incentive management fee (the "Incentive Management Fee")
together with any sales and use taxes.
B. The Base Management Fee will be equal to the percentage of gross
Revenues set forth on Schedule I with respect to each separate, full
or partial month during the term of this Agreement. The Base
Management Fee will be payable no later than the tenth (10th) day of
the month immediately succeeding the month for which the Base
Management Fee is earned.
C. The Incentive Management Fee will be as set forth on Schedule I. The
Incentive Management Fee for each Operating Year will be paid in
substantially equal Monthly installments based upon the anticipated
Incentive Management Fees for the Operating Year as determined in the
current Annual Plan, as adjusted during the Operating Year, and will
be payable no later than the tenth (10th) of each month. The Incentive
Management Fee will be based on actual results after the first month
that the Hotel is managed by Manager.
6.02 Accounting Service Fees. Manager will charge, and Owner will pay to
Manager, an accounting service fee as set forth on Schedule I.
6.03 Reimbursement of Costs and Expenses. Owner will reimburse Manager for all
costs and expenses incurred by Manager for Owner's account in the ordinary
course of business under the terms and provisions of this Agreement, and such
reimbursement items will include, but not be limited to, the following:
(a) The salaries and wages, including costs of payroll taxes, bonuses,
retirement plan contributions, fringe benefits, and related payroll
items incurred with respect to Manager's employees assigned to the
Hotel;
(b) Expenses for shared services and purchases (equitably allocated to
each hotel benefitting from the shared services or purchases in a
manner consistent with Manager's allocation policy uniformly applied
to all managed hotels.)
(c) All taxes, including sales and use taxes and similar assessments
levied against all fees and reimbursements payable by Owner to Manager
or Manager's affiliates under this Agreement.
7. DISBURSEMENTS.
7.01 Priority of Payments. All Gross Revenues will be deposited in the Hotel
Accounts as and when received, Manager is authorized to and will disburse on a
current basis, on behalf of Owner, funds from the Hotel Accounts (to the extent
Available) in the following order of priority:
(a) Payment of payroll and payroll taxes and other employment costs identified
in Section 6.03 (a), including any sales and use taxes imposed on such
costs;
(b) Payment of all remaining sales and use taxes, including sales and use taxes
on fees and reimbursements to Manager;
(c) Payment to Manager of all other amounts due under Article 6;
(d) Payment of any Operating Expenses (i) payable to Manager, or (ii) with
respect to which Manager has pledged its credit;
(e) Payment of all other Operating Expenses;
(f) Transfers pursuant to Section 2.03;
(g) Payment (as allocated by Owner to the extent of available cash) of real
estate and personal property taxes, debt service on the First Mortgage,
rents and other sums due under any ground lease and Fixed Charges (not
otherwise provided for in this schedule of priorities);
(h) Other Cash Flow Expenditures (not otherwise provided for in this schedule
of priorities); and
(i) Payment of the balance to Owner.
Manager may reserve funds in the Hotel Accounts each month (i) for any of
the above items that are not paid on a monthly basis for a period of up to
twelve (12) months in advance and (ii) for cash deficiencies anticipated to
occur at the Hotel during the ninety (90) day period following any monthly
disbursement date.
7.02 Remittances to Owner. Concurrently with delivery of the monthly statements
required pursuant to Section 5.04A. Manager will remit to Owner all sums in the
Hotel Accounts (except the Capital Replacement Reserve Account) in excess of the
Minimum Balance plus reserve funds.
8. INSURANCE.
8.01 Maintenance of Insurance. Owner will maintain, at Owner's cost and expense,
a comprehensive general liability insurance policy which includes, but is not
necessarily limited to, coverage for products liability, inkeepers and dram shop
liability, and comprehensive automobile liability, that insures both Owner and
Manager. In addition, Owner will maintain at its cost and expense other
insurance of the types and in amounts prudent for hotels similar to the Hotel.
8.02 Owners Methods of Obtaining Insurance. At its option Owner may procure and
maintain the insurance required by this Agreement by (i) undertaking the
procuring of insurance directly in its own name and behalf, but naming Manager
as an additional named insured, or (ii) agreeing to coverage under Manager's
blanket policies in accordance with Manager's proposal at a price established by
Manager.
8.03 Parties Insured, Amount of Coverage, Etc. All insurance policies provided
for in Section 8.01 and 8.02 will include:
(a) Manager and Owner as parties insured, as their interests may appear;
(b) Coverage and deductible as will be reasonably agreed to from time to time
by Manager and Owner;
(c) Where appropriate the insurer's waiver of subrogation rights against
Manager; and
(d) A requirement that the insurer provide at least thirty (30) days notice of
cancellation or material change in the terms and provisions of the
policies.
8.04 Evidence of Insurance. At least thirty (30) days prior to the expiration
date of all insurance policies the party obtaining the insurance will provide
the other party with a binder, or certificates of insurance, evidencing renewal.
8.05 Limitations on Scope of Service. Although Manager believes that the
insurance available under its blanket policies is adequate for its business
purposes, it is not advising Owner as to insurance coverage's and Owner shall
seek independent advice, Manager is not responsible for the solvency of any
insurance carrier.
9. INDEMNIFICATION.
9.01 Indemnification to Manager. Owner will defend, indemnify, and hold Manager
harmless from and against any and all actions, suits, claims, penalties, losses,
liabilities, damages, and expenses, including attorney's fees, arising out of
Manager's performance of the services to be performed by Manager under this
Agreement (whether directed by Owner or not), including (i) liabilities under
statutes requiring notice as a prerequisite to the discharge of employees if
Owner terminates this Agreement and (ii) liabilities arising with respect to any
union contract related to the Hotel, except claims based upon Manager's gross
negligence or willful misconduct, failure to act in good faith, or action beyond
the authority granted to Manager by this Agreement.
9.02 Indemnification to Owner. Manager will defend, indemnify, and hold Owner
harmless from and against any and all claims arising out of Manager's performing
the services to be performed by Manager under this Agreement to the extent
claims arise on account of Manager's gross negligence, willful misconduct,
failure to act in good faith, or action beyond the authority granted to Manager
by this Agreement.
9.03 Indemnified Parties. The indemnities contained in this Article 9 will run
to the benefit of both Manager and Owner, and the directors, officers, partners,
agents and employees of Owner and Manager and of their affiliates.
9.04 Certain Claims to be Operating Expenses. All costs and expenses, including
attorneys' fees, arising out of claims of negligence against the Hotel by
Employees or any proceeding before any state or federal employment commission,
wages and hours commission, and union grievance committee, or any similar
proceeding will be deemed an Operating Expense.
10. CONDEMNATION.
10.01 Full Condemnation. If (i) the entire Hotel is condemned, or (ii) only a
portion is condemned but it is unreasonable to or Owner elects not to continue
operating the remainder of the Hotel, this Agreement will terminate on the date
when the ownership of the Hotel or condemning portion is transferred to the
condemning authority and Manager will be paid the fee called for in Article 13.
For purposes of this Article 10 a "condemnation" is any exercise of the power of
eminent domain by any governmental authority, including a voluntary conveyance
in lieu of judicial proceedings.
10.02 Partial Condemnation. Upon any condemnation not covered by Section 10.01,
unless Owner elects to terminate this Agreement under Article 13, Owner will
promptly repair the Hotel and restore it to operating condition.
11. CASUALTY.
11.01 Damage by Fire and Other Causes. If all or any part of the Hotel is
damaged or destroyed by fire or other casualty, unless Owner elects to terminate
this Agreement under Article 13, Owner will promptly repair the Hotel and
restore it to operating condition.
12. TERMINATION FOR CAUSE.
12.01Termination by Manager. Manager may terminate this Agreement upon the
occurrence of any of the following:
(a) Owner defaults in its performance of any obligation of the Agreement
and (i) fails to cure the default within thirty (30) days after
written notice or (ii) if the default is susceptible to cure but
cannot be cured in thirty (30) days, then fails to commence within
thirty (30) days and to diligently pursue the cure.
(b) Manager notifies Owner that it has insufficient funds to repair or
correct any condition at the Hotel which is in violation of any Legal
Requirement or insurance requirement or presents a threat to life or
personal safety and Owner fails to provide sufficient funds to repair
or correct the condition within seven days of the notice.
12.02 Termination by Owner. Owner may terminate this Agreement if Manager
defaults in its performance of any term of the Agreement and (i) fails to cure
the default within thirty (30) days after written notice or (ii) if the default
is susceptible to cure but cannot be cured in thirty (30) days, then fails to
commence within such thirty (30) days and to diligently pursue the cure.
12.03 Remedies Reserved. Termination of this Agreement will not constitute
the exclusively remedy of either Manager or Owner. Both Manager and Owner will
retain all other remedies provided for in this Agreement and by law.
13. TERMINATION FEE.
13.01 Termination Fee. Owner may terminate this Agreement at any time by giving
Manager sufficient notice to comply with all applicable laws, including laws
governing notification to employees (but not less than thirty (30) days notice
in any event), and including with its notice of termination, payment of the
termination fee (the "Termination Fee") set forth on Schedule I, together with
the balance due of any and all amounts due Manager under this Agreement,
including the Base Management Fee and the Incentive Management Fee, earned
through the date of termination.
13.02 Additional Consideration. Owner acknowledges that Manager will suffer
damage and be entitled to compensation if, as a result of Owner's breach of this
Agreement, this Agreement terminates or Manager is otherwise unable to continue
managing the Hotel. Accordingly, Owner, as additional consideration, agrees to
pay to Manager at the termination of this Agreement upon Owner's breach, the
amounts set forth in Section 13.01, together with amounts sufficient to
indemnify Manager against liability arising under any law governing notification
to employees.
14. DEFINITIONS.
14.01 "Accounting Services Fee". Has the meaning contained in Section 6.02.
14.02 "Annual Plan". Has the meaning contained in Section 3.01.
14.03 "Base Management Fee". Has the meaning contained in Section 6.01.
14.04 "Capital Replacement Reserve Account". Has the meaning contained in
Section 2.03.A.
14.05 "Capital Replacement". Means the furnishings and equipment and other
items, the cost of which for accounting purposes may not be expensed but trust
be capitalized over a useful life of greater than one year according to
generally acceptable accounting principles.
14.06 "Commencement Date". Means the date contained on Schedule I.
14.07 "Employees". Has the meaning contained in Section 2.02.
14.08 "Excluded Revenues". Means (i) any gratuity or sales charges added to a
customer's xxxx which are payable to Hotel employees, (ii) sales taxes, excise
taxes, gross receipt taxes, admission taxes, entertainment taxes, tourist taxes
or other similar taxes, (iii) proceeds from the sale of refinancing of the
Hotel, (iv) abatement of taxes, and (v) proceeds of insurance, except business
interruption insurance.
14.09 "Expiration Date". Has the meaning contained in Section 1.02.
14.10 "First Mortgage". Means the mortgage described in Schedule I.
14.11 "Fixed Charges". Means any and all amounts paid or expenses incurred in
connection with the following:
(a) Rental and other charges imposed under any lease for the use,
possession or operation of the Hotel;
(b) Taxes (other than income and payroll taxes) including without
limitation real and personal property taxes, business and occupation
taxes, and utility taxes such as sewer taxes;
(c) Insurance (other than employee benefits insurance such as workers'
compensation insurance and health or life insurance); and
(d) Transfers to the Capital Replacement Reserve Account.
14.12 "Fixed Expense Lease". Means any lease of real property and of furnishings
and equipment which if not leased would be purchased and capitalized as fixed
assets.
14.13 "Franchise Cost". Means expenditures for compliance with the requirements
of the Franchiser of the Hotel, including without limitation payment of
royalties, marketing contributions, and reservation system fees, but excluding
the cost of compliance with Franchiser's operating standards requiring Capital
Replacements.
14.14 "Franchiser". Means the hotel franchise company licensing the use of the
Hotel name, if any.
14.15 "Furnishing and Equipment". Means all furniture, finishing, equipment,
fixtures, apparatus and other personal property used in, or held in storage for
use in (or if the context so dictates, required in connection with), the
operation of the Hotel, other than Operating Equipment and Operating Supplies.
14.16 "Gross Revenues". Means all revenues of the Hotel and all its uses of
every nature and kind regardless of source, excluding Excluded Revenues. By way
of illustration but not limitation, Gross Revenues will include:
(a) The amount received as payment for the use and occupancy of all guest
rental units;
(b) The amount received as payment for the use and occupancy of all
meeting rooms, banquet function rooms, and public areas;
(c) All revenues derived from the sale of food and other edibles in
restaurants, lounges, meeting rooms, banquets, guest rooms, banquets,
and any other location at the Hotel;
(d) All revenues derived from the sale of liquor, beverages, and other
potables in restaurants, lounges, meeting rooms, banquets, guest
rooms, and any other location at the Hotel;
(e) All revenues derived from the use of telephone in guest rooms or in
public areas;
(f) All revenues derived from leases, subleases, concessions, vending,
valet services, swimming pool memberships, banquet extras, movies or
income of a similar or related nature; and
(g) Proceeds of business interruption insurance.
14.17 "Ground Lease". Means the lease described on Schedule I.
14.18 "Hotel". Means the Hotel described on Schedule I.
14.19 "Hotel Accounts". Has the meaning contained in Section 4.01.
14.20 "House Profit" or "Gross Operating Profit". Means Gross Revenues less
Operating Expenses.
14.21 "Incentive Management Fee". Has the meaning contained in Section 6.01.
14.22 "Legal Requirements". Means all laws, statutes, ordinances, orders, rules,
regulations, permits, licenses, authorizations, directions and requirements of
all governments and governmental authorities, which now or hereafter may be
applicable to the Hotel and its operation.
14.23 "Manager". Means HMGT Management Corporation, or its successor.
14.24 "Minimum Balance". Has the meaning contained in Section 4.02.
14.25 "Net Operating Income". Means House Profit less the Base Management Fee,
the Incentive Management Fee, Fixed Charges and Other Cash flow Expenditures.
14.26 "Operating Equipment". Means all china, glassware, linens, silverware and
uniforms used in, or held in storage for use in (or if the context so dictates,
required in connection with), the operation of the Hotel.
14.27 "Operating Expenses". Means any and all amounts paid or expenses incurred
in connection with the operation of the Hotel, as determined in accordance with
the Uniform System of Accounts for Hotels, in accordance with the generally
accepted accounting principles, consistently applied, but excluding the Base
Management Fee, Accounting Services Fee, Fixed Charges, and other cash flow
expenditures and non-cash items such as depreciation. By way of illustration,
but not limitation, Operating Expenses include:
(a) Salaries, wages, payroll taxes, bonuses, and employee benefits,
including sales and use taxes imposed thereon, and payroll processing
fees;
(b) Legal, accounting, and other professional fees;
(c) Fees for licenses and permits;
(d) Costs of Operating Supplies;
(e) Costs of Operating Equipment;
(f) Rentals under Operating Leases;
(g) Franchise Costs;
(h) Expenses allocated by Manager in the ordinary course as Operating
Expenses not otherwise itemized above, directly related to rooms,
food, beverage, telephone, and other segregated outlets; and
(i) Expenses not allocated by Manager in the ordinary course and not
otherwise itemized above, including administrative and general
expenses such as advertising, sales and promotion, utilities, and
repair and maintenance (but not of Capital Replacements).
14.28 "Operating Lease". Means leases of personal property, which are not, Fixed
Expense Leases.
14.29 "Operating Supplies". Means consumable items used in or held in storage
for use in (or if the context so dictates, required in connection with), the
operation of the Hotel, including but not limited to food and beverages, fuel,
soap, cleaning material, matches, stationery and other similar items.
14.30 "Operating Year". Means each twelve month period commencing on the First
day of January (except for the first year which will commence on the
Commencement Date) and ending on the subsequent December 31, (except for the
last year which will end on the date of termination, whether by expiration of
the term of the Agreement or otherwise).
14.31 "Other Cash Flow Expenditures". Means any and all expenses incurred in
connection with the following:
(a) Interest, principal, and other payments on any debt or other
obligation for borrowed money, including debt service on any mortgage
debt and rents and other charges on Fixed Expense Leases; and
(b) Payments and distributions to Owner. Excepting the distribution
required pursuant to Section 7.01(j).
14.32 "Owner". Means the entity identified on Schedule I or its successors.
14.33 "Termination Fee". Has the meaning contained in Section I.
14.34 "Uniform System of Accounts". Means the Uniform System of Accounts for
Hotels (Eighth Revised Edition, 1986) as revised from time to time; but not any
subsequent revisions unless approved by both Owner and Manager in writing.
15. GENERAL PROVISIONS.
15.01 Estoppel Certificates. Owner and Manager each, upon at least ten (10)
days' notice, will execute and deliver to Owner, and to any third party having
or about to have, a bona fide interest in the Hotel, a written certificate
stating that this Agreement is unmodified and in full force and effect, or if
not, stating the details of any modification, and stating that, as modified, it
is in full force and effect, the date to which payments have been paid, and
whether there is any existing default on the part of the other.
15.02 No Partnership or Joint Venture. Nothing contained in this Agreement will
be constructed to be or create a partnership or joint venture between Owner, any
affiliate of Owner, its successors or assigns, on the one part, and Manager, any
affiliate of Manager, its successors and assigns, on the other part.
15.03 Modifications and Changes. This Agreement cannot be changed or modified
except by another agreement in writing signed by the party sought to be charged
therewith, or by its duly authorized agent.
15.04 Understanding and Agreements. This Agreement constitutes all of the
understandings and agreements of whatsoever nature or kind existing between the
parties with respect to Manager's management of the Hotel.
15.05 Headings. The Article and Section headings contained herein are for
convenience of reference only and are not intended to define, limit or describe
the scope or intent of any provisions of this Agreement.
15.06 Survival of Covenants. Any covenant, term or provision of this Agreement
which, in order to be effective, must survive the termination of this Agreement,
will survive any such termination.
15.07 Third Parties. None of the obligations of this Agreement of either party
will run to or be enforceable by any party other than the party to this
Agreement or its assignee pursuant to the terms of this Agreement. Owner is
expressly authorized to assign its rights under this Agreement to any mortgagee
of the Hotel.
15.08 Waivers. No failure by Manager or Owner to insist upon the strict
performance of any covenant, agreement, term or condition of this Agreement, or
to exercise any right or remedy consequent upon the breach of this Agreement
will constitute a waiver of any breach or any subsequent breach of any covenant,
agreement, term, or condition. No covenant, agreement, term or condition of this
Agreement and no breach of this Agreement will be waived, altered or modified
except by written instrument. No waiver of any breach will affect or alter this
Agreement, but each and every covenant, agreement, term and condition of this
Agreement will continue in full force and effect with respect to any other than
existing or subsequent breach.
15.09 Governing Law; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas. VENUE FOR ANY CAUSE OF ACTION
RELATING TO THIS AGREEMENT SHALL BE EXCLUSIVELY DALLAS COUNTY, TEXAS.
15.10 Notices. Except as otherwise provided in this Agreement all notices
required or permitted to be given hereunder, or which are to be given with
respect to this Agreement, will be in writing sent by registered or certified
mail, postage prepaid, return receipt requested, addressed to the party to be so
notified as set forth on Schedule I. Any notice will be deemed delivered when
received or receipt rejected. Notices may also be delivered by hand, or by
special courier, if, in either case, the addressee acknowledges receipt. Any
notice delivered by hand, or by special courier, will be deemed delivered when
received. Either party may at any time change the address for notice by written
notice to the other party.
15.11 Binding Effect. This Agreement will be binding upon, and will inure to the
benefit of, the successors in interest and the assigns of the parties hereto,
provided that no assignment, transfer, sale, pledge, encumbrance, mortgage,
lease or sublease by or through Manager or by or through Owner, as the case may
be, in violation of the provisions of this Agreement, will vest any rights
relative to this Agreement in the assignee, transferee, purchaser, secured
party, mortgagee, pledgee, lessee, sublessee or occupant, or will diminish,
reduce or release the obligations of the parties hereto.
15.12 Confidentiality. Manager and Owner agree that the contents of this
Agreement will not be disclosed to any other individual or entity (except as
directed by law or judicial order), provided, Owner may disclose the contents of
this Agreement to (i) its partners and limited partners, or shareholders and
directors, if a corporate partner; and (ii) individuals or entities providing,
or proposing to provide, financing to Owner.
15.13 Non-Solicitation of Manager's Employees. Owner agrees that it will not,
for a period of two (2) years from the date of expiration or earlier termination
of this Agreement, directly or indirectly (i) solicit (other than general
solicitations made to the public at large) the employment of any key employee,
officer, or senior or regional director or property manager of Manager, or (ii)
hire any key employee, officer, or senior or regional director or property
manager employed by Manager or any former key employee, officer, or senior
property manager (of Manager) whose employment with Manager has ceased within
180 days of such solicitation or hire. The term "key employee" includes regional
and on-site hotel employees such as the regional vice presidents, regional
directors of sales, district managers, hotel general managers and assistant
general managers, hotel directors of sales, hotel food and beverage manager and
assistant food and beverage managers, and executive housekeepers. Owner and
Manager agree that Manager will suffer substantial damage as the result of the
loss of trained and experienced supervisory personnel, and that Owner's
agreement contained in this Section 15.13 is a material consideration. Further,
Owner and Manager acknowledge that the damages that Manager will sustain as a
result of Owner's breach of this provision are substantial but are difficult to
ascertain. Therefore, Owner and Manager agree to provide for liquidated damages
in the sum of $500,000.00, representing Owner's and Manager's best estimate as
to the damages that would be incurred by Manager from each separate breach of
this Section 15.13 by Owner, and not as a penalty or forfeiture. Owner and
Manager agree that such liquidated damages are in lieu of any other remedy and
that the solicitation and/or employment of each individual in violation of this
Section 15.13 will constitute a separate breach and give rise to a separate
damage award. Owner will cause its subsidiaries and affiliates to comply with
the provisions of this Section 15.13.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed or caused this Agreement to be executed, all as of the
day and year first above written.
OWNER:
AMERI-FIRST HOLDINGS, INC.,
a Texas corporation
By:_______________________________________
Xxxxxxx X. Bruteyn, President
MANAGER:
HMGT MANAGEMENT CORPORATION,
a Delaware corporation
By:_______________________________________
C. Xxxxx Xxxxxxxxx XX, President
SCHEDULE I
TERMS OF AGREEMENT
1. Date of Agreement: June 15, 2000
2. Description of Hotel (Preamble): All hospitality properties owned or
controlled by Ameri-First Group, Inc.
and its subsidiaries. This includes
hotels, motels, inns, resorts, and
extended stay properties.
3. Commencement Date (Section 1.02): June 27, 2000
4. Expiration Date (Section 1.02): June 26, 2004
5. Capital Replacement Reserve Account (Section 2.03): 3.0%
6. Agreement Limitations (Section 3.04):
a. Maximum Amount: $125,000.00
b. Time Period: 48 months
7. Minimum Balance (Section 4.02): $10,000.00
8. Base Management Fee (Section 6.01):4.0% of Gross Revenue
9. Incentive Management Fee (Section 6.01): 2% of Gross Operating Profit
10. Accounting Service Fee (Section 6.02): $1,500.00 per month per
property ($1,500 per
month per hotel managed)
11. Termination Fee (Section 13.01): $1,000,000.00
12. First Mortgage (Section 14.10): All mortgages on all properties
13. Ground Lease (Section 14.17): If applicable
15. Owner (Section 14.32): Ameri-First Financial Group, Inc. and its
subsidiaries, including, but not limited to,
Ameri-First Holdings, Inc., 0000 Xxxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxx 00000
16. Notices (Section 15.10)
17. Use of the xxxx "HomeGate": HMGT Management Corporation will allow
Owner to use the xxxx "HomeGate" in the
Hotel name as long as Manager continues
to manage the Hotel. Owner agrees to
immediately cease using HomeGate upon
the termination of this Agreement.
SCHEDULE II
MANAGEMENT SERVICES INCLUDED IN BASE MANAGEMENT FEE
AND ACCOUNTING SERVICES FEE
1. Establish staffing requirements
2. Establish employment politics such as hiring policies terms of employment,
wage scales, and vacation and benefit packages
3. Select key employees and department heads.
4. Provide property level training
5. Establish rates and charges for the goods and services to be sold by the
Hotel
6. Implement sales and marketing strategies
7. Supervise property operations
8. Negotiate and sign purchase orders and service agreements
Home Office
9. Provide a regional director of operations to supervise property activities
10. Provide a regional sales director
11. Provide human resources management
12. Provide management information systems
13. Make available Manager's legal staff to provide assistance in day-to-day
property operations.
14. Negotiate national vending contracts
15. Purchase all Operating Supplies and Operating Equipment
16. Pay all expenses incurred in the operation of the Hotel
17. Maintain the Hotel in good order, repair and condition
18. Prepare a schedule of suggested insurance coverage and administrate
purchase of all insurance, if requested by Owner
19. Implement Manager's standard administrative, accounting, budgeting,
marketing, and operational policies and practices
Accounting Services
1. Prepare sales and use tax returns
2. Process accounts payable
3. Prepare monthly and yearly financial statement
4. Provide cash management services
