HOTEL/MOTEL MANAGEMENT AGREEMENT
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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 Operation Team. 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
identifed in writing by Owner.
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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.
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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.
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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
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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.
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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.
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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
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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 regained 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 polices in accordance with
Manager's proposal at a price established by Manager.
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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 (80)
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
Managers 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.
9.08 Indemnified Parties. The indemnities contained in this Article 9
will tun 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
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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.
12.01 Termination 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.
18.02 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 18.01, together with amounts sufficient to indemnify
Manager against liability arising under any law governing notification
to employees.
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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
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arid 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.
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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 exduding 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 takes, 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 ail 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 7.016).
HOTEL/MOTEL MANAGEMENT AGREEMENT -- Page 13
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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 arse 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 nun 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 tights 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.
HOTEL/MOTEL MANAGEMENT AGREEMENT - Page 14
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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'hotice 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 tire 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.
HOTEL/MOTEL MANAGEMENT AGREEMENT - Page 15
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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: /s/ X.X. Bruteyn
--------------------------------
Name: Xxxxxxx X. Bruteyn
---------------------------
Title: President
--------------------------
MANAGER:
-------
HMGT MANAGEMENT CORPORATION,
a Delaware corporation
BY: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxx, President
HOTEL/MOTEL MANAGEMENT AGREEMENT - Page 16
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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 Financial
Group, Inc. and 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 27, 2000
5. Capital Replacement Reserve Account (Section 2.08): 3.0%
6. Agreement Limitations (Section 3.04):
1. Maximum Amount: 125,000
2. Time Period: 48 months
7. Minimum Balance (Section 4.02): $10,000
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): $1500 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
subsidiaries including but not
limited to Ameri-First Financial
Groups Inc., 0000 Xxxx Xxx, Xxx.
000, Xxxxxx, Xxxxx 00000, Ameri-
First Holdings Inc.
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.
HOTEL/MOTEL MANAGEMENT AGREEMENT - Page 17
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