DAILY GRILL RESTAURANT MANAGEMENT AGREEMENT
DAILY GRILL RESTAURANT MANAGEMENT AGREEMENT (this "Agreement") made as of
the 30th day of July, 1998 between Hotel Restaurants Properties, Inc.
("Operator"), a California corporation, Grill Concepts, Inc. ("Affiliate"), a
Delaware corporation, and CapStar Georgetown Company, L.L.C. ("Owner"), a
Delaware limited liability company. Owner and Operator acknowledge that Operator
is affiliated with Affiliate.
RECITALS
A. Owner is the owner of a full-service hotel (the "Hotel") known as the
Georgetown Inn located at 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000;
B. Operator and/or Affiliate own and operate, among other restaurants, The
Daily Grill restaurant chain ("Daily Grill"), and have substantial experience in
the management and operation of such restaurants;
D. Operator and/or Affiliate own the uniform restaurant operating system,
necessary for the establishment and operation of Daily Grill restaurants with
distinctive features, equipment, equipment design, menus, food formulas,
inventories, manuals, training Systems, and accounting systems (collectively,
the "Operating System") which restaurant and Operating System are identified by
the service and trademarks "Daily Grill" and related words and symbols
(collectively, "Existing Marks") identifying the Daily Grill restaurants and
their goods and services;
E. Subject to the terms and conditions set forth in this Agreement, (i)
Owner wishes to retain Operator (either directly and/or indirectly through
Affiliate) to act as manager in connection with certain of Hotel's restaurant,
bar, room service, and limited banquet food service operations as more
specifically described herein (the "Managed Outlet") and (ii) Operator desires
to accept such retention; and
F. Owner and Operator desire to evidence their agreement with respect to
the operation, direction, management, and supervision of the Managed Outlet as
more particularly set forth below.
NOW, THEREFORE, for and in consideration of the premises, and other good
and valuable consideration, Owner and Operator agree as follows:
ARTICLE I
THE MANAGED OUTLET
1.1. Owner and Operator acknowledge that the Managed Outlet means
collectively the Hotel's restaurant, bar, room service operation, and associated
kitchen area that are approximately 5,000 square feet and more fully described
in Exhibit "A" hereto including, without limitation:
A. The non-structural portions of the restaurant in the Hotel, including
the interior walls, ceiling and floor (the "Restaurant");
B. Mechanical systems and built-in installations (the "Installations")
serving the Restaurant exclusively or primarily, including, but not limited to,
heating, ventilation, air conditioning, electrical and plumbing systems,
elevators and lifts, and built-in refrigeration and kitchen equipment;
C. Restaurant furniture, furnishings, wall coverings, floor coverings,
window treatments, fixtures and other equipment (the "FF&E");
D. Chinaware, glassware, silverware, linens, and other items of a similar
nature used in the operation of the Managed Outlet (the "Operating Equipment");
and
E. Stock and inventories of paper supplies, cleaning materials and similar
consumable items and food and beverage used in the operation of the Managed
Outlet (the "Operating Supplies").
ARTICLE II
OPERATING TERM
2.1. This Agreement shall have a term consisting of (i) a start-up period
("Start-up Period") commencmg on July 1, 1998 (the "Effective Date") and
ternninating on the later to occur of (x) December 31, 1998 and (y) the date on
which the Managed Outlet opens for business to the public, and (b) an operating
term (the "Operating Term"; the "Start-up Period and the Operating Term being
sometimes collectively referred to as the "Term") commencing upon the
termination of the Start-up Period and expiring on December 31, 2020, unless
sooner terminated in accordance with the provisions of this Agreement or unless
extended by the written agreement of Owner and Operator. During the Start-up
Period, all the terms and conditions of this Agreement other than as set forth
in Section 10.2 shall apply.
ARTICLE III
GENERAL SERVICES BY OPERATOR
3.1. During the Operating Term (and, as applicable, the Start-up Period),
Operator, as agent and for the account of Owner, shall in accordance with the
Budgets (as defined in Section 9.4) and the other applicable provisions of this
Agreement and subject to the availability of funds:
A. Provide first class breakfast, lunch and dinner to the Managed Outlet
comparable to other Daily Grill operations from 6:30am to at least 11 :0Opm,
seven (7) days each week, three hundred sixty-five (365) days a year. The menu
and pricing for the Managed Outlet and banquets shall be at a price comparable
to other Daily Grill locations and subject to the prior reasonable approval of
Hotel Operator.
B. Provide first class food and beverage service for banquet and catering
events at Operator's standard menu pricing, subject to the reasonable prior
approval of Hotel Operator, for any events scheduled by the Hotel. Operator
shall add a fixed fifteen percent (15%) service charge to all banquet checks.
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C. Provide first class room service operations for breakfast, lunch and
dinner during the hours when the Restaurant is open for business, seven (7) days
each week, three hundred sixty-five (365) days a year. Room service menu prices
shall not be greater than fifteen percent (15%) above the prices on the dining
room menu without the prior written consent of Owner. A fixed gratuity of
fifteen percent (15%) or a reasonable delivery charge (at Operator's discretion,
subject to the approval of Owner, such approval not to be unreasonably withheld)
may be charged on all room service orders and will be clearly indicated on the
Hotel guest check.
D. Recruit, train, direct, supervise, employ and dismiss on-site staff
("Managed Outlet Employees") for the operation of the Managed Outlet, and at
Operator's expense provide such corporate supervisory personnel as it deems
necessary at its corporate offices to oversee management of the Managed Outlet.
E. Develop and implement advertising, marketing, promotion, publicity and
other similar programs for the Managed Outlet, in accordance with this
Agreement and the Budgets or as otherwise approved by Owner.
F. Negotiate and enter into contracts for the provision of services to the
Managed Outlet; provided, however, that any contract for an amount in excess of
$25,000 per year; which has a term in excess of two years, with any affiliate of
Operator or affiliate, which would result in a lien or encumbrance on the
Restaurant or Hotel or which is not terminable on thirty days' or less notice
without payment of penalty or premium shall require the prior written approval
of Owner.
G. Apply for, process and take all necessary steps to procure and keep in
effect in Owner's name (and/or, if required by the applicable licensing
authority, in Owner's and/or Operator's name) all licenses and permits required
for the operation of the Managed Outlet.
H. Purchase all FF&E, Operating Equipment and Operating Supplies necessary
for the operation of the Managed Outlet.
I. Provide routine accounting and purchasing services as required in the
ordinary course of business of the Managed Outlet.
J. Maintain the Restaurant in first class condition and state of repair
comparable with other Daily Grills as of the date hereof and in compliance with
all applicable laws, ordinances, regulations, rulings and orders of governmental
authorities and the requirements of all permits and licenses, including without
limitation liquor licenses.
K. Represent Owner in connection with the making of any capital
improvements to the Restaurant or the renovation, refurbishment, refixturing and
reequipping of the Restaurant, including without limitation the Initial Remodel
(as defined in Exhibit C to this Agreement), and to that end and subject to the
prior written approval of Owner in each instance negotiate and enter into
agreements for architectural, engineering. testing, consulting and construction
services.
L. Provide such other services as are required under the terms of this
Agreement or as are customarily performed by restaurant management companies of
similar restaurants in the area of the Hotel.
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3.2. The parties acknowledge and agree that to in order to position the
Managed Outlet to function in an orderly and appropriate manner from and after
the commencement of the Operating Term, Operator shall during the Start-Up
Period perform the services set forth in Sections 3.1 A through 3.1 L to the
extent necessary or desirable to prepare and organize the Managed Outlet for its
opening (collectively, "Pre-Opening Services"), including without limitation
preparing for Owner's approval an operating budget and a capital budget for the
Managed Outlet during the Start-Up Period (the "Initial Budgets"), including but
not limited to FF&E expenditures and the Initial Remodel, which Initial Budgets
shall be initially prepared and delivered to Owner for Owner's review on or
prior to the Effective Date. The Initial Budgets and plans and specifications
for the Initial Remodel shall be prepared by Operator and delivered to Owner no
later than August 15, 1998.
3.3 Operator will discharge its duties under this Agreement using a
standard of diligence customary for operators of similar properties with the
objective of maximizing Total Revenues (as hereinafter defined) and Net
Operating Income (as hereinafter defined) consistent with the requirements of
the Budgets.
ARTICLE IV
GENERAL OPERATION OF THE MANAGED OUTLET
4.1. Owner hereby engages Operator as the operator of the Managed Outlet
during the Start-Up Period and the Operating Tenn, and Operator hereby accepts
such engagement. Subject to the terms of this Agreement and the applicable
Budgets, Operator shall have control and discretion in the operation, direction,
management and supervision of the Managed Outlet.
4.2. Operator shall operate the Managed Outlet in the same manner as is
customary and usual in Operator's other Daily Grill restaurants as of the date
hereof and otherwise in confonmity with the operation of the Hotel.
4.3 Operator will be available to consult with and advise Owner, at Owner's
reasonable request, concerning all policies and procedures affecting all phases
of the conduct of business at the Managed Outlet. Operator shall in all events
consult with and obtain the approval of Owner before implementing any material
changes in policies and procedures relating to the Managed Outlet.
4.4 Subject to the availability of parking spaces at the Hotel, Owner shall
provide Operator with up to two (2) hour valet parking per Restaurant guest at a
discounted monthly rate equal to the lesser of: (a) $1.50 per hour utilized by
Operator, and (b) $2500 per month. Restaurant guests will pay posted parking
rates for any excess parking time over the two (2) hour discounted period. These
rates shall increase each year by an amount equal to the annual increase (not to
exceed three percent (3%) in any calendar year) in the Consunier Price Index
(CPI) for urban consumers in the Washington. D.C. metropolitan area throughout
the Term of this Agreement. The foregoing parking expenditures made by Operator
shall be included as Operating Expenses.
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ARTICLE V
AGENCY; HOTEL EMPLOYEES
5. 1. In the performance of its duties as operator of the Managed Outlet,
Operator shall act solely as agent of Owner. Nothing in this Agreement shall
constitute or be construed to be or create a partnership or joint venture
between Owner and Operator. Except as otherwise provided in this Agreement, (a)
all debts and liabilities to third persons incurred by Operator in the course of
its operation and management of the Managed Outlet in accordance with the
provisions of this Agreement shall be the debts and liabilities of Owner only
and (b) Operator shall not be liable for any such obligations by reason of its
management, supervision, direction and operation of the Managed Outlet as agent
for Owner. Operator may so inform third parties with whom it deals on behalf of
Owner and may take any other reasonable steps to carry out the intent of this
paragraph.
5.2. Notwithstanding anything contained in Section 5.1 to the contrary, all
Managed Outlet Employees other than salaried employees such as the General
Manager, Assistant Managers, Chef and Sous Chefs (such salaried employees being
hereinafter referred to as "Operator's Employees") shall be employees of Owner
("Owner's Employees"), and all Operator's Employees shall be employees of
Operator. Owner shall pay all wages and benefits of Owner's Employees directly
and Operator shall reimburse Owner for such amounts from the Agency Account
within three (3) days after receipt of an invoice with respect thereto from
Owner. All compensation of both Owner's Employees and Operator's Employees shall
be an Operating Expense (as defined in Section 11.2).
5.3. (a) Operator, with Owner's prior approval, may enroll the Operator's
Employees in pension, medical and health, life insurance and similar employee
benefit plans substantially similar to corresponding plans implemented in other
Daily Grills and first class restaurants in the area of the Hotel. Such plans
may, with Owner's prior approval, be joint plans for the benefit of employees at
more than one facility owned, leased or managed by Operator, Affiliate or their
respective affiliates. Employer contributions to such plans (including any
withdrawal liability incurred upon termination of this Agreement) and reasonable
administrative fees which Operator may expend in connection therewith shall be
the responsibility of Owner and shall be an Operating Expense. The
administrative expenses of any joint plans will be equitably apportioned by
Operator among properties covered by such plan.
(b) Owner may enroll the Owner's Employees in pension, medical and health,
life insurance and similar employee benefit plans substantially similar to
corresponding plans implemented in the Hotel and other hotels owned or managed
by Owner or its affiliates. Such plans may be joint plans for the benefit of
emplovees at more than one facility owned, leased or managed by Owner or its
affiliates. Employer contributions to such plans (including any withdrawal
liability incurred upon termination of this Agreement) and reasonable
administrative fees which Owner may expend in connection therewith shall be an
Operating Expense and reimbursed to Owner by Operator out of the Agency Account
within three (3) days after receipt of an invoice with respect thereto from
Owner. The administrative expenses of any joint plans will be equitably
apportioned by Owner among properties covered by such plan.
5.4. Owner shall provide Operator with a ma\imum of sixty (60) room nights
(including only room, tax and parking charges, and which may be either at the
Hotel, another hotel in the Washington D.C. area managed by affiliates of Owner
and reasonably convenient to the Hotel, or another hotel in the Washington. D.C.
area similar to any of the foregoing and reasonably convenient to the Hotel)
during the first 12 months of the Term, for the purpose of housing Operator's
representatives who are responsible for supervising the construction, opening,
and training of employees of the Managed Outlet. After the end of such period,
Hotel shall provide twenty (20) room nights (including only room, tax and
parking charges, and which may be either at the Hotel, another hotel in the
Washington D.C. area managed by affiliates of Owner and reasonably convenient to
the Hotel, or another hotel in the Washington, D.C. area similar to any of the
foregoing and reasonably convenient to the Hotel) during each twelve (12) month
period for the purpose of enabling such representatives to monitor continuing
employee training and supervision.
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5.5. Operator shall not be liable for any failure of the Managed Outlet to
comply prior to the Effective Date with all federal, state, local and foreign
statutes, laws, ordinances, regulations, rules, permits, judgments, orders and
decrees affecting labor union activities, civil rights or employment in the
United States, including, without limitation, the Civil Rights Act of 1870, 42
U.S.C. Sec. 1981, the Civil Rights Acts of 1871, 42 U.S.C. Sec. 1983 the Fair
Labor Standards Act, 29 U.S.C. Sec. 201, et. seq., the Civil Rights Act of 1964,
42 U.S.C. Sec. 2000e, et. seq., as amended, the Age Discrimination in Employment
Act of 1967, 29 U.S.C. Sec. 621, the Rehabilitation Act, 29 U.S.C. Sec. 701, et.
seq., the Americans With Disabilities Act of 1990, 29 U.S.C. Sec. 706,42 U.S.C.
Sec. 12101, the Employee Retirement Income Security Act of 1974,29 U.S.C. Sec.
301, et. seg. , the Equal Pay Act, 29 U.S.C. Sec. 201, et seq., the National
Labor Relations Act, 29 U.S.C. Sec. 151, et. seq., and any regulations
promulgated pursuant to such statutes (collectively, as amended from time to
time, and together with any similar laws now or hereafter enacted, the
"Employment Laws").
5.6. Operator shall from time to time develop and implement policies,
procedures and programs for the Managed Outlet (collectively, the "Employment
Policies") reasonably designed to effect compliance with the Employment Laws.
The Employment Policies shall be consistent with industry standards from time to
time for reputable hotel management companies.
5.7. At Owner's request, Operator shall periodically make recommendations
to Owner with respect to the desirability of maintaining Employment Practices
Liability Insurance ("Employment Insurance") for the benefit of Owner and
Operator. If Owner shall purchase, or shall approve the purchase of Employment
Insurance, the premium for such insurance (or an allocable amount in the event
that more than one hotel is covered by such policy) shall be an Operating
Expense.
ARTICLE VI
PROVISION OF FUNDS
6.1. In performing its services under this Agreement, Operator shall act
solely as agent and for the account of Owner. Operator shall not be deemed to be
in default of its obligations under this Agreement to the extent it is unable to
perform any obligation due to the lack of available funds from the operation of
the Managed Outlet or as otherwise provided by Owner.
6.2. Operator shall in no event be required to advance any of its funds
(whether by waiver or deferral of its management fees or otherwise) for the
operation of the Managed Outlet.
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ARTICLE VII
DAILY GRILL LICENSE
7.1 In addition to the definitions set forth elsewhere herein, the terms
set forth in this Article VII will have the meanings set forth herein:
A. "License Rights" mean, collectively, the Operating System, the
Existing Marks, and the Marks defined below.
B. "Marks" mean, collectively, the Existing Marks and such other
tradenames, service marks, logo types, trade symbols, emblems, signs,
logos, insignias, trademarks, designs, patents and copyrights as Operator
or Affiliate owns or may hereafter acquire, develop, or adopt or designate
for use in conjunction with the Operating System.
7.2. Upon the terms and conditions set forth herein, Operator grants to
Owner, and Owner accepts from Operator, the right, license, and privilege of
utilizing the License Rights during the Term, solely and only in connection with
operation of the Managed Outlet and the Hotel and (with reference to any use of
the License Rights not in the ordinary course of business of the Hotel) only in
such manner as Operator approves in writing. Owner will not make or authorize
any direct or indirect use of any of the License Rights other than directly in
connection with operation of the Managed Outlet and the Hotel, and (with
reference to any use of the License Rights not in the ordinary course of
business of the Hotel) only in such manner as Operator approves in writing. The
Operator hereby approves the use by Owner in the Hotel of signs, pictures and
posters advertising the presence of the Managed Outlet in the Hotel, and the
inclusion in Hotel advertising and promotional materials of reference to the
Managed Outlet, provided such advertising and promotional material is in keeping
with the quality of a Daily Grill and has been approved in advance by Operator,
which approval shall not be unreasonably withheld or delayed. The license
granted hereby shall be effective only during the Tenn of this Agreement and
shall automatieally end on the expiration or earlier termination of this
Agreement.
7.3. Owner acknowledges and agrees that the License Rights shall at all
times during the Term be the sole and exclusive property of Operator. Operator
expressly retains and reserves all rights in and to each of the License Rights,
subject only to the rights specifically granted to Owner in this Agreement.
Owner further acknowledges and agrees that it has been granted the use of the
License Rights solely for the duration of the Term and only in conjunction with
the Managed Outlet and the Hotel, and that this Agreement is not intended as
Operator's transfer or sale to Hotel of any of the License Rights. Nothing
contained in this Agreement shall be construed to prevent Operator from granting
any other licenses for the use of any or all of the License Rights at any other
location, except Operator shall not license or operate any new Daily Grill
restaurant within two (2) miles of the Hotel, or from utilizing any of the
License Rights in any manner whatsoever, provided, however, that Operator shall
not use the License Rights in such a way as could materially and adversely
affect Owner or the Hotel. Owner acknowledges that it will not acquire any
rights whatsoever in any of Operator's goodwill and/or proprietary marks,
including any of the License Rights. as a result of the Hotel's use thereof,
except as specifically set forth herein. Owner agrees that it shall not, during
the Term or thereafter, take any actions that encumber the Operator's ownership
of its proprietary marks, including the License Rights or the validity thereof.
7.4 Owner agrees at all times during the Term to use the License Rights
only in conjunction with the Hotel and in the manner provided herein.
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ARTICLE VIII
WORKING CAPITAL AND BANK ACCOUNTS
8.1. Owner will provide Operator with a sufficient amount of initial
working capital for the Managed Outlet, as determined in the reasonable
discretion of Owner (the "Initial Working Capital"). Thereafter, funds
sufficient in amount to constitute normal working capital for the uninterrupted
and efficient operation of the Managed Outlet shall be maintained from Total
Revenues or otherwise provided by Owner in an amount at least equal to the
working capital specified in the most recent Cash Flow Forecast (as defined in
Section 9.4).
8.2. All funds received by Operator in the operation of the Managed Outlet,
including working capital furnished by Owner, shall be deposited in a special
account or accounts bearing the name of the Managed Outlet (the "Agency
Account") in such federally insured bank, savings and loan or trust company as
may be selected by Operator and reasonably approved by Owner. Any successor or
substitute bank, savings and loan or trust company shall be selected in the same
manner. From the Agency Account, Operator shall pay all Operating Expenses,
Fixed Charges, the Hotel Priority Return (as hereinafter defined) and other
amounts required to be paid by Operator on Owner's behalf under this Agreement.
In addition to the Agency Account, an account shall be established at the same
institution for a reserve for replacements, substitutions and additions to the
FF&E (the "FF&E Reserve Account").
8.3. The Agency Account and the FF&E Reserve Account shall be in the name
of Operator as agent for Owner and shall be under the control of Operator.
Checks or other documents of withdrawal shall be signed only by representatives
of Operator, provided that such representatives shall be bonded or otherwise
insured in a manner reasonably satisfactory to Owner. The premiums for bonding
or other insurance shall be an Operating Expense except for premiums for bonding
off-site executive employees of Operator. Upon the expiration or termination of
this Agreement all remaining amounts in the Agency Account and the FF&E Reserve
Account shall be transferred to Owner.
ARTICLE IX
BOOKS, RECORDS AND STATEMENTS; BUDGETS
9.1. Operator shall keep full and accurate books of account and other
records reflecting the results of the operation of the Managed Outlet in
accordance with GAAP, or in such other format proposed by Operator as Owner
shall approve in its sole discretion. Except for the books and records which may
be kept in Operator's home office or other suitable location pursuant to the
adoption of a central billing system or other centralized service, the books of
account and all other records relating to or reflecting the operation of the
Managed Outlet shall be kept at the Managed Outlet and shall be available to
Owner and its representatives at all reasonable times for examination. audit,
inspection and transcription. All of such books and records shall be the
property of Owner. Upon any termination of this Agreement, all of such books and
records shall thereafter be available to Operator at all reasonable times for
inspection, audit, examination and transcription for a period of three (3)
years.
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9.2. Operator shall deliver to Owner within twenty (20) days after the end
of each month the following iterns (collectively, the "Monthly Reports"):
A. An executive summary noting highlights of operations for such
month;
B. A source and use of funds statement (which statement shall be
required within twenty (20) days after the end of each calendar quarter
only);
C. An income and expense statement for such month;
D. A twelve-month summary and forecast of operations for the current
fiscal year utilizing (i) actual year-to-date figures, (ii) forecasts for
the next 30, 60 and 90 day periods and (iii) budgeted amounts for the
balance of the fiscal year;
E. A twelve-month summary and forecast of cash flow for the current
fiscal year utilizing (i) actual year-to-date figures, (ii) forecasts for
the next 30, 60 and 90 day periods and (iii) budgeted amounts for the
balance of the fiscal year;
F. A summary of year-to-date capital expenditures and budgeted amounts
for the balance of the year; and
G. Such other monthly reports as Owner may reasonably request and as
are customarily provided by managers of similar restaurant facilities in
the area of the Hotel.
The Monthly Reports shall be prepared in accordance with the GAAP and shall
otherwise be prepared in accordance with Operator's standard financial reporting
and budgeting practices. Owner agrees that the Monthly Reports may be prepared
on a consistent basis for periods other than one month (an "Operator's Reporting
Period"), but only on the condition that the end of each calendar quarter
coincides with the end of an Operator's Reporting Period.
9.3. Year-end financial statements for the Managed Outlet (including a
balance sheet, income statement and statement of sources and uses of funds)
shall be prepared and certified by an independent certified public accountant
selected by Operator and approved by Owner. Operator shall cooperate in all
respects with such accountant in the preparation of such statements.
9.4. On or before each December 1 during the Operating Term, Operator shall
submit to Owner for the next fiscal year the following items (collectively, the
"Budgets"):
A. An operating budget (the "Operating Budget") setting forth in
reasonable line-item detail the projected income from and expenses of all
aspects of the operations of the Managed Outlet;
B. A capital budget (the "Capital Budget") setting forth in reasonable
line-item detail proposed capital projects and expenditures for the Managed
Outlet including but not limited to FF&E expenditures;
C. A cash flow forecast (the "Cash Flow Forecast") on a monthly
basis; and
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D. Such other reports or projections as Owner may reasonably request
and as are customarily provided by managers of similar restaurant
facilities in the area of the Hotel.
The Budgets shall be prepared in accordance with the Operator's standard
financial reporting and budgeting practices consistent with other Daily Grill
operations; provided, however, that Operator shall from time to time upon
Owner's request make such reasonable modifications thereto as may be necessary
to allow Owner (i) to satisfy mortgagee requirements, if any, (ii) to satisfy
reporting requirements imposed on Owner by applicable law or (iii) to prepare
Owner's own financial statements in accordance with the "Uniform System of
Accounts" (Eighth Revised Edition 1986, as further revised from time to time) as
adopted by the American Hotel and Motel Association of the United States and
Canada ("Uniform System").
9.5. Upon approval of the Budgets by Owner, Operator shall cause the
Managed Outlet to be operated substantially in accordance with the Budgets.
Operator shall not, without Owner's prior approval:
A. Incur any expense for any line-item in the Operating Budget which
causes the aggregate expenditures for such line-item to exceed the budgeted
amount by the greater of (i) 10% or (ii) $5,000 or more for the applicable
fiscal period set forth in the Operating Budget, provided that Operator
may, without Owner's approval, (i) pay any expenses (the "Necessary
Expenses") regardless of amount, which are necessary for the continued
operation of the Managed Outlet and which are not within the reasonable
control of Operator (including, but not limited to, those for taxes,
utility charges and debt service) and (ii) pay any expenses (the "Emergency
Expenses") regardless of amount which, in Operator's good faith judgment,
are immediately necessary to protect the physical integrity or lawful
operation of the Managed Outlet or the health or safety of its occupants;
or
B. Incur any expense for any line-item in the Capital Budget which
causes the aggregate expenditures for such line-item to exceed the budgeted
amount by the greater of (i) 10% or (ii) $5,000 more provided that Operator
may, without Owner's approval, pay any Emergency Expenses which are capital
in nature.
Nothing in this Section 9.5 shall be deemed in any way to limit the provisions
of Article VI above.
9.6. If the Budgets (or any component of the Budgets), have not been
approved by Owner prior to any applicable fiscal year, then, until approval of
the Budgets (or such components) by Owner, Operator shall cause the Managed
Outlet to be operated substantially in accordance with the such prior year's
Budgets except for, or as modified by, (a) those components of such Budgets for
the applicable fiscal year approved by Owner, b) the Necessary Expenses which
shall be paid as required and (c) the Emergency Expenses which shall be paid as
required.
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ARTICLE X
MANAGEMENT FEES
AND PAYMENTS TO OPERATOR AND OWNER
10.1. Operator shall pay to Owner, in consideration of the Hotel Capital
Contribution (as defined in Exhibit C) and in consideration of the loss to Owner
caused by the period of time the existing restaurant is to be closed for
business with the public while it is being converted to a "Daily Grill" outlet,
on a monthly basis on or prior to the tenth (10th day of each month from and
after the Effective Date through the end of the Start-up Period, a fee equal to
$10,000 per month (the "Start-Up Fee"), which fee shall in no event be less than
$60,000.
10.2. Owner shall pay to Operator, on a monthly basis from and after the
commencement of the Operating Term, for services rendered under this Agreement
during the Operating Term, but only with respect to periods with respect to
which Owner has received its full Hotel Priority Return, a management fee (the
"Basic Fee") equal to the lesser of (i) an amount equal to Total Revenues with
respect to such period multiplied by eight percent (8%) and (ii) an amount equal
to Net Operating Thcome Before Basic Fee (as hereinafter defined) for the
applicable period. If there is not sufficient cash flow from operations of the
Managed Outlet for Operator to be paid the Basic Fee at the end of any month,
the amount of the deficiency shall accrue without interest and, subject to the
provisions of Section 3 of Exhibit B of this Agreement, be repaid in the first
period or periods when there is available cash flow after payment of the then
current Operating Expenses and Fixed Charges. As part of the adjustment to be
made pursuant to Section 10.6 below, if Net Operating Income Before Basic Fee
with respect to any calendar year during the Term is greater than or equal to
eight percent (8%) of Total Revenues with respect to such calendar year, then
Owner shall pay to Operator the amount, if any, by which eight percent (8%) of
Total Revenues with respect to such calendar year exceeds the aggregate Basic
Fee otherwise paid or payable to Operator with respect to such calendar year,
which amount, if any, shall from and after its payment be part of Operator's
Basic Fee and further provided that Owner may offset against any such amount any
Second Tier Payback (as hereinafter defined) then due and owing from Operator.
10.3. In addition to the Basic Fee, Owner shall pay to Operator on an
annual basis an incentive management fee (the "Incentive Fee") determined in
accordance with Exhibit B to this Agreement.
10.4. In each month during the Operating Term, Operator shall be paid out
of the Agency Account the Basic Fee for the preceding month, as determined from
the monthly income and expense statement, such payment to be made upon delivery
of the income and expense statement for such month showing the computation of
Total Revenues and the Basic Fee for such month.
10.5. On or before the twentieth (2Oth) day following the last day of each
calendar quarter (or such other fiscal period as Owner and Operator may
determine) of each fiscal year during the Operating Term, after (a) payment of
Operating Expenses and other amounts required to be paid under this Agreement,
(b) deposits to the FF&E Reserve Account in accordance with the Budget and (c)
retention of working capital sufficient to assure the uninterrupted and
efficient operation of the Managed Outlet, in accordance with the most recently
approved Cash Flow Forecast, all funds in the Agency Account shall be paid to
Owner.
10.6. At the end of each fiscal year and following receipt by Owner of the
annual audit set forth in Section 9.3, an adjustment will be made, if necessary,
based on the audit so that Operator shall have received the accurate Basic Fee
and Incentive Fee for such fiscal year. Within thirty (30) days of receipt by
Owner and Operator of such audit, Operator shall either (a) place in the Agency
Account or remit to Owner, as appropriate, any excess amounts Operator may have
received for such fees during such calendar year or (b) be paid out of the
Agency Account or by Owner, as appropriate, any deficiency in the amounts due
Operator for the Basic Fee and the Incentive Fee.
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10.7 With respect to any month in which there is outstanding any Additional
Hotel Capital Contribution (as defined in Exhibit C) which has not been fully
repaid to Owner, Operator shall pay to Owner (i) out of any aggregate Basic Fee
and/or Incentive Fee otherwise due to Operator hereunder but only for so long as
any Second Tier Additional Hotel Capital Contribution (as defined in Exhibit C)
shall remain outstanding, in whole or partial repayment, as the case may be, of
the Second Tier Additional Hotel Capital Contribution, an amount (the "Second
Tier Payback"), if any, equal to the lesser of (x) the total Second Tier
Additional Hotel Capital Contribution then outstanding and (y) the aggregate
Basic Fee and Incentive Fee due to Operator with respect to such month and (ii)
after the Second Tier Additional Hotel Capital Contribution has been repaid in
full, in whole or partial repayment, as the case may be, of the First Tier
Additional Hotel Capital Contribution (as defined in Exhibit C), and prior to
the payment of the Basic Fee or any Incentive Fee due Operator but after Owner
has received the Hotel Priority Return, an amount (the "First Tier Payback"; the
First Tier Payback and the Second Tier Payback being hereinafter sometimes
individually or collectively referred to as a "Capital Payback"), if any, equal
to (i) the lesser of (x) the total First Tier Additional Hotel Capital
Contribution then outstanding and (y) Net Operating Income Before Basic Fee with
respect to such month, which First Tier Payback shall be paid out of the Agency
Account. Any Capital Payback shall be paid to Owner by Operator within ten (10)
days after the delivery to Operator by Owner of a reasonably detailed statement
setting forth the Capital Payback payable with respect to such month. At the end
of each fiscal year and following receipt by Owner of the annual audit set forth
in Section 9.3, an adjustment will be made, if necessary, based on the audit so
that Owner shall have received the accurate Capital Payback for such fiscal
year. Within thirty (30) days of receipt by Owner and Operator of such audit,
Operator shall either (a) place in the Agency Account or remit to Owner, as
appropriate, any excess amounts Operator may have received on account of its
Fees during such calendar year or (b) be paid out of the Agency Account or by
Owner, as appropriate, any deficiency in the amounts due Operator for the Basic
Fee and the Incentive Fee.
ARTICLE XI
CERTAIN DEFINITIONS
11.1. A. The term "Total Revenues" shall mean all income, revenue and
proceeds resulting from the operation of the Managed Outlet and all of its
facilities (net of rebates, refunds and overcharges of revenues not known at
the time of sale but adjusted at a later date) which are properly attributable
under the Uniform System to the period in question. Subject to Section 11. lB,
Total Revenues shall include, without limitation, all amounts derived from.
(i) The rentals of banquet or other facilities of the Managed Outlet;
(ii) The sale of food and beverage whether sold in a bar, lounge or
restaurant, delivered to a guest room, sold through an in-room facility or
vending machines, provided in meeting or banquet rooms or sold through
catering operations;
(iii) Charges for other Managed Outlet services or amenities; and
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(iv) The gross income upon which the proceeds of business interruption
or similar insurance are calculated.
B. Total Revenues shall not include:
(i) Sales or use taxes or similar governmental impositions collected by
Owner or Operator;
(ii) Tips, service charges and other gratuities received by Managed Outlet
Employees;
(iii) Proceeds of insurance except as set forth in Section 11.0 lA;
(iv) Proceeds of the sale or condemnation of the Hotel, any interest
therein or any other asset, or the proceeds of any loans or financings;
(v) Capital contributed to Owner or the Managed Outlet;
(vi) The repayment of any loans or interest thereon made by Owner other
than in the ordinary course of Hotel operations;
(vii) amounts attributed to complimentary meals served or provided to
employees of the Managed Outlet; and
(viii) the amount of any Capital Payback.
11.2. A. The term "Operating Expenses" shall mean all costs and expenses of
maintaining, conducting and supervising the operation of the Managed Outlet and
all of its facilities which are properly attributable under the Uniform System
to the period in question. Operating Expenses shall include, without limitation:
(i) The cost of all Operating Equipment and Operating Supplies;
(ii) Salaries and wages of Managed Outlet Employees, including costs of
payroll taxes and employee benefits. The salaries or wages of off-site employees
or executives of Operator shall not be Operating Expenses, provided that if it
becomes necessary for an off-site employee or executive of Operator to
temporarily perform services at the Managed Outlet of a nature normally
performed by Managed Outlet Employees, his salary (including payroll taxes and
employee benefits) for such period only as well as his traveling expenses shall
be Operating Expenses;
(iii) The cost of all other goods and services obtained in connection with
the operation of the Managed Outlet including, without limitation heat and
utilities, laundry, landscaping and exterminating services and office supplies:
(iv) The cost of all repairs to and maintenance of the Managed Outlet;
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(v) Insurance premiums (or the allocable portion thereof in the case of
blanket policies) for all insurance maintained under Article XIII (other than
insurance against physical damage to the Hotel) and losses incurred on any
self-insured risks (including deductibles);
(vi) All taxes, assessments, permit fees, inspection fees, and water and
sewer charges and other charges (other than income or franchise taxes) payable
by or assessed against Owner with respect to the operation of the Managed
Outlet, excluding Property Taxes (as defined in Section 11.4);
(vii) Legal fees and fees of any independent certified public accountant
for services directly related to the operation of the Managed Outlet and its
facilities;
(viii) All actual expenses for advertising the Managed Outlet and all
expenses of sales promotion and public relations activities;
(ix) All out-of-pocket expenses and disbursements reasonably incurred by
Operator, pursuant to, in the course of; and directly related to, the management
and operation of the Managed Outlet under this Agreement. Without limiting the
generality of the foregoing, such charges may include all reasonable travel,
telephone, telegram, facsimile, air express and other incidental expenses, but,
except as otherwise provided in this Agreement, shall not include any of the
regular expenses of the central offices maintained by Operator, other than
offices maintained at the Managed Outlet for the management of the Managed
Outlet. Operator shall maintain and make available to Owner invoices or other
evidence supporting such charges;
(x) The Basic Fee;
(xi) Payments under any applicable franchise agreement;
(xii) Any other item specified as an Operating Expense in this Agreement;
and
(xiii) Any other cost or charge classified as an Operating Expense or an
Administrative and General Expense under the Uniform System unless specifically
excluded under the provisions of this Agreement.
B. Operating Expenses shall not include:
(i) Amortization and depreciation;
(ii) the making of or the repayment of any loans or any interest thereon;
(iii) The costs of any alterations. additions or improvements which for
Federal income tax purposes must be capitalized and amortized over the life of
such alteration addition or improvement:
(iv) Payments into the FF&E Reserve Account;
(v) Any item defined as a Fixed Charge in Section 11.4; or
(vi) the amount of any Second Tier Payback.
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11.3 "Hotel Priority Return" shall mean an imputed annual return to Owner
prorated on a monthly basis equal to the (A) the Initial Hotel Capital
Contribution (as defined in Exhibit C) plus the then current outstanding balance
of the Additional Hotel Capital Contribution multiplied by (B) eight percent
(8%). The Hotel Priority Return shall be paid to Owner on a monthly basis out of
Net Operating Income Before Priority Return.
11.4 "Fixed Charges" shall mean the cost of the following items relating to
the Hotel or the Managed Outlet which are properly attributable under the
Uniform System to the period in question:
(i) 5.5% of the real estate taxes on the Building, an amount Owner
represents to Operator would currently equal $8,000, assessments, personal
property taxes and any other ad valorem taxes imposed on or levied in
connection with the Managed Outlet (collectively, "Property Taxes");
(ii) Insurance against physical damage to the Hotel; and
(iii) Rental payments or payments for purchase options under leases of
equipment which are capital leases under the Uniform System;
(iv) the Hotel Priority Return; and
(v) any First Tier Payback.
11.5. "Net Operating Income" for any period shall mean the amount, if any,
by which Total Revenues for such period exceed the sum of (a) Operating Expenses
and (b) Fixed Charges for such period.
11.6. "Net Operating Income Before Basic Fee" for any period shall mean the
amount, if any, by which Total Revenues for such period exceed the sum of (a)
Operating Expenses for such period (excluding the Basic Fee payable with respect
to such period) and (b) Fixed Charges for such period.
11.7. "Net Operating Income Before Priority Return" for any period shall
mean the amount, if any, by which Total Revenues for such period exceed the sum
of (a) Operating Expenses for such period (excluding the Basic Fee payable with
respect to such period) and (b) Fixed Charges for such period (excluding any
amounts referenced in clauses 11.4 (iv) and (v) above).
11.8. "Fiscal year" shall mean each calendar year or partial calendar year
within the Operating Term unless Owner and Operator otherwise agree.
ARTICLE XII
FF&E RESERVE
12.1. During each fiscal year there shall be allocated and paid on a
monthly basis to the FF&E Reserve Account from Total Revenues or other funds
provided by Owner such amount as is reflected in the applicable Budget for such
fiscal year.
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12.2. All funds in the FF&E Reserve Account, together with any interest
earned thereon and the proceeds of any sale of FF&E (which proceeds shall be
deposited in the FF&E Reserve Account) shall be used solely for purposes of
replacing or refurbishing the FF&E in accordance with the applicable Capital
Budget.
ARTICLE XIII
INSURANCE
13.1. Operator shall arrange for and maintain the following insurance in
connection with the Managed Outlet, the cost of which shall be an Operating
Expense:
A. Insurance covering the Restaurant, the Installations and the FF&E
on an all-risk, broad form basis, against such risks as are customarily
covered by such insurance (including, without limitation, boiler and
machinery insurance, but excluding damage resulting from earthquake, war,
and nuclear energy), in aggregate amounts which shall be not less than the
full replacement cost of the Restaurant, the Installations and the FF&E;
B. Commercial general liability insurance (including broad form
endorsement and coverage against liability arising out of the ownership or
operation of motor vehicles) with a combined single limit of not less than
$25,000,000 for each occurrence for liability for (i) bodily injury, (ii)
death, (iii) property damage, (iv) assault and battery, (v) false arrest,
detention or imprisonment or malicious prosecution, (vi) libel, slander,
defamation or violation of the right of privacy, (vii) wrongful entry or
eviction, or (viii) liquor law or dram shop liability;
C. Worker's compensation insurance or insurance required by similar
employee benefit acts having a minimum per occurrence limit as Owner may
deem advisable against all claims which may be brought for personal injury
or death of Managed Outlet Employees, but in any event not less than
amounts prescribed by applicable state law;
D. Fidelity bonds, in such amounts and with such deductibles as Owner
may require, covering Operator's employees at the Managed Outlet (other
than executive employees of Operator) or in job classifications normally
bonded in other restaurants it manages in the United States or otherwise
required by law;
E. Business interruption insurance covering loss of income for a
minimum period of six (6) months resulting ftom interruption of business
caused by the occurrence of any of the risks insured against under
"all-risk" policy referred to in Section 15.1A;
F. If elected by Owner pursuant to Section 5.5 of this Agreement,
Employment Insurance with reasonable limits and deductibles to be
determined by Owner;
G. If the Hotel is located within an area designated "flood prone"
pursuant to the National Flood Insurance Act of 1968 and the Flood Disaster
Protection Act of 1973, as the same mav be amended from time to time flood
insurance in such amount as Owner may reasonably require; and
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H. Such other or additional insurance as may be (i) required under the
provisions of any applicable mortgage, deed of trust, ground lease or
franchise agreement (collectively, "Major Agreements") or (ii) customarily
carried by prudent operators of first-class restaurants in the geographic
area of the Managed Outlet.
13.2. All insurance policies shall name Owner as the insured party and
shall name as additional insureds Operator and such other parties as may be
required by the terms of the Major Agreements as appropriate.
13.3. All insurance policies shall be in such form and with such companies
as shall be reasonably satisfactory to Owner and shall comply with the
requirements of any Major Agreement. Insurance may (at Owner's election or with
Owner's prior approval) be provided under blanket or master policies covering
one or more other restaurants operated by Operator or owned by Owner. The
portion of the premium for any blanket or master po1icy which is allocated to
the Managed Outlet as an Operating Expense or Fixed Charge shall be determined
in an equitable manner by Operator and reasonably approved by Owner.
13.4. All insurance policies shall specify that they cannot be canceled or
modified on less than twenty (20) days prior written notice to both Owner and
Operator and any additional insureds (or such longer period as may be required
under a Major Agreement) and shall provide that claims shall be paid
notwithstanding any act or negligence of Owner or Operator or their respective
agents or employees.
13.5. All insurance policies shall provide that the insurance company will
have no right of subrogation against Owner, Operator any party to a Major
Agreement or any of their respective agents, employees, partners, members,
officers, directors or beneficial owners.
13.6. Owner and Operator hereby release one another from any and all
liability associated with any damage, loss or liability with respect to which
property insurance coverage is provided pursuant to this Article or otherwise.
13.7. The proceeds of any insurance claim (other than proceeds payable to
third parties under the terms of the applicable policy) shall be paid into the
Agency Account unless otherwise required by the terms of a Major Agreement.
ARTICLE XIV
PROPERTY TAXES
14.1. Owner shall pay all Property Taxes with respect to the Hotel,
including the Managed Outlet, a percentage of which as agreed in each Budget
shall be allocated to the Managed Outlet and shall be a Fixed Charge as set
forth in Section 11.4(ii).
14.2. Owner may contest the validity or amount of any Property Tax (a "Tax
Contest"), and Operator agrees to cooperate with Owner in a Tax Contest and
execute any documents or pleadings required for such purpose, provided that the
facts set forth in such documents or pleadings are accurate and that such
cooperation or execution does not impose any liability on Operator. All costs
and expenses incurred by Owner and Operator in connection with a Tax Contest
shall be Operating Expenses.
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ARTICLE XV
DAMAGE OR DESTRUCTION; CONDEMNATION
15.1. If the Managed Outlet is damaged by fire or other casualty, Operator
shall promptly notify Owner. This Agreement shall remain in full force and
effect subsequent to such casualty provided that either party may terminate this
Agreement upon thirty days prior notice to the other party if (a) Owner shall
elect to close the Managed Outlet as a result of such casualty (except on a
temporary basis for repairs or restoration) or (b) Owner shall determine in good
faith not to proceed with the restoration of the Managed Outlet and provided
further that Operator may terminate this Agreement upon thirty days prior notice
to Owner if the Managed Outlet cannot be opened for business with the public for
a period of six months or more as a result of such casualty.
15.2. If all or any portion of the Managed Outlet becomes the subject of a
condemnation proceeding or if Operator learns that any such proceeding may be
commenced, Operator shall promptly notify Owner. Either party may terminate this
Agreement on thirty (30) days notice to the other party if (a) all or
substantially all of the Managed Outlet is taken through condemnation or (b)
less than all or substantially all of the Managed Outlet is taken, but, in the
reasonable judgment of the party giving the termination notice, the Managed
Outlet cannot, after giving effect to any restoration as might be reasonably
accomplished through available funds from the condemnation award, be profitably
operated as a first-class restaurant.
15.3. Any condemnation award or similar compensation shall be the property
of Owner, provided that Operator shall have the right to bring a separate
proceeding against the condemning authority for any damages and expenses
specifically incurred by Operator as a result of such condemnation.
ARTICLE XVI
EVENTS OF DEFAULT
16.1. The following shall constitute events of default:
A. If either party shall be in default in the payment of any amount
required to be paid under the terms of this Agreement, and such default
continues for a period often (10) after written notice from the other
party;
B. If either party shall be in material default in the performance of
its other obligations under this Agreement, and such default continues for
a period of thirty (30) days after written notice from the other party,
provided that if such default cannot by its nature reasonably be cured
within such thirty day period. an event of default shall not occur if and
so long as the defatilting party promptly commences and diligently pursues
the curing of such default;
C. If either party shall (i) make an assignment for the benefit of
creditors, (ii) institute any proeding seeking relief under any federal or
state bankruptcy or insolvency laws, (iii) institute any proceeding seek
ing the appointment of a receiver, trustee, custodian or similar official
for its business or assets or (iv) consent to the institution against it of
any such proceeding by any other person or entity (an "Involuntary
Proceeding"); or
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D. If an Involuntary Proceeding shall be commenced against either
party and shall remain undismissed for a period of sixty (60) days.
16.2. If any event of default shall occur, the non-defaulting party may
terminate this Agreement on five (5) days prior notice to the defaulting party.
16.3. The right of termination set forth in Section 16.2 shall not be in
substitution for, but shall be in addition to, any and all rights and remedies
for breach of contract available in law or at equity.
16.4. Neither party shall be deemed to be in default of its obligations
under this Agreement if and to the extent that such party is unable to perform
such obligation as a result of fire or other casualty, act of God, strike or
other labor unrest, unavailability of materials, war, riot or other civil
cornmotion or any other cause beyond the control of such party (which shall not
include the inability of such party to meet its financial obligations).
ARTICLE XVII
TERMINATION
17.1. Operator shall have the right to terminate this Agreement as of (i)
January 1, 2004, (ii) provided that Operator did not previously terminate this
Agreement, January 1, 2009 and (iii) provided that Operator did not previously
terminate this Agreement, January 1, 2014, subject to providing Owner with
irrevocable written notice thereof delivered not more than one hundred eighty
(180) days' and not less than ninety (90) days' prior to the applicable
termination date, time being of the essence.
17.2. Operator shall have the right, but not the obligation, to terminate
this Agreement upon sixty (60) days' prior written notice to Owner, such notice
to be delivered within ten (10) after the delivery of the annual report for such
Reference Year (as hereinafter defined) prepared pursuant to Section 9.3 above,
if as of December 31st of any year durrng the Operating Term subsequent to the
first year of the Operating Term (a "Reference Year"), Total Revenues for the
Managed Outlet are less than $2,000,000 for the preceding twelve months.
17.3 Owner shall have the right, but not the obligation, to terminate this
Agreement upon sixty (60) days' prior written notice to Operator (a "Termination
Notice'), such Termination Notice to be delivered within ten (10) days after the
delivery of the annual report for such Reference Year (as hereinafter defined)
prepared pursuant to Section 9.3 above, if Owner did not receive the full
Hotel Priority, Return with respect to such Reference Year; provided, however,
that such Termination Notice shall be of no force or effect if (i) prior to the
expiration of such ten day period Operator delivers to Owner a written notice
stating that Operator will pay to Owner within thirty (30) days an amount (the
"Shortfall Payment",) equal to the full Hotel Prioritv Return for such
Reference Year less any amounts received by Owner on account of such Hotel
Priority Return with respect to such Reference Year and (ii) within thirty (30)
days thereafter Operator actually pays the Shortfall Payment to Owner.
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ARTICLE XVIII
ASSIGNMENT
18.1 Operator shall not assign, pledge or encumber this Agreement or its
interest in this Agreement, voluntarily or by operation of law, without the
prior consent of Owner, provided that Operator may, without the consent of
Owner, assign this Agreement to Affiliate if Affiliate agrees in writing to be
bound by all of the obligations of Operator under this Agreement and to assume
all of Operator's obligations under this Agreement from and after the effective
date of such assignment.
18.2. Owner shall not assign this Agreement without the prior consent of
Operator, provided that Owner may assign this Agreement without Operator's
consent to any person or entity (i) acquiring Owner's fee interest in the Hotel
or (ii) to whom Owner leases the Hotel, including without limitation the Managed
Outlet, provided that in either case such assignee agrees in writing to be bound
by this Agreement and to assume all of Owner's obligations under this Agreement
(other than any obligation Owner may specifically agree to retain in connection
with such assignment) from and after the effective date of such assignment.
18.3. Upon any permitted assignment of this Agreement and the assumption of
this Agreement by the assignee, the assignor shall be relieved of any obligation
or liability under this Agreement arising after the effective date of the
assignment.
ARTICLE XIX
NOTICES
19.1. Any notice, statement or demand required to be given under this
Agreement shall be in writing, sent by certified mail, postage prepaid, return
receipt requested, or by facsimile transmission, receipt electronically or
verbally confirmed, or by nationally-recognized overnight courier, receipt
confirmed, addressed if to:
Owner: 0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000
Attention: Xx. Xxxx Xxxxxxxx
Facsimile No.: (000)000-0000
and Operator: Hotel Restaurant Properties, Inc.
00000 Xxx Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxx President
or to such other addresses as Operator and Owner shall designate in the manner
provided in this Section 19.1. Any notice or other communication shall be deemed
given (a) on the date three (3) business days after it shall have been mailed if
sent by certified mail, (b) on the business dav it shall have been sent by
facsimile transmission (unless sent on a non-business day or after business
hours in which event it shall be deemed given on the following business day), or
(c) on the date received if it shall have been given to a nationally-recognized
overnight courier service.
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ARTICLE XX
ESTOPPELS
20.1. Owner and Operator agree that from time to time upon the request of
the other party or a party to a Major Agreement, it shall execute and deliver
within ten (10) days after the request a certificate confirming that this
Agreement is in full force and effect, stating whether this Agreement has been
modified and supplying such other information as the requesting party may
reasonably require.
ARTICLE XXI
INDEMNIFICATION
21.1. Operator shall indemnify and hold Owner (and Owner's agents,
principals, shareholders, partners, members, officers, directors and employees)
harmless from and against all liabilities, losses, claims, damages, costs and
expenses (including, but not limited to, reasonable attorneys' fees and
expenses) that may be incurred by or asserted against any such party and that
arise from (a) the fraud, wilful misconduct or gross negligence of the
executive, managerial or off-site employees of Operator, (b) the breach by
Operator of any provision of this Agreement or (c) any action taken by Operator
which is beyond the scope of Operator's authority under this Agreement. Owner
shall promptly provide Operator with written notice of any claim or suit brought
against it by a third party which might result in such indemnification and
Operator shall have the option of defending any claim or suit brought against
the Owner with counsel selected by Operator and reasonably approved by Owner.
Owner shall cooperate with the Operator or its counsel in the preparation and
conduct of any defense to any such claim or suit.
21.2. Except as provided in Section 21.1, Owner shall indemnify and hold
Operator (and Operators agents, principals, shareholders, partners, members,
officers, directors and employees) harmless from and against all liabilities,
losses, claims, damages, costs and expenses (including, but not limited to,
reasonable attonleys' fees and expenses) that may be incurred by or asserted
against such party and that arise from or in connection with (a) the performance
of Operator's services under this Agreement, (b) any act or omission (whether or
not wilful, tortious, or negligent) of Owner or any third party or (c) or any
other occurrence related to the Managed Outlet whether arising before, during or
after the Term. Operator shall promptly provide Owner with written notice of any
claim or suit brought against it by a third party which might result in such
indemnification and Owner shall have the option of defending any claim or suit
brought against Operator with counsel selected by Owner and reasonably
satisfactory to Operator. Operator shall cooperate with the Owner or its counsel
in the preparation and conduct of any defense to any such claim or suit.
21.3. Supplementing the provisions of Sections 21.1 and 21.2, if any claim
shall be made against Owner and/or Operator which is based upon a violation or
alleged violation of the Employment Laws (an "Employment Claim"), the Employment
Claim shall fall within Operator's indemnification obligations under Section
21.1 only if it is based upon (a) the wilful misconduct or gross negligence of
Operator's executive or managerial employees (including such wilfril misconduct
or gross negligence as may arise in the hiring, supervision or dismissal of any
Hotel Employee) or (b) Operator's breach of its obligations under Section 5.6.
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21.4. The provisions of this Article shall survive the termination of this
Agreement with respect to acts, omissions and occurrences arising during the
Term.
ARTICLE XXII
MISCELLANEOUS
22.1. Owner and Operator shall execute and deliver all other appropriate
supplemental agreements and other instruments, and take any other action
necessary to make this Agreement fully and legally effective, binding, and
enforceable as between them and as against third parties.
22.2. This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof, superseding all prior agreements or
undertaldngs, oral or written. Owner acknowledges that in entering into this
Agreement Owner has not relied on any projection of earnings, statements as to
the possibility of future success or other similar matter which may have been
prepared by Operator.
22.3. The headings of the titles to the several articles of this Agreement
are inserted for convenience only and are not intended to affect the meaning of
any of the provisions hereof.
22.4. A waiver of any of the terms and conditions of this Agreement may be
made only in writing and shall not be deemed a waiver of such terms and
conditions on any future occasion.
22.5. This Agreement shall be binding upon and inure to the benefit of
Owner and Operator and their respective successors and permitted assigns.
22.6. This Agreement shall be construed, both as to its validity and as to
the performance of the parties, in accordance with the laws of the District of
Columbia. All disputes among the parties hereto shall be resolved by binding
arbitration pursuant to the then existing rules of the American Arbitration
Association applicable to such dispute. The prevailing party in any such
arbitration shall be entitled to reimbursement from the losing party of its
reasonable attorneys' fees and expenses incurred in connection therewith.
IN WITNESS WIIERE OF, Operator and Owner have duly executed this Agreement
the day and year first above written.
CAPSTAR GEORGETOWN COMPANY, L.L.C.
By:CapStar Management Company II, L.P., member
By:CapStar General Corp. general partner
By:/s/ Xxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior
HOTEL RESTAURANT PROPERTIES, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Name: Xxxxx X. Xxxxx
Title: President
GRILL CONCEPTS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
