Exhibit 10.44
MANAGEMENT AGREEMENT
THIS AGREEMENT, is made and entered into on April 18, 2003 (the
"Effective Date"), by and between JAGI SUBSIDIARY, INC., as agent on behalf of
the Companies (defined below), with its office at 0000 Xxxx Xxxxxx Xxxx,
Xxxxxxxxxx, Xxxx 00000 ("Owner") and JANUS HOTELS AND RESORTS, INC., with its
principal office at 0000 Xxxxxxxxx Xxxx., X.X., Xxxxx 000, Xxxx Xxxxx, XX 00000
("Manager").
WHEREAS, Owner through its ownership of JAGI Sharonville, LLC and JAGI
North Canton, LLC and its indirect ownership of Beckelbe, Ltd and Kings Dominion
Lodge (the "Companies"), indirectly owns the hotel(s) as identified in Exhibit
"B" (the "Property"); and;
WHEREAS, the parties hereto desire that Manager shall manage and
operate the Property on Owner's behalf under the terms of this written
Management Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the mutual promises and premises
hereinafter set forth, the parties hereto agree as follows:
ARTICLE IAPPOINTMENT AND COMPENSATION OF MANAGER
1.1 Appointment of Manager. Owner, as agent of the Companies, hereby
appoints Manager, and Manager hereby accepts appointment, on the terms and
conditions hereinafter set forth, to maintain, operate and manage the Property
on Owner's behalf from the Effective Date.
1.2 Delegation of Authority. Solely to the extent expressly provided
herein, the day-to-day operation, management and maintenance of the Property
shall be under the supervision, direction and control of Manager.
1.3 Management Fee. For its services hereunder, Manager shall receive
a management fee (the "Base Management Fee") equal to the amount calculated as
provided in Exhibit A attached hereto, plus the other fees set forth in
Exhibit A.
The Base Management Fee shall be calculated monthly and shall be paid to Manager
from the General Account (as defined in Section 3.2 below) no later than the 5th
day of each month.
ARTICLE II
TERM
2.1 Term. The term of this Agreement shall be for Ten (10) years (the
"Initial Term"). This Agreement shall automatically renew for additional like
terms unless the party that does not wish to have an extended term(s) notifies
the other party, in writing, no later than ninety (90) days before or earlier
than one hundred eighty (180) days prior to the end of the then current term.
Notwithstanding anything to the contrary herein, upon sale of the Property to an
unrelated third party, this Agreement may be terminated at the option of the
Manager or Owner, upon the closing of the sale with at least Sixty (60) days
prior written notice to the other party of intent to cancel. In the event of
such sale and termination upon sale by Owner, Owner shall pay Manager the
Termination Fee as set forth in Article VII of this Agreement.
2.2 Early Termination. This Agreement may be terminated prior to the
expiration of the Initial Term, without penalty, upon the occurrence of any of
the following circumstances provided Owner or Manager, as the case may be, does
not cure said event within thirty (30) days after written notice by the other
party (hereinafter referred to as an "Early Termination Event"). The foregoing
notwithstanding, there shall be no cure period pursuant to (b) below, in which
event Owner may terminate Manager immediately, upon written notice, without
penalty.
(a) If either Owner or Manager materially breaches this
Agreement or fails to observe or perform any of its material covenants or
agreements.
1
Exhibit 10.44
(b) If Manager engages in any act of willful misconduct or
fraud with respect to, or the misappropriation or diversion of funds or property
of Owner or the Property.
(c) If either Owner or Manager files a voluntary petition for
reorganization or for any arrangements under any provisions of any bankruptcy
code now or hereafter enacted.
(d) If a petition shall be filed by any third party for the
reorganization of Owner or Manager under any provisions of any bankruptcy code
now or hereafter enacted and such proceeding is not dismissed within ninety (90)
days after such filing.
(e) If a receiver, trustee in involuntary bankruptcy or other
similar officer shall be appointed to take care of all or a substantial portion
of the property of Owner or Manager.
(f) If either Owner or Manager makes a general assignment for
the benefit of its creditors.
(g) If the Property is not operated in substantial compliance
with their Operating Budgets (less than 80% of the Net Operating Income pursuant
to the operating budgets and less than 80% of fair market share as determined by
Xxxxx Travel Report) for a trailing twelve month period not withstanding
variances caused by identifiable exogenous factors including, without
limitation, weather and economic dislocations (such as an oil embargo) or area
specific economic dislocations.
If the General Account is not replenished in the prescribed time
(Section 3.2(g)), Manager may terminate this Agreement at any time before Owner
replenishes the account, and Owner shall pay Manager the Termination Fee stated
in Article VII.
If Manager disagrees with its termination pursuant to any Early
Termination Event, Manager may, within thirty days of the notice of termination,
notify Owner that Manager is requiring that damages caused to Manager by such
termination be arbitrated under the rules of the American Arbitration
Association or through a court of competent jurisdiction. Such action shall take
place in the State of Florida, in Palm Beach County, and the result shall be
binding upon both parties and specifically enforceable by any court having
jurisdiction.
2.3 Additional Services Upon Termination. Owner may request Manager,
upon termination of this Agreement, to provide to Owner, or any third
party designated by Owner, the following additional reports, filings and/or
information.
a. Utilities Transfer
b. Closing of Financial Statement Information
c. Sales Tax Filings
d. Lodging Tax Filings
e. Transfer of Accounting paperwork to Owner
f. Payroll Tax Reporting/Summary, Unemployment
g. Vacation Accruals & Adjustment
h. Transfer of Licenses and Permits
i. Accounts Payable (30-90 days) and payment after
transfer
Should Owner make this request of Manager, Manager shall be entitled to
an additional fee (the "Close Out Fee") as described on the attached Exhibit A.
Owner acknowledges and agrees that Manager shall have the right to keep
possession of all the above documents and that Manager shall have no other
obligations under this agreement until all fees and expenses owed to Manager are
paid in full.
2
Exhibit 10.44
ARTICLE III
OPERATION OF THE PROPERTY
3.1 General Responsibilities of Manager. Manager shall be responsible
for all matters relating to the day-to-day operation, management and maintenance
of the Property including, without limitation, (i) rental and occupancy of rooms
and commercial space, if any, and setting of charges therefore; (ii) food and
beverage services; (iii) employment policies; (iv) the receipt, holding and
disbursement of funds; (v) accounting; (vi) budgeting; (vii) procurement of
inventories, supplies and services; (viii) promotion, sales, marketing and
publicity; and (ix) maintenance, repair and cleaning of all improvements and
equipment.
Manager shall use its best efforts to operate, manage and maintain the
Property in such a manner as to provide a high quality guest environment and to
maximize to Owner the profits that can be derived from the Property and, upon
its own initiative, with reasonable frequency, shall consult with and advise
Owner and otherwise bring to Owner's attention opportunities to obtain and
increase such profits.
3.2 General Accounts, Payments, and Distributions.
(a) Manager, on behalf of Owner, shall establish a bank
account (the "General Account") for the Property in both Owner's name and
in Manager's name as agent for Owner in a bank approved by Owner (which approval
shall not be unreasonably withheld).
The General Account for the Property shall be used to deposit all cash generated
by the Property and to pay all permitted costs and expenses of the Property.
Manager shall deposit all funds collected from the operation of the Property in
the General Account. All funds deposited shall be held by Manager for the
benefit of Owner. Funds from the General Account shall be disbursed by the
Manager to pay its Management Fee and other normal and reasonable expenses of
the Property incurred in the operation and maintenance of the Property pursuant
to this Agreement, including, but not limited to, any indemnification of Owner
under Section 6.3(a) herein. It is understood and agreed that to facilitate the
payment of expenses for the Property (such as payroll), Manager may elect to
make such payments from an account maintained by Manager for making such
payments with regard to the Property and shall be entitled to withdraw from the
General Account for the Property and deposit to such other account from time to
time an amount equal to the checks to be drawn upon such other account for the
payment of expenses of the Property. All other accounts shall be approved in
advance by Owner. All bank accounts shall be owned by Owner and shall be
operated by Manager as the agent of Owner.
(b) Nothing herein contained shall be construed to deprive
Manager of the right to maintain xxxxx cash funds and to make payment therefrom
as the same are understood and employed generally in the hospitality property
management business.
(c) Manager shall keep its own funds separate and apart from
Owner's funds.
(d) Subject to maintaining a minimum working capital balance
and reasonably forecasted working account balance, Manager shall transfer to
Owner in a timely manner such excess funds as Owner shall specify.
(e) Manager shall not be required to incur any liability or
obligation for Owner's account without assurances satisfactory to Manager that
the funds necessary for the discharge thereof will be provided by the Owner.
(f) Manager shall provide cash management for all funds of
Owner controlled by Manager. For the purpose of this Agreement, the term "cash
management" shall mean expediting cash inflows, controlling cash outflows.
(g) Owner hereby agrees to maintain, at all times, a minimum
balance in the General Account of not less than an amount to sufficiently run
the daily operations of the Property. If the balance in the General Account
falls below said required amount, Manager may request that Owner replenish the
General Account and Owner shall replenish the General Account within ten
business days after receipt of notification. If the General Account is not
3
Exhibit 10.44
replenished in the prescribed time, Manager may terminate this Agreement at any
time before Owner replenishes the account, and Owner shall pay Manager the
Termination Fee stated in Article VII.
3.3 Books and Records. Manager shall maintain, at its principal office,
full, adequate and separate books and records as are necessary to reflect all
transactions of the Property and of Manager with respect to the Property. Such
books and records shall be kept in a manner such that accounting statements may
be prepared in accordance with Generally Accepted Accounting Principles
("GAAP"). Owner shall have the right and privilege of examining such books and
records at the Manager's principal office at any and all reasonable times during
normal business hours. Manager shall not destroy or dispose of any such books or
records except by delivery to Owner or as Owner may otherwise instruct. Upon
termination of this Agreement, all books and records shall be forthwith
delivered to Owner so as to ensure the orderly continuance of the operation of
the Property, but all such books and records shall thereafter be available to
Manager at all reasonable times for inspection, audit, examination, and
transcription for a period of not less than seven (7) years from the date of
said termination. Owner acknowledges and agrees that Manager shall have the
right to keep possession of all the above documents and that Manager shall have
no other obligations under this agreement until all fees and expenses owed to
Manager are paid in full.
3.4 Monthly Financial Reports. Within fifteen (15) days after the end
of each month, Manager shall deliver to Owner an accounting for the operations
of the Property, including a detailed profit and loss statement and balance
sheet showing the results of operation of the Property for the preceding month
and for the calendar year (the "Fiscal Year") to date and the cash needs, if
any, for the subsequent three months. Such statements shall be calculated on the
accrual method. Manager shall also deliver to Owner at such times: (a) a report
comparing actual results to budgeted results, (b) occupancy and room rate
reports and (c) other such financial and operating reports, reasonably available
to Manager, as Owner shall request.
3.5 Annual Financial Reports. Within thirty (30) days after the end of
each Fiscal Year, Manager shall deliver to Owner unaudited financial statements
including a detailed balance sheet, a statement of cash flows and an income and
expense statement showing the results of operations of the Property during such
Fiscal Year. Such financial statements shall be calculated on the accrual method
and shall be prepared in accordance with GAAP.
3.6 Audits. Owner shall have the right, at any time, to cause an audit
of the books, records, and operations of the Property to be made by a recognized
independent certified public accounting firm. Manager shall cooperate fully with
such auditors and shall make available to them any and all information
concerning the Property. Owner shall deliver to Manager copies of all financial
reports regarding the Property promptly after they are received from such
auditors. Any adjustment to any Management Fee required because of the results
of such audit shall be made by the parties within ten (10) business days of
receipt of the audit. The cost of any such independent audit shall be an
administrative and general expense of the Property for the Fiscal Year in which
such audit occurs. Such expense shall not be deemed an expense of the Property
for the purpose of calculating any Incentive Fee (as defined in Exhibit A)
payable to Manager.
3.7 Annual Budgets.
(a) Manager shall submit to Owner, in a form reasonably
satisfactory to Owner, for its consideration and approval, the following for the
Property for each Fiscal Year, not later than sixty (60) days prior to the
beginning of each Fiscal Year (or within 45 days of the Effective Date for the
initial budgets):
(i) a proposed operating budget on a monthly and
yearly basis ("Operating Budget") for the Property as
approved by Owner and which shall set forth Manager's best estimate of the
following items for such Fiscal Year including supporting schedules for each
line item:
A. Projected occupancy and average room rate;
B. Projected gross revenue;
C. Leasing plan with respect to commercial or
retail spaces, if any, that will be vacant;
D. Projected expenses, detailed by type;
E. Detailed proposed scheduling of staff,
salaries and wages;
F. Property room rates and charges for other
services;
G. Insurance premiums and property taxes;
4
Exhibit 10.44
H. Property operations and maintenance
(non-capital);
I. Advertising, promotional and marketing
expenses;
J. Calculation of estimated Management Fee; and
K. Narrative overview of all budgeted revenue
and expense levels and an analysis of
budgeted levels to the previous year's
actual results, with an explanation of any
differences.
(ii) a proposed budget on a monthly and yearly basis
("Equipment Budget") setting forth Manager's best estimate of the capital
expenditures to be made for replacement of and additions to furniture,
furnishings and equipment for such Fiscal Year; and
(iii) a proposed budget ("Capital Expenditures
Budget" and together with the Operating Budget and the Equipment Budget, the
"Annual Budget") setting forth Manager's best estimate of capital expenditures
to be made for major building improvements, renovation, capital repairs and
expansion for such Fiscal Year.
(b) Owner shall be deemed to have approved the foregoing
budgets, unless Owner gives notice of its disapproval to Manager within thirty
(30) days of Owner's receipt of same.
In the event Owner does not approve all or any part
of the foregoing budgets prior to the expiration of the
above thirty day period, Owner promptly shall furnish to Manager an interim
budget which shall reasonably permit the continued operation of the Property
pursuant to the Annual Budget for the previous fiscal year until final approval
is given.
(c) Manager shall comply with the Annual Budget, once it is
approved by Owner, and shall not deviate substantially therefrom or change the
manner of operation (including the marketing plan) of the Property without prior
written consent of Owner, except where such deviation is because of and is in
direct proportion to an increase (or decrease) in the revenues of the Property
in excess of (or below) the budgeted amounts or in case of an emergency, of
which Owner shall be promptly notified.
(d) With respect to the portion of a Fiscal Year remaining
following the Effective Date, Manager shall submit the Annual Budget no later
than forty-five (45) days after the signing of this Agreement by both parties.
(e) Upon the request of Owner, Manager shall make available
to Owner the data utilized in preparing the Annual Budget.
3.8 Insurance.
(a) Owner agrees to maintain at all times during the
term hereof the following insurance in amounts reasonably acceptable to Manager:
(i) Insurance on the building, equipment, furniture and
furnishings (including business interruption coverage) against loss or damage.
(ii) Comprehensive general liability insurance (including
protective liability coverage on operations of independent contractors engaged
in construction and also blanket contractual liability insurance, with an
umbrella policy, which provides total coverage, against claims for personal
injury, death, or property damage, including coverage against liability arising
out of the use by or on behalf of the Owner or Manager of any owned, non-owned
or hired automotive equipment and including coverage against Manager's
liability, liquor liability, and dram shop liability, to the extent required by
the laws of the jurisdiction in which the Property is located.
In the event Owner and Manager mutually agree to utilize
Manager's blanket liability and property insurance for the Property, Manager
shall obtain and maintain the insurance described above at the sole expense of
Owner. Owner may terminate Manager's insurance at any time upon thirty (30) days
written notice and such insurance shall automatically terminate upon expiration
or termination of this Agreement. Any penalty charged by the insurance carrier
for terminating the insurance prior to expiration of the policy shall be at the
sole expense of Owner.
5
Exhibit 10.44
(b) All policies of insurance shall: (i) name and designate
the Manager and Hospitality Employee Leasing Program, Inc. (see paragraph 4.2
hereof) ("HELP") as an additional insured, and (ii) be an expense of the
Property. Without limiting the foregoing, all insurance shall be effected under
policies issued by insurers of recognized responsibility and shall, to the
extent obtainable, provide that such policies shall not be canceled without at
least thirty (30) days' prior written notice to the Manager and HELP as
additional insureds and that any loss shall be payable to the Owner,
notwithstanding any act of negligence of the Manager or HELP that otherwise
might result in forfeiture of said insurance. Certificates of insurance, along
with evidence or renewal from time to time thereof, shall be given to Manager no
less than ten (10) days prior to their effective date.
(c) Manager shall report to the appropriate insurance
companies all accidents and potential claims.
(d) Manager shall cause to be placed and kept in force at the
sole expense of Owner, worker's compensation insurance up to the statutory
limit, as required by the state where the Property is located, and employer's
liability of at least $100,000. Manager shall furnish Owner with certificates
of same in a timely manner.
(e) Provided that Owner and Manager shall procure and keep in
force all of the insurance required to be obtained by each of them,
respectively, pursuant to this Agreement, neither Owner nor Manager shall assert
against the other claims for any losses, damages, liabilities or expenses
(including attorney fees) incurred or sustained by either of them, to the extent
that the same are covered by such insurance, on account of damage or injury to
person or property arising out of the ownership, operation, or maintenance of
the Property. The parties agree that all policies of insurance shall permit the
foregoing waiver. Owner also agrees to hold Manager harmless to any claims not
covered by insurance which are not caused by or arisen out of the gross
negligence or willful misconduct of the Manager.
(f) Owner understands that under certain circumstances, HELP
may receive policy discounts as a result of the number of properties listed
under its insurance policies. Any discounts received by HELP as a result of such
group discounts shall remain the property of HELP as consideration for the cost
it incurs in processing liability claims and defending EEOC claims. In addition,
HELP charges an administrative fee for the processing of all property and
worker's compensation insurance.
3.9 Taxes and Assessments. Manager shall obtain bills for real estate
and personal property taxes, improvement assessments and other like charges that
are or may become liens against the Property and recommend to Owner payment
thereof or appeal therefrom. Manager shall annually review and submit all real
estate and personal property taxes and all assessments affecting the Property or
Owner. Manager is under no obligation whatsoever to pay any tax or assessment
xxxx on behalf of Owner, unless such payment has been agreed to in writing by
both parties.
3.10 Compliance With Legal Requirements. Owner and Manager shall take
such actions (to the extent of the delegation of responsibilities hereunder) as
may be necessary to comply with any and all material laws, rules, regulations,
orders, or requirements of any federal, state, county, parish, or municipal
agency, or other authority having jurisdiction thereof, affecting the Property
or the ownership or operations thereof by Owner or Manager. Manager, however,
shall not take any such action as long as Owner is contesting, or has affirmed
its intention to contest any material payment, assessment, order or requirement
(except that where failure to comply promptly with any such order or requirement
might expose Manager to civil or criminal liability, Manager may take such
action without Owner's approval). Manager promptly shall notify Owner, in
writing, of all such orders, notices or requirements. Manager shall prepare,
execute and, after obtaining the approval of Owner, file any such reports and
documents as may be required by any governmental authority. Manager hereby
specifically covenants and agrees to use its reasonable best efforts to obtain
and maintain all licenses and permits necessary for the operation of the
Property. Such expenses and permits together with all other costs incurred by
Manager under this Section shall be deemed expenses of the Property.
3.11 Use and Maintenance of the Property. Manager shall use the
Property solely for the operation of a hotel and related facilities under
standards comparable to those prevailing in the transient guest lodging industry
and for all activities in connection therewith that are customary and usual to
such an operation. Manager and Owner agree not to permit the Property to be used
for any purpose Manager or Owner know might void any policy of insurance
6
Exhibit 10.44
relating to such Property or which Manager or Owner know might render any loss
thereunder uncollectible.
Manager hereby covenants and agrees to use its reasonable best efforts
to keep the Property in good condition and repair and to make regular
inspections thereof within the limitations contained herein. Expenses incurred
by Manager in keeping the Property in good condition and repair shall be
expenses of the Property. Manager further covenants and agrees to take all
reasonable precautions against fire, vandalism, burglary, and trespass to the
Property within the limitations contained herein, the cost of all such
precautions to be expenses of the Property.
3.12. Marketing.
(a) Manager shall use its reasonable best efforts to secure
and retain guests for the Property and to merchandise food and beverages served
at the Property. Subject to the Annual Budget, Manager shall have the right to
rent suites and rent meeting room services in such manner and upon such terms
and conditions as Manager deems advisable, including the offering of
complimentary suites, food, and beverages when deemed necessary by Manager in
the furtherance of its marketing activities related to the Property.
(b) Both parties recognize the goal is to achieve the highest
possible occupancy at the most profitable rates possible and that the Manager
shall use its reasonable best efforts to achieve that goal.
(c) Manager agrees that upon Owner's request, at the
termination of the Agreement or otherwise, it immediately will deliver to
Owner all customer folios, marketing files and records pertaining to the
Property. Manager shall make available to Owner all other records and files
pertaining to guests, tenants or customers and correspondence and files related
to prospective and existing guests and tenants. Owner acknowledges and agrees
that Manager shall have the right to keep possession of all the above documents
and that Manager shall have no other obligations under this agreement until all
fees and expenses owed to Manager are paid in full.
(d) Manager will prepare, on an annual basis, a marketing plan
that shall include, but not be limited to, projected occupied room-nights and a
detailed program for the advertising and promotion of the Property.
3.13 Sales of FF&E. All proceeds from the sale of operating equipment
and/or furniture, furnishings and equipment ("FF&E") no longer needed for the
operation of the Property shall be paid to Owner. Any such sale shall occur
only with the prior approval of Owner, unless such sale is included in the
Annual Budget.
3.14 Compliance with Franchise Requirements. Manager shall make a good
faith effort to operate and manage the Property in substantial compliance with
the Franchise Agreement (if any), consulting when necessary with Owner with
regard to recommended activities relating thereto. Manager shall communicate
with the franchiser, purchase such supplies and services as may be required by
the Franchise Agreement, advise Owner as to its suggested course of business
which will be in substantial compliance with the Franchise Agreement, and
prepare any and all writings and make all payments required by the Franchise
Agreement to the extent there are funds available for payment of such Property
expenses from the General Account. Manager shall forward to Owner copies of all
notices, correspondence, and other writings received from or sent to the
franchiser immediately following such receipt or dispatch. Upon Owner's request,
Manager shall cause an appropriate employee(s) of Manager to attend any and all
required meetings administered by franchiser or held by or for the franchisees
and to prepare reports of such meetings for Owner, all as an expense of the
Property.
3.15 Compliance with Mortgage Requirements. If Manager receives notice
of default under any mortgage, lease or other agreement executed by Owner which
relates to the Property, Manager shall immediately give written notice thereof
to Owner and may, upon 30 days written notice, terminate this Agreement in the
event of commencement of any foreclosure action by any lender to Owner or the
Property. Owner shall be responsible for all fees and expenses due and owing
Manager through such termination date including, without limitation, the
Termination Fee stated in Article VII.
7
Exhibit 10.44
3.16 Periodic Meetings. After each fiscal quarter, Manager and Owner
shall, if deemed necessary by Manager or Owner (or more frequently if deemed
necessary), meet at a mutually agreeable time and place to review operating
results for the Fiscal Year to date and operating plans for the balance of the
Fiscal Year.
3.17 Owner Responsible for Debts, Liabilities, and Expenses. Except as
otherwise provided in this Agreement, all debts and liabilities to third persons
incurred by Manager in the course of its operation and management of the
Property and within the scope of its authority hereunder shall be the debts and
liabilities of Owner only, and Manager shall not be liable for any such
obligations by reason of its management, supervision, direction or operation of
the Property for Owner or for any other reason whatsoever.
3.18 Manager to Consult With Owner. Except as otherwise provided in
this Agreement, Manager shall consult with and advise Owner concerning all
policies and procedures affecting all phases of the conduct of business at the
Property and will give consideration to suggestions made by Owner. To the
greatest extent possible, such consultation and advice shall take place prior to
the institution of any major change in policies and procedures.
3.19 MANAGER DOES NOT GUARANTEE PROJECTIONS OR ANNUAL BUDGET. OWNER
HEREBY REPRESENTS THAT IN ENTERING INTO THIS AGREEMENT, OWNER HAS NOT RELIED ON
ANY PROJECTION OF EARNINGS, PROFORMAS, BUDGETS OR STATEMENTS AS TO THE
POSSIBILITY OF FUTURE SUCCESS OR OTHER SIMILAR MATTERS THAT MAY HAVE BEEN
PREPARED BY MANAGER.
ARTICLE IV
MANAGEMENT AUTHORITY
4.1 Contracts. Manager is authorized to make and enter into for the
account of, in the name of, and at the expense of Owner, all contracts,
equipment leases and agreements (i) as are included in the Annual Budget, (ii)
which permit Manager or Owner to terminate same without penalty upon thirty (30)
days or less prior notice, (iii) which do not require the expenditure at any one
time of an amount in excess of $5,000 and (iv) which are required in the
ordinary course of business for the operation, maintenance and services of the
Property. All other contracts, equipment leases and similar type agreements
shall not be entered into by Manager unless prior written consent of Owner is
first obtained, or Owner is the actual contracting party. Notwithstanding the
foregoing, in the event of an emergency as reasonably determined by Manager,
Manager may enter into a contract or contracts in excess of $5,000 with notice
to Owner as soon as practical thereafter.
4.2 Employment of Personnel.
(a) Manager, either directly or under the terms of its
pre-existing agreement with Hospitality Employee Leasing Program, Inc. ("HELP"),
will hire, train, supervise, direct the work of, and discharge all personnel of
the Property that Manager reasonably determines to be necessary or appropriate
for the operation of the Property ("Property Employees"). Owner acknowledges
that it has been advised by Manager that it is Manager's present intention to
utilize the services of HELP in filling the personnel requirements of operating
the Property. Manager will not, and will not permit HELP to, discriminate
against any employee or applicant for employment because of race, creed, color,
sex, age or national origin. Such personnel shall in every instance be deemed
employees of HELP, and shall not be deemed employees of Owner. Manager shall use
its reasonable best efforts and exercise reasonable care to seek qualified,
competent and trustworthy employees.
(b) The salaries, wages (including bonus plans) and other
compensation, including social security, taxes, worker's compensation insurance,
relocation expenses and the like, of Property Employees shall be a budgeted
expense of the Property. Manager shall cause its accounting department, or
competent accounting department of a third party, to prepare and timely file all
necessary reports with respect to withholding taxes, social security taxes,
unemployment insurance, disability insurance, the Fair Labor Standards Act, and
all other statements and reports pertaining to labor employment on or about the
Property.
8
Exhibit 10.44
(c) Manager shall provide appropriate training for all
Property Employees. Manager also shall cause the appropriate employees to attend
any program required by the franchiser (if any) pursuant to the Franchise
Agreement. The costs of attending any such meetings or seminars, including the
cost of tourist class travel, accommodations, and food, shall be an expense of
the Property, but shall not unreasonably exceed the amount provided for such
purpose in the Annual Budget.
(d) Manager shall be entitled to reimbursement for all
pre-approved travel-related expenses for travel to and from the Property,
including air and ground transportation, lodging, and needs incurred in
connection with visits to the Property by members of Manager's home office and
regional offices. Any such expense shall be charged to the Property, and all
such individuals shall receive complimentary room, food and beverage services at
the Property during their work-related visits to the Property. The Annual Budget
shall include a line item for such travel expenses.
(e) All salaries, wages, and compensation of Property
Employees, shall be deemed to be expenses of the Property payable out of the
General Account. In addition, so-called fringe benefits such as medical
insurance or group life insurance pertaining to such Property Employees also
shall be expenses of the Property payable out of the General Account.
(f) Subject to the restrictions imposed by the Annual Budget,
Manager shall set the salaries, bonuses and fringe benefits of all Property
Employees.
(g) Exhibit A sets forth the additional consideration, if any,
to be paid by Owner for the services to be obtained from HELP. 4.3 Advertising.
Manager shall ensure that all advertising and signage in and around the Property
shall have its primary goal and purpose the promotion and marketing of the
Property.
4.4 Inventories and Supplies. Manager shall purchase such consumable
supplies and other expendable items as are necessary to operate the Property and
shall pay for such supplies out of the General Account.
4.5 Accounting Fee. Manager shall provide, in connection with the
operation of the Property, for a fee as set forth on the attached Exhibit A (the
"Accounting Fee"), Manager's complete system of central financial services
utilizing Manager's home office financial staff, third party vendors (as
appropriate) and computer equipment.
The services included as part of the Accounting Fee shall include, without
limitation, verification of daily work, preparation of payroll and benefits
administration, preparation of payroll tax returns, handling of accounts
receivable (including normal in-house collection activities) and accounts
payable, billing under national credit cards, cash management, preparation of
monthly internal operating statements, verification of financial controls,
advice and monitoring of accounting and reporting systems and internal controls
(relating to cash, inventories, and accounts receivable), and training and
supervision of cashiers, front desk, and inventory personnel. Such services
shall not include the cost of a certified audit or the preparation and filing of
state and federal income tax returns.
4.6 Sales and Use Taxes. Manager shall maintain all required records
and prepare and file all forms related to the collection and payment of all
sales and use taxes. Manager shall make required payments to the appropriate
taxing authority from the Operating Accounts. Manager's responsibilities
hereunder specifically exclude the preparation or filing of local, state or
federal income tax returns.
4.7 Extraordinary Services. Manager shall not be obligated under this
Agreement to provide any extraordinary, specialized services of its
construction, architectural, engineering, legal or similar staff, or any other
services of a professional, technical, extraordinary, non-routine nature, which
services involve a substantial commitment of Manager's personnel to or on behalf
of Owner or the Property, whether in connection with construction or remodeling
activities at the Property or otherwise. Any such services as may be requested
by Owner and provided by Manager shall be upon such terms and provisions as may
be agreed upon by Manager and Owner at the time of such services. Manager shall
make available to Owner at no cost to Owner or the Property the services of the
Manager's specialized facilities employed in the performance of its Property
management activities generally, including its central buying facilities, cost
control, food and beverage expertise, publicity, marketing and interior design.
9
Exhibit 10.44
If Owner requests that Manager supervise any maintenance and/or
remodeling for any renovation or Property Improvement Plan in excess of $50,000,
it is agreed that Manager shall be paid a supervision fee equal to 10% of the
total of such expenditure.
In the event Owner circumvents Manager and directly hires a contractor
(that was brought to Owner by Manager) to complete any project stated above,
Owner shall be obligated to pay manager the above stated fee. The above
notwithstanding, if Owner decides to complete a project as stated above, Owner
shall be obligated to use Manager as the project supervisor/coordinator if the
bid price obtained by Manager is the same price or less than any bid received
directly by Owner.
In addition to the above, Owner may request that Manager retain the
services of counsel at the rate of $100.00 per hour (or contingency, where
noted), for the following services that are not deemed normal obligations of
Manager:
a. Property Tax Contestments (fee is 1/3 of reduction of taxes
paid);
b. Collection on accounts receivable for accounts accrued prior to
Manager taking control of the Property;
c. Review of Franchise Agreements;
d. Review or preparation of any contracts used in connection with
the day-to-day operations of the Property;
e. Assistance in any matters not related to the day-to-day operation
of the Property.
ARTICLE V
CONDEMNATION
5.1 Condemnation.
(a) If the whole of the buildings or the land shall be taken
or condemned by reason of any eminent domain, condemnation, or like proceeding
by any competent authority for any public or quasi-public use or purpose, or if
such a portion thereof shall be taken or condemned as to make it imprudent or
unreasonable, in the reasonable opinion of Owner and/or Manager, to use the
remaining portion as a hotel of the type and class as immediately preceding such
taking or condemnation, then in either of such events, this Agreement shall
terminate thirty (30) days after written notice from Owner or Manager to the
other party. Owner may settle any such action or award, solely as to its own
interest in the Property, on such terms as it may deem advisable. All proceeds
of any condemnation (including a partial condemnation) shall belong to Owner,
except to the extent that a separate award is made to Manager. Manager
shall have the right to seek an award in an eminent domain, condemnation,
compulsory acquisition or like proceeding only if such action by Manager is not
likely to, and does not, prejudice Owner's rights or diminish or adversely
affect any award or proceeds sought by or awarded to Owner.
(b) If only a portion of the building or land shall be taken
or condemned, and the taking or condemnation of such portion does not make it
unreasonable or imprudent to operate the remainder of the condemned property as
a hotel of the type and class immediately preceding such taking or condemnation,
this Agreement shall not terminate and shall continue as if the taking or
condemnation had not occurred.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 Relationship. Manager shall manage the Property pursuant to this
Agreement as a contractor employed by Owner. Nothing herein contained shall
constitute or be construed to be or create a partnership or joint venture
between Owner and Manager with respect to the management of the Property as
provided for in this Agreement.
6.2 Assignment. This Agreement is not assignable by either party hereto
without prior written consent of the other party hereto; provided, however,
Manager may assign this Agreement to an affiliate, a wholly-owned subsidiary or
limited liability company of which it is the sole member, without the prior
written consent of Owner. Subject to the foregoing, the covenants and agreements
herein contained shall inure to the benefits of, and be binding upon, the
parties hereto and their respective successors and permitted assigns.
10
Exhibit 10.44
6.3 Indemnifications.
(a) Owner shall indemnify, defend and hold Manager harmless
from and against all claims, damages and costs (including reasonable attorney's
fees and costs) arising out of or in connection with any acts of Owner, its
agents, officers, employees or contractors, that (i) involve negligence or
willful misconduct of Owner, its agents, officer, employees or contractors;
(ii) constitute a breach of this Agreement; or (iii) violate any law or
regulation. In addition, Owner shall indemnify Manager and HELP with regards to
any E.E.O.C. claim or otherwise, filed by an employee of HELP or of the
Property, where the basis of said complaint occurred prior to Manager taking
control of the Property.
(b) Owner does hereby covenant, represent and warrant to
Manager that to its actual knowledge, without duty to investigate, prior to the
date of this Agreement no part of the Property has been or is being used for the
storage of any hazardous waste materials of any kind whatsoever other than
cleaning and maintenance products used in the normal course of business; there
are no violations of any applicable environmental protection laws, ordinances or
regulations affecting the Property; and the Property is unencumbered by the lien
of any governmental or quasi-governmental environmental agency. Owner agrees to
and shall indemnify, defend and hold harmless Manager from any liability,
claims, obligations or losses, including reasonable attorneys' fees, incurred by
Manager or assessed against the Property or any part thereof by virtue of any
claim or lien of any governmental or quasi-governmental unit, body or agency or
any third party for clean-up costs or other costs pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
any other similar statute, law, rule or regulation of any governmental or
quasi-governmental unit, body or agency arising on account of acts or omissions
prior to or after the date of this Agreement. This provision shall survive the
termination of this Agreement and shall continue in full force and effect so
long as the possibility of any such liability, claims, obligations or losses
exists.
(c) If any hazardous waste materials excluding cleaning and
maintenance products used in the normal course of business of any kind
whatsoever are discovered upon any part of the Property, Manager, upon
notification of such discovery, shall immediately notify Owner and shall have
the right, but not the obligation, to terminate this Management Agreement.
(d) Manager shall indemnify, defend and hold Owner harmless
from and against all claims, damages and costs (including reasonable attorneys'
fees and costs) arising out of or in connection with any acts of Manager, its
agents, officers, employees or contractors, that (i) are outside the scope of
Manager's employment hereunder; or (ii) involve gross negligence or willful
misconduct of Manager, it agents, officers, employees or contractors; or (iii)
constitute a breach of this Agreement; or (iv) violate any law or regulation.
(e) It is expressly understood and agreed that the foregoing
provisions shall survive the termination of this Agreement and shall be binding
upon all successors and assigns.
6.4 Owner's Right to Inspect. Owner or its agents shall have access to
the Property at any and all reasonable times for the purpose of protecting the
same against fire or other casualty, prevention of damage to the Property,
inspection, making repairs or showing the Property to prospective purchasers,
tenants or mortgagees. Owner may converse with any Property's Employees
regarding any subject and Manager shall instruct them to disclose fully to Owner
at Owner's request all information regarding the Property.
In all respects, Owner shall seek to minimize any disruptions to the
operations of the Property resulting from its access thereto.
11
Exhibit 10.44
6.5 Notice. Whenever, under the terms of this Agreement, any notice is
required, it may be served either upon the other party by personal service or by
sending said notice by certified mail, personal service or overnight delivery
mail to the other party. Notice to each party shall be in writing and, until
further notification in writing, shall be mailed as follows:
(a) If to Owner:
(b) Xxxxx X. Xxxx, Chairman
JAGI SUBSIDIARY, INC.
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
(b) If to Manager:
Xxxxxxx X. Xxxxxxx, President
JANUS HOTELS AND RESORTS, INC.
0000 Xxxxxxxxx Xxxx, XX
Xxxx Xxxxx, XX 00000
6.6 Amendments. None of the covenants, terms or conditions of this
Agreement shall, in any manner, be altered, waived, changed or abandoned, except
by written instrument signed by both parties. Consent to or any acquiescence in
any breach of this Agreement shall not constitute a waiver of any other or later
breach of the same or of any other covenants, agreement or condition thereof.
6.7 Consent. Owner and Manager shall not unreasonably withhold their
consent whenever such consent shall be required under the terms of this
Agreement.
6.8 Complete Agreement. This Agreement is the complete agreement
between the parties, and supersedes all prior agreements whether written or
oral.
6.9 Authority. Each person signing this Agreement warrants that he has
full authority to execute the same, that all necessary approvals to the
execution of this Agreement and the transactions contemplated herein have been
or will be timely obtained and will not result in the breach or termination of a
provision of or constitute a default under any indenture, agreement or other
instrument to which it is a party or by which it is bound or violate any
provision of law.
6.10 Counterparts. This agreement may be executed in any number of
counterparts, each of which is deemed to be an original document.
6.11 Choice of Laws and Venue. This Agreement shall be construed and
interpreted pursuant to the laws of the State of Florida. All claims or suits
brought under this agreement shall be brought in Palm Beach County, Florida.
6.12 Separation Clause. In the event any section(s) of this agreement
are found to be unenforceable or invalid by a court of competent jurisdiction,
all other sections of this agreement shall remain in full force and effect.
6.13 Damage or Destruction by Fire. In the event of damage or
destruction of the Property in which at least 50% of the rooms in the Property
cannot be opened to the public, Owner or Manager may terminate this Agreement
upon written notice to the other party. Owner shall be responsible for all
Management Fees accrued to the date of termination. If the time needed to repair
the Property is in excess of 60 days, either party may terminate this Agreement
and Manager shall be entitled to its Management Fee accrued to the date of
termination together with the Termination Fee.
6.14 Non-Circumvention by Owner. Owner shall not, during the term of
this Agreement and one year thereafter, solicit or hire any employee of Manager
that was employed by Manager during any period of this Agreement. In the event
Owner does hire any said employee of Manager, Owner agrees to pay Manager, as
damages, the amount of three (3) times said employees annual salary, due
immediately upon hiring. For purposes of this section, employee of Manager shall
only be an employee of Manager that was never on the payroll of the Property.
6.15 Legal Fees. All legal fees and costs related to any claim made as
a result of this Agreement shall be awarded to the prevailing party in said
action.
6.16 Facsimile Signatures. For purposes of this Agreement, fax
signatures shall be deemed as original signatures.
12
Exhibit 10.44
ARTICLE VII
TERMINATION FEE
In the event this Agreement is terminated by Owner for any reason other
than in accordance with those termination rights expressly provided for in
Section 2.2 hereof, Manager shall be entitled to a fee, as liquidated damages,
which fee shall be determined as follows: the average monthly Base Management
Fee, as defined in Exhibit A, for the most recent trailing 12 month period of
this Agreement (in the event 12 months have not elapsed, the average Base
Management Fee shall be determined using the actual number of months elapsed)
shall be multiplied by the remaining number of months remaining in this
Agreement. The product of such calculation, in dollars, shall be the amount due
and payable to Manager as the Termination Fee and shall be paid on the date of
termination by Owner.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
OWNER:
JAGI SUBSIDIARY, INC.
By: /s/ Xxxxx X. Xxxx
----------------------
Xxxxx X. Xxxx, Chairman
MANAGER:
JANUS HOTELS AND RESORTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx, President
13
Exhibit 10.44
Exhibit A
Base Management Fee: Monthly, Three Percent (3%) of Gross Revenues as
hereinafter defined.
Incentive Fee: Fifty Percent (50%) of Owner's positive change in cash and
cash equivalents for the applicable fiscal year and Fifty Percent (50%) of
the net sale proceeds from the disposition by Owner of the Property(s).
"Gross Revenues" means all revenues and income of every kind resulting from the
operation of the Property and all of its facilities, from guests, tenants,
subtenants, licensees, concessionaires and other entities or persons occupying
space or rendering services in, at, on, or from the Property, including, but not
limited to, rooms, telephone, newsstand, interest income, and rental management
fees, whether on a cash basis or on credit, paid or unpaid, collected or
uncollected, and without reserve or deduction for failure or inability to
collect, all as determined in accordance with generally accepted accounting
principles applied on a consistent basis; provided, however, that there shall be
deducted or excluded from Gross Revenues: (i) cash or credit refunds paid to
customers upon transactions included in Gross Revenues; (ii) the amount of any
city, county, state or federal sales, use, luxury or excise taxes on such sales
which are required to be collected from the customer (but included in the price
or stated separately therefrom) and paid to the taxing authorities; (iii)
proceeds of claims under any insurance policies other than rent or business
interruption insurance and (iv) gains arising from the sale or other disposition
of capital assets.
Close-Out Fee: Shall equal the Base Management Fee for the month immediately
preceding the termination of the Management Agreement.
Accounting Fee: Holiday Inn Canton $700.00 per month
Red Roof Inn $475.00 per month
Days Inn Sharonville $475.00 per month
Days Inn Kings Island $475.00 per month
Days Inn Cambridge $475.00 per month
Best Western Cambridge $475.00 per month
Best Western Kings Quarters $475.00 per month
HELP Fee: For each pay period, $10.15 per person employed at the Property by
HELP for the first 12 months of the term. Thereafter, upon 30 days advance
written notice, such fee may be increased, but in no amount greater than 5%
every 12 months. The above fee shall include the following duties: check
processing for employees, administration of employees, employee practices
liability insurance and the processing of worker's compensation.
14
Exhibit 10.44
Exhibit B
Holiday Inn Canton 0000 Xxxxxxxx Xxxx, Xxxxx Xxxxxx, Xxxx 00000
Red Roof Inn 0000 Xxxxxx Xxxx, Xxxxx, Xxxx 00000
Days Inn Sharonville X-000 & Xxxxx 00, Xxxxxxxxxxx, Xxxx 00000
Days Inn Cambridge 0000 Xxxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxx 00000
Days Inn Kings Island 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx, Xxxx 00000
Best Western Cambridge 0000 Xxxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxx 00000
Best Western Kings Quarters 00000 Xxxxx Xxxx Xxx, Xxxxxxx, Xxxxxxxx 00000
15
