EXHIBIT 10.31
OMNIBUS AGREEMENT
For a 17 Hotel Conversion
THIS OMNIBUS AGREEMENT FOR A 17 HOTEL CONVERSION (this "Agreement") is made
and entered into this 25th day of March, 2003, by and between, (a) on the one
hand, Residence Inn By Marriott, Inc., a Delaware corporation ("RIBM") and
TownePlace Management Corporation, a Delaware corporation ("TPMC"), affiliates
of Marriott International, Inc., a Delaware corporation ("Marriott"); and (b) on
the other hand, Innkeepers USA Trust, a Maryland real estate investment trust
("Innkeepers Trust"); Innkeepers Hospitality, Inc. and its sister corporations
(collectively, "Outgoing Lessees"); Innkeepers Hospitality Management, Inc., a
Virginia corporation ("New Manager"); KPA Leaseco, Inc. and its sister
corporations, indirect subsidiaries of Innkeepers Trust (each, a "New
Lessee/Franchisee," and, collectively, "New Lessees/Franchisees"), and the other
affiliates of Innkeepers Trust that are executing this Agreement (collectively,
Innkeepers Trust, Outgoing Lessees, New Manager, New Lessees, and such
affiliates are the "Innkeepers Conversion Parties," and, individually, any one
of them is an "Innkeepers Conversion Party").
RECITALS
WHEREAS, the Innkeepers Conversion Parties comprise the current owners and
lessees of the seventeen (17) hotel properties listed in Schedule R-1 hereto
(each, a "Conversion Hotel," and, collectively, the "Conversion Hotels"), as
well as the proposed new lessees and new manager of the Conversion Hotels
following the consummation of the transactions contemplated herein and certain
reorganizations among the Innkeepers Conversion Parties;
WHEREAS, each of the Conversion Hotels is currently managed by RIBM or
TPMC, as indicated in Schedule R-1 pursuant to the existing management
agreements identified in Schedule R-1 (each, an "Outgoing Management Agreement,"
and, collectively, the "Outgoing Management Agreements");
WHEREAS, in order to effect the conversion of each Conversion Hotel from
being a managed hotel to being a franchised hotel (the "Conversion"), the
Innkeepers Conversion Parties and Marriott, in accordance with the terms and
conditions set forth herein, will terminate each Outgoing Management Agreement
and enter into a franchise agreement for each Conversion Hotel (each, together
with its attachments and related agreements, a "New Franchise Agreement," and,
collectively, the "New Franchise Agreements"), on the date indicated opposite
such Conversion Hotel in Schedule R-1 (each, a "Conversion Date," and
collectively, the "Conversion Dates");
WHEREAS, in lieu of the fees that would otherwise become due and owing from
the Innkeepers Conversion Parties under the Outgoing Management Agreements, the
Innkeepers Conversion Parties will pay to Marriott a conversion fee in
accordance with the terms and conditions set forth herein; and
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS
1.1. The following terms shall have the following meanings:
1.1.1. "Affiliate(s)" means any individual or entity directly or
indirectly through one or more intermediaries, Controlling,
Controlled by or under common Control with a party. The term
"Control" means, with respect to a corporation, partnership,
limited liability company, or other entity: (a) the right to
exercise, directly or indirectly, more than fifty percent (50%)
of the voting rights attributable to the equity interests of such
entity or Controlled corporation, and, (b) otherwise, the
possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such entity.
1.1.2. "Claims" means any and all suits, claims, controversies,
rights, promises, debts, liabilities, demands, obligations,
costs, expenses, actions and causes of action of every nature,
character, and description, in law or in equity, whether
presently known or unknown, vested or contingent, suspected or
unsuspected.
1.1.3. "Confidential Information" means each party's confidential and
proprietary business and technical information, whether provided
prior to or subsequent to the execution of this Agreement,
including written materials as well as information transferred
orally, visually, electronically or by other means, together with
the analyses, compilations, studies or other documents prepared
by a party or its representatives that contain or otherwise
reflect any of such information (and any copies of the
foregoing). Without limiting the generality of the foregoing, the
provisions of this Agreement shall constitute Confidential
Information.
1.1.4. "Franchise Documents" means, collectively, this Agreement, the
Termination Agreements, the New Franchise Agreements, and the
related agreements, instruments and certificates contemplated
thereby, including without limitation Guaranties, Manager
Acknowledgments and Owner Agreements.
1.1.5. "Generation 1 Residence Inn Hotel" means each of the Conversion
Hotels designated as a Generation 1 hotel on the list attached
hereto in Schedule R-1.
1.1.6. "Gross Room Revenues" has the meaning for such term set forth
in the Reference Agreement.
1.1.7. "GSS" means the guest satisfaction survey score under the
Quality Assurance Program for the Residence Inn by Marriott
system, or, as the case may be, for the
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TownePlace Suites system, which score is utilized to measure the level
of customer satisfaction with customers' experience, at a hotel.
1.1.8. "Innkeepers Releasors" means the Innkeepers Conversion Parties,
together with their respective Affiliates, subsidiaries,
officers, directors, shareholders, members, trustees, partners,
employees, predecessors, attorneys, agents, representatives,
successors and assigns, in all cases jointly and severally.
1.1.9. "Marriott Brand" means any hotels, lodging facilities,
restaurants or other business operations of any type whatsoever
operated by, or operated pursuant to a license granted by,
Marriott or its subsidiaries and Affiliates, at any and all
locations, including, without limitation, Marriott Hotels,
Resorts and Suites hotels; Renaissance Hotels, Resorts and Suites
hotels; Courtyard by Marriott hotels; Fairfield Inn hotels;
Fairfield Suites hotels; Fairfield Inn & Suites hotels;
SpringHill Suites by Marriott hotels; TownePlace Suites by
Marriott hotels; Residence Inn by Marriott hotels; Xxxx-Xxxxxxx
hotels; and XxxxxXxxx by Marriott extended stay lodging
facilities.
1.1.10. "Marriott Releasees" means each of Marriott, RIBM and TPMC,
and each of their respective Affiliates, subsidiaries, officers,
directors, shareholders, employees, predecessors, attorneys,
agents, representatives, successors and assigns.
1.1.11. "New Denver Residence Inn" means any Residence Inn by Marriott
hotel comprising up to Two Hundred Fifty (250) rooms developed,
promoted, constructed, owned, leased, acquired and/or operated by
Marriott or a third-party licensee of Marriott, other than by the
Innkeepers Conversion Parties, and to be located in the Denver,
Colorado central business district.
1.1.12. "Quality Assurance Program" means the brand specific program
utilized by Marriott, as amended from time to time, to measure
the performance of the hotels under each of the Marriott Brands.
The Quality Assurance Program consists of two components: (a) the
GSS; and (b) the Quality Assurance Review, which is a review that
is conducted twice a year to measure a hotel's performance in key
operational areas.
1.1.13. "Red Zone Hotel" means each Conversion Hotel that has been
identified as being in the Red Zone under and pursuant to the
Quality Assurance Program.
1.1.14. "Reference Agreement" means the form of Residence Inn
Franchise Agreement attached hereto as Exhibit C, which form
shall provide the basis for each New Franchise Agreement
contemplated herein.
1.1.15. "Special Circumstances" has the meaning set forth for such
term in the Reference Agreement.
1.1.16. "Termination Agreement" means the agreements to be executed by
and between Marriott, RIBM and/or TPMC, and the applicable
Innkeepers Conversion Parties for
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the purpose of terminating the Outgoing Management Agreements, in
a form substantially similar to the form of Termination of
Outgoing Management Agreement set forth in Exhibit B.
1.1.17. "Yellow Zone Hotel" means each Conversion Hotel that has been
identified as being in the Yellow Zone under and pursuant to the
Quality Assurance Program.
1.2. Each Conversion Hotel may be referred to herein by the name assigned
to such Conversion Hotel in Schedule R-1.
1.3. The term Innkeepers Conversion Parties shall mean those specific
constituent entities composing the Innkeepers Conversion Parties as
required by the context, provided, however, that:
1.3.1. Unless specifically provided otherwise, all representations,
warranties and acknowledgments given by the Innkeepers Conversion
Parties, and all releases granted by the Innkeepers Conversion
Parties shall be deemed given and granted by all of the
Innkeepers Conversion Parties, jointly and severally;
1.3.2. Innkeepers Trust shall guaranty, and hereby agrees to guaranty,
the performance of each of the obligations of each of the
Innkeepers Conversion Parties under this Agreement, regardless of
whether or not this Agreement directly assigns such obligation to
Innkeepers Trust; and
1.3.3. Marriott and its Affiliates shall be entitled to rely upon all
actions taken, and all agreements entered into, by Innkeepers
Trust for and on behalf of the other entities and persons
constituting the Innkeepers Conversion Parties, and such actions
and agreements shall be binding upon all such other entities and
persons.
2. CONVERSIONS
2.1. Conversion. Subject to the terms and conditions of this Agreement,
Marriott, RIBM, TPMC, and the Innkeepers Conversion Parties shall
terminate the Outgoing Management Agreements and enter into the New
Franchise Agreements on the Conversion Dates set forth in Schedule
R-1.
2.2. Deferral of Conversion Date.
2.2.1. Innkeepers Trust may defer the Conversion of any of the
Conversion Hotels (each a "Deferred Hotel", and, collectively,
"Deferred Hotels"), through the Accounting Period ending on
Friday, August 15, 2003, by giving written notice thereof to
Marriott no later than thirty (30) days prior to the Conversion
Date for such Deferred Hotel(s). Such notice shall state the date
upon which Innkeepers Trust desires to complete such Conversion,
and Marriott and RIBM and/or TPMC shall use their commercially
reasonable efforts to accommodate such request on or after
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such date (the actual date(s) of the Conversion becoming the new
Conversion Date(s) for such Deferred Hotel(s)). Each such
Deferred Hotel shall have a Conversion Date that coincides with
the end of an Accounting Period.
2.2.2. The Innkeepers Conversion Parties acknowledge and agree that
(a) Marriott has agreed to accommodate the Innkeepers Conversion
Parties' request for enhanced deferral rights in order to give
the Innkeepers Conversion Parties greater flexibility in working
with their lenders, among other things, and (b) the deferral of a
Conversion Date may reasonably be expected to cause difficulties
relating to the operations of any Deferred Hotel, including, but
not limited to, the maintenance of a trained staff and,
particularly, key management personnel. For their part, each of
RIBM and TPMC, as the case may be, agrees to use its reasonable
commercial efforts to address such operational difficulties. For
their part, the Innkeepers Conversion Parties agree to hold
harmless, and to not bring Claims against, RIBM, TPMC, and
Marriott, with respect to, or arising from, any such operations
difficulties relating to such deferral and the commercially
reasonable efforts of RIBM and TPMC, as the case may be, to
mitigate same.
2.3. Conditions Precedent to Marriott's Obligations to Convert.
Notwithstanding any provision to the contrary, Marriott shall not be
obligated to complete the Conversion of any Conversion Hotel unless:
2.3.1. The Innkeepers Conversion Parties shall have executed and
delivered to Marriott (a) the Termination Agreement; (b) the New
Franchise Agreement; and (c) all other Franchise Documents
relating to the subject Conversion Hotel;
2.3.2. On each Conversion Date, no Innkeepers Conversion Party shall
be in breach of any material provision of any existing
management, franchise or other agreement between Marriott or any
of its Affiliates and such Innkeepers Conversion Party;
2.3.3. Without limiting the generality of the provisions of Section
2.3.2, on each Conversion Date, all Innkeepers Conversion Parties
shall have satisfied all monetary obligations owed by them to
Marriott and its Affiliates as of the Conversion Dates, including
but not limited to, the Conversion Fees that the Innkeepers
Conversion Parties will owe Marriott as a result of the
transactions contemplated by this Agreement;
2.3.4. Each of the Innkeepers Conversion Parties' representations,
warranties and covenants contained in Section 8.1 and in all
other Franchise Documents shall have been true and correct on the
date when given, and shall be true and correct on the Conversion
Dates as though made on and as of such dates, as further
evidenced by the execution of an officer's certificate, in the
form substantially similar to the certificate set forth in
Exhibit A (the "Officer's Certificate"), by the Innkeepers
Conversion Parties, as of the Conversion Dates;
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2.3.5. The Innkeepers Conversion Parties on behalf of themselves and
the Innkeepers Releasors, shall have executed and delivered to
Marriott a general release substantially in the form attached to
the Termination Agreement, to be effective as of each Conversion
Dates with respect to the applicable Conversion Hotel. The
Innkeepers Conversion Parties hereby agree that the failure to
execute and deliver such release shall be an event of default
under this Agreement, the applicable Termination Agreements, and
such New Franchise Agreements, and a failure of consideration for
the termination of the Outgoing Management Agreement(s), giving
Marriott the right to terminate any or all such agreements by
delivering written notice to Innkeepers Trust; provided, however,
that the Innkeepers Conversion Parties' failure to execute and
deliver such release shall not, by itself, give Marriott, RIBM or
TPMC the right to terminate any Outgoing Management Agreement(s).
2.4. Conditions Precedent to the Innkeepers Conversion Parties Obligations
to Convert. Notwithstanding any provision to the contrary, the
Innkeepers Conversion Parties shall not be obligated to complete the
Conversion of any Conversion Hotel unless:
2.4.1. Marriott and its Affiliates shall have executed and delivered
to the Innkeepers Conversion Parties (a) the Termination
Agreement; (b) the New Franchise Agreement; and (c) all other
Franchise Documents relating to such Conversion Hotel; and
2.4.2. The Innkeepers Conversion Parties shall have received the
approval of its lenders' with respect to such Conversion Hotel,
to the extent required, and in accordance with the provisions of
Article 11.
2.5. The parties acknowledge and agree that the Innkeepers Conversion
Parties are in the process of undergoing intra-company restructuring
as a result of the REIT Modernization Act, and that, as a result, in
the course of the Conversions, or following them, the roles of the
Innkeepers Conversion Parties may change, including, without
limitation, entities defined in this Agreement as "Outgoing Lessees"
may become the franchisee under a New Franchise Agreement in lieu of
any identified "New Lessee/Franchisee." Such changes shall be subject
to the ordinary approval by Marriott required in the Franchise
Documents, and the Innkeepers Conversion Parties shall confirm any
such changes in the Officer's Certificates delivered by the Innkeepers
Conversion Parties at each Conversion.
3. FORMS OF FRANCHISE AGREEMENTS
3.1. General. Each of the New Franchise Agreements shall be substantially
similar to the Reference Agreement, provided that: (a) the New
Franchise Agreements shall contain the modifications set forth in this
Agreement; (b) the New Franchise Agreements may contain changes
reasonably determined by Marriott to be necessary to satisfy
Marriott's obligations under state and Federal franchise and
securities laws and regulations; and (c) the New Franchise Agreement
for Horsham TPS will contain brand-specific provisions
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applicable to the TownePlace Suites brand as of the Conversion Date
for Horsham TPS, together with the modifications contemplated herein.
3.2. Royalty Fee. The royalty fee in each of the New Franchise Agreements
shall be six and one-half percent (6 1/2%) of Gross Room Revenues for
the first ten (10) years of the term of the New Franchise Agreement
and shall be five percent (5%) of Gross Room Revenues thereafter for
the remaining term of the New Franchise Agreement; except that, in the
case of Louisville (North) RI, the royalty fee shall be six and
one-half percent (6 1/2%) of Gross Room Revenues for the first three
(3) years of the term of the New Franchise Agreement for Louisville
(North) RI and five percent (5%) thereafter.
3.3. Term of the New Franchise Agreements. Each of the New Franchise
Agreements shall have the term set forth in Schedule 3.3. Neither
Marriott nor the Innkeepers Conversion Parties shall have the right to
renew the New Franchise Agreements.
3.4. Special Termination Rights.
3.4.1. Notwithstanding any provision in the Franchise Documents to the
contrary, in the event that the Innkeepers Conversion Parties
have not sold the Eden Prairie RI on or prior to the fourth (4th)
anniversary of its Conversion Date, then Marriott shall have the
right to terminate the New Franchise Agreement of such Conversion
Hotel without liability to the Innkeepers Conversion Parties.
Marriott may exercise such right by delivering to the applicable
New Lessee/Franchisee written notice at least six (6) months
prior to the date of termination set forth on such notice.
Marriott shall forbear from seeking any liquidated damages owed
with respect to such termination and any termination fee in
connection with such termination, on condition that the
Innkeepers Conversion Parties have: (i) provided Marriott with a
limited release and covenant not to xxx whereby the Innkeepers
Conversion Parties agree and covenant that in no event will any
of them commence any litigation or other legal or administrative
proceeding against Marriott, whether in law or equity, relating
to any Claim, arising out of or in any way connected with or
related to Marriott's exercise of its rights under this Section
3.4.1, or any facts related to or action taken by Marriott in
connection with its exercise of such rights; and (ii) entered
into a termination agreement with Marriott on Marriott's
then-existing standard form relating to the applicable Conversion
Hotel, which termination agreement shall contain the limited
release and covenant not to xxx set forth in (i) above in lieu of
the standard general release.
3.4.2. Notwithstanding any provision in the Franchise Documents to the
contrary, Marriott shall have the right to terminate the New
Franchise Agreement for any Conversion Hotel that is designated a
Generation 1 Residence Inn Hotel in Schedule R-1, in the event
that any such hotel is a Yellow Zone Hotel at any time after the
tenth (10th) contract year of such New Franchise Agreement;
provided however, the applicable New Lessee/Franchisee shall have
an opportunity to cure, on terms and conditions similar to, and
subject to, the termination provisions applicable to Red Zone
Hotels at such time. Marriott shall exercise its termination
right herein by
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delivering written notice of termination to such New
Lessee/Franchisee. The effective date of termination of such New
Franchise Agreement shall be twelve (12) months after the date of
the delivery of the notice (the "Termination Notice Period"). The
applicable New Lessee/Franchisee shall not be required to pay
royalties during the Termination Notice Period, provided that,
during such Termination Notice Period, such New Lessee/Franchisee
continues to operate the applicable Conversion Hotel (a) strictly
in accordance with Marriott's system standards relating to life
safety issues and critical items, and (b) substantially in
accordance with all other system standards. Marriott shall
forbear from seeking any liquidated damages owed with respect to
such termination and any termination fee in connection with such
termination, on condition that the Innkeepers Conversion Parties
have: (i) provided Marriott with a limited release and covenant
not to xxx whereby the Innkeepers Conversion Parties agree and
covenant that in no event will any of them commence any
litigation or other legal or administrative proceeding against
Marriott, whether in law or equity, relating to any Claim,
arising out of or in any way connected with or related to
Marriott's exercise of its rights under this Section 3.4.2, or
any facts related to or action taken by Marriott in connection
with its exercise of such rights; and (ii) entered into a
termination agreement with Marriott on Marriott's then-existing
standard form relating to the applicable Conversion Hotel, which
termination agreement shall contain the limited release and
covenant not to xxx set forth in (i) above in lieu of the
standard general release.
4. ACKNOWLEDGMENT AND RELEASE
4.1. Acknowledgement and Release. The Innkeepers Conversion Parties
acknowledge and agree that Marriott, its subsidiaries, Affiliates and
partners, and their respective successors and assigns, have and retain
the right to develop, promote, construct, own, lease, acquire and/or
operate the New Denver Residence Inn. The Innkeepers Conversion
Parties, for themselves and the Innkeepers Releasors, and for all
other persons and entities acting on their behalf or claiming under
any of them, release and forever discharge the Marriott Releasees from
any and all Claims arising under, relating to or in connection with
such development, promotion, construction, ownership, lease,
acquisition and/or operation of the New Denver Residence Inn, as
further provided in Article 12.
5. CONVERSION FEE. The Innkeepers Conversion Parties shall pay a Conversion
Fee (as defined in Schedule 5 (Conversion Fee)) for each Conversion Hotel
to Marriott in accordance with the terms and conditions of Schedule 5
(Conversion Fee).
6. TERMINATION FEE
6.1. Payment Obligation. Without limiting the Innkeepers Conversion
Parties' obligations relating to termination under this Agreement and
under the New Franchise Agreements, if, during the Conversion Fee
Payout Period (as such term is defined in Schedule 5 (Conversion Fee))
any Conversion Hotel ceases to do business under the Residence Inn by
Marriott or TownePlace Suites by Marriott system, as applicable, or is
transferred by
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the Innkeepers Conversion Parties to a third party, the Innkeepers
Conversion Parties shall pay to Marriott a termination fee (the
"Termination Fee") with respect to such terminated or transferred
Conversion Hotel.
6.2. Termination Fee Determination. The Termination Fee shall be equal to
the sum of the Allocated Amount of the Base Amount (as defined in
Schedule 5 (Conversion Fee)) of such Conversion Hotel, plus an amount
to compensate Marriott for the loss of one and one-half percent (1
1/2%) of Gross Room Revenues that would be due for the remainder of
the ten (10) year period (the "Rooms Revenue Royalty Shortfall"). The
Rooms Revenue Royalty Shortfall shall be calculated by taking the
average monthly Gross Room Revenues from the twelve (12) month period
preceding such transfer or termination, multiplied by one and one half
percent (1 1/2%), multiplied by the number of months remaining in the
ten (10) year period (except in the case of the Louisville (North) RI,
in which case the multiplier shall be the number of months remaining
in the three (3) year period). Notwithstanding the foregoing, in the
event that the Innkeepers Conversion Parties choose to spread the
payment of the Termination Fee over the remainder of the ten or three
year period, as applicable (pursuant to Section 6.3 below), the
Termination Fee shall consist only of the Rooms Revenue Royalty
Shortfall, and the Allocated Portion of the Base Amount for each
applicable Conversion Hotel shall be reallocated as described in
Schedule 5 (Conversion Fee).
6.3. Termination Fee Payment. The Termination Fee shall be payable, in the
discretion of Innkeepers Trust, as a lump sum payment at an eight and
three-quarters percent (8.75%) discount or may be spread, pro rata,
over the remainder of the ten (10) year period (or three (3) year
period, in the case of the Louisville (North) RI); provided that the
portion of the Termination Fee calculated by reference to the Rooms
Revenue Royalty Shortfall shall be adjusted, from year to year, by any
change in the Consumer Price Index (as defined in Schedule 5
(Conversion Fee)) using calendar year 2002 as the base year.
6.3.1. The Termination Fee shall be in addition to any other fees or
costs payable by the Innkeepers Conversion Parties in connection
with such termination, including, without limitation, liquidated
damages. Notwithstanding any provision to the contrary, in the
event that the Innkeepers Conversion Parties pay both liquidated
damages and a Termination Fee, the liquidated damages that are
due and payable under the New Franchise Agreements shall be
calculated by using a five percent (5%) royalty fee rate, in
place of the six and one half percent (6 1/2%) royalty fee rate
that would have been otherwise due and payable.
6.3.2. In the event that the Innkeepers Conversion Parties choose to
pay the Termination Fee in a lump sum, such lump sum payment
shall be paid within forty-five (45) days after the date on which
the Conversion Hotel ceases to do business under the Residence
Inn by Marriott or TownePlace Suites by Marriott system, as
applicable, or is transferred by the Innkeepers Conversion
Parties to a third party (the "Termination Date").
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6.3.3. In the event that the Innkeepers Conversion Parties choose to
spread the payment of the Termination Fee over the remainder of
the ten or three year period, as applicable, the first such pro
rata portion of the Termination Fee due shall be paid within
forty-five (45) days after the Termination Date, and each
successive pro rata portion of the Termination Fee due shall be
made on the anniversary date of the Termination Date in each
successive calendar year.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1. Innkeeper Conversion Parties Representations, Warranties and
Covenants. Each of the Innkeepers Conversion Parties hereby
represents, warrants and covenants to each of Marriott, RIBM and TPMC
(collectively, the "Marriott Companies") as follows, which
representations, warranties and covenants shall be true at and as of
each of the Conversion Dates, and shall be confirmed at and as of each
such Conversion Date, by the execution of the Officer's Certificate by
the Innkeepers Conversion Parties:
7.1.1. Schedule 7.1.1 (Innkeepers Entities) contains a complete and
accurate description of the current ownership structure of the
Innkeepers Conversion Parties; the owners, lessees, managers and
franchisees of the Conversion Hotels; and the primary debt
obligation of each such owner as of the date hereof.
7.1.2. Each of the Innkeepers Conversion Parties entities listed in
Schedule 7.1.1 (Innkeepers Entities) is duly organized, validly
existing and in good standing in the jurisdiction of its
formation that is indicated in Schedule 7.1.1 (Innkeepers
Entities). Each of the Innkeepers Conversion Parties is
conducting its business activities in a manner that is consistent
with the purposes set forth in its organic documents. None of the
Innkeepers Conversion Parties is engaged in any activity or
course of conduct prohibited by its organic documents.
7.1.3. Each of the Innkeepers Conversion Parties that is entering into
this Agreement and will enter into the Franchise Documents, has
full power and authority to enter into the Franchise Documents to
which it is or will be a party, and has obtained the necessary
approvals of the Franchise Documents by its general partner,
board of directors, or other managing or governing body, as the
case may be, to consummate the transactions contemplated by the
Franchise Documents.
7.1.4. The execution, delivery and performance by each of the
Innkeepers Conversion Parties of the Franchise Documents to which
it is a party have been duly and validly approved and authorized
by its general partner, board of directors, or other managing or
governing body, as the case may be. The corporate and partnership
officers identified in Schedule 7.1.4 (Innkeepers Officers)
hereto hold the office of the Innkeepers Conversion Parties
listed in Schedule 7.1.4 (Innkeepers Officers) and in such
capacities are duly authorized to execute and deliver to Marriott
each of the Franchise Documents on behalf of such Innkeepers
Conversion Parties. The Innkeepers Conversion Parties, through
the officers identified in Schedule 7.1.4 (Innkeepers Officers),
have duly and validly executed and delivered the Franchise
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Documents that have been executed and delivered by the Innkeepers
Conversion Parties to date.
7.1.5. The execution and delivery of the Franchise Documents by the
Innkeepers Conversion Parties do not, and the performance by the
Innkeepers Conversion Parties of their obligations thereunder,
and the consummation of the transactions contemplated thereby
will not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a
default under, result in or give to any person any right of
payment or reimbursement, termination, cancellation, modification
or acceleration of, or result in the creation or imposition of
any lien upon any of the Conversion Hotels or any of the rights,
assets or properties under the New Franchise Agreements under any
of the terms, conditions or provisions of (i) the organic
documents of the Innkeepers Conversion Parties, (ii) any laws
applicable to the Innkeepers Conversion Parties, or (iii) any
material contract, agreement or commitment to which any
Innkeepers Conversion Party is a party or by which any Innkeepers
Conversion Party or any of its assets or properties is bound.
7.1.6. Except as may have already been obtained by the Innkeepers
Conversion Parties, no consent or approval of any person or
entity, including, without limitation, any lender or creditor of
any of the Innkeepers Conversion Parties, is required by any of
the Innkeepers Conversion Parties in connection with the
execution and delivery of the Franchise Documents, or the
consummation by the Innkeepers Conversion Parties of the
transactions contemplated thereby. Each of the Innkeepers
Conversion Parties represents that it has obtained the consent
and approval of each of the lenders set forth in Schedule 11.1
prior to the date hereof or shall immediately obtain such consent
and approval and have such consent and approval in place at least
ten (10) days prior to the Conversion Date of the applicable
Conversion Hotel.
7.1.7. Other than comfort letters with respect to the Addison (Dallas)
RI, Arlington (DFW -South) RI, Atlanta (Downtown) RI, Innkeepers
Denver (Downtown) RI, San Mateo RI, Silicon Valley I RI and
Silicon Valley II RI., which will be delivered by the respective
Conversion Dates and which will be in the standard form of
Marriott's comfort letter, no comfort letter or other instrument
from Marriott is necessary or required by any lender or creditor
of any of the Innkeepers Conversion Parties in connection with
the execution and delivery of the Franchise Documents, or the
consummation by the Innkeepers Conversion Parties of the
transactions contemplated thereby.
7.1.8. The entity designated as the owner of the Conversion Hotels in
Schedule 7.1.1 (Innkeepers Entities) is the owner of such
Conversion Hotels and has delivered a copy of the deed or other
instrument of transfer evidencing such ownership. The Innkeepers
Conversion Parties have delivered, or will by the Conversion
Date, deliver to Marriott true and complete copies of all
operating leases. Each such leases is valid and subsisting and
there is no default or event or state of facts which with notice
or passage of time may result in a default under the such leases.
11
7.1.9. None of the Franchise Documents or other documents and written
information furnished to Marriott by or on behalf of the
Innkeepers Conversion Parties in connection with the transactions
contemplated herein or in the other Franchise Documents contains
any untrue statement of material fact or omits to state any
material fact necessary in light of the circumstances in which it
was made, to make the statements contained herein or therein not
misleading.
7.2. Indemnification. Each of the Innkeepers Conversion Parties and
Innkeepers Releasors shall and hereby does indemnify and shall defend
and save harmless the Marriott Releasees from and against all losses,
costs, liabilities, damages, claims and expenses, of every kind and
description, including reasonable attorneys' fees, arising out of or
resulting from a breach of any of the representations, warranties or
covenants set forth in Section 8.1. The Innkeepers Conversion Parties
shall promptly give written notice to the Marriott Releasees of any
such breach of which it becomes aware. The Marriott Releasees shall in
any event have the right, through counsel of their choice at the
Innkeepers Conversion Parties' expense, to control the defense or
response to any legal action if it could affect the interests of the
Marriott Releasees, and such undertaking by the Marriott Releasees
shall not, in any manner or form, diminish the Innkeepers Conversion
Parties' obligations to the Marriott Releasees hereunder.
7.3. Marriott Companies' Representations, Warranties and Covenants. Each of
the Marriott Companies hereby represents, warrants and covenants to
the Innkeepers Conversion Parties as follows: (a) Each of the Marriott
Companies is duly organized, validly existing and in good standing in
the jurisdiction of its formation; (b) Each of the Marriott Companies
has full power and authority to enter into and perform its obligations
under the New Franchise Agreements to which it is or will be a party;
and (c) the execution, delivery and performance by Marriott of the New
Franchise Agreements to which it is or will be a party, have been duly
and validly approved and authorized, and the individuals executing the
Franchise Documents on behalf of each of the Marriott Companies are
duly authorized to execute and deliver to the applicable Innkeepers
Conversion Parties each of the Franchise Documents on behalf of each
of the Marriott Companies; (d) each of the Marriott Companies, through
its authorized persons, has duly and validly executed and delivered
the Franchise Documents; and (e) except for comfort letters to, or any
consents or approvals by, the creditors or lenders of the Innkeepers
Conversion Parties, with respect to which each of the Marriott
Companies is relying on the Innkeepers Conversion Parties'
representations and warranties set forth in Section 8.1 above, no
consent or approval of any person or entity is required by each of the
Marriott Companies in connection with the execution and delivery of
the Franchise Documents, or the consummation by each of the Marriott
Companies of the transactions contemplated thereby.
8. GUARANTY
8.1. Innkeepers Trust shall be the guarantor of all of the obligations of
each of the owners of the Conversion Hotels, and shall evidence such
obligation by executing and delivering to
12
Marriott a guaranty in form substantially similar to the form of
guaranty set forth in the Reference Agreement.
8.2. Each of the owners of the Conversion Hotels shall be the guarantor of
all of the obligations of the New Lessees/Franchisees under the
Franchise Documents, including without limitation, the New Franchise
Agreements, and shall evidence such obligation by executing and
delivering to Marriott an owner's agreement in form substantially
similar to the form of owner's agreement set forth in the Reference
Agreement.
9. NO DEFAULTS
9.1. Each of the Innkeepers Conversion Parties' rights to waiver of
payments and special termination rights set forth in this Agreement
shall be subject to there existing no defaults under any of the
Franchise Documents, including without limitation, this Agreement, the
Termination Agreements, and each of the applicable New Franchise
Agreements, at the time that any such Innkeepers Conversion Party
desires to exercise such rights.
10. CERTAIN POST CONVERSION OBLIGATIONS
10.1. Continued Participation. For a minimum period of twelve (12) months
after conversion of an Conversion Hotel, the Innkeepers Conversion
Parties shall continue to participate in all market revenue management
and sales programs involving such Conversion Hotel as of the date of
conversion, including, but not limited to, cluster sales, cluster
revenue management and event booking centers programs. The Innkeepers
Conversion Parties shall have the right to terminate such
participation provided that the Innkeepers Conversion Parties give at
least six (6) months prior written notice to Marriott of their
decision to cease such participation with respect to any Conversion
Hotel at the end of such twelve (12) months period.
10.2. Other Obligations. The Innkeepers Conversion Parties shall pay to
Marriott or to any party designated by Marriott all amounts that
become due or are payable under the terminated Outgoing Management
Agreements and shall generally comply with all post termination
obligations under the terminated Outgoing Management Agreements.
11. LENDER APPROVAL
11.1. The Innkeepers Conversion Parties' Covenant. The Innkeepers
Conversion Parties shall diligently and in good faith obtain such
approval from their lenders that are set forth in Schedule 11.1, as is
required to consummate the transactions contemplated by this
Agreement. In the event that the Innkeepers Conversion Parties fail to
obtain any such lender approval, then: (a) the Innkeepers Conversion
Parties shall indemnify and hold Marriott harmless for the Innkeepers
Conversion Parties' failure to consummate the transactions
contemplated herein with respect to Marriott's reasonable out of
pocket costs and expenses relating to the relocation and hiring of
employees; and (b) the provisions of Section 11.1(a) shall be
Marriott's sole remedy for such failure to obtain
13
such approval, provided that the Innkeepers Conversion Parties have
complied with the provisions of the first sentence of this Section
11.1 and can demonstrate that they did so.
12. GENERAL RELEASE
12.1. General Release. The parties acknowledge and agree that they have
been involved in a business relationship in excess of seven (7) years,
and that the parties have, or may have had, disputes and disagreements
regarding a variety of matters and issues relating to their business
relationship. In consideration of the various changes to and the
agreements concerning the parties' business relationship, as of the
date hereof, the Innkeepers Conversion Parties, for themselves and for
each of the other Innkeepers Releasors, hereby, jointly and severally,
release and discharge the Marriott Releasees from, and agree and
covenant that in no event will any Innkeepers Releasor commence any
litigation or other legal or administrative proceeding against, the
Marriott Releasees, whether in law or equity, relating to any Claims,
arising out of or in any way connected with or related to:
12.1.1. each and every Conversion Hotel listed in Schedule R-1,
including, without limitation, any Claims as regards the Marriott
Releasees' (including, without limitation, Marriott's, RIBM's or
TPMC's) management of, and performance under, the Outgoing
Management Agreements listed in Schedule R-1 through the date
hereof;
12.1.2. any and all Claims concerning any other management or
franchise agreements between the Marriott Releasees and the
Innkeepers Conversion Parties and their respective Affiliates
related to any hotels licensed, managed, franchised, owned or
operated by the Marriott Releasees not listed in Schedule R-1,
through the date hereof; and
12.1.3. Marriott's development, promotion, ownership, operation,
licensing, franchising or management of any existing hotel
property, any proposed hotel project or any hotel property under
construction under any Marriott Brand, as previously identified
in writing (the "Pipeline List") by Marriott to the Innkeepers
Conversion Parties;
including, with respect to each of the foregoing subsections, any
Claims relating to or arising out of the financial or economic impact
that such development, promotion, ownership, operation, licensing
and/or management would have, or has had, on any Conversion Hotel or
other property developed, promoted, owned, operated, licensed or
managed by, and of, the Innkeepers Releasors. The Innkeepers
Conversion Parties, for themselves and for each of the other
Innkeepers Releasors, hereby acknowledge and agree that Marriott
retains the right to amend the Pipeline List through the Conversion
Date with respect to each Conversion Hotel, but not with respect to
the Restricted Territory (as defined in Section I.G. of each New
Franchise Agreement) relating to any Conversion Hotel for which the
Conversion has already occurred.
14
12.2. Representations and Warranties. Each of the Innkeepers Conversion
Parties hereby represents, warrants and covenants as follows:
12.2.1. collectively, the Innkeepers Conversion Parties, directly or
indirectly own or Control each of the Conversion Hotels and
Innkeepers Conversion Parties and, in such capacity, hereby grant
the releases set forth in this Article 12 on behalf of each of
the Conversion Hotels and Innkeepers Conversion Parties; and
12.2.2. it has full power and authority to grant the foregoing
releases.
12.3. Waiver of Rights under California and Similar State Laws. Each of the
releases set forth in this Article 12 is intended to be effective as a
bar to every Claim stated above. Accordingly, each of the Innkeepers
Conversion Parties hereby expressly waives any rights and benefits
conferred by Section 1542 of the California Civil Code, which provides
that, "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR," and hereby expressly waives
any rights and benefits conferred by any similar provision of law
existing under any other applicable state or local code.
12.4. General Release Carveout. In the event that Marriott, RIBM and/or
TPMC has willfully and wrongfully failed, in breach of this Agreement,
to complete the Conversion of any Conversion Hotel, Innkeepers Trust
shall have the right to declare such party or parties in breach of
this Agreement by delivering written notice thereof to the breaching
party, and if the breaching party or parties have not cured such
breach within thirty (30) days of the receipt of such notice, then the
general release set forth in this Article 12 shall be null and void
with respect to the Conversion Hotels that Marriott, RIBM, and/or TPMC
has willfully and wrongfully failed, in breach of this Agreement, to
complete the Conversion of; provided that: (a) such written notice
sets off the alleged breach or breaches with particularity; (b) as of
the date of such written notice, all of the Innkeepers Conversion
Parties and their Affiliates are operating all Marriott-brand hotels
in good standing under all existing agreements with Marriott and its
Affiliates and that no breaches by the Innkeepers Conversion Parties
and their Affiliates exist under any agreements between them and
Marriott and its Affiliates, including, without limitation, this
Agreement; (c) such written notice shall set forth the statement
contained in the previous subsection (b) and certify that it is true
and accurate; and (d) the senior executive officers of the Innkeepers
Conversion Parties shall sign such written notice.
13. SURVIVAL. This Agreement shall survive the expiration or earlier
termination of any of the individual New Franchise Agreements.
14. MISCELLANEOUS
14.1. Notices. Any and all notices required or permitted under this
Agreement shall be in writing and shall be delivered personally or
delivered by a nationally-recognized
15
overnight commercial delivery service (such as Airborne Express or
Federal Express), by certified mail, return receipt requested, or by
facsimile (followed by delivery by certified mail, return receipt
requested) to the respective parties at the following addresses unless
and until a different address has been designated by written notice to
the other party:
Notices to Marriott: Marriott International, Inc.
Franchise Attorney
Law Department 52/923.25
00000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
with copy to: Marriott International, Inc.
Dept. 51/944.52
Lodging Franchising
00000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Notices to the Innkeepers Conversion
Parties:
[name of entity(ies) receiving notice]
c/o Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxxxxxxx Xxx
Xxxx Xxxxx, XX 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
Any notice shall be deemed to have been given at the date and time of (a)
receipt or first refusal of delivery if sent via certified mail, (b) one (1) day
after posting if sent via overnight commercial delivery service, or (c) upon
receipt of electronic confirmation is sent by facsimile.
16
14.2 Expenses. Each party hereto shall bear its own expenses with respect
to the transactions contemplated hereby; provided, however, that
Innkeepers Trust shall pay all legal fees and expenses incurred by
Marriott in connection with the consummation of the transactions
contemplated under this Agreement in an amount up to Seventy Five
Thousand Dollars ($75,000).
14.3. Waivers. The failure or delay of a party hereto at any time or times
to require performance of any provision hereof shall in no manner
affect its right at a later time to enforce the same. No waiver by a
party of any condition or of any breach of any term, representation,
warranty or covenant contained in this Agreement shall be effective
unless in writing, and no waiver in any one or more instances shall be
deemed to be a further or continuing waiver of any such condition or
breach in other instances or a waiver of any other condition or breach
of any other term, representation, warranty or covenant.
14.4. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Maryland
without giving effect to the principles of conflicts of law thereof.
14.5. No Assignment. This Agreement and the rights of the Innkeepers
Conversion Parties set forth herein and/or as reflect in any other
Franchise Document are personal to the Innkeepers Conversion Parties
and shall not be transferable, by operation of law or otherwise. Any
attempted transfer of such rights by the Innkeepers Conversion Parties
shall be null and void. Marriott shall have the right to transfer this
Agreement and the rights and obligations hereunder and under any
Franchise Document to the same extent as set forth in Section XV.M of
the Reference Agreement.
14.6. Enforcement of the Agreement. The parties hereto agree that
irreparable damage would result in the event that any provision of
this Agreement is not performed in accordance with specific terms or
is otherwise breached. It is accordingly agreed that the parties
hereto will be entitled to equitable relief including an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof.
14.7. Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or
enforceability of the other provisions hereof shall not be affected
thereby, and there shall be deemed substituted for the provision at
issue a valid, legal and enforceable provision as similar as possible
to the provision at issue.
14.8. Interpretation. The various headings used in this Agreement are for
convenience only and are not to be used in interpreting the text of
the article or section in which they appear or to which they relate.
The use of the masculine, feminine or neuter gender herein shall not
limit any provision of this Agreement.
14.9. Incorporation of Recitals and Attachments; Entire Agreement;
Amendments. The parties acknowledge and agree that the recitals to
this Agreement and each Schedule and Exhibit to this Agreement, are an
integral part of this Agreement, and are hereby
17
incorporated herein. This Agreement, including such definitions and
together with the Schedules and Exhibits hereto, constitutes the
entire agreement between the parties relating to the subject matter
herein. All prior agreements or arrangements and understandings,
written or oral, among the parties relating to the subject matter
hereof are hereby canceled and superseded, including without
limitation any term sheet between them. In the event any provision of
any Schedule or Exhibit hereto is deemed to conflict with any
provision of this Agreement, the provisions of this Agreement shall
control. This Agreement may not be amended, modified or terminated
except in a writing executed by the parties hereto.
14.10. Waiver of Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL
BY JURY IN ANY DISPUTE IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT AND THE OTHER RELATED AGREEMENTS, AND
AGREES TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT
SUCH WAIVER.
14.11. Mutual Cooperation and Further Assurances. The parties agree to
reasonably cooperate with each other in order to carry out the intent
and goals of this Agreement. Without limiting the generality of the
foregoing sentence, the parties agree to execute and deliver, or cause
to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to
carry out the transactions or more fully effect or confirm the
agreements contemplated hereby, including without limitation, each of
the Innkeepers Conversion Parties agrees that, upon request from
Marriott, it will confirm, and will cause any Affiliate or subsidiary
to confirm, in writing to Marriott, the releases set forth in Article
12 above, as of the dates thereof.
14.12. Confidential Information. No Innkeepers Conversion Party shall,
during the term of this Agreement or thereafter, without Marriott's
prior written consent, which consent may be granted or withheld in
Marriott's sole discretion, copy, duplicate, record, reproduce, in
whole or in part, or otherwise transmit or make available to any
unauthorized person any Confidential Information; provided, however
that in the event (a) any Confidential Information is the subject of
court ordered disclosure, the Innkeepers Conversion Parties shall seek
a protective order and provide immediate notice to Marriott of such
court order and give Marriott a reasonable opportunity to seek a
protective order or (b) Innkeepers Trust has reasonably determined
that any Confidential Information must be disclosed in any filing made
on its behalf with the U.S. Securities and Exchange Commission,
Innkeepers Trust shall (i) immediately notify Marriott of such
determination and provide Marriott with the opportunity to review and
comment on such disclosure; and (ii) take all measures possible to
minimize the amount and type of Confidential Information being
disclosed including without limitation, vigorously redacting or
eliminating as much Confidential Information as possible. The
Innkeepers Conversion Parties may divulge such Confidential
Information only to such of the Innkeepers Conversion Parties'
employees or agents as must have access to it in order to operate the
Conversion Hotels; all other persons shall be deemed "unauthorized"
for purposes of this Agreement. Each Innkeepers Conversion Party shall
18
maintain the Confidential Information in a safe and secure location
and shall immediately report to Marriott the theft or loss of all or
any part of the Confidential Information. The contents of the Manual,
all Software, and all other information, knowledge, know-how or other
data that Marriott designates as confidential shall be deemed
confidential for purposes of this Agreement. Notwithstanding any
provision to the contrary, Marriott and the Innkeepers Conversion
Parties acknowledge and agree that Innkeepers Trust intends to file
this Agreement, together with the Schedules and Exhibits listed on
page 23 of this Agreement, with the Securities and Exchange
Commission.
14.13. CERTAIN ACKNOWLEDGMENTS OF THE INNKEEPERS CONVERSION PARTIES
14.13.1. THE INNKEEPERS CONVERSION PARTIES ACKNOWLEDGE THAT THEY DID
NOT RELY ON ANY PROMISES, REPRESENTATIONS OR AGREEMENTS ABOUT
MARRIOTT OR MARRIOTT'S FRANCHISE NOT EXPRESSLY CONTAINED IN THE
FRANCHISE DOCUMENTS AND IN MAKING THEIR DECISION TO SIGN THIS
AGREEMENT. THE INNKEEPERS CONVERSION PARTIES FURTHER REPRESENT
AND WARRANT THAT MARRIOTT AND ITS REPRESENTATIVES HAVE NOT MADE
ANY PROMISES, REPRESENTATIONS OR AGREEMENTS, ORAL OR WRITTEN,
EXCEPT AS EXPRESSLY CONTAINED IN THE FRANCHISE DOCUMENTS.
14.13.2. THE INNKEEPERS CONVERSION PARTIES ACKNOWLEDGE THAT THEY HAVE
CONDUCTED AN INDEPENDENT INVESTIGATION OF THE BUSINESS TO BE
FRANCHISED UNDER THE FRANCHISE DOCUMENTS, AND RECOGNIZE THAT THE
BUSINESS VENTURE CONTEMPLATED BY THE FRANCHISE DOCUMENTS INVOLVES
BUSINESS RISKS AND THAT THEIR SUCCESS WILL BE LARGELY DEPENDENT
UPON THE ABILITY OF THE INNKEEPERS CONVERSION PARTIES AS
INDEPENDENT BUSINESSMEN. MARRIOTT EXPRESSLY DISCLAIMS THE MAKING
OF, AND THE INNKEEPERS CONVERSION PARTIES ACKNOWLEDGE THAT THE
INNKEEPERS CONVERSION PARTIES HAVE NOT RECEIVED, ANY WARRANTY OR
GUARANTEE, EXPRESS OR IMPLIED, AS TO THE POTENTIAL VOLUME,
PROFITS OR SUCCESS OF THE BUSINESS VENTURE CONTEMPLATED BY THE
FRANCHISE DOCUMENTS.
19
14.14. Counterparts; Delivery by Facsimile. This Agreement may be executed
multiple counterparts and delivered by facsimile.
[SIGNATURE PAGES FOLLOW]
20
IN WITNESS WHEREOF, the parties hereto have caused this Omnibus Agreement
for a 17 Hotel Conversion to be executed as of the day and year first above
written.
MARRIOTT INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxx
---------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
RESIDENCE INN BY MARRIOTT, INC.
By: /s/ Xxxx Xxxxx
---------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
TOWNEPLACE MANAGEMENT CORPORATION
By: /s/ Xxxx Xxxxx
---------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
INNKEEPERS USA TRUST
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
INNKEEPERS HOSPITALITY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
21
I acknowledge that I am executing this Omnibus Agreement on behalf of each of
the entities set forth in Schedule 7.1.1 (Innkeepers Entities) hereto, in my
capacity as the officer of each such entity as identified in Schedule 7.1.4
(Innkeepers Officers). My signature is and shall be considered the signature of
each such entity, and shall be binding on each such entity.
----------------------------------
Xxxxxxx X. Xxxxxx
22
List of Schedules and Exhibits
Schedule R-1 The Conversion Hotels
Schedule 3.3 Schedule of Franchise Agreement Terms
Schedule 5 Conversion Fee Schedule
Schedule 7.1.1 Innkeepers Conversion Parties' Organizational Chart
Schedule 7.1.4 Innkeepers Conversion Parties and Authorized Officers
Schedule 11.1 List of Lenders and Collateralized Conversion Hotels
Exhibit A Form of Officer's Certificate
Exhibit B Form of Termination of Management Agreement
Exhibit C Reference Agreement
23
SCHEDULE R-1
CONVERSION HOTELS
----------------------------------------------------------------------------------------------------------------------------
Outgoing Management Agreement; Conversion Date Generation 1
Conversion Hotel Address Lessee/Owner Residence Inn
------------------------------------------------------------------------------------------------------------------ ---------
1. Addison (Dallas) RI 14975 Quorum Dr. Management Agreement by and May 23, 2003 No
Xxxxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated January 31, 1997,
as amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence
Addison (TX) LP
----------------------------------------------------------------------------------------------------------------------------
2. Arlington (DFW- 0000 Xxxxxxxxxxx Xxxxx Xx. Management Agreement by and May 23, 0000 Xx
Xxxxx) XX Xxxxxxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated January 31, 1997,
as amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence
Arlington (TX) LP
----------------------------------------------------------------------------------------------------------------------------
3. Atlanta (Downtown) 000 Xxxxxxxxx Xx. XX Management Agreement by and April 25, 2003 No
RI Xxxxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated September 6, 1996,
as amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence
Atlanta-Downtown LP
----------------------------------------------------------------------------------------------------------------------------
24
----------------------------------------------------------------------------------------------------------------------------
4. Atlanta (Peachtree 0000 Xxxxxxxx Xx. Management Agreement by and March 28, 2003 No
RI Xxxxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated October 9, 1998, as
amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence RI
General LP
----------------------------------------------------------------------------------------------------------------------------
5. Chicago (X'Xxxx) RI 00000 Xxxx Xxxxx Xxx. Management Agreement by and March 28, 2003 No
Xxxxxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated January 8, 1999, as
amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence RI
General LP
----------------------------------------------------------------------------------------------------------------------------
6. Detroit (Livonia) 00000 Xxx Xx. Management Agreement by and
XX Xxxxxxx, XX 00000 between RIBM and JF Hotel III, March 28, 2003 No
Inc., dated March 12, 1999, as
amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence RI
General LP
----------------------------------------------------------------------------------------------------------------------------
7. Eden Prairie RI 7780 Flying Cloud Drive Management Agreement by and May 23, 2003 Yes
Xxxx Xxxxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated January 4, 1997, as
amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence
Eden Prairie LP
----------------------------------------------------------------------------------------------------------------------------
8. Gaithersburg 0000 Xxxxxxxxxxxxx Xxxx. Management Agreement by and May 23, 2003 No
(Washingtonian) RI Xxxxxxxxxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated July 10, 1998, as
amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence RI
General LP
----------------------------------------------------------------------------------------------------------------------------
9. Horsham TPS 198 Precision Dr. Management Agreement by and May 23, 2003 No
between
----------------------------------------------------------------------------------------------------------------------------
25
----------------------------------------------------------------------------------------------------------------------------
Xxxxxxx, XX 00000 TPMC and Innkeepers
Hospitality III, Inc., dated
May 13, 1999;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers USA LP
----------------------------------------------------------------------------------------------------------------------------
10. Innkeepers Denver 0000 X. Xxxx Xx. Management Agreement by and April 25, 2003 Yes
(Downtown) XX Xxxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated November 1, 1996,
as amended;
Lessee: Innkeepers Hospitality
V, Inc.
Owner: Innkeepers Residence
Denver-Downtown LP
----------------------------------------------------------------------------------------------------------------------------
11. Louisville (North) 000 Xxxxx Xxxxxxxxxxx Amended and Restated Management May 23, 2003 Yes
RI Parkway Agreement by and between RIBM
Xxxxxxxxxx, XX 00000 and JF Hotel III, Inc., dated
December 13, 1995, as amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence RI
General LP
----------------------------------------------------------------------------------------------------------------------------
12. Portland (Maine) RI 000 Xxxxxxxxx Xx. Management Agreement by and April 25, 2003 Yes
Xxxxxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated November 1, 1996,
as amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence
Portland LP
----------------------------------------------------------------------------------------------------------------------------
13. Richmond (Northwest) 0000 Xxxxxxxx Xxxxxxx Management Agreement by and May 23, 2003 No
RI Xxxxxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated January 8, 1999, as
amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence RI
General LP
----------------------------------------------------------------------------------------------------------------------------
14. San Xxxx (South) RI 6111 San Xxxxxxx Ave. Management Agreement by and March 28, 2003 No
Xxx Xxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated November
----------------------------------------------------------------------------------------------------------------------------
26
----------------------------------------------------------------------------------------------------------------------------
6, 1998, as amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence RI
General LP
----------------------------------------------------------------------------------------------------------------------------
15. San Mateo RI 0000 Xxxxxxx Xxx Management Agreement by and April 25, 2003 Yes
Xxx Xxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated November 1, 1996,
as amended;
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence San
Mateo LP
----------------------------------------------------------------------------------------------------------------------------
16. Silicon Valley I RI 750 Lakeway Dr. Management Agreement by and April 25, 2003 Yes
Xxxxxxxxx, XX 00000 between RIBM and JF Hotel III,
Inc., dated November 1, 1996,
as amended;
Lessee: Innkeepers Hospitality
V, Inc.
Owner: Innkeepers Residence
Sili I LP
----------------------------------------------------------------------------------------------------------------------------
17. Silicon Valley II RI 1080 Xxxxxxx Dr. Letter Agreement by and between May 23, 2003 Yes
Xxxxxxxxx, XX 00000 RIBM and JF Hotel III, Inc.,
dated November 1, 1996, as
amended.
Lessee: Innkeepers Hospitality
III, Inc.
Owner: Innkeepers Residence
Sili II LP
----------------------------------------------------------------------------------------------------------------------------
27
SCHEDULE 3.3
FRANCHISE AGREEMENT TERMS
-----------------------------------------------------
Conversion Hotel Term (years)
-----------------------------------------------------
1. Addison (Dallas) RI 20
-----------------------------------------------------
2. Arlington (DFW-South) RI 20
-----------------------------------------------------
3. Atlanta (Downtown) RI 20
-----------------------------------------------------
4. Atlanta (Peachtree) RI 20
-----------------------------------------------------
5. Chicago (X'Xxxx) RI 20
-----------------------------------------------------
6. Detroit (Livonia) RI 20
-----------------------------------------------------
7. Eden Prairie RI 15
-----------------------------------------------------
8. Gaithersburg (Washingtonian) RI 20
-----------------------------------------------------
9. Horsham TPS 20
-----------------------------------------------------
10. Innkeepers Denver (Downtown) RI 15
-----------------------------------------------------
11. Louisville (North) RI 15
-----------------------------------------------------
12. Portland (Maine) RI 20
-----------------------------------------------------
13. Richmond (Northwest) RI 20
-----------------------------------------------------
14. San Xxxx (South) RI 20
-----------------------------------------------------
15. San Mateo RI 15
-----------------------------------------------------
16. Silicon Valley I RI 20
-----------------------------------------------------
17. Silicon Valley II RI 20
-----------------------------------------------------
28
SCHEDULE 5
CONVERSION FEE SCHEDULE
1. General. The Innkeepers Conversion Parties and Marriott acknowledge that
in connection with the conversion of each Conversion Hotel from a managed hotel
to a franchised hotel, the Innkeepers Conversion Parties will pay to Marriott a
Conversion Fee (defined below) for each Conversion Hotel, in lieu of fees which
otherwise would have become due under the Outgoing Management Agreements.
Capitalized terms used in this Schedule 5, but not otherwise defined herein,
shall have the meanings assigned to such terms in the Omnibus Agreement.
Additional terms are defined in Section 3 of this Schedule 5 below.
2. Payment of the Conversion Fee.
The Innkeepers Conversion Parties shall have the obligation to pay the
Aggregate Conversion Fee to Marriott on an annual basis with respect to
each calendar year during the Conversion Fee Payout Period according to the
following schedule:
(i) seventy-five percent (75%) of the Base Amount shall be paid
to Marriott no later than fifteen (15) days after the end of the third
calendar quarter of each year.
(ii) the remaining twenty-five percent (25%) of the Base Amount
shall be paid to Marriott no later than fifteen (15) days after the
end of the fourth calendar quarter of each year.
(iii) the Aggregate Participation Amount shall be paid no later
than forty-five (45) days after the end of the fourth calendar quarter
of each year.
3. Reporting Requirements.
(a) In addition to the accounting and records requirements provided
for in the Franchise Documents, the Innkeepers Conversion Parties shall
deliver to Marriott (pursuant to the notice provisions of the Omnibus
Agreement) its financial statements which form the basis for the
calculation of the Aggregate Participation Amount and Aggregate Suite
Revenues by the twentieth (20th) day after the end of each calendar
quarter. Such statements shall include a statement (substantially in the
form attached hereto as Exhibit 5-2) accurately reflecting: (i) the Suite
Revenues for each Conversion Hotel and the source and amounts of all other
revenues generated at each Conversion Hotel required to calculate Gross
Revenues for each Conversion Hotel, (ii) the amount and classification of
all Deductions from Gross Revenues for the purpose of calculating Operating
Profit for each Conversion Hotel and (iii) such other information as is
necessary to calculate the Aggregate Participation Amount and Aggregate
Suite Revenues.
29
(b) Marriott or its designated agent shall have the right at all
reasonable times, and upon reasonable notice to the Innkeepers Conversion
Parties, to examine and copy, at its expense, all books, records, accounts
and tax returns of the Innkeepers Conversion Parties related to the
operation of the Conversion Hotels during the preceding calendar year.
Marriott also shall have the right, at any time, and upon reasonable notice
to the Innkeepers Conversion Parties, to have an independent audit, at its
expense, made of these books, accounts and records related to the operation
of the Conversion Hotels. Subject to (d) below, Marriott may exercise its
rights to undertake an independent audit under the immediately preceding
sentence only once in each calendar year.
(c) If an examination reveals that the Innkeepers Conversion Parties
have underpaid Marriott in connection with the Conversion Fee, upon written
notification by Marriott to the Innkeepers Conversion Parties, the
Innkeepers Conversion Parties shall immediately pay to Marriott upon
demand, the amount underpaid plus interest thereon (at a rate of eighteen
percent (18%) per annum (calculated on the basis of the actual number of
days the payment has been overdue over a 360-day year) or, if such interest
exceeds the legal amount, the highest rate allowed by law) from the date
such amount was due until paid. If an inspection discloses an
understatement of the Aggregate Conversion Fee in any fiscal year of three
percent (3%) or more, the Innkeepers Conversion Parties also shall
reimburse Marriott for all costs and expenses connected with the
examination and audit (including reasonable accounting and attorneys'
fees). The foregoing remedies shall be in addition to any other remedies
Marriott may have. If an examination or audit reveals that the Innkeepers
Conversion Parties have overpaid Marriott, the amount of any such
overpayment, without interest, shall be credited against future Conversion
Fee payments due and payable by the Innkeepers Conversion Parties to
Marriott.
(d) Notwithstanding anything to the contrary in clause (b) above,
Marriott or its designated agent shall have the right at all reasonable
times, and upon reasonable notice to the Innkeepers Conversion Parties, to
conduct an on-site review, at Marriott's expense, of all books, records,
accounts and tax returns of the Innkeepers Conversion Parties related to
the operation of the Conversion Hotels during the preceding calendar
quarter. In the event that the aforementioned review detects any
questionable practices or reporting problems in the reasonable opinion of
Marriott, Marriott may undertake an additional independent audit
notwithstanding the limitation set forth in the last sentence of clause (b)
above.
(e) The Innkeepers Conversion Parties shall have fifteen (15) days
after the delivery by Marriott of written notice of an underpayment of the
Conversion Fee to object to the determination by delivery of notice to
Marriott containing a detailed explanation of its calculations. If Marriott
and the Innkeepers Conversion Parties cannot resolve their dispute within
ten (10) days after the delivery of the Innkeepers Conversion Parties'
objection notice, either party may submit the dispute to an Expert (as
defined below) for resolution in accordance with the provisions of this
Section 3(e) within 180 days after delivery of the objection notice.
30
(i) The use of the Expert shall be the exclusive remedy of the
parties and neither party shall attempt to adjudicate any dispute in
any other forum. The decision of the Expert shall be final and binding
on the parties and shall not be capable of challenge, whether by
arbitration, in court or otherwise.
(ii) Each party shall be entitled to make written submissions to
the Expert, and if a party makes any submission it shall also provide
a copy to the other party and the other party shall have the right to
comment on such submission. The parties shall make available to the
Expert all books and records relating to the issue in dispute and
shall render to the Expert any assistance requested of the parties.
The costs of the Expert and the proceedings shall be borne equally by
the parties or as otherwise directed by the Expert.
(iii) The Expert shall make its decision with respect to the
matter referred for determination by applying U.S. generally accepted
accounting principles and the Uniform System of Accounts.
(iv) The terms of engagement of the Expert shall include an
obligation on the part of the Expert to: (A) notify the parties in
writing of his decision within forty-five (45) days from the date on
which the Expert has been selected (or such other period as the
parties may agree or as set forth herein); and (B) establish a
timetable for the making of submissions and replies.
(v) For the purposes of this Section 3(e), "Expert" means an
independent, nationally recognized lodging consulting firm or
individual who is qualified to resolve the issue in question, and who
is appointed in each instance by agreement of the parties or, failing
agreement, each party shall select one such nationally recognized
consulting firm or individual and the two (2) respective firms and/or
individuals so selected shall select another such nationally
recognized consulting firm or individual to be the Expert. Each party
agrees that it shall not appoint an individual as an Expert hereunder
if the individual is, as of the date of appointment or within six (6)
months prior to such date, employed by such party, either directly or
as a consultant, in connection with any other matter. In the event
that either party calls for an Expert determination pursuant to the
terms hereof, the parties shall have ten (10) days from the date of
such request to agree upon an Expert and, if they fail to agree, each
party shall have an additional ten (10) days to make its respective
selection of a firm or individual, and within ten (10) days of such
respective selections, the two (2) respective firms and/or individuals
so selected shall select another such nationally recognized consulting
firm or individual to be the Expert. If either party fails to make its
respective selection of a firm or individual within the ten (10) day
period provided for above, then the other party's selection shall be
the Expert. Also, if the two (2) respective firms and/or individuals
so selected shall fail to select a third nationally recognized
consulting firm or individual to be the Expert, then such Expert shall
be appointed by the American Arbitration Association and shall be a
qualified
31
person having at least ten (10) years recent professional experience
as to the subject matter in question.
4. Definitions. As used in this Schedule 5, the following terms shall have
the following meanings:
(a) "Aggregate Base Year Revenues" means the sum of the Suite Revenues
for each of the Conversion Hotels for calendar year 2002 (both such sum and
the Suite Revenues for each individual Conversion Hotel for calendar year
2002 as calculated by Marriott, and verified by the Innkeepers Conversion
Parties), as adjusted downward to reflect any Conversion Hotel
Terminations. In any calendar year in which a Conversion Hotel Termination
occurs, Aggregate Base Year Revenues shall be reduced by an amount equal to
the Suite Revenues in calendar year 2002 for each Conversion Hotel that was
the subject of a Conversion Hotel Termination during such year multiplied
by a fraction: (i) the numerator of which is the number of days in the
period from the effective date of the Conversion Hotel Termination to the
last day of such year (including the first and last days of the period) and
(ii) the denominator of which is the total number of days in such year.
(b) "Aggregate Conversion Fee" means the sum of the Conversion Fees
for each of the Conversion Hotels.
(c) "Aggregate Participation Amount" means the sum of the
Participation Amounts for each of the Conversion Hotels.
(d) "Aggregate Suite Revenues" means the sum of the Suite Revenues for
each of the Conversion Hotels in a given calendar year.
(e) "Allocated Amount of the Base Amount," for each Conversion Hotel,
means the dollar amount set forth under the heading "Allocated Amount of
the Base Amount" opposite the name of such Conversion Hotel on Table 5-1 to
this Schedule 5. Notwithstanding the foregoing, in the event that any
Conversion Hotel is the subject of a Conversion Hotel Termination and the
Termination Fee is paid pursuant to Section 6.3.3 of the Omnibus Agreement,
the Allocated Amount of the Base Amount for each of the Conversion Hotels
shall be reallocated, at the discretion of Marriott, to take such
Conversion Hotel Termination into effect, and Table 5-1 to this Schedule 5
shall be replaced to reflect such readjustment.
(f) "Allocated Amount of the Owner's Priority," for each Conversion
Hotel, means the dollar amount set forth under the heading "Allocated
Amount of the Owner's Priority" opposite the name of such Conversion Hotel
on Table 5-1 to this Schedule 5, as adjusted downward to reflect any
Conversion Hotel Terminations. In any calendar year in which a Conversion
Hotel Termination occurs, the Allocated Amount of the Owner's Priority for
such Conversion Hotel for such year shall be the dollar amount set forth
under the heading "Allocated Amount of the Owner's Priority" opposite the
name of such
32
Conversion Hotel on Table 5-1 to this Schedule 5 multiplied by a fraction:
(i) the numerator of which is the number of days in the period from the
first day of such year to the effective date of the Conversion Hotel
Termination (including the first and last days of the period) and (ii) the
denominator of which is the total number of days in such year.
(g) "Available Cash Flow" means:
(i) for each Conversion Hotel other than Louisville (North) RI,
with respect to each calendar year or portion thereof, an amount that
is equal to the excess (deficit) of the Operating Profit for such year
over the applicable Lessee's Priority; and
(ii) for Louisville (North) RI, with respect to each calendar
year or portion thereof, an amount that is equal to the excess
(deficit) of the Operating Profit for such year over the Stand Aside.
(h) "Base Amount" means a figure equal to Eight Hundred Fifty Thousand
Dollars ($850,000.00) per annum; provided that the Base Amount shall be
reduced in the event that a Termination Fee, due and payable in connection
with a Conversion Hotel Termination, is paid pursuant to Section 6.3.2 of
the Omnibus Agreement. The amount of such reduction shall be the Allocated
Amount of the Base Amount of the Conversion Hotel subject to such
Conversion Hotel Termination.
(j) "Base Rent," for each Conversion Hotel, means the dollar amount
set forth under the heading "Base Rent" opposite the name of such
Conversion Hotel on Table 5-1 to this Schedule 5, as adjusted, from year to
year, by any increase in the Consumer Price Index using the Consumer Price
Index for 2002 as the base year. Base Rent shall be prorated for any
partial calendar years based upon the actual number of days in such year.
(k) "Buildings" means the facilities and buildings of each of the
Conversion Hotels.
(l) "Consumer Price Index" means the "Consumer Price Index" published
by the Bureau of Labor Statistics of the United States Department of Labor,
U.S. City Average, All Items for Urban Wage Earners and Clerical Workers
(1982-1984 = 100).
(m) "Conversion Fee," for each Conversion Hotel in any given calendar
year in the applicable Conversion Fee Payout Period means the sum of the
Allocated Portion of the Base Amount for such Conversion Hotel plus the
Participation Amount for such Conversion Hotel. No Conversion Fee shall be
due for any Conversion Hotel that is the subject of a Conversion Hotel
Termination in any calendar year during the Conversion Fee Payout Period
after the year in which such Conversion Hotel Termination takes effect.
33
(n) "Conversion Fee Payout Period" means (A) for each Conversion Hotel
(other than Louisville (North) RI), a period of ten (10) years commencing
with and including calendar year 2004 and ending with and including
calendar year 2013 and (B) for Louisville (North) RI only, a period of
three (3) years commencing with and including calendar year 2004 and ending
with and including calendar year 2006.
(o) "Conversion Hotel Termination" means any termination or Transfer
of a Conversion Hotel under Section 3.4 or Article 6 of the Omnibus
Agreement.
(p) "Deductions" has the meaning assigned to such term in the
definition of Operating Profit.
(q) "FF&E" means furniture, furnishings, fixtures, kitchen appliances,
vehicles, carpeting and equipment, including front desk and
back-of-the-house computer equipment, but shall not include Fixed Asset
Supplies or any computer software of any type (including upgrades and
replacements) owned by Manager, Marriott, an Affiliate of Manager of
Marriott, or the licensor of any of them.
(r) "First Mortgage" means any first-lien mortgage indebtedness
incurred by Lessee or Owner to finance any Conversion Hotel.
(s) "Fixed Asset Supplies" means items included within "Property and
Equipment" under the Uniform System of Accounts including, but not limited
to, linen, china, glassware, tableware, uniforms, and similar items,
whether used in connection with public space or Suites.
(t) "Gross Revenues" means all revenues and receipts of every kind
derived from operating any Conversion Hotel or any department or part
thereof, including, but not limited to:
(i) income (from both cash and credit transactions) from rental
of suites, telephone charges, stores, offices, exhibit or sales space
of every kind; license, lease and concession fees and rentals (not
including gross receipts of licensees, lessees and concessionaires);
(ii) income from vending machines;
(iii) income from parking; health club membership fees; food and
beverage sales; wholesale and retail sales of merchandise; service
charges; and
(iv) proceeds, if any, from business interruption or other loss
of income insurance;
provided, however, that Gross Revenues shall not include the following:
34
(i) gratuities to employees of any Conversion Hotel;
(ii) federal, state or municipal excise, sales or use taxes or
any other taxes collected directly from patrons or guests or included
as part of the sales price of any goods or services;
(iii) proceeds from the sale of FF&E;
(iv) interest received or accrued with respect to the other
operating accounts of any Conversion Hotel;
(v) any refunds, rebates, discounts and credits of a similar
nature, given, paid or returned in the course of obtaining Gross
Revenues or components thereof;
(vi) insurance proceeds (other than proceeds from business
interruption or other loss of income insurance; condemnation proceeds
(other than for a temporary taking); or
(vii) any proceeds from any Transfer of a Conversion Hotel or
from the refinancing of any debt encumbering any Conversion Hotel.
(w) "Inventories" means "Inventories" as defined in the Uniform System
of Accounts (such as, but not limited to, provisions in storerooms,
refrigerators, pantries and kitchens; beverages in wine cellars and bars;
other merchandise intended for sale; fuel; mechanical supplies; stationery;
and other expensed supplies and similar items).
(x) "Lessee" means, with respect to each Conversion Hotel, the party
set forth under the heading "Lessee" in Schedule R-1 to the Omnibus
Agreement. The term "Lessee" shall also include all successors and
permitted assigns of the identified entity.
(y) "Lessee's Priority" means:
(i) for each Conversion Hotel (other than Louisville (North) RI),
the greater of:
(A) Base Rent, or
(B) thirty percent (30%) of Suite Revenues up to and
including the Threshold Amount for each calendar year
and sixty-eight percent (68%) of Suite Revenues in
excess of the Threshold Amount for each calendar year.
35
(z) "Manager" means Innkeepers Hospitality Management, Inc., a
Virginia corporation. The term "Manager" shall also include all successors
and permitted assigns of the respective Manager.
(aa) "Operating Profit" for each Conversion Hotel means the excess of
Gross Revenues over the following deductions ("Deductions") incurred by
Manager on behalf of Lessee, in operating the Conversion Hotel:
(i) the cost of sales, including, without limitation,
compensation, fringe benefits, payroll taxes and other costs related
to employees (the foregoing costs shall not include salaries and other
employee costs of executive personnel of Manager who do not work at
the Conversion Hotel on a regular basis; except that the foregoing
costs shall include the allocable portion of the salary and other
employee costs of any general manager or other supervisory personnel
(not including regional vice-presidents or regional salespeople)
assigned to a "cluster" of hotels and inns which includes the
Conversion Hotel);
(ii) departmental expenses incurred at departments within the
Conversion Hotel; administrative and general expenses; the cost of
marketing incurred by the Conversion Hotel; advertising and business
promotion incurred by the Conversion Hotel; heat, light and power;
computer line charges; and routine repairs, maintenance and minor
alterations which are normally expensed under United States generally
accepted accounting principles;
(iii) the cost of Inventories and Fixed Asset Supplies consumed
in the operation of the Conversion Hotel;
(iv) a reasonable reserve for uncollectible accounts receivable
as determined by Manager; provided that such reserve shall not exceed
the greater of (A) three percent (3%) of all outstanding accounts
receivable or (B) fifty percent (50%) of accounts receivable that are
more than 120 days past due;
(v) all costs and fees of independent professionals or other
third parties who are retained by Manager to perform required or
permitted services;
(vi) all costs and fees, payable by Manager to Marriott, of
technical consultants and operational experts who are retained or
employed by Marriott and/or Affiliates of Marriott for specialized
services (including, without limitation, the costs of any quality
assurance inspections which exceed the level of quality assurance
inspections which are mandated by System Standards) and the cost of
attendance by employees of the Conversion Hotel at training and
manpower development programs sponsored by Marriott;
(vii) the royalty fee for such Conversion Hotel, as set forth in
Article III (Fees), Section C of the franchise agreement for such
Conversion Hotel;
36
(viii) insurance costs and expenses consistent with past
practices, with the exception of property insurance on the Buildings
and contents against loss or damage by fire, lightning, and all other
risks consistent with past practices for such Conversion Hotel, which
shall be paid by Owner;
(ix) taxes, if any, payable by or assessed against Manager
related to the management or to Manager's operation of the Conversion
Hotel (inclusive of any and all sales, use, occupancy and like taxes
and assessments but exclusive of Manager's income taxes and any real
estate taxes related to the Conversion Hotel);
(x) the marketing fund fee for such Conversion Hotel, as set
forth in Article III (Fees), Section D of the franchise agreement for
such Conversion Hotel;
(xi) in the case of Horsham TPS only, all sums charged to such
Conversion Hotel for room reservations as set forth in Article III
(Fees), Section E. of the franchise agreement for such Conversion
Hotel;
(xii) such other costs and expenses incurred by Manager for the
proper and efficient operation of the Conversion Hotel as are
consistent with past practices for such Conversion Hotel;
The term "Deductions" shall not include:
(i) with respect to Horsham TPS, the percentage lease payments
pursuant to the percentage lease agreement between the Owner and
Lessee of such Conversion Hotel,
(ii) debt service payments pursuant to the First Mortgage or any
other mortgage financing on the Conversion Hotel,
(ii) payments pursuant to equipment leases or other forms of
financing obtained for the FF&E located in or connected with the
Conversion Hotel,
(iv) rental payments pursuant to any ground lease of the Site,
all of which shall be paid by Lessee from its own funds, or
(v) any amounts reserved for the maintenance of FF&E.
(bb) "Owner" means, with respect to each Conversion Hotel, the party
set forth under the heading "Owner" in Schedule R-1 to the Omnibus
Agreement. The term "Owner" shall also include all successors and permitted
assigns of the entity identified as the Owner.
37
(cc) "Owner's Priority" means an amount equal to $2,850,000, as
adjusted downward to reflect any Conversion Hotel Terminations. In any
calendar year in which a Conversion Hotel Termination occurs, Owner's
Priority shall be reduced by an amount equal to the Allocated Amount of the
Owner's Priority for each Conversion Hotel that was the subject of a
Conversion Hotel Termination during such year multiplied by a fraction: (i)
the numerator of which is the number of days in the period from the
effective date of the Conversion Hotel Termination to the last day of such
year (including the first and last days of the period) and (ii) the
denominator of which is the total number of days in such year.
(dd) "Participation Amount," for each Conversion Hotel, in any given
calendar year, is an amount equal to fifty percent (50%) of:
(i) the Available Cash Flow for such Conversion Hotel (which may
be a negative number); less
(ii) the Allocated Amount of the Base Amount for such Conversion
Hotel; less
(iii) the Allocated Amount of the Owner's Priority for such
Conversion Hotel.
(ee) "Site" means the parcel of real property owned by the Owner and
as described in detail in the recitals to the respective management
agreements.
(ff) "Stand Aside" means, with respect to Louisville (North) RI only,
the sum of: (A) $1,025,471, plus (B) all real estate taxes and personal
property taxes, levies, assessments and similar charges on or relating to
such Conversion Hotel plus, (C) a dollar amount equal to four percent (4%)
of Gross Revenues for such Conversion Hotel during the applicable calendar
year, plus (D) property insurance on the Buildings and contents of such
Conversion Hotel against loss or damage by fire, lightning, and all other
risks consistent with past practices for such Conversion Hotel.
(gg) "Suite" means a lodging unit in a Conversion Hotel.
(hh) "Suite Revenues" means that portion of the Gross Revenues of the
Conversion Hotel which is attributable to the rental of the Suites.
(jj) "System" means, as applicable, all hotels and inns which are
operated under the "Residence Inn by Marriott," "Residence Inn," "Marriott
Residence Inn," "TownePlace Suites by Marriott", "TownePlace Suites" or
"Marriott TownePlace Suites" trade names.
38
(kk) "System Standards" means the operational standards (for example,
staffing, amenities offered to guests, advertising, etc.) and the physical
standards (for example, the quality, condition and age of the FF&E) that
are generally required of hotels which are in the System, as such
operational and physical requirements may fluctuate from time to time.
(ll) "Threshold Amount," with respect to each Conversion Hotel, means
the amount set forth under the heading "Applicable Threshold Amount"
opposite the name of such Conversion Hotel on Table 5-1 to this Schedule 5,
as adjusted, from year to year, by any increase in the Consumer Price Index
using the Consumer Price Index for 2002 as the base year. The Threshold
Amount for any partial calendar year shall be prorated based upon the
actual number of days in such year.
(mm) "Transfer" means any "Transfer" of a Conversion Hotel as defined
in the Franchise Documents.
(nn) "Uniform System of Accounts" means the Uniform System of Accounts
for Hotels, Ninth Revised Edition, 1996, as published by the Hotel
Association of New York City, Inc.
39
TABLE 5-1 TO SCHEDULE 5
CONVERSION HOTEL INFORMATION
-----------------------------------------------------------------------------------------------
Allocated
Allocated Amount of Applicable
Amount of the Owner's Threshold
Conversion Hotel Base Amount Priority Base Rent Amount
-----------------------------------------------------------------------------------------------
Addison (Dallas) RI $ 60,000.00 $ 200,000.00 $ 978,428.00 $2,242,882.00
-----------------------------------------------------------------------------------------------
Arlington (DFW-South) RI 26,000.00 86,000.00 696,469.00 1,844,813.00
-----------------------------------------------------------------------------------------------
Atlanta (Downtown) RI 60,000.00 200,000.00 1,397,754.00 3,606,684.00
-----------------------------------------------------------------------------------------------
Atlanta (Peachtree) RI 60,000.00 200,000.00 991,457.00 2,269,775.00
-----------------------------------------------------------------------------------------------
Chicago (X'Xxxx) RI 60,000.00 200,000.00 2,636,960.00 3,558,491.00
-----------------------------------------------------------------------------------------------
Detroit (Livonia) RI 43,000.00 143,000.00 1,058,597.00 2,113,738.00
-----------------------------------------------------------------------------------------------
Eden Prairie RI N/A N/A 873,597.00 2,217,457.00
-----------------------------------------------------------------------------------------------
Gaithersburg (Washingtonian) RI 43,000.00 143,000.00 1,409,500.00 2,198,778.00
-----------------------------------------------------------------------------------------------
Horsham TPS 9,000.00 29,000.00 699,478.00 857,351.00
-----------------------------------------------------------------------------------------------
Innkeepers Denver (Downtown) RI N/A N/A 788,827.00 3,171,570.00
-----------------------------------------------------------------------------------------------
Louisville (North) RI 9,000.00 29,000.00 N/A N/A
-----------------------------------------------------------------------------------------------
Portland (Maine) RI 3,000.00 23,000.00 490,879.00 1,437,209.00
-----------------------------------------------------------------------------------------------
Richmond (Northwest) RI 9,000.00 29,000.00 882,019.00 1,853,471.00
-----------------------------------------------------------------------------------------------
San Xxxx (South) RI 255,000.00 855,000.00 1,918,352.00 3,248,683.00
-----------------------------------------------------------------------------------------------
San Mateo RI 43,000.00 143,000.00 1,645,699.00 2,825,460.00
-----------------------------------------------------------------------------------------------
Silicon Valley I RI 85,000.00 285,000.00 2,484,117.00 3,113,885.00
-----------------------------------------------------------------------------------------------
Silicon Valley II RI 85,000.00 285,000.00 2,484,117.00 3,113,885.00
===============================================================================================
Total 850,000.00 2,850,000.00
=========== =============
-----------------------------------------------------------------------------------------------
40
EXHIBIT 5-2 TO SCHEDULE 5
FORM OF ANNUAL FINANCIAL STATEMENTS
[To be attached]
41
SCHEDULE 7.1.1
INNKEEPERS CONVERSION PARTIES' ORGANIZATIONAL CHART
(Attached)
42
SCHEDULE 7.1.4
INNKEEPERS CONVERSION PARTIES AND AUTHORIZED OFFICERS
-------------------------------------------------------------------------------------------------------
Each of the following Innkeepers Conversion
Parties is hereby executing this Omnibus
Agreement: Executed by:
-------------------------------------------------------------------------------------------------------
Innkeepers USA Trust Xxxxxxx X. Xxxxxx,
Chairman of the Board, Chief Executive Officer
& President
-------------------------------------------------------------------------------------------------------
Innkeepers Financial Corporation Xxxxxxx X. Xxxxxx,
President
-------------------------------------------------------------------------------------------------------
Innkeepers USA Limited Partnership, owner of the Xxxxxxx X. Xxxxxx,
general partners of owners of the Conversion President, Innkeepers Financial Corporation
Hotels and direct owner of Horsham TPS,
By Innkeepers Financial Corporation, Its General
Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Sili II, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Silicon Valley II RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Sili II LP, direct owner of Xxxxxxx X. Xxxxxx,
Silicon Valley II RI, President, Innkeepers Residence Sili II, Inc.
By Innkeepers Residence Sili II, Inc., Its General
Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Financial Corporation III, general Xxxxxxx X. Xxxxxx,
partner of the owners of Innkeepers Denver President
(Downtown) RI and Silicon Valley I RI
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Denver-Downtown LP, direct Xxxxxxx X. Xxxxxx,
owner of Innkeepers Denver (Downtown) RI, President, Innkeepers Financial Corporation III
By Innkeepers Financial Corporation III, its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Sili I LP, direct owner of Xxxxxxx X. Xxxxxx,
Silicon Valley I RI, President, Innkeepers Financial Corporation III
By Innkeepers Financial Corporation III, its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Atlanta-Downtown, Inc., Xxxxxxx X. Xxxxxx,
general partner of the owner of Atlanta (Downtown) President
RI
-------------------------------------------------------------------------------------------------------
42
-------------------------------------------------------------------------------------------------------
Each of the following Innkeepers Conversion
Parties is hereby executing this Omnibus
Agreement: Executed by:
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Atlanta-Downtown LP, direct Xxxxxxx X. Xxxxxx,
owner of Atlanta (Downtown) RI, President, Innkeepers Residence Atlanta-Downtown,
By Innkeepers Residence Atlanta-Downtown, Inc., Inc.
its General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence San Mateo, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of San Mateo RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence San Mateo LP, direct owner of Xxxxxxx X. Xxxxxx,
San Mateo RI, President, Innkeepers Residence San Mateo, Inc.
By Innkeepers Residence San Mateo, Inc., its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Arlington, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Arlington (DFW-South) RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Arlington (TX) LP, direct Xxxxxxx X. Xxxxxx,
owner of Arlington (DFW-South) RI, President, Innkeepers Residence Arlington, Inc.
By Innkeepers Residence Arlington, Inc., its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Addison, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Addison (Dallas) RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Addison (TX) LP, direct owner Xxxxxxx X. Xxxxxx,
of Xxxxxxx (Dallas) RI, President, Innkeepers Residence Addison, Inc.
By Innkeepers Residence Addison, Inc., its General
Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Eden Prairie, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Eden Prairie RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Eden Prairie LP, direct owner Xxxxxxx X. Xxxxxx,
of Eden Prairie RI, President, Innkeepers Residence Eden Prairie, Inc.
By Innkeepers Residence Eden Prairie, Inc., its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence RI General, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Atlanta (Peachtree) RI; President
Chicago (X'Xxxx) RI; Detroit (Livonia) RI;
Gaithersburg (Washingtonian) RI; Louisville
(North) RI; Richmond (Northwest) RI; and San Xxxx
(South) RI hotels
-------------------------------------------------------------------------------------------------------
44
-------------------------------------------------------------------------------------------------------
Each of the following Innkeepers Conversion
Parties is hereby executing this Omnibus
Agreement: Executed by:
-------------------------------------------------------------------------------------------------------
Innkeepers Residence RI General LP, direct owner Xxxxxxx X. Xxxxxx,
of Atlanta (Peachtree) RI; Chicago (X'Xxxx) RI; President, Innkeepers Residence RI General, Inc.
Detroit (Livonia) RI; Gaithersburg (Washingtonian)
RI; Louisville (North) RI; Richmond (Northwest)
RI; and San Xxxx (South) RI hotels,
By Innkeepers Residence RI General, Inc., its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Portland, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Portland (Maine) RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Portland LP, direct owner of Xxxxxxx X. Xxxxxx,
Portland (Maine) RI, President, Innkeepers Residence Portland, Inc.
By Innkeepers Residence Portland, Inc., its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Hospitality III, Inc., the Outgoing Xxxxxxx X. Xxxxxx,
Lessee (and as currently contemplated under President
Section 2.5, the new franchisee) of Addison
(Dallas) RI; Arlington (DFW-South) RI; Atlanta
(Downtown) RI; Atlanta (Peachtree) RI; Chicago
(X'Xxxx)RI; Detroit (Livonia) RI; Eden Prairie RI;
Gaithersburg (Washingtonian) RI; Louisville
(North) RI; Portland (Maine) RI; Richmond
(Northwest) RI; San Xxxx (South) RI; San Mateo RI,
Silicon Valley II RI; and Horsham TPS
-------------------------------------------------------------------------------------------------------
Innkeepers Hospitality V, Inc., the Outgoing Xxxxxxx X. Xxxxxx,
Lessee (and as currently contemplated under President
Section 2.5, the new franchisee) and the current
New Lessee/Franchisee of Innkeepers Denver
(Downtown) RI and Silicon Valley I RI hotels
-------------------------------------------------------------------------------------------------------
KPA Leaseco, Inc., the (as currently contemplated Xxxxxxx X. Xxxxxx,
under Section 2.5, the future, proposed) New President
Lessee/Franchisee of Addison (Dallas) RI;
Arlington (DFW-South) RI; Atlanta (Downtown) RI;
Atlanta (Peachtree) RI; Chicago (X'Xxxx)RI;
Detroit (Livonia) RI; Eden Prairie RI;
Gaithersburg (Washingtonian) RI; Louisville
(North) RI; Portland (Maine) RI; Richmond
(Northwest) RI; San Xxxx (South) RI; San Mateo RI;
Silicon Valley II RI; and Horsham TPS
-------------------------------------------------------------------------------------------------------
45
-------------------------------------------------------------------------------------------------------
Each of the following Innkeepers Conversion
Parties is hereby executing this Omnibus
Agreement: Executed by:
-------------------------------------------------------------------------------------------------------
KPA Leaseco III, Inc., the (as currently Xxxxxxx X. Xxxxxx,
contemplated under Section 2.5, the future, President
proposed) New Lessee/Franchisee of Innkeepers
Denver (Downtown) RI and Silicon Valley I RI
hotels
-------------------------------------------------------------------------------------------------------
Innkeepers Hospitality Management, Inc., the (as Xxxxxxx X. Xxxxxx,
currently contemplated under Section 2.5, the President
future, proposed) New Manager of all of the
Conversion Hotels
-------------------------------------------------------------------------------------------------------
In addition, Xxxx Xxxxxx is the Vice President of each entity identified above
as a general partner or New Lessee and the General Counsel and Corporate
Secretary of Innkeepers USA Trust.
46
SCHEDULE 11.1
LIST OF LENDERS AND COLLATERALIZED CONVERSION HOTELS
1. MassMutual
. Silicon Valley II RI
2. Nomura/Pacific Life Insurance Company
. Innkeepers Denver (Downtown) RI; and
. Silicon Valley I RI
3. Wachovia National Bank/Lennar Partners Inc.
. Addison (Dallas) RI;
. Arlington (DFW-South) RI;
. Atlanta (Downtown) RI; and
. San Mateo RI
47
EXHIBIT A
[FORM OF OFFICER'S CERTIFICATE]
OFFICER'S CERTIFICATE
OF
INNKEEPERS CONVERSION PARTIES
In accordance with and pursuant to the provisions of that certain OMNIBUS
AGREEMENT FOR A 17 HOTEL CONVERSION (the "Omnibus Agreement") made and entered
into on the 25th day of March, 2003, by and between, (a) on the one hand,
Residence Inn By Marriott, Inc., a Delaware corporation ("RIBM") and TownePlace
Management Corporation, a Delaware corporation ("TPMC"), affiliates of Marriott
International, Inc., a Delaware corporation ("Marriott"); and (b) on the other
hand, Innkeepers USA Trust, a Maryland real estate investment trust ("Innkeepers
Trust"); Innkeepers Hospitality, Inc. and its sister corporations (collectively,
"Outgoing Lessees"); Innkeepers Hospitality Management, Inc., a Virginia
corporation ("New Manager"); KPA Leaseco, Inc. and its sister corporations,
indirect subsidiaries of Innkeepers Trust (each, "New Lessee/Franchisee," and,
collectively, "New Lessees/Franchisees"), and the other affiliates of Innkeepers
Trust which executed the Omnibus Agreement (collectively, Innkeepers Trust,
Outgoing Lessees, New Manager, New Lessees, and such affiliates are the
"Innkeepers Conversion Parties," and, individually, any one of them is an
"Innkeepers Conversion Party") each of the undersigned hereby certifies to
Marriott as follows:
1. I am the duly elected, qualified and acting officer of each of the
Innkeepers Conversion Parties (the "Certifying Parties").
2. I have reviewed and am familiar with the contents of this Officer's
Certificate. I have reviewed and am familiar with the provisions of the Omnibus
Agreement and all of the Franchise Documents.
3. As of the date hereof, each of the representations and warranties
contained in Section 8.1 of the Omnibus Agreement and in each of the Franchise
Documents is true and correct, and each of the Certifying Parties is in
compliance with each of the covenants contained in said agreements.
Capitalized terms used herein but not defined have the meanings assigned to
such terms in the Omnibus Agreement.
48
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Officer's Certificate as of , 2003.
---------
INNKEEPERS USA TRUST
By:
----------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
INNKEEPERS HOSPITALITY, INC.
By:
----------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
I acknowledge that I am executing this Officer's Certificate on behalf of each
of the entities set forth in Schedule A hereto, in my capacity as the officer of
each such entity as identified in such Schedule
------------------------
Xxxxxxx X. Xxxxxx
49
SCHEDULE A
-------------------------------------------------------------------------------------------------------
Innkeepers Conversion Parties: Position held:
-------------------------------------------------------------------------------------------------------
Innkeepers USA Trust Xxxxxxx X. Xxxxxx,
Chairman of the Board, Chief Executive Officer
& President
-------------------------------------------------------------------------------------------------------
Innkeepers Financial Corporation Xxxxxxx X. Xxxxxx,
President
-------------------------------------------------------------------------------------------------------
Innkeepers USA Limited Partnership, owner of the Xxxxxxx X. Xxxxxx,
general partners of owners of the Conversion President, Innkeepers Financial Corporation
Hotels and direct owner of Horsham TPS, By
Innkeepers Financial Corporation, Its General
Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Sili II, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Silicon Valley II RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Sili II LP, direct owner of Xxxxxxx X. Xxxxxx,
Silicon Valley II RI, President, Innkeepers Residence Sili II, Inc.
By Innkeepers Residence Sili II, Inc., Its General
Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Financial Corporation III, general Xxxxxxx X. Xxxxxx,
partner of the owner of Innkeepers Denver President
(Downtown) RI and Silicon Valley I RI
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Denver-Downtown LP, direct Xxxxxxx X. Xxxxxx,
owner of Innkeepers Denver (Downtown) RI, President, Innkeepers Financial Corporation III
By Innkeepers Financial Corporation III, its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Sili I LP, direct owner of Xxxxxxx X. Xxxxxx,
Silicon Valley I RI, President, Innkeepers Financial Corporation III
By Innkeepers Financial Corporation III, its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Atlanta-Downtown, Inc., Xxxxxxx X. Xxxxxx,
general partner of the owner of Atlanta (Downtown) President
RI
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Atlanta-Downtown LP, direct Xxxxxxx X. Xxxxxx,
owner of Atlanta (Downtown) RI, President, Innkeepers Residence Atlanta-Downtown,
By Innkeepers Residence Atlanta-Downtown, Inc., Inc.
its General Partner
-------------------------------------------------------------------------------------------------------
50
-------------------------------------------------------------------------------------------------------
Innkeepers Conversion Parties: Position held:
-------------------------------------------------------------------------------------------------------
Innkeepers Residence San Mateo, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of San Mateo RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence San Mateo LP, direct owner of Xxxxxxx X. Xxxxxx,
San Mateo RI, President, Innkeepers Residence San Mateo, Inc.
By Innkeepers Residence San Mateo, Inc., its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Arlington, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Arlington (DFW-South) RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Arlington (TX) LP, direct Xxxxxxx X. Xxxxxx,
owner of Arlington (DFW-South) RI, President, Innkeepers Residence Arlington, Inc.
By Innkeepers Residence Arlington, Inc., its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Addison, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Addison (Dallas) RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Addison (TX) LP, direct owner Xxxxxxx X. Xxxxxx,
of Xxxxxxx (Dallas) RI, President, Innkeepers Residence Addison, Inc.
By Innkeepers Residence Addison, Inc., its General
Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Eden Prairie, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Eden Prairie RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Eden Prairie LP, direct owner Xxxxxxx X. Xxxxxx,
of Eden Prairie RI, President, Innkeepers Residence Eden Prairie, Inc.
By Innkeepers Residence Eden Prairie, Inc., its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Residence RI General, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Atlanta (Peachtree) RI; President
Chicago (X'Xxxx) RI; Detroit (Livonia) RI;
Gaithersburg (Washingtonian) RI; Louisville
(North) RI; Richmond (Northwest) RI; and San Xxxx
(South) RI hotels
-------------------------------------------------------------------------------------------------------
Innkeepers Residence RI General LP, direct owner Xxxxxxx X. Xxxxxx,
of Atlanta (Peachtree) RI; Chicago (X'Xxxx) RI; President, Innkeepers Residence RI General, Inc.
Detroit (Livonia) RI; Gaithersburg (Washingtonian)
RI; Louisville (North) RI; Richmond (Northwest)
RI; and San Xxxx (South) RI hotels,
By Innkeepers Residence RI General, Inc., its
General Partner
-------------------------------------------------------------------------------------------------------
51
-------------------------------------------------------------------------------------------------------
Innkeepers Conversion Parties: Position held:
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Portland, Inc., general Xxxxxxx X. Xxxxxx,
partner of the owner of Portland (Maine) RI President
-------------------------------------------------------------------------------------------------------
Innkeepers Residence Portland LP, direct owner of Xxxxxxx X. Xxxxxx,
Portland (Maine) RI, President, Innkeepers Residence Portland, Inc.
By Innkeepers Residence Portland, Inc., its
General Partner
-------------------------------------------------------------------------------------------------------
Innkeepers Hospitality III, Inc., the Outgoing Xxxxxxx X. Xxxxxx,
Lessee of Addison (Dallas) RI; Arlington President
(DFW-South) RI; Atlanta (Downtown) RI; Atlanta
(Peachtree) RI; Chicago (X'Xxxx)RI; Detroit
(Livonia) RI; Eden Prairie RI; Gaithersburg
(Washingtonian) RI; Louisville (North) RI;
Portland (Maine) RI; Richmond (Northwest) RI; San
Xxxx (South) RI; San Mateo RI , Silicon Valley II
RI; and Horsham TPS
-------------------------------------------------------------------------------------------------------
Innkeepers Hospitality V, Inc., the Outgoing Xxxxxxx X. Xxxxxx,
Lessee of Innkeepers Denver (Downtown) RI and President
Silicon Valley I RI hotels
-------------------------------------------------------------------------------------------------------
KPA Leaseco, Inc., the New Lessee/Franchisee of Xxxxxxx X. Xxxxxx,
Addison (Dallas) RI; Arlington (DFW-South) RI; President
Atlanta (Downtown) RI; Atlanta (Peachtree) RI;
Chicago (X'Xxxx)RI; Detroit (Livonia) RI; Eden
Prairie RI; Gaithersburg (Washingtonian) RI;
Louisville (North) RI; Portland (Maine) RI;
Richmond (Northwest) RI; San Xxxx (South) RI; San
Mateo RI; Silicon Valley II RI; and Horsham TPS
-------------------------------------------------------------------------------------------------------
KPA Leaseco III, Inc., the New Lessee of Xxxxxxx X. Xxxxxx,
Innkeepers Denver (Downtown) RI and Silicon Valley President
I RI hotels
-------------------------------------------------------------------------------------------------------
Innkeepers Hospitality Management, Inc., the New Xxxxxxx X. Xxxxxx,
Manager of all of the Conversion Hotels President
-------------------------------------------------------------------------------------------------------
52
EXHIBIT B
FORM OF TERMINATION OF MANAGEMENT AGREEMENT
(To be attached)
53
AGREEMENT FOR TERMINATION OF
MANAGEMENT AGREEMENT
THIS AGREEMENT FOR TERMINATION OF MANAGEMENT AGREEMENT (this "Agreement"),
is entered into as of this , day of , ("Effective Date") by
------- ----- -----
and between Innkeepers Hospitality III, Inc., a Virginia corporation with a
mailing address at 000 Xxxxx Xxxxxxxxx Xxx, Xxxx Xxxxx, Xxxxxxx 00000
("Lessee"), and RESIDENCE INN BY MARRIOTT, INC. ("Management Company"), a
Delaware corporation with a mailing address at 00000 Xxxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, Lessee and Management Company are parties to that certain
Management Agreement dated as of [[[insert date of management agreement]]],
[[[insert if applicable: which is subject to two letter agreements dated
December 13, 1995 and one letter agreement dated December 30, 1997]]] (together
with all amendments, the "Management Agreement") for the operation and
management of a Residence Inn by Marriott located at [[[insert Inn address]]]
("Inn"); and
WHEREAS, Lessee and Management Company desire to terminate the Management
Agreement;
NOW, THEREFORE, for the mutual covenants and considerations herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Management Agreement Terminology.
Any capitalized term not specifically defined in this Agreement shall have
the definition given such term in the Management Agreement. Any provision of the
Management Agreement governing the Termination of the Management Agreement shall
not be affected by this Agreement unless specifically modified herein.
Although referred to as "Owner" in the Management Agreement, Innkeepers
Hospitality III, Inc. shall be referred to throughout this Agreement as
"Lessee," and each such reference herein shall have the same force and effect as
if Innkeepers Hospitality III, Inc. were identified by the designation "Owner."
2. Date of Termination and Conditions Precedent to Termination.
(a) Provided that all Conditions Precedent set forth in Paragraph 2(b)
below have been fully satisfied, the Management Agreement will terminate at
11:59 PM on [[[insert date that Marriott's management will end]]] (the
"Termination Date"). Revenues from room sales of the night beginning the evening
of [[[insert date Marriott's management will end]]]] and ending the morning of
[[[inset day after Marriott's management ends]]] will be considered as Gross
54
Revenues under the Management Agreement. After the Termination Date, Management
Company shall have no further obligations regarding the management of the Inn.
(b) The termination of the Management Agreement is expressly subject to,
and conditioned upon, satisfaction of each and all of the following
conditions precedent: (i) full execution of a License Agreement
between Marriott International, Inc., ("Marriott") in its role as
Franchisor, and Lessee (or its permitted assignee), in its role as
Franchisee, in the form attached as an exhibit to Marriott's
then-current Uniform Franchise Offering Circular, as amended by mutual
agreement of Marriott and Lessee; and (ii) execution of a Release by
Owner in the manner and form set forth in Exhibit A attached hereto.
3. Termination of Inn Management by Management Company.
It is understood that following the termination of the Management
Agreement, Management Company shall not provide corporate services of any kind
with respect to the Inn except: (i) as set forth in the provisions of the
Management Agreement that expressly survive termination; and (ii) for a period
of ninety (90) days following the Termination Date, Management Company shall pay
the Inn's payables resulting from operations of the Inn prior to the Termination
Date to the extent sufficient funds exist in the Payables Escrow (herein
defined) or from Inn operations prior to the Termination Date.
4. Termination Fee.
Notwithstanding any provision to the contrary in the Management Agreement,
and in complete satisfaction of any Termination Fee otherwise payable under the
Management Agreement, Lessee shall pay Management Company a termination fee in
accordance with that certain Omnibus Agreement by and between (a) on the one
hand, Residence Inn By Marriott, Inc., a Delaware corporation and TownePlace
Management Corporation, a Delaware corporation, affiliates of Marriott
International, Inc., a Delaware corporation; and (b) on the other hand,
Innkeepers USA Trust, a Maryland real estate investment trust; Innkeepers
Hospitality, Inc. and its sister corporations; Innkeepers Hospitality
Management, Inc., a Virginia corporation; KPA Leaseco, Inc. and its sister
corporations, indirect subsidiaries of Innkeepers USA Trust, and the other
affiliates of Innkeepers USA Trust which executed the Omnibus Agreement dated as
of March 25, 2003, effective as of March 28, 2003.
5. Employees.
(a) Lessee acknowledges and agrees that employees currently employed to
operate the Inn are employees of Management Company or one of its affiliates
("Employees") and as such will be terminated or transferred as a result of the
termination of the Management Agreement. Lessee hereby represents and warrants
to Management Company that:
(i) except for Employees identified on Schedule A (which Management Company
has informed Lessee will be transferred by Management Company and thus not
available to by hired by Lessee), and except for Employees that, at
Lessee's request, Management Company (or its appropriate affiliate) shall
"lend/lease" to Lessee (or its appropriate affiliate) under the terms and
conditions set forth in the form agreement attached as
55
Exhibit B hereto, Lessee will, prior to the Termination Date, offer
employment at the Inn to each person who is, or will be, employed by
Management Company at the Inn as of the Termination Date (collectively, the
"Available Employees") at no less than the same hourly wage or annual
salary, as applicable, and with substantially similar benefits, as each
such Available Employee receives from Management Company as of the date of
such offer of employment; Lessee shall not be liable for severance costs
with respect to Available Employees to whom Lessee extends an offer of
employment at the Inn under substantially similar terms and conditions
prior to the Termination Date;
(ii) for at least ninety (90) days after the Termination Date, Lessee will
not terminate the employment of any one or more of the Available Employees
without cause or materially alter the terms of any Available Employee's
employment; and
(iii) for at least ninety (90) days following the Termination Date, Lessee
will not change the benefits offered to Available Employees by Lessee (and
approved by Management Company) prior to the Termination Date.
(b) Notwithstanding offers of employment by Lessee, Management Company
shall have the right, upon reasonable notice to Lessee, to transfer Inn
employees to other properties managed by Management Company or one of its
affiliates. Funds placed into the escrow fund required in Section 11.11 (I) of
the Management Agreement for reimbursement of employee related costs shall not
be treated as Deductions. In the event any one or more Employees are eligible
for Management Company's Severance Plan, severance will be paid, if at all, to
Employees and charged to Lessee as a result of the termination of the Management
Agreement only in accordance with the terms of said Severance Plan as
administered and interpreted in the sole discretion of the Management Company as
administrator of the Severance Plan.
(c) Lessee acknowledges and agree that Management Company shall pay to each
Employee directly such Employee's vested paid time off accrued as of the
Termination Date. Management Company shall not be liable for Employees' vested
or unvested paid time off accruing after the Termination Date.
6. Indemnification.
Lessee, on behalf of itself and its successors and assigns, hereby agrees
to indemnify, defend and hold harmless Management Company, its parent companies,
subsidiaries, affiliates, and each of their officers, directors, shareholders,
agents, and assigns ("Management Company Releasees") against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs and expenses, including attorneys' fees of whatever kind or nature which
may be imposed on or incurred by Management Company Releasees, individually or
collectively, arising out of or relating to any of the following: (i) any loss
or damage to the contents of any Safe Deposit Boxes (hereafter defined) or Guest
Baggage (hereafter defined); (ii) Existing Inn Contracts (hereafter defined);
(iii) severance and WARN Act (and all similar state statutes) claims by one or
more Employees; and (iv) any events or occurrences, of whatever kind, relating
to or arising out of ownership or management of the Inn after the Termination
Date.
56
From the Effective Date through the Termination Date, Management Company
shall not enter into any material service contracts, equipment leases, or other
such agreements with respect to the Inn that cannot be terminated without
penalty. Further, Management Company covenants and agrees to manage and operate
the Inn in accordance with Management Company's obligations under the Management
Agreement from the Effective Date through the Termination Date.
7. Use of Names.
As provided in Article 11.12 of the Management Agreement, the names
"Marriott" and "Residence Inn by Marriott," whether used alone or in connection
with another word or words, and all other Proprietary Marks shall in all events
remain the exclusive property of Management Company or its affiliates. Lessee
shall have no right to use the name "Marriott," "Residence Inn by Marriott," or
any other Proprietary Marks in the operation of the Inn after the Termination
Date unless permitted by a written contract between the parties or their
affiliates.
8. Commitments.
Lessee agrees (i) to honor and fully perform all commitments or agreements
that were entered into by Management Company on behalf of the Inn on or before
the Termination Date ("Existing Inn Contracts"), including, but not limited to,
agreements involving room reservations, group sales events, banquet events,
catered functions, service, maintenance, and equipment leases or (ii) to
terminate such Existing Inn Contracts in accordance with their terms.
9. Deposits.
All deposits, advance rents under leases, and bank accounts relating to the
operation of the Inn shall be terminated or transferred to Lessee or its
designee at the direction of Lessee at the time Management Company delivers the
final accounting statement to Lessee as set forth in the Management Agreement.
57
10. Escrows.
Pursuant to the Management Agreement, Management Company is establishing
escrow funds from Gross Revenues in the following amounts that Management
Company reasonably believes will be necessary in connection with the termination
of the Management Agreement:
(i) Approximately [[[insert amount based on Inn's claim history, pending
claims, and location]]] for claims under worker's compensation and
employer's liability ("Insurance Escrow"), with the exact amount of
funds placed in said escrow to be determined by Management Company no
later than fourteen (14) days after the Termination Date;
(ii) [[[insert amount based on the Inn's prior tax audits/liabilities]]]
for sales and use tax assessments ("Tax Escrow"); and
(iii) $[[[insert amount per business agreement]]] for severance pay
liabilities ("Severance Escrow");
(iv) $ 10,000 for payment of Inn expenses and liabilities incurred on or
before the Termination Date ("Payables Escrow").
Management Company shall be obligated to disburse to Lessee any funds remaining
in the: (a) Insurance Escrow after[[[insert date thirty days after close of
Inn's insurance cycle]]]; (b) Tax Escrow after the earlier of sixty (60) days
after the completion of all audits or sixty (60) days after the expiration of
any and all applicable statute of limitations; (c) Severance Escrow at the time
Management Company delivers the final accounting statement to Lessee as set
forth in the Management Agreement (less any funds in the Severance Escrow which
Management Company reasonably determines is necessary to pay severed employees
who elect to be paid out over time rather than in lump sum); and (d) Payables
Escrow at the time Management Company delivers the final accounting statement to
Lessee as set forth in the Management Agreement. To the extent there are
insufficient funds in such escrows to reimburse Management Company for all
expenses relating to such escrows or for other Deductions paid by Management
Company pursuant to the Management Agreement, Lessee (or Lessee's assigns or
successors) shall reimburse Management Company for all expenses relating to such
expenses (including, but not limited to, severance pay and any liability arising
from any WARN Act violations) within ten (10) days of being notified by
Management Company of such insufficient funds and demand for reimbursement.
Lessee agrees that Management Company may commingle funds in such escrows and
use the escrowed funds for any of the aforementioned purposes.
11. Reserve Shortfalls.
The Reserve (as such term is defined in the Management Agreement) shall be
transferred to Lessee no later than thirty (30) days after the Termination Date.
With respect to FF&E costs and expenses of the Inn that are required to paid
from the Reserve pursuant to Article 5.02 of the Management Agreement ("FF&E
Expenses") and costs and expenses for major repairs,
58
renovations, alternations, and improvements to the Inn required to be funded
solely by Lessee pursuant to Article 5.03 of the Management Agreement ("CapEx
Expenses"), Management Company shall pay such FF&E Expenses and CapEx Expenses
from the Reserve. If a shortfall occurs because the FF&E Expenses and/or the
CapEx Expenses of the Inn exceed the amount of the Inn's Reserve (said amount
constituting a "Shortfall"), Management Company shall in its sole discretion
either (i) use other Inn funds in control of Management Company to pay such
Shortfall; or (ii) provide a written request to Lessee for payment of such
Shortfall that describes with reasonable particularity the FF&E Expenses and/or
CapEx Expenses incurred. If Management Company requests payment of a Shortfall
pursuant to (ii) in the immediately preceding sentence, Lessee shall thereafter
have ten (10) days within which to satisfy the demand for payment in full.
12. House Banks.
As of the Termination Date, Lessee or its designee and Management Company
shall jointly count all till money then held at the Inn for use as house banks.
Upon completion of such count, all such funds will be turned over to Lessee or
its designee and Lessee or its designee will deliver to Management Company a
receipt thereof.
13. Safe Deposit Boxes.
On the Termination Date, Management Company shall deliver to Lessee or its
designee (i) all keys in its possession to the Inn's safe deposit boxes ("Safe
Deposit Boxes"), and (ii) any receipts, agreements, and lists relating to the
Safe Deposit Boxes. Additionally, on the Termination Date, the Safe Deposit
Boxes shall be inventoried in the presence of representatives of both Management
Company and Lessee or its designee and the contents thereof delivered to Lessee.
14. Guest Baggage.
All baggage of guests who are still at the Inn on the Termination Date that
has been checked with or left in the care of Management Company shall be
inventoried and tagged jointly by Management Company and Lessee or its designee
and delivered to Lessee. Any baggage or other items in the Inn's "Lost and
Found" shall be inventoried in the presence of representatives of both
Management Company and Lessee or its designee and delivered to Lessee. All
baggage described in this paragraph 14 is collectively called "Guest Baggage".
15. Publicity.
Except as otherwise permitted under the Omnibus Agreement, no party to this
Agreement shall make any publicity releases or other public notice of the
transactions described in this Agreement without the prior written consent of
the other party, which consent may be conditioned upon the reasonable review and
approval of the text and method of dissemination of the publicity release.
59
16. Construction.
Each party hereby acknowledges that it has participated equally in the
drafting of this Agreement, with assistance of counsel, and therefore that no
court construing this Agreement should construe it more stringently against one
party than the other.
17. Cumulative Remedies.
All rights, benefits and remedies provided to the parties by this
Agreement, or any instruments or documents executed pursuant to this Agreement,
are cumulative and shall not be exclusive of any other of the rights, remedies
and benefits allowed by law or equity to the parties.
18. Governing Law.
This Agreement shall be governed by, and construed under, the laws of the
State in which the Inn is located.
19. Invalid Provisions.
If any provision of any of this Agreement is held to be illegal, invalid,
or unenforceable under present or future laws in effect from time to time, such
provision shall be fully severable; this Agreement shall be construed and
enforced as if the illegal, invalid, or unenforceable provision had never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom. Furthermore, in lieu of
such illegal, invalid, or unenforceable provision there shall be added
automatically as a part of this Agreement a provision as similar in terms to the
illegal, invalid, or unenforceable provision as may be possible so as to make it
legal, valid, and enforceable.
20. Multiple Counterparts.
This Agreement may be executed in identical counterparts, each of which
shall be deemed an original for all purposes and all of which shall constitute,
collectively, one Agreement.
21. Authority.
The parties hereto represent and warrant that they are duly authorized to
execute and deliver this Agreement on behalf of the party in accordance with the
party's organizational and governing documents, including, as applicable,
corporate charter, corporate bylaws and/or partnership agreements and that this
Agreement is binding upon the party in accordance with its terms.
22. Binding Effect.
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This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns. No
assignment or other transfer of the rights or obligations of the parties shall
relieve the assignor or transferor of any obligations under this Agreement.
23. Waiver; Modification; Entire Agreement.
Failure by a party to insist upon or enforce any of its rights hereunder
shall not constitute a waiver thereof. Any party hereto may waive, in writing,
any benefit contained in this Termination Agreement. No oral modification or
waiver hereof shall be binding upon the parties, and any modification shall be
in writing and signed by all parties hereto. This Agreement constitutes the
entire agreement between the parties concerning termination of the Management
Agreement and supercedes any and all prior understandings and agreements, oral
or written, relating thereto.
24. Guarantee of Lessee's Obligations.
As consideration and inducement for Management Company to execute this
Agreement for Termination of Management Agreement, Innkeepers USA Trust
("Guarantor"), on behalf of itself and its successors and assigns hereby
unconditionally warrants to Management Company and its successors and assigns
that all of Lessee's obligations under the Management Agreement and this
Agreement for Termination of Management Agreement will be punctually paid and
performed. Upon notice from Management Company that any such obligation of
Lessee has not been punctually fulfilled by Lessee, Guarantor shall immediately
and fully perform such obligation.
IN WITNESS WHEREOF, the parties have executed this Termination Agreement as
of the date first above written.
[SIGNATURES FOLLOW ON NEXT PAGE]
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"MANAGEMENT COMPANY" "LESSEE"
RESIDENCE INN BY MARRIOTT, INC. [[[[INSERT NAME OF ENTITY]]]
By: By:
-------------------------------- -------------------------------------
Title Title:
------------------------------ ----------------------------------
GUARANTOR
INNKEEPERS USA TRUST, a Maryland
Real Estate Investment Trust,
By:
--------------------------------
Title:
-----------------------------
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Exhibit A
RELEASE
THIS RELEASE (this "Release") is entered into as of this day of
---------
, , ("Effective Date") by and between Innkeepers USA Trust, a Maryland
------ ----
real estate investment trust ("Innkeepers Trust"); Innkeepers Hospitality, Inc.
and its sister corporation Innkeepers Hospitality III, Inc, (the "Outgoing
Lessee"), Innkeepers Hospitality Management, Inc. (the "New Manager") and KPA
Leaseco, Inc. (the "New Lessee/Franchisee") (collectively, Innkeepers Trust,
Outgoing Lessee, New Manager and New Lessee/Franchisee, the "Innkeepers
Parties," and, individually, any one of them is an "Innkeepers Party"), and
RESIDENCE INN BY MARRIOTT, INC. ("Management Company"), a Delaware corporation
with a mailing address at 00000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000.
WHEREAS, Outgoing Lessee and Management Company are parties to (i) that
certain Management Agreement dated as of , as amended (the
------------------
"Management Agreement"), for the operation and management of the Residence Inn
by Marriott located at (the "Inn"); (ii) that
----------------------------
certain Agreement for Termination of Management Agreement of even date hereof
("Termination Agreement") concerning the Inn; and (iii) that certain Omnibus
Agreement dated as of March 25, 2003, effective as of March 28, 2003 (the
"Omnibus Agreement");
WHEREAS, Outgoing Lessee desires to terminate the Management Agreement
governing the Inn;
WHEREAS, Management Company desires to terminate the Management Agreement
provided that Lessee execute a license agreement with Marriott International,
Inc. governing the Inn and execute a release of all claims relating to or
arising out of Management Company's operation or management of the Inn;
NOW, THEREFORE, without acknowledging any liability, the same being
expressly denied, in consideration of the mutual covenants contained herein, and
for good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, it is agreed as follows:
1. Each recital set forth above is true and correct and is incorporated as
a substantive part of this Release.
2. With the exception of any Excluded Claims (as herein defined), each of
the Innkeepers Parties, for itself and all of its officers, directors,
shareholders, employees, predecessors, insurers, attorneys, agents,
representatives, affiliates, successors and assigns (and any affiliates,
subsidiaries and/or parent companies of the foregoing) (together, the
"Innkeepers Releasors"), in all cases jointly and severally, hereby releases,
discharges, and forever waives and relinquishes any and all claims, demands,
obligations, liabilities, defenses, affirmative defenses, set-offs,
counterclaims, actions and causes of action of whatever kind or nature, whether
known or unknown, which any of the Innkeepers Releasors has, may have, might
have, or may assert now or in the future have against Management Company and/or
any of its present or former officers,
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directors, shareholders, employees, predecessors, insurers, attorneys, agents,
representatives, affiliates, successors and assigns (and any affiliates,
subsidiaries and/or parent companies of the foregoing) (together, the
"Management Company Releasees"), directly or indirectly, arising out of, based
upon, or in any manner connected with any transaction, event, circumstance,
action, failure to act, or occurrence of any sort or type, whether known or
unknown, which occurred, existed, was taken, permitted, or begun prior to the
execution of this Release and occurred, existed, was taken, permitted, or begun
in connection with, pursuant to, or by virtue of the Management Agreement and/or
Termination Agreement or which was in any way related to or connected with
Management Company's operation, management, and/or development of the Inn
(including, with respect to each of the foregoing Management Company Releasees,
any claims or alleged claims relating to or arising out of the financial or
economic impact that any development, promotion, ownership, operation,
licensing, franchising, and/or management would have or has had on the Inn
arising out of or related to any other property developed, promoted, owned,
operated, licensed, franchised or managed by, and of, Management Company
Releasees that is in existence as of the date of this release or that has been
previously identified in writing by Marriott to Innkeepers Trust; provided,
however, that the foregoing release shall not apply to, or prohibit the
Innkeepers Releasors from asserting, a claim for: (i) breach of the Termination
Agreement, the Omnibus Agreement, or any Management Support Agreements between
the parties; (ii) failure to make any payment accruing prior to the Termination
of the Management Agreement but not due and payable until a date thereafter;
and/or (iii) breach of any other obligation of Management Company arising after
the Termination Date ("Excluded Claims").
The release set forth above is intended to be effective as a bar to every
claim stated above. Accordingly, the Innkeepers Releasors hereby expressly
waives any rights and benefits conferred by Section 1542 of the California Civil
Code, which provides that, "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR," and hereby expressly waives any rights and benefits
conferred by any similar provision of law existing under any other applicable
state or local code.
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IN WITNESS WHEREOF, the parties have executed this Release as of the
Effective Date set forth above.
"MANAGEMENT COMPANY"
RESIDENCE INN BY MARRIOTT, INC.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
INNKEEPERS USA TRUST
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
INNKEEPERS HOSPITALITY, INC.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
INNKEEPERS HOSPITALITY III, INC.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
65
EXHIBIT C
REFERENCE AGREEMENT
(To be Attached)
66
