HOTEL/MOTEL MANAGEMENT AGREEMENT
This Hotel/Motel Management Agreement (this "Agreement") is made on the
date specified on Schedule I by and between Owner (identified on Schedule 1) and
HOSPITALITY PLUS CORPORATION (hereinafter referred to as "Manager"), a Delaware
corporation, having offices at 0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000-#0,
Xxxxxx, Xxxxx 00000.
Preamble
Owner is the owner of that certain real property, improved by a hotel
facility (the "Hotel"), described on Schedule I. Owner and Manager have entered
into this Agreement to provide for the management and operation of the Hotel.
'Me definitions for the capitalized terms contained in this Agreement are found
in Article 14.
I. APPOINTMENT AND TERM.
1.01 Appointment. Owner hereby appoints Manager as manager of the Hotel with the
obligation to direct, supervise, manage and operate the Hotel. Owner will not
employ any other party to manage the Hotel during the term(s) of this Agreement
1.02 Operation Team. The initial operating term of this Agreement will commence
at 12:01 A.M., on the date identified on Schedule I (the "Commencement Date")
and terminate at 11:59 P.M. on the expiration date identified on Schedule I (the
"Expiration Date").
1.03 Management Procedures. Manager will consult with Owner on a periodic and
regular basis with respect to the management of the Hotel. Manager, on behalf of
Owner, may take all actions it deems appropriate for the operation of the Hotel
and will carry out all written directives of Owner, excepting directives (i)
contrary to law, (ii) inconsistent with the contractual obligations of Owner or
(iii) which will subject Manager to liability above and beyond Manager's
responsibilities contemplated by this Agreement Owner's written directives will
be delivered -to Manager's regional vice president of operations responsible for
the Hotel and not the general manager on site at the Hotel. For purposes of
communications between Manager and Owner, Owner's Authorized representatives
will be those individuals. identified in writing by Owner.
2. HOTEL OPERATIONS.
2.01 Hotel Management Services. Manager will manage the Hotel in accordance with
standards and policies appropriate for the operation of comparable facilities,
'including the Standards and policies of Owner's Franchiser, if any. Manager
will perform the activities contained on Schedule 1, but only to the extent that
sufficient finds are available to Manager to perform those activities.
2.02 Employees.
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A. Manager will select a general manager and the department heads for the
Hotel and all personnel, which Manager determines to be necessary for the
operation of the Hotel (collectively, the,`'Employees"). All Employees will
be employed at Owner's cost and expense, but will be employees of Manager.
However, at the sole option and discretion of Manager, Manager may procure
the Employees from a third party employee leasing company.
B. All decisions with regard to -the terms of employment, including but
limited to compensation, bonuses, fringe benefits, discharge, and
replacement of all Employees, will be made and implemented directly by
Manger or through the general manager, department heads, or any of their
designees under the supervision of Manager.
C. Manager will administer necessary employee benefit programs, maintain all
necessary records, file all necessary reports, and pay for the accounts of
Owner, out of the Hotel Accounts, all taxes that relate to the Employees.
D. Manager will assist Owner in responding to organizational efforts by unions
and in negotiating and implemention union agreements that relate to Owner's
employees. With respect to Manager's employees, only Manager will respond
to organizational efforts by unions and have contractual Authority with
respect to the terms of any union contract. Additionally, Manager staff not
be required (by Owner) to take actions which will unreasonably increase
Manager's liabilities under any union contract. Upon termination of this
Agreement, Owner will assume Manager's obligations under any union contract
with respect to Employees hired by Owner at that time.
2.03 Capital Replacements.
A. An independent and segregated replacement reserve account will be created
in the name of Owner (the "Capital Replacement Reserve Account'). The
Capital Replacement Reserve Account will be funded by transferring on the
tenth (10th) of each month a sum equal to the percentage identified on
Schedule I of the Gross Revenue of the preceding month.
B. Proceeds (insurance or otherwise) received 'in reimbursement for
expenditures previously charged to the Capital Replacement Reserve Account
for Capital Replacements and all proceeds from the sale of any capital
items determined by Manager to no longer be needed or appropriate for the
operation of the Hotel or to be replaced, will be added to the Capital
Replacement Reserve Account.
C. Manager will administer the Capital Replacement Reserve Account on behalf
of Owner. The proceeds of the Capital Replacement Reserve Account will be
applied to Capital Replacements in accordance with the Annual Plan or with
the Owners approval.
3. ANNUAL PLAN.
3.01 Preparation and Submission. Owner and Manager acknowledge that the
budgeting process is a critical factor to the successful operation of the Hotel
and is also a key communication link between the parties. Not later than thirty
(30) days after the Commencement Date, Manger will submit to Owner, for its
approval, an operating budget for the initial Operating Year. For purposes of
this Article 3, the operating budget for the initial Operating Year will be
deemed to be the Annual Plan for that year. Thereafter, Manager will submit to
Owner, for its approval, not later than thirty (30) days before' the beginning
of each Operating Year the proposed annual plan for the Hotel (the "Annual
Plan") comprised of the following:
(a) A statement of the estimated income and expenses for
the Operating Year, including assumptions as to
payroll, room rates, and occupancies, which will
reflect the estimated results of operations for each
month of the Operating Year;
(b) Either as part of the statement of the estimated income
and expenses referred to in the preceding cause (a), or
separately, budgets covering proposed expenses for the
coming Operating Year for (i) Capital Replacements and
(ii) Operating Equipment;
(c) A marketing plan; and
(d) A monthly cash flow forecast which presents the amount
of funds that must remain in the Hotel Accounts as of
the end of each month
capital and expenditures Authorized trader the Annual
Plan.
Owner acknowledges that Manager's budgets and forecasts are management
tools to be used solely for internal management purposes and does not represent
performance standards or warranties of performance by Manager. in preparing all
budgets and forecasts and the estimated profit and loss statements comprising
the Annual Plan, Manager will base its estimates upon the most recent and
reliable information available, taking into account the location of the Hotel
and Manager's experience in hotel operations. Manager expressly disclaims any
warranty of or representations as to results of operations of the Hotel.
3.02 Owner's Approval. Owner will review the Annual Plan with in fifteen (15)
days after receiving such Annual Plan. Within fifteen (15) days after Owner
completes its review, Owner and Manger will meet at Manager's offices to dismiss
Owners comments and to review Manager's financial and operational analysis. If
an agreement is not reached by the first day of the Operating Year, the Annual
Plan will be based on actual results of the previous Operating Year.
3.03 Compliance with Annual Plan. Manager will use reasonable efforts to comply
with the Annual Plan and will not incur any material additional expense or
change materially the manner of operation of the Hotel without the written
approval of Owner.
3.04 Agreement Limitation. Manager will not enter into any commitment on behalf
of Owner requiring payments of amounts in excess of the amount set forth on
Schedule I or requiring performance over a time period in excess of the period
set forth on Schedule I without the written approval of Owner.
3.05 Emergencies. The limitations of Sections 3.03 and 3.04 do not apply to
emergency repairs or emergency actions. For the purposes of this Section 3.05,
an emergency means an unforeseen circumstance that in the opinion of Manager
requires immediate action which cannot be delayed in order to minimize injury to
the Hotel or injury to any person or property.
4. HOTEL ACCOUNTS: MAINTENANCE OF MINIMUM BALANCE.
4.01 Hotel Bank Accounts. Manager will conduct its various banking affairs
required by this Agreement, subject, however, to Owner's approval. Manager will
have no liability for any loss to Owner as a result of any bank insolvency or
failure or as a result of any negligence or misconduct of any ank or its
employees. All funds received in the operation of the Hotel will be, deposited
into one or more special accounts bearing the name of the Hotel (the "Hotel
Accounts"), or the Capital Replacement Reserve Accounts as appropriate, in the
banks so selected by Manager. Owners funds will not be co-mingled or funds of
other hotels managed by Manager. However, all of the Hotel's disbursements will
be made out of a common corporate disbursement account along with disbursements
for other hotels, which will be funded only at time of payment from the Hotel
Accounts or, as to Capital Replacements, from the Capital Replacement Reserve
Account.
4.02 Minimum Balance. Upon establishment of Hotel Accounts and at Manager's
direction, Owner will deliver to Manager for deposit in the Hotel Accounts the
sum set forth on Schedule I (the "Minimum Balance") and will advance additional
funds from time to time (3) working days of receipt of a written request from
Manager, to maintain the Minimum Balance.
5. BOOKS AND RECORDS.
5.01 Maintenance of Books and Records. Manager will keep complete and adequate
books of account and such other records as are necessary to reflect the results
of the operation of the Hotel. Manager will keep the books and records for the
Hotel in all material respects in accordance with the Uniform System of
accounts, on an accrual basis, in accordance with generally accepted accounting
principles consistently applied.
5.02 Location Examination and Inspection Except for the books and records which
may be kept in Manager's home office or, other suitable location, pursuant to
the adoption of a control billing system or other centralized service, the books
of account and all other records relating to or reflecting the operation of the
Hotel will be available to Owner and its representatives upon reasonable request
for examination, inspection and transcription.
5.03 Owner to Receive All Books and Records upon Termination. Upon any
termination of this Agreement, all original books and records not kept at the
Hotel, will be turned over to the Owner forthwith so as to ensure the orderly
continuance of the operation of the Hotel provided, however, Manager will, at
its expense, be entitled to retain copies of all books and records wherever
located.
5.04 Reports to Owner.
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A. Manager will deliver, not later than the twentieth
(20") day of the month, a detailed (i) profit and
loss statement showing the results of operation of
the Hotel for the prior month and the year to date,
with a comparison to the forecasts contained in the
then Current Annual Plan; (ii) market segmentation
report; (iii) accounts receivable aging report as of
the end of the previous month; and (iv) report of
cash balances at month end.
B. Within ninety (90) days after the end of each
Operating Year, Manager will deliver a balance
sheet, a profit and loss statement, and a statement
of cash flows. Costs of a certified audit or any
other reports by an independent certified public
accountant, if and when requested by Owner, will be
an Operating Expense and will be directed as to
scope-and content by Manager.
C. At Owner's request, Manager will futher deliver
financial reports required by third partic.5. If
Manager incurs substantial additional costs in
producing these reports, these additional costs
will constitute an Operating Expense.
5.05 Final Accounting. Upon termination of this Agreement, for any reason,
Manager will promptly deliver to Owner, but will be permitted to retain a copy
of, the following:
(a) A final accounting, reflecting the balance of
income and expenses of the Hotel as of the date of
termination;
(b) Any balance of funds in the Hotel Accounts, or
elsewhere, held by Manager with respect to the
Hotel (after payment or reservation with respect to
all committed obligations); and
(c) All books and records of the Hotel (including those
stored on computerized software), and All
contracts, bookings, reservations, leases, receipts
for deposits, unpaid bills and other records,
papers or documents which pertain to the Hotel, and
duplicate copies of the personnel records of
employees of the Hotel (provided, Manager will not
be required to mm over computer software, but will
provide all printouts from the software related to
the Hotel).
5.06 Form of Reports. ALL reports will be in Manager's customary detail and form
for managed properties. A sample of a profit and loss statement is attached as
Schedule III.
6. MANAGEMENT FEE AND EXPENSES.
6.0l Management Fees.
A. Owner will pay to Manager a base management fee (the "Base Management
Fee') and an incentive management fee (the "Incentive Management Fee")
together with any sales and use taxes.
B. The Base Management Fee will be equal to the percentage of gross
Revenues set forth on Schedule I with respect to each separ-ate, full
or partial month during the term of this Agreement. 'Me Base
Management Fee will be payable no later than the tenth (10') day of
the month immediately succeeding the month for which the Base
Management Fee is earned.
C. The Incentive Management Fee will be as set forth on Schedule I. The
incentive Management Fee for each Operating Year will be paid Monthly
installments based upon the anticipated Incentive Management Fees for
the Operating Year as determined in the current Annual Plan, as
adjusted during the Operating Year, and will be payable no later than
the tenth (10th) of each month. The Incentive Management Fee will be
based on actual results after the first month that the Hotel is
managed by Manager.
6.02 Accounting Service Fees. Manager will charge, and Owner will pay to
Manager, an accounting service fee as set forth on Schedule 1.
6.03 Reimbursement of Costs and Expenses. Owner will reimburse Manager for all
costs and expenses incurred by Manager for Owner's account in the ordinary
course of business under the terms and provisions of this Agreement, and such
reimbursement items will include, but not be limited to, the following:
(a) The salaries and wages. including costs of payroll
taxes, bonuses, retirement plan contributions,
fringe benefits, and related payroll items incurred
with respect to Manager's employees assigned to the
Hotel;
(b) Expenses for shared services and purchases
(equitably allocated to each hotel benefiting from
the shared services or purchases in a manner
consistent with Manager's allocation policy
uniformly applied to all managed hotels.)
(c) ALL taxes, including sales and use taxes and
similar assessments levied against all fees and
reimbursements payable by Owner to Manager or
Manager's affiliates under this Agreement.
7. DISBURSEMENTS.
7.01 Priority of Payments. All Gross Revenues will be deposited in the Hotel
Accounts as and when received, Manager is Authorized to and will
disburse on a current basis, on behalf of Owner, funds from the Hotel
Accounts (to the extent Available) 'in the following order of priority:
(a) Payment of payroll and payroll taxes and other
employment costs identified in Section 6.03 (a),
including any sales and use taxes imposed on such
costs;
(b) Payment of all remaining sales and use taxes,
including sales and use taxes on fees and
reimbursements to Manager;
(c) Payment to Manager of all other amounts due under
Article 6;
(4) Payment of any Operating Expenses (i) payable to
Manager, or (ii) with respect to which Manager has
pledged its credit;
(a) Payment of all other Operating Expenses;
(f) Transfers pursuant to section 2.03;
(g) Payment (as allocated by Owner to the extent of
available cash) of real estate and personal
property taxes, debt service on the First
Mortgage, rents and other sums due under any
ground lease and Fixed Charges (not otherwise
provided for in this schedule of priorities);
(h) Other Cash Flow Expenditures (not otherwise
provided for in this schedule of priorities); and
Payment of the balance to Owner.
Manager may reserve funds in the Hotel Accounts each month (i) for any
of the above items that are not paid on a monthly basis for a period of up to
twelve (12) months in advance and (ii) for cash deficiencies anticipated to
occur at the Hotel during the ninety (90) day period following any monthly
disbursement date.
7.02 Remittances to Owner. Concurrently with delivery of the monthly statements
required pursuant to Section 5.04A. Manager will remit to the Owner all sums in
the Hotel Accounts (except the Capital Replacement Reserve Account) in excess of
the Minimum Balance plus reserve funds.
8. INSURANCE.
8.01 Maintenance of Insurance. Owner will maintain, at Owner's cost and expense,
a comprehensive general liability insurance policy which includes, but is not
necessarily limited to coverage for products liability, innkeepers and dram shop
liability, and comprehensive Automobile liability, that insures both Owner and
Manager. In addition, Owner will maintain at its cost and expense other
insurance of the types and in amounts prudent for hotels similar to the Hotel.
8.02 Owners Methods of Obtaining Insurance. At its option Owner may procure and
maintain the insurance required by this Agreement by (i) undertaking the
procuring of insurance directly in its own name and behalf, but naming Manager
as an additional named insured, or (ii) agreeing to cover-age under Manager's
blanket policies in accordance with Manager's proposal at a price established by
Manager.
8.03 Parties Insured, Amount of Coverage, Etc. ALL insurance policies provided
for in Section
8.01 and 8.02 will include:
(a) Manager and Owner as parties insured, as their
interests may appear;
(b) Coverage and deductible as will be reasonably
agreed to from time to time by Manager and Owner.
(c) Where appropriate the insurer's waiver of
subrogation rights against Manager, and
(d) A requirement that the insurer provide at feet
thirty (30) days notice of cancellation or material
change in the terms and previsions of the policies.
8.0.4 Evidence Of Insurance. At least thirty (30) days prior to the expiration
date of all insurance policies the party obtaining the insurance will provide
the other party with a binder, or certificates of insurance, evidencing renewal.
8.05 Limitations on Scope of Service. Although Manager believes that the
insurance available under its blanket policies is adequate for its business
purposes, it is not advising Owner as to insurance coverage's and Owner shall
seek independent advice, Manager is not responsible for the solvency of any
insurance carrier.
9. INDEMNIFICATION.
9.01 Indemnification to Manager. Owner will defend, indemnify, and hold Manager
harmless from and against any and all actions, suits, claims, penalties, loss",
liabilities, damages, and expenses, including attorney's fees, arising out of
Manager's Performance of the services to be performed by Manager under this
Agreement (whether directed by Owner or not), including (i) liabilities under
statutes requiring notice as a prerequisite to the discharge of employees if
Owner terminates this Agreement and (ii) liabilities arising with respect to any
union contract to the Hotel, except claims based upon Manager's gross negligence
or willful misconduct, failure to act in good faith, or action beyond the
Authority granted to Manager by this Agreement.
9.02 Indemnification to Owner. Manager will defend, indemnify, and hold Owner
harmless from and against any and all claims arising out of Manager's performing
the services to be performed by Manager under this Agreement to the extent
claims arise on account of Manager's gross negligence, willful misconduct future
to act in good faith, or action beyond the Authority granted to Manager by this
Agreement
9.03 Indemnified Parties. 'Me indemnities contained in this Article 9 will run
to the benefit of both Manager and Owner, and the directors, officers, partners,
agents and employees of owner and Manager and of their affiliates.
9.04 Certain Claims to be Operating Expenses. All costs and expenses, including,
attorneys' fees, arising out claims of negligence against the Hotel by Employees
or any proceeding before any state or federal employment commission, wages and
hours commission, and union grievance committee, or any similar proceeding will
be deemed an operating Expense.
10. CONDEMNATION.
10.01 Full Condemnation. If (i) the entire Hotel is condemned, or (ii) only a
portion is condemned but it is unreasonable to or Owner elects not to continue
operating the remainder of the Hotel, this Agreement will terminate on the date
when the ownership of the Hotel or condemning portion is to the condemning
Authority and Manager will be paid the fee called for in Article 13. For
purposes of this Article I 0 a "condemnation" is any exercise of the power of
eminent domain by any governmental Authority, including a voluntary conveyance
in lieu of judicial proceedings.
10.02 Partial Condemnation. Upon any condemnation not covered by Section 10.01,
unless Owner elects to terminate this Agreement under Article 13, Owner will
promptly repair the Hotel and restore it to operating condition.
II. CASUALTY.
11.1 Damage by Fire and Other. If all or any part of the Hotel is damaged or
destroyed by fire or other casualty, unless owner elects to terminate the
Agreement under Article 13, Owner will promptly repair the Hotel and restore it
to operating condition.
12. TERMINATION FOR CALLSE.
12.01 Termination by Manager. Manager may terminate this Agreement upon the
occurrence of any of the following:
(a) Owner defaults in its performance of any obligation
of the Agreement and (i) fails to care the defaults
within thirty (30) days, after written notice or (ii)
if the defaults is susceptible to cure but cannot be
cured in thirty (30) days, then f3ib to commence
within thirty (30) days and to diligently pursue the
cure.
(b) Manager notifies Owner that it has insufficient funds
to repair or correct any condition at the Hotel which
a in violation of any Legal Requirements or insurance
requirements or presents a threat to life or personal
safety and Owner fails to provide sufficient funds to
repair or correct the condition within seven days of
the notice.
12.02 Termination by Owner. Owner may terminate this Agreement if Manager
defaults in its performance of any term of the Agreement and (i) fails to cure
the defaults within thirty (30) days after written notice or (ii) if the default
is susceptible to cure but cannot be cured in thirty (30) days, then fails to
commence within such thirty (30) days and to diligently pursue the awe.
12.03 Remedies Reserved. Termination of this Agreement will not constitute the
exclusively remedy of either Manager or Owner. Both Manager and Owner will
retain all other remedies provided for in this Agreement and by law.
13. TERMINATION FEE.
13.01 Termination Fee. Owner may terminate this Agreement at any time by giving
Manager sufficient notice to comply with all applicable laws, including laws
governing notification to employees (but not less than thirty (30) days notice
in any event), and including with its notice of termination, payment of the
termination fee (the "Termination Fee") set forth on Schedule 1, together with
balance due of any and all amounts due Manager under this Agreement, including
the Base Management Fee and the Incentive Management Fee, earned through the
date of termination.
13.02 Additional Consideration. Owner acknowledges that Manager will suffer
damage and be, entitled to compensation i& as a result of owner's breach of this
Agreement, this Agreement terminates or Manager is otherwise unable to continue
managing the Hotel. Accordingly, Owner, as additional consideration. agrees to
pay to Manager at the termination of this Agreement upon Owner's breach, the
amounts set forth in section 13.0 1, together with amounts sufficient to
indemnify Manager against
14. DEFINITIONS.
14.01 "Accounting Services Fee". Has the meaning contained in Section 6.02.
14.02 "Annual Plan". Has the meaning contained in Section 3.01.
14.03 "Base Management Fee". Has the meaning contained in Section 6.01.
14.04 "Capital Replacement Reserve Account". Has the Meaning contained in
Section 2.03.A.
14.05 "Capital Replacement". Means the furnishings and equipment and other
items, the cost of which for accounting purposes may not be expensed but be
capitalized over a useful life of greater than one year according to generally
acceptable accounting principles.
14.06 "Commencement Date". Means the date contained on Schedule 1.
14.07 "Employees". Has the meaning contained in Section 2.02.
14.08 "Excluded Revenues". Means (i) any gratuity or sales charges added to a
customer's xxxx which are payable to Hotel employees, (ii) sales taxes, excise
taxes, gross receipt taxes, admission taxes, enterainment taxes. tourist taxes
or other similar taxes, (iii) proceeds from the sale of refinancing of the
Hotel, (iv) abatement of taxes, and (v) proceeds of insurance, except business
interruption insurance.
14.09 "Expiration Date". Has the meaning contained in Section 1.02.
14.10 "First Mortgage". Means the mortgage described in Schedule l.
14.11 "Fixed Charges" Means any and all amounts paid or expenses incurred in
connection with the following:
(a) Rental and other charges imposed under any lease for
the use. possession or operation of the Hotel;
(b) Taxes (other than income and payroll taxes) including
without limitation real and personal property taxes,
business and occupation taxes, and utility taxes such
as sewer taxes;
(c) Insurance (other than employee benefits insurance
such as workers' compensation insurance and health or
fife insurance); and
(d) Transfers to the Capital Replacement Reserve Account.
14.12 "Fixed Expense Lease". Means any lease of real property and of furnishings
and equipment which if not leased would be purchased and capitalized as fixed
assets.
14.13 "Franchise Cost". Means expenditures for compliance with the requirements
of the Franchiser of the Hotel, including without limitation payment of
royalties, marketing contributions, and reservation system fees, but excluding
the cost of compliance with Franchiser's operating standards requiring Capital
Replacements.
14.14 "Franchiser". Means the hotel franchises company licensing the use of the
Hotel name, if any.
14.15 "Furnishing and Equipment" . Means all furniture, finishing, equipment,
fixtures, apparatus and other personal property used in, or held in storage for
use in (or if the context so dictates, required in connection with), the
operation of the Hotel, other than Operating Equipment and Operating Supplies.
14.16 "Gross Revenues". Means all revenues of the Hotel and all its uses of
every nature and kind regardless of source, excluding Excluded Revenues. By way
of illustration but not limitation. Gross Revenues will include:
(a) The amount received as payment for the use and occupancy
of all guest rental units;
(b) The amount received as payment for the use and occupancy
of all meeting rooms, banquet function rooms, and public
areas;
(c) ALL revenues derived from the sale of food and other
edibles in restaurants, lounges, meeting rooms, banquets,
guest rooms, banquets, and any other location at the
Hotel;
(d) ALL revenues derived from the sale of liquor, beverages,
and other potables in restaurants, lounges, meeting rooms,
banquets, guest rooms, and any other location at the
Hotel;
(e) All revenues derived from the use of telephone in guest
rooms or in public areas;
(f) All revenues derived from leases, subleases, concessions,
vending, valet services, swimming pool memberships,
banquet events, movies or income of a similar or related
nature; and
(g) Proceeds of business interruption Insurance.
14.17 "Ground Lease". Means the lease described on Schedule 1.
14.18 "Hotel". Means the Hotel described on Schedule 1.
14.19 Hotel Accounts. Has the meaning contained in Section4.01.
14.20 House Profit or Gross Operating Profit. Means Gross Revenues less
Operating Expenses.
14.21 "Incentive Management Fee". Has the meaning contained in Section 6.01.
14.22 "Legal Requirements". means all laws, statutes, ordinances, orders, rules,
regulations, permits, licenses, Authorizations, directions and requirements of
all governments and governmental Authorities, which now or hereafter may be
applicable to the Hotel and its operation.
14.23 "Manager". Means HOSPITALITY PLUS Corporation, or its successor.
14.24 "Minimum Balance". Has the meaning contained in Section 4.02.
14.25 "Net Operating Income". Means House Profit less the Base Management Fee,
the Incentive Management Fee, Fixed Charges and other Cash flow Expenditures.
14.26 "Operating Equipment". Means all china, glassware, linens, silverware and
uniforms used in, or held in storage for use in (or if the context so dictates,
required in connection with), the operation of the hotel
14.27 "Operation Expenses". Means any and all amounts paid or expenses incurred
in correction with the operation of the Hotel, as determined in accordance with
the Uniform System of accounts for Hotels, in accordance with the generally
accepted accounting principles, consistently applied, but excluding the Base
Management Fee, Accounting services Fee, Fixed Charges, and other cash flow
expenditures and non-cash items such as depreciation. By way of illustration,
but not limitation, Operating Expenses include:
(a) Salaries, wages, payroll taxes, bonuses, and employee
benefits, including sales and use taxes imposed thereon, and
payroll processing fees;
(b) Legal, accounting, and other professional fees;
(c) Fees for licenses and permits;
(d) Costs of Operating Supplies;
(e) Costs of Operating Equipment;
(f) Rentals under operating Leases;
(g) Franchise Costs;
(h) Expenses allocated by Manager in the ordinary course as
Operating Expenses not otherwise itemized above, directly
related to rooms, food, beverage, telephone, and other
segregated outlets; and
(i) Expenses not allocated by Manager in the ordinary course and
not otherwise itemized above, including administrative and
general expenses such as advertising, sales and promotion,
utilities, and repair and maintenance (but not of Capital
Replacements).
14.28 "Operating Lease". Means leases of personal property, which are not, Fixed
Expense Leases.
14.29 "Operation Supplies". Means consumable items used in or held in storage
for use in (or if the context so dictates, required in connection with), the
operation of the Hotel, including but not limited to food and beverages, fuel,
soap, cleaning material, matches, stationery and other similar items.
14.30 "Operating Year". Means each twelve month period commencing on the First
day of January (except for the first year which will commence on the
Commencement Date) and ending on the subsequent December 3 1, (except for the
last year which will end on the date of termination, whether by expiration of
the term of the Agreement or otherwise).
4.31 "Other Cash Flow Expenditures". Means any and all expenses incurred in
connection with the following:
(a) Interest, principal, and other payments on any debt or other
obligation for borrowed money, including debt service on any
mortgage debt and rents and other charges on Fixed Expense
Leases; and to Section 7.010).
14.32 "Owner". Means the entity identified on Schedule I or its successors.
14.33 "Termination Fee". Has the meaning contained in Section I.
14.34 "Uniform System of Accounts". Means the Uniform System of accounts for
Hotels (Eighth Revised Edition. 1986) as revised from time to time; but not any
subsequent revisions unless approved by both Owner and Manager in writing.
GENERAL PROVISIONS
15.01 Estoppel Certificates. Owner and Manager each, upon at least ten (10)
days' notice, will execute and deliver to owner, and to any third party having
or about to have. a bona fide interest in the Hotel a written certificate
stating that d3is Agreement is unmodified and in full force and effect, or if
not, stating the details of any modification, and stating that, as modified, it
is in full force and effect the date to which payments have been paid, and
whether there n any existing default on the part of the other.
15.02 No Partnership or Joint Venture. Nothing contained in this Agreement will
be constructed to be or create a partnership or joint venture between Owner, any
affiliate of Owner, its successors or assigns, on the one part and Manager any
affiliate of Manager, its successors and assigns, on the other part.
15.03 Modifications and Changes. This Agreement cannot be changed or modified
except by another agreement in writing signed by the party sought to be charged
therewith, or by its duly Authorized agent.
15.04 Understanding and Agreements. This Agreement constitutes all of the
understandings and agreements of whatsoever nature or kind existing between the
parties with respect to Manager's management of the Hotel.
15.05 Heading. The Article and Section headings contained herein are for
convenience of reference only and are not intended to define, lima or describe
the scope or intent of any provisions of this Agreement.
15.06 Survival of Covenants. Any covenant, term or provision of this Agreement
which in order to be effective, must survive the termination of this Agreement,
will survive any such termination.
15.07 Third Parties. None of the obligations of this Agreement of either party
win ran to or be enforceable by any party other than the party to this Agreement
or its assignee pursuant to the terms of this Agreement. Owner is expressly
Authorized to assign its rights under this Agreement to any mortgagee of the
Hotel.
15.08 Waivers. No failure by Manager or Owner to insist upon the strict
performance of any covenant. agreement, term or condition of this Agreement, or
to exercise any right or remedy consequent upon the breach of this Agreement
will constitute a waiver of any breach or any subsequent 'breach of any
covenant, agreement, term. or condition. No covenant. agreement, term or
condition of this Agreement and no breach of this Agreement will be waived,
altered or modified except by written instrument, No waiver of any breach will
affect or alter this Agreement, but each and every covenant. agreement, term and
condition of this Agreement will continue in full force and effect with respect
to any other than existing or subsequent breach.
15.09 Governing Law; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas. VENUE FOR ANY CALLSE OF ACTION
RELATING TO THIS AGREEMENT SHALL BE EXCLUSIVELY DALLAS COUNTY, TEXAS.
15.10 Notices. Except as other wise provided in this Agreement all notices
required or permitted to be given hereunder, or which are to be given with
respect to this Agreement, will be in writing sent by registered or certified
mail, postage paid, return receipt requested addressed to the party to be so
notified as set forth on Schedule I. Any notice will be deemed delivered when
received or receipt rejected. Notice may also be delivered by hand, or by
special courier, if, in either case, the addressee acknowledges receipt. Any
notice delivered by hand, or by special courier, will be deemed delivered when
received. Either party may at any time change the address for notice by written
notice to the other party.
15.11 Binding Effect. This Agreement will be binding upon, and will insure to
the benefit of, the successors in interest and the assigns of the parties
hereto, provided that no assignment, transfer, sale, pledge. encumbrance,
mortgage, lease or sublease by or through Manager or by or through Owner, as the
case may be, in violation of the provisions of this Agreement will vest any
rights relative to this Agreement in the assignee, transferee,, purchaser,
secured party, mortgagee, pledge, lessee, sublease or occupant, or will
diminish. reduce or release the obligations of the party hereto.
15.12 Confidentiality. Manager and owner agree that the contents of this
Agreement will not be disclosed to any other individual or entity (except as
directed by law or judicial order), provided Owner may disclose the contents of
this Agreement to (i) its partners and limited partners, or shareholders and
directors, if a corporate partner, and (ii) individuals or entities providing,
or proposing to provide, financing to Owner.
15.13 Non-Solicitation of Manager's Employees. Owner agrees that it will not,
for a period of two (2) years from the date of expiration or early termination
of this Agreement, directly or indirectly (i) solicit (other than general
solicitations made to the public at large) the employment of any key employee,
officer, or senior or regional director or property manager of Manager, or (ii)
hire any key employee, officer, or senior or regional director or property
manager employed by Manager or any former key employee. officer, Or senior
property manager (of Manager) whose employment with Manager has ceased within
18O days of such solicitation or hire. The term 'key employee includes regional
and on-site hotel employees such as the regional vice presidents, regional
directors of sales, district managers, hotel general managers and assistant
general managers, hotel directors of sales, hotel food and beverage manager and
assistant food and beverage managers, and executive housekeeping. Owner and
Manager agree that manager will suffer substantial damage as the result of the
low of trained and experienced supervisory personnel, and that Owner's agreement
contained in this Section 15.13 a material consideration. Further, Owner and
Manager acknowledge that the. damages that Manager will sustain as a result of
owner's breach of this provision are substantial but are difficult to ascertain.
Therefore, owner and manager agree to provide for liquidated damages in the Slim
of $500,000.00, representing owner's and Manager's best estimate as to the
damages that would be incurred by Manager from each separate breach of this
Section 15.13 by Owner, not as a penalty or forfeiture. Owner and Manager agree
that such liquidated damages are in lieu of any other remedy and that the
solicitation and/or employment of each individual in violation of this Section
15.13 will constitute a separate breach and give rise to a separate damage
award. Owner will cause subsidiaries and affiliates to comply with the
provisions of this Section 15.13.
SCHEDULEI
TERMS OF AGREEMENT
1. Date of Agreement: September 1, 2002
2. Description of Hotel (Preamble): INN-Vestors, Inc . 3. Commencement Date
(Section 1.02):
4. Expiration Date (Section 1.02): December 1, 2006
5. Capital Replacement Reserve Account (Section 2.03): 3.0%
6. Agreement Limitations (Section 3.04):
1 . Maximum Amount: 125, 000
2. Time Period: 48 months
7. Minimum Balance (Section 4.02): $10,000
8. Base Management Fee (Section 6.0 1): 4.0% of Gross Revenue
9. Incentive Management Fee (Section 6.0 1): 2% of Gross Operating Profit
10. Accounting Service Fee (Section 6.02): $5,000 per month
11. Termination Fee (Section 13.01): 36 mouths of Fees including
account fees
12. First Mortgage (Section 14.10): all mortgages on all properties
13. Ground Lease (Section 14.17): if applicable
14. Owner (Section 14.32): 000 Xxxxxxxx, Xx Xxxx, Xxxxx
15. Notices (Section 15.10)
