EXHIBIT 10.39
MANAGEMENT AGREEMENT
by and
between
HPT TRS SPES, INC., AS OWNER,
AND
CANDLEWOOD MANAGEMENT, LLC, AS MANAGER
TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS............................................................................................. 1
1.1 Agreement ....................................................................................... 1
1.2 Approved Budgets ................................................................................ 1
1.3 Business Day .................................................................................... 1
1.4 Entity .......................................................................................... 1
1.5 Fiscal Year ..................................................................................... 2
1.6 Hotels .......................................................................................... 2
1.7 Hotel Accounts .................................................................................. 2
1.8 Hotel Expenses .................................................................................. 2
1.9 Hotel Leases .................................................................................... 2
1.10 Hotel Records ................................................................................... 2
1.11 Hotel Revenues .................................................................................. 2
1.12 HPT ............................................................................................. 3
1.13 Management Fee .................................................................................. 3
1.14 Owner ........................................................................................... 3
1.15 Person .......................................................................................... 3
1.16 Required Minimum Balance ........................................................................ 3
1.17 Uniform System of Accounts ...................................................................... 3
ARTICLE 2 APPOINTMENT; DUTIES..................................................................................... 4
2.1 Appointment of the Manager........................................................................ 4
2.2 Acceptance; General Description of Duties......................................................... 4
2.3 Certain Specific Duties........................................................................... 5
2.4 Brand and Trademarks.............................................................................. 8
2.5 Standard of Care.................................................................................. 8
2.6 Authority of the Manager.......................................................................... 8
ARTICLE 3 INSURANCE............................................................................................... 8
3.1 Maintenance of the Owner's Insurance.............................................................. 8
3.2 Manager's Insurance............................................................................... 8
3.3 Indemnification of Owner.......................................................................... 9
ARTICLE 4 REPORTING AND RECORDKEEPING............................................................................. 9
4.1 Maintenance of Records, Etc....................................................................... 9
4.2 Owner's Property; Continuing Access............................................................... 9
4.3 Owner's Audit Rights.............................................................................. 9
4.4 Required Reports, Etc............................................................................. 9
4.5 Supporting Documentation.......................................................................... 10
ARTICLE 5 BANK ACCOUNTS........................................................................................... 10
5.1 Hotel Accounts.................................................................................... 10
5.2 Access to Accounts, Etc........................................................................... 11
ARTICLE 6 PAYMENT OF EXPENSES..................................................................................... 11
6.1 Costs Eligible for Payment from Hotel Accounts, Etc............................................... 11
6.2 Excluded Manager Costs............................................................................ 11
6.3 Required Minimum Balance; Insufficient Funds...................................................... 12
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TABLE OF CONTENTS
PAGE
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ARTICLE 7 COMPENSATION; TERM; TERMINATION......................................................................... 13
7.1 Management Fee.................................................................................... 13
7.2 Term.............................................................................................. 13
7.3 Fees on Termination or Expiration................................................................. 13
7.4 Orderly Transition................................................................................ 13
ARTICLE 8 ADDITIONAL COVENANTS OF MANAGER......................................................................... 14
8.1 REIT Qualification Matters........................................................................ 14
8.2 Occupancy Agreements, Etc......................................................................... 14
ARTICLE 9 DISPUTE RESOLUTION; DAMAGES LIMITATIONS................................................................. 15
9.1 Disputes to be Arbitrated......................................................................... 15
9.2 Venue; Applicable Statute and Rules............................................................... 15
9.3 Constitution of the Arbitration Panel;
Qualifications.................................................................................. 15
9.4 Award............................................................................................. 15
9.5 Conduct of the Arbitration........................................................................ 15
9.6 Damages Limitations............................................................................... 16
ARTICLE 10 MISCELLANEOUS.......................................................................................... 16
10.1 Limitation on Assignment.......................................................................... 16
10.2 Other Business, Etc............................................................................... 16
10.3 Notices........................................................................................... 16
10.4 Successors and Assigns, Etc....................................................................... 17
10.5 Severability...................................................................................... 18
10.6 Entire Contract................................................................................... 18
10.7 Headings; Counterparts............................................................................ 18
10.8 Governing Law..................................................................................... 18
10.9 Modification of Agreement......................................................................... 19
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MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made as of April 25, 2003, by and between
HPT TRS SPES, INC., a Maryland corporation, as owner (the "Owner"), and
CANDLEWOOD MANAGEMENT, LLC, a Delaware corporation, as manager (the "Manager").
W I T N E S S E T H :
WHEREAS, the Owner leases the fifteen hotels described on Exhibits
A-1--A-15 (collectively, the "Hotels"); and
WHEREAS, the Owner desires to retain the Manager, and the Manager is
willing to serve, as manager and operator of the Hotels, subject to and upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, the Owner and the Manager
hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings set
forth below or in the section of this Agreement referred to below.
1.1 "AGREEMENT" shall mean this Management Agreement, together
with Exhibits A-1 through A-15 attached hereto, as it may be amended from time
to time as herein provided.
1.2 "APPROVED BUDGETS" shall have the meaning given such term in
Section 4.4.
1.3 "BUSINESS DAY" shall mean any day other than Saturday, Sunday,
or any other day on which banking institutions in The Commonwealth of
Massachusetts are authorized by law or executive action to close.
1.4 "ENTITY" shall mean any corporation, general or limited
partnership, limited liability company, stock company or association, joint
venture, association, company, trust, bank,
trust company, land trust, business trust, any government or agency or political
subdivision thereof or any other entity.
1.5 "FISCAL YEAR" shall mean each twelve (12) month period during
the term of this Agreement commencing January 1.
1.6 "HOTELS" shall have the meaning given such term in the
recitals to this Agreement.
1.7 "HOTEL ACCOUNTS" shall have the meaning given such term in
Section 5.1.
1.8 "HOTEL EXPENSES" shall mean all costs, expenses and cash
disbursements of any type (determined in accordance with the Uniform System of
Accounts and generally accepted accounting principles, consistently applied),
relating to or arising out of the ownership or operation of the Hotels,
including, without limitation, taxes, capital improvements, rental and other
payments under any Hotel Lease, debt service (interest and principal) on any
indebtedness, expenses of operating, maintaining and repairing the Hotels and
funding necessary reserves.
1.9 "HOTEL LEASES" shall mean, collectively, any ground leases
from time to time in effect with respect to the Hotels.
1.10 "HOTEL RECORDS" shall mean all records, books and accounts,
vouchers, statements, receipts, invoices, plans, specifications, permits,
approvals, contracts and other documents relating to the ownership, management
or operation of the Hotels or otherwise relating to performance by the Manager
of its services with respect to the Hotels hereunder.
1.11 "HOTEL REVENUES" shall mean, for any period, all revenues and
receipts of every kind (determined in accordance with the Uniform System of
Accounts and generally accepted accounting principles, consistently applied),
received by, or by reason of the operation of, the Hotels during such period,
including, without limitation, all income (from both cash and credit
transactions), after deductions for bad debts, and discounts for prompt or cash
payments and refunds, from rental of rooms, stores, offices, meeting, exhibit or
sales space of every kind; license, lease and concession fees and rentals (not
including gross receipts of licensees, lessees and concessionaires); income from
vending machines; health club membership fees; food and beverage sales;
wholesale and retail
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sales of merchandise (other than proceeds from the sale of furnishings, fixture
and equipment no longer necessary to the operation of the Hotels); service
charges, to the extent not distributed to the employees at the Hotels as
gratuities; and proceeds, if any, from business interruption or other loss of
income insurance; provided, however, that Hotel Revenues shall not include
gratuities to or collected on behalf of Hotels employees; federal, state or
municipal excise, sales, use, occupancy or similar taxes collected directly from
patrons or guests or included as part of the sales price of any goods or
services; insurance proceeds (other than proceeds from business interruption or
other loss of income insurance); condemnation awards (other than those awarded
in connection with a temporary condemnation); any proceeds from any sale of the
Hotels or from the refinancing of any debt thereon; proceeds from the
disposition of furnishings, fixture and equipment no longer necessary for the
operation of the Hotels; and any security deposits and other advance deposits,
until and unless the same are forfeited or applied for the purpose for which
they were collected.
1.12 "HPT" shall mean Hospitality Properties Trust, and its
successors and assigns.
1.13 "MANAGEMENT FEE" shall mean a fee equal to three percent (3%)
of Hotel Revenues.
1.14 "OWNER" shall have the meaning given such term in the
preambles to this Agreement.
1.15 "PERSON" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of such
Person where the context so admits.
1.16 "REQUIRED MINIMUM BALANCE" shall mean an aggregate amount
equal to One Million Five Hundred Thousand Dollars ($1,500,000).
1.17 "UNIFORM SYSTEM OF ACCOUNTS" shall mean The Uniform System of
Accounts for the Lodging Industry, Ninth Revised Edition, 1996, as published by
the Hotel Association of New York City, Inc., as the same may be further revised
from time to time.
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ARTICLE 2
APPOINTMENT; DUTIES
2.1 APPOINTMENT OF THE MANAGER. The Owner hereby engages the
Manager to manage, supervise and operate (either directly or through affiliates)
the Hotels in a manner consistent with prudent business and management practices
applicable to the operation, repair, maintenance and management of Hotels
comparable in size, character and location to the Hotels, and to carry out
general management functions with respect to the Hotels.
2.2 ACCEPTANCE; GENERAL DESCRIPTION OF DUTIES. The Manager accepts
such engagement and agrees to provide (either directly or through affiliates)
all services necessary to provide and maintain such care and management,
including, without limitation, the following:
(a) Maintaining the Hotels and the furnishings, fixture
and equipment and operating equipment required for the operation of the
Hotels in good operating order and condition in the manner which is the
standard customarily used for Hotels of the size, character and
location of the Hotels;
(b) Using commercially reasonable efforts to secure and
retain guests, tenants, and customers for the Hotels, market the Hotels
and optimize occupancy of its guest rooms at the most profitable rates;
(c) Advancing the business, interests, profitability, and
future prospects of the Hotels;
(d) Promoting and enhancing the name and reputation of
the Hotels;
(e) Supervising the performance of all administrative
functions as may be necessary in the management and operation of the
Hotels;
(f) Selecting, hiring, training, supervising, monitoring
the performance of and terminating all personnel involved in the
administration and day-to-day operations of the Hotels, including,
without limitation, professional personnel, custodial, cleaning,
maintenance, and other
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operational personnel, and secretarial and bookkeeping personnel;
(g) Providing accounting, billing, purchasing and xxxx
payment functions for the Hotels;
(h) Establishing systems of accounts and supervising the
maintenance of ledgers and other primary accounting records by
personnel of the Hotels;
(i) Supervising the financial affairs of the Hotels;
(j) Establishing and supervising the implementation of
operating budgets and establishing and administering financial controls
over the operations and management of the Hotels;
(k) Developing and establishing financial standards and
norms by which the income, costs, and operations of the Hotels may be
evaluated;
(l) Serving as adviser and consultant in connection with
policy decisions to be made by the Owner;
(m) Furnishing such reports to the Owner as the Owner may
reasonably request consistent with the ordinary operation of the
Hotels, and providing the Owner with economic and statistical data in
connection with or relative to the operation and management of the
Hotels;
(n) Representing the Hotels in all dealings with guests,
tenants and customers, creditors, personnel, and agents for collection
and insurers;
(o) Acting as agent for the Owner in disbursing or
collecting the funds of the Hotels, in paying the debts and fulfilling
the obligations of the Hotels; and
(p) Generally seeing to the operations and management of
the Hotels, the marketing of the services provided at the Hotels,
planning for future operations and establishing and implementing
policies for the Hotels.
2.3 CERTAIN SPECIFIC DUTIES. In addition to the general duties set
forth in Section 2.2 and the other obligations of the Manager set forth in this
Agreement, the Manager shall have the
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following specific responsibilities, all of which shall be performed (either
directly or through affiliates) in a manner consistent with the Approved
Budgets, unless the prior consent of the Owner is obtained or as otherwise
provided below:
2.3.1 EMPLOYEES. The Manager shall (either directly or
through affiliates)recruit, evaluate and select the management staff
(e.g., the general manager, assistant managers and department heads)
who shall be responsible for the functional operation of the Hotels and
supervision of personnel at the Hotels, on a day-to-day basis, as well
as all on-site professional, custodial, food service, cleaning,
maintenance, clerical, secretarial, bookkeeping, management, collection
and other administrative personnel for the day-to-day operations of the
Hotels. From and after the later of the date of this Agreement and the
date the Manager hires each such employee, all such personnel shall be
employees of the Manager and the salary and wages, payroll taxes,
insurance, workmen's compensation and other benefits of such
administrators and other personnel shall be the responsibility of, and
paid by, the Manager, subject to reimbursement as Hotels Expenses.
The Manager shall establish such personnel policies, wage
structures and staff schedules as it deems necessary and advisable. The
Manager shall maintain payroll records and shall prepare payrolls and
returns of withholding taxes.
2.3.2 PURCHASING. The Manager shall purchase all supplies,
foodstuffs, materials, appliances, tools and equipment necessary in the
operation of the Hotels. The Manager shall use commercially reasonable
efforts to limit purchasing costs and to maintain such costs at a level
reasonably calculated to allow the Hotels to operate profitably. The
Manager may make such purchases in bulk under a centralized purchasing
system established by it for multiple hotels under its management in
order to minimize costs to the Owner and all such costs may be
allocated among the managed hotels, including the Hotels. The Manager
shall arrange for all contracts for electricity, gas, telephone, and
any other utility or service necessary for the operation of the Hotels.
The Manager shall, on behalf of the Owner, contract for and supervise
the making of any necessary repairs, alterations and improvements to
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the Hotels; provided, however, that in the case of any major repair
(defined as any repair that the Manager reasonably estimates will cost
at least $10,000), alteration or improvement (other than in the event
of emergency), the Manager shall obtain the approval of the Owner,
unless the same is authorized by the Approved Budgets.
2.3.3 COLLECTIONS, ACCOUNTS, DISBURSEMENTS AND INVESTMENTS.
The Manager shall prepare and submit bills and collect, for the account
of the Owner, any and all moneys owing to the Owner.
2.3.4 TECHNICAL AND PROFESSIONAL SERVICES. The Manager
shall secure such engineering, legal and other specialized technical
and professional services as may be necessary to advise or to represent
the Owner in connection with any matter involving or arising out of the
operation of the Hotels; provided, however, that the providers of any
such services shall be subject to the approval of the Owner.
2.3.5 PLANT MAINTENANCE. The Manager shall monitor and
review practices and procedures of the maintenance, engineering,
security, housekeeping and related services and shall implement,
maintain and supervise inspections (interior and exterior) and
preventative maintenance programs with respect to the Hotels.
2.3.6 ACCOUNTING. The Manager shall provide for payment of
accounts payable, employee payrolls, taxes, insurance premiums and
other obligations of the Hotels. The Manager shall establish an
accounting system to record all business activity in order to provide
financial reporting as required by Article 4. The Manager will prepare,
or arrange for the timely reporting to, the Owner as the Owner may from
time to time reasonably require.
2.3.7 COMPLIANCE WITH LAW. The Manager shall use
commercially reasonable efforts to keep in full force and effect all
licenses, permits, approvals and authorizations necessary for the Owner
and the Manager to occupy and operate the Hotels. The Manager shall not
take or omit to take any action which jeopardizes any such licenses,
permits, approvals or authorizations.
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2.4 BRAND AND TRADEMARKS. The Manager shall operate the Hotels as
extended stay suite hotels under the name "Cambridge Suites" and in a manner
consistent with other Cambridge Suites hotels. The Manager shall not operate the
Hotels under any other name without the Owner's prior written consent.
2.5 STANDARD OF CARE. The Manager shall use commercially
reasonable efforts and act in good faith and in a professional manner in
rendering the services called for hereunder in accordance with prevailing
standards of the hotel industry and shall render the services called for
hereunder in good faith and with a duty of care.
2.6 AUTHORITY OF THE MANAGER. Subject to the terms and conditions
set forth in this Agreement, the parameters established by the Approved Budgets
and the policies from time to time established by the Owner, the Manager shall
have the authority, control and discretion with regard to the operation,
administration and management of the business, policies, and assets of the
Hotels (including, without limitation, the exercise of its rights and
performance of its duties provided for in Sections 2.1, 2.2 and 2.3) and the
right to determine all operating policies affecting the appearance, maintenance,
personnel, standards of operation, quality of services, and any other matter
affecting the Hotels or the operation of the Hotels.
ARTICLE 3
INSURANCE
3.1 MAINTENANCE OF THE OWNER'S INSURANCE. The Manager shall
obtain, on behalf of the Owner and as an expense of the Hotels, all necessary
liability and property insurance covering the Hotels, any equipment used in
connection with the Hotels, and the Owner, including, without limitation, all
insurance required to be maintained by the Owner under any Hotels Leases in
accordance with the terms and provisions thereof.
3.2 MANAGER'S INSURANCE. The Manager shall maintain such insurance
as is customarily obtained by prudent managers of facilities similar to the
Hotels, including, without limitation, workmen's compensation insurance covering
the employees at the Hotels.
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3.3 INDEMNIFICATION OF OWNER. The Manager shall indemnify, defend
and hold harmless the Owner for, from and against any cost, loss, damage or
expense (including, but not limited to, reasonable attorneys fees and all court
costs and other expenses of litigation, whether or not taxable under local law)
arising out of a breach of this Agreement by the Manager or the Manager's
negligence, misconduct or bad faith performance of its obligations hereunder,
unless arising from the negligence or misconduct of the Owner.
ARTICLE 4
REPORTING AND RECORDKEEPING
4.1 MAINTENANCE OF RECORDS, ETC. As a part of the Hotel Records,
the Manager shall develop and maintain on a current basis a system of accounts,
data processing and payroll processing systems and a document filing system, as
well as procedures for recording accounts payable and receivable, with respect
to the Hotels and performance of the Manager's obligations under this Agreement,
which systems and procedures shall at all times be reasonably satisfactory to
the Owner. All Hotel Records shall be maintained at the Hotels, at the Manager's
principal place of business or regional offices, or at such other location as
may be mutually agreed upon by the Manager and the Owner.
4.2 OWNER'S PROPERTY; CONTINUING ACCESS. All Hotel Records
received and/or maintained by the Manager pursuant to this Agreement are and
shall remain the property of the Owner and, upon termination or expiration of
this Agreement for any reason whatsoever, shall be promptly turned over to the
Owner.
4.3 OWNER'S AUDIT RIGHTS. The Manager shall cooperate with, and
make all Hotel Records available to, any auditor, independent accountant, agent
or other person designated from time to time by the Owner and the Owner shall at
all times have the right to conduct, or cause to be conducted, audits and
examinations of the Hotels Records. The cost of all such audits and examinations
shall be Hotels Expenses.
4.4 REQUIRED REPORTS, ETC.
(a) Annual Budget. The Manager shall prepare and submit
to the Owner for the Owner's approval, prior to the start of each
Fiscal Year for the ensuing Fiscal Year, an
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operating budget, on an accrual basis, with respect to the Hotels
during the ensuing calendar year. The Owner shall have the opportunity
to review such operating budgets and the Manager shall make such
changes and adjustments thereto as the Owner may require (such
operating budgets, upon approval thereof by the Owner, collectively,
the "Approved Budgets").
The Manager agrees to use commercially reasonable efforts to
manage and operate the Hotels in accordance with the applicable
Approved Budget.
The Manager shall further prepare and propose for the Owner's
approval from time to time such additional revisions to the Approved
Budgets as may reasonably be required to reflect changes in costs or
expenditures in management and operation of the Hotels.
(b) Other Reports. The Manager shall prepare and furnish
to the Owner, on a monthly, quarterly and annual basis, such
information with respect to the Hotels as the Owner may from time to
time reasonably request consistent with the ordinary operations of the
Hotels.
4.5 SUPPORTING DOCUMENTATION. As additional support to required
reporting information under this Agreement, the Manager shall, at the Owner's
request, provide copies of (a) all bank statements and reconciliations, (b)
detailed cash receipts and disbursement records, (c) general ledger listings,
(d) copies of invoices for expenditures, (e) summaries of adjusting journal
entries, (f) copies of all paid bills, (g) all information required to prepare
state and federal tax returns on a timely basis, and (h) such other supporting
documentation as the Owner may reasonably require.
ARTICLE 5
BANK ACCOUNTS
5.1 HOTEL ACCOUNTS. Except as otherwise directed by the Owner, the
Manager shall deposit all revenues received by the Manager with respect to the
Hotels, and pay all Hotels Expenses from, one or more bank accounts established
for the Hotels (collectively, the "Hotel Accounts"). The system of accounts for
the Hotels and the applicable depository institution(s) shall be approved by the
Owner and the Owner shall be given
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written notice of the account number and location of each such account. In no
event shall any Hotel Accounts be commingled with any account of the Manager.
The Hotel Accounts may be commingled one with the other in order to facilitate
efficient pooled cash management, provided the depository institution or the
Manager maintains records showing the separate value of the Owner's ownership of
these accounts. The Owner may direct the Manager to change any depository
institution or depository arrangement at any time.
Upon execution of this Agreement, the Manager shall open and establish
the Hotel Accounts. Within two (2) Business Days after notice from the Manager
to the Owner of the applicable Hotel Account information, the Owner shall
advance the Required Minimum Balance among the Hotel Accounts as directed by the
Manager.
5.2 ACCESS TO ACCOUNTS, ETC. Authorized representatives of the
Owner shall at all times have access to the Hotel Accounts and the contents
thereof. The Owner shall notify the Manager of any withdrawals made by the Owner
from such bank accounts. The Manager's authority to draw against the Hotel
Accounts may be terminated by the Owner without notice to the Manager upon any
termination of this Agreement or, if earlier, upon the occurrence of any default
with respect to the Manager.
ARTICLE 6
PAYMENT OF EXPENSES
6.1 COSTS ELIGIBLE FOR PAYMENT FROM HOTEL ACCOUNTS, ETC. The
Manager shall pay, directly from the Hotel Accounts, all Hotel Expenses.
6.2 EXCLUDED MANAGER COSTS. The following expenses and costs
incurred by or on behalf of the Manager shall be at the sole cost and expense of
the Manager and shall not be paid from the Hotel Accounts:
(a) the training and hiring expenses and any costs of
salary and wages, payroll taxes, insurance, workmen's compensation and
other benefits of the Manager's home office and regional staff except
for the portion of such costs as are properly allocable to the Hotels;
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(b) the cost of the Manager's overhead, including,
without limitation, office rent, telephone, telecopy, courier,
expedited delivery and postage charges, office supplies and equipment,
and miscellaneous expenses; provided, however, that telephone, courier
and expedited delivery expenses and costs incurred with respect to
matters specific to the Hotels (such as the cost of the Owner's and the
Hotels' tax returns), properly attributable to the operation of the
Hotels, as distinguished from the Manager's overall operations, may, to
the extent separately itemized, be paid from the Hotel Accounts; and
(c) political or charitable contributions, unless
approved by the Owner.
The Manager shall indemnify and hold the Owner harmless from any and
all liability with respect to any of the above costs and expenses.
6.3 REQUIRED MINIMUM BALANCE; INSUFFICIENT FUNDS. At all times,
the Hotel Accounts shall contain at least the Required Minimum Balance. If, at
the end of any calendar month, the aggregate cash balances of the Hotel Accounts
exceed the Required Minimum Balance, the Manager shall disburse to the Owner
from the Hotel Accounts such excess amount within fifteen (15) calendar days of
the end of the applicable month. If the aggregate cash balances of the Hotel
Accounts at the end of any calendar month (or at any other time the Manager
advises the Owner of such shortage) is less than the Required Minimum Balance,
the Owner shall advance to the Hotel Accounts, within fifteen (15) calendar days
of the end of the applicable month (or the Manager's request), an amount equal
to such deficiency.
In addition, if, at any time, the Manager determines that there are
not, or are projected not to be within the next thirty (30) days, sufficient
funds in the Hotel Accounts to pay all Hotel Expenses that the Manager
reasonably projects will be incurred during such period, then the Manager shall
promptly inform the Owner. Upon receipt of such notice, the Owner shall advance
funds in an amount sufficient to cover any such shortfall in a timely manner. If
the Owner shall fail to advance such funds, then the Manager shall have the
right, but not the obligation, in the Manager's sole discretion, to expend its
own funds to pay Hotel Expenses. The Owner shall reimburse the Manager for all
such payments within fifteen (15) calendar days' written notice of such
expenditures.
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The Manager shall have no obligation to expend its own funds in payment
of expenses and liabilities with respect to the Hotels (other than those costs
and expenses specified in Section 6.2 hereof to be the Manager's costs and
expenses), and the Manager shall not be in default under this Agreement by
reason of any failure to pay any such expenses and liabilities or take any
action due to a lack of funds in the Hotel Accounts.
ARTICLE 7
COMPENSATION; TERM; TERMINATION
7.1 MANAGEMENT FEE. As compensation for the services to be
rendered (either directly or through affiliates) by the Manager during the term
of this Agreement, the Manager shall receive the Management Fee. The Management
Fee shall be payable monthly, in arrears, on the last day of each calendar
month. Within two (2) Business Days after the date of this Agreement, the Owner
shall advance to the Manager $750,000 to cover internal costs incurred in
assuming the management of the Hotels. The Manager shall provide the Owner with
an accounting of the uses of such funds in reasonable detail and shall return
any unused portion of such funds to the Owner in a timely manner.
7.2 TERM. This Agreement shall commence on April 28, 2003 and,
unless sooner terminated as herein provided, shall expire December 31, 2003.
Thereafter, this Agreement shall be automatically renewed for successive
one-year periods. Notwithstanding the foregoing, either party may terminate this
Agreement, by the giving of thirty (30) days prior written notice thereof to the
non-terminating party. Any notice of termination shall designate the effective
date of termination.
7.3 FEES ON TERMINATION OR EXPIRATION. In the event of termination
or expiration of this Agreement, the Manager shall be entitled to receive any
Management Fee accrued and unpaid through the date of termination, and the
reimbursement of any expenses due and owing the Manager in accordance with this
Agreement.
7.4 ORDERLY TRANSITION. The Manager shall cooperate with the Owner
to assist in an orderly transition of the management and operation of the Hotels
to a successor or to any representative of the Owner.
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ARTICLE 8
ADDITIONAL COVENANTS OF MANAGER
8.1 REIT QUALIFICATION MATTERS. From and after the date hereof:
(a) The Manager shall not permit any wagering activities
to be conducted at or in connection with any of the Hotels.
(b) The Manager shall use best efforts to ensure that at
least one-half of the rooms in each of the Hotels are used on a
transient basis and that each such Hotel includes amenities and
facilities which are at least customary for similarly situated
properties.
(c) The Manager shall not own, either directly or
indirectly, more than thirty five percent (35%) of the shares of HPT
(whether by vote, value or number of shares).
(d) The Manager, or a person who is sufficiently related
or affiliated with the Manager, as determined by the Owner, shall be
actively engaged in the trade or business of operating, for one or more
persons who are not related to HPT or the Owner, "qualified lodging
facilities" (it being understood that, for these purposes, a "qualified
lodging facility" shall mean a hotel, motel, or other establishment
more than one-half of the dwelling units in which are used on a
transient basis, provided that wagering activities are not conducted at
or in connection with such facility).
(e) At the Owner's request, the Manager shall confirm, in
writing, its compliance with the foregoing provisions of this Section
8.1.
8.2 OCCUPANCY AGREEMENTS, ETC. The Manager shall not permit any
occupancy or other arrangement with respect to all or a portion of the Hotels on
any basis such that the rental or other fees would be based, in whole or in
part, on the income or profits derived by the business activities of any
occupant or other party (it being understood and agreed that no agreements in
effect as of the date of this Agreement violate the foregoing restrictions).
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ARTICLE 9
DISPUTE RESOLUTION; DAMAGES LIMITATIONS
9.1 DISPUTES TO BE ARBITRATED. Any dispute between or among the
parties hereto, arising under or in any way related to this Agreement, including
without limitation any matter relating to questions of arbitrability, shall be
submitted to arbitration.
9.2 VENUE; APPLICABLE STATUTE AND RULES. Any arbitration hereunder
shall be conducted as a self administered arbitration in accordance with and
subject to the Federal Arbitration Act (9 U.S.C. " 1 et seq., the "Arbitration
Act") to the exclusion of any state law and, to the extent not inconsistent with
the Arbitration Act, in accordance with the commercial arbitration rules of the
American Arbitration Association, as then in effect (the "Arbitration Rules").
The arbitration shall occur in Massachusetts.
9.3 CONSTITUTION OF THE ARBITRATION PANEL; QUALIFICATIONS. The
arbitration panel shall consist of three (3) arbitrators, one chosen by each
party and the third chosen by mutual agreement of the two (2) arbitrators
selected by the parties. The third arbitrator shall be a lawyer, judge or
mediator experienced in the resolution of commercial disputes. Once the
arbitration panel has been constituted, all arbitrators shall be treated as
neutral arbitrators, and no ex parte communications shall be permitted.
9.4 AWARD. The award of an arbitration panel shall be final and
binding upon the parties thereto, with only such rights of appeal or review as
are available under the Arbitration Act.
9.5 CONDUCT OF THE ARBITRATION. Except for the matters
specifically addressed in the Arbitration Rules or hereafter in this Section 9,
the procedural rules for the conduct of an arbitration under this Section 9
shall be established by the arbitration panel, but it is the intent of the
parties that arbitration hereunder shall be conducted in an expedited manner and
as economically as practicable. In addition, the following shall apply:
(a) All costs and fees of counsel and expert witnesses
shall be borne by the party incurring the same.
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(b) The costs of the arbitration panel shall be divided
equally between the parties to any arbitration proceeding.
9.6 DAMAGES LIMITATIONS. No party shall be entitled to
consequential, multiple or punitive damages in connection with any dispute
between or among the parties or in any way related to this Agreement.
ARTICLE 10
MISCELLANEOUS
10.1 LIMITATION ON ASSIGNMENT. Neither the Manager nor the Owner
shall suffer or permit any, direct or indirect, transfer of or encumbrance upon
its interest in this Agreement.
10.2 OTHER BUSINESS, ETC. The Manager may manage facilities for
third parties (other than the Owner), which may include, without limitation,
management of Hotels which may be competitive with the Hotels.
The Owner and its affiliates may use any other managers to
manage the Hotels or other Hotels owned or leased by the Owner as the
Owner may, from time to time, in its sole discretion, determine.
10.3 NOTICES.
(a) Any and all written notices, demands, consents,
approvals, offers, elections and other communications required or
permitted under this Agreement shall be deemed adequately given if in
writing and the same shall be delivered either in hand, by telecopier
with confirmed receipt, or by mail or Federal Express or similar
expedited commercial carrier, addressed to the recipient of such
notice, postpaid and registered or certified with return receipt
requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).
(b) All written notices required or permitted to be sent
hereunder shall be deemed to have been given for all purposes of this
Agreement upon the date of confirmed receipt, in the case of a notice
by telecopier, and, in all other cases, upon the date of receipt or
refusal, except that whenever under this Agreement a notice is either
16
received on a day which is not a Business Day or is required to be
delivered on or before a specific day which is not a Business Day, the
day of receipt or required delivery shall automatically be extended to
the next Business Day.
(c) All such notices shall be addressed:
if to the Owner, to:
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Telecopier No. 000-000-0000
if to the Manager, to:
0000 Xxxx 00xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Mr. Xxx Xxxxxxx
Telecopier No. 000-000-0000
(d) By notice given as herein provided, the parties
hereto and their respective successors and assigns shall have the right
from time to time and at any time during the term of this Agreement to
change their respective addresses effective upon receipt by the other
parties of such notice and each shall have the right to specify as its
address any other address within the United States of America.
(e) If under this Agreement the failure of the recipient
to respond to any notice within a specified period of time is intended
to constitute deemed consent, approval, disapproval or other action by
such recipient, it shall be a condition of the effectiveness of such
notice that the same include a conspicuous statement of the applicable
response period and the effect of a failure to respond within such
period.
10.4 SUCCESSORS AND ASSIGNS, ETC. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party and all covenants and agreements which are
contained in this Agreement shall be binding upon and inure to the benefit of
the respective successors and assigns of the parties hereto.
17
10.5 SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby, but this
Agreement shall be reformed and construed and enforced to the maximum extent
permitted by applicable law.
10.6 ENTIRE CONTRACT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede and take the place of any other instruments purporting to be
an agreement of the parties hereto relating to the subject matter hereof.
10.7 HEADINGS; COUNTERPARTS. Headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument, and in pleading or proving any provision of this Agreement, it shall
not be necessary to produce more than one of such counterparts.
10.8 GOVERNING LAW. This Agreement shall be interpreted, construed,
applied and enforced in accordance with the laws of The Commonwealth of
Massachusetts applicable to contracts between residents of Massachusetts which
are to be performed entirely within Massachusetts, regardless of (i) where this
Agreement is executed or delivered; or (ii) where any payment or other
performance required by this Agreement is made or required to be made; or (iii)
where any breach of any provision of this Agreement occurs, or any cause of
action otherwise accrues; or (iv) where any action or other proceeding is
instituted or pending; or (v) the nationality, citizenship, domicile, principal
place of business, or jurisdiction of organization or domestication of any
party; or (vi) whether the laws of the forum jurisdiction otherwise would apply
the laws of a jurisdiction other than The Commonwealth of Massachusetts; or
(vii) any combination of the foregoing. Notwithstanding the foregoing, the laws
of the jurisdiction where any Hotel is located shall apply, to the extent
required by the laws of such
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jurisdiction, to matters relating to interests in real property or title
thereto.
10.9 MODIFICATION OF AGREEMENT. This Agreement may not be modified,
altered or amended in any manner except by an amendment in writing duly executed
by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date above first written.
OWNER:
HPT TRS SPES, INC.
/s/ XXXXXXXX X. XXXXX
---------------------------------
BY: ITS (VICE) PRESIDENT
MANAGER:
CANDLEWOOD MANAGEMENT, LLC.
/s/ XXXXXX X. FIX
---------------------------------
BY: ITS EXECUTIVE VICE PRESIDENT
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EXHIBIT A-1 THROUGH A-15
HOTELS
ZIP
PROPERTY ADDRESS CITY STATE CODE
-------- ------- ---- ----- ----
Xxxxxxxxxxx - Xxxxxx 00000 Xxxxxxxxxx Xxxx Xxxxxxx XX 00000
Summerfield - Buckhead 000 Xxxxx Xxxx XX Xxxxxxx XX 00000
Summerfield - Chatsworth 00000 Xxxxxx Xxxxxx Xxxxxxxxxx XX 00000
Summerfield - Lake Buena Vista 0000 Xxxxxxxxx Xxxxx Xxxxxxx XX 00000
Summerfield - Malvern 00 Xxxxxxxx Xxxx Xxxxxxx XX 00000
Summerfield - Orlando 0000 Xxxxxxxxxxxxx Xxxxx Xxxxxxx XX 00000
Summerfield - Perimeter 000 Xxxxx Xxxxxx Xxxxxxx XX Xxxxxxx XX 00000
Summerfield - Princeton 0000 XX Xxxxxxx X Xxxxx Xxxxxxxxx XX 00000
Summerfield - San Xxxx Airport 0000 Xxxxxxxxxx Xxxxxx Xxx Xxxxx XX 00000
Summerfield - San Xxxx 0000 Xxxxx Xxxxx Xxx Xxxx XX 00000
Summerfield - Somerset 000 Xxxxxxxx Xxxxxx Xxxxxxxx XX 00000
Summerfield - Schaumburg 000 Xxxx Xxxxxxxxx Xxxxxx Xxxxx Xxxxxxxxxx XX 00000
Summerfield - Sunnyvale 000 Xxxxxx Xxxxx Xxxxxxxxx XX 00000
Xxxxxxxxxxx - Xxxxxxxx 00000 Xxxxxxx Xxxxxx Xxxxxxxx XX 00000
Summerfield - Westport 0000 Xxxxxxxxxx Xxxx Xx. Xxxxx XX 00000
