Exhibit 10.17
RESTAURANT MANAGEMENT AGREEMENT
made as of the 7th day of September, 2000
between
PLAZA OPERATING PARTNERS, LTD., as Owner
and
PARADE 59 RESTAURANT, LLC, as Manager
TABLE OF CONTENTS
1. Definitions ............................................................ 1
2. Term ................................................................... 13
3. Retention of Manager; Duties; Limitation of Authority .................. 13
4. Operation of Managed Premises .......................................... 17
5. Project Costs .......................................................... 17
6. Management Fee ......................................................... 20
7. Working Capital and Reserve Account .................................... 20
8. Cash Flow; Acquisition of Priority Contribution ........................ 21
9. Annual Operating Budget; Reporting; Accounting ......................... 23
10. Staff; Labor Issues .................................................... 27
11. Insurance .............................................................. 28
12. Liquor and Other Licenses .............................................. 30
13. Maintenance and Repair of Managed Premises ............................. 30
14. Loading Docks .......................................................... 35
15. Services ............................................................... 35
16. Marketing .............................................................. 37
17. Preferential Treatment of Hotel Guests; Room and Credit Charges ........ 38
18. Moviehouse Entrance; Landmarks ......................................... 39
19. Title to Managed Premises Property ..................................... 40
20. Termination Events; Events of Default; Return of Invested Capital ...... 40
21. Owner's Right to Finance ............................................... 45
22. Transactions with Affiliates ........................................... 47
23. Damage or Destruction .................................................. 48
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24. Eminent Domain ......................................................... 49
25. Manager's Obligations Personal ......................................... 50
26. Assignment by Manager; Change In Control ............................... 50
27. (a) Representations and Warranties of Manager .......................... 50
(b) Representations and Warranties of Owner ............................ 51
28. No Partnership ......................................................... 51
29. Guaranty ............................................................... 52
30. Indemnity .............................................................. 52
31. Reimbursement .......................................................... 52
32. Previous Agreements; Amendments ........................................ 53
33. Counterparts ........................................................... 53
34. Further Assurances ..................................................... 53
35. Waiver ................................................................. 53
36. Successors and Assigns ................................................. 53
37. Limitation on Liability ................................................ 53
38. Governing Law .......................................................... 53
39. Estoppel Certificates .................................................. 54
40. Inspection Rights; Books and Records ................................... 55
41. Time of the Essence .................................................... 55
42. Confidentiality ........................................................ 55
43. Fees ................................................................... 55
44. Notices ................................................................ 56
45. Consents ............................................................... 57
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EXHIBITS
Exhibit A Managed Premises
Exhibit B Pro Forma Cash Flow
Exhibit C Restaurant Concept
Exhibit D Project Costs Budget
Exhibit E Initial Operating Budget
Exhibit F Memorandum of Understanding
Exhibit G 59th Street Entrance
Exhibit H Intentionally Omitted
Exhibit I Group Services
Exhibit J Parent Guaranty
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RESTAURANT MANAGEMENT AGREEMENT
THIS RESTAURANT MANAGEMENT AGREEMENT dated as of the 7th day of September,
2000 between Plaza Operating Partners, Ltd., a Texas limited partnership with
offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Owner") and
PARADE 59 RESTAURANT, LLC, a limited liability company with offices at ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Manager").
W I T N E S S E T H:
WHEREAS, Owner owns the buildings and improvements known as the Plaza
Hotel located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (the "Hotel");
WHEREAS, Owner desires that certain space located on the ground floor and
the basement of the Hotel substantially as shown on Exhibit A annexed hereto
(the "Managed Premises") be used for a restaurant (the "Restaurant") and be
managed and operated by Manager on terms and conditions hereinafter set forth;
and
WHEREAS, Manager, through its principals and employees, is experienced in
the management and operation of restaurants, and desires to manage and operate
the Managed Premises on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Owner and Manager agree as
follows:
1. Definitions. For the purposes of this Agreement, the following terms shall
have the following meanings:
"59th Street Entrance" shall have the meaning given to such term in
Section 18(a).
"Accounts" shall mean the Project Cost Account, the Working Capital
Account, the Operating Account and the Reserve Account,
collectively.
"Additional Management Fee" shall have the meaning given to such
term in Section 8.1(vi).
"Additional Working Capital Contribution" shall have the meaning
given to such term in Section 7(a).
"Adjusted Cash Flow" shall have the meaning given to such term in
Section 8.1.
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"Affiliate" With reference to a specified Person, (i) any Person
that directly or indirectly through one or more intermediaries
controls or is controlled by or is under common control with the
specified Person, (ii) any Person that is an officer of; partner in,
or trustee of; or serves in a similar capacity with respect to, the
specified Person, or of or in which the specified Person is an
officer, partner or trustee, or with respect to which the specified
Person serves in a similar capacity, (iii) any Person that, directly
or indirectly, is the beneficial owner of 10% or more of any class
of equity securities of the specified Person or is the beneficial
owner of a 10% or more interest in the capital and profits of the
specified Person, or (iv) any Person of which the specified Person
is directly or indirectly the beneficial owner of 10% or more of any
class of equity securities or any Person of which the specified
Person is the beneficial owner of a 10% or more interest in the
capital and profits. Without limiting the foregoing, all members of
the family of any officer, director or trustee of such Person and
their Affiliates shall be deemed Affiliates of each other and of
such Person and its Affiliates.
"Agreement" shall mean this Restaurant Management Agreement.
"Annual Audited Statement" shall have the meaning given to such term
in Section 9(c)(ii).
"Annual Operating Budget" shall have the meaning given to such term
in Section 9(a).
"Approved Annual Operating Budget" shall have the meaning given to
such term in Section 9(b).
"Bankruptcy" shall mean the occurrence of any of the following
events in respect of any Person: (i) the filing of a petition
against such Person in an involuntary case under the United States
Bankruptcy Code which is not dismissed within sixty (60) days after
the filing thereof; or in any such involuntary case, the approval of
the petition by such Person as properly filed, or the admission by
such Person of material allegations contained in the petition, or
(ii) the execution by such Person of a general assignment for the
benefit of creditors, or (iii) the commencement of a voluntary case
under the United States Bankruptcy Code by such Person, or (iv) the
appointment of a receiver, liquidator, administrator, trustee or
Person with similar powers for such Person or for all or a
substantial part of the assets of such Person, or (v) in the case of
a Person which is a corporation, joint venture, partnership, limited
liability company or other business entity, the commencement by such
Person of liquidation, dissolution or winding-up
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proceedings, or the commencement against any such Person of a
proceeding to liquidate, wind-up or dissolve such Person, which
proceeding is not dismissed within sixty (60) days.
"Base Building Work" shall have the meaning given to that term in.
Section 5(a)(i).
"Base Management Fee" shall have the meaning given to that term in
Section 6.
"Breakfast Service" shall have the meaning given to such term in
Section 4.
"Cash Flow" shall mean Gross Revenues less all of the costs and
expenses incurred by Manager or Owner in the ordinary course of
business and consistent with the Approved Annual Operating Budget
and the other provisions of this Agreement with respect to
Restaurant operations (all such costs and expenses being
collectively referred to as the "Operating Expenses") computed on an
accrual basis in accordance with generally accepted accounting
principles ("GAAP") and the Approved Annual Operating Budget, and,
to the extent consistent with the foregoing, the methodology
employed in the pro forma Cash Flow statement set forth on Exhibit B
which shall include:
(1) cost of food;
(2) cost of beverages;
(3) employment compensation expenses up to and including the level
of the Restaurant manager;
(4) advertising and promotion expenses for the Managed Premises;
(5) cost of decorations;
(6) cost of flowers;
(7) cost of garbage removal and sanitation;
(8) cost of building services, including HVAC, gas and
electricity; cost of utilities; the amounts transferred to the
Reserve Account;
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(9) equipment rental and lease payments (but only to the extent
the purchase price thereof; had the equipment been purchased,
would otherwise constitute an Operating Expense);
(10) actual out-of-pocket legal, accounting and other professional
fees and expenses for services rendered in connection with
the operation of the Managed Premises;
(11) cost of licenses and permits;
(12) cost of uniforms, linen and laundry;
(13) cost of maintenance, repairs, refurbishment and replacement of
the FF&E other than amounts paid for out of the Reserve
Account;
(14) cost of menus and other promotional matters;
(15) office expenses and supplies;
(16) cost of Operating Supplies;
(17) cost of payroll service;
(18) cost of additional security services procured by Owner;
(19) cost of Group Services;
(20) cost of insurance as determined in accordance with Section 11;
(21) public relations and entertaining costs;
(22) the Management Fee; and
(23) charges of credit card companies with respect to all receipts
which are included in Gross Revenues.
Operating Expenses shall not include:
(1) depreciation of the Hotel, FF&E or Hotel operating equipment;
(2) rental payments pursuant to any ground lease;
(3) debt service (interest and principal) on mortgages placed on
the Hotel;
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(4) payments pursuant to any equipment leases or installment sales
agreements to the extent not included in Operating Expenses;
(5) rentals paid for FF&E unless their inclusion is included in
the Approved Annual Operating Budget;
(6) amounts payable by Manager under its indemnification
obligations under this Agreement or as a result of its default
hereunder, including without limitation, amounts payable by
Manager under Sections 13(c) and (d) hereof;
(7) Except for Group Services, Manager's central office overhead,
general administrative expenses and salaries of Manager,
Manager's Affiliate and Manager's employees above the level of
Restaurant manager;
(8) Manager's corporate accounting (as compared to accounting
related solely to the Managed Premises);
(9) any other amounts which pursuant to this Agreement shall not
constitute Operating Expenses, as determined in accordance
with GAAP and the Uniform System; and
(10) legal, accounting or other costs incurred in negotiating this
Agreement.
Operating Expenses shall not include any cost which is payable as a
Project Cost or is deducted or excluded in computing Gross Revenues.
"Commencement Date" shall mean the date of the execution of this
Agreement.
"Comparable Restaurants" shall have the meaning given to such term
in the definition of Operating Standard.
"Contribution Purchase Period" shall have the meaning given to such
term in Section 8.2.
"CPI" shall mean the Consumer Price Index-All Urban Consumers-All
Items (1982-1984=100) for New York-Northeastern New Jersey now being
published by the United States Department of Labor or such index as
the United States Department of Labor may substitute for this index
during the Term, or if there is no substitute, then such index or
report which is selected
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by Owner and which is reasonably acceptable to Manager to perform
the function of the CPI.
"CPI Increase" shall mean the percentage increase, if any, of the
CPI during the immediately preceding 12-month period.
"Default Rate" shall have the meaning given to such term in Section
13(d).
"Draft Annual Operating Budget" shall have the meaning given to such
term in Section 9(a).
"Electrical Equipment" shall have the meaning given to such term in
Section 15(a).
"Environmental Costs" shall have the meaning given to such term in
Section 13 (c)(iii)(A).
"Environmental Laws" shall have the meaning given to such term in
Section 13 (c)(iii)(B).
"Environmental Matters" shall have the meaning given to such term in
Section l3(c)(iii)(B).
"Event of Default" shall have the meaning given to such term in
Section 20(b).
"Excess Amount" shall have the meaning given to such term in Section
5(g).
"FF&E" shall mean all furniture, furnishings, decorations, and
equipment necessary for the efficient operation of the Managed
Premises in accordance with the Operating Standard and the Approved
Annual Operating Budget.
"Force Majeure" shall mean fire, casualty, any strike, lock-out or
other labor trouble, governmental preemption of priorities or other
controls in connection with a national or other public emergency or
shortages of fuel, supplies or labor resulting therefrom, or any
failure or defect in the supply, quantity or character of
electricity, water or any other service furnished to the Managed
Premises, by reason of any requirement, act or omission of the
public utility or others serving the Building with electric energy,
steam, oil, gas or water; or for any other similar reason, in each
instance beyond the party in question's reasonable control but shall
not include lack of funds.
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"GAAP" shall have the meaning given to such term in the definition
of Cash Flow.
"Gross Revenues" shall mean all receipts or revenues of the Managed
Premises from all sources of any kind, including, without
limitation, the sale of food and beverages sold, computed on an
accrual basis in accordance with GAAP (except as specifically set
forth herein), excluding only (i) sales, use, excise or other taxes
collected from customers from receipts which are included in Gross
Revenues, (ii) gratuities paid to the Staff (or paid to the Hotel or
Manager and paid by the Hotel or Manager, as the case may be, to the
Staff) by patrons of the Managed Premises, (iii) amounts collected
by Manager from patrons for the account of; and for direct payment
to, unrelated third parties providing services specifically for a
patron's function which generates Gross Revenues, such as flowers,
music and entertainment, (iv) proceeds paid as a result of an
insurable loss, (v) proceeds of condemnation awards, (vi) proceeds
from the financing or refinancing of the Hotel, or proceeds from the
sale, exchange or other disposition of all or any part of the Hotel
(including, without limitation, the sale of condominium units) or
any other similar items which in accordance with applicable federal
income tax regulations are attributable to capital or Section 1231
assets (as defined by the Internal Revenue Code of 1986, as
amended), or any comparable definition, (vii) interest income from
the Reserve, (viii) funds provided by Owner or Manager, including
amounts payable out of the Working Capital Account, (ix) meals for
the Staff, if such meals are charged separately, and (x) subject to
the limitations set forth in Section 3.2(i), complimentary meals and
beverages to patrons of the Restaurant. Gross Revenues shall be
reduced by the amount of any loss on uncollectible accounts and by
the amount of over-rings, refunds, rebates, discounts and credits
given, paid or returned by Manager in the course of obtaining Gross
Revenues or in connection with credit card transactions occurring
with respect to obtaining Gross Revenues. Gross Revenues shall be
increased by any amounts withdrawn from the Reserve Account in
accordance with the last sentence of Section 7(b)(i).
"Ground Lease" shall have the meaning given to such term in Section
21(a).
"Group Services" shall have the meaning given to such term in
Section 22(c).
"Guaranty" shall have the meaning given to such term in Section 29.
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"Hard Opening Date" shall mean the date upon which Manager shall
cease charging the "pre-opening" discounted rate to patrons for food
and beverages at the Restaurant; provided that the Hard Opening Date
shall in no event occur more than 60 days after the Soft Opening
Date.
"Hazardous Materials" shall have the meaning given to such term in
Section 13 (c)(iii)(C).
"Holder" shall have the meaning given to such term in Section 21(a).
"Hotel" shall have the meaning given to such term in the first
WHEREAS clause of this Agreement.
"HVAC" shall have the meaning given to such term in Section 15(b).
"Landlord" shall have the meaning given to such term in Section
21(a).
"Law" shall mean any statute, ordinance, promulgation, law, treaty,
rule, regulation, code, judicial precedent or order (including,
without limitation, the New York State Liquor Law), of any court or
any governmental or regulatory entity, or other power, department,
agency, authority, or officer whether federal, state, local, or any
subdivision thereof.
"Liquor License" shall have the meaning given to such term in
Section 12.
"License Due Date" shall have the meaning given to such term in
Section 18(g)(i).
"LPC" shall have the meaning given to such term in Section 18(b).
"Lunch Service" shall have the meaning given to such term in Section
4.
"Managed Premises" shall have the meaning given to such term in the
second WHEREAS clause of this Agreement.
"Management Fee" shall have the meaning given to such term in
Section 8.1.
"Manager" shall have the meaning given such term in the first
paragraph of this Agreement.
"Manager's Basic Contribution" shall have the meaning given to such
term in Section 5(c).
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"Mechanical Installations" shall have the meaning given to such term
in Section 15(b).
"Menu" shall have the meaning given to such term in Section 3.1(b).
"Monthly Service Charge" shall have the meaning given to such term
in Section 15(d).
"Monthly Statements" shall have the meaning given to such term in
Section 9(c)(i).
"MOU" shall have the meaning given to such term in Section 10(c)(i).
"New Occupant" shall have the meaning given to such term in Section
20(h).
"Notice" shall have the meaning given to such term in Section 44.
"Operating Account" shall have the meaning given such term in
Section 9(f).
"Operating Expenses" shall have the meaning given to such term in
the definition of Cash Flow.
"Operating Loss" shall mean a negative Cash Flow.
"Operating Standard" shall mean the operation by Manager of the
Managed Premises as a first-class, luxury full-service restaurant
with fine dining breakfast, lunch and dinner service, all in
accordance with standards for quality and ambiance as appropriate
for the Hotel, taking into account the Hotel's first-class, luxury
character and of a quality level equivalent to the quality level (as
of the Commencement Date) of the following restaurants: ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇; Park Avenue Cafe; Balthazar and Gramercy Tavern (the
"Comparable Restaurants").
"Operating Supplies" shall mean china, cutlery, glassware, linens,
silverware, serving equipment, utensils, pots, pans, and similar
items of personal property, as well as paper products, inventories,
and other items commonly referred to as consumable items (other than
food and beverage) necessary for the efficient operation of the
Managed Premises in accordance with the Operating Standard and as
regularly utilized in Comparable Restaurants.
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"Other Costs" shall have the meaning given to such term in Section 5
(a)(ii).
"Owner" shall have the meaning given to such term in the first
paragraph of this Agreement.
"Owner Indemnified Persons" shall have the meaning given to such
term in Section 30(a).
"Owner's Basic Contribution" shall have the meaning given to such
term in Section 5(b).
"Parent" shall mean The ▇▇▇▇▇ & Wollensky Restaurant Group, Inc., a
Delaware corporation.
"Performance Goals" shall mean Adjusted Cash Flow of at least (i)
$100,000 during the 24-month period ending on the second (2nd)
anniversary of the Commencement Date, (ii) $800,000 during the
12-month period ending on the third (3rd) anniversary of the
Commencement Date, (iii) $1,000,000 during the 12-month period
ending on the fourth (4th) anniversary of the Commencement Date,
(iv) $1,000,000 (as increased by the CPI Increase) (the "5th
Anniversary Number") during the 12-month period ending on the fifth
(5th) anniversary of the Commencement Date, (v) the 5th Anniversary
Number plus the CPI Increase (the "6th Anniversary Number"), for the
12-month period ending on the 6th anniversary of the Commencement
Date, (vi) the 6th Anniversary Number plus the CPI Increase (the
"7th Anniversary Number"), for the 12-month period ending on the 7th
anniversary of the Commencement Date, (vii) the 7th Anniversary
Number plus the CPI Increase (the "8th Anniversary Number") for the
12-month period ending on the 8th anniversary of the Commencement
Date, (viii) the 8th Anniversary Number plus the CPI Increase (the
"9th Anniversary Number") for the 12-month period ending on the 9th
Anniversary of the Commencement Date, (ix) the 9th Anniversary
Number plus the CPI Increase (the "10th Anniversary Number") for the
12-month period ending on the 10th Anniversary of the Commencement
Date and (x) the 10th Anniversary Number plus the CPI Increase for
the 12-month period ending on the Expiration Date. The Performance
Goal for any 12-month period (or the initial 24-month period, as
applicable) shall be reduced on an equitable basis to the extent
that Adjusted Cash Flow for such 12-month (or such 24-month period)
period was reduced by reason of Force Majeure which directly and
specifically adversely affects the operation of the Hotel (as
opposed to, among other
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things, events which may adversely affect overall business
conditions or the climate for travel to New York City).
"Person" shall mean any individual, partnership, corporation,
limited liability company, trust, association or other entity,
including, without limitation, any governmental agency or
subdivision thereof.
"Priority Contribution Option" shall have the meaning given to such
term in Section 8.2.
"Priority Contributions" shall have the meaning given to such term
in Section 5(g).
"Project Cost Amount" shall have the meaning given to such term in
Section 5(b).
"Project Costs" shall have the meaning given to such term in Section
5(a).
"Project Costs Account" shall have the meaning given to such term in
Section 5(c).
"Project Costs Budget" shall have the meaning given to such term in
Section 5(b).
"Proper Forums" shall have the meaning given to such term in Section
38.
"Renovation Costs" shall have the meaning given to such term in
Section 5(a)(i).
"Renovation Work" shall have the meaning given to such term in
Section 5(a)(i).
"Required Information" shall have the meaning given to such term in
Section 9(c)(i).
"Reserve Account" shall mean an account established by Owner for the
purposes set forth in Section 7(b)(i) at a bank selected by Owner.
"Restaurant" shall have the meaning given to such term in the second
WHEREAS clause of this Agreement.
"Restaurant Name" shall have the meaning given to such term in
Section 18(b).
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"Restaurant Plans" shall have the meaning given to such term in
Section 5(a)(i).
"Restaurant Work" shall have the meaning given to such term in
Section 5(a)(i).
"Revised Budgeted Project Costs" shall have the meaning given to
such term in Section 5(g).
"▇▇▇▇" shall have the meaning given to such term in Section 1
3(c)(iii)(C)(4).
"Secured Loan" shall mean and include (a) any mortgage encumbering
the Hotel or all or any part of Owner's interest therein, (b) any
pledge or collateral assignment of all or any part of the direct or
indirect ownership interests in Owner, (c) any sale/leaseback or
similar financing transaction, together with all other instruments
evidencing or securing the payment of the indebtedness secured by
such mortgage, pledge, collateral assignment or the obligation to
make rental or other payments in connection with any such
sale/leaseback or similar financing transaction, and (d) all
amendments, modifications, supplements and extensions of such
instruments. In the event of any sale/leaseback, the tenant under
the lease shall be treated as Owner for purposes of this Agreement.
"Soft Opening Date" shall mean the date that Manager shall commence
the testing of equipment and procedures (including the kitchen and
Staff) at the Managed Premises and the Managed Premises shall be
open for so-called "rehearsal" seatings. The parties hereby agree
that the Soft Opening Date shall occur no later than January 1,
2001; provided, however, that if the Owner fails to substantially
complete the Renovation Work to be performed by Owner on or before
January 1, 2001 and such failure is not the result of the acts or
omissions of the Manager, the Soft Opening Date shall be delayed by
one day for each day by which Owner so fails to substantially
complete such work.
"Staff" shall mean all individuals working in the Managed Premises
at any time during the Term up to and including the level of
restaurant manager, including, without limitation, cashiers, chefs,
cooks and other kitchen workers, bartenders, waiters, buspersons,
dishwashers, janitors, hosts, doorpersons, captains and such other
personnel as shall be appropriate in connection with the operation
of the Managed Premises in accordance with the Operating Standard
and the Approved Annual Operating Budget.
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"Substantial Damage Termination" shall have the meaning given to
such term in Section 23(a).
"Successor Owner" shall have the meaning given to such term in
Section 21(e).
"System" shall have the meaning given to such term in Section 17.
"Term" shall have the meaning given to such term in Section 2.
"Termination Costs" shall have the meaning given to such term in
Section 20(f).
"Termination Notice" shall have the meaning given to such term in
Section 7(a).
"Transfer" shall have the meaning given to such term in Section
20(a)(iv).
"Uniform System" shall mean the Uniform System of Accounts for
Hotels (9th edition) as published by the Hotel Association of New
York.
"Wine List" shall have the meaning given to such term in Section
3.1(b).
"Working Capital Account" shall have the meaning given to such term
in Section 7(a).
2. Term. The term of this Agreement (the "Term") shall commence on the
Commencement Date and shall expire on the tenth (10th) anniversary of the Hard
Opening Date, unless terminated earlier pursuant to the terms of this Agreement.
3. Retention of Manager; Duties; Limitation of Authority.
3.1 Retention of Manager. Owner hereby engages Manager and Manager agrees
to operate and manage the Managed Premises under the name "One CPS," for the
account of, and on behalf of, Owner on an exclusive basis in accordance with the
Operating Standard, the Approved Annual Operating Budget and the other terms of
this Agreement. Manager shall not change the name of the Managed Premises
without Owner's prior written consent, which shall not be unreasonably withheld.
Subject to the provisions of this Agreement, Manager shall have decision-making
authority in the day-to-day operation, direction, management and supervision of
the Managed Premises. Manager's authority and obligations shall include:
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(a) hiring, training, compensation, supervision and discharge and
determining the size of Restaurant personnel, all in accordance with the
Operating Standard and the Approved Annual Operating Budget;
(b) the creation of food and beverage menus (each, a "Menu"), wine
lists (each, a "Wine List") and the pricing of the same and the setting of
the dress codes for the Managed Premises, all of which shall, prior to
being implemented by Manager, be approved by Owner, such approval not to
be unreasonably withheld or delayed so long as the same are consistent
with (x) the Operating Standard and (y) the "Restaurant Concept" as set
forth on Exhibit C;
(c) maintaining and operating the Managed Premises in accordance
with the Operating Standard and the Restaurant Concept. As to matters
relating to the operation or management of the Managed Premises which are
not provided for in this Agreement, Manager shall consider in good faith
Owner's reasonable observations and requests with respect thereto,
provided that Owner shall not make any such requests which would be
inconsistent with the Operating Standard or the Restaurant Concept. At
Owner's request, Manager shall meet with Owner to discuss such
observations and requests;
(d) establishing and supervising all advertising, public relations
and promotional policies with respect to the Managed Premises with the
costs thereof not exceeding the applicable amounts set forth in the Annual
Approved Operating Budget;
(e) purchasing and maintaining the Managed Premises' inventory of
food, beverages (including, without limitation, wines and liquors) and
Operating Supplies. The cost of the initial purchase of such inventories
shall be a Project Cost;
(f) obtaining, and keeping in full force and effect, in the name of
Owner or Manager, as appropriate (or as expressly provided herein), with
preference to be in the name of the Owner if legally possible to do so,
all necessary licenses and permits (including the Liquor License and other
bar, restaurant, sign and occupancy licenses and permits) as may be
required by law to operate the Managed Premises from time to time. Manager
shall not take any actions which could jeopardize or otherwise adversely
affect any of such licenses or permits. Manager shall comply with the
conditions set forth in any such licenses and permits and at all times
shall manage and operate the Managed Premises in accordance with such
conditions and other Laws;
(g) providing Group Services;
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(h) cooperating with Owner concerning (I) any applicable disputes or
contests including disputes with parties to any Secured Loan or ground
lease, (II) contests of Laws, and (III) adjustments of insurance claims or
condemnation awards to the extent any of the foregoing relate to the
Managed Premises;
(i) applying sound administrative, accounting, cash management,
budgeting, operational, sales, advertising, legal, personnel and
purchasing policies and practices in accordance with the terms of this
Agreement to the end of optimizing the aggregate amount of Cash Flow
generated by the Managed Premises. The parties acknowledge that Manager
shall prepare the Annual Operating Budget consistent with the goal of
optimizing Cash Flow; and
(j) notifying Owner if it has actual knowledge relating to, and
promptly forwarding to Owner any notices or other communications it
delivers or receives with respect to: (i) the occurrence of damage or
destruction to the Managed Premises; (ii) any litigation, claim or
proceeding affecting Owner, Manager or the operation of the Managed
Premises in which the amount claimed or in controversy is $5,000 or more
or otherwise which is material to the operation of the Managed Premises;
and any written threat to institute any of the same which is likely to
give rise to any such litigation, claim, or proceeding; (iii) any notice
of violation (or alleged violation) of any Law relating to the ownership
or operation of the Managed Premises which could expose Owner or Manager
to any criminal penalty or to any civil penalty or which is otherwise
material to the ownership or operation of the Managed Premises; and (iv)
any strikes or other material labor unrest relating to the Managed
Premises.
3.2 Limitation on Manager's Authority. In addition to any other
limitations on Manager's authority set forth in this Agreement, Manager shall
not, without Owner's written approval (which written approval, solely with
respect to items (a) and (c) below, shall not be unreasonably withheld or
delayed), take any of the following actions with respect to the Managed Premises
(except as otherwise expressly permitted by the terms hereof and except if the
specific terms of such action shall have been expressly provided for in the
Approved Annual Operating Budget or otherwise approved in writing by Owner):
(a) enter into any contract or other agreement which could require
payment of more than $25,000 per year or having a term longer than one
year (unless such contract is terminable after one year upon not more than
thirty (30) days notice without penalty) or so modify or amend any such
contract or agreement; subject to the further limitation that Manager
shall not enter into any contract or other agreement for more than $25,000
unless the same shall contain provisions unconditionally exculpating Owner
and its Affiliates; or
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(b) enter into any lease, license, concession or other occupancy
agreement; or
(c) enter into any arrangement for the employment of any
professional firm (other than attorneys and accountants) except as set
forth in the Approved Annual Operating Budget; or enter into any
arrangement for the employment of any attorney or accountant (other than
attorneys retained to collect accounts receivable and other attorneys and
accountants to the extent such other attorneys and accountants and the
terms of their employment are set forth in the Approved Annual Operating
Budget); or
(d) enter into, renew, modify, amend or terminate any union contract
or collective bargaining agreement affecting the Managed Premises; or
(e) settle any litigation or claims for more than $10,000 unless the
settlement solely involves the payment of an amount in cash which is
covered by insurance proceeds for which the deductible amount does not
exceed $5,000; or
(f) extend more than $10,000 of credit to any single customer or
group of related customers; or
(g) borrow money, issue any guarantees or incur any interest or
contingent obligation, except ordinary trade debt, which trade debt shall
be repaid in accordance with the time deadlines set forth in Section 9(e);
(h) sell, transfer or otherwise dispose of all or any portion of the
Managed Premises, except for the sale of inventory in accordance with the
Approved Annual Operating Budget or as otherwise approved by Owner; or
(i) provide complimentary services to any patrons in an amount in
any calendar year greater than the product of (x) $1.50 and (y) the number
of individuals patronizing the Restaurant for such calendar year and then
only as reasonably deemed by Owner to be for the benefit of the Restaurant
(and not for the benefit of any Affiliates of Manager or any other
restaurant owned, operated or managed by Manager or its Affiliates);
consistent with the foregoing, in no event shall complimentary services be
granted as part of a promotional package sponsored by Manager or its
Affiliates rewarding patrons for dining at restaurants (other than the
Restaurant) owned, operated or managed by Manager or its Affiliates; or
(j) acquire any capital assets or interest therein; or
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(k) finance, refinance or otherwise encumber the Managed Premises or
any portion thereof; or
(1) take any other action that is prohibited under the terms of this
Agreement or requires the approval of Owner.
4. Operation of Managed Premises. Manager agrees to open the Managed Premises
for business seven (7) days a week for breakfast service ("Breakfast Service"),
seven (7) days a week for lunch service ("Lunch Service"), and seven (7) days a
week for dinner service, unless Owner and Manager otherwise mutually agree.
Notwithstanding the preceding sentence, Manager shall not be required to provide
(A) Breakfast Service until the date that is 90 days following the Hard Opening
Date and (B) Lunch Service until the date that is 21 days after the Hard Opening
Date. Furthermore, Manager may eliminate one breakfast seating and one lunch
seating per week to the extent that Manager reasonably determines that providing
seven-day-a-week breakfast and/or lunch service is commercially unfeasible.
5. Project Costs.
(a) Owner and Manager agree that in order to open the Restaurant for
business and to provide Working Capital, the costs ("Project Costs") set
forth in clauses (i), (ii) and (iii) below either have been or will need
to be incurred:
(i) "hard" and "soft" costs in connection with the renovation
of the Managed Premises ("Renovation Costs"). Renovation Costs consist of
the hard and soft costs of certain improvements to the Managed Premises
and the Hotel systems serving the same ("Base Building Work") and the hard
and soft costs of executing the improvements to the Managed Premises set
forth in the plans ("Restaurant Plans") prepared by ▇▇▇▇ ▇▇▇▇▇▇ and other
Persons (the "Restaurant Work"). To the extent that the Restaurant Plans
require FF&E, such items will not be deemed Restaurant Work but Other
Costs (as defined below). The Restaurant Work and the Base Building Work
are collectively referred to as the "Renovation Work."
(ii) FF&E, Operating Supplies, food, beverage and other
inventories, pre-opening expenses, marketing expenses, and other costs for
the items necessary to open the Restaurant for business and operate it
through the Soft Opening Date (all such costs are defined herein as,
"Other Costs").
(iii) Working Capital.
(b) As of the date hereof, the aggregate of Project Costs as set
forth in the "Project Costs Budget" (annexed hereto as Exhibit D) is
estimated to be
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between $4,500,000 and $5,250,000 (the "Project Cost Amount"), and subject
to the further provisions hereof, Owner shall contribute $4,000,000
("Owner's Basic Contribution") towards payment of such Project Costs and
Manager shall contribute $500,000 ("Manager's Basic Contribution") towards
payment of such Project Costs. Manager acknowledges that Owner has
heretofore expended $500,000 on account of Base Building Work.
Accordingly, Manager hereby agrees that Owner shall only be obligated to
fund an additional $3,500,000 to satisfy Owner's Basic Contribution.
(c) Simultaneously with the execution of this Agreement (I) Owner
shall establish a bank account (the "Project Costs Account") in the name
of Owner and at a bank selected by Owner and (ii) Manager shall deposit
Manager's Basic Contribution into such account. Owner shall make
withdrawals from the Project Costs Account for the purpose of paying
Project Costs incurred by Owner or Manager in accordance with this
Agreement and the Project Costs Budget. Owner shall deposit into the
Project Costs Account from time to time funds sufficient to pay Project
Costs in accordance with this Agreement and the Project Costs Budget;
provided however in no event will Owner be obligated to disburse to
Manager more than the line items in the Project Costs Budget attributable
to Other Costs and, as set forth in Section 7(a), Owner shall deposit
$500,000 on the Hard Opening Date in the Working Capital Account on
account of Working Capital.
(d) Manager shall be responsible for procuring all of the items that
constitute Other Costs and shall do so in a timely fashion to the end that
the Managed Premises can be opened for business on or before the Soft
Opening Date. Manager may from time to time request that Owner disburse
funds from the Project Costs Account for the purpose of paying Other Costs
which are then due and payable, provided that:
(i) Manager provides Owner with invoices and other
documentation as Owner shall reasonably request that the amount requested
is then due and payable and does not exceed the amount for such item then
remaining unspent in the portion of the Project Costs Budget allocable to
Other Costs;
(ii) The undisbursed portion of the Project Costs Budget
allocable to Other Costs is sufficient to pay for all Other Costs not yet
paid for or incurred, or, if not, Owner may exercise the termination
option set forth in Section 5(g) below;
(iii) The items of Other Costs have been delivered to the
Managed Premises.
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(iv) No default or Event of Default under this Agreement by
Manager has occurred and is continuing; and
(v) Manager shall have provided Owner with invoices and such
other documentation as Owner shall reasonably request to confirm the
foregoing items (i) through (iv) and the chief financial officer of Parent
shall have certified the same to Owner in a manner reasonably satisfactory
to Owner.
Owner will pay Manager, or, at Owner's option, the party to whom
payment is due, within 30 days after the conditions set forth in this
Section 5(d) have been satisfied.
(e) Intentionally Omitted.
(f) Owner has heretofore completed to Manager's satisfaction the
following items of Base Building Work: base building HVAC system upgrade,
restoration of mosaic floor, demolition of portion of Managed Premises and
bronze entry door installation. Subject to the provisions of Section 5(g)
below, Owner shall use commercially reasonable efforts to cause the
Restaurant Work to be substantially completed substantially in accordance
with the Restaurant Plans on or before the Soft Opening Date, subject to
Force Majeure, or delays caused by Manager or Persons engaged by or under
Manager's control or direction.
(g) If the budgeted Project Costs as revised (the "Revised Budgeted
Project Costs") are (I) greater than $4,500,000 and (II) equal to or less
than $5,250,000 (the difference between (x) $4,500,000 and (y) such
greater amount up to $5,250,000 is defined herein as, the "Excess
Amount"), this Agreement shall remain in full force and effect and Owner
shall be obligated to fund the Excess Amount provided that the Excess
Amount shall be deemed to be a "Priority Contribution" and treated in
accordance with Sections 8.1(i) and (ii) below. If the Revised Budgeted
Project Costs are more than the Excess Amount, Owner at its option may
upon notice to Manager cancel this Agreement, in which event this
Agreement shall be cancelled without any further liability of either party
to the other (and, for the avoidance of doubt, without any obligation of
Owner to make any payment to Manager under Sections 20(c) or (d)). If
Owner so cancels, each party shall be entitled to a return of any amounts
it deposited in the Project Costs Account which have not been disbursed or
are not necessary for payment of Project Costs which have been incurred
but not paid. For the avoidance of doubt, the parties confirm that Owner
may not exercise any cancellation option under this Paragraph (g) unless
the Revised Budgeted Project Costs exceed $5,250,000 after application of
all the amounts in the Working Capital Account for the purposes described
in Clause (i) of the second sentence of Section 7 (a) below.
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6. Management Fee.
(a) Base Management Fee. Subject to the last sentence of this
Section 6(a) and so long as (i) this Agreement is in full force and effect
and (ii) Manager is not in default hereunder beyond any applicable notice
and/or grace period, Manager shall be entitled to a management fee (the
"Base Management Fee") in the aggregate amount of 4% of Gross Revenues as
compensation for the services provided by Manager under this Agreement.
The Base Management Fee shall be payable monthly, in arrears, subject to
year-end audit and adjustment and otherwise in the manner set forth in
Section 9 below. Manager agrees that, except for Group Services, the Base
Management Fee is intended to cover all of Manager's general and
administrative overhead and all salaries and other compensation of
Manager, Manager's Affiliates and Manager's employees above the level of
Restaurant manager. Notwithstanding the foregoing, the Base Management Fee
shall be payable on a current basis only to the extent there is sufficient
Cash Flow (prior to deduction of the Base Management Fee) after all
Operating Expenses (other than the Management Fee) have been accrued. To
the extent there is not sufficient Cash Flow to pay the Base Management
Fee on a current basis, payment thereof shall be carried forward without
interest from one year to the next during the Term, but Owner shall have
no liability therefor.
7. Working Capital and Reserve Account.
(a) Owner shall establish (as a Project Cost) at a bank selected by
Owner a working capital account in the amount of $500,000 (the "Working
Capital Account"). Title to Working Capital Account shall be vested in
Owner. The Working Capital Account shall be used as a cash reserve to fund
(i) pre-opening expenses, food, beverage and other inventories in
connection with the opening of the Restaurant and (ii) Operating Losses
for the period following the Hard Opening Date and to pay principal and
interest on any outstanding Priority Contributions, but such account shall
not be used to pay any return of Project Costs (except as described above)
or the Management Fee (as hereinafter defined). Amounts in the Working
Capital Account shall be disbursed by Owner from time to time upon request
of Manager upon submission of such documentation as Owner shall reasonably
request to support such request. In the event that additional monies are
required to pay Operating Expenses and no funds remain in the Working
Capital Account, each party shall be obligated to make an additional
contribution (each, an "Additional Working Capital Contribution") in an
amount not exceeding $300,000 each (or $600,000 in the aggregate) but not
less than an amount which shall cover any anticipated Operating Losses for
the immediately succeeding 180-day period (such amount to be based upon
Operating Losses during the immediately preceding 180-day period).
Additional Working
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Capital Contributions shall be treated in accordance with Section 8.1
(iii). In the event the Additional Working Capital Contributions have been
expended and insufficient funds exist to pay Operating Expenses, either
party may terminate this Agreement upon written notice to the other (a
"Termination Notice") in which event this Agreement may be cancelled
immediately upon delivery of the Termination Notice without any further
liability of either party to the other (and without any obligation of
Owner to make any payment to Manager under Section 20(c) or (d)).
(b) Reserves.
(i) On or before the tenth (10th) day of each calendar month
following the Hard Opening Date, Manager shall transfer into the Reserve
Account the applicable amounts set forth in the Approved Annual Operating
Budget, which, unless otherwise provided, shall be equal to 1% of the
previous month's Gross Revenues as a replacement reserve for FF&E but not
less than $75,000 annually. Title to the Reserve Account shall be vested
in Owner. Manager may draw upon the Reserve Account in accordance with the
Approved Annual Operating Budget to pay for replacement FF&E or as
otherwise approved by Owner in writing. In the event that, in Owner's
reasonable and good faith judgment, the amounts contained in the Reserve
Account exceed the amounts required for the uses thereof (taking into
account the anticipated requirements for disbursements therefrom and the
anticipated deposits thereto), such excess amounts may be withdrawn by
Owner and treated as Gross Revenues in the year of withdrawal; provided
that such excess amounts shall not be calculated for purposes of the
Management Fee.
(ii) At the end of each calendar year during the Term, any
amounts remaining in the Reserve Account shall be carried forward to the
following calendar year and shall be in addition to the amounts to be
contributed to the Reserve in the next such calendar year. At the end of
the Term, any amounts remaining in the Reserve shall be treated as Gross
Revenues as of the last day of the Term (unless the Term ends as a result
of an Event of Default in which event Owner may retain all amounts
remaining in the Reserve Account).
8. Cash Flow; Acquisition of Priority Contribution.
8.1 Cash Flow. Cash Flow shall be computed on a calendar year-to-date
basis and disbursed within ten (10) days after the end of each calendar month
simultaneously with the delivery of the Monthly Statements for such calendar
month (subject to adjustment as set forth in Section 8.1 below), in the
following order of priority:
(i) first, to pay to Owner (or Owner and Manager, 50/50, if Manager
has acquired one-half (1/2) of the Priority Contributions pursuant to
Section 8.2)
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an amount equal to a return of 12% per annum compounded monthly on the
principal amount of the Priority Contributions outstanding from time to
time during such period;
(ii) second, to pay to Owner (or Owner and Manager, 50/50, if
Manager has acquired one-half (1/2) of the Priority Contributions pursuant
to Section 8.2) an amount to be applied to reduce the outstanding
principal amount of the Priority Contributions until the aggregate amount
which has been so applied to principal is equal to the original principal
amount of the Priority Contributions multiplied by a fraction, the
numerator of which is the number of complete calendar months which have
elapsed since the Hard Opening Date, and the denominator of which is sixty
(60);
(iii) third, to pay to the party (or parties) that have advanced the
Additional Working Capital Contributions an amount equal to a return of
12% per annum compounded monthly on the principal amount of the Additional
Working Capital Contributions outstanding from time to time during such
period;
(iv) fourth, to pay to the party (or parties) that have advanced the
Additional Working Capital Contributions an amount to be applied to reduce
the outstanding principal amount of the Additional Working Capital
Contributions until the aggregate amount which has been so applied to
principal is equal to the original principal amount of the Additional
Working Capital Contributions multiplied by a fraction, the numerator of
which is the number of complete calendar months which have elapsed since
the date the Additional Working Capital Contribution was funded, and the
denominator of which is sixty (60);
(v) fifth, to be shared between Owner and Manager in the ratio of
60% to Owner and 40% to Manager and applied by them, first, in return of
their respective outstanding balances of Project Cost Contributions until
both Manager's Contributions and Owner's Contributions have been reduced
to zero; and
(vi) the balance, if any, shall be shared between Owner and Manager
in the ratio of 50% to Owner and 50% to Manager.
The portion of Cash Flow distributable to Owner and Manager after payments
in respect of return on and of Priority Contributions and Additional Working
Capital Contributions is hereinafter referred to as the "Adjusted Cash Flow."
The portion of Adjusted Cash Flow payable to Manager hereunder shall be treated
as an additional Management Fee (the "Additional Management Fee"; the Base
Management Fee and the Additional Management Fee are defined herein collectively
as, the "Management Fee").
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8.2 Acquisition of Priority Contributions. For a period (the "Contribution
Purchase Period") of one year following the date of this Agreement Manager shall
have the option (the "Priority Contribution Option") to acquire one-half (1/2)
(and not less than one-half (1/2) of the outstanding Priority Contributions and
accrued and unpaid return thereunder (as of the date of the closing of Manager's
purchase of the same) for a price equal to one-half (1/2) of all accrued and
unpaid Priority Contributions and accrued and unpaid return thereunder. Manager
may exercise the Priority Contribution Option by notifying Owner of Manager's
election no later than 20 days prior to the close of the Contribution Purchase
Period. If Manager shall fail to timely elect the Contribution Purchase Option,
Manager shall be deemed to have waived any further right to purchase any
Priority Contributions. Furthermore, if Manager exercises the Priority
Contribution Option, interest on all Priority Contributions shall be waived.
9. Annual Operating Budget; Reporting; Accounting.
(a) Annual Operating Budget. Attached hereto as Exhibit E is an
initial operating budget for the Managed Premises for the period from the
Soft Opening Date through the end of calendar year 2000. On or prior to
September 1, 2001 and on every November 15th thereafter during the Term,
Manager shall deliver to Owner, for Owner's approval (which approval shall
not be unreasonably withheld or delayed) a proposed draft of the annual
operating budget ("Draft Annual Operating Budget") for the Managed
Premises in respect of the immediately succeeding calendar year. The Draft
Annual Operating Budget shall project in a detailed, line item fashion the
monthly (with comparisons to the prior year) estimated Gross Revenues,
Operating Expenses, Cash Flow and Adjusted Cash Flow for the forthcoming
calendar year for the Managed Premises, which shall be substantially in
the same form as the initial operating budget and shall include:
(I) a detailed schedule of the amounts to be transferred to
the Reserve Account and all anticipated expenditures to be made from the
Reserve Account, such schedule to include each item of FF&E required, the
number of units to be replaced, unit costs and costs in aggregate,
together with such additional information as Owner shall reasonably
request during the calendar year relating to any anticipated expenditures.
Where color or type of style of an item is changed from the previous item,
the new item shall be presented for Owner's approval (such approval not to
be unreasonably withheld or delayed so long as the color or type of style
is consistent with the Operating Standard);
(II) the program for the advertising of and marketing the
Managed Premises for the forthcoming calendar year containing a detailed
itemization of the proposed expenditures by category. Assumptions forming
the basis of such itemization shall be presented in narrative form. Such
advertising and marketing
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program may include advertising in which the Managed Premises participates
with one or more other restaurants owned or controlled by Manager's
Affiliates which operate at a level of quality consistent with the
Operating Standard, in which case the cost shall be included as part of
Group Services;
(III) a detailed staffing plan, with a description of each
position, the number of employees at each position, the estimated cost
thereof and an explanation of any proposed changes from previously
Approved Annual Operating Budgets; and
(IV) a detailed schedule of the Group Services to be provided
by Manager, the total cost therefor and the portion thereof to be
allocated to the Managed Premises and the basis for such allocation, which
shall be consistent with the requirements of Section 22(c).
(b) Manager shall promptly modify the proposed Draft Annual
Operating Budget as reasonably requested by Owner and resubmit the same to
Owner for its approval (such approval not to be unreasonably withheld or
delayed), and, upon approval of the draft, as so modified, the same shall
be deemed the "Approved Annual Operating Budget" for all purposes of this
Agreement. If Owner and Manager are unable to agree on any portion of the
Draft Annual Operating Budget, Manager shall operate the Managed Premises
as follows: (I) with respect to those items approved by Owner, in
accordance with the Draft Annual Operating Budget and (II) with respect to
those items not approved by Owner, Manager may pay non-discretionary
items, the cost of which is established by an independent third-party or
governmental entity and which are necessary to be incurred to operate the
Managed Premises. Manager recognizes that the budgeting process is a key
aspect of the Owner/Manager relationship and Manager agrees that the
Annual Operating Budget shall be prepared with due diligence after
consideration of all relevant factors. Manager shall use its best efforts
to achieve the results projected in the Approved Annual Operating Budget
and shall not incur any expense which is inconsistent with the Approved
Annual Operating Budget except to the extent caused by reasons beyond
Manager's reasonable control (e.g., changes in inventory levels due to
changes in sales, variations in utility costs and usage).
(c) Reporting.
(i) On or prior to the twentieth (20th) day of each calendar
month during the Term, Manager shall deliver to Owner detailed statements
(collectively, the "Monthly Statements") of profit and loss, Gross
Revenues, Operating Expenses, Cash Flow, Adjusted Cash Flow, payments of
the Management Fee,
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payments on account of Priority Contributions and Additional Working
Capital Contributions and distributions to Owner, statements of the
amounts deposited in or withdrawn from the Accounts, accounts receivable
(including aging) and accounts payable (including aging) for the Managed
Premises, and such operating statements and other information as Owner
shall reasonably request (collectively, the "Required Information") in
respect of the immediately preceding calendar month and on a year-to-date
basis and a comparison with the prior year. Such statements shall also
provide for reforecasts, showing any anticipated deviations from the
Approved Annual Operating Budget. Each such statement shall be accompanied
by a certificate from Parent's chief financial officer certifying that
such statement was prepared under such officer's direction and, in such
officer's opinion, is true and correct.
(ii) Within ninety (90) days after the end of each calendar
year, Manager shall deliver to Owner (w) an annual financial statement of
Parent, (x) an annual accounting certified as true and correct by the
chief financial offer of Parent, audited and certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
& Co. (or such other firm of certified public accountants as shall have
been selected by Owner), setting forth the Required Information, all for
such preceding calendar year and (y) a statement certified by the chief
financial officer of Parent as to whether or not the applicable
Performance Goal has been met for such preceding calendar year ((x) and
(y) are collectively, the "Annual Audited Statement"). The Annual Audited
Statement for any calendar year shall be controlling over and shall
supercede the interim accountings for such calendar year. If such Annual
Audited Statement indicates that Manager has been paid any amounts in
excess of the amounts Manager was entitled to receive, Manager shall,
within 30 days refund the same to Owner with interest thereon at the
Default Rate from the date of the overpayment until the date of the
refund. If the Annual Audited Statement indicates Manager is owed monies,
Owner shall reimburse such amount to Manager within 30 days after receipt
of the Annual Audited Statement, without interest.
(d) Owner's Audit Right. Owner shall have the right, at any time
during the Term, through its employees, accountants or other
representatives, to audit Manager's books and records relating to the
Managed Premises or Group Services. Manager shall cooperate with Owner in
connection with any such audits in all reasonable respects, including,
without limitation, making available for review and copying by Owner,
Owner's employees, accountants or other representatives, all of Manager's
books and records relating to the Managed Premises or Group Services. If
any such audit shall indicate that additional amounts are due to Owner
under the Agreement, Manager shall pay such amounts within 30 days after
notice with interest thereon at the Default Rate from the date of the
overpayment until the
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date of payment, and if the additional amounts due are greater than
$50,000, Manager shall also pay for the cost of the audit.
(e) Disposition of Accounts Payable. Manager shall pay or cause to
be paid, within 90 days after receipt thereof, all invoices for goods or
services provided to Manager or in respect of the Managed Premises, unless
Manager is disputing, in good faith, the amount or validity of any such
invoice. If Manager is disputing any such invoice, Manager shall deposit
with Owner in reserve the amount of such invoice, which amount shall be
released to Manager upon final disposition of such dispute and payment in
full of the then agreed amount of such invoice. Manager shall not permit
any such dispute to interfere with the operation of the Managed Premises
in accordance with the Operating Standard and the Approved Annual
Operating Budget. In addition, if any mechanic's or materialmen's lien is
filed against the Hotel or any interest therein by reason of any claim
relating to the Managed Premises (other than Renovation Costs which Owner
is responsible for paying) then within 30 days after the filing thereof
Manager shall cause the same to be discharged of record by filing the
necessary bond or otherwise.
(f) Operating Account. Gross Revenues or funds supplied by Owner or
Manager, exclusive of Working Capital or funds deposited in the Reserve
Account, shall be deposited in an account (the "Operating Account") at a
bank selected by Manager and approved by Owner. Title to the Operating
Account shall be in Owner's name. Owner shall be a co-signatory on the
Operating Account. Checks or other documents of withdrawal therefrom shall
be signed by two (2) representatives of Manager approved by Owner. Owner
shall also be authorized to sign such checks or documents of withdrawal,
but Owner shall exercise this authority only in the event of default by
Manager under the terms of this Agreement or upon termination of this
Agreement. Notwithstanding the foregoing or anything to the contrary
contained in this Agreement, all checks or other documents of withdrawal
from the Operating Account in excess of $25,000 shall require the
signature of Owner.
(g) Investments. Manager shall temporarily invest funds in the
Operating Account, and Owner shall temporarily invest funds in all other
Accounts with due regard for the cash needs of the Managed Premises.
Amounts earned as investments from the Operating Account shall constitute
Gross Revenues and amounts earned from any other Accounts shall not
constitute Gross Revenues. Manager shall request written approval from
Owner of permitted investment mediums for this purpose. The following
investments are hereby approved: (i) Treasury Bills issued by the United
States Government with a term of six months or less; and (ii) Certificates
of Deposit in amounts of $100,000 or less
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(including accrued and unpaid interest) and for a term of six months or
less insured by the Federal Deposit Insurance Corporation or money market
accounts, in either case maintained at Citibank, N.A. or such other major
financial institution as shall be selected by Owner.
10. Staff; Labor Issues.
(a) Manager shall hire and replace as necessary throughout the Term,
such Staff as shall be necessary to operate the Managed Premises in a
manner consistent with the Operating Standard, and the Restaurant Concept
subject, in each case, to (i) the requirements of paragraph (b) below, and
(ii) Owner's approval (with respect to executive Restaurant personnel
(including, without limitation, the executive chef, the construction and
maintenance directors, the wine director and the MIS support directors),
which approval shall not be unreasonably withheld. All Restaurant
personnel shall be, for all purposes (including, without limitation,
insurance), Manager's employees. The staffing levels for employees at the
Managed Premises shall be set forth in the Approved Annual Operating
Budget and any changes thereto must be approved by Owner in writing. All
wages, benefits and other compensation to be paid to the Staff shall be
as set forth in the Approved Annual Operating Budget. Manager shall not be
entitled to enter into, modify or amend any employment agreement for a
definite term without Owner's written approval. All labor policies
covering employees at the Managed Premises must be approved by Owner and
consistent with such agreements then applicable.
(b) Manager shall not discriminate against any employee or applicant
for employment at the Managed Premises because of race, creed, color, age,
sex or national origin, or any other class of persons protected under law.
(c) (i) Manager acknowledges that the Hotel is subject to certain
labor union collective bargaining agreements, and that the operation of
the Managed Premises shall be subject to such collective bargaining
agreements, as modified by that certain Memorandum of Understanding
between The Plaza Hotel and New York Hotel and Motel Trades Council,
AFL-CIO, dated May 3, 2000 and set forth on Exhibit F (the "MOU"). Owner
shall have the exclusive right to negotiate, amend and modify the MOU and
all other collective bargaining agreements relating to the Hotel,
including provisions thereof which may affect the Managed Premises.
Manager shall, at all times during the Term, comply with the MOU and all
other applicable labor agreements.
(ii) Manager shall not, at any time prior to or during the
term of this Agreement, directly or indirectly, engage any full or part
time employees or any third-party contractor, mechanic or laborer in
respect of the Managed
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Premises, whether in connection with (A) any alteration permitted by this
Agreement, (B) any services to be provided to the Managed Premises or to
Manager, or (C) any other matter, if such employment is, in the judgment
of Owner, likely to violate the MOU or any other collective bargaining
agreement affecting the Hotel, or to result in any strike, work stoppage,
labor disruption, disharmony or dispute at or relating to the Managed
Premises or the Hotel. Upon Manager's request, Owner shall provide Manager
with a list of approved third-party contractors.
11. Insurance.
(a) With the exception of the insurance described in Section
11(a)(i) below, which shall be maintained by Owner throughout the Term,
Manager shall maintain the following insurance with respect to the Managed
Premises:
(i) (A) "All-risk" insurance covering the Managed Premises,
against loss or damage from normal property perils, in aggregate amounts
which shall be not less than 100% percent of replacement cost thereof
(without depreciation or coinsurance) and as required to meet then-current
building, health and safety codes and other applicable Laws
(notwithstanding the foregoing, "all-risk" insurance covering the FF&E
within the Managed Premises shall be maintained by Manager throughout the
Term) and (B) business interruption insurance covering loss of income to
both Owner and Manager for a period of twenty-four (24) months resulting
from interruption of business caused by the occurrence of any of the risks
insured against under the property damage insurance referred to in this
Section 11(a)(i).
(ii) Commercial general liability insurance in an amount not
less than a combined single limit of $10,000,000 for each occurrence in or
about the Managed Premises, for personal injury and death and property
damage, as well as coverage for products and completed operations, in such
amount against all claims arising out of alleged (A) bodily injury, (B)
death, (C) property damage, (D) assault or battery, (E) false arrest,
detention or imprisonment or malicious prosecution, (F) libel, slander,
defamation or violation of the right of privacy, (G) wrongful entry or
eviction, (H) liquor law or dram shop liability or (I) food poisoning.
(iii) Worker's compensation and New York State long-term
disability coverage insurance in amounts not less than the amounts
prescribed by applicable Laws and employer's liability insurance in an
amount equal to not less than $1,000,000 (and scheduled under the
commercial general liability insurance policy).
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(iv) Comprehensive crime insurance, including fidelity bond
coverage (including but not limited to computer theft coverage) in an
amount equal to not less than $2,000,000.
During the Term, Owner may change the above-described insurance (including
requiring that the limits of any of the above-described insurance be increased)
and may require that other or additional insurance be maintained, and the cost
thereof shall be an Operating Expense; provided that such changes are consistent
with the insurance being maintained (for comparable restaurants) by owners
and/or operators of first class hotels in Manhattan. All insurance shall be
primary and non-contributory.
(b) Form of Policies. All insurance required by this Section 11
shall be in such form and with such companies as shall be reasonably
satisfactory to Owner and in no event shall be a company that has a Best
rating less than A-VIII. Any insurance may be provided under blanket
policies of insurance. All property damage insurance maintained pursuant
to this Section 11 shall be in the name of Owner (it being agreed that
Manager shall have no interest therein and shall not be named as a loss
payee thereunder). The liability and business interruption insurance
described in Section 11 (a)(ii) shall be in the name of Manager with Owner
named as an additional insured and loss payee as their interests may
appear. The workmen's compensation and New York disability insurance
described in Section 11(a)(iii) and the crime insurance described in
Section 1l(a)(iv) shall be in the name of Manager with Owner as an
additional insured and loss payee. The property damage insurance policy
shall provide, if available at reasonable cost, that the insurance company
will have no right of subrogation against Owner, Manager or any of their
respective Affiliates or the agents or employees thereof unless there is
gross negligence on the part of Manager.
(c) Responsibility to Maintain. The cost of insurance set forth
above shall be paid as an Operating Expense. To the extent any such
insurance shall cover property in addition to the Managed Premises, the
expense of such insurance shall be allocated equitably. Rebates,
reductions and other such items shall also be allocated.
(d) Certificates. If any insurance is procured by Manager,
certificates of such insurance policies shall be delivered to Owner
simultaneously herewith and thereafter certificates of renewal shall be
delivered to Owner not less than thirty (30) days prior to the expiration
date of such policies. Owner shall deliver to Manager copies of
certificates of insurance policies procured by Owner. All certificates of
the insurance provided for under this Section 11 shall specify that the
policies to which they relate cannot be cancelled or modified on less than
thirty (30) days prior written notice to Owner.
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12. Liquor and Other Licenses. (a) Manager shall, promptly upon the execution of
this Agreement, apply for, and, on or prior to the Soft Opening Date, Manager
shall have procured in respect of the Managed Premises a New York State liquor
license, together with any other applicable governmental licenses, permits and
approvals necessary for the retail dispensing, service and sale of alcoholic
beverages in the Managed Premises (collectively, the "Liquor License") and all
other licenses necessary to operate the Managed Premises. Owner shall, to the
extent necessary, reasonably cooperate with Manager in obtaining the Liquor
License and, if necessary, become a co-signatory on such Liquor License. If
Manager is unable to procure the Liquor License on or prior to October 8, 2000,
either party may terminate this Agreement. Pending procurement of the Liquor
License, Manager shall not serve any alcoholic beverage, except that Manager may
serve alcoholic beverages on a complimentary basis in accordance with applicable
Law. Manager shall, at all times during the Term, maintain the Liquor License
and all other licenses required to operate the Managed Premises in full force
and effect.
(b) In the event that this Agreement shall terminate and the Liquor
License shall be in effect, Manager shall act in accordance with Section
20(g)(i) with respect to the transfer of the Liquor License to Owner's
name.
13. Maintenance and Repair of Managed Premises.
(a) Repairs.
(i) Manager shall keep the Managed Premises (including,
without limitation, all FF&E) in good condition and in accordance with the
Operating Standard and, upon expiration or earlier termination of the
Term, shall surrender the same to Owner in the same condition as when
first occupied, reasonable wear and tear excepted. Manager's obligation
shall include, without limitation, the obligation to pay for all damage to
the Managed Premises or the FF&E and other installations in the Managed
Premises or anywhere in the Hotel caused by Manager, its agents,
employees, invitees and licensees. Manager shall not commit or allow to be
committed any waste or damage to any portion of the Managed Premises or
the Hotel.
(ii) Subject to Section 23 herein, Owner shall operate,
maintain and repair (and make all necessary replacements to) the portions
of the Hotel's systems which provide service to the Managed Premises and
to the exterior and foundations of the Hotel and the public portions of
the Hotel, both interior and exterior, in accordance with standards
applicable to first class hotels in Manhattan. Notwithstanding the
foregoing, all damage or injury to the Managed Premises or to any other
part of the Hotel or the Hotel's systems, whether requiring structural or
non-structural repairs, to the extent caused by or resulting from the
negligence or
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willful misconduct of Manager, or alterations made by Manager, shall be
repaired by Owner at the sole cost and expense of Manager.
(b) Manager shall not make any alterations, changes or improvements
to the Managed Premises or to any other part of the Hotel without Owner's
consent, which consent may be granted or withheld in Owner's sole
discretion; provided, however, that Manager may make minor, solely
decorative alterations within the Managed Premises without Owner's consent
and Owner shall not unreasonably withhold its consent to alterations which
are wholly within the Managed Premises, non-structural in nature, do not
(x) affect the Hotel's HVAC systems, any structural component of the
Hotel, or any areas outside of the Managed Premises, (y) alter the overall
appearance or design of the Managed Premises or (z) affect any asbestos or
asbestos-containing materials on or within the Managed Premises. Nothing
herein shall obligate Owner to permit Gross Revenues to be used for any
alterations, changes or improvements to the Managed Premises.
(c) Environmental Matters.
(i) Manager shall fully comply with all applicable
environmental laws, rules and regulations with respect to the operation of
the Managed Premises and its condition during the term of this Agreement.
Manager shall indemnify, defend and hold Owner and its Affiliates harmless
from all Environmental Costs (as hereinafter defined) arising out of any
such failure by Manager aforesaid to so comply with such Environmental
Laws.
(ii) Manager shall not use or knowingly permit the use of any
portion of the Managed Premises for the production, storage, handling,
transfer, treatment, installation, generation, manufacture, disposal,
processing, discharge or release of any Hazardous Materials (as
hereinafter defined), except those chemicals, substances, and materials
customarily used in the operation and maintenance of the Managed Premises
and used, stored, handled, transferred, treated, generated, released, and
disposed of in compliance with all environmental laws, rules and
regulations. Manager hereby agrees to indemnify, defend and hold harmless
Owner and all of Owner's Affiliates from all Environmental Costs arising
out of, relating to, or in connection with, Manager's breach of its
obligations under the preceding sentence.
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(iii) For purposes hereof:
(A) "Environmental Costs" shall mean any actual or
potential cleanup costs, remediation, removal, or other
response costs (which without limitation shall include costs
to come into compliance with environmental laws, rules and
regulations), investigation costs (including without
limitation fees of consultants, counsel, and other experts in
connection with any environmental investigation, testing,
audits or studies), losses, liabilities or obligations
(including without limitation, liabilities or obligations
under any lease or other contract), payments, damages
(including without limitation any actual, punitive or
consequential damages under any statutory laws, common law
cause of action or contractual obligations or otherwise,
including without limitation damages (x) of third parties for
personal injury or property damage (except to the extent paid
by insurance required to be carried hereunder) or (y) to
natural resources), civil or criminal fines or penalties,
judgments, and amounts paid in settlement relating to
environmental laws, rules and regulations.
(B) "Environmental Laws" shall mean without limitation,
the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. ss.ss.9601 et seq., the Emergency
Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
ss.ss.11001 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. ss.ss.6901 et seq., the Toxic Substances
Control Act, 15 U.S.C. ss.ss.2601 et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C.
ss.ss.136 et seq., the Clean Air Act, 42 U.S.C. ss.ss.7401 et.
seq., the Clean Water Act (Federal Water Pollution Control
Act), 33 U.S.C. ss.ss.1251 et seq., the Safe Drinking Water
Act, 42 U.S.C. ▇▇.▇▇. 300f et seq., the Occupational Safety
and Health Act, 29 U.S.C. ss.ss.641, et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. ss.ss.1801, et seq.,
as any of the above statutes have been or may be amended from
time to time, all rules and regulations promulgated pursuant
to any of the above statutes, and any other federal, state or
local law, statute, ordinance, rule or regulation governing
Environmental Matters, as the same have been or may be amended
from time to time, including any common law cause of action
providing any right or remedy relating to Environmental
Matters, all indemnity agreements and other contractual
obligations (including leases, asset purchase and merger
agreements) relating to Environmental Matters, and all
applicable judicial and administrative
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decisions, orders, and decrees relating to Environmental
Matters. "Environmental Matters" Means any matter arising out
of, relating to, or resulting from pollution, contamination,
protection of the environment, human health or safety, health
or safety of employees, sanitation, and any matters relating
to emissions, discharges, disseminations, releases or
threatened releases, of Hazardous Materials into the air
(indoor and outdoor), surface water, groundwater, soil, land
surface or subsurface, buildings, facilities, real or personal
property or fixtures or otherwise arising out of, relating to,
or resulting from the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, handling,
release or threatened release of Hazardous Materials.
(C) "Hazardous Materials" shall mean any pollutants,
contaminants, toxic or hazardous or extremely hazardous
substances, materials, wastes, constituents or chemicals
(including, without limitation, petroleum or any by-products
or fractions thereof, natural gas, lead, asbestos-containing
materials, radon and other radioactive elements, infectious
agents, pesticides, flammables, urea formaldehyde foam
insulation) which now or hereafter are regulated by or may
form the basis of a liability under any applicable federal,
state or local environmental laws, rules and regulations,
including any of the following:
(1) any substance included within the definition
of "hazardous substances," "extremely hazardous,"
"hazardous materials," "hazardous waste," or "toxic
substances" in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Sections 9601 et seq., the Emergency Planning and
Community Right-To-Know Act, 42 U.S.C. ss.11001-11050,
the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Sections 6901 et seq., the Clean Air Act, 42
U.S.C. Section 2401 et seq., the Clean Water Act, 33
U.S.C. Section 1251 et seq., the Toxic Substances
Control Act, 15 U.S.C. Sections 2601 et seq., and the
Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801 et seq., and the regulations adopted and
promulgated pursuant to said laws and comparable state
and local laws, rules and regulations as any of the
above have been or may be amended from time to time;
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(2) any substance listed in the United States
Department of Transportation Table (49 C.F.R. 172.101
and amendments thereto) or by the Environmental
Protection Agency (or any successor agency) as hazardous
substances. (40 C.F.R. Part 302 and amendments thereto);
(3) any substance which contains polychlorinated
biphenyls (PCBs), and any asbestos or asbestos
containing substance;
(4) any waste, substance or material that exhibits
any of the characteristics enumerated in 40 C.F.R. ss.
261.20-261.24, inclusive, or any "extremely hazardous"
substance listed under ss. 302 of the Superfund
Amendment and Reauthorization Act of l986 ("▇▇▇▇") that
are present in excess of or equal to threshold planning
or reportage quantities defined under ▇▇▇▇, or any toxic
or hazardous chemical substances that are present in
quantities that exceed exposure standards under Sections
6 and 8 of the Occupational Safety and Health Act and 29
C.F.R. Part 1910 subpart 2 or any comparable state or
local laws and regulations; and
(5) any other substances, materials, wastes,
forces (including, without limitations, electromagnetic
fields and other radiation) and agents.
(d) If Manager fails to perform any of its obligations under this
Section 13, Owner may perform the same at the expense of Manager (x)
immediately and without notice in the case of emergency or in case such
failure interferes with the uses at the Hotel or with the efficient
operation of the Hotel or may result in a violation of any Law (or
imminent danger to persons or property) or in a cancellation of any
insurance policy maintained by Owner and (y) in any other case if such
failure continues beyond any reasonable notice delivered by Owner. If
Owner performs any of Manager's obligations under this Agreement, Manager
shall pay to Owner the costs thereof, together with interest at the
Default Rate from the date incurred by Owner until paid by Manager, within
10 days after receipt by Manager of a statement as to the amounts of such
costs. "Default Rate" means the lesser of (i) the base rate from time to
time announced by Citibank, N.A. (or, if Citibank, N.A. shall not exist or
shall cease to announce such rate, such other bank in New York, New York,
as shall be designated by Owner in a notice to
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Manager) to be in effect at its principal office in New York, New York
plus 4% and (ii) the maximum rate permitted by law.
(e) Owner represents that, except as set forth in that certain Phase
I Environmental Site Assessment, dated November 24, 1999 prepared by IVI
Environmental, Inc., (I) the Managed Premises are not in violation of any
Environmental Law which, individually or in the aggregate, would be
expected to have a material adverse effect on the Managed Premises or the
operation thereof and (II) no Hazardous Materials are present in the
Managed Premises. Owner hereby agrees to indemnify, defend and hold
harmless Manager from and against any Environmental Costs incurred by
Manager as a result of the inaccuracies of the representations made by
Owner in this Section 13(e).
14. Loading Docks. Manager shall use the Hotel loading docks for shipping (if
any) and receiving of all Operating Supplies, food and beverages, and other
items and materials used in connection with the operation of the Managed
Premises, subject to such reasonable rules and regulations as Owner may specify
from time to time. Owner and Manager shall use all reasonable efforts to cause
persons making deliveries for Manager at the loading docks to convey the
delivered goods directly to the Managed Premises through such areas of the Hotel
as Owner shall direct; provided, that if such persons refuse to do so or Owner
determines that conveyance through the Hotel may cause labor disharmony or a
security risk or otherwise be disadvantageous to the Hotel, Manager shall use
its own personnel to transport such deliveries from the loading docks to the
Managed Premises through such areas of the Hotel as Owner shall direct.
15. Services.
(a) Electricity. Owner shall furnish basic electricity to the
Managed Premises. Manager shall at all times comply with the rules and
regulations of the utility company supplying electricity to the Hotel.
Manager shall not use any electrical equipment which, in Owner's
reasonable judgment, would exceed the capacity of the electrical equipment
serving the Managed Premises or interfere with the electrical service to
other areas of the Hotel. If Owner, in the exercise of its reasonable
judgment, determines that Manager's electrical requirements necessitate
installation of any additional risers, feeders or other electrical
distribution equipment (collectively, "Electrical Equipment"), or if
Manager provides Owner with evidence reasonably satisfactory to Owner of
Manager's need for excess electricity and requests that additional
Electrical Equipment be installed, Owner shall, at Manager's expense,
install such additional Electrical Equipment, provided that Owner, in its
reasonable judgment, considering the potential needs of the Hotel,
determines that (a) such installation is practicable and necessary, (b)
such additional Electrical Equipment is permissible under applicable
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laws, and (c) the installation of such Electrical Equipment will not cause
permanent damage or injury to the Hotel or the Managed Premises, cause or
create a dangerous or hazardous condition, entail excessive or
unreasonable alterations, interfere with or disturb or limit electrical
usage at the Hotel or exceed the limits of the switchgear or other
facilities serving the Hotel, or require power in excess of that available
from the public utility serving the Hotel. Any reasonable costs actually
incurred by Owner in connection therewith shall be paid by Manager within
20 days after the rendition of a ▇▇▇▇ therefor together with reasonable
supporting documentation. Manager shall not make or perform, or permit the
making or performance of, any alterations to wiring installations or other
electrical facilities in or serving the Managed Premises without the prior
consent of Owner, in each instance.
(b) Heating, Ventilation and Air Conditioning. Owner shall furnish
to the Managed Premises basic heating, ventilation and air-conditioning
("HVAC"). Owner, at its expense, shall repair and maintain the HVAC System
in good working order, provided repairs required as a result of the
negligence or willful misconduct of Manager, its agents or employees,
shall be performed at Manager's expense. Owner shall have access to all
air-cooling, fan, ventilating and machine rooms and electrical closets and
all other mechanical installations in or about the Managed Premises
(collectively, "Mechanical Installations"), and Manager shall not
construct partitions or other obstructions which would reasonably be
anticipated to interfere with Owner's access thereto or the moving of
Owner's equipment to and from the Mechanical Installations. Neither
Manager, nor its agents, employees or contractors shall at any time enter
the Mechanical Installations or tamper with, adjust, or otherwise affect
such Mechanical Installations.
(c) Water, Gas, Steam. Owner shall provide to the Managed Premises
hot and cold water, gas and steam. If Manager requires or uses water, gas
or steam in excess of the amounts furnished, Owner may install a meter to
measure the water, gas or steam furnished. Manager shall pay the cost of
such installation, and for all maintenance, repairs and replacements
thereto, and for the reasonable charges of Owner for the water, steam or
gas furnished. If any tax is imposed upon Owner's receipts from the sale
or resale of water or steam to Manager, Manager shall reimburse Owner for
such tax, if and to the extent permitted by law.
(d) Service Charge. Manager shall pay to Owner for the services
described in paragraphs (a) - (c) above an amount equal to $500 per month
(the "Monthly Service Charge"), payable on the first business day of each
month during the Term. Owner shall review the rates charged to Owner for
the services
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provided above on a quarterly basis and, to the extent such rates
increase, the Monthly Service Charge shall increase accordingly.
(e) Refuse and Rubbish Removal. Owner shall provide refuse and
rubbish removal services at the Managed Premises pursuant to regulations
reasonably established by Owner. Manager shall pay to Owner on the first
business day of each month during the Term amount equal to $1,667.00 for
such service; provided that to the extent Owner's refuse contract (or
other costs in connection with the provision of refuse services)
increases, the monthly charge for refuse stated above shall increase
accordingly. Manager shall not dispose of any refuse and rubbish in the
public areas of the Hotel, and if Manager or any party under the control
of Manager shall do so, Manager shall be liable for Owner's reasonable
charge for such removal. Manager shall observe such additional rules and
regulations regarding rubbish removal and/or recycling as Owner may, from
time to time, reasonably impose.
Owner may stop or interrupt electricity or any other service and may stop
or interrupt the use of any Hotel facilities and systems at such times as may be
necessary and for as long as may reasonably be required by reason of accidents,
strikes, or the making of repairs, alterations or improvements, or inability to
secure a proper supply of fuel, gas, steam, water, electricity, labor or
supplies, or by reason of any other cause beyond the reasonable control of
Owner. Owner shall have no liability to Manager by reason of any stoppage or
interruption of electricity or any other service or the use of any Hotel
facilities and systems for any reason. Owner shall use reasonable diligence to
make such repairs as may be required to machinery or equipment within the
Managed Premises or the Hotel to cause the same to be restored by diligent
application or request to the provider.
16. Marketing. Manager shall plan and execute a comprehensive marketing program
for the Managed Premises in accordance with the Operating Standard and the
Annual Approved Operating Budget, or otherwise subject to Owner's prior written
approval, which approval shall not be unreasonably withheld. Notwithstanding the
foregoing sentence, all advertisements placed in Hotel guest rooms or public
areas and all advertisements using the names "Plaza" or "The Plaza Hotel" or any
combination thereof, shall be subject to the prior approval of Owner, which
approval may be granted or withheld in Owner's sole discretion; provided,
however, that any such advertisements using such names in a non-prominent manner
or to otherwise indicate the Managed Premises address shall not be subject to
Owner's prior approval. Owner may, in connection with Owner's marketing of the
Hotel (by advertising or otherwise), mention the name of, or otherwise describe
or depict, the Managed Premises without Manager's approval and Manager shall
cooperate with Owner in connection therewith.
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17. Preferential Treatment of Hotel Guests; Room and Credit Charges. Manager
shall use its best efforts to provide preferential treatment to Hotel guests in
accommodating reservation or drop-in seating requests. Manager shall honor all
Hotel guest, room account and Hotel credit account charges. Manager shall,
throughout the Term, use the Hotel's "Micros" system or other centralized point
of sale system (collectively, the "System"). So long as Manager is not in
default under this Agreement beyond any applicable notice or grace period, Owner
shall cause the amount collected by or on behalf of Owner in respect of those
Hotel guest rooms and Hotel credit account charges to be paid to Manager on a
weekly basis, subject to a service charge in the aggregate amount of the service
charges or commissions, if any, payable by Owner to any third parties in respect
of such Hotel guest room and Hotel credit account charges. Any credit losses in
respect of Hotel guests shall be charged as follows: If the credit charge was
confirmed at the time of incurrence as accepted by the System, then the loss
shall be charged to Owner; if the credit charge was not so accepted, then the
loss shall be charged to Manager. The party bearing the credit loss shall be
obligated to contribute the full amount thereof to Gross Revenues from its own
funds at the same time as the charges would have been received as Gross Revenues
but for the credit loss (and without the same being treated as an Operating
Expense or otherwise being entitled to reimbursement) under this Agreement.
18. Moviehouse Entrance; Landmarks.
(a) The Managed Premises and its guests shall be entitled to the
non-exclusive use of (i) the entrance to the Hotel located on the ▇▇▇▇
▇▇▇▇▇▇ side of the Hotel in the area designated on Exhibit G-1 (the "59th
Street Entrance") and (ii) that certain stairway connecting the ground
floor of the Hotel to the basement level of the Hotel, as more
particularly described on Exhibit G-2.
(b) Owner shall apply to the New York City Landmarks Preservation
Commission (the "LPC") for permission to affix a brass plaque setting
forth the name of the restaurant being operated in the Managed Premises
(the "Restaurant Name") to the exterior wall of the Hotel adjacent to the
▇▇▇▇ ▇▇▇▇▇▇ Entrance. Manager's design (including, without limitation, the
dimensions) of such plaque shall be subject to the prior approval of
Owner, which approval shall not be unreasonably withheld. Manager
acknowledges that Owner shall have no liability, and this Agreement shall
continue in full force and effect, if such application is not approved by
the LPC. All costs incurred by Owner in connection with such application,
including, without limitation, architect's fees, shall be deemed Project
Costs.
(c) If Owner's application described in paragraph (b) above is not
approved by the LPC, Owner shall cause the Restaurant Name to be affixed
to a
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stand-alone sign next to the ▇▇▇▇ ▇▇▇▇▇▇ Entrance, in a manner and using a
design and materials proposed by Manager, and, in any event, not requiring
the approval of the LPC (if possible), but subject in any case to the
prior approval of Owner, which approval shall not be unreasonably
withheld. Owner shall have no liability, and this Agreement shall remain
in full force and effect, if the LPC (or any other governmental authority)
shall prohibit the placement of the stand-alone sign described in this
paragraph (c) or the same shall not be permitted by applicable Law.
(d) Manager is hereby notified that the Managed Premises are subject
to the jurisdiction of the LPC. In accordance with sections 25-305,
25-306, 25-309 and 25-310 of the Administrative Code of the City of New
York and the rules set forth in Title 63 of the Rules of the City of New
York, any demolition, construction, reconstruction, alteration or minor
work as described in such sections and such rules may not be commenced
within or at the Managed Premises without the prior written approval of
the LPC. Manager is notified that such demolition, construction,
reconstruction, alterations or minor work includes, but is not limited to,
(i) work to the exterior of the Hotel involving windows, signs, awnings,
flagpoles, banners and storefront alterations and (ii) interior work to
the Managed Premises that (x) requires a permit form the Department of
Buildings or (y) changes, destroys or affects an interior architectural
feature of an interior landmark or an exterior architectural feature of an
improvement that is a landmark or located on a landmark site or in a
historic district.
19. Title to Managed Premises Property. Title to the Managed Premises and all
Managed Premises assets, including, without limitation, all real and personal
property, tangible and intangible, including the Accounts, all FF&E, Operating
Supplies and Restaurant inventory, the Restaurant Name, and any trademarks,
service-marks or tradenames now or hereafter existing, including, without
limitation, title to the name "The Plaza Hotel," the crested logo, the names of
the Hotel restaurants, banquet rooms, bars and other public rooms and other
materials relating to the Managed Premises and any software or other
intellectual property used in connection with the Managed Premises shall, at all
times, remain the sole property of Owner and neither Manager nor Manager's
principals or Affiliates shall have any interest therein. Manager shall, from
time to time, at Owner's request, execute and deliver such additional documents,
agreements, certificates or instruments as are necessary or desirable, in
Owner's sole discretion, to better evidence or to vest title to any such assets
in Owner. Notwithstanding the foregoing, Owner shall not use the Restaurant Name
at any other location without Manager's consent and if Owner terminates this
Agreement, Owner shall not thereafter use the Restaurant Name at the Hotel
without the consent of Manager; provided that
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Owner shall be allowed a reasonable period of time (not to exceed 180 days) to
effectuate a transition of the Restaurant Name.
20. Termination Events; Events of Default; Return of Invested Capital.
(a) This Agreement shall, at Owner's option, terminate and be of no
further force or effect upon the occurrence of any of the following:
(i) Manager's failure to achieve the applicable Performance
Goals, in which event Manager shall be entitled to the payment referred to
in Section 20(c);
(ii) at any time, upon 90 days' prior notice by Owner to
Manager, in which event Manager shall be entitled to the payment referred
to in Section 20(d);
(iii) if (x) Manager shall be unable to obtain a Liquor
License on or prior to the Soft Opening Date or (y) additional monies are
required to pay Operating Expenses and no funds remain in the Working
Capital Account and neither party elects to fund the Additional Working
Capital Contributions in accordance with Section 7(a), then, in either
case, Owner shall have no obligation to return any of Manager's
Contributions or to make any other payment to Manager; or
(iv) if, at any time, the individuals who (i) direct the daily
operations of Parent and/or (ii) have overall control and decision-making
authority with respect to the business and management of Parent (the
individuals described in clauses (i) and (ii) are collectively, the
"Control Persons") shall be other than (A) the Control Persons existing on
the date hereof (the "Current Control Persons") or (B) individuals
appointed by the Current Control Persons (or their successors) in the
ordinary course of the operation of Parent's business (as opposed to, for
example, appointing a Control Person in anticipation of, or in connection
with, the merger, consolidation or other transfer of any direct or
indirect interest in Parent).
(b) The occurrence of any one or more of the following events shall
constitute an "Event of Default":
(i) the suspension for more than one week or revocation of the
Liquor License or other material license for the Managed Premises or the
Hotel, in each case, resulting from Manager's or Manager's employees',
agents' or contractors' acts or omissions, unless (and for so long as) a
court of competent jurisdiction stays the effect of any such suspension or
revocation such that (except
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for a suspension of not more than one week) there is no effect on the
continued operation of the Restaurant (including the sale of alcohol);
(ii) the Bankruptcy of Manager or Parent;
(iii) the occurrence of an event (A) at or relating to the
operation of the Managed Premises or (B) with respect to Manager, Parent,
or any Affiliate thereof, which, in Owner's reasonable judgment, is
materially damaging to the reputation of the Hotel or Owner, or in Owner's
reasonable judgment otherwise causes Manager to be viewed as disreputable;
provided that Manager shall be entitled to furnish Owner reasonable
evidence in opposition to Owner's judgment (it being understood that, upon
review of such evidence, Owner's judgment shall prevail);
(iv) the breach of any provisions of this Agreement not
otherwise specified in this Section 20(a) by Manager and Manager's
failure, as applicable, to cure such breach within 10 days following
notice thereof from Owner; provided, however, if in Owner's reasonable
judgment the default is curable, but cannot with due diligence be cured
within such 10-day period, an Event of Default shall not be deemed to have
occurred if Manager shall have commenced to cure such breach within such
10-day period and thereafter diligently continues to prosecute such to
completion;
(v) the breach of any provision under the Guaranty (as
hereinafter defined);
(vi) the failure by Manager to make any required payment, when
due, pursuant to this Agreement, within 5 business days after notice from
Owner;
(vii) any warranty or representation made herein or any
document or financial statement or report executed or delivered in
connection herewith or pursuant hereto is inaccurate in any material
respect;
(viii) if Parent or any of its subsidiaries shall fail to own
and/or operate at least five (5) restaurants comparable to the Comparable
Restaurants;
(ix) if Parent shall transfer, assign or encumber any of its
interest in Manager; or
(x) any other breach of Manager's obligations under this
Agreement which shall continue following 5 business days after notice from
Owner.
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(c) If this Agreement terminates as a result of the event described
in (I) Section 20(a)(i) above, simultaneously with the Final Accounting
described in Section 20(g)(iii) below, Manager shall be entitled to the
return of fifty percent (50%) of the then outstanding balance of Manager's
Contributions and (II) Section 20(a)(iv) above, simultaneously with the
Final Accounting described in paragraph (g)(iii) below, Owner shall (x)
return to Manager the then outstanding balance of Manager's Contributions
and (y) pay to Manager an amount equal to the greater of $700,000 or, if
after the 1st anniversary of the Term (A) the Additional Management Fee
which the parties reasonably project will be paid to Manager during the
4th year of the Term (the "4th Year Fee") if such termination shall occur
during the period commencing on the date immediately succeeding the 1st
anniversary of the date of this Agreement and ending on the date that is
the 2nd anniversary of the date of this Agreement, (B) the 4th Year Fee
multiplied by two (2) if such termination shall occur during the period
commencing on the date immediately succeeding the 2nd anniversary of the
date of this Agreement and ending on the date that is the 3rd anniversary
of the date of this Agreement, (C) the 4th Year Fee multiplied by three
(3) if such termination shall occur during the period commencing on the
date immediately succeeding the 3rd anniversary of the date of this
Agreement and ending on the date that is the 4th anniversary of the date
of this Agreement and (D) in accordance with Section 20(d)(ii) if such
termination shall occur on or after the 4th anniversary of the date of
this Agreement.
(d) Upon termination of this Agreement solely upon the election of
Owner, as described in Section 20(a)(ii) above, Owner shall,
simultaneously with the Final Accounting described in Section 20(g)(iii)
below, (i) return to Manager the then outstanding balance of Additional
Manager Contributions and (ii) pay to Manager an amount equal to the
Additional Management Fee paid to Manager during the immediately preceding
calendar year multiplied by four (4) or, if the number of years remaining
until the expiration of the Term shall be less than four (4), then such
lesser number; provided, however, that if notice of termination is given
prior to the end of the fourth (4th) year of the Term, the amount payable
under Section 20(a)(ii) above shall be based upon the amount of Additional
Management Fees which the parties reasonably project will be paid to
Manager during the 4th year of the Term.
(e) If Manager has defaulted under this Agreement under Section
20(b), Owner may terminate this Agreement without any obligation to return
Manager's Contributions (or any other amounts contributed by Manager) and
may exercise any other remedies available to Owner at law or otherwise.
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(f) Upon the expiration or earlier termination of this Agreement,
all Termination Costs (as defined below) which shall be payable to Staff
shall be the sole and exclusive obligation of Owner if such termination
shall have occurred as a result of Section 20(a)(ii) and all Termination
Costs shall be the sole and exclusive obligation of Manager (and the cost
thereof shall be paid by Manager and shall not be an Operating Expense) if
this Agreement terminates as a result of an Event of Default under Section
20(b). If this Agreement terminates for any reason other than as expressly
set forth above, Owner and Manager shall each pay one-half (1/2) of the
Termination Costs. "Termination Costs" shall mean all severance payments,
payment of accrued fringe benefits and other costs and expenses arising
from, or at the termination of, an employee's employment at the Managed
Premises (whether arising pursuant to the terms of any agreement with such
employee (including any collective bargaining agreement) or pursuant to
applicable Laws). If there are not sufficient Gross Revenues to pay the
Termination Costs, the parties shall utilize any remaining amounts in the
Working Capital Account towards the payment of the Termination Costs.
(g) Transition Procedures. Upon the expiration or earlier
termination of this Agreement, for whatever reason, Owner and Manager
shall do the following (and the provisions of this Section 20(g) shall
survive the expiration or termination of this Agreement until they have
been fully performed):
(i) Licenses. Manager shall execute all documents and
instruments reasonably necessary to transfer (if transferable) to Owner or
its nominee all permits and licenses held by Manager with respect to the
Managed Premises. In the event such permits and licenses are not
transferable, Manager will cooperate with Owner in Owner's efforts to
obtain new licenses and permits with respect to the Managed Premises. If
the Liquor License shall not be transferred to Owner on or prior to the
date (the "License Due Date") that is 30 days following the expiration or
earlier termination of this Agreement, for each day thereafter that the
Liquor License shall not have been transferred to Owner's name, Manager
shall pay to Owner liquidated damages in an amount equal to 150% of the
average daily receipts with respect to beverages served at the Managed
Premises for the 12-month period immediately preceding the License Due
Date.
(ii) Books and Records. All books and records for the Managed
Premises kept by Manager shall be turned over to Owner so as to ensure the
orderly continuance of the operation of the Managed Premises.
(iii) Final Accounting. Manager shall prepare and deliver to
Owner an interim accounting statement with respect to the Managed Premises
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dated as of the Expiration Date within forty-five (45) days following the
Expiration Date and a final accounting statement within ninety (90) days
following the Expiration Date. Within ten (10) business days following
Owner's receipt and approval of such final accounting statement, a
reconciliation shall be made of any amounts, if any, due Manager as of
the Expiration Date and Manager shall reimburse Owner for any overpayment
made to Manager with interest thereon at the "prime rate" announced by
Citibank N.A. from time to time plus 1%.
(h) Holdover. If Manager continues to operate or occupy the Managed
Premises without the consent of Owner after the expiration or earlier
termination of this Agreement, Manager shall (a) be liable to Owner for
the greater of (X) two (2) times the fair market rental value of the
Managed Premises at the time of the holdover (as determined by an
independent third party reasonably selected by Owner who shall have at
least 10 years experience in the New York commercial real estate market)
and (Y) two (2) times the amount of Cash Flow for the 12-month period
immediately prior to such holdover, and (b)indemnify Owner against (i) any
amounts which Owner may be required to pay to any subsequent manager or
occupant of any part of the Managed Premises (a "New Occupant") or (ii)
any amounts which Owner shall incur in connection with re-using the
Managed Premises (for banquet rooms or otherwise), by reason of the late
delivery of space to the New Occupant as a result of Manager's holding
over or in order to induce such New Occupant not to terminate its
agreement by reason of the holding over by Manager, (iii) the loss of the
benefit of the bargain if any New Occupant shall terminate its agreement
by reason of the holding over by Manager or other termination of an
agreement in connection with Owner's re-use of the Managed Premises and
(iv) any claim for damages by any New Occupant. No holding over by Manager
after the Term shall operate to extend the Term. This Section 20(h) shall
not reduce any other rights of Owner at law or in equity.
21. Owner's Right to Finance.
(a) Owner shall have the right without the approval of Manager at
any time and from time to time to (i) assign or encumber (A) all or any
part of its interest in the Hotel or any ground lease or other superior
lease affecting all or any portion of the Hotel (a "Ground Lease") by way
of any one or more Secured Loans or otherwise and (B) its interest in this
Agreement as security to any holder of a Secured Loan (a "Holder") or a
landlord under a Ground Lease (a "Landlord") or (ii) enter into a Ground
Lease covering all or any portion of the Hotel. In connection with any
transactions permitted under this Section 21, Owner may, without the
consent of Manager, create a security interest in any Account for the
benefit of a Holder (it being agreed that the creation of security
interest shall not affect Manager's right to use the same during the Term
as provided for in this
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Agreement) and the Manager shall take such steps as shall be reasonably
requested by a Holder or prospective Holder in order to perfect or
otherwise effectuate such security interest. In addition, if requested by
any Holder, Manager agrees to consent to, execute and deliver any
reasonable modification to this Agreement, provided that such modification
would not (x) reduce, defer, or delay the amount of any payment to be made
to Manager hereunder, (y) materially increase Manager's obligations
hereunder, or (z) shorten the term of this Agreement.
(b) Owner may, from time to time without the consent of Manager,
enter into, modify or terminate any Secured Loan or Ground Lease.
(c) This Agreement does not create any interest in real or personal
property, or any lien or encumbrance on any Ground Lease or on the Hotel.
Unless Owner otherwise elects in writing, the rights of Manager hereunder,
whether with respect to the Hotel and the revenue thereof or otherwise,
shall be inferior and subordinate to the rights and remedies of any Holder
and, in confirmation thereof, Manager shall promptly execute and deliver
such instruments as any Holder may reasonably request in recordable form
for the State of New York and County of New York, but no such instruments
shall be necessary in order to make the provisions of this Section 21(c)
effective.
(d) This Agreement and any extension hereof shall be subject and
subordinate to any and all Secured Loans and Ground Leases affecting the
Hotel and any and all renewals, modifications, consolidations,
replacements and extensions thereof.
(e) (i) If (A) any Holder, such Holder's nominee or designee, any
purchaser at a sale in connection with the foreclosure of a Secured Loan,
or (B) any purchaser of the Hotel or any interest therein following (I)
the foreclosure of a Secured Loan or (II) any transfer to the Holder, such
Holder's nominee or designee (any or all of which parties described in
clause (A) and (B) are herein referred to as the "Successor Owner"), shall
succeed to Owner's interest in the Hotel, such Successor Owner may
terminate this Agreement, in which event Manager shall, within 30 days (or
such greater period, not to exceed one year, as Successor Owner shall
specify in Successor Owner's notice of termination) after notice of the
exercise of such option peaceably quit and surrender the Managed Premises.
(ii) If this Agreement is terminated by Successor Owner in
accordance with Section 20(g), the Successor Owner shall have no
obligation to pay any sums due to Manager under this Agreement, whether by
reason of Manager's services hereunder or the termination of this
Agreement, including any
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claims for indemnity by Manager, except for any sums which accrued during
the period following the date on which Successor Owner shall have
succeeded to Owner's interest in the Hotel until such termination;
provided, that Manager shall retain all of its rights to seek payment of
such sums from Owner. Prior to the date on which Manager relinquishes
management of the Managed Premises following any such termination, (A)
Manager shall operate the Managed Premises pursuant to the terms of this
Agreement, (B) the Successor Owner shall assume all of the obligations of
the Owner (other than any obligations under Section 20(c) or (d) and (C)
Manager shall be entitled to receive all fees (including the Management
Fee) to which it is entitled pursuant to the terms of this Agreement
through such date.
(iii) If the Successor Owner elects to keep this Agreement in
effect, Manager shall attorn to Successor Owner and to continue this
Agreement in full force and effect according to the terms hereof in favor
of Successor Owner, and in no event shall Successor Owner be subject to
(nor shall its rights to terminate this Agreement be abrogated by) any
claim, obligation or right of setoff arising from defaults by the prior
Owner.
(iv) If there is more than one Holder, the Holder whose
security interest is senior in lien shall have the prior right to exercise
the rights of a Holder under this Section 21(e), unless and to the extent
that another Holder is designated in writing by the Holder of such senior
security interest.
(v) No amendment, modification, termination or surrender of
this Agreement shall be binding unless each Holder of which Owner has
notified Manager, and whose consent is required under its Secured Loan,
shall have consented thereto in writing.
(vi) Upon request of Owner, Manager shall enter into an
agreement with any Holder (and, at Owner's request, with Owner) (A)
pursuant to which Manager, inter alia, (I) acknowledges that Owner's
interest in this Agreement has been assigned as security to such Holder,
and (II) agrees that upon notice from such Holder, Manager shall make all
payments otherwise due to Owner directly to or at the direction of such
Holder unless and until such Holder, or a court of competent jurisdiction,
otherwise directs, and (B) which contains such other terms as are
customarily included for the protection of a holder of a Secured Loan on a
first-class hotel.
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22. Transactions with Affiliates.
(a) Manager shall not enter into any transaction or make any payment
of funds to any Affiliate without Owner's consent, which consent may be
granted or withheld in Owner's sole discretion.
(b) Notwithstanding the foregoing, Manager may effectuate "bulk
buying" of goods and services on behalf of the restaurant being operated
in the Restaurant together with other restaurants owned or managed by
Manager or its Affiliates provided (i) such arrangements are disclosed in
writing in advance to Owner; (ii) Manager and its Affiliates do not make
any profit or markup through such bulk buying, and the Restaurant receives
its allocable share of any discounts or rebates or similar benefits
resulting from such bulk buying, (iii) the quality is at least as high as,
and the cost is no greater than, the Restaurant could obtain directly
without such arrangements and (iv) Owner receives such documentation as it
shall request to evidence Manager's compliance with clauses (i)-(iii)
above. In furtherance of clause (iii) above, Owner may require Manager,
from time to time, to seek bids or quotes from independent suppliers for
such goods and services and to procure from such suppliers if such
suppliers' costs are lower than those of Manager or its Affiliates for
comparable goods and/or services.
(c) Manager may allocate to the Restaurant, as well as other
restaurants owned or managed by Manager or its affiliates, the services
("Group Services") described on Exhibit I. Such allocation shall be made
in accordance with the method described on such Exhibit and in accordance
with the following terms and conditions:
(i) The scope, cost and type of Group Services shall be
subject to Owner's approval unless set forth in an Approved Annual
Operating Budget or otherwise approved by Owner;
(ii) Group Services shall be provided without profit or markup
to Manager and the Restaurant shall be entitled to its allocable share of
any discounts, rebates or similar benefits resulting from Group Services;
(iii) Owner shall be given reasonable backup and documentation
for Group Services (including the cost thereof), and shall be permitted to
audit the records relating thereto;
(iv) Owner shall be entitled to require Manager to cause the
Restaurant to discontinue participating in Group Services if the number of
restaurants participating therein is less than five (5) (including the
Restaurant);
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(v) If the basis on which any other restaurant participates in
Group Services is more favorable than that upon which such Group Services
are provided to the Restaurant, the Restaurant shall participate on such
more favorable basis rather than in accordance with the method specified
on Exhibit I.
(vi) In no event shall the Group Services exceed the amount
set forth in the Approved Annual Operating Budget (even if the
Restaurant's allocable share for the expenses of Group Services has been
increased as a result of Manager having ceased to provide a Group Service
to other restaurants).
23. Damage or Destruction.
(a) If (x) the Managed Premises or the Hotel shall be "Substantially
Damaged" (as defined below) by fire or other casualty (a "Substantial
Damage Termination") or (y) the Managed Premises or the Hotel shall be
damaged (whether or not substantially damaged) by an Unrestorable Casualty
(as hereafter defined) then, in any such case, Owner shall have the right
to terminate this Agreement by delivering written notice thereof to
Manager and this Agreement shall terminate ninety (90) days following the
delivery of such notice. For purposes hereof, an "Unrestorable Casualty"
shall mean a fire or other casualty in respect of which (1) the "net
insurance proceeds" are not fully sufficient to restore the damaged or
destroyed portion of the Hotel (including the Managed Premises) so that
the Hotel (including the Managed Premises) shall be either substantially
the same as it was prior to such casualty or an otherwise architecturally
complete and economically viable restaurant of the same class, character
and scope or (2) it is not reasonably practicable to restore the Hotel or
Managed Premises by reason of applicable zoning law or other Laws or for
other reasons beyond Owner's reasonable control. Owner shall exercise its
right to terminate this Agreement (I) in the case of a Substantial Damage
Termination, not later than ninety (90) days following adjustment of the
claim under the Hotel's casualty policy (i.e., payment of the net
insurance proceeds to Owner), or (II) in the case of an Unrestorable
Casualty, not later than ninety (90) days following Owner's final
determination that such casualty constitutes an Unrestorable Casualty. For
the purposes hereof, the Managed Premises shall be deemed to have been
"Substantially Damaged" if (i) the estimated length of time required to
restore the Managed Premises substantially to its condition and character
just prior to the occurrence of such casualty shall be in excess of ninety
(90) days or, if the casualty occurs in the last two calendar years of the
Term, in excess of three (3) months, or (ii) if the estimated cost of
restorations exceeds 10% of the then current replacement cost of the
Managed Premises (if the Managed Premises are destroyed) or Hotel (whether
or not the Managed Premises are destroyed), or if the casualty occurs in
the last two calendar years of the Term, such estimated cost of
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restoration of the Managed Premises or Hotel exceeds 5% of the then
current replacement cost of the Managed Premises or Hotel.
If this Agreement shall not terminate in the event of damage to the Hotel
or the Managed Premises, either because (i) the damage or casualty shall not
give rise to a right of Owner to terminate this Agreement or (ii)
notwithstanding Owner's right to terminate this Agreement, Owner does not elect
to terminate this Agreement within the applicable time periods, then, provided
restoration is permitted under the terms of any Secured Loan or Ground Lease and
Owner shall have received "net insurance proceeds" sufficient to complete
restoration, Owner shall (unless Manager elects to terminate this Agreement as
provided below) proceed with all due diligence to commence and complete the
restoration of the Managed Premises to its condition and character just prior to
the occurrence of such casualty or otherwise to a standard for a restaurant of
similar class, character and scope, and if such restoration is not substantially
completed within two (2) years following the occurrence of the casualty, then
Manager shall, as its sole remedy, have the right to terminate the Agreement by
delivering notice thereof to Owner, in which case this Agreement shall terminate
ninety (90) days after the delivery of such notice. If at any time Owner
notifies Manager in writing that it will take more than two (2) years to
substantially complete such restoration together with a revised estimate of the
time for substantial completion, Manager shall, within 30 days after receipt of
such notice, either elect to terminate or elect to stay (provided Owner
completes such restoration within the revised estimated time).
24. Eminent Domain. If any portion of the Hotel, or such substantial portion
thereof as to make it infeasible, in the reasonable opinion of Owner, to restore
and continue to operate the Managed Premises for the purposes contemplated
hereby, shall be taken through the exercise, or by agreement in lieu of the
exercise, of the power of eminent domain, then upon the date that the Owner
shall be required to surrender possession of the Hotel, or a portion thereof,
this Agreement shall terminate. If such taking of a portion of the Hotel shall
not make it infeasible, in the reasonable opinion of Owner, to restore and
continue to operate the Managed Premises, then this Agreement shall not
terminate, and Owner shall proceed with all due diligence to repair any damage
to the Hotel (or the Managed Premises, as applicable), or to alter or modify the
Hotel so as to enable the Managed Premises to be of substantially the same type
and class as before; and if such restoration is not completed within two (2)
years following the taking, then Manager shall, as its sole remedy, have the
right to terminate this Agreement by delivering notice thereof to Owner, in
which case this Agreement shall terminate sixty (60) days following the delivery
thereof. In any event, all proceeds from any taking shall belong solely to
Owner, and Manager shall not be entitled to any portion thereof, provided that
Manager shall have the right by separate petition to seek to recover the value
of the remaining term of this Agreement so long as the same shall not limit or
interfere with any claims of Owner with respect to such taking
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25. Manager's Obligations Personal. The rights and obligations of Manager under
this Agreement shall be personal to Manager and may not be assigned or otherwise
delegated by Manager without Owner's consent, which consent may be granted or
withheld by Owner in its sole discretion.
26. Assignment by Manager; Change In Control. Manager shall not have the right
to assign or encumber any of its rights or obligations under this Agreement
without the approval of Owner and any purported assignment or encumbrance by
Manager without the approval of Owner shall be null and void and of no force or
effect.
27. (a) Representations and Warranties of Manager. In order to induce Owner to
enter into this Agreement, Manager does hereby make the following
representations and warranties:
(i) the execution of this Agreement is permitted by the
organizational documents of Manager and this Agreement has been duly
authorized, executed and delivered and constitutes the legal, valid and
binding obligation of Manager enforceable in accordance with the terms
hereof;
(ii) there is no claim, litigation, proceeding or governmental
investigation pending, or to the best of Manager's knowledge, threatened,
against or relating to Manager (or Manager's affiliates), or the business
of Manager (or its Affiliates) or the transactions contemplated by this
Agreement which does, or may reasonably be expected to, adversely affect
the ability of Manager to enter into this Agreement or to carry out its
obligations hereunder; and
(iii) neither the consummation of the actions contemplated by this
Agreement on the part of Manager to be performed nor the fulfillment of
the terms, conditions and provisions of this Agreement, conflicts with or
will result in the breach of any of the terms, conditions or provisions
of, or constitute a default under, any agreement, indenture, instrument or
undertaking to which Manager (or its Affiliates) is a party or by which it
is bound.
(b) Representations and Warranties of Owner. In order to induce Manager to
enter into this Agreement, Owner does hereby make the following
representations and warranties:
(i) the execution of this Agreement is permitted by the partnership
agreement of Owner and this Agreement has been duly authorized, executed
and delivered and constitutes the legal, valid and binding obligation of
Owner enforceable in accordance with the terms hereof;
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(ii) there is no claim, litigation, proceeding or governmental
investigation pending, or to the best of Owner's knowledge, threatened,
against or relating to Owner (or Owner's affiliates), or the business of
Owner (or its Affiliates) or the transactions contemplated by this
Agreement which does, or may reasonably be expected to, adversely affect
the ability of Owner to enter into this Agreement or to carry out its
obligations hereunder; and
(iii) neither the consummation of the actions contemplated by this
Agreement on the part of Owner to be performed nor the fulfillment of the
terms, conditions and provisions of this Agreement, conflicts with or will
result in the breach of any of the terms, conditions or provisions of, or
constitute a default under, any agreement, indenture, instrument or
undertaking to which Owner (or its Affiliates) is a party or by which it
is bound.
28. No Partnership. Nothing in this Agreement shall constitute or be construed
to be or create a partnership or joint venture between Owner and Manager, or be
construed to be or create a lease or sublease by Manager of the Managed
Premises.
29. Guaranty. Simultaneously with the execution hereof, Parent shall execute an
unconditional Guaranty of payment and Manager's obligations (the "Guaranty")
under this Agreement in the form attached as Exhibit J.
30. Indemnity.
(a) Manager hereby covenants and agrees to indemnify, save, defend,
at Manager's sole cost and expense, and hold harmless, Owner, Owner's
Affiliates, and the officers, directors, agents, employees, legal
representatives and shareholders of Owner and Owner's Affiliates and the
successors and assigns of each of the foregoing (all of such Persons being
collectively referred to herein as the "Owner Indemnified Persons" and
each such reference to such term shall jointly and severally apply to each
such Person) from and against the full amount of any and all costs or
expenses (including attorneys fees), which may be asserted against any
Owner Indemnified Persons, arising from, in respect of, as a consequence
of, or in connection with any of the following: (i) the management,
operation or maintenance of the Managed Premises to the extent caused by
the negligence or misconduct of Manager or any Person acting under the
control or direction of Manager; (ii) any wrongful termination or
discrimination claims made by any employee at the Managed Premises; and
(iii) any breach or nonfulfillment, in any material respect of the
representations, warranties, covenants or agreements made by Manager in
this Agreement.
(b) Owner, at Manager's expense if and to the extent not covered by
insurance or if Manager does not undertake the defense of such action,
suit or
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proceeding in a timely manner, may defend such action, suit or proceeding
or cause the same to be defended by counsel designated by Owner, subject
to the reasonable approval of Manager, which approval shall not be
unreasonably withheld, conditioned or delayed; provided that any counsel
selected by Owner's insurance company shall be deemed reasonably
acceptable to Manager and, if Manager shall defend Owner, the counsel
selected by Manager shall be reasonably approved by Owner. Manager's duty
to indemnify Owner and Owner's Affiliates shall survive the termination of
this Agreement and shall apply to any event or occurrence arising before
or after the execution or termination, as the case may be, of this
Agreement.
31. Reimbursement. If Owner shall make any payments with respect to the Managed
Premises for which reimbursement shall be required by Manager, Manager shall
reimburse Owner therefor within 30 days after notice is given by Owner.
32. Previous Agreements; Amendments. This Agreement supersedes all previous
contracts, agreements and understandings of the parties, either oral or written,
relating to the Hotel, Owner, the Managed Premises or the transactions
contemplated hereby. This Agreement cannot be modified, or any of the terms
hereof waived, except by an instrument in writing executed by the party against
whom enforcement of the modification or waiver is sought.
33. Counterparts. This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed an original, and
all such counterparts shall together constitute one and the same instrument.
34. Further Assurances. Owner and Manager shall execute and deliver all other
appropriate supplemental agreements and other instruments, and take any other
action necessary to make this Agreement fully and legally effective, binding and
enforceable as between them and as against third parties and to carry out the
purposes and intents of this Agreement.
35. Waiver. The waiver of any of the terms and conditions of this Agreement on
any occasion or occasions must be in writing and shall not be deemed a waiver of
such terms and conditions on any future occasion.
36. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Owner, its successors and assigns, and shall be binding upon and
inure to the benefit of Manager, its permitted successors and assigns.
37. Limitation on Liability. Notwithstanding anything to the contrary contained
in this Agreement, Manager agrees that (i) it shall look for the satisfaction of
its remedies against Owner in the event of any default by Owner in the
observance or performance of
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any of its obligations under this Agreement, or with respect to Owner's
obligations hereunder, solely to Owner's estate in the Hotel and (ii) no other
property or assets of Owner (or of any of Owner's Affiliates) shall be subject
to levy, execution or other enforcement procedure for the satisfaction of
Manager's remedies under or with respect to this Agreement.
38. Governing Law. This Agreement shall be governed by the internal laws of the
State of New York without giving effect to conflict of laws principles thereof.
Owner and Manager agree and intend that proper forums for the litigation of any
and all disputes or controversies arising out of or related to this Agreement
shall be a court of competent jurisdiction in the Borough of Manhattan in New
York City or in the United States District Court of the Southern District of New
York (collectively, the "Proper Forums"). Owner and Manager agree that they will
not commence any action or proceedings arising out of or relating to this
Agreement in any court other than the Proper Forums on grounds of forum non
conveniens or any other grounds.
Owner and Manager hereby stipulate that each of the Proper Forums shall
have in personam jurisdiction over Owner and Manager for the purpose of
litigation of any dispute or controversy arising out of or related to this
Agreement. Owner and Manager hereby irrevocably agree that service of process
may be made, and personal jurisdiction over Owner and Manager may be obtained,
by serving a copy of the Summons and Complaint upon Owner and Manager in
accordance with the applicable laws of the State of New York, at such address of
Owner and Manager as may from time to time be specified in accordance with the
notice provision contained herein.
In the event Owner and Manager should commence or maintain any action
arising out of or related to this Agreement in a forum other than the Proper
Forums, any party shall be entitled either to request the dismissal of such
action, in which event Owner and Manager stipulate that such action shall be
dismissed, or alternatively to move to transfer the action to a forum agreed
upon herein, in which event Owner and Manager shall stipulate to the transfer.
39. Estoppel Certificates. Owner and Manager agree, at any time and from time to
time, as requested by the other party upon not less than ten (10) days' prior
written notice, to execute and deliver to the other a written statement
certifying (a) that this Agreement is unmodified and in full force and effect
(or if there have been modifications, that this Agreement is in full force and
effect as modified and stating the modifications), (b) the dates to which
required payments have been paid, (c) whether or not, to the best knowledge of
the signer, the other party is in default in performance of any of its
obligations under this Agreement and whether any event has occurred which with
the passage of time or the giving of notice or both would constitute such a
default, and if so, specifying each such default of which the signer may have
knowledge and (d) such other
-53-
information as the other party shall reasonably request which shall not modify
any of the terms of this Agreement, it being intended that any such statement
delivered pursuant hereto may be relied upon by others with whom the party
requesting such certificate may be dealing but shall not constitute a waiver of
any default of which the signer has no knowledge.
40. Inspection Rights; Books and Records.
(a) Owner shall have the right to inspect the Managed Premises
during the Term and Owner and any Holder, and any prospective Holder or
Landlord or purchaser, shall have access to the Managed Premises
pertaining thereto at all times during the Term.
(b) Owner, and any Holder (or prospective Holder or Landlord), may
upon reasonable notice to Manager have reasonable access to, and examine,
the Restaurant's books and records.
41. Time of the Essence. Time is of the essence with respect to all time periods
set forth in this Agreement.
42. Confidentiality. Except as otherwise expressly provided, the terms and
provisions of this Agreement shall be confidential between Owner and Manager and
shall not be released to any persons or entities except (i) to the attorneys,
accountants or other parties advising Owner and/or Manager in connection with
this Agreement, (ii) in connection with enforcement proceedings in any court or
arbitration proceeding or in connection with any order of court, (iii) as may be
required to comply with any Laws, (iv) to any prospective purchaser of all or
any portion of Owner's interests in the Hotel, any prospective Holder or
Landlord or any prospective purchaser of any direct or indirect interest in
Owner or any of its partners and (v) as required by the existing or future
rules, regulations or requirements of any stock exchange on which the shares of
any direct or indirect holder of an equity interest in Owner or Manager are
listed. Manager agrees that it shall keep all information relating to the
Managed Premises and the Hotel confidential and shall not release the same to
any persons or entities other than Manager's consultants who need to know the
same in connection with the performance of Manager's obligations hereunder and
as may be required to comply with any order of court or Laws.
43. Fees. If a party to this Agreement incurs any legal fees or expenses as a
result of the default or breach by the other party to this Agreement (including
any such fees or expenses in connection with the enforcement or the exercise of
remedies under this Agreement) the defaulting party shall reimburse the
non-defaulting party for such legal fees or expenses within 10 days after
demand, and, if such fees or expenses are not paid within such time period, the
same shall bear interest at the Default Rate from the 11th day after demand
through and including the date paid.
-54-
44. Notices. Any notice, payment, report, request or other communication (each a
"Notice") required or permitted to be given by one party to the other party
under this Agreement shall be in writing and shall be delivered by (a) personal
delivery, (b) express, registered or certified first-class mail, return receipt
requested, postage prepaid, (c) internationally recognized courier service or
(d) facsimile transmission (with the original being simultaneously delivered by
one of the methods described in clauses (a)-(c)), addressed to the other party
at its address as indicted below, or to such other address as the addressee
shall have furnished to the other party by like notice:
To Owner: Plaza Operating Partners Ltd.
c/o CDL Plaza Operating Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (Fax)
With a copy to: Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (Telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (Fax)
- and -
The Plaza Hotel
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Telephone)
(▇▇▇) ▇▇▇-▇▇▇▇
To Manager: c/o The ▇▇▇▇▇ & Wollensky
Restaurant Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (Fax)
-55-
With a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (Telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (Fax)
and, only with respect to notices relating to an Event
of Default:
The ▇▇▇▇▇ & Wollensky
Restaurant Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Telephone)
(▇▇▇) ▇▇▇-▇▇▇▇ (Fax).
Notices shall be deemed delivered upon receipt or refusal to accept
delivery (as evidenced by the return receipt or the receipt of the personal
delivery or courier service or by the facsimile transmission "answerback").
Counsel for each party may deliver Notices on behalf of its client.
45. Consents. All consents that are required pursuant to this Agreement shall be
in writing and comply with the notice provisions of Section 44.
46. Monthly Statements. In lieu of providing a Monthly Statement on a "calendar
month" basis, Manager may provide such Monthly Statement in accordance with its
own accounting procedure so long as such statements shall be provided on a
consistent basis and shall result in no loss or expense to Owner.
[SIGNATURE PAGE FOLLOWS]
-56-
IN WITNESS WHEREOF, the parties have caused these presents to be
executed as of the year and date first above written.
PLAZA OPERATING PARTNERS, LTD.
By: New Plaza Associates L.L.C., its
general partner
By: CDL Hotels USA, Inc., its
managing member
By: /s/[ILLEGIBLE]
-------------------------------
Name:
Title:
PARADE 59 RESTAURANT, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President of S&WRG, INC.
sole member
-57-
EXHIBIT A
Managed Premises
-58-
[FLOOR PLAN OMITTED]
[FLOOR PLAN OMITTED]
EXHIBIT B
Pro Forma Cash Flow
-59-
ONE cps
Stmt of Cash Flows
1/1/01
Adjustments to Reconcile Net Loss to Net Cash used in Operating Activities:
Net Loss $(127,717)
Depreciation 24,000
Changes in Operating Assets/Liabilities:
Accounts Receivable (50,000)
Inventory (160,000)
Prepaid Expenses (50,000)
Other Assets --
Accounts Payable 165,000
Due to Managers (110,000)
---------
Net Cash Used in Operating Activities (308,717)
Adjustments to Reconcile Net Loss to Net Cash used in Investing Activities::
Purchase of Fixed Assets --
Purchase of Non-depreciable Assets --
---------
Net Cash Used in Investing Activities --
Increase (Decrease) in Cash Used (308,717)
Cash at Beginning of Period 500,000
---------
Cash Available at End of Period $ 191,283
=========
THE ▇▇▇▇▇ & WOLLENSKY RESTAURANT GROUP, INC.
PROJECTFD INCOME STATEMENTS
PLAZA HOTEL
YEAR - 1 YEAR - 2 YEAR - 3 YEAR - 4
-------------------- -------------------- -------------------- --------------------
PCT PCT PCT PCT
-------------------- -------------------- -------------------- --------------------
---------- ---------- ---------- ----------
GROSS SALES 8,034,000 100.00% 10,106,200 100.00% 11,583,140 100.00% 12,664,115 100.00%
---------- ---------- ---------- ----------
COVERS 185,900 213,785 230,888 242,432
========== ========== ========== ==========
AVERAGE CHECK $ 43.22 $ 47.27 $ 50.17 $ 52.24
========== ========== ========== ==========
SEATS 200 200 200 200
========== ========== ========== ==========
COVERS / SEAT 930 1,069 1,154 1,212
========== ========== ========== ==========
COST OF SALES 2,490,540 31.00% 2,930,798 29.00% 3,243,279 28.00% 3,545,952 28.00%
---------- ---------- ---------- ----------
GROSS PROFIT 5,543,460 69.00% 7,175,402 71.00% 8,339,861 72.00% 9,118,163 72.00%
---------- ---------- ---------- ----------
Payroll-Restaurant 1,248,000 15.53% 1,300,000 12.86% 1,326,000 11.45% 1,352,000 10.68%
Payroll-Managers / Cooks 832,000 10.36% 884,000 8.75% 910,000 7.86% 936,000 7.39%
Payroll Taxes 312,000 3.88% 372,600 3.69% 380,400 3.28% 394,200 3.11%
Other Employee Benefits 291,200 3.62% 131,040 1.30% 134,160 1.16% 137,280 1.08%
Bonuses 75,000 0.93% 100,000 0.99% 120,000 1.04% 140,000 1.11%
Cost of Union 0.00% 600,000 5.94% 600,000 5.18% 680,000 5.37%
---------- ---------- ---------- ----------
TOTAL 2,758,200 34.33% 3,387,640 33.52% 3,470,560 29.96% 3,639,480 28.74%
---------- ---------- ---------- ----------
Total Payroll * / Seat 10,400 10,920 11,180 11,440
========== ========== ========== ==========
Total Payroll * / Cover 11.19 10.22 9.68 9.44
========== ========== ========== ==========
Total Payroll * / Week 40,000 42,000 43,000 44,000
========== ========== ========== ==========
YEAR - 5
--------------------
PCT
--------------------
----------
GROSS SALES 13,560,911 100.00%
----------
COVERS 249,705
==========
AVERAGE CHECK $ 54.31
==========
SEATS 200
==========
COVERS / SEAT 1,249
==========
COST OF SALES 3,797,055 28.00%
----------
GROSS PROFIT 9,763,856 72.00%
----------
Payroll-Restaurant 1,378,000 10.16%
Payroll-Managers / Cooks 962,000 7.09%
Payroll Taxes 411,000 3.03%
Other Employee Benefits 140,400 1.04%
Bonuses 160,000 1.18%
Cost of Union 800,000 5.90%
----------
TOTAL 3,851,400 28.40%
----------
Total Payroll * / Seat 11,700
==========
Total Payroll * / Cover 937
==========
Total Payroll * / Week 45,000
==========
* Does not include "Cost of Union" effect
THE ▇▇▇▇▇ & WOLLENSKY RESTAURANT GROUP, INC.
PROJECTED INCOME STATEMENTS
PLAZA HOTEL
YEAR - 1 YEAR - 2 YEAR - 3
-------------------- -------------------- --------------------
OTHER EXPENSES PCT PCT PCT
-------------------- -------------------- --------------------
Store Rent/Service Fee 0.00% 0.00% 0.00%
Heat, Light & Power (I) 175,000 2.18% 182,000 1.80% 189,280 1.63%
Telephone 25,000 0.31% 26,000 0.26% 27,000 0.23%
Carting 0 0.00% 0 0.00% 0 0.00%
Office Expense 45,000 0.56% 47,000 0.47% 49,000 0.42%
Corporate Payroll - Allocated (3) 60,000 0.75% 62,000 0.61% 64,000 0.55%
Auto 5,000 0.06% 5,000 0.05% 5,000 0.04%
Travel & Entertainment 25,000 0.31% 26,000 0.26% 27,000 0.23%
Tips 1,500 0.02% 1,500 0.0l% 1,500 0.01%
M & E Rental 25,000 0.31% 25,000 0.25% 25,000 0.22%
Professional Fees 30,000 0.37% 30,000 0.30% 30,000 0.26%
Security 0 0.00% 0 0.00% 0 0.00%
Contributions 2,000 0.02% 2,000 0.02% 2,000 0.02%
Consultants Fee 30,000 0.37% 30,000 0.30% 30,000 0.26%
Miscellaneous 10,000 0.12% 10,000 0.10% 10,000 0.09%
Linens & Uniforms (2) 120,835 1.50% 138,960 1.38% 150,077 1.30%
Other Operating Supplies 135,000 1.68% 180,000 1.78% 200,000 1.73%
Decorating 90,000 1.12% 92,000 0.91% 94,000 0.81%
Discounts 185,900 2.31% 160,339 1.59% 173,166 1.49%
Public Relations 90,000 1.12% 100,000 0.99% 105,000 0.91%
Insurance 75,000 0.93% 77,500 0.77% 80,000 0.69%
Licenses 10,000 0.12% 10,000 0.10% 10,000 0.09%
Repairs & Maintenance 75,000 0.93% 77,500 0.77% 80,000 0.69%
Advertising 250,000 3.11% 250,000 2.47% 250,000 2.16%
Dues & Subscriptions 1,000 0.01% 1,000 0.01% 1,000 0.01%
Real Estate Taxes 0 0.00% 0 0.00% 0 0.00%
Credit Card Charges 216,918 2.70% 272,867 2.70% 312,745 2.70%
Management Fee 321,360 4.00% 404,248 4.00% 463,326 4.00%
Bad Debts 1,000 0.01% 2,000 0.02% 2,000 0.02%
---------- ---------- ----------
TOTAL OTHER EXPENSES 2,005,513 24.96% 2,212,914 21.90% 2,381,093 20.56%
---------- ---------- ----------
TOTAL EXPENSES (4,763,713) -59.29% (5,600,554) -55.42% (5,851,653) -50.52%
---------- ---------- ----------
EBITDA and Special Items 779,747 9.71% 1,574,848 15.58% 2,188,208 21.48%
Depreciation & Amortization 75,000 0.93% 75,000 0.74% 75,000 0.65%
0.00% 0.00% 0.00%
0.00% 0.00% 0.00%
---------- ---------- ----------
NET INCOME BEFORE TAXES 704,747 8.77% 1,499,848 14.84% 2,413,208 20.83%
---------- ---------- ----------
Taxes 0.00% 0.00% 0.00%
---------- ---------- ----------
NET INCOME 704,747 8.77% 1,499,848 14.84% 2,413,208 20.83%
---------- ---------- ----------
YEAR - 4 YEAR - 5
-------------------- --------------------
OTHER EXPENSES PCT PCT
-------------------- --------------------
Store Rent/Service Fee 0.00% 0.00%
Heat, Light & Power (I) 196,851 1.55% 204,725 1.51%
Telephone 28,000 0.22% 29,000 0.21%
Carting 0 0.00% 0 0.00%
Office Expense 51,000 0.40% 53,000 0.39%
Corporate Payroll - Allocated (3) 66,000 0.52% 68,000 0.50%
Auto 5,000 0.04% 5,000 0.04%
Travel & Entertainment 28,000 0.22% 29,000 0.21%
Tips 1,500 0.01% 1,500 0.01%
M & E Rental 25,000 0.20% 25,000 0.18%
Professional Fees 30,000 0.24% 30,000 0.22%
Security 0 0.00% 0 0.00%
Contributions 2,000 0.02% 2,000 0.01%
Consultants Fee 30,000 0.24% 30,000 0.22%
Miscellaneous 10,000 0.08% 10,000 0.07%
Linens & Uniforms (2) 157,581 1.24% 162,308 1.20%
Other Operating Supplies 200,000 1.58% 200,000 1.47%
Decorating 96,000 0.76% 98,000 0.72%
Discounts 181,824 1.44% 187,279 1.38%
Public Relations 110,000 0.87% 115,000 0.85%
Insurance 82,500 0.65% 85,000 0.63%
Licenses 10,000 0.08% 10,000 0.07%
Repairs & Maintenance 82,500 0.65% 85,000 0.63%
Advertising 250,000 1.97% 250,000 1.84%
Dues & Subscriptions 1,000 0.01% 1,000 0.01%
Real Estate Taxes 0 0.00% 0 0.00%
Credit Card Charges 341,931 2.70% 366,145 2.70%
Management Fee 506,565 4.00% 542,436 4.00%
Bad Debts 3,000 0.02% 3,000 0.02%
---------- ----------
TOTAL OTHER EXPENSES 2,496,252 19.71% 2,592,393 19.12%
---------- ----------
TOTAL EXPENSES (6,135,732) -48.45% (6,443,793) -47.52%
---------- ----------
EBITDA and Special Items 2,982,431 23.55% 3,320,062 24.48%
Depreciation & Amortization 75,000 0.59% 75,000 0.55%
0.00% 0.00%
0.00% 0.00%
---------- ----------
NET INCOME BEFORE TAXES 2,907,431 22.96% 3,245,062 23.93%
---------- ----------
Taxes 0.00% 0.00%
---------- ----------
NET INCOME 2,907,431 22.96% 3,245,062 23.93%
---------- ----------
NOTE:
1. Reflects a 4% increase per year for cost of living or utility purveyor
increases.
2. Assumes linens are cleaned by hotel.
3. Reflects the allocation of payroll from the following Corporate personnel:
▇▇▇▇▇ ▇▇▇▇▇ (Executive Chef), ▇▇▇▇▇ ▇▇▇▇▇▇ (Construction / Maintenance),
▇▇▇▇ ▇▇▇▇▇▇ (Wine Director), ▇▇▇ ▇▇▇▇▇ (MIS Support), ▇▇▇▇▇ ▇▇▇▇▇▇ (MIS
Support) and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (Construction / Maintenance). Any increases in
salaries will be offset by the increase in amounts allocated to new units.
The ▇▇▇▇▇ & Wollensky Restaurant Group, Inc.
Project Cash Flow - Plaza Hotel
Assumptions:
Owner Contribution 4,000,000 (1)
Manager Contribution 500,000 (1)
Working Capital Acct 500,000
* Preopening Costs Included in (1)
Year 1 Year 2 Year 3
------ ------ ------
Manager Owner Manager Owner Manager Owner
------- ----- ------- ----- ------- -----
Contribution 500 4,000 188 3,532 2,587
Cash Flow from Operations 1,101 1,979 2,951
1. Payment of Mgmt Fee (321) (404) (463)
Available Cash Flow 780 1,575 2,488
2. Interest and Principal on Priority Contributions
3. 60% to Owner / 40% to Manager (until contribution repaid) (312) (468) (630) (945) (995) (1,493)
----- ----- -----
4. 50% to Owner / 50% to Manager
-------------------------------------- -------------------------------------------------------------
Total Fees Distributed 633 468 1,034 945 1,458 1,493
-------------------------------------- -------------------------------------------------------------
-------------------------------------- -------------------------------------------------------------
Cumulative Fees Distributed 633 468 1,667 1,413 3,125 2,906
-------------------------------------- -------------------------------------------------------------
Year 4 Year 5
------ ------
Manager Owner Manager Owner
------- ----- ------- -----
Contribution 1,094
Cash Flow from Operations 3,489 3,862
1. Payment of Mgmt Fee (507) (542)
Available Cash Flow 2,982 3,320
2. Interest and Principal on Priority Contributions
3. 60% to Owner / 40% to Manager (until contribution repaid) (729) (1,094)
4. 50% to Owner / 50% to Manager (580) (580) (1,660) (1,660)
-------------------------------------- ---------------------------------------
Total Fees Distributed 1,816 1,673 2,202 1,660
-------------------------------------- ---------------------------------------
-------------------------------------- ---------------------------------------
Cumulative Fees Distributed 4,941 4,579 7,143 6,239
-------------------------------------- ---------------------------------------
EXHIBIT C
Restaurant Concept
-60-
▇▇▇▇▇ & Wollensky: New York--Miami Beach--Chicago--New Orleans--Las Vegas
The Post House
The Manhattan Ocean Club
Cite
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Park Avenue Cafe: New York--Chicago
Mrs. Park's Tavern: Chicago
The New York Restaurant Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ FAX (▇▇▇) ▇▇▇-▇▇▇▇
NYRG - EDWARDIAN ROOM CONCEPT
The New York Restaurant Group currently runs 6 extraordinary
white-tablecloth restaurants in New York and 6 additional restaurants in cities
around the United States (Miami, New Orleans, Chicago, Las Vegas, Washington
D.C.) These restaurants draw approximately 2 million people, with 60% being
locals and 40% being tourists. We intend to use a similar methodology of unusual
and unique product to include an extraordinary wine list, an exotic cocktail
list and spectacular pastry offerings, all of which will be especially created
for this particular concept.
We envision this to be the best American Bistro in the country. Check
average should start at approximately $52 per person and progress to $60 per
person over time.
We intend the physical space to be as casual as possible to offset the
formality of the space. "Plushness" will be avoided and instead be replaced it
with a tongue in cheek, more down to Earth, but fun decor that will enable a
clientele of 25 to 55 year olds to be loud, and noisy which will serve as an
enticing foil to the rest of the Plaza. This style of restaurant should be
similar to our current restaurants to draw from our 2 million client base.
Both the menu and wine list should have a high to low quality that will
allow the clientele to choose from entrees under $20 to over $30. We will plan
for the bar to become a meeting place from 5:00 to 7:00 that will take on the
fun atmosphere of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 57/57, or The 21 Club in New York. This
should start the evening off with exotic drinks in a relaxed but convivial
atmosphere and then flow naturally into a dining experience that will run from
6:00p.m. to 12:00a.m. for the post theatre crowd.
Dress rules will be relaxed, therefore hoping to draw people from all
walks of life. This should result in a sophisticated, yet accessible dining
experience, which is what we have achieved in all of our other mid-town
restaurants, and take the "Edwardian Rooms" to a modern and special
establishment.
The quality standard and the level of service will be comparable to that
of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Park Avenue Cafe, Balthazar and Gramercy Tavern.
EXHIBIT D
Project Costs Budget
$ 500,000 - Working capital
$ 100,000 - Small wares
$ 110,000 - Pre-opening expenses
$ 600,000 - FF&E including Tihany fee
$ 250,000 - Professional fees
$3,690,000 - Construction maximum
----------
$5,250,000
EXHIBIT E
Initial Operating Budget
-62-
THE ▇▇▇▇▇ & WOLLENSKY RESTAURANT GROUP, INC.
PROJECTED INCOME STATEMENTS
PLAZA HOTEL
SEPTEMBER (2 weeks) OCTOBER NOVEMBER DECEMBER
-------------------- ------------------ ------------------- -------------------
PCT PCT PCT PCT
-------------------- ------------------ ------------------- -------------------
------- ------- ------- -------
GROSS SALES 250,000 100.00% 520,000 100.00% 560,000 100.00% 750,000 100.00%
------- ------- ------- -------
COVERS 5,435 10,833 11,667 15,000
======= ======= ======= =======
AVERAGE CHECK $46.00 $48.00 $48.00 $50.00
======= ======= ======= =======
SEATS 200 200 200 200
======= ======= ======= =======
COVERS/SEAT 27 54 58 75
======= ======= ======= =======
COST OF SALES 95,000 38.00% 176,800 34.00% 184,800 33.00% 240,000 32.00%
------- ------- ------- -------
GROSS PROFIT 155,000 62.00% 343,200 66.00% 375,200 67.00% 510,000 68.00%
------- ------- ------- -------
Payroll - Restaurant 52,000 20.80% 104,000 20.00% 104,000 18.57% 130,000 17.33%
Payroll - Managers/▇▇▇▇ 36,000 14.40% 72,000 13.85% 72,000 12.86% 95,000 12.67%
Payroll Taxes 13,200 5.28% 26,400 5.08% 26,400 4.71% 33,750 4.50%
Other Employee Benefits 12,320 4.93% 10,560 2.01% 10,560 1.89% 13,500 1.80%
Bonuses 7,500 3.00% 7,500 1.41% 7,500 1.34% 7,500 1.00%
Cost of Union 0.00% 0.00% 0.00% 0.00%
------- ------- ------- -------
TOTAL 121,020 48.41% 220,460 42.40% 220,460 39.37% 279,750 37.30%
------- ------- ------- -------
Total Payroll* / Seat 440 880 880 1,125
======= ======= ======= =======
Total Payroll* / Cover 16.19 16.25 15.09 15.00
======= ======= ======= =======
Total Payroll* / Week 44,000 44,000 44,000 45,000
======= ======= ======= =======
* Does not include "Cost of Union" effect
EXHIBIT F
Memorandum of Understanding
-63-
MEMORANDUM OF AGREEMENT entered into May 3, 2000 by and
between_________ ("Restaurant"), THE PLAZA HOTEL ("Hotel") and the NEW YORK
HOTEL AND MOTEL TRADES COUNCIL, AFL-CIO ("Union").
WHEREAS, the Hotel is a party and signatory to the June 26, 1985
Industry Wide Collective Bargaining Agreement between the Union and the Hotel
Association of New York City, Inc. ("Hotel Association") as amended and extended
by a January 30, 1990 Memorandum of Understanding and by a July 5, 1995
Memorandum of Understanding between the Union and the Hotel Association
(hereinafter collectively referred to as the "Industry Wide Agreement" or
"IWA"); and
WHEREAS, pursuant to the provisions of the Industry Wide Agreement
the Hotel and the Restaurant are deemed to be joint employers with respect to
the Restaurant's employees; and
WHEREAS, the Union, the Hotel and the Restaurant are desirous of
maintaining stable and harmonious labor relations and the wage and benefit area
standards established by the Union;
NOW THEREFORE, the parties agree to amend the Industry Wide
Agreement to reflect the status of the Hotel and Restaurant as joint employers
as more particularly set forth below:
1. Restaurant shall recognize the Union as its employees' sole and
exclusive "collective bargaining representative" and shall assume, adopt and
become party to the Industry Wide Agreement between the Hotel and the Union
effective upon its hiring of a representative complement of its "bargaining
unit" employees and said Industry Wide Agreement shall, subject to the
provisions of this Memorandum of Agreement, including, but not limited to,
paragraph 3 below, be deemed to be the Collective Bargaining Agreement ("CBA")
between the Restaurant and the Union.
2. The duration of the CBA between the Restaurant and the Union will
be coterminous with the duration of the Industry Wide Agreement between the
Hotel and the Union. At the expiration of the CBA, the Restaurant agrees to be
bound by the terms of the successor labor IWA then in effect between the Hotel
and the Union. In the event there is no such successor IWA, the Restaurant
agrees that it will execute a "Me Too" agreement wherein it agrees to adopt the
terms and conditions of such successor IWA when same has been agreed to.
3. The terms and conditions of the CBA between the Restaurant and
the Union shall be effective and implemented twenty-four (24) months after the
date upon which Restaurant commences business operations, which opening is
currently projected to be May 2000 or January 1, 2001, whichever occurs sooner.
The arbitration provisions of the CBA shall be effective immediately regarding
any issues arising out of this Agreement.
4. Notwithstanding the provisions of the Industry Wide Agreement,
the Union agrees that the following job classifications will not be covered
under the CBA with the Restaurant:
(a) Executive Chef (one per shift)
(b) Sous Chef- One in day shift, one in evening
Chef Pastry - one
(c) All Security Personnel
(d) All Office and Clerical Personnel
Accounting Staff
Data Processing Staff
Secretaries
Administrative Assistants
Purchasing Agents
(e) Executive ▇▇▇▇▇▇▇ (one (1) per shift)
(f) One General Manager, one Floor Manager per shift
(g) Beverage Manager
-2-
(h) Head Waiter/Sommelier
(i) Host/Hostesses. The Restaurant and Union agree however
that the Host/Hostesses will only take food and drink
orders on an as-needed basis so long as such functions
do not adversely affect the bargaining unit's
opportunities, and will not handle or serve any food or
drinks to the customers of the Restaurant.
5. Notwithstanding the provisions of the Industry Wide Agreement,
the wage rates payable to the Restaurant's employees, for the first three (3)
years of the CBA shall be 75% of the then current Schedule "A" wage rates as
then set forth in the Industry Wide Agreement. By way of example, if the CBA
becomes effective May 1, 2002, then during the period May 1, 2002 through April
30, 2003 (the first year of the CBA), employees employed by the Restaurant in
the job category "Food Server" shall be paid at the weekly rate of 75% of the
Schedule "A" wage rate then set forth in the Industry Wide Agreement for such
job category during the first year of the CBA; and 75% of the Schedule "A" wage
rate then set forth in the Industry Wide Agreement for such job category during
the second year of the CBA, and 75% of the Schedule "A" wage rate then set forth
in the Industry Wide Agreement for such job category during the third year of
the CBA.
The Restaurant shall pay its employees at the rate of 85% of the
Schedule "A" wage rate then set forth in the Industry Wide Agreement during the
fourth (4th) year of the CBA, and at 100% of the Schedule "A" wage rate then set
forth in the Industry Wide Agreement during the fifth and all subsequent years
(or parts thereof) of the CBA. The Industry Wide Agreement regarding the payment
of wages for new employees shall remain in effect for the duration of this CBA,
but the wages payable to new employees are modified as set forth above.
6. Notwithstanding the provisions of the Industry Wide Agreement to
the contrary, the Restaurant and Union agree that employees working in the job
category "Bartender" and "Barboy" shall be deemed to be tipping category
employees and shall work a forty (40) hour
-3-
work week. The wage rate for said employees shall be the then current Schedule
"A" wage rate set forth in the Industry Wide Agreement for bartenders and
barboys. The Bartender may perform cashiering responsibilities for the
Restaurant. It is agreed that, if, at anytime after the effective date of the
CBA, the Union determines that as a result of the aforesaid provisions of this
paragraph 6 the Restaurant's bartenders and barboys are suffering an undue
hardship, financial or otherwise, the Union may, after discussions with the
bartenders and barboys and after discussions with the Restaurant, determine
whether said employees shall be restored to a thirty five (35) hour work week
with no loss of pay or other benefits. The Restaurant will after such
discussions with the Union implement such change within ten (10) days after the
Union requests such a change.
7. The Restaurant shall have the right to utilize its regular
kitchen and restaurant staff to service private parties and banquet functions in
ala carte dining rooms, at the employees' regular rate of pay. The Restaurant
shall distribute fifteen (15%) percent of the private party food and beverage
sales as a gratuity to bussers (if any) and servers. The Restaurant and the
Union must agree to the formula to be used in the distribution of the fifteen
(15%) percent gratuity.
8. The Restaurant, with the written consent of the employee and with
notice to and the written consent of the Union, shall have the right to create
regular part-time waiter or bartender positions not subject to premium pay in
those situations where a full-time waiter or bartending employee is not
necessary or is not possible due to lack of business during certain hours and on
certain days. A copy of that agreement will be sent to the Union and it shall be
valid and binding. The intention of this paragraph is not to avoid full-time
employment opportunities where business warrants full-time staffing.
9. Subject to the provisions of paragraph 3 hereof, the Restaurant
shall become party to each of the Trust Agreements by and between the Union and
the Hotel Association creating
-4-
and maintaining the Pension, Insurance, Union Family Medical, Dental,
Scholarship & Training and Legal Funds. The Restaurant shall commence making
contributions to the Insurance and Union Family Medical Funds ninety (90) days
after the effective date of the CBA. The Restaurant shall commence making
contributions to the Dental Fund two (2) years after the effective date of the
CBA. The Restaurant shall commence making contributions to the Legal Fund,
Scholarship and Training Funds, and Pension Fund three (3) years after the
effective date of the CBA.
10. During the first year of the CBA, all provisions of the Industry
Wide Agreement with respect to all new hires, as modified by this Mem6randum of
Agreement, shall apply except that the probationary period for new hires shall
be one hundred and eighty (180) calendar days. During the second and remaining
years of the CBA, all provisions of the Industry Wide Agreement with respect to
new hires, as modified by this Memorandum of Agreement, shall apply and the
probationary period for new hires shall be sixty (60) work days.
11. It is agreed that Paragraph 51 of the Agreement with respect to
night shift differential pay shall not be applicable until the last month of the
CBA.
12. The Restaurant may establish a four day work week for kitchen
employees consisting of three 12-hour shifts and one seven hour shift, whereby
no overtime will be payable for kitchen employees on such shift who work in
excess of eight hours in any given day. Notwithstanding the above, overtime
shall be payable to such employees who work over 35 hours in any given week.
[Alt - 10 hour shifts; 1.25 rate for 35-40 hours; 1.5 rate for over 40 hours]
13. The Union agrees that the Hotel's agreement to become party to
this Memorandum of Agreement shall fulfill the Hotel's obligations under section
45 of the industry Wide Agreement. The Hotel shall at all times hold and
exercise full control of and be responsible for the terms and conditions of
employment of employees of the Restaurant, its joint employer, for
-5-
labor relations purposes with regard to the schedule of hours, wages and
economic benefits provided in this Memorandum of Agreement, including holidays,
vacations, premises, overtime, health and welfare, dental, pension, legal
training and/or any other economic benefits required in the Restaurant and Union
CBA. Conditioned on the above, the Union shall not require security for the
Restaurant under Section 46 of the Industry Wide Agreement.
________________________ (Restaurant)
Dated: _______, 1999 By: /s/ ▇▇▇ ▇▇▇▇, President
------------------------------
(Print Name, Position)
THE PLAZA HOTEL
Dated: ________, 1999 By: /s/ [ILLEGIBLE]
------------------------------
(Print Name, Position)
NEW YORK HOTEL AND MOTEL
TRADES COUNCIL, AFL-CIO
Dated: May 3, 2000 By: /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇, President
-6-
EXHIBIT G
59th Street Entrance
-64-
[FLOOR PLAN OMITTED]
EXHIBIT H
Intentionally Omitted
-65-
EXHIBIT I
Group Services
-66-
GROUP SERVICES
1. The following personnel who will provide on-site services to the Restaurant
as well as other restaurants owned or managed by Manager or its Affiliates:
Anticipated Allocable Cost for
Description of Job Current Annual Cost First Year of Restaurant Operation
Executive Chef $330,000 $27,500
Construction/Maintenance $170,000 $14,l67
MIS Support $125,000 $10,416
Wine Director $75,000 $6,250
The cost of such personnel will be allocated on a pro rata basis between all of
the restaurants owned or managed by Manager or its affiliates (currently 12,
including the restaurant).
2. Group marketing and advertising for all of the restaurants owned and managed
by Manager-or its affiliates. The cost of such group marketing and advertising
was approximately $1.8 million in calendar year 1998 and its anticipated to be
$3.0 million for calendar 1999. The restaurant's share of such cost will be
calculated as follows:
$3.0 million / 12 = $250,000
EXHIBIT J
Parent Guaranty
-67-
GUARANTEE OF MANAGEMENT AGREEMENT
GUARANTEE made as of this 7th day of September 2000, by ▇▇▇▇▇ &
WOLLENSKY RESTAURANT GROUP, INC., a Delaware corporation having an address at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇, ▇.▇. ▇▇▇▇▇, (herein referred to as
"Guarantor") to PLAZA OPERATING PARTNERS, LTD., a Texas limited partnership
whose address is ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇ (hereinafter
referred to as "Owner").
W I T N E S S E T H:
WHEREAS:
A. Guarantor has requested Owner to enter into a Management
Agreement (the "Agreement") with Parade 59 Restaurant, LLC "Manager"), dated as
of the date hereof. Capitalized terms used herein and not otherwise defined
sha11 have the meanings assigned to such terms in the Agreement.
B. Owner has refused to enter into the Agreement unless Guarantor
guarantees the performance by Manager of all of the terms, covenants,
conditions, obligations and agreements (hereinafter being collectively called,
the "Covenants") contained in the Agreement on the part of Manager to be
performed thereunder.
NOW, THEREFORE, in consideration of the sum of Ten ($10.00) Dollars
by each of the parties to the other in hand paid, the receipt whereof is hereby
acknowledged and in consideration of the making of the Agreement and other good
and valuable consideration, including the undertakings herein contained, the
Guarantor hereby agrees with and guarantees to Owner as follows:
1. Guarantor unconditionally guarantees to Owner the full and
faithful performance and observance of any and all Covenants contained in the
Agreement on the part of Manager to be performed and observed; and Guarantor
unconditionally covenants and agrees to and with Owner that, if default or
breach shall at any time be made by Manager in the performance of any of the
Covenants contained in the Agreement on Manager's part to be performed,
Guarantor will well and truly perform the Covenants that may remain due thereon
to Owner, including all damages stipulated in the Agreement with respect to the
non-performance of said Covenants.
Notwithstanding anything stated herein, with respect to payment and
performance under this Guarantee, Guarantor shall pay or perform the Covenants
contained in the Agreement on the part of Manager to be performed upon written
demand. With respect to enforcement under this Guarantee, Guarantor agrees that
Guarantor shall pay to Owner, within thirty (30) days after written demand, all
expenses actually incurred by Owner (including reasonable attorney's fees) of,
or incidental to or relating, to the enforcement or protection of Owner's rights
hereunder
or under the Agreement together with interest thereon at the Default Rate from
the date such expenses are incurred to the date such expenses are paid.
2. Guarantor expressly agrees that the liability of Guarantor
hereunder shall not be impaired, abated, deferred, diminished, modified,
released, terminated or discharged, in whole or in part, or otherwise affected
by any event, condition, occurrence, circumstance, proceeding, action or failure
to act, with or without notice to, or the knowledge or consent of, Guarantor,
including but not limited to:
(a) any amendment or modification of the provisions of the
Agreement;
(b) any extensions of time for performance, whether in whole
or in part, of the Covenants under the Agreement on the part of Manager to be
performed given prior to or after default thereunder;
(c) any other guarantee now or hereafter executed by Guarantor
or anyone else except as may be otherwise provided in the Agreement;
(d) any waiver of or assertion or enforcement or failure or
refusal to assert or enforce, in whole or in part, any Covenants, claims, causes
of action, rights or remedies which Owner may, at any time, have under the
Agreement;
(e) the release of any other guarantor from liability for the
performance or observance of any other covenants under the Agreement on the part
of Manager to be performed, whether by operation of law or otherwise;
(f) any rights, powers or privileges Owner may now or
hereafter have against any person, entity or collateral;
(g) any assignment, conveyance, mortgage, merger or other
transfer, voluntary or involuntary (whether by operation of law or otherwise),
of all or any part of Manager's interest in the Agreement, or the occurrence of
any such assignment, conveyance, mortgage, merger or other voluntary or
involuntary transfer which results in Guarantor becoming the Manager under the
Agreement; or
(h) any assignment, conveyance, mortgage, merger or other
transfer, voluntary or involuntary (whether by operation of law or otherwise) of
all or part of the interest or rights of Owner under the Agreement.
In the event that any agreement or stipulation between Owner
and Manager shall extend the time of performance or modify any of the covenants
of the Agreement on the part of Manager to be performed, Guarantor shall
continue liable upon its guarantee according to the tenor of any such agreement
or stipulation.
3. To hold Guarantor liable under this Guarantee no demand shall be
required and Guarantor hereby expressly waives any such demand. Owner shall have
the right to enforce this Guarantee without pursuing any rights or remedies of
Owner against Manager or any other party, or any security Owner may hold; it
being intended that if there shall occur any breach, insolvency or bankruptcy
default or any other default by Manager in the performance or observance of any
Covenant in the Agreement, then Guarantor shall be obligated to perform its
obligations hereunder. Owner may commence any action or proceeding based upon
this Guarantee directly against Guarantor without making Manager or anyone else
a party defendant in such action or proceeding. Any one or more successive
and/or concurrent actions may be brought hereon against Guarantor either in the
same action, if any, brought against Manager and/or any other party or in
separate actions, as often as Owner, in its sole discretion, may deem advisable.
4. This Guarantee shall be binding upon Guarantor and its successors
and assigns, and shall inure to the benefit of and may be enforced by the
successors and assigns of Owner or by any person to whom Owner's interest in the
Agreement or any part thereof, including the rents, may be assigned whether by
way of mortgage or otherwise. Wherever in this Guarantee reference is made to
either Owner or Manager, the same shall be deemed to refer also to the then
successor or assign of Owner or Manager.
5. Guarantor hereby expressly waives and releases (i) notice of the
acceptance of this Guarantee and notice of any change in the Manager's financial
condition; (ii) the right to interpose all substantive and procedural defenses
of the law of guarantee, indemnification and suretyship, except the defenses of
prior payment or prior performance by Manager or Guarantor (of the obligations
which Guarantor is called upon to pay or perform under this Guarantee); (iii)
all rights and remedies accorded by applicable law to guarantors, or sureties,
including without limitation, any extension of time conferred by any law now or
hereafter in effect; (iv) the right to trial by jury, in any action or
proceeding of any kind arising on, under, out of, or by reason of or relating,
in any way, to this Guarantee or the interpretation, breach or enforcement
thereof; (v) the right to interpose any defense (except as allowed under (ii)
above), set off or counterclaim (unless the failure to interpose such
counterclaim would constitute a bar to a separate proceeding and a waiver of
such claim) of any nature or description in any action or proceeding (provided
nothing stated herein shall prevent Guarantor from bringing a separate
proceeding of any nature or description); and (vi) any right or claim or right
to cause a marshaling of Manager's assets or to cause Owner to proceed against
Manager, and/or any collateral held by Owner at any time or in any particular
order.
6. Without limiting Guarantor's obligations elsewhere under this
Guarantee, Guarantor agrees that if Manager, or Manager's trustee, receiver or
other officer with similar powers with respect to Manager, rejects, disaffirms
or otherwise terminates the Agreement pursuant to any bankruptcy, insolvency,
reorganization, moratorium or any other law affecting creditors' rights
generally, Guarantor shall automatically be deemed to have assumed, from and
after the date such rejection, disaffirmance or other termination of the
Agreement is deemed effective, all obligations and liabilities of Manager under
the Agreement to the same extent as if Guarantor had been originally named
instead of Manager as a party to the Agreement and the
Agreement had never been so rejected, disaffirmed or otherwise terminated.
Guarantor, upon such assumption, shall be obligated to perform and observe all
of the terms, conditions and covenants of the Agreement to be observed and
performed by the Manager thereunder whether theretofore accrued or thereafter
accruing and Guarantor shall be subject to any rights or remedies of Owner which
may have theretofore accrued or which may thereafter accrue against the Manager
on account of any default under the Agreement, notwithstanding that such
defaults existed prior to the date Guarantor was deemed to have automatically
assumed the Agreement or that such rights or remedies are unenforceable against
Manager by reason of such rejection, dissaffirmance or other termination.
Guarantor shall confirm such assumption in writing at the request of Owner upon
or after such rejection, dissaffirmance or other termination, but the failure to
do so shall not affect such assumption. Guarantor, upon the assumption of the
Agreement, shall have all the rights of Manager under the Agreement (to the
extent permitted by law). Neither Guarantor's obligation to make payment in
accordance with the terms of this Guarantee nor any remedy for the enforcement
thereof shall be impaired, modified, changed, stayed, released or limited in any
manner whatsoever by any impairment, modification, change, release, limitation
or stay of the liability of Manager or its estate in bankruptcy or any remedy
for the enforcement thereof, resulting from the operation of any present or
future provision of the Bankruptcy Code of the United States or other statute or
from the decision of any court interpreting any of the same, and Guarantor shall
be obligated under this Guarantee as if no such impairment, stay, modification,
change, release or limitation had occurred.
7. This Guarantee and all tights, obligations and liabilities
arising hereunder shall be construed according to the laws of the State of New
York. Guarantor hereby irrevocably agrees that any legal action, suit, or
proceeding against it with respect to its obligations, liabilities or any other
matter under or arising out of or in connection with this Guarantee or for
recognition or enforcement of any judgment rendered in any such action, suit or
proceeding may be brought in the United States Courts for the Southern District
of New York, or in the courts of the State of New York, as Owner may elect, and,
by execution and delivery of this Guarantee, Guarantor hereby irrevocably
accepts and submits to the venue and non-exclusive jurisdiction of each of the
aforesaid courts in persona, generally and unconditionally with respect to any
such action, suit, or proceeding for itself and in respect of its property.
Guarantor further agrees that final judgment against it in any action, suit, or
proceeding referred to herein shall be conclusive and may be enforced in any
other jurisdiction, by suit on the judgment, a certified or exemplified copy of
which shall be conclusive evidence of the fact and of the amount of its
indebtedness.
Guarantor hereby appoints Manager as its attorney-in-fact and agent
in its name, place and stead to accept service of legal process in any such
action or proceeding, and consents that service of legal process in any such
action or proceeding may be made upon it by service upon Manager at c/o Smith &
Wollensky Restaurant Group, LLC, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇, provided in the event Manager is no longer in occupancy
at said address service may be made upon it by service upon ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
8. Guarantor represents and warrants to Owner that as of the date
hereof:
(a) Guarantor has full power, authority and legal right to
execute, deliver, perform and observe the provisions of this Guarantee,
including, without limitation, the payment of all moneys hereunder.
(b) The execution, delivery and performance by Guarantor of
this Guarantee has been duly authorized by all necessary corporate action.
(c) This Guarantee constitutes the legal, valid and binding
obligation of Guarantor, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, and other laws affecting
creditors' rights generally, to moratorium laws from time to time in effect and
to general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
9. If Guarantor shall merge or consolidate with any corporation or
sell all or substantially all of its assets either (i) Guarantor shall be the
surviving corporation or (ii) contemporaneously with such merger or
consolidation or sale, the surviving or purchasing corporation shall execute and
deliver to Owner a guarantee of the Agreement, substantially in the form and
substance of this Guarantee, together with reasonably satisfactory evidence of
the due authorization, execution, delivery, validity, binding effect and
enforceability thereof but whether or not such execution and delivery shall take
place the surviving or purchasing entity shall be bound by the provisions set
forth above as if it had so executed and delivered such guarantee.
10. If Owner shall be obligated by reason of any bankruptcy,
insolvency or other legal proceeding to pay or repay to Manager or to Guarantor
or to any trustee, receiver or other representative of either of them, any
amounts previously paid by Manager or Guarantor pursuant to the Agreement or
this Guarantee, Guarantor shall reimburse Owner for any such payment or
repayment and this Guarantee shall extend to the extent of such payment or
repayment made by the Owner, except to the extent, if any, that such payment or
repayment is prohibited by law or that such payment or repayment constitutes
merely a reimbursement of any overpayment. Owner shall not be required to
litigate or otherwise dispute its obligation or make such payment or repayment
if in good faith and on written advice of counsel it believes that such
obligation exists.
11. Guarantor shall, at any time and from time to time, within ten
(10) days following the request by Owner, execute, acknowledge and deliver to
Owner a statement certifying that this Guarantee is unmodified and in full force
and effect (or if there have been modifications, that the same is in full force
and effect as modified and stating such modifications) and that to the best of
the Guarantor's knowledge, Guarantor is not in default hereunder (or if there is
such a default, describing such default in reasonable detail).
12. All remedies afforded to Owner by reason of this Guarantee or
the Agreement, or otherwise available at law or in equity, are separate and
cumulative remedies and it is agreed that no one remedy, whether or not
exercised by Owner, shall be deemed to be in
exclusion of any other remedy available to Owner and shall not limit or
prejudice any other legal or equitable remedy which Owner may have.
13. Guarantor waives trial by jury of any and all issues arising in
any action, suit or proceeding to which Owner and Guarantor may be parties upon,
under or connected with this Guarantee or any of its provisions, directly or
indirectly.
14. If any term, covenant, condition or provision of this Guarantee
or the application thereof to any circumstance or to Guarantor shall be invalid
or unenforceable to any extent, the remaining terms, covenants, conditions and
provisions of this Guarantee or the application thereof to any circumstances or
to Guarantor other than those as to which any term, covenant, condition or
provision is held invalid or unenforceable, shall not be affected thereby and
each remaining term, covenant, condition and provision of this Guarantee shall
be valid and shall be enforceable to the fullest extent permitted by law.
15. Any notice hereunder shall be in writing and personally
delivered, sent by certified or registered mail, return receipt requested or
sent by overnight courier, including without limitation Federal Express or any
other reputable overnight courier, postage prepaid to Owner or Guarantor at
their respective addresses hereinabove set forth with a copy of all notices to
Guarantor delivered to ▇▇▇▇▇ & Wollensky Restaurant Group, LLC, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇., Attention: ▇▇▇▇▇ ▇▇▇▇, and a copy of all notices to
Owner delivered to Plaza Operating Partners, Ltd., c/o CDL Plaza Operating
Corp., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, or such other addresses designated by Owner or Guarantor by 10 days
prior notice. Any notice shall be deemed given as of the date of delivery as
indicated by affidavit in case of personal delivery, by the return receipt in
the case of mailing or as set forth in the records of the overnight courier; and
in the event of failure to deliver by reason of changed address of which no
notice is given or refusal to accept delivery, as of the date of such failure as
indicated by affidavit, return receipt or as set forth in the records of the
overnight courier as aforesaid.
IN WITNESS WHEREOF, the Guarantor has executed this Agreement as of
the day and year first above written.
▇▇▇▇▇ & WOLLENSKY RESTAURANT
GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President