MANAGEMENT AGREEMENT
THIS AGREEMENT, made and entered into this 23rd day of April, 1997 (the
"Effective Date"), by and between ______________________________, a ______
corporation (hereinafter called "Owner") and JANUS INDUSTRIES, INC., a Delaware
corporation (hereinafter called "Manager").
WHEREAS, Owner represents that it owns the motel and the underlying real
estate which is more fully described on Exhibit A attached hereto and made a
part hereof (hereinafter called the "Property"); and
WHEREAS, the parties hereto desire that Manager shall manage and operate
the Property as agent of Owner under the terms of this written Management
Agreement (hereinafter called the "Agreement").
NOW, THEREFORE, in consideration of the mutual promises and premises
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
APPOINTMENT AND COMPENSATION OF MANAGER
1.1 Appointment of Manager. Owner hereby appoints Manager, and Manager
hereby accepts appointment, on the terms and conditions hereinafter set forth,
to maintain, operate and manage the Property on Owner's behalf from the date
hereof. Manager shall be an agent of Owner.
1.2 Delegation of Authority. Solely to the extent expressly provided
herein, the day-to-day operation, management and maintenance of the Property
shall be under the supervision, direction and control of Manager.
1.3 Management Fee. For its services hereunder, Manager shall receive a
management fee (the "Management Fee") equal to five percent (5%) of the Gross
Revenues (as defined in Exhibit B attached hereto) of the Property. The
Management Fee shall be calculated for each Accounting Period (as defined in
Exhibit B attached hereto) and payable to Manager from the General Account (as
defined in Section 3.2 below) at the end of each Accounting Period.
ARTICLE II
TERM
2.1 Term. The term ("Term") of this Agreement shall be for an initial term
(the "Initial Term") of ten (10) years commencing on the Effective Date and
ending on the tenth anniversary of such date (the "Initial Term Expiration
Date"). The Agreement shall
automatically be renewed after the Initial Term for successive one (1) year
periods (each term referred to hereinafter as a "Renewal Term") unless either
party hereto shall affirmatively decide not to renew the same. Notice of
termination must be delivered in writing on or before ninety (90) days prior to
the expiration of the Initial Term or the Renewal Term.
2.2 Early Termination. This Agreement shall cease prior to the expiration
of the Initial Term hereof upon the occurrence of any of the following
circumstances (hereinafter referred to as an "Early Termination Event"):
(a) In the event of a bona fide sale of the Property, Owner may
terminate this agreement upon thirty (30) days prior written notice to Manager.
(b) In the event that either Owner or Manager materially breaches this
Agreement or fails to observe or perform any of its material covenants or
agreements and shall not cure any such breach within thirty (30) days after
written notice from the other part, then the other party may terminate this
Agreement upon written notice to such breaching party.
(c) If Manager shall engage in any act of willful misconduct or fraud
with respect to, or the misappropriation or diversion of funds or property of,
Owner or the Property.
(d) If either Owner or Manager shall file a voluntary petition for
reorganization or for any arrangements under any provisions of any bankruptcy
code now or hereafter enacted, the other party may terminate this Agreement upon
written notice to the party filing such petition.
(e) If a petition shall be filed by any third party for the
reorganization of Owner or Manager under any provisions of any bankruptcy code
now or hereafter enacted and such proceeding is not dismissed within ninety (90)
days after such filing, then the other party may terminate this Agreement upon
written notice to the party against whom such petition was filed.
(f) If a receiver, trustee in involuntary bankruptcy or other similar
officer shall be appointed to take care of all or a substantial portion of the
property of Owner or Manager, then the other party may terminate this Agreement
upon written notice to the party for whom such official has been appointed.
(g) If either Owner or Manager makes a general assignment for the
benefit of its creditors, the other party may terminate this Agreement upon
written notice to the party making such assignment.
(h) If any material license, permit, or government authorization
necessary for the operation of the Property is terminated, or renewal refused by
the governing authority having jurisdiction thereof.
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(i) If the current franchise agreement ("Franchise Agreement") is
terminated or expires, and Manager and Owner cannot agree on Owner's new
franchise agreement or cannot agree that the Property should be operated without
a new franchise agreement.
2.3 Payment Upon Early Termination. In the event this Agreement is
terminated upon the occurrence of the Early Termination Event provided for in
Section 2.2(a) of this Agreement, Owner shall pay to Manager on the early
termination date ("Early Termination Date"), as liquidated damages and not as a
penalty, an amount equal to the Present Value (as hereinafter defined) of the
Management Fee, for each Accounting Period that remains between the Early
Termination Date and the Initial Term Expiration Date (the "Expected Gross
Revenues"). For purposes of this Section 2.3, the Gross Revenues for each
Accounting Period between the Early Termination Date and the Initial Term
Expiration Date shall be the average of the Gross Revenues for each Accounting
Period for the three (3) years prior to the Early Termination Date; provided,
however, if this Agreement is in effect less than three (3) years on the
occurrence of the Early Termination Date, then the average of the Gross Revenues
for each Accounting Period from the Effective Date until the Early Termination
Date shall be used as the Gross Revenues for calculating the payment provided
for herein. "Present Value" shall be an amount of the Expected Gross Revenues
discounted to present value at the Discount Rate. The "Discount Rate" shall mean
the yield on the United States Treasury obligations quoted on the Early
Termination Date which most closely matches the unexpired term of this
Agreement. For example, if on the Early Termination Date there is six years and
seven months remaining on the Initial Term of this Agreement, then the Discount
Rate would be calculated by adding 300 basis points to the then current yield on
the 7-year U.S. Treasury obligations. If there were six years and four months
remaining on the Initial Term of this Agreement, the Discount Rate would be
calculated by adding 300 basis points to the then current yield on the 6-year
U.S. Treasury obligations.
ARTICLE III
OPERATION OF THE PROPERTY
3.1 General Responsibilities of Manager. Manager shall be responsible for
all matters relating to the day-to-day operation, management and maintenance of
the Property including, without limitation, (i) rental and occupancy of rooms
and commercial space, if any, and setting of charges therefore; (ii) food and
beverage services; (iii) employment policies; (iv) the receipt, holding and
disbursement of funds; (v) accounting; (vi) budgeting; (vii) procurement of
inventories, supplies and services; (viii) promotion, sales, marketing and
publicity; and (ix) maintenance, repair and cleaning of all improvements and
equipment. Manager shall use its best efforts to operate, manage and maintain
the Property in such a manner as to provide a quality environment and to
maximize to Owner the profits that can be derived from the Property and, upon
its own initiative, with reasonable frequency, shall consult with and advise
Owner and otherwise bring to Owner's attention opportunities to obtain and
increase such profits.
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3.2 General Accounts, Payments, and Distributions.
(a) Manager, on behalf of Owner, shall establish a bank account (the
"General Account") for the Property in both Owner's name and in Manager's name
as agent for Owner in banks approved by Owner (which approval shall not be
unreasonably withheld). The General Account for the Property shall be used to
deposit all cash generated by the Property and to pay all permitted costs and
expenses of the Property. Manager shall deposit all funds collected from the
operation of the Property in the General Account. All funds deposited shall be
held by Manager for the benefit of Owner. Funds from the General Account shall
be disbursed by the Manager to pay its Management Fee and other normal and
reasonable expenses of the Property incurred in the operation and maintenance of
the Property pursuant to this Agreement. It is understood and agreed that to
facilitate the payment of expenses for the Property (such as payroll), Manager
may elect to make such payments from an account maintained by Manager for making
such payments with regard to the Property and shall be entitled to withdraw from
the General Account for the Property and deposit to such other account from time
to time an amount equal to the checks drawn upon such other account for the
payment of expenses of the Property. All other accounts shall be approved in
advance by Owner. All bank accounts shall be owned by Owner and shall be
operated by Manager as the agent of Owner.
(b) Nothing herein contained shall be construed to deprive Manager of
the right to maintain ▇▇▇▇▇ cash funds and to make payment therefrom as the same
are understood and employed in the property management business.
(c) Manager shall keep its own funds separate and apart from those
belonging to the Owner.
(d) On or before the Effective Date, Owner agrees to deposit in the
General Account the sum of $10,000 (the "Minimum Working Capital Balance").
Thereafter, at any time when the balance in the General Account shall be less
than the Minimum Working Capital Balance and the balance in the Depository
Account is not sufficient to fund such deficit, Owner shall deposit to such
General Account, upon seven (7) business days prior written notice from Manager,
an amount equal to such deficiency.
(e) Subject to maintaining the Minimum Working Capital Balance,
Manager shall transfer to Owner such excess funds as Owner shall specify.
(f) Manager shall not be required to incur any liability or obligation
for Owner's account without assurances satisfactory to Manager that the funds
necessary for the discharge thereof will be provided by the Owner.
(g) Manager shall provide cash management for all funds of Owner
controlled by Manager. For the purpose of this Agreement, the term "cash
management" shall mean expediting cash inflows, controlling cash outflows, and,
to the extent reasonably possible, investing the difference between cash inflows
at a market rate of interest.
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3.3 Books and Records. Manager shall maintain at its principal office full,
adequate and separate books and records as are necessary to reflect all
transactions of the Property and of Manager with respect to the Property. Such
books and records shall be kept in a manner such that accounting statements may
be prepared in accordance with Generally Accepted Accounting Principles
("GAAP"). Owner shall have the right and privilege of examining such books and
records at the Manager's principal office at any and all reasonable times during
normal business hours. Manager shall not destroy or dispose of any such books or
records except by delivery to Owner or as Owner may otherwise instruct. Upon
termination of this Agreement, all books and records shall be forthwith
delivered to Owner so as to ensure the orderly continuance of the operation of
the Property, but all such books and records shall thereafter be available to
Manager at all reasonable times for inspection, audit, examination, and
transcription for a period of not less than seven (7) years from the date of
said termination.
3.4 Monthly Financial Reports. Within fifteen (15) days after the end of
each Accounting Period, Manager shall deliver to Owner an accounting for the
operations of the Property, including a detailed profit and loss statement and
balance sheet showing the results of operation of the Property for the preceding
Accounting Period and for the Fiscal Year (as defined in Exhibit B attached
hereto) to date and the cash needs, if any, for the subsequent three (3) months.
Such statements shall be calculated on the accrual method. Manager shall also
deliver to Owner at such times: (a) a report comparing actual results to
budgeted results (b) occupancy and room rate reports, (c) reports on insurance
claims and (d) other reports as reasonably requested by Owner, in each case for
the preceding Accounting Period and for the Fiscal Year to date.
3.5 Annual Financial Reports. Within thirty (30) days after the end of each
Fiscal Year, Manager shall deliver to Owner unaudited financial statements
including a detailed balance sheet, a statement of cash flows and an income and
expense statement showing the results of operations of the Property during such
Fiscal Year. Such financial statements shall be calculated on the accrual method
and be prepared in accordance with GAAP.
3.6 Audits. Owner shall have the right at any time to cause an audit of the
books, records, and operations of the Property to be made by an independent
certified accounting firm. Manager shall cooperate fully with such auditors and
shall make available to them any and all information concerning the Property.
Owner shall deliver to Manager copies of all financial reports regarding the
Property promptly after they are received from such auditors. Any adjustment to
any Management Fee required because of the results of such audit shall be made
by the parties within ten (10) business days. The cost of any such independent
audit shall be an administrative and general expense of the Property for the
Fiscal Year in which such audit occurs.
3.7 Annual Budgets.
(a) Manager shall submit to Owner, in a form reasonably satisfactory
to Owner, for its consideration and approval, the following for the Property for
each Fiscal Year, no later than sixty (60) days prior to the beginning of each
Fiscal Year:
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(i) a proposed operating budget on a monthly and yearly basis
("Operating Budget") for the Property as approved by Owner and which shall set
forth Manager's best estimate of the following items for such Fiscal Year
including supporting schedules for each line item:
A. Projected occupancy and average room rate;
B. Projected gross revenue;
C. Leasing plan with respect to commercial or retail spaces, if any,
that will be vacant;
D. Projected expenses, detailed by type;
E. Detailed proposed scheduling of staff, salaries and wages;
F. Property room rates and charges for other services;
G. Insurance premiums and property taxes;
H Property operations and maintenance (non-capital);
I. Advertising, promotional and marketing expenses;
J. Calculation of estimated Management Fee; and
K. Narrative overview of all budgeted revenue and expense levels and
an analysis of budgeted levels to the previous year's actual
results, with an explanation of any differences.
(ii) a proposed budget on a monthly and yearly basis ("Equipment
Budget") setting forth Manager's best estimate of the capital expenditures to be
made for replacement of and additions to furniture, furnishings and equipment
for such Fiscal Year; and
(iii) a proposed budget ("Capital Expenditures Budget" and
together with the Operating Budget and the Equipment Budget, the "Annual
Budget") setting forth Manager's best estimate of capital expenditures to be
made for major building improvements, renovation, capital repairs and expansion
for such Fiscal Year.
(b) Owner shall be deemed to have approved any of the foregoing
budgets, unless Owner gives notice of its disapproval to Manager on or before
the commencement of a new fiscal year. In the event Owner does not approve all
or any part of the foregoing budgets prior to the commencement of a new Fiscal
Year, Owner promptly shall furnish to Manager an interim budget which shall
reasonably permit the continued operation of the Property until final approval
is given.
(c) Manager shall comply with the Annual Budget, once it is approved
by Owner, and shall not deviate substantially therefrom as to the planned
expenditures on a line-item basis or change the manner of operation (including
the marketing plan) of the Property without prior written consent of Owner,
except where such deviation is due to and is in direct proportion to an increase
(or decrease) in the revenues of the Property in excess of (or below) the
budgeted amounts on a line-item basis or in case of an emergency, where Owner is
promptly advised thereof.
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(d) With respect to the portion of a Fiscal Year remaining following
the Effective Date, Manager shall submit the Annual Budget no later than
forty-five (45) days after the date Manager assumes control of the Property.
(e) Upon the request of Owner, Manager shall make available to Owner
the data utilized in preparing the Annual Budget.
3.8 Insurance.
(a) Owner agrees to maintain at all times during the term hereof the
following insurance:
(i) Insurance on the building, equipment, furniture and
furnishings (including business interruption coverage) against loss or damage.
(ii) Comprehensive general liability insurance (including
protective liability coverage on operations of independent contractors engaged
in construction and also blanket contractual liability insurance) at a minimum
amount of two (2) million dollars general aggregate with an umbrella policy to
exceed five (5) million dollars in total coverage, against claims for personal
injury, death, or property damage, including coverage against liability arising
out of the use by or on behalf of the Owner or Manager of any owned, non-owned
or hired automotive equipment and including coverage against Manager's
liability, liquor liability, and dram shop liability, to the extent required by
the laws of the jurisdiction in which the Property is located.
(b) All policies of insurance shall: (i) name and designate the
Manager as an additional insured and (ii) be an expense of the Property. Without
limiting the foregoing, all insurance shall be effected under policies issued by
insurers of recognized responsibility and shall, to the extent obtainable,
provide that such policies shall not be canceled without at least thirty (30)
days' prior written notice to the Manager as an additional insured and that any
loss shall be payable to the Owner, notwithstanding any act of negligence of the
Manager that otherwise might result in forfeiture of said insurance.
Certificates of insurance, along with evidence or renewal from time to time
thereof, shall be given to Manager no less than ten (10) days prior to their
effectiveness.
(c) Manager shall report to the appropriate insurance companies all
accidents and potential claims.
(d) Manager shall cause to be placed and kept in force worker's
compensation insurance up to the statutory limit, as required by the state where
the Property is located, and employer's liability of at least $100,000. Manager
shall furnish Owner with certificates of same no less than ten (10) days prior
to their effectiveness.
(e) Provided that Owner and Manager shall procure and keep in force
all of the insurance required to be obtained by each of them, respectively,
pursuant to this Agreement,
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neither Owner nor Manager shall assert against the other claims for any losses,
damages, liabilities or expenses (including attorney fees) incurred or sustained
by either of them, to the extent that the same are covered by such insurance, on
account of damage or injury to person or property arising out of the ownership,
operation, or maintenance of the Property. The parties agree that all policies
of insurance shall permit the foregoing waiver.
3.9 Taxes and Assessments. Manager shall obtain bills for real estate and
personal property taxes, improvement assessments and other like charges that are
or may become liens against the Property and recommend to Owner payment thereof
or appeal therefrom. Manager shall annually review and submit all real estate
and personal property taxes and all assessments affecting the property to Owner.
3.10 Compliance With Legal Requirements. Owner and Manager shall take such
actions (to the extent of the delegation of responsibilities hereunder) as may
be necessary to comply with any and all material laws, rules, regulations,
orders, or requirements of any federal, state, county, parish, or municipal
agency, or other authority having jurisdiction thereof, affecting the Property
or the ownership or operations thereof by Owner or Manager. Manager, however,
shall not take any such action as long as Owner is contesting, or has affirmed
its intention to contest any material payment, assessment, order or requirement
(except that where failure to comply promptly with any such order or requirement
might expose Manager to criminal liability, Manager may take such action without
Owner's approval). Manager promptly shall notify Owner in writing of all such
orders and notices or requirements. Manager shall prepare, execute and, after
obtaining the approval of Owner, file any such reports and documents as may be
required by any governmental authority. Manager hereby specifically covenants
and agrees to use its reasonable best efforts to obtain and maintain all
licenses and permits necessary for the operation of the Property and all other
costs incurred by Manager under this Section shall be deemed expenses of the
Property.
3.11 Use and Maintenance of the Property. Manager shall use the property
solely for the operation of a Property under standards comparable to those
prevailing in the transient guest lodging industry and for all activities in
connection therewith that are customary and usual to such an operation. Manager
agrees not to permit the Property to be used for any purpose the Manager knows
might void any policy of insurance relating to such Property or which Manager
knows might render any loss thereunder uncollectable. Manager hereby covenants
and agrees to use its reasonable best efforts to keep the Property in good
connection and repair and to make regular inspections thereof within the
limitations contained herein. Expenses incurred by Manager in keeping the
Property in good condition and repair shall be expenses of the Property. Manager
further covenants and agrees to take all reasonable precautions against fire,
vandalism, burglary, and trespass to the Property within the limitations
contained herein, the cost of all such precautions to be expenses of the
Property.
3.12 Marketing.
(a) Manager shall use its reasonable best efforts to secure and retain
guests for the Property and to merchandise food and beverages served at the
Property. Subject to the
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Annual Budget, Manager shall have the right to rent suites and rent meeting room
services in such manner and upon such terms and conditions as Manager deems
advisable, including the offering of complementary suites, food, and beverages
when deemed necessary by Manager in the furtherance of marketing activities.
(b) Both parties recognize the goal is to achieve the highest possible
occupancy at the most profitable rates possible and that the Manager shall use
its reasonable best efforts to achieve that goal.
(c) Manager agrees that upon Owner's request, at termination of the
Agreement or otherwise, it immediately will deliver to Owner all customer
folios, marketing files and records pertaining to the Property. Manager shall
make available to Owner all other records and files pertaining to guests,
tenants or customers and correspondence and files related to prospective and
existing guests and tenants.
(d) Manager will prepare on an annual basis a marketing plan that
shall include, but not be limited to, projected occupied room-nights and a
detailed program for advertising and promotion.
3.13 Sales of FF&E. All proceeds from the sale of operating equipment
and/or furniture, furnishings and equipment no longer needed for the operation
of the Property shall be paid to Owner. Any such sale shall occur only with the
prior approval of Owner, unless such sale is included in the Annual Budget.
3.14 Compliance with Franchise Requirements. Manager shall operate and
manage the Property in compliance with the Franchise Agreement and shall, in
connection therewith, communicate with the franchisor, purchase such supplies
and services as may be required by the Franchise Agreement, conduct the business
of the Property in compliance with the Franchise Agreement, and prepare any and
all writings and make all payments required by the Franchise Agreement to the
extent of funds available for payment of Property expenses from the Operating
Account. Manager shall forward to Owner copies of all notices, correspondence,
and other writings received from or sent to the franchisor immediately following
such receipt or dispatch. Upon Owner's request, Manager shall cause an
appropriate employee of Manager to attend any and all meetings administered by
franchisor or held by or for the franchisees and to prepare reports of such
meetings for Owner, all at the expense of Owner.
3.15 Compliance with Mortgage Requirements. If Manager receives notice of
default under any mortgage, lease or other agreement executed by Owner which
relates to the Property, Manager shall immediately give written notice thereof
to Owner.
3.16 Periodic Meetings. After each fiscal quarter, Manager and Owner shall,
if deemed necessary by Manager or Owner (or more frequently if deemed
necessary), meet at a mutually agreeable time and place to review operating
results for the Fiscal Year to date and operating plans for the balance of the
Fiscal Year.
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3.17 Owner Responsible for Debts, Liabilities, and Expenses. Except as
otherwise provided in this Agreement, all debts and liabilities to third persons
incurred by Manger in the course of its operation and management of the Property
and within the scope of its authority hereunder shall be the debts and
liabilities of Owner only, and Manager shall not be liable for any such
obligations by reason of its management, supervision, direction or operation of
the Property for Owner or for any other reason whatsoever.
3.18 Manager to Consult With Owner. Except as otherwise provided in this
Agreement, Manager shall consult with and advise Owner concerning all policies
and procedures affecting all phases of the conduct of business at the Property
and will give consideration to suggestions made by Owner. To the greatest extent
possible, such consultation and advice shall take place prior to the institution
of any major policies and procedures.
3.19 Manager Does Not Guarantee Projections or Annual Budget. Owner hereby
represents that in entering into this Agreement, Owner has not relied on any
projection of earnings, budgets or statements as to the possibility of future
success or other similar matters that may have been prepared by Manager. Owner
understands that no guaranty is made or implied by Manager as to the future
financial success of the Property and that Manager does not warrant or guarantee
any projections, budget or similar matter in any way whatsoever.
ARTICLE IV
MANAGEMENT AUTHORITY
4.1 Contracts. Manager is authorized to make and enter into for the account
of, in the name of, and at the expense of Owner, all such contracts, equipment
leases and agreements as are included in the Annual Budget and are required in
the ordinary course of business for the operation, maintenance and service of
the Property and to pay the same when due. However, Manager shall be required to
obtain the written consent of Owner before entering into any contract for the
account of Owner, of whatever nature, if the total amount payable under such a
contract exceeds $5,000, unless it is made under circumstances which the Manager
reasonably shall consider to constitute an emergency. Notwithstanding the
foregoing, Manager shall use its best efforts to contact and secure approval of
Owner in the event any such emergency expenditure should be likely to exceed
$10,000.
4.2 Term of Contracts. Any contract, equipment lease, or agreement entered
into by Manager of the Property shall not exceed a term of one (1) year without
the prior written approval of Owner.
4.3 Employment of Personnel.
(a) Manager, either directly or under the terms of its agreement with
Hospitality Employee Leasing Program, Inc. ("HELP"), will hire, train,
supervise, direct the work of, and discharge all personnel of the Property that
Manager reasonably determines to be necessary or appropriate for the operation
of the Property ("Property Employees"). Owner acknowledges that it has been
advised by Manager that it is Manager's present intention to utilize
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the services of HELP in filling the personnel requirements of operating the
Property. Manager will not, and will not permit HELP to, discriminate against
any employee or applicant for employment because of race, creed, color, sex, age
or national origin. Such personnel shall in every instance be deemed employees
of the Manager or HELP, as applicable. Manager shall use its reasonable best
efforts and exercise reasonable care to seek qualified, competent and
trustworthy employees.
(b) The salaries, wages (including bonus plans) and other
compensation, including social security, taxes, worker's compensation insurance,
relocation expenses and the like, of Property Employees shall be an expense of
the Property. Manager shall cause its accounting department, or competent
accounting department of a third party, to prepare and timely file all necessary
reports with respect to withholding taxes, social security taxes, unemployment
insurance, disability insurance, the Fair Labor Standards Act, and all other
statements and reports pertaining to labor employment on or about the Property.
(c) Manager shall provide appropriate training for all Property
Employees. Manager also shall cause the appropriate employees to attend any
program required by the franchisor pursuant to the Franchise Agreement. The
costs of attending any such meetings or seminars, including the cost of tourist
class travel, accommodations, and food, shall be an expense of the Property, but
shall not unreasonably exceed the amount provided for such purpose in the Annual
Budget.
(d) Manager shall be entitled to reimbursement for any reasonable
travel-related expenses for travel to and from the Property, including tourist
air and ground transportation, lodging, and needs incurred in connection with
visits to the Property by members of Manager's home office and regional offices.
Any such expense shall be charged to the Property, and all such individuals
shall receive complimentary room, food and non-alcoholic beverage services at
the Property during their work-related visits to the Property. The Annual Budget
shall include a line item for such travel expenses.
(e) All salaries, wages, and compensation of Property Employees, to
the extent their time shall be devoted to the Property, shall be deemed to be
expenses of the Property payable to Manager out of the General Account. In
addition, so-called fringe benefits such as insurance or group life insurance
pertaining to such Property Employees also shall be expenses of the Property
payable to Manager out of the General Account.
(f) Immediately following any termination hereof, Manager shall
withdraw its employees and other personnel from the Property. In the event of a
termination of Manager for any reason other than Manager's default hereunder,
Owner agrees that it shall not employ the following employees of the Property
for a period of one (1) year following such termination without the written
approval of the Manager, which may be withheld in Manager's sole discretion:
general manager of the Property, food and beverage manager and director of sales
or any home office management personnel of Manager.
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(g) Subject to the restrictions imposed by the Annual Budget, Manager
shall set the salaries, bonuses and fringe benefits of all Property Employees.
4.4 Advertising. Manager shall ensure that all advertising and signage in
and around the Property shall have its primary goal and purpose the promotion
and marketing of the Property.
4.5 Inventories and Supplies. Manager shall purchase such consumable
supplies and other expendable items as are necessary to operate the Property and
shall pay for such supplies out of the General Account.
4.6 Accounting and Control Fees. Manager shall provide, in connection with
the Property (i) all required and necessary accounting functions and reports, as
described on the attached Exhibit B (the "Accounting Functions"), for a fee of
$475.00 per month (during the first twelve months of the Management Term) (the
"Accounting Fee"), and (ii) computer hardware and software for a Reservation
Property Control System (hereinafter called the "Control System") for a fee of
$699.60 per month (during the first twelve months of the Management Term)
("Control Fee"). Said Control System will make available to the Property's front
desk a reservation management system, instantaneous accounting information, and
a protective audit system in lieu of and/or in conjunction with the manual or
cash register system. The hardware, software and Control System shall at all
times not be the property of the Owner, and upon termination of this Agreement,
the parties agree the Control System shall be removed from the Property by the
Manager. Owner agrees to maintain the confidential nature of the Control System
software and operating procedures during and after the termination of this
Agreement.
The parties agree that they shall negotiate in good faith every 12 months
with respect to the amount of the Accounting Fee and Control Fee, but if they
cannot agree, the maximum increase each 12 months shall not exceed 10%.
4.7 Sales and Use Taxes. Manager shall maintain all required records and
prepare and file all forms related to the collection and payment of all sales
and use taxes. Manager shall make required payments to the appropriate taxing
authority from the Operating Accounts. Manager's responsibilities hereunder
specifically exclude the preparation or filing of local, state or federal income
tax returns.
4.8 Extraordinary Services. Manager shall not be obligated under this
Agreement to provide any extraordinary, specialized services of its
construction, architectural, engineering, legal or similar staff, or any other
services of a professional, technical, extraordinary, non-routine nature, which
services involve a substantial commitment of Manager's personnel to or on behalf
of Owner or the Property, whether in connection with construction or remodeling
activities at the Property or otherwise. Any such services as may be requested
by Owner and provided by Manager shall be upon such terms and provisions as may
be agreed upon by Manager and Owner at the time of such services. Manager shall
make available to Owner at no cost to Owner or the Property the services of the
Manager's specialized facilities employed in the performance of its
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Property management activities generally, including its central buying
facilities, accounting, cost control, food and beverage expertise, publicity,
marketing and interior design.
ARTICLE V
CONDEMNATION
5.1 Condemnation.
(a) If the whole of the buildings of the land shall be taken or
condemned by reason of any eminent domain, condemnation, or like proceeding by
any competent authority for any public or quasi-public use or purpose, or if
such a portion thereof shall be taken or condemned as to make it imprudent or
unreasonable, in the reasonable opinion of Owner, to use the remaining portion
as a Property of the type and class as immediately preceding such taking or
condemnation, then in either of such events, this Agreement shall terminate as
of thirty (30) days after written notice from Owner to Manager. Owner may settle
any such action or award, solely as to its own interest in the Property, on such
terms as it may deem advisable. All proceeds of any condemnation (including a
partial condemnation) shall belong to Owner, except to the extent that separate
award is made to Manager. Manager shall have the right to seek an award in an
eminent domain, condemnation, compulsory acquisition or like proceeding only if
such action by Manager is not likely to, and does not, in Owner's opinion,
prejudice any of Owner's rights or diminish or adversely affect any award or
proceeds sought by or awarded to Owner.
(b) If only a portion of the Building or Land shall be taken or
condemned, and the taking or condemnation of such portion does not make it
unreasonable or imprudent to operate the remainder of such Property as a
Property of the type and class immediately preceding such taking or
condemnation, this Agreement shall not terminate.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 Relationship. The relationship of Owner and Manager created hereby is
that of a principal and agent, it being understood that Manager's agency is
defined by virtue of this Agreement. Nothing herein contained shall constitute
or be construed to be or create a partnership or joint venture between Owner and
Manager with respect to the management of the Property as provided for in this
Agreement.
6.2 Assignment. This Agreement is not assignable by either party hereto
without prior written consent of the other party hereto; provided, however,
Manager may assign this Agreement to a wholly-owned subsidiary or limited
liability company of which it is the sole member, without the prior written
consent of Owner. Subject to the foregoing, the covenants and agreements herein
contained shall inure to the benefits of, and be binding upon, the parties
hereto and their respective successors and permitted assigns.
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6.3 Indemnifications.
(a) Owner shall indemnify, defend and hold Manager harmless from and
against all claims, damages and costs (including reasonable attorney's fees and
costs) arising out of or in connection with any acts of Owner, its agents,
officers, employees or contractors, that (i) involve negligence or willful
misconduct of Owner, its agents, officer, employees or contractors; (ii)
constitute a breach of this Agreement; or (iii) violate any law or regulation.
(b) Owner does hereby covenant, represent and warrant to Manager that
prior to the date of this Agreement that no part of the Property has been or is
being used for the storage of any hazardous waste materials of any kind
whatsoever; there are no violations of any applicable environmental protection
laws, ordinance or regulations affecting the Property; and the Property is
unencumbered by the lien of any governmental or quasi-governmental environmental
agency. Owner agrees to and shall indemnify, defend and hold harmless Manager
from any liability, claims, obligations or losses, including reasonable
attorneys' fees, incurred by Manager or assessed against the Property or any
part thereof by virtue of any claim or lien of any governmental or
quasi-governmental unit, body or agency or any third party for clean-up costs or
other costs pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any other similar statute, law, rule
or regulation of any governmental or quasi-governmental unit, body or agency
arising on account of acts or omissions prior to the date of this Agreement.
This provision shall survive the termination of this Management Agreement and
shall continue in full force and effect so long as the possibility of any such
liability, claims, obligations or losses exists. If any hazardous waste
materials of any kind whatsoever are discovered upon any part of the Property,
Manager shall have the right, but not the obligation, to terminate this
Management Agreement.
(c) Manager shall indemnify, defend and hold Owner harmless from and
against all claims, damages and costs (including reasonable attorneys' fees and
costs) arising out of or in connection with any acts of Manager, its agents,
officers, employees or contractors, that (i) are outside the scope of Manager's
employment hereunder; (ii) involve negligence or willful misconduct of Manager,
it agents, officers, employees or contractors; (iii) constitute a breach of this
Agreement; or (iv) violate any law or regulation.
(d) It is expressly understood and agreed that the foregoing
provisions shall survive the termination of this Agreement and shall be binding
upon all successors and assigns.
6.4 Owner's Right to Inspect. Owner or its agents shall have access to the
Property at any and all reasonable times for the purpose of protecting the same
against fire or other casualty, prevention of damage to the Property,
inspection, making repairs or showing the Property to prospective purchasers,
tenants or mortgagees. Owner may converse with any Property Employee regarding
any subject and Manager shall instruct them to disclose fully to Owner at
Owner's request all information regarding the Property. In all respects, Owner
shall seek to minimize any disruptions to the operations of the Property
resulting from its access thereto.
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6.5 Notice. Whenever, under the terms of this Agreement, any notice is
required, it may be served either upon the other party by personal service or by
sending said notice by certified mail or overnight delivery mail to the other
party. Notice to each party shall be in writing and, until further notification
in writing, shall be mailed as follows:
(a) If to Owner, to: Motel Associates of Pompano, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(b) If to Manager, to: Janus Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
6.6 Amendments. None of the covenants, terms or conditions of this
Agreement shall, in any manner, be altered, waived, changed or abandoned, except
by written instrument signed by both parties. Consent to or any acquiescence in
any breach of this Agreement shall not constitute a waiver of any other or later
breach of the same or of any other covenants, agreement or condition thereof.
6.7 Consent. Owner and Manager shall not unreasonably withhold their
consent whenever such consent shall be required under the terms of this
Agreement.
6.8 Complete Agreement. This Agreement is the complete agreement between
the parties, and supersedes all prior agreements whether written or oral.
6.9 Authority. Each person signing this Agreement warrants that he has full
authority to execute the same, that all necessary approvals to the execution of
this Agreement and the transactions contemplated herein have been or will be
timely obtained and will not result in the breach or termination of a provision
of or constitute a default under any indenture, agreement or other instrument to
which it is a party or by which it is bound or violate any provision of law.
6.10 Cancellation. The parties agree that this Agreement shall supersede
all prior Management Agreements between the parties hereto, including, but not
limited to, predecessors of Manager (including but not limited to ▇▇▇▇ Group
Management Corp. and ▇▇▇▇ Hospitality, Inc.). All such prior management
agreements shall be canceled effective this date.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
OWNER
__________________________________
a _________ corporation
By:_______________________________
Name:
Title:
MANAGER
JANUS INDUSTRIES, INC.,
a Delaware corporation
By:________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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EXHIBIT "A"
PROPERTY
Days Inn Pompano
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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EXHIBIT "B"
DEFINITIONS
"Accounting Period" is hereby defined to mean a calendar month.
"Fiscal Year" is hereby defined to mean a calendar year.
"Gross Revenues" is hereby defined to mean all revenues and income of every
kind resulting from the operation of the motel and all of its facilities from
guests, subtenants, licensees, concessionaires and other persona occupying space
or rendering services in, at, on or from the motel, including, but not limited
to, rooms, telephone, newsstand, interest income, and rental and management
fees, whether on a cash basis or on credit, paid or unpaid, collected or
uncollected, and without reserve or deduction for failure or inability to
collect, all as determined in accordance with generally accepted accounting
principles applied on a consistent basis; provided, however, that there shall be
deducted or excluded from Gross Revenues: (i) cash or credit refunds paid to
customers upon transactions included in Gross Revenues; (ii) the amount of any
city, county, state or federal sales, use, luxury or excise taxes on such sales
which are required to be collected from the customer (but included in the price
or stated separately therefrom) and paid to the taxing authorities; (iii)
proceeds of claims under any insurance policies other than rent or business
interruption insurance; (iv) gains arising from the sale or other disposition of
capital assets; and (v) any reversal of any contingency or tax reserve.
"Accounting Functions" is hereby defined to mean Manager's complete system
of central financial services utilizing Manager's home office financial staff
and computer equipment. The services included as part of the Accounting Fee
shall include, without limitation, verification of daily work, preparation of
payroll and benefits administration, preparation of payroll tax returns,
handling of accounts receivable (including normal in-house collection
activities) and accounts payable, billing under national credit cards, cash
management, preparation of monthly internal operating statements, verification
of financial controls, advice and monitoring of accounting and reporting systems
and internal controls (relating to cash, inventories, and accounts receivable),
and training and supervision of cashiers, front desk, and inventory personnel.
Such services shall not include the cost of a certified audit or the preparation
and filing of state and federal income tax returns.
18