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Title: |
Management Agreement |
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Entities: |
Hospitality Properties Trust; InterContinental Hotels Group plc; Intercontinental Hotels Group Resources, Inc.; Sullivan & Worcester LLP; HPT TRS IHG-1, Inc. |
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Date: |
2003 |
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Size: |
Preview shows 27KB of 224KB total |
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Price: |
$66 |
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ID: |
#268317 |
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MANAGEMENT AGREEMENT
BY AND
BETWEEN
HPT TRS IHG-1, INC.
AND
INTERCONTINENTAL HOTELS GROUP RESOURCES, INC.
{PAGE}
Table of Contents
Page
ARTICLE 1 DEFINITIONS.........................................................1
1.1 8.1(c) Statement................................................1
1.2 Accounting Principles...........................................1
1.3 Additional Hotels...............................................1
1.4 Affiliate.......................................................1
1.5 Agreed Upon Procedure Letter....................................2
1.6 Arbitration.....................................................2
1.7 Assumed Mortgage................................................2
1.8 Authorized Mortgage.............................................3
1.9 Award...........................................................3
1.10 Bank Accounts...................................................3
1.11 Base Management Fee.............................................3
1.12 Base Year.......................................................3
1.13 Brand...........................................................3
1.14 Brand Standards.................................................3
1.15 Buildings.......................................................4
1.16 Business Day....................................................4
1.17 Capital Replacements............................................4
1.18 Capital Replacements Budget.....................................4
1.19 Code............................................................4
1.20 Collateral Agency Agreement.....................................4
1.21 Collateral Agent................................................4
1.22 Competitor......................................................5
1.23 Condemnation....................................................5
1.24 Condemnor.......................................................5
1.25 Consolidated Financials.........................................5
1.26 Consumer Price Index............................................5
1.27 Controlling Interest............................................5
1.28 Debt Service Coverage Ratio.....................................5
1.29 Disbursement Rate...............................................6
1.30 Effective Date..................................................6
1.31 Environmental Laws..............................................6
1.32 Environmental Notice............................................6
1.33 Expiration Date.................................................6
1.34 FF&E Reserve Commencement Month.................................6
1.35 Fiscal Month....................................................6
1.36 Fiscal Year.....................................................6
1.37 First Management Fee............................................6
1.38 First Management Fee Percentage.................................6
1.39 Furniture, Fixtures and Equipment or FF&E.......................7
1.40 Government Agencies.............................................7
1.41 Gross Revenues..................................................7
i
{PAGE}
Table of Contents
(continued)
Page
1.42 Guarantor.......................................................8
1.43 Guaranty........................................................8
1.44 Hazardous Substances............................................8
1.45 Hotel...........................................................9
1.46 HPT.............................................................9
1.47 HPT Group.......................................................9
1.48 IHG.............................................................9
1.49 Incentive Management Fee........................................9
1.50 Initial Term...................................................10
1.51 Initial Working Capital........................................10
1.52 Insurance Requirements.........................................10
1.53 Interest Rate..................................................10
1.54 Landlords......................................................10
1.55 Leases.........................................................10
1.56 Legal Requirements.............................................10
1.57 Management Fees................................................10
1.58 Manager........................................................11
1.59 Manager Default................................................11
1.60 Manager Event of Default.......................................11
1.61 Master Lease...................................................11
1.62 Material Repair................................................11
1.63 New Management Agreement.......................................11
1.64 NOI............................................................11
1.65 Officer's Certificate..........................................11
1.66 Operating Cost(s)..............................................12
1.67 Operating Equipment............................................13
1.68 Operating Profit...............................................13
1.69 Operating Standards............................................13
1.70 Operating Supplies.............................................13
1.71 Original Hotels................................................13
1.72 Overland Landlord..............................................13
1.73 Overland Lease.................................................13
1.74 Owner..........................................................13
1.75 Owner's First Priority.........................................13
1.76 Owner's Fixed Priority.........................................14
1.77 Owner's Percentage Priority....................................14
1.78 Owner's Second Priority........................................14
1.79 Parent.........................................................14
1.80 Person.........................................................14
1.81 Pledged Hotels.................................................14
1.82 Priority Coverage Ratio........................................14
1.83 Renewal Terms..................................................15
1.84 Repairs........................................................15
ii
{PAGE}
Table of Contents
(continued)
Page
1.85 Replacement Property...........................................15
1.86 Reservation System.............................................15
1.87 Reserve Account................................................15
1.88 Residual Distribution..........................................15
1.89 Restricted Area................................................15
1.90 Restricted Period..............................................15
1.91 Rooms Revenue..................................................15
1.92 SARA...........................................................15
1.93 Second Management Fee..........................................15
1.94 Second Management Fee Percentage...............................16
1.95 Services Fees..................................................16
1.96 Sites..........................................................16
1.97 Subsidiary.....................................................16
1.98 Substitute Tenant..............................................16
1.99 Successor Landlord.............................................16
1.100 System Marks...................................................16
1.101 Term...........................................................16
1.102 Transaction Documents..........................................16
1.103 Ultimate Parent................................................17
1.104 Uniform System of Accounts.....................................17
1.105 Unsuitable for Its Permitted Use...............................17
1.106 Working Capital................................................17
1.107 Yearly Budget..................................................17
ARTICLE 2 SCOPE OF AGREEMENT.................................................18
2.1 Engagement of Manager..........................................18
2.2 Additional Services............................................20
2.3 Use of Hotels..................................................20
2.4 Right to Inspect...............................................21
2.5 Right of Offset................................................21
2.6 Condition of the Hotels........................................21
ARTICLE 3 TERM AND RENEWALS..................................................23
3.1 Term...........................................................23
3.2 Renewal Term...................................................23
3.3 Owner's Termination Right at End of Term.......................24
ARTICLE 4 TITLE TO HOTEL.....................................................24
4.1 Covenants of Title.............................................24
4.2 Non-Disturbance................................................24
4.3 Financing......................................................25
4.4 Sale of a Hotel to an Affiliate................................27
4.5 Sale of All the Hotels.........................................27
iii
{PAGE}
Table of Contents
(continued)
Page
4.6 The Leases.....................................................28
4.7 Restricted Sale................................................28
ARTICLE 5 REQUIRED FUNDS.....................................................28
5.1 Working Capital................................................28
5.2 Reserve Account................................................29
5.3 Additional Requirements for Reserve............................31
5.4 Ownership of Replacements......................................31
5.5 Manager Reserve Advances.......................................31
5.6 No Additional Contributions....................................31
ARTICLE 6 BRAND STANDARDS AND MANAGER'S CONTROL..............................31
6.1 Brand Standards................................................31
6.2 Manager's Control..............................................32
6.3 Arbitration....................................................32
ARTICLE 7 OPERATION OF THE HOTEL.............................................32
7.1 Permits........................................................32
7.2 Equipment and Supplies.........................................33
7.3 Personnel......................................................33
7.4 Sales, Marketing and Advertising...............................34
7.5 Reservation and Communication Services.........................35
7.6 Maintenance and Repairs........................................36
7.7 Material Repairs...............................................36
7.8 Liens; Credit..................................................37
7.9 Real Estate and Personal Property Taxes........................38
7.10 Contest........................................................38
ARTICLE 8 FISCAL MATTERS.....................................................38
8.1 Accounting Matters.............................................38
8.2 Yearly Budgets.................................................40
8.3 Bank Accounts..................................................42
8.4 Consolidated Financials........................................42
ARTICLE 9 FEES TO MANAGER....................................................43
9.1 Management Fees................................................43
9.2 Services Fees..................................................43
ARTICLE 10 DISBURSEMENTS.....................................................44
10.1 Disbursement of Funds.........................................44
10.2 Residual Distribution.........................................45
10.3 Owner's Fixed Priority........................................46
10.4 Owner's Percentage Priority...................................46
10.5 No Interest...................................................47
iv
{PAGE}
Table of Contents
(continued)
Page
10.6 Amounts Outstanding at End of Term............................47
10.7 Calculations..................................................47
10.8 Survival......................................................47
ARTICLE 11 CERTAIN OTHER SERVICES............................................47
11.1 Optional Services.............................................47
11.2 Purchasing....................................................47
ARTICLE 12 SIGNS AND SERVICE MARKS...........................................48
12.1 Signs.........................................................48
12.2 System Marks..................................................48
12.3 System Mark Litigation........................................49
ARTICLE 13 INSURANCE.........................................................50
13.1 Insurance Coverage............................................50
13.2 Insurance Policies............................................51
13.3 Insurance Certificates........................................52
13.4 Insurance Proceeds............................................53
13.5 Manager's Insurance Program...................................53
ARTICLE 14 INDEMNIFICATION AND WAIVER OF SUBROGATION.........................53
14.1 Indemnification...............................................53
14.2 Waiver of Subrogation.........................................54
14.3 Survival......................................................54
ARTICLE 15 DAMAGE TO AND DESTRUCTION OF THE HOTEL............................54
15.1 Termination...................................................54
15.2 Restoration...................................................55
ARTICLE 16 CONDEMNATION......................................................56
16.1 Total Condemnation............................................56
16.2 Partial Condemnation..........................................57
16.3 Temporary Condemnation........................................58
16.4 Effect of Condemnation........................................58
ARTICLE 17 DEFAULT AND TERMINATION...........................................58
17.1 Manager Events of Default.....................................58
17.2 Remedies for Manager Defaults.................................60
17.3 Owner Events of Default and Remedies for Owner Defaults......60
17.4 Post Termination Obligations..................................61
ARTICLE 18 NOTICES 63
18.1 Procedure.....................................................63
v
{PAGE}
Table of Contents
(continued)
Page
ARTICLE 19 RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS.......................65
19.1 Relationship..................................................65
19.2 Further Actions...............................................65
ARTICLE 20 APPLICABLE LAW....................................................65
ARTICLE 21 SUCCESSORS AND ASSIGNS............................................66
21.1 Assignment....................................................66
21.2 Binding Effect................................................67
ARTICLE 22 RECORDING.........................................................68
22.1 Memorandum of Agreement.......................................68
ARTICLE 23 FORCE MAJEURE.....................................................68
23.1 Operation of Hotel............................................68
23.2 Extension of Time.............................................68
ARTICLE 24 GENERAL PROVISIONS................................................68
24.1 Trade Area Restriction........................................69
24.2 Environmental Matters.........................................69
24.3 Authorization.................................................70
24.4 Severability..................................................70
24.5 Merger........................................................71
24.6 Formalities...................................................71
24.7 Consent to Jurisdiction; No Jury Trial........................71
24.8 Performance on Business Days..................................72
24.9 Attorneys' Fees...............................................72
24.10 Section and Other Headings....................................72
24.11 Documents.....................................................72
24.12 No Consequential Damages......................................72
24.13 No Political Contributions....................................72
24.14 REIT Qualification............................................73
24.15 Further Compliance with Section 856(d) of the Code............73
24.16 Adverse Regulatory Event......................................74
24.17 Commercial Leases.............................................75
24.18 Nonliability of Trustees......................................75
24.19 Arbitration...................................................76
24.20 Estoppel Certificates.........................................77
24.21 Confidentiality...............................................78
24.22 Hotel Warranties..............................................79
24.23 Effective Date................................................79
24.24 Overland Landlord.............................................79
24.25 Jersey City Hotel.............................................80
vi
{PAGE}
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made and entered into
as of October 27, 2003, by and between HPT TRS IHG-1, INC., a Maryland
corporation ("Owner"), and INTERCONTINENTAL HOTELS GROUP RESOURCES, INC. a
Delaware corporation ("Manager").
W I T N E S S E T H
WHEREAS, on the Effective Date (this and other capitalized terms used
and not otherwise defined herein having the meanings ascribed to such terms in
ARTICLE 1), pursuant to the Leases, the Landlords are leasing to Owner the
Hotels; and
WHEREAS, Owner wishes to engage Manager and Manager wishes to be
engaged to manage and operate the Hotels, subject to and upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are herein acknowledged, Owner and Manager, intending to be
legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized Term used in this Agreement and not otherwise defined
herein shall have the meanings set forth below, in the Section of this Agreement
referred to below, or in such other document or agreement referred to below:
1.1 "8.1(c) Statement" shall have the meaning given such term in
Section 8.1(c).
1.2 "Accounting Principles" shall mean generally accepted accounting
principles, as adopted in the United States of America, consistently applied.
1.3 "Additional Hotels" shall mean the Hotels other than the Original
Hotels, collectively.
1.4 "Affiliate" shall mean, with respect to any Person, (a) in the case
of any such Person which is a partnership, any partner in such partnership; (b)
in the case of any such Person which is a limited liability company, any member
of such
{PAGE}
company; (c) any other Person which is a Parent, or Subsidiary or a Subsidiary
of a Parent with respect to such Person or to one or more of the persons
referred to in the preceding clauses (a) and (b), and; (d) any other Person who
is an officer, director, trustee or employee of, or partner in, such Person or
any Person referred to in the preceding clauses (a), (b) and (c).
1.5 "Agreed Upon Procedure Letter" shall mean, a letter from Ernst &
Young or another firm of independent certified public accountants (the
"auditor") selected by Manager and approved by Owner (which approval shall not
be unreasonably withheld or delayed), which letter shall, subject to the
limitations and conditions imposed by the auditor, address the following
components and such other reasonable matters as Owner and the auditor shall
reasonably agree:
(a) That auditor has tested Manager's systems of internal controls.
(b) That auditor has verified that the information provided was
generated from the same reporting systems as Manager uses for its regular
periodic accounting and reporting.
(c) That auditor has verified the mathematical accuracy of the 8.1(c)
Statement.
(d) That auditor has recomputed the annual calculation of Operating
Profit, Management Fees, Service Fees, contributions to the Reserve Account,
expenditures from the Reserve Account, Owner's Percentage Priority and the
Residual Distribution.
(e) That auditor has confirmed the Hotels subjected to audit procedures
by Manager's internal audit department, if any, and reviewed work papers
provided in connection therewith. If auditor has performed hotel level audit
procedures at any Hotel, auditor shall identify those Hotels and list the
procedures performed and results obtained. In any event at least three Hotels
shall be subjected to audit procedures each Fiscal Year by either internal audit
or the auditor.
1.6 "Arbitration" shall mean an arbitration conducted in accordance
with the terms of Section 24.19.
1.7 "Assumed Mortgage" shall mean the existing mortgage encumbering the
Hotel located in Overland Park, Kansas.
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