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Wyndham Hotel - Asset Management Agreement
Wyndham Form
ASSET MANAGEMENT AGREEMENT
MAY 21,1996
between
WYNDHAM HOTEL CORPORATION
and
PLAYHOUSE SQUARE HOTEL L.P. 2
TABLE OF CONTENTS
Page
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ARTICLE 1
ENGAGEMENT OF ASSET MANAGER
Section 1.1 General Engagement . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
ASSET MANAGER DUTIES
Section 2.1 Business Plans . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2.2 Asset and Entity Services . . . . . . . . . . . . . . . . . 2 Section 2.3 Disposition Services . . . . . . . . . . . . . . . . . . . . 4 Section 2.4 Legal Services . . . . . . . . . . . . . . . . . . . . . . . 4 Section 2.5 Retention of Third Parties . . . . . . . . . . . . . . . . . 4 Section 2.6 Books, Records and Reports . . . . . . . . . . . . . . . . . 5 Section 2.7 Payment of Costs and Expenses . . . . . . . . . . . . . . . 5 Section 2.8 Insufficiency of Asset Revenues . . . . . . . . . . . . . . 6
ARTICLE 3
OWNER'S DUTIES
Section 3.1 Information and Cooperation . . . . . . . . . . . . . . . . 6 Section 3.2 Approval Policy . . . . . . . . . . . . . . . . . . . . . . 6 Section 3.3 Funding . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4
COMPENSATION
Section 4.1 Asset Management Fee . . . . . . . . . . . . . . . . . . . . 6 Section 4.2 Reimbursable Expenses . . . . . . . . . . . . . . . . . . . 7 Section 4.3 Additional Services . . . . . . . . . . . . . . . . . . . . 7 Section 4.4 Emergency Expenditures . . . . . . . . . . . . . . . . . . . 7 3
ARTICLE 5
LIABILITY INSURANCE AND RISK ALLOCATION
Section 5.1 Fidelity Bond . . . . . . . . . . . . . . . . . . . . . . . 7 Section 5.2 Liability Insurance . . . . . . . . . . . . . . . . . . . . 7 Section 5.3 Evidence of Insurance . . . . . . . . . . . . . . . . . . . 8 Section 5.4 Mutual Waiver of Subrogation . . . . . . . . . . . . . . . . 8 Section 5.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 6
TERM
Section 6.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 6.2 Duties on Termination or Expiration . . . . . . . . . . . . 9
ARTICLE 7
MISCELLANEOUS
Section 7.1 Assignment; Change of Ownership Interest . . . . . . . . . . 10 Section 7.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 7.3 Number: Gender; Captions; and References . . . . . . . . . . 11 Section 7.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 7.5 No Waiver of Default . . . . . . . . . . . . . . . . . . . . 11 Section 7.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 11 Section 7.7 Competition . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 7.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 12 Section 7.9 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . 12 Section 7.10 Relationship of the Parties . . . . . . . . . . . . . . . . 12 Section 7.11 Representations and Warranties . . . . . . . . . . . . . . . 12 Section 7.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 13 Section 7.13 Liability of Owner . . . . . . . . . . . . . . . . . . . . . 13 Section 7.14 Liability of Asset Manager . . . . . . . . . . . . . . . . . 13 Section 7.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 13
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LIST OF DEFINED TERMS
Page No.
-------- Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Asset Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Asset Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Disposition Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Hotel Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 2 Hotel Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Property Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Refinancing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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ASSET MANAGEMENT AGREEMENT
THIS ASSET MANAGEMENT AGREEMENT (the "Agreement"), is entered into by PLAYHOUSE SQUARE HOTEL L.P., a Texas limited partnership (the "Owner"), and WYNDHAM HOTEL CORPORATION, a Delaware corporation (the "Asset Manager"), effective as of May 21, 1996 (the "Effective Date").
RECITAL
Wyndham Hotel Company LTD, a Texas limited partnership, has been providing certain asset and entity management services for Owner. Pursuant to that certain Formation Agreement dated as of March 10, 1996, the assets and operations of Wyndham Hotel Company LTD will be "rolled-up", together with other assets, into Asset Manager or its subsidiaries. Owner and Asset Manager desire to evidence and formalize their agreements with respect to entity and asset management services.
ARTICLE 1
ENGAGEMENT OF ASSET MANAGER
Section 1.1 GENERAL ENGAGEMENT. Owner engages Asset Manager as an independent contractor to provide certain services described in this Agreement relating to (i) the administration of certain aspects of Owner's legal entity and the legal entities (whether partnerships, corporations or other business associations) that comprise Owner (the "ENTITIES" and each an "ENTITY"); and (ii) the acquisition, financing, administration, supervision and disposition of the assets described in Schedule I (the "ASSETS" and each an "ASSET"). Additional Assets may be brought within the scope of this Agreement by a supplement to Schedule I signed by the parties. Owner may from time to time expand or reduce the scope of services to be provided hereunder and either party, upon request of the other shall execute a schedule that properly evidences the scope of services then being provided hereunder. The Asset Manager shall in good faith provide the services set forth in this Agreement in accordance with normal and prudent practices in the hotel real estate industry and shall have the authority to take all actions necessary or appropriate to fulfill its obligations.
ARTICLE 2
ASSET MANAGER DUTIES
Section 2.1 BUSINESS PLANS.
(1) INITIAL BUSINESS PLAN. Pursuant to the terms of a separate agreement (the "HOTEL MANAGEMENT AGREEMENT"), Owner has engaged Wyndham Management Corporation, a wholly owned subsidiary of Asset Manager (the "HOTEL MANAGER") to operate and manage the Assets. The Hotel Management Agreement provides for Owner and Hotel Manager to agree on an annual
1 6 budget and capital plan for the operation, management and maintenance of the Assets. In addition, Owner determines an annual business plan for the Assets and Entities. In the event that the initial business plan for the Assets and Entities has not yet been prepared by Owner, Asset Manager shall cooperate with Hotel Manager to provide all services requested by Owner that are within the scope of this Agreement to administer, preserve, protect and maintain the Assets and Entities until the initial business plan is prepared and approved by or on behalf of Owner.
(2) REVISIONS TO BUSINESS PLANS. To the extent requested by Owner, Asset Manager shall cooperate with Owner and Hotel Manager in the preparation of a revised business plan for the following year, and Owner and Asset Manager shall cooperate so as to have a revised business plan approved by Owner (in its sole discretion) by April 30 of the operating year to which it relates. After approval by Owner, the revised plan shall be a "Business Plan" hereunder.
Section 2.2 ASSET AND ENTITY SERVICES. The Asset Manager will provide the following services (subject to expansion or reduction provided in Section 1.1 above) with regard to the Assets and Entities:
(1) ACCOUNTING SERVICES. Coordinate with Hotel Manager to (i) perform all normal and customary accounting functions for Owner's legal entity and for all entities that comprise Owner's legal entity and maintain all necessary books and records in connection therewith; and (ii) monitor the actual monthly income and expenses of the Assets and Entities, collect revenues and pay operating expenses, compare actual results to the relevant operating budgets, and report to Owner.
(2) RISK MANAGEMENT SERVICES. Assist Owner in review of the insurable risks of each Asset and the determination of levels of insurance coverage; develop, administer and implement a risk management program for the Assets in accordance with the requirements set forth in any loan documents or other legal documents that are binding against the Assets or Entities and are provided by Owner to Asset Manager; procure insurance coverage in accordance with Owner's instructions; and subject to Owner's guidelines and approval, oversee the investigation and resolution of all casualty and liability claims brought by or against the Assets or Entities.
(3) TAX SERVICES. Prepare all state and federal income tax returns for Owner and, to the extent requested by Owner, for those constituent ownership entities that comprise Owner; review existing assessed valuations of Assets for ad valorem tax purposes and implement appropriate plans to reduce assessed valuations, where appropriate; coordinate with Hotel Manager all sales tax filings and state unemployment tax filings; and coordinate with Owner and Hotel Manager and oversee any challenges, disputes and audits of any income, sales or unemployment taxes.
(4) CONSTRUCTION MANAGEMENT SERVICES. Upon Owner's request and in accordance with Owner's direction and guidelines, Asset Manager shall supervise the performance of all renovation, improvement, repair, and other construction work with regard to the Assets and shall, as Owner's agent, engage such architects, engineers, contractors, managers, and other parties as may be necessary to accomplish the same.
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(5) REPAIR, MAINTENANCE, AND ALTERATION REVIEW. Inspection of the Assets and, in accordance with the Business Plan and at Owner's request, implementation of any alterations, construction, redemption, renovation, or repairs that are necessary or desirable to preserve, maintain, or enhance the value of the Assets.
(6) REGULATORY COMPLIANCE REVIEW. Assist Owner (if requested) in (a) reviewing Assets to assure compliance with applicable governmental regulations (including environmental regulations and the Americans With Disabilities Act); (b) subject to Owner's budgetary constraints, implementing a program to bring any non-complying Assets into compliance with applicable regulations; and (c) implementing a program to monitor continuing compliance with governmental regulations.
(7) FINANCING SERVICES. From time to time, if requested by Owner, Asset Manager shall act as Owner's agent in financing or refinancing indebtedness with respect to the Assets. Asset Manager shall:
(a) monitor existing financing;
(b) negotiate and finalize existing financing renewals as required;
(c) monitor and negotiate any equity partner requirements on behalf of
Owner;
(d) negotiate any required refinancing of Assets; and
(e) negotiate any required restructuring/workout of existing financing
(debt or equity).
Although Asset Manager shall make recommendations to Owner concerning terms
and conditions of any financing or refinancing and the lender(s) to provide
the same and shall negotiate the terms thereof and shall assist in
consummating the transactions, Owner shall have the sole authority to
execute the requisite agreements therefor.
Section 2.3 DISPOSITION SERVICES. Upon Owner's request and in accordance with Owner's direction and guidelines, Asset Manager shall act as Owner's agent in the disposition of any Assets in accordance with the terms and provisions contemplated by the Business Plan. Asset Manager shall be primarily responsible for negotiating disposition agreements and for consummating approved dispositions within Owner's guidelines, but Owner shall have the sole authority to approve the final terms of such dispositions and to execute agreements therefor.
Section 2.4 LEGAL SERVICES. Asset Manager is authorized to engage attorneys and other advisors (including, without limitation, Asset Manager's in-house legal staff) as necessary to provide legal services in connection with the day-to-day operation of the Assets and Entities, including enforcement of contracts; review of contracts, leases, and other documents; maintenance of the Entities; and implementing and defending legal actions. Notwithstanding the foregoing, except for insured litigation, Asset Manager shall be entitled to make recommendations
3 8 to Owner regarding the initiation or defense of litigation affecting the Assets and/or the Entities, but Owner shall have the sole authority to control and direct such litigation.
Section 2.5 RETENTION OF THIRD PARTIES. Asset Manager is authorized and empowered, as Owner's agent but subject to the terms and restrictions of this Agreement, to engage and enter into contracts with third parties to provide the services referred to in this Article 2, and may delegate performance of its duties to third parties, including the Hotel Manager. Such contracts shall be on such terms as Asset Manager approves, provided the same are in compliance with the Business Plan. Without limiting the generality of the foregoing, the services of third parties which may be engaged include property management services, ad valorem tax services, brokerage services, surveyors, title services, data processing services, construction management services, marketing and market study services, engineering services, environmental consulting services, legal services and architectural services. Asset Manager shall not engage or enter into a contract with an Affiliate (defined below) unless the compensation payable to the Affiliate for such services does not exceed that which would be payable to a comparably qualified third party service provider that is not affiliated with Asset Manager. For the purposes of this Agreement, an "Affiliate" of any person shall mean any other person that is directly or indirectly controlling, controlled by, or under common control with that person, where the term "control" means the possession, directly or indirectly, of the actual power to direct the affairs of the controlled person.
Section 2.6 BOOKS, RECORDS AND REPORTS.
(1) BOOKS AND RECORDS. Asset Manager shall maintain at its principal place of business, or at such other location as it may reasonably designate, a complete and accurate set of files, books and records of all business activities and operations conducted by Asset Manager with respect to the Assets. All financial records shall be kept in accordance with sound accounting principles and practices, with such modifications as Owner may request or approve. During the Term (defined below) and during the one (1) year period following the expiration or termination of this Agreement, Owner and its duly authorized agents may, at reasonable times, examine, inspect, audit, and copy Asset Manager's books, records, files, and reports pertaining to the Assets.
(2) MONTHLY REPORTS. Asset Manager shall make available to Owner, within 20 days after the end of each calendar month, reports detailing the operations of the Assets which shall be in the format specified in Schedule 2.6(b).
(3) QUARTERLY REPORTS. Asset Manager shall make available to Owner, within 45 days after the end of each calendar quarter, reports detailing the operations of the Assets which shall be in the format specified in Schedule 2.6(c).
(4) ANNUAL REPORTS. Asset Manager shall, within ninety (90) days after the end of each calendar year, make available to Owner the following reports and statements, having been prepared in accordance with sound accounting principles (as modified at Owner's request and with Owner's approval):
(a) a balance sheet and statements of income and expenses as
of the end of such year; and
(b) a cash flow statement for such year.
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(5) OTHER REPORTS. Asset Manager shall make available to Owner reports listed on Schedule 2.
(6) SPECIAL REPORTS. Asset Manager shall also, at Owner's expense, provide any other reports, summaries, statements or schedules reasonably requested by Owner.
Section 2.7 PAYMENT OF COSTS AND EXPENSES. In accordance with the Business Plan, Asset Manager is authorized to pay out of Asset revenues all of the costs and expenses incurred by Asset Manager in performing its duties hereunder. Asset Manager shall maintain detailed records of all such payments with appropriate cash and disbursement controls in compliance with Owner's requirements.
Section 2.8 INSUFFICIENCY OF ASSET REVENUES. If the Asset revenues are insufficient to enable Asset Manager to perform its duties, Asset Manager shall notify Owner, specifying the amounts necessary to enable Asset Manager to perform its duties. Owner shall fund such amounts within ten (10) days of the receipt of Asset Manager's notice, failing which, Asset Manager shall be released from all responsibilities for which it has not been provided sufficient funds. Asset Manager shall not be obligated to pay any expense of Owner with Asset Manager's funds to discharge its duties and responsibilities hereunder.
ARTICLE 3
OWNER'S DUTIES
Section 3.1 INFORMATION AND COOPERATION. Owner shall (1) provide Asset Manager one copy of all files in its possession pertaining to the Assets, (2) furnish Asset Manager with all information in Owner's possession reasonably necessary to enable Asset Manager to perform its duties, and (3) otherwise cooperate with, and assist Asset Manager in, performance of Asset Manager's duties.
Section 3.2 APPROVAL POLICY. Owner has delivered to Asset Manager a list of those parties empowered to approve matters requiring Owner's approval under this Agreement. Owner may revise such list from time to time by delivering written notice to Asset Manager. Owner shall cooperate with Asset Manager in granting or withholding approvals required under this Agreement in a timely manner. If Asset Manager seeks approval of any matter of Owner hereunder and Owner does not respond to such request for approval within five (5) business days following such request, then Owner shall be deemed to have disapproved the matter in question. When seeking Owner's approval of matters hereunder, Asset Manager shall endeavor to provide such supporting information as may be reasonably necessary to enable Owner to evaluate the matter in question.
Section 3.3 FUNDING. Owner shall provide all funds required to enable Asset Manager to perform its duties hereunder and for Asset Manager's compensation.
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ARTICLE 4
COMPENSATION
Section 4.1 ASSET MANAGEMENT FEE. For performing its Asset review and management duties, Owner shall pay to Asset Manager a fee equal to a reasonable cost allocation of all salaries, cost and overhead of Asset Manager for the time devoted to performing the duties and services herein described (the "ASSET MANAGEMENT FEE"). The methodology for determining such cost allocation shall be agreed to by Owner and Asset Manager at the time Owner prepares its Business Plan. The Asset Management Fee shall be payable in arrears on or before the twentieth (20th) day of each calendar quarter in respect of the services provided during the preceding quarter and Asset Manager shall provide such reasonable back-up information as requested by Owner.
Section 4.2 REIMBURSABLE EXPENSES. Without duplication of the items included in the cost allocation determination for the Asset Management Fee, Owner shall reimburse Asset Manager for all expenses incurred by Asset Manager in performing its duties hereunder, including, without limitation, expenses of third parties engaged pursuant to this Agreement; travel and other out-of- pocket expenses; and filing or other fees paid to third parties. Asset Manager shall not be reimbursed for legal fees and expenses relating to the negotiation and preparation of this Agreement.
Section 4.3 ADDITIONAL SERVICES. If Owner requests Asset Manager to perform services other than those required hereunder, such additional services, if performed, shall be compensated separately on terms agreed upon by Asset Manager and Owner prior to the performance of such services, which terms shall not be (1) less favorable to Asset Manager than the terms under which qualified unaffiliated persons are then performing such services for comparable organizations, or (2) less favorable to Owner than the terms under which Owner could obtain such services from qualified unaffiliated third persons.
Section 4.4 EMERGENCY EXPENDITURES. Subject to any restrictions set forth in contracts binding against Owner, Asset Manager, Hotel Manager and/or the Property, in case of an emergency, Asset Manager may make expenditures for the preservation of the Assets, repairs to the Assets and other items without Owner's prior written approval if, in the reasonable judgment of Asset Manager, such expenditure...
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