SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 18, 1996
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
(Exact name of registrant as specified in its charter)
Delaware 0-18151 13-3286866
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
Two World Trade Center, New York, New York 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 392-1054
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
In May 1996, TWC Eleven, Ltd. agreed to sell the Bayport Plaza Hyatt
Hotel, located in Tampa, Fl., to Hyatt Corporation, manager of the hotel,
for a net sales price of approximately $72.2 million. The Partnership owns
a 91.6% indirect general partnership interest in TWC Eleven, Ltd., as a
result of its 99% general partnership interest in Bayport, Ltd., which owns
a 92.5% general partnership interest in TWC Eleven, Ltd. The sale was made
pursuant to Hyatt Corporation's right of first offer contained in the hotel
management agreement.
The closing of the sale took place on July 18, 1996. The purchase
price was paid in cash at closing.
At closing, a portion of the sales proceeds was used to repay the
mortgage note encumbering the hotel and loans from affiliates.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
By: Dean Witter Realty Growth Properties Inc.
Managing General Partner
By: /s/ E. Davisson Hardman, Jr.
E. Davisson Hardman, Jr.
President
Date: August 2, 1996
<PAGE>
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
(1) Pro Forma Balance Sheet as of March 31, 1996
(2) Pro Forma Statements of Operations for the year ended December
31, 1995 and three months ended March 31, 1996
(c) Exhibits
(1) Second Amended and Restated Management Agreement, dated January
26, 1995, between TWC Eleven, Ltd. and Hyatt Corporation
<PAGE>
Dean Witter Realty Growth Properties, L.P.
Pro Forma Consolidated Balance Sheet
As of March 31, 1996
The following unaudited pro forma balance sheet has been presented as if the
Bayport Plaza Hyatt Hotel was sold as of March 31, 1996. The pro forma
adjustments reflect a) the cash proceeds from the sale; b) the elimination
of the net carrying value of the property from real estate and other
assets and liabilities relating to the hotel; and c) the repayment of the
mortgage note and loans from affiliates.
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
ASSETS
<S> <C> <C> <C>
Real estate, at cost:
Buildings and improvements $ 47,284,214 $ (47,284,214) $ -
Land and land improvements 4,658.353 ( 4,658.353) -
51,942,567 (51,942,567) -
Accumulated depreciation 21,440,276 (21,440,276) -
30,502,291 (30,502,291) -
Real estate held for sale 2,021,342 - 2,021,342
Cash and cash equivalents 2,016,464 26,814,333 28,830,797
Deferred expenses, net 1,228,483 (23,689) 1,204,794
Accounts receivable 2,411,110 - 2,411,110
Restricted cash 3,315,774 (3,315,774) -
Other assets 308,098 (288,907) 19,191
$ 41,803,562 $ (7,316,328) $ 34,487,234
LIABILITIES AND PARTNERS' CAPITAL
Mortgage note payable $ 40,093,731 $ (40,093,731) $ -
Due to affiliates 6,512,780 (6,088,850) 423,930
Accounts payable
and accrued expenses 3,023,903 (2,599,608) 424,295
Excess of distributions and
losses over cost of
investments in partnerships 7,706,024 - 7,706,024
Minority interests 1,614,642 - 1,614,642
58,951,080 (48,782,189) 10,168,891
Total partner's capital (17,147,518) 41,465,861 24,318,343
$ 41,803,562 $ (7,316,328) $ 34,487,234
</TABLE>
<PAGE>
Dean Witter Realty Growth Properties, L.P.
Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1995
The following unaudited pro forma consolidated statement of operations has been
presented as if the Bayport Plaza Hyatt Hotel was sold as of January 1, 1995.
The pro forma adjustments reflect the elimination of hotel and other revenues,
hotel operating expenses, interest, amortization, depreciation, and general
and administrative expenses relating to the hotel. The pro forma adjustments
do not reflect the Partnership's nonrecurring gain on the sale of the hotel.
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Revenues:
<S> <C> <C> <C>
Hotel operating $ 27,351,396 $ (27,351,396) $ -
Rental 1,236,740 - 1,236,740
Interest and other 143,188 (20,080) 123,108
28,731.324 (27,371,476) 1,359,848
Expenses:
Hotel operating 20,483,839 (20,483,839) -
Interest 5,327,001 (4,350,085) 976,916
Property operating 381,262 - 381,262
Amortization 246,841 (33,418) 213,423
Depreciation 2,119,206 (1,894,869) 224,337
Equity in net losses of
partnerships 845,578 - 845,578
General and administrative 464,415 (66,565) 397,850
Losses on real estate sold 1,249,457 - 1,249,457
31,117,599 (26,828,776) 4,288,823
Loss before minority interest (2,386,275) (542,700) (2,928,975)
Minority interest in income of
consolidated partnerships (954) (5,763) (6,717)
Loss before extraordinary item (2,387,229) (548,463) (2,935,692)
Extraordinary item:
Gain of extinguishment of
debt due to foreclosure 1,938,645 - 1,938,645
Net loss $ (448,584) $ (548,463) $ (997,047)
Net loss per Unit of Limited
partnership interest $ (5.22) $ (6.70) $ (11.92)
/TABLE
<PAGE>
Dean Witter Realty Growth Properties, L.P.
Pro Forma Consolidated Statement of Operations
For the three months ended March 31, 1996
The following unaudited pro forma consolidated statement of operations has been
presented as if the Bayport Plaza Hyatt Hotel was sold as of January 1, 1996.
The pro forma adjustments reflect the elimination of hotel and other
revenues, hotel operating expenses, interest, amortization, depreciation,
and general and administrative expenses relating to the hotel. The pro forma
adjustments do not reflect the Partnership's nonrecurring gain on the sale of
the hotel.
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
Revenues:
<S> <C> <C> <C>
Hotel operating $ 9,138,921 $ (9,138,921) $ -
Interest and other 56,137 (8,481) 47,656
9,195,058 (9,147,402) 47,656
Expenses:
Hotel operating 5,701,327 (5,701,327) -
Interest 1,057,153 (1,057,153) -
Property operating 33,912 - 33,912
Amortization 49,204 (8,354) 40,850
Depreciation 455,437 (455,437) -
Equity in net losses of
partnerships 195,449 - 195,449
General and administrative 90,309 (11,963) 78,346
7,582,791 (7,234,234) 348,557
Income (loss) before minority
interest 1,612,267 (1,913,168) (300,901)
Minority interest in loss (income)
of consolidated partnerships (31,507) 35,416 3,909
Net income (loss) $ 1,580,760 $ (1,877,752) $ (296,992)
Net income (loss) per Unit of
Limited partnership interest $ 19.31 $ (22.94) $ (3.63)
/TABLE
<PAGE>
SECOND AMENDED AND RESTATED
MANAGEMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED
MANAGEMENT AGREEMENT (this "Management Agreement") is executed in
several counterparts as of January 26, 1995, by and between TWC
ELEVEN, LTD., a Florida limited partnership (hereinafter called
"Owner"), and HYATT CORPORATION, a Delaware corporation (hereinafter
called "Hyatt").
RECITALS
A. Owner owns that certain
real property located in the City of Tampa, Hillsboro County,
Florida, more particularly described in Exhibit A attached hereto
(the "Site"), and on which the Hyatt Regency Westshore hotel has
been built and is now located.
B. Owner and Hyatt have
heretofore entered into a certain Amended and Restated Management
Agreement, dated as of May 28, 1985, as amended by a certain Letter
Agreement likewise dated May 28, 1985 (the said Amended and Restated
Management Agreement, as so amended, being herein collectively
referred to as the "Original Management Agreement"), between Owner
and Hyatt, pursuant to which Owner retained Hyatt to operate and
manage the "Hotel" (as hereinafter defined) on behalf of and for the
benefit of Owner for the consideration and on the terms and
conditions set forth in the Original Management Agreement.
C. Owner and Hyatt have now
agreed to amend and modify the Original Management Agreement in
certain respects, and, as so amended, to restate the same in full,
all upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, Owner and Hyatt agree
that, subject to the provisions of Section 28, the Original
Management Agreement be, and hereby is, amended, and, as so amended,
shall read in its entirety as follows:
Section 1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms and
phrases shall have the following meanings, respectively:
(a) "FFE" shall mean and refer to the following items
necessary or desirable to meet the first-class hotel
standard: (1) furniture and furnishings; (2) hotel
equipment (including office equipment and property
management equipment as necessary); (3) uniforms,
tools and utensils; and (4) china, glassware, linens,
silverware and the like. The items referred to under
(1) and (2) above are sometimes hereinafter referred
to as the "Furnishings and Equipment" or "F&E", and
the items referred to under (3) and (4) above are
sometimes herein collectively referred to as the
"Operating Equipment".
(b) The "first-class hotel standard", as regards the
quality of FFE and hotel facilities and amenities, and
as regards the standards of operation, shall mean the
applicable quality and standards currently in effect
with respect to the Hotel.
(c) "Hotel" shall mean the Site, together with all
buildings and improvements now located thereon, and
together with the FFE.
Section 2. TERM.
The Term of the Management Agreement (the "Term")
commenced as of the date referred to in the Original Management
Agreement and shall expire at 11:59 p.m. on November 1, 2014, unless
sooner terminated as provided in the Management Agreement.
Accordingly, the last "fiscal year" under the Management Agreement
shall, anything in Section 4.1(a) to the contrary notwithstanding,
be the period from January 1 of the year in which the Management
Agreement expires or is otherwise terminated to and including the
actual date of expiration or termination.
Section 3. USE AND OPERATION OF THE HOTEL.
3.1 Use and Standard of Operation.
(a) Owner hereby grants to Hyatt the sole and
exclusive right to manage and operate the Hotel pursuant to
the terms of this Agreement and Hyatt agrees that, except to
the extent excused as hereinafter provided, Hyatt will, as the
agent of Owner, operate the Hotel during the Term in
conformity with a first-class hotel standard and in a
businesslike and efficient manner; and Hyatt shall use the
Hotel solely for the operation of a hotel business conforming
to a first-class hotel standard and for other activities which
are customary and usual in connection with such an operation.
Except as otherwise specifically limited under this Agreement,
Hyatt, as sole and exclusive agent of Owner, shall (subject to
compliance with the provisions of Section 6.2 hereof) have
absolute control and discretion in the operation of the Hotel
including, without limitation, the right and power to
negotiate and enter into such reasonable contracts (including,
without limitation, collective bargaining agreements or labor
contracts) in the name and at the expense of Owner as may be
reasonably necessary or advisable in connection with the
operation of the Hotel (subject, however, to Owner's right to
approve contracts with a corporation or a person or persons
controlling, controlled by, or under common control or
affiliated with Hyatt) and the right to determine the terms of
admittance, charges for rooms, charges for entertainment, food
and beverages, labor policies (including wage rates, the
hiring and discharging of employees, and the installation of
employee retirement or other benefit plans), and all phases of
promotion and publicity relating to the Hotel. The rights of
Owner to receive an amount based on the financial returns from
the operation of the Hotel shall not be deemed to give Owner
any interest, control or discretion in the operation of the
Hotel which is vested in Hyatt, as agent for Owner, pursuant
to this Agreement. Hyatt agrees that in setting wage rates
for employees, it shall take into account competitive
conditions in the area, including rates of pay and rates of
salary and wage increase, in the hospitality industry in the
general area of the Hotel and shall use reasonable efforts,
consistent with the efficient operation of the Hotel, to
maintain wage rates (exclusive of Hyatt national or regional
fringe benefits and subject to collective bargaining
agreements, if any) and increases therein in conformity with
competitive conditions in the area.
Notwithstanding the foregoing provisions of this
Section 3.1(a), and subject in all respects to the provisions
of Section 3.7, except for an "Excluded Transaction", Hyatt
shall not, without the consent of Owner, enter into (i) any
contract or other arrangement having a term in excess of two
(2) years if the amount of the aggregate expenditures
thereunder would, or are reasonably anticipated to, exceed
$50,000 in the aggregate; or (ii) any contract or arrangement,
regardless of its term, providing for an aggregate expenditure
in excess of $100,000. For purposes of the foregoing, the
term "Excluded Transaction" shall mean any of the following:
(i) any collective bargaining agreements, labor policies or
fringe benefit plans or arrangements; (ii) expenditures of
funds from the F&E Fund as provided in Section 5.4, and
contracts for other capital expenditures, provided such
contracts or expenditures are within the budget limits for
capital expenditures set forth in this Agreement; and (iii)
contracts or expenditures required in cases of emergency or
casualty. The amounts of $50,000 and $100,000 shall be
subject to increase to correspond to any increases in the CPI
between May 28, 1985 and the date of the contemplated contract
or expenditure.
Anything herein to the contrary notwithstanding,
Owner agrees that Hyatt may retain its affiliate, Rosemont
Purchasing Company ("Rosemont"), to act as a purchasing agent
for Owner in connection with acquiring replacements of and
additions to Operating Equipment, FFE, or otherwise; provided,
however, Rosemont shall be retained as purchasing agent only
so long as (i) the prices for goods obtainable through the
services of Rosemont are generally competitive with prices
available from other sources (this standard to be based upon
the purchases by Rosemont as a whole and not on an item by
item basis); (ii) the fees charged by Rosemont for its
services are competitive with those charged by other
third-party purchasing agents whose services are available to
Owner (and in no event shall such fees exceed five percent
(5%) of the cost of goods purchased by Rosemont); and (iii)
the prices (excluding freight and taxes) of goods purchased
through Rosemont for the Hotel shall be no higher than the
prices for comparable goods charged to other Hyatt hotels.
Upon request from time to time, Rosemont will provide Owner in
writing with information on pricing for a selected sample of
goods being purchased by Rosemont for the Hotel.
All employees of the Hotel shall be the employees
of Hyatt and Hyatt may reimburse itself out of operating
accounts for the total aggregate compensation, including,
without limitation, fringe benefits and annual bonuses paid or
payable to all employees of the Hotel.
The term "fringe benefits" shall, without
limitation, include the cost of pension or profit sharing
plans, workers compensation benefits, group life and accident
and health insurance or equivalent benefits and similar
benefits available to such employees by virtue of their
employment by Hyatt.
In the event and whenever Hyatt shall be subject
to any tax, irrespective of its designation (including a fee,
charge or other imposition for the issuance of a license,
permit or the privilege to conduct a business or occupation),
imposed, levied or assessed by the United States, the State of
Florida, the County of Hillsborough, the City of Tampa, any
subdivision or agency of the foregoing or any other government
body, which tax is measured, in whole or in part, by reference
to reimbursements to Hyatt for compensation, employment taxes
or any fringe benefits paid or payable to or in respect of
employees of the Hotel, then, and in any such event, Owner
will indemnify and hold Hyatt harmless from and against any
and all liability for such tax or taxes to the extent so
measured. At Owner's request, Hyatt will resist, by
appropriate proceedings, any liability for any tax which is
the subject of the foregoing indemnification, in which case
all costs and expenses (including, without limitation,
attorneys' fees) incurred by Hyatt in resisting or defending
itself against such liability shall be borne and paid for by
Owner. Any payments made by Owner in this connection, and any
costs incurred in contesting such tax, shall be deducted in
computing Profit (as defined in Section 5.2 hereof) hereunder
for any period.
(b) Notwithstanding anything in this Section 3.1 or
elsewhere in this Agreement contained, Hyatt shall be excused
from its obligation to operate the Hotel in conformity with a
first-class hotel standard (i) to the extent and whenever
Hyatt shall be prevented from compliance with such standard by
"Force Majeure Causes," (ii) to the extent of any breach by
Owner of any provision hereof, including, without limitation,
a breach of Owner's obligations under Sections 7.1 and 5.4(c)
hereof and (iii) to the extent and whenever there is herein
provided a limitation upon Hyatt's ability to expend funds in
respect of the Hotel (for example, the limitations contained
in Section 5.4 hereof respecting monies available for the
replacement of, and additions to, Furnishings and Equipment),
provided that the failure to expend funds by reason of the
operation of such limitation shall reasonably prevent Hyatt
from meeting such standard. For the purpose hereof, Force
Majeure Causes shall mean causes beyond the reasonable control
of Hyatt, including casualties, war, insurrection, strikes,
lockouts and governmental actions (but excluding causes which
can be controlled by the expenditure of money in accordance
with good business practices).
It is expressly agreed and understood that each
and every provision contained in this Agreement pursuant to
which Hyatt is excused from its obligation to operate the
Hotel in conformity with a first-class hotel standard shall
operate without prejudice to any other remedy (including,
without limiting the generality of the foregoing, the right to
terminate this Agreement) which Hyatt shall have under the
terms of this Agreement.
(c) Prior to the appointment by Hyatt of any
person to any "Executive Staff" position, or any
replacement for any of those positions, Hyatt will
notify Owner of the proposed appointment in writing and
shall, at the request of Owner, afford Owner an
opportunity to meet in person with the candidate and to
consult with Hyatt regarding the advisability of such
appointment. No person shall be appointed to any
Executive Staff position until Owner has approved the
appointment (which approval shall not be unreasonably
withheld or delayed, it being reasonable to disapprove
any such person if such person does not have adequate
experience at a hotel of similar quality and mix of
business to the Hotel), except that, where appropriate,
persons may be appointed by Hyatt on an interim or
acting basis where necessary in order to fill the
position temporarily pending receipt of final approval
from Owner, provided, however, Hyatt shall promptly
propose in writing a permanent replacement as soon as
reasonably practical. Unless requested by Owner, Hyatt
shall not propose the replacement of more than one (1)
member of the Executive Staff in any fiscal year without
the approval of Owner unless additional replacements are
required as a result of death, retirement, discharge (as
opposed to transfer), or resignation of an employee, or
the result of a request from Owner to Hyatt for the
transfer or termination of a particular member of the
Executive Staff. For purposes hereof, the Executive
Staff shall mean the General Manager, the Rooms
Executive, the Food and Beverage Executive and the
Director of Marketing, or persons performing similar
functions however designated.
3.2 Leases and Concessions.
(a) Hyatt shall not, without the approval of Owner,
arrange leases or concessions for any hotel operations, any
restaurant or food service operations or for any other
commercial operation in or about the Hotel. Owner's approval
of leases or concessions may be granted or withheld in Owner's
sole discretion, except in the case of leases or concession
agreements for the operation of hotel gift shops, newsstands
and sundry shops, in which event Owner agrees that its consent
shall not be unreasonably withheld. Any such lease or
concession so approved shall be entered into in Owner's name
and shall be executed by Owner (or Hyatt, as agent).
(b) Hyatt shall, during the Term, use reasonable
efforts to perform, as agent for Owner, all of the obligations
of Owner as landlord or concessionaire under all present or
future leases and concessions made or granted with respect to
the Hotel.
(c) Hyatt shall collect all rents and other sums
falling due during the Term under any present or future lease
or concession, and shall deposit the same in the operating
accounts.
3.3 Bank Account.
There shall be deposited in a bank or banks designated
by Owner and in accounts established in Owner's name all monies
advanced to the Hotel as working capital by Owner, as provided in
Section 7.1 hereof, and all monies received by Hyatt from the
operations of the Hotel ("operating accounts"), and Hyatt shall pay
out of the operating accounts, to the extent of the funds from time
to time therein, all costs and expenses incurred in connection with
the operation of the Hotel, all other items entering into the
calculation of Profit hereunder and all other amounts required to
perform its obligations hereunder. Checks or other documents of
withdrawal drawn upon the operating accounts shall be signed by
representatives of Hyatt or Hotel employees designated by Hyatt, as
agent for Owner, which persons drawing on such accounts shall be
bonded or otherwise insured.
3.4 Negation of Partnership or Joint Venture.
Nothing in this Agreement contained shall constitute,
or be construed to be or to create, a partnership, joint venture or
lease between Owner and Hyatt with respect to the Hotel.
3.5 Termination Upon Sale.
Owner shall have the right to terminate this Management
Agreement in connection with any sale of the Hotel consummated at
any time either (1) between September 1, 1996 and March 31, 1997, or
(2) after November 30, 1999, (although Owner may commence its sales
effort prior to such dates), provided such sale has been made to a
third party unaffiliated with Owner, and provided further that (i)
Owner advises Hyatt of its election to so terminate pursuant to this
Section 3.5 by timely delivery of a written notice (the "Termination
Notice") delivered either prior to or after the date of closing of
such sale, but in no event later than sixty (60) days after such
date, setting forth the identity of the purchaser, Owner's intention
to terminate this Agreement, and the date of closing or the proposed
date of closing of such sale, as applicable; (ii) on or prior to the
"Effective Date," (as hereinafter defined) of such termination,
there shall have been paid to Hyatt by bank, certified or cashier's
check or by wire transfer of funds, a termination fee (the
"Termination Fee") equal to the following percentages of the Annual
Management Fee payable to Hyatt in the fiscal year immediately
preceding the fiscal year in which the Effective Date shall occur
(plus $350,000 for any, and exclusively in connection with a,
termination resulting from a sale consummated on or after September
1, 1996 and on or prior to March 31, 1997): (a) 100% for any sale
consummated on or after September 1, 1996 and on or prior to March
31, 1997, or on or after December 1, 1999 and on or prior to
November 30, 2004; (b) 75% for any sale consummated on or after
December 1, 2004 and on or prior to November 30, 2009; and (c) 50%
for any sale consummated on or after December 1, 2009 and on or
prior to the expiration of the Term; (iii) the Termination Notice
shall set forth the date (the "Effective Date") as of which the
termination shall become effective (which may in no event be sooner
than sixty-five (65) days after delivery of the Termination Notice);
and (iv) the provisions of Section 15.4 or Section 15.5, as the case
may be, shall have been complied with by Owner and Hyatt has not
elected to purchase the Hotel in connection therewith or if, having
elected to so purchase the Hotel, Hyatt shall have failed to comply
with its obligations to consummate such purchase; provided, however,
Owner shall have the right, subject to the next succeeding
paragraph, to extend the date of closing, and therefore the
Effective Date, one or more times, to a date or dates which are in
no event later than one hundred eighty (180) days after the date of
closing set forth in Owner's original Termination Notice.
Notwithstanding the foregoing provisions of this
Section 3.5, Owner may select as the "Effective Date" any date it
may choose, including, without limitation, a date which is less than
sixty-five (65) days after delivery of a Termination Notice, or,
having selected an Effective Date, may delay or extend the same,
provided only that the Effective Date actually selected by the Owner
shall not be sooner than the actual date of closing of the sale,
and, provided further, if the Effective Date selected by Owner shall
be less than sixty-five (65) days after delivery of the Termination
Notice, or shall be less than sixty-five (65) days after any
previously selected Effective Date, Owner shall have delivered to
Hyatt a "WARN Indemnity". For purposes hereof, a WARN Indemnity
shall mean an indemnity in favor of Hyatt, its officers, directors,
shareholders, employees and affiliates, indemnifying and agreeing to
defend and hold each of the foregoing parties completely free and
harmless of and from any and all manner of claim, loss, damage,
liability and expense which any of the foregoing parties may suffer
or incur under or pursuant to the "WARN Act" (as hereinafter
defined); provided, however, Hyatt shall be obligated to deliver
WARN Act notices not later than five (5) days after receipt of
written notice from Owner setting forth the Effective Date, or, if
applicable, not later than five (5) days after receipt of any notice
from Owner extending any Effective Date theretofore established by
Owner, and no WARN Indemnity shall apply to the extent of any
liability attributable to the failure by Hyatt to deliver such WARN
Act notices within the aforesaid five (5) day period. In the event
Hyatt, in its reasonable judgment, deems a WARN Indemnity from Owner
financially insufficient as a credit matter, Owner agrees that it
shall (a) provide a WARN Indemnity from such other person or entity
whose financial ability to meet its obligations under the WARN
Indemnity has been demonstrated to Hyatt's reasonable satisfaction
or (b) secure its WARN Indemnity by an irrevocable and unconditional
letter of credit in an amount reasonably satisfactory to Hyatt for
the purpose of securing the performance by Owner with respect to its
WARN Indemnity and issued by a bank, reasonably satisfactory to
Hyatt, having its principal place of business in the States of
Illinois, Florida or New York.
Notwithstanding any termination of this Agreement
pursuant to the provisions of this Section 3.5, Owner shall continue
to be liable to Hyatt for the payment of Annual Management Fees and
all other amounts due or accrued to Hyatt hereunder to the date of
such termination, together with any and all liabilities relating or
incident to the termination of this Agreement and which, under the
express provisions of this Agreement, are intended to survive the
termination hereof and are expressly agreed to be assumed by Owner.
The provisions of Section 15.2 of the Management
Agreement shall not be applicable to any sale made pursuant to this
Section 3.5 but Sections 15.4 or 15.5 (as the case may be) shall be
applicable.
A sale to any person or entity controlled by,
controlling or under common control with Dean Witter, Discover & Co.
shall not, for purposes of this Section 3.5, be deemed a sale to an
unaffiliated entity ("control" for this purpose meaning control in
fact).
Hyatt and Owner agree that, in connection with any
termination of the Management Agreement pursuant to the provisions
of this Section 3.5, if Hyatt reasonably believes the same are
required by law, notices shall be delivered by Hyatt, not later than
five (5) days after receipt by Hyatt of a Termination Notice, under,
pursuant to and in accordance with the provisions of the United
States Worker Adjustment and Retraining Notification Act, as amended
(the "WARN Act") at least sixty (60) days prior to the Effective
Date. Notwithstanding the foregoing, at the request of Owner, the
notice above referred to may be delivered less than sixty (60) days
prior to the Effective Date, or, as indicated above, the Effective
Date may be altered or amended from time to time by Owner, provided
that Owner delivers to Hyatt a WARN Indemnity, it being understood
and agreed that, unless a WARN Indemnity is delivered as hereinabove
provided, in no event shall the Effective Date occur prior to the
expiration of the aforesaid sixty (60) day period so long as Hyatt
shall have complied with the provisions of this paragraph regarding
the delivery of notices.
If the closing of any sale contemplated by this Section
3.5 shall not have occurred on or prior to the Effective Date set
forth in the Termination Notice, as the same may have been amended
or altered by Owner in accordance with the provisions of this
Section 3.5, then, unless the date of closing, and, therefore, the
Effective Date, shall have been extended by Owner as hereinabove
provided and unless a WARN Indemnity has been issued to Hyatt as and
when required hereunder, this Agreement shall continue in full force
and effect until such time as a new Termination Notice (setting
forth a new Effective Date meeting the above requirements) shall
have been delivered by Owner to Hyatt in accordance with the above
set forth provisions and until the closing of the sale shall have
actually occurred.
If this Agreement shall have been terminated by Owner
pursuant to the provisions of this Section 3.5, and if, on the
Effective Date Hyatt shall fail to relinquish management of the
Hotel as herein required for any reason other than the default or
breach of the provisions of this Section 3.5 by Owner, then Hyatt
shall (i) no longer be entitled to receive its Termination Fee or
any part thereof; (ii) forfeit any right to receive payment from
Owner for any unpaid fees or expense reimbursements which may then
otherwise be due to Hyatt hereunder; (iii) be liable to Owner, as
liquidated damages, in the amount of $500,000 for each month or
portion thereof in which it wrongfully holds over in management, it
being agreed that it is difficult for the parties to determine the
amount of damages that Owner may suffer as a result of any such
breach by Hyatt and that said amount is a reasonable estimate
thereof; and (iv) reimburse Owner for any expenses, including
attorneys' fees and expenses, incurred by Owner in connection with
advice or proceedings relating to Hyatt's wrongful hold over, and
Owner shall also be entitled to any and all other rights or remedies
it may have against Hyatt, at law or in equity, including injunctive
relief.
Anything herein contained to the contrary
notwithstanding the provisions of this Section 3.5, with respect to
a sale of the Hotel consummated between September 1, 1996 and March
31, 1997, shall terminate, and be of no further force or effect,
upon any sale of the Hotel to an unaffiliated third party made in
accordance with the provisions of Section 15.2 hereof, and in
connection with which the purchaser has elected to continue this
Agreement in effect and shall have assumed in writing the
obligations of Owner hereunder.
For all purposes of this Section 3.5, a sale shall be
deemed consummated between September 1, 1996 and March 31, 1997 if
a contract of sale for the Hotel is executed and delivered and
provides for a closing, during such period, and if pursuant to such
contract of sale the closing occurs during such period or is
adjourned pursuant to the terms thereof or by agreement of the
parties thereto for any reason whatsoever (including, without
limitation, clearing title exceptions and compliance with the WARN
Act), so long as such closing actually occurs on or prior to June
30, 1997.
3.6 Hyatt Termination Right.
So long as Owner shall have the right to terminate this
Agreement pursuant to the provisions of Section 3.5 in connection
with a sale which is consummated at any time on or after September
1, 1996, and on or before March 31, 1997, whether or not Owner has
in fact delivered a Termination Notice pursuant thereto, Hyatt shall
have the right, at its option, to terminate the Management
Agreement, and the rights and obligations of the parties hereto
(including, without limitation, any rights of Hyatt under Section
15.4 or Section 15.5 hereof), upon delivery by Hyatt to Owner of a
written notice to that effect setting forth the effective date of
termination, which, in no event, shall be sooner than six (6) months
after the delivery of such notice; provided, however, no such notice
may be delivered by Hyatt pursuant hereto, and the rights of Hyatt
under this Section 3.6 shall terminate and expire, unless such
notice is delivered by Hyatt in accordance with the provisions of
this Section 3.6 on or prior to March 31, 1996. No termination fee
shall be due or payable in connection with any termination by Hyatt
pursuant to the provisions of this Section 3.6.
3.7 Budgets.
As soon as the same are available, but in any event
prior to November 1 of each fiscal year during the Term (commencing
with the 1995 fiscal year), Hyatt will prepare and submit to Owner
(i) Hyatt's forecast of Hotel operations for the succeeding calendar
year including estimates of revenues and operating expenses and the
assumptions underlying the same; (ii) Hyatt's proposed marketing
plan for the succeeding calendar year; and (iii) a budget of
"Capital Expenditures" for the ensuing calendar year. The materials
described in clauses (i) and (ii) above are herein collectively
referred to as the "Operating Forecast", and the budgets referred to
in clause (iii) above are herein referred to as the "Capital
Budget". The Operating Forecast and Capital Budget shall be
prepared in accordance with Hyatt's standard internal planning and
budgeting procedures and formats. Hyatt's current format for
Operating Forecasts and Capital Budgets is attached hereto as
Attachment 1, which, however, shall be subject to change from time
to time to conform to Hyatt revised formats. Whenever format
changes are made, Hyatt shall advise Owner, in the first year in
which such change becomes effective, of the nature of such change,
and shall provide, upon written request of Owner, a retroactive
analysis (for the two prior fiscal years) of operating results using
the revised format so that the effect of format changes may be taken
into account in Owner's review. Promptly after submission of the
Operating Forecast and Capital Budget, Owner and representatives of
Hyatt (consisting initially of the general manager and other members
of the Hotel's Executive Staff as deemed appropriate by Hyatt or
Owner, and the applicable divisional or regional vice president)
shall meet (at a mutually convenient time and place and in any event
within thirty (30) days of delivery to Owner of the Operating
Forecast and Capital Budget by Hyatt in accordance with the
provisions of this Section 3.7) to discuss the Operating Forecast
and the Capital Budget, with respect to which Hyatt and Owner hereby
agree as follows:
(1) Hyatt shall take into account the views expressed,
and any changes requested, by Owner regarding the Operating
Forecast and Capital Budget in an attempt to achieve a
consensus and the Owner's approval of the same. In this
connection, Owner shall have the right to propose additional
Capital Expenditures and to suggest changes in operating
policies and in the proposed Operating Forecast. Hyatt will
address Owner's questions, comments and suggestions in good
faith, incorporating those modifications upon which mutual
agreement has been reached and providing explanations as to
its position on matters on which mutual agreement has not been
reached. Such responses shall be in writing if requested by
Owner, and a revised Operating Forecast and Capital Budget
shall be delivered to Owner promptly following the meeting of
Owner and Hyatt with respect thereto, and in any event on or
prior to December 15 of such year, incorporating any changes
thereto which have theretofore been agreed to between Owner
and Hyatt.
(2) Subject in all respects to the provisions of
subparagraph (3) below, items of expenditures contained
in the Operating Forecast, other than those excluded
below, will be subject to Owner's approval, which
approval will be subject to the following provisions and
standards: (i) Owner's consent shall not be unreasonably
withheld or delayed and shall be deemed unreasonably
withheld if the item of expenditure in question is
reasonably necessary in nature and amount to enable the
Hotel to continue operation in accordance with the first
class hotel standard; (ii) approval will not be
required for any costs associated with practices,
procedures or programs which are Hyatt chain
requirements or standards generally at other comparable
Hyatt hotels provided that charges for Chain Expenses,
Gold Passport (or other Hyatt sponsored or affiliated
frequent traveler programs) are generally assessed to
the Hotel on the same basis (although not necessarily in
the same overall dollar amount) as such charge is
assessed to other Hyatt hotels included in the group of
hotels to be assessed; (iii) subject to compliance with
applicable collective bargaining agreements, if any,
approval will not be required for compensation levels to
Hotel employees (although increases in staffing levels
may be subject to approval as provided below) or in
Hyatt chain-wide or regional fringe benefit programs;
(iv) approval will not be required of costs associated
with arrangements which Hyatt has made in good faith
with vendors on a chain-wide or regional basis; (v)
approval will not be required of any expenditures
reasonably necessary to protect persons or property in
the event of casualty or emergency; and (vi) approval
will not be required for any expenditures required to be
made under the express provisions of this Agreement
including expenditures for Annual Management Fees. From
time to time, not more frequently than semi-annually,
Owner shall have the right to request (and Hyatt shall
provide) specific information on all items of
expenditure referred to in clauses (i) through (vi)
including, without limitation, amounts actually
expended, the basis on which the amount of expenditures
were determined (including, in the case of Chain
Expense, Gold Passport and other Hyatt chain-wide or
regional programs, the basis of allocation to the Hotel)
for the purpose of assisting Owner in monitoring
performance and compliance by Hyatt with the above
provisions.
(3) Prior to the date hereof, Owner and Hyatt
have met and conferred regarding all aspects of the
operations of the Hotel including categories of
expenses, staffing levels and other operational
policies, with the intention of reducing operating
expenses and staffing levels. Attached hereto as
Exhibit B is a copy of the report prepared by Hyatt
describing staffing changes and expense reductions
agreed to by Owner and Hyatt (the "Best Practices
Report" such term being inclusive of the attached "Full
Time Equivalent Employee Staffing Report"). It is the
desire and intention of the parties that, while
recognizing that costs may increase, Hyatt, in operating
the Hotel, will use good faith efforts to adhere to
staffing levels and operating policies as heretofore
approved by Owner and Hyatt (including staffing levels
relating to positions described in the Best Practices
Report) so as to minimize, on a long term basis,
operating expenses consistent, however, with the first-
class hotel standard. In preparing Operating Forecasts
for 1995 and each subsequent fiscal year, Hyatt shall
use reasonable efforts to continue to adhere to staffing
levels and operating policies as described in the Best
Practices Report to the extent consistent with the
first-class hotel standard and to the extent consistent
with the volume and mix of Hotel business.
Nevertheless, if Hyatt shall determine that changes are
required in staffing levels, or in operating policies,
from those described in the Best Practices Report which
will have the effect of increasing expenditure levels,
it shall so advise Owner in connection with the budget
process hereinabove contemplated, and state its reasons
therefore, but may not institute such proposed changes
without Owner's approval (which may not be unreasonably
withheld). If Owner refuses to approve one or more of
the changes in staffing positions or operating policies
from those described in the Best Practices Report, and
the parties are unable within a reasonable time to
resolve their differences, the same shall be submitted
to expedited expert arbitration conducted in accordance
with the provisions of Section 14 hereof. In any such
arbitration, Hyatt shall have the burden of
demonstrating that the additional staff positions or
operating policies are reasonably necessary in order for
the Hotel to operate in accordance with the first-class
hotel standard.
(4) Until such time as an Operating Forecast has
been approved in accordance with the provisions set
forth above, and pending resolution of any differences
between Owner and Hyatt, Hyatt shall continue to operate
the Hotel in accordance with the standards of
operations, operating policies and staffing levels in
effect during the preceding fiscal year subject,
however, to the provisions of subparagraph (2) above
regarding those items of expenditures not requiring
Owner approval.
(5) Owner and Hyatt both acknowledge that the
estimates of revenues and expenses contained in the
Operating Forecast represent Hyatt's best estimate of
the same for the ensuing fiscal year which, however, can
vary for reasons beyond the reasonable control of Hyatt
such as (i) the volume of business and the levels of
Hotel occupancy; (ii) the mix of business (that is, the
relationship of food and beverage revenues to room
revenues and other Hotel related revenues); (iii)
prevailing wage rates and the effects of collective
bargaining agreements; (iv) inflation; (v) utility rate
increases; (vi) unanticipated and extraordinary repair
and maintenance expenses; (vii) the need to meet
competitive market conditions; and (viii) other similar
causes. Nevertheless, the Operating Forecast embodies
assumptions regarding staffing levels and operating
policies which shall constitute a standard to which
Hyatt shall use reasonable efforts to adhere and to
which it shall adhere with respect to the matters
referred to in subparagraph (3) above. Owner
acknowledges, however, that so long as Hyatt adheres to
the provisions of the preceding sentence (including,
without limitation, the obligation to comply with the
requirement of subparagraph (3) above), Hyatt shall have
no liability to Owner, and shall not otherwise be deemed
in default hereunder, if actual operating results vary
to any extent from the Operating Forecast, and further
agrees that in the event of any breach by Hyatt of its
covenants and obligations with respect to Operating
Forecasts (after notice and opportunity to cure as set
forth in Section 12), Owner's sole rights and remedy
shall be termination of this Agreement.
(6) With respect to "Capital Expenditures" as
set forth in the Capital Budget, Hyatt shall have no
right to incur any such "Capital Expenditures" except
pursuant to and in accordance with a Capital Budget
approved by Owner, and, after approval of a Capital
Budget, Hyatt may not incur Capital Expenditures in
excess of those required or permitted under the approved
Capital Budget; provided, however, (i) Hyatt shall have
the right, whether or not a Capital Budget shall have
been approved and whether or not an approved Capital
Budget shall contemplate the same, to make expenditures,
including Capital Expenditures, which it reasonably
deems necessary to minimize personal injury and property
damage in cases of casualty or other emergency; and (ii)
whether or not an approved Capital Budget shall be in
effect, no single Capital Expenditure of $50,000 or more
shall be made without specific approval thereof by
Owner, although such specific approval may be contained
in, and comprise part of, the Capital Budget.
(7) Owner agrees that it shall promptly review
all Operating Forecasts and Capital Budgets submitted to
it, and Hyatt agrees that it shall provide Owner with
such additional and supplemental information with
respect thereto as shall be reasonably available to
Hyatt and which may be prepared or compiled without
unreasonable delay, expense or interruption of normal
operations. In the event Owner shall fail to approve a
Capital Budget, or any line item within a Capital
Budget, within thirty (30) days after delivery of the
same to Owner, then such Capital Budget, or any line
item not specifically approved by Owner, shall be deemed
disapproved. With respect to any disapproved Capital
Budget, or line item within a Capital Budget, Owner and
Hyatt shall meet and confer in good faith in an effort
to reconcile differences.
(8) In reviewing and approving Capital Budgets,
Owner agrees that it shall not unreasonably withhold its
approval to expenditures for "F&E Replacements and
Additions", and shall (subject to the $50,000 limitation
set forth in subparagraph (6) above) approve such
expenditures to the extent funds sufficient for the
payment thereof are available in the F&E Fund, but may
withhold its approval to "Capital Improvements" in its
sole discretion. All Capital Expenditures shall be
funded from amounts then on deposit, or to be deposited
during the applicable fiscal year, in the F&E Fund,
subject, however, to the provisions of Section 5.4(c).
For purposes hereof, (i) "F&E Replacements and
Additions" shall mean any replacements of or additions
to Furnishings and Equipment as well as repairs and
replacements of capital items; (ii) "Capital
Improvements" shall mean alterations, additions and
improvements in and to the Hotel, but excluding repairs
or replacements of capital items; and (iii) "Capital
Expenditures" shall mean F&E Replacements and Additions
and Capital Improvements, collectively, without
distinction between them. Replacements of F&E shall be
with items of comparable quality to those items being
replaced.
(9) From time to time (but not more frequently
than quarterly) during any fiscal year in which an
Owner-approved Capital Budget or Operating Forecast, or
both, shall be in effect, if Hyatt anticipates that
expenditures shall be greater than those forecasted or
budgeted, Hyatt shall advise Owner thereof in writing,
and shall explain or comment on the reason for such
deviation, and shall submit revisions to the then
applicable Capital Budget and Operating Forecasts for
review and approval by Owner in accordance with the
above provisions. The necessity for an amendment to an
Operating Forecast or Capital Budget shall not be deemed
an event of default by Hyatt hereunder.
(10) From time to time upon request of Owner, not more
frequently than quarterly, Hyatt will cause the general
manager of the Hotel to prepare and submit to Owner a report
detailing compliance by Hyatt with the Best Practices Report,
stating any deviations therefrom, and explaining the reasons
for any such deviations.
(11) The provisions of this Section 3.7 are intended
to, and shall, supersede and prevail over any contrary or
inconsistent provisions of this Agreement.
Section 4. MANAGEMENT FEES AND REMITTANCES TO OWNER
4.1 Fiscal Year.
(a) A "fiscal year" hereunder shall mean a period of
twelve (12) consecutive months included in the Term and ending
on December 31st, except that the first fiscal year hereunder
commenced on December 1, 1986 and ended on December 31st of
that year, and, in the event that there shall be a termination
of the Term on a date other than December 31st, the last
fiscal year hereunder shall end on such date of termination.
(b) The "Cumulative Period" in respect of any month
included in a fiscal year shall mean the period commencing on
the first day of such fiscal year and ending on the last day
of such calendar month.
The Gross Receipts for any Cumulative Period shall mean
the sum of the Gross Receipts (as defined in Section 5.3 hereof) for
each calendar month included in such Cumulative Period. The Profit
for any Cumulative Period shall mean the sum of the amounts of
Profit for each calendar month included in such Cumulative Period,
such sum to be determined after taking into account any deficit in
Profit for any such calendar month.
4.2 Hyatt's Management Fee.
4.2.1 Annual Management Fee.
For each fiscal year Hyatt shall receive, in respect
of its management services hereunder, an amount (the "Management
Fee" or "Annual Management Fee") equal to thirty-five percent (35%)
of the "Adjusted Profit" (if any) for such fiscal year; provided,
however, in no event shall the Annual Management Fee exceed an
amount equal to three and three-quarters percent (3.75%) of the
Gross Receipts for such fiscal year.
For purposes hereof, the term "Adjusted Profit" shall
mean "Profit" as defined in Section 5.2 with the following
adjustments: (i) there shall be deducted from the Profit for each
fiscal year the sum of Four Million Fifty Thousand and No/100
Dollars ($4,050,000.00); (ii) throughout the Term, the full amount
of the deposits to the F&E Fund required to be made pursuant to
Section 5.4(a) shall be deducted; and (iii) there shall be deducted
any amounts invested by Owner in Capital Expenditures not funded
from the amounts on deposit in the F&E Fund or not otherwise
deducted in computing Adjusted Profit for such fiscal year. In no
event shall the negative amount (if any) of Adjusted Profit for any
fiscal year be carried back to any preceding fiscal year or carried
forward to any subsequent fiscal year.
Notwithstanding the foregoing, for the 1994 fiscal
year, "Basic Fee" (as said term is defined in the Original
Management Agreement) shall be calculated under the provisions of
the Original Management Agreement for the period from January 1,
1994 to and including October 31, 1994 and the above provisions
shall be applicable effective as of November 1, 1994 and for all
fiscal periods thereafter (subject, however, to the provisions of
Section 28). There shall be no "Incentive Fee" (as said term is
defined in the Original Management Agreement) for the period from
January 1, 1994 through October 31, 1994. For the period from
November 1, 1994 through December 31, 1994 (the "Stub Period"), the
Management Fee shall be equal to the quotient of (a) the sum of (i)
the Stub Period Averaged Fee, and (ii) the Stub Period Actual Fee,
and (b) two (2). The Stub Period Averaged Fee shall be equal to
five and eighty-five one hundredths percent (5.85%) of the Adjusted
Profit for the entire 1994 fiscal year. The Stub Period Actual Fee
shall be equal to thirty-five percent (35%) of the Adjusted Profit
calculated for the Stub Period only provided that the sum of Six
Hundred Seventy-Five Thousand Dollars ($675,000) shall be deducted
in calculating Adjusted Profit for the Stub Period instead of the
Four Million Fifty Thousand Dollars ($4,050,000) which is deducted
in the case of a full fiscal year. Notwithstanding the foregoing,
in no event shall the Annual Management Fee for fiscal year 1994
(both the periods before and after November 1, 1994) exceed in the
aggregate an amount equal to four percent (4.0%) of the Gross
Receipts for such fiscal year.
4.2.2 Time and Manner of Payment.
With respect to any fiscal year, commencing with the
1995 fiscal year, and each calendar month included therein, the
Management Fee shall be payable in tentative monthly installments of
eighty percent (80%) of one-twelfth (1/12th) of the Management Fee
as estimated in the Operating Forecast for the fiscal year in
question prepared and approved in accordance with Section 3.7
hereof. Installments of Management Fee for any calendar month shall
be paid by Hyatt withdrawing the same from the operating accounts at
any time after Hyatt shall furnish to Owner the unaudited financial
statement for such calendar month pursuant to Section 7.4 hereof.
If, for any fiscal year, the aggregate amount of
tentative monthly installments paid to Hyatt on account of the
Management Fee shall be more or less than the amount thereof payable
for such fiscal year based on the final determination of Gross
Receipts and Adjusted Profit for such fiscal year as reflected in
the audited Certified Financial Statement for such fiscal year
referred to in Section 7.4 hereof, then, by way of year-end
adjustment, within fifteen (15) days after the delivery of such
audited Certified Financial Statement to Owner, Hyatt shall pay into
the operating accounts the amount of any such overpayment or
withdraw from the operating accounts the amount of any such
underpayment.
If, for any reason, Owner and Hyatt shall agree that
the year end financial statements need not be audited or certified
(any such agreement to be void unless set forth in a written
instrument signed by both parties), then, for purposes hereof, the
Certified Financial Statement shall mean the year end financial
statements delivered pursuant to Section 7.4, whether or not audited
or certified.
4.3 Remittances to Owner.
Contemporaneously with furnishing the monthly statement
for each calendar month pursuant to Section 7.4 hereof, Hyatt shall
remit to Owner out of the operating accounts an amount (the "Owner's
Remittance Amount") by which the total funds then in the operating
accounts exceed the amount then reasonably required to be maintained
in the operating accounts (after withdrawal of the Management Fee
and after fulfilling the provisions of the Supplemental Payment as
required in Section 4.4) in order to carry on the operation of the
Hotel in accordance with the standards of operations contemplated by
the then applicable Operating Forecast and otherwise in accordance
with the provisions of this Management Agreement. Each remittance
shall be paid to Owner at Owner's address then in effect hereunder
for receipt of notices hereunder by Owner, or at such other place as
Owner may, from time to time, designate in a notice to Hyatt.
4.4 Supplemental Payment.
In addition to the Owner's Remittance Amount to be paid
by Hyatt under Section 4.3, Hyatt shall deposit, in respect of each
calendar month during the Term as a supplemental payment to Owner,
the amount specified in Section 5.4(a) hereof in respect of such
calendar month and payable under Section 5.4 into the F&E Fund
referred to therein, such amount to be deposited by Hyatt into such
Fund for the account of Owner.
Section 5. DETERMINATION OF PROFIT AND CROSS RECEIPTS.
5.1 Books and Records.
Hyatt shall keep full and adequate books of account and
other records reflecting the results of the operation of the Hotel.
Such books and records shall, at all times, be kept in all material
respects, in accordance with the then latest edition of the Uniform
System of Accounts for Hotels (the "Uniform System"), as adopted by
the American Hotel Association, except as otherwise specified in
this Agreement.
5.2 "Profit" Defined.
There is attached hereto as Exhibit C, and hereby made
a part hereof, a copy of page 12 of the Uniform System, Sixth
Revised Edition (the "Sixth Edition"), showing the items of income
and expense which are taken into account in determining "Gross
Operating Profit," it being understood that a reserve for doubtful
accounts and commissions due to others (such as travel agents and
credit card companies) are items of expense deducted in computing
Gross Operating Profit.
The "Profit" derived from the Hotel for any period
shall mean the Gross Operating Profit of the Hotel for such period,
determined in accordance with the Sixth Edition, without regard to
any supplements or amendments thereto hereafter adopted, but without
taking into account any deduction for management fees payable under
Section 4 hereof, and less deductions for the following amounts (but
only to the extent that such amounts are not otherwise deducted
under the Sixth Edition in computing Gross Operating Profit):
(a) An amount equal to the costs incurred during such
period in replacing, or adding to, the Operating Equipment;
(b) For the first fifteen (15) fiscal years of the
Term, an amount equal to the aggregate deductions made under
Section 5.4(a) for such period, and thereafter an amount equal
to one-half such deductions;
(c) The Hotel's prorata share of Allocable Chain
Expense for such period, in accordance with Section 7.2;
(d) The cost of insurance maintained in accordance
with Section 8.1 and properly allocable to such period;
(e) All real and personal property taxes referred to
in Section 7.6 and properly allocable to such period;
(f) All costs and expenses incurred during such period
in respect of items described in Section 6.1 and 6.2 hereof;
(g) Rental charges not in excess of $10,000 per annum
for the leasing or rental of miscellaneous business or office
equipment; and
(h) All other reasonable costs and expenses incurred
during such period in the operation of the Hotel and all other
amounts deductible in respect of such period under the terms
of this Agreement.
Notwithstanding any of the foregoing, the actual cost
of leasing or renting or other similar charges incurred for the
replacement of or addition to Furnishings and Equipment shall not be
deductions in determining Profit. Such payments or costs shall be
charged against the Fund for Replacement of and Additions to
Furnishings and Equipment or shall otherwise be paid by Owner, as
agreed upon between Hyatt and Owner.
5.3 Definition of Gross Receipts.
"Gross Receipts" during any period shall mean all
revenues and income of any kind properly accrued during such period
and derived, directly or indirectly, from the Hotel during such
period including, without limitation, all revenues derived from the
sale during such period of rooms and food and beverages (without
taking into account any costs incurred in respect of such sales) and
all rents or fees payable by subtenants and concessionaires in
respect of such period (but not the gross receipts of subtenants or
concessionaires, including the concessionaire operating the parking
concession, if any) provided that the net proceeds (after deduction
of the expenses of adjustment and collection) of use and occupancy
or other similar insurance in respect of the Hotel shall be included
only to the extent actually received during such period, as well as
all of the other items listed under "Departmental Profit (Loss)" on
Exhibit C hereto. There shall be excluded in determining Gross
Receipts for any period (i) any sales or other excise taxes required
by law to be collected from customers of the Hotel and remitted to
the appropriate taxing authorities, (ii) any interest earned on
funds held in the operating accounts when not required (a) for the
operation of the Hotel or (b) to be paid to Owner as Owner's
Remittances, (iii) gratuities collected on behalf of and paid to
employees, and (iv) unless such parking facilities are operated by
Hyatt, parking revenues pertaining to the adjacent office project.
5.4 Fund for Replacement of and Additions to Furnishings
and Equipment.
(a) During each fiscal year (commencing with the 1994
fiscal year) during the Term Hyatt shall deposit, out of the
operating accounts and on behalf of Owner, for each calendar
month included in such fiscal year, an amount equal to (i)
three percent (3%) of the Gross Receipts for such calendar
month for each of the 1994, 1995 and 1996 fiscal years; (ii)
three and one-half percent (3 1/2%) of the Gross Receipts for
such calendar month for each fiscal year thereafter up to and
including the fiscal year ending December 31, 2002; and (iii)
four percent (4%) of the Gross Receipts for such calendar
month for each fiscal year thereafter, into a fund to be
entitled "Fund for Replacement of and Additions to Furnishings
and Equipment" (the "F&E Fund") which fund shall be maintained
on deposit by Hyatt in trust for Owner in an interest bearing
bank account. Amounts deposited into the F&E Fund for any
fiscal year (including all amounts deposited on or prior to
November 1, 1994) shall be subject to adjustment on the basis
of the audited Certified Financial Statement delivered
pursuant to Section 7.4 for the fiscal year in question. The
monies in such Fund shall be the property of Owner. Interest
earned during any period from the amounts in the F&E Fund
shall be excluded from Gross Receipts for such period and in
computing Profit for such period and shall remain part of such
F&E Fund. In addition to such payments, all proceeds from the
sale of Furnishings and Equipment no longer needed for the
operation of the Hotel shall be paid into the F&E Fund.
Subject to the provisions and limitations of Section 3.7,
Hyatt shall be entitled to withdraw from the F&E Fund any
amounts required to make Capital Expenditures reasonably
deemed by Hyatt to be necessary or desirable. Funds deposited
in the Fund pursuant to Section 5.4(a) of the Original
Management Agreement shall be deemed to have been deposited
in, and shall constitute part of, the F&E Fund above referred
to.
(b) Anything in this Agreement to the contrary
notwithstanding, Owner shall be obligated to make sufficient
funds available to Hyatt so that the Hotel can be maintained
at all times during the Term in accordance with the first-
class hotel standard. Notwithstanding the preceding sentence
and for so long (and not thereafter) as an entity controlled
by, controlling or under common control with Dean Witter,
Discover & Co. shall have a controlling interest in Owner if
(i) there are insufficient funds in the F&E Fund for F&E
Replacements and Additions which Hyatt deems necessary to
maintain the Hotel in accordance with the first-class hotel
standard, (ii) either Owner agrees in writing that such
expenditures are necessary or there is a determination through
arbitration that such expenditures are necessary in order for
the Hotel to be maintained in accordance with the first-class
hotel standard, and (iii) Owner refuses to provide funds in
addition to those available in the F&E Fund for such purpose,
Owner shall be deemed in default hereunder but Hyatt's sole
remedy therefore, after delivery of notice thereof and after
providing Owner twenty (20) days in which to cure such
default, shall be to terminate the Management Agreement
(without payment to Hyatt of any termination fee), and the
rights and obligations of the parties thereto, which notice of
election to terminate must be delivered no later than thirty
(30) days after expiration of the aforesaid period of twenty
(20) days. Although the Management Agreement shall terminate
in accordance with the provisions of the preceding sentence,
Owner shall remain liable to Hyatt for the payment of all fees
and other amounts accrued and owing (but not any termination
fee), together with any and all liabilities relating or
incident to the termination of this Agreement, and which,
under the express provisions of this Agreement, are intended
to survive the termination hereof and are expressly agreed to
be assumed by Owner.
(c) Owner and Hyatt agree that upon request by Owner
made at any time after January 1, 1995 and on or prior to July
31, 1995, Hyatt shall disburse, or cause to be disbursed, to
Owner, or at the direction of Owner, the sum of $1,500,000 out
of funds then on deposit in the F&E Fund. Upon receipt
thereof, Owner agrees that it shall apply all of such funds in
reduction of the principal amount of the then outstanding
mortgage indebtedness now due and owing to Sun Life Insurance
Company of America as successor in interest to NCNB National
Bank of Florida as mortgage lender with respect to the Hotel.
Any funds remaining in the F&E Fund following disbursement
pursuant to the preceding sentence shall be retained in the
F&E Fund in accordance with the provisions of Section 5.4(a)
and also in accordance with all of the other terms and
provisions of the Management Agreement.
Section 6. REPAIRS AND CHANGES; LEGAL REQUIREMENTS.
6.1 Repairs and Maintenance.
Except to the extent prevented by causes beyond its
reasonable control (including Force Majeure Causes and the
unavailability of funds from Owner), Hyatt shall, throughout the
Term, take good care of the Hotel (other than such portions thereof
as are leased to tenants who undertake a duty of repair and
maintenance) and maintain the same in good order and condition and
make all repairs thereto as may be necessary to maintain the first-
class hotel standard. Provided, however, that Hyatt's
responsibilities, as hereinabove stated in this Section, shall not
include any matters relating to the structural integrity of the
Hotel or other matters relating to defects in design, materials or
workmanship in the construction of the Improvements (other than
alterations or additions made by Hyatt pursuant to Section 6.3)
which shall be the responsibility of Owner throughout the term of
this Agreement. Notwithstanding the foregoing, in the event Hyatt
has express actual knowledge of any defect or condition known to
Hyatt to relate to the structural integrity of the Hotel or other
material construction related defects, Hyatt shall notify Owner
thereof in writing, it being understood and agreed, however (i)
Hyatt shall have no obligation to undertake any inspections,
examinations or investigations as to the structural integrity of the
Hotel or any other defects therein, and shall have no liability or
obligation to Owner or any other party for any failure to observe or
discover the same; (ii) Hyatt's responsibility hereunder shall be
limited to notification to Owner, and Hyatt shall have no
responsibility to correct any such defect; and (iii) knowledge shall
not be imputed to Hyatt by reason of the knowledge of any such
defect observed or known to any employees of the Hotel, unless
expressly and actually known to the general manager of the Hotel or
any Hyatt personnel superior to the general manager of the Hotel.
6.2 Compliance with Legal Requirements.
Except as elsewhere herein limited or excused, Hyatt
shall, throughout the Term, comply with all applicable requirements
(the "Legal Requirements") of which Hyatt has knowledge under all
laws, ordinances, orders, rules and regulations of governmental
authorities having jurisdiction over the Hotel and Hyatt may, at its
option, defend any actions, suits or other proceedings alleging
noncompliance. Hyatt may, but only after approval by Owner (which
approval shall not be unreasonably withheld), contest, by
appropriate legal proceedings conducted in good faith, in the name
of Hyatt or Owner, or both, the validity or application of any Legal
Requirements. If Owner shall approve any such contest, Owner shall
execute and deliver any appropriate documents which may be necessary
or proper to permit Hyatt to prosecute such contest. Owner may, by
notice to Hyatt, direct Hyatt to contest, or Owner may contest
directly, any Legal Requirements which Hyatt may otherwise desire
not to contest. Owner shall be responsible to insure that all Legal
Requirements shall have been met on the commencement of the Term
including, without limitation, the procurement of all liquor and
other licenses and Hyatt agrees to cooperate with and assist Owner
in the procurement thereof.
6.3 Alterations and Additions.
Except as provided hereinafter or in Section 5.4, or
in order to comply with the Legal Requirements, Hyatt shall make no
alterations, additions or improvements in or to the Improvements
without the approval of Owner (which approval may be arbitrarily
withheld). Notwithstanding the preceding sentence, (i) in the event
any alterations, additions or improvements, structural or non-
structural, shall be required in order that the Building be in
compliance with applicable Legal Requirements, the same shall be the
responsibility of Owner, and (ii) Hyatt shall have the right
(without obtaining the approval of Owner), from time to time during
the Term, to make voluntary alterations, additions or improvements
in or to the Improvements (which shall become part thereof for the
purposes of this Agreement) in order to improve the operation of the
Hotel, provided that the aggregate amount which may be incurred in
respect thereof during any fiscal year shall not exceed ten percent
(10%) of the aggregate amount deductible under Section 5.4(a) for
each of the calendar months included in such fiscal year.
Section 7. GENERAL COVENANTS OF HYATT AND OWNER.
7.1 Working Capital.
Except as otherwise in this Agreement specifically
provided, Owner shall, at all times during the Term, cause
sufficient working capital funds to be on hand in the operating
accounts to assure the timely payment of all current liabilities of
the Hotel (including the deposits required to the F&E Fund under
Section 5.4(a) and Hyatt's fees and the installments thereof payable
under Section 4.2 hereof) and all other items entering into the
calculation of Profit, the uninterrupted and efficient operation of
the Hotel at all times during the Term and the performance by Hyatt
of its other obligations hereunder. On the commencement of the
Term, Owner shall have adequate funds in the operating accounts and
there shall be on hand all necessary inventories of food, beverages
and operating supplies. Owner's obligation to provide sufficient
working capital funds shall be fully satisfied upon deposit in the
operating accounts, within fifteen (15) days after delivery of a
written notice from Hyatt to Owner, of the amount of funds requested
by Hyatt in said written notice.
7.2 Chain Services and Reservations Expenses.
Hyatt shall provide, or shall cause its affiliate to
provide, in connection with the operation and for the benefit of the
Hotel, those group benefits, services and facilities (hereinafter
referred to collectively as "Chain Services") generally made
available by Hyatt from time to time during the Term to hotels
(which term, as used herein, does not include Hyatt Lodges or any
hotel not operated under a name which includes the word "Hyatt")
operated by Hyatt or its affiliates. Chain Services presently
consists of (i) convention, business and sales promotion services
(including the maintenance and staffing of Hyatt's home office sales
force and of regional sales offices in various parts of the United
States and the world), (ii) advertising, publicity and public
relations services, (iii) food and beverage, personnel and other
operational departmental supervision and control services, (iv)
centralized reservations services in Omaha, Nebraska, and (v) the
making available of qualified personnel through the Hyatt employee
training program. Neither Hyatt nor any of its affiliates shall
charge or receive any profit in respect of any such Chain Services.
Hyatt shall, however, be entitled to charge the operation of the
Hotel and to be reimbursed for the Hotel's pro rata share of
"Allocable Chain Expense." "Chain Expense" for any period shall
include all costs incurred during such period by Hyatt or by any of
its affiliates in respect of Chain Services other than the costs of
food and beverage, personnel and other operational departmental
supervision and control services. "Allocable Chain Expense" for any
period shall mean all Chain Expense incurred during such period,
reduced by any amounts which Hyatt or any of its affiliates shall be
entitled to be paid in respect of Chain Services furnished during
such period to hotels which are situated outside of the United
States (whether or not opened to the public) or which are situated
in the United States but are not opened to the public (for the
reason that they are under construction or are otherwise being
prepared for opening). The Hotel's pro rata share of Allocable
Chain Expense for any period shall bear the same ratio of the
Allocable Chain Expense for such period as the number of guest rooms
in the Hotel bears to the average number of guest rooms in all
hotels in the United States opened to the public and operated during
such period by Hyatt or its affiliates; provided, however, (i) the
Hotel's pro rata share of Allocable Chain Expense shall not, in any
fiscal year, exceed two and one-half percent (2.5%) of the Hotel's
Gross Receipts for such fiscal year; and (ii) if, in any fiscal
year, the average number of guest rooms in all hotels in the United
States which are included for purposes of determining Allocable
Chain Expenses shall be reduced by more than fifteen percent (15%)
of the number of rooms used in such determination for the
immediately preceding fiscal year, the Hotel's pro rata share of
Allocable Chain Expense for such fiscal year shall be based upon
that total number of rooms which is fifteen percent (15%) less than
the number of such available rooms in the immediately preceding
fiscal year. Each time that Hyatt shall charge the operation of the
Hotel for its pro rata share of Allocable Chain Expense for any
period, it shall furnish to Owner a statement in reasonably
sufficient detail to provide Owner with data supporting such charge.
Upon written request from Owner, Hyatt will provide Owner with
copies of the most recently completed audit of Chain Expenses
conducted by the independent public accounting firm selected by
Hyatt to perform such audit, showing the aggregate amount of Chain
Expense incurred by Hyatt, the number of hotel rooms in service
during the applicable period, and the amount of per room Chain
Expense for such period.
7.3 Right of Inspection and Review.
Hyatt shall accord to Owner and its duly authorized
agents the right to enter upon any part of the Hotel at all
reasonable times during the Term for the purpose of examining or
inspecting the Hotel or examining or making extracts from the books
and records of the Hotel operation, or for any other purpose which
Owner, in its discretion, shall deem necessary or advisable, but the
same shall be done with as little disturbance to the operation of
the Hotel as possible. Owner and its duly authorized agents shall
also have the right to examine the books of Hyatt relative to the
Hotel's pro rata share of Allocable Chain Expense.
7.4 Financial Reports.
(a) Hyatt shall deliver to Owner, within thirty (30)
days after the end of each calendar month, an unaudited financial
statement prepared from the books of account maintained by Hyatt and
containing (i) a statement of current assets and current liabilities
of the Hotel as of the end of such calendar month, (ii) a profit and
loss statement showing the results of operation of the Hotel for
such calendar month and for the Cumulative Period in respect of such
calendar month and (iii) a statement of the Gross Receipts for such
calendar month and such Cumulative Period. Not later than February
1 of each year, Hyatt will make available the books and records of
the Hotel for the preceding fiscal year for the purposes of audit
and within ninety (90) days after the end of such fiscal year
(seventy five (75) days if the auditor shall be Laventhol & Horwath)
Hyatt shall deliver to Owner a financial statement for such fiscal
year (herein referred to as the "Certified Financial Statement"),
containing a statement of the current assets and current liabilities
of the Hotel as of the end of such fiscal year, and a profit and
loss statement showing the results of operation of the Hotel
(including store rentals) for such fiscal year, with an opinion
thereon after an audit by a duly licensed independent certified
public accounting firm retained by Hyatt and approved by Owner.
(Owner hereby gives approval to the firm of KPMG Peat Marwick if
such firm is properly licensed to make such audit and give such
opinion.) Such Certified Financial Statement shall set forth the
Gross Receipts, the Profit, Adjusted Profit and the Annual
Management Fee (broken down for 1994 between the periods prior to
and commencing on or after November 1, 1994) for such fiscal year.
The cost of such audit in respect of such Certified Financial
Statement for a fiscal year shall be charged as an expense of the
operation of the Hotel for the succeeding fiscal year. If the
opinion of such independent certified public accounting firm with
respect to the matters set forth in such Certified Financial
Statement for a fiscal year shall be an unqualified opinion, then
such Certified Financial Statement shall be conclusive upon the
parties hereto with respect to such matters and shall be deemed to
be a final determination of the Gross Receipts, the Profit, the
Adjusted Profit and the Annual Management Fee for such fiscal year.
(b) In addition to the foregoing, Hyatt will provide
the additional reports and information listed and described on
Exhibit D hereto.
7.5 Owner's Warranties as to Title.
Owner warrants that the interest of Hyatt under this
Agreement shall not be subject or subordinate to any of the
following matters to the extent created, or expressly assumed, by
Owner, or arising by, through or under Owner (and Owner has no
actual knowledge of any such matters created by, or arising by,
through or under another person or entity): (a) any ground or
underlying leases, mortgages, deeds of trust, security agreements or
other encumbrances affecting the Hotel except those which contain,
or are subject to, a non-disturbance agreement, so-called, to the
effect that this Agreement shall not be subject to forfeiture or
termination except in accordance with the provisions thereof,
notwithstanding a default, termination, foreclosure or exercise of
a power of sale under such lease, mortgage, deed of trust, security
agreement or other encumbrance or any obligation secured thereby, or
(b) any other matters affecting title to the Hotel, except for
nondelinquent real and personal property taxes and such other
matters as shall not materially and adversely affect the operation
of the Hotel by Hyatt. Owner further warrants that, so long as
Hyatt shall not be in default hereunder, Hyatt shall be entitled to
operate the Hotel for the Term free from any disturbance from any
person or entity claiming by, through or under Owner, and Owner
shall, at no expense to Hyatt, undertake and prosecute all
appropriate actions, judicial or otherwise, required to assure such
right of operation to Hyatt.
Owner agrees that it shall, throughout the Term:
(a) Keep and maintain, or cause to be kept and
maintained, any leases covering real or personal property or
other agreements necessary to the ownership or control of the
Hotel, or any part thereof, in full force and effect and free
from default, and in this connection Owner shall pay and
discharge, or cause to be paid and discharged, any ground
rents or other rental payments or other charges payable by
Owner in respect of the Hotel;
(b) Maintain, or cause to be maintained, in good
standing and free from default, any and all mortgages
affecting the Hotel (but no additional rights against Owner
are hereby created in favor of any mortgagee under such
mortgage); and
(c) Observe, or cause to be observed, and comply with,
or cause to be complied with, any and all other liens,
encumbrances, covenants, charges, burdens or restrictions
pertaining to the Hotel or any part thereof, none of which
shall, however, materially and adversely affect the operation
of the Hotel by Hyatt.
The provisions of this Section 7.5 are for the benefit of the
parties hereto and their respective successors and assigns, and
shall not inure to the benefit of any third party, including,
without limitation, any lender, lessor or mortgagee.
7.6 Payment of Taxes.
During the Term, Owner shall, prior to delinquency, pay
all real and personal property taxes assessed against the Hotel to
the extent that the same are properly allocable to the Term. Owner
shall have the right, if it shall so elect, to contest the validity
or amount of any such taxes in good faith, by appropriate
proceedings provided such proceedings do not interfere with the
operation of the Hotel or result in a default under any mortgage or
ground lease affecting the Hotel. During the time any such contest
is pending, Owner shall pay all taxes being contested unless
collection, or enforcement of any lien securing payment thereof, is
effectively stayed during such pendency. Such property taxes for
any period which includes the Opening Date or the date on which the
Term shall expire or otherwise terminate shall be prorated and only
the portion of such property taxes applicable to the Term shall be
deductible under Section 5.2(e).
Section 8. INSURANCE.
8.1 Insurance to be Maintained During Term.
Owner shall maintain, at all times during the Term, the
following insurance respecting the Hotel in amounts and with
responsible and properly licensed companies as approved by Hyatt
(such amounts shall in no event be less than the amounts required
under any mortgage, deed of trust or security agreement affecting
the Hotel):
(a) Public liability insurance for injury to or death
of persons and damage to or loss of property, with
endorsements including coverage for those risks listed in
Exhibit E attached hereto and hereby made a part hereof;
(b) Workers' compensation, including employers'
liability and a broad form "all states" endorsement or similar
insurance as may be required by law;
(c) Insurance against all risk of direct physical
loss, including but not limited to, fire and extended coverage
including business interruption, boiler and machinery coverage
including use and occupancy, and such other risks and perils
with respect to which insurance is customarily carried by
Hyatt for hotels of similar character;
(d) Crime and fidelity insurance against dishonest
acts by employees and others; and
(e) Such other insurance as Hyatt shall deem necessary
for protection against claims, liabilities and losses arising
from the operation of the Hotel.
All policies evidencing the foregoing insurance shall
name Owner as the principal insured and shall name Hyatt, its
directors, officers, employees and agents and (if required by Owner)
any mortgagee of the Hotel as additional insureds thereunder. If
obtainable, all such policies shall contain a waiver of subrogation
against Owner and Hyatt.
Whenever Owner is about, or proposes, to purchase any
insurance policy or policies required under this Section 8.1, Owner
shall invite a bid from Hyatt (the "Hyatt bid") covering such policy
or policies and prepared by Hyatt's insurance broker or adviser.
The Hyatt bid may be based upon self-insurance (as described in and
subject to Section 8.4) or providing all or part of the insurance in
question under a blanket policy insuring, in addition to the Hotel,
other hotels operated by Hyatt or its affiliates, in which event the
insurance premiums to be included in the Hyatt bid shall be those
properly allocable to the Hotel, as determined in good faith by the
insurance carrier or carriers involved. If Owner shall purchase
such policy or policies of insurance (the "Owner-procured policies")
through its own resources in preference to accepting the Hyatt bid,
then, for the purposes of determining Profit hereunder, the premiums
in respect of the Owner-procured policies shall be deemed not to
exceed the amount of the premiums which would have been payable for
such policies pursuant to the Hyatt bid, which amount shall be
prorated over the term or terms of such policies in determining the
amount of premiums deductible in respect of each period included in
the Term.
8.2 Notice of Cancellation or Change.
All insurance policies required to be carried hereunder
shall, to the extent obtainable, have attached thereto an
endorsement that the same shall not be cancelled or changed without
at least thirty (30) days' prior written notice to all named
insureds and additional insureds.
8.3 Evidence of Insurance Coverage.
For the purpose of evidencing compliance with the
provisions of this Section 8, Owner shall from time to time furnish
to Hyatt certified duplicate policies of all insurance required to
be maintained by Owner pursuant to this Section 8.
8.4 Self-Insurance.
Owner understands that Hyatt customarily and in the
course of managing the hotels in its chain, self-insures and assumes
the risk of certain losses and liabilities and places certain
coverage with an affiliated insurance carrier. Subject to the next
succeeding paragraph, Owner agrees that Hyatt may, in submitting the
Hyatt bid, be a self-insurer of all or any of the risks described in
this Section 8, or may place coverage with such affiliated carrier,
so long as such self-insurance or coverage is consistent in type and
amount with Hyatt's self-insurance or coverage practices at other
hotels; provided, however, in all events the provisions for self-
insurance must be reasonably satisfactory to the holder of any first
mortgage on the Hotel. In the event that Hyatt self-insures, it
will carry insurance, in customary amounts, above the self-insured
deductibles protecting Owner and Hyatt. Owner shall be named as an
additional insured in said policies.
Section 9. INDEMNIFICATION OF OWNER.
To the extent that Owner shall not be fully covered by
insurance, Hyatt will indemnify Owner and hold it harmless from any
damages, liability, cost, claim or expense, including attorneys'
fees, arising out of or in connection with the operation of the
Hotel or Hyatt's operations other than at the Hotel. The costs of
such indemnity shall be borne as follows:
(a) If the damage, liability, cost, claim or expense
is attributable to Hyatt's gross negligence, willful misconduct,
willful violation of any Legal Requirements or breach of this
Agreement (other than Hyatt's covenant to comply with the Legal
Requirements), the cost of such indemnification shall be borne
solely by Hyatt and shall not be charged against Profit;
(b) If the damage, liability, cost, claim or expense
is attributable to any other reason or cause, the cost of such
indemnification shall be paid by Hyatt out of the operating accounts
and may be charged against the Profit. Hyatt's obligations under
this Section 9 shall not include any losses, expenses or damages
arising from any matters relating to the structural integrity of the
Hotel or other matters relating to defects in design, materials or
workmanship in the construction of the Improvements (other than
alterations or additions made by Hyatt pursuant to Section 6.3).
Section 10. DAMAGE TO AND DESTRUCTION OF HOTEL AND CONDEMNATION.
10.1 Owner's Duty of Restoration.
If the Hotel, or any portion thereof, shall be damaged
or destroyed at any time or times during the Term by fire or any
other casualty Owner, at no expense or risk to Hyatt, shall using
due diligence and dispatch, repair, rebuild or replace the same
(such repairing, rebuilding or replacing being herein called
"restoration") so that after such restoration the Hotel shall be
substantially the same as prior to such damage or destruction, and
all proceeds of insurance shall be made available to Owner for this
purpose; provided that Hyatt shall have the right to ensure that
such proceeds of insurance shall be applied to such restoration.
10.2 Owner's Election Not to Restore.
Anything in Section 10.1 to the contrary contained
notwithstanding, if, in connection with any casualty, the cost of
restoring the Hotel shall equal or exceed (i) ten percent (10%) of
the replacement cost thereof immediately prior to such casualty if
such casualty shall be covered by insurance or (ii) one percent (1%)
of such replacement cost if such casualty shall not be covered by
insurance, then, and in either event, Owner shall have an election
exercisable by notice to Hyatt, given within ninety (90) days from
the occurrence of such casualty, not to restore the Hotel and to
terminate this Agreement without the payment of any termination fee,
including, without limitation, the Termination Fee; provided,
however, if, within two (2) years following the effective date of
any such termination, Owner or its successors or assigns shall
either undertake to rebuild the Hotel, or commence construction of
a new hotel on the Site, this Management Agreement shall continue in
effect with respect to the new or rebuilt hotel for the balance of
the Term remaining as of the effective date of such termination.
10.3 Eminent Domain.
If the whole or any substantial portion of the Hotel
is taken by any public authority under the power of eminent domain,
or taken in any manner for any public or quasi-public use, so as to
render, in the reasonable judgment of Hyatt and Owner, with the
consent of mortgagees, the remaining portion of the Hotel unsuitable
for operations as a first-class hotel, then the term of this
Agreement shall cease and terminate as of the date possession shall
be taken by such public authority and no termination fee shall be
payable in connection therewith, including, without limitation, the
Termination Fee; provided, however, that Hyatt shall provide for and
implement an appropriate plan for winding down the affairs of the
Hotel prior to such date. All proceeds of damages, including
damages, if any, portions any interest Hyatt may have or claims to
have in the unexpired Term of this Agreement, consequential damages
to the land not taken, fixtures, or alterations to the premises or
their use or otherwise, for such taking under the power of eminent
domain or any like proceeding shall belong to and be the property of
Owner, subject to Owner's obligations to any mortgagee and to Hyatt
hereunder. Hyatt shall have the right through any separate legal
action to pursue damages for the taking of its personal property (if
any) or for other losses, provided such legal action does not
diminish Owner's recovery.
Section 11. INTEREST ON OVERDUE SUMS.
If either party (the "defaulting party") shall fail
to pay, when due, to the other party (the "non-defaulting party")
any sum payable to the latter hereunder, then the defaulting party
shall, without notice to or demand upon it, be liable to the non-
defaulting party for the payment of such sum together with interest
thereon at the rate of (i) "Prime" plus 1% per annum or (ii) the
maximum rate of interest allowed by law, whichever shall be less,
from the date when such sum shall become due to the date of actual
payment. For the purposes hereof, "Prime" shall mean the rate per
annum announced from time to time by The First National Bank of
Chicago as its prime or equivalent rate of interest.
Section 12. EVENTS OF DEFAULT.
The following shall constitute events of default
hereunder:
(1) The failure of either party (the "defaulting
party") to pay to the other party (the "non-defaulting party")
any sum which may become due hereunder within fifteen (15)
days after receipt by the defaulting party of a notice from
the non-defaulting party specifying such failure; or
(2) The failure by either party (the "defaulting
party") to perform, keep or fulfill any of the terms,
covenants, undertakings, obligations or conditions set forth
in this Agreement other than those referred to in the
foregoing paragraph (1), and the continuance of such failure
for a period of thirty (30) days after receipt by the
defaulting party of notice thereof from the other party hereto
(the "non-defaulting party") specifying such failure; or, in
the event such failure is of a nature that it cannot, with due
diligence and in good faith, be cured within thirty (30) days
and such defaulting party fails to proceed promptly and with
due diligence and in good faith to cure the same and
thereafter to prosecute the curing of such failure with due
diligence and in good faith (it being intended that, in
connection with a failure not susceptible of being cured with
diligence and in good faith within thirty (30) days, the time
of such defaulting party within which to cure the same shall
be extended for such period, not in excess of one hundred
eighty (180) days, as may be reasonably necessary for the
curing thereof with due diligence and in good faith).
If an event of default shall occur, the non-defaulting
party may give to the defaulting party notice of intention to
terminate the Term after the expiration of a period of fifteen (15)
days from the date of such notice and, upon the expiration of such
period, the Term shall expire. Such termination shall be without
prejudice to any right to damages which the non-defaulting party may
have against the defaulting party under applicable law.
Section 13. TRADENAME.
During the Term the Hotel shall at all times be known
and designated by such name as shall be mutually agreed upon by
Owner and Hyatt. Hyatt represents and warrants to Owner that Hyatt
has the legal right to use each of the names "Hyatt" and "Regency"
(herein called the "protected names") either alone or in conjunction
with another word or words. Owner acknowledges that each of the
protected names, when used either alone or in conjunction with any
other word or words, is the exclusive property of Hyatt.
Accordingly, Owner agrees that no right or remedy of Owner for any
default of Hyatt hereunder, nor the delivery of possession of the
Hotel to Owner upon the expiration or sooner termination of the
Term, nor any provision of this Agreement, shall confer upon Owner,
or any transferee, assignee or successor of Owner, or any person,
firm or corporation claiming by or through Owner, the right to use
either of the protected names, either alone or in conjunction with
any other word or words, in connection with the use or operation of
the Hotel or otherwise, except that, following the expiration or
sooner termination of the Term, Owner may continue to use any
supplies or Operating Equipment bearing Hyatt names or trademarks
which are at that time in the Hotel's inventory until Owner's
inventory thereof shall have been used up, but shall not have any
right to re-order or replace any of such inventory, and Hyatt shall
have the right to purchase (for cash and at Owner's cost) all or any
part of such inventory upon such termination. In the event of any
breach of this covenant by Owner, Hyatt shall be entitled to
damages, to relief by injunction, and to all other available legal
rights or remedies, and this provision shall be deemed to survive
the expiration or sooner termination of the Term.
Notwithstanding the foregoing, if at any time, Hyatt
shall be excused from its obligation to operate the Hotel in
conformity with a first-class hotel standard in accordance with the
provisions of Section 3.1(b), then, in addition to any other right
or remedy available to Hyatt by reason thereof, Hyatt may, in its
sole and absolute discretion, and for so long as Hyatt may be
excused from its said obligation, change the name of the Hotel to
such other name as Hyatt, in its discretion, shall select, which
name may, if Hyatt so elects, exclude the use of the names "Hyatt"
or "Regency", or either of them, provided only that the new name
selected by Hyatt shall not infringe upon the rights of any other
person, firm or corporation.
Section 14. ARBITRATION.
Except as otherwise herein provided, if any
controversy should arise between the parties in the performance,
interpretation or application of this Agreement, either party may
serve upon the other a written notice stating that such party
desires to have such controversy reviewed by a board of three (3)
arbitrators and naming the person whom such party has designated to
act as an arbitrator. Within fifteen (15) days after receipt of
such notice, the other party shall designate a person to act as
arbitrator and shall notify the party requesting arbitration of such
designation and the name of the person so designated. The two (2)
arbitrators designated as aforesaid shall promptly select a third
arbitrator, and if they are not able to agree on such third
arbitrator, then either arbitrator, on five (5) days' notice in
writing to the other, or both arbitrators, shall apply to the
American Arbitration Association to designate and appoint such third
arbitrator. If the party upon whom such written request for
arbitration is served shall fail to designate its arbitrator within
fifteen (15) days after receipt of such notice, then the arbitrator
designated by the party requesting arbitration shall act as the sole
arbitrator and shall be deemed to be the single, mutually approved
arbitrator to resolve such controversy. The decision and award of
a majority of the arbitrators or of such sole arbitrator shall be
binding upon both Owner and Hyatt and shall be enforceable in any
court of competent jurisdiction. Such decision and award may
allocate the costs of such arbitration to one of the parties or
disproportionately between the parties. Any arbitration pursuant to
this Section 14 shall take place in Tampa, Florida in accordance
with the rules and regulations of the American Arbitration
Association then in effect unless otherwise mutually agreed by the
parties.
Section 15. SUCCESSORS AND ASSIGNS.
15.1 Assignment by Hyatt.
Hyatt shall have the right to assign its rights and
obligations under this Agreement, without the consent of Owner, to
(i) any affiliate having full right, power and authority to provide
to Owner all services and organizational expertise (including,
without limitation, Chain Services and the use of Hyatt names and
trademarks) which Hyatt may, or is required to, provide hereunder,
or (ii) to any assignee who also acquires all, or substantially all,
of the assets of Hyatt and assumes its obligations, including those
hereunder, provided such assignee is financially responsible and
capable of performing the duties of Hyatt hereunder, retains the
right to use the names "Hyatt" or "Regency" and other trademarks and
names used in the operation of the Hotel, and continues to enjoy the
expertise of Hyatt's operating staff. In such latter event, Hyatt's
liability hereunder shall terminate upon such assignment, but in the
event of such an assignment to an affiliate Hyatt shall continue to
be liable under this Agreement to the same extent as though such
assignment had not been made. Except as hereinabove provided, Hyatt
shall not assign its rights and obligations under this Agreement
without the approval of Owner (which approval may be granted or
withheld in Owner's sole discretion). In the event that Hyatt shall
assign its rights and obligations under this Agreement to any
affiliate (the "assignee affiliate"), as hereinbefore provided, then
the sale by Hyatt or by an affiliate of controlling interest in such
assignee shall constitute an assignment of Hyatt's interest
requiring Owner's approval, as provided in the immediately preceding
sentence, except for a sale which is part of a sale of all, or
substantially all, of the assets of Hyatt to an assignee who assumes
its obligations, including those hereunder (in which case, any
contingent liability of Hyatt hereunder shall terminate upon such
sale). A "controlling interest" in an affiliate refers to shares of
capital stock representing more than fifty percent (50%) of the
voting power of such affiliate.
It is understood and agreed that any approval given
by Owner to any assignment shall not be deemed a waiver of the
covenant herein contained against assignment in any subsequent case.
Any assignee who succeeds to the interest of Hyatt hereunder (or to
the interest of an assignee of Hyatt hereunder) shall be deemed to
be Hyatt hereunder for all purposes. The term "affiliate", as used
herein, shall mean a corporation included in an "affiliated group"
as that term is defined in Section 1504(a) of the Internal Revenue
Code as presently in effect and of which Hyatt is the common parent
corporation.
15.2 Assignment by Owner.
(a) Except as provided in this Section 15.2 or in
Sections 3.5, 15.4 or 15.5, Owner shall not have the right to sell,
hypothecate or convey the Hotel or any portion thereof, or to assign
its interest in this Agreement, except to a "Qualified Transferee",
without the prior approval of Hyatt. Sale, hypothecation or
conveyance of the Hotel, and, in that connection, assignment of
Owner's rights and interests under this Agreement, to a Qualified
Transferee, shall not require consent or approval of Hyatt. Hyatt's
approval of any proposed transferee other than a Qualified
Transferee (which shall not be unreasonably withheld, delayed or
conditioned) shall be based on the following factors (i) the ability
of the prospective assignee to fulfill the financial obligations of
Owner hereunder, (ii) the character and business reputation of the
proposed transferee or its principal owners, and (iii) the nature of
any other business activities engaged in by the proposed transferee
or its principal owners. Any approved assignee shall expressly
assume in writing the obligations of Owner hereunder.
For the purposes of this Agreement, an assignment of
this Agreement shall be deemed to have occurred, if, within any
twelve-month period, there is a transfer of more than twenty five
percent (25%) of the beneficial ownership of Owner other than by
bequests, devise or transfers under laws of intestacy.
For purposes hereof, a "Qualified Transferee" shall
mean any person or entity meeting all of the following criteria: (i)
a net worth, computed in accordance with generally accepted
accounting principles, of not less than $5,000,000 inclusive of its
invested equity in the Hotel (whether denominated as capital, equity
or loan); (ii) does not itself, or through one or more affiliated
entities, engage in the business of operating, franchising or
managing (as opposed to mere ownership) of seven (7) or more other
hotels in the aggregate; and (iii) itself and its affiliates are not
generally reputed to be, or to be associated with, any material
criminal activity.
(b) Notwithstanding the provisions of Section
15.2(a), if Owner shall have financed its interest in the Hotel with
the approval of Hyatt (the "Initial Financing") it shall thereafter
have the right to refinance its interest in the Hotel from time to
time and in connection therewith to encumber its interest in the
Hotel by granting a lien or liens on the Site and the Improvements
and by granting a lien or liens on FF&E and other personal property
and to assign its interest in this Agreement as collateral, without
the prior consent of Hyatt, provided that: (i) such refinancing
results in the discharge of the liens of all prior mortgages, deeds
of trust and security interests; (ii) the amount of net proceeds of
such refinancing (consisting of the loan proceeds less costs and
expenses of the borrowing(s), including legal fees and any
commitment or other fees payable to the lender(s)) are not in excess
of the then outstanding principal amount of the indebtedness being
refinanced; (iii) such refinancing has a term of at least five
years; (iv) the lender(s) with respect to such refinancing(s) are
one or more institutional lenders, such as a pension or retirement
fund or system, commercial bank or trust company, real estate
investment trust, savings bank, insurance company, educational
institution, governmental or quasi governmental agency or savings
and loan; (v) such refinancing has other terms and provisions which
are reasonable and customary for nonrecourse loans of similar size
secured by similar properties, and (vi) except in the case of a
refinancing of the Initial Financing (or any subsequent loan
obtained in compliance with the provisions of this Section 15.2(b)
for the purpose of refinancing the previous refinancing) obtained
within 180 days of the maturity thereof, annual debt service
payments payable under the new loan(s) shall not exceed the amount
payable under the loan(s) being refinanced. The Owner will provide
Hyatt with written notice at least 45 days prior to any such
refinancing and with such information with respect to such
refinancing as Hyatt shall reasonably request. Hyatt agrees to
enter into a subordination and nondisturbance agreement with the
lender(s) for such refinancing on substantially the same terms as
contained in Hyatt's then standard form thereof.
15.3 Binding on Successors.
The terms, provisions, covenants, undertakings,
agreements, obligations and conditions of this Agreement shall be
binding upon and shall inure to the benefit of the successors in
interest and the assigns of the parties hereto with the same effect
as if mentioned in each instance where the party hereto is named or
referred to.
15.4 Right of First Offer.
Unless Owner elects, at its sole and absolute
discretion, to proceed under the provisions of Section 15.5, the
provisions of this Section 15.4 shall be applicable to any sale of
the Hotel wherein the Management Agreement is to be terminated
pursuant to the provisions of Section 3.5. Accordingly, the
provisions of this Section 15.4 (i) shall, at Owner's election, not
apply (and Hyatt shall have no right to purchase the Hotel under any
of this Section 15.4) if, in connection with such sale, the
purchaser thereof shall, by written instrument reasonably
satisfactory in form and substance to Hyatt, assume all of the
liabilities and obligations of Owner hereunder which accrue or are
otherwise attributable to the period from and after the closing date
of the sale, and shall agree to be substituted for all purposes as
the Owner under the Management Agreement for all of the rest and
remainder of the Term; and (ii) shall terminate concurrently with
the expiration or termination of Owner's right to terminate this
Agreement in accordance with the provisions of Section 3.5.
Subject to the provisions of Section 15.5, in the
event Owner at any time elects to sell the Hotel and, in connection
therewith either elects, or intends, to terminate this Agreement in
accordance with the provisions of Section 3.5, it shall so notify
Hyatt thereof in writing (the "Sale Notice") setting forth the
"Purchase Price" at which Owner proposes to sell. Hyatt shall have
the right, exercisable not later than ten (10) days after Hyatt's
receipt of the Sale Notice, either (i) to elect to purchase the
Hotel, at the Purchase Price and in accordance with the provisions
of this Section 15.4, by delivery of written notice to that effect
to Owner (herein an "Acceptance Notice"); (ii) to reject the offer
contained in the Sale Notice; or (iii) to offer to purchase the
Hotel, at the "Purchase Price" as proposed by Hyatt in the "Hyatt
Counteroffer" but otherwise in accordance with the provisions of
this Section 15.4, by delivery of a written notice from Hyatt to
Owner delivered within the aforesaid period of ten (10) days (any
notice delivered pursuant to this clause (iii) being herein referred
to as the "Hyatt Counteroffer"); provided, however, if Hyatt elects
to purchase the Hotel as above provided, it shall have fifteen (15)
days after delivery of its Acceptance Notice to revoke the same, and
to terminate the contract for the purchase of the Hotel, if Hyatt,
after using good faith efforts, shall determine within said period
of fifteen (15) days that financing, on terms acceptable to Hyatt in
its sole discretion, is not reasonably available to Hyatt with
respect to its proposed purchase and shall so notify Owner thereof
in writing. If Hyatt shall fail to respond in writing to the Sale
Notice within the aforesaid period of ten (10) days after its
receipt of the Sale Notice, said failure shall irrevocably and
conclusively be deemed an election by Hyatt to reject the offer
contained in the Sale Notice.
If Hyatt makes timely election in writing to purchase
the Hotel at the Purchase Price set forth in the Sale Notice, the
same shall constitute a binding contract for the sale of the Hotel
at the said Purchase Price and upon the terms and conditions
hereinafter set forth which shall be consummated in accordance with
the provisions hereof on the date specified in the Sale Notice,
which date, however, shall in no event be sooner than twenty (20)
days, nor later than seventy-five (75) days, after delivery of the
Acceptance Notice.
If Hyatt delivers a Hyatt Counteroffer, Owner may, at
any time within twenty-five (25) days after receipt thereof, either
(i) elect to sell the Hotel to Hyatt upon the terms and conditions
hereinafter set forth and at the Purchase Price set forth in the
Hyatt Counteroffer, or (ii) elect to reject the Hyatt Counteroffer.
If Owner accepts the Hyatt Counteroffer, the same shall constitute
a binding contract for the sale of the Hotel at the Purchase Price
set forth in the Hyatt Counteroffer and upon the terms and
conditions hereinafter set forth which shall be consummated on the
date specified in the Hyatt Counteroffer, which date, however, shall
in no event be sooner than twenty (20) days nor later than seventy-
five (75) days, after delivery of Owner's written notice electing to
accept the Hyatt Counteroffer. If Owner fails to accept or reject
the Hyatt Counteroffer in writing within the aforesaid period of
twenty-five (25) days, Owner shall irrevocably and conclusively be
deemed to have rejected the Hyatt Counteroffer.
If Hyatt fails or refuses to deliver an Acceptance
Notice, or if Owner fails or refuses to accept the Hyatt
Counteroffer (if Hyatt shall have made one), in each case within the
aforesaid respective periods of ten (10) or twenty-five (25) days,
Hyatt shall have no further right (except as otherwise hereinafter
set forth) to purchase the Hotel under the provisions of this
Section 15.4, and Owner shall have the right to sell the Hotel at a
Purchase Price not less than ninety-five percent (95%) of the
Purchase Price set forth in the Sale Notice, except that, if Hyatt
shall have delivered a Hyatt Counteroffer, then at a Purchase Price
not less than One Dollar ($1.00) above the Purchase Price set forth
in the Hyatt Counteroffer (regardless of whether such Purchase Price
is greater or less than ninety-five percent (95%) of the Purchase
Price set forth in the Sale Notice); provided that the consummation
of such sale shall occur not later than nine (9) months after
expiration of the aforesaid period of ten (10) or twenty-five (25)
days. If no sale shall be consummated within the aforesaid period
of nine (9) months, Owner may not again sell the Hotel pursuant to
the provisions of this Section 15.4 until it shall again have
delivered another Sale Notice and the provisions of this Section
15.4 shall once again have been complied with; provided, however,
nothing herein contained shall limit or restrict the right of Owner,
at any time, to sell the Hotel in accordance with the provisions of
Section 15.5. For purposes of the preceding sentence, a sale shall
be deemed consummated during such nine (9) month period if a
contract of sale for the Hotel is executed and delivered, and
provides for a closing, during such period, which closing, however,
may be subject to customary adjournment provisions which do not, in
any event, exceed a total of one hundred eighty (180) days.
If, having complied with the above provisions of this
Section 15.4 within the preceding period of nine (9) months, Owner
elects to sell the Hotel, and to accept an offer therefore, at a
Purchase Price less than the lower of (a) ninety-five percent (95%)
of the Purchase Price set forth in the Sale Notice and (b) if Hyatt
shall have made a Hyatt Counteroffer, $1.00 in excess of the Hyatt
Counteroffer, then Owner shall notify Hyatt in writing setting forth
the Purchase Price applicable to such sale (such notice being herein
referred to as the "Revised Sale Notice"). Upon receipt of the
Revised Sale Notice, Hyatt shall have the right, at any time within
ten (10) days thereafter, to elect to purchase the Hotel at the
Purchase Price set forth in the Revised Sale Notice and on the terms
and conditions hereinafter set forth provided it shall have
delivered to Owner, within the aforesaid period of ten (10) days, a
written notice (the "Revised Acceptance Notice") containing its said
election. Upon delivery by Hyatt of a Revised Acceptance Notice,
the same shall constitute a binding contract for the sale of the
Hotel which shall be consummated in accordance with the provisions
of the Revised Sale Notice and on the terms and conditions
hereinafter set forth on the date specified therein, which date,
however, shall in no event be sooner than twenty (20) days, nor
later than seventy-five (75) days, after delivery of Hyatt's notice
of acceptance.
For purposes hereof, the term "Purchase Price"
(whether referring to the Purchase Price contained in the Sale
Notice, Revised Sale Notice or to the Purchase Price contained in
the Hyatt Counteroffer) shall mean and include only the price,
payable either in cash at the closing and/or by assumption of any
then existing mortgage indebtedness (if permitted by the holder
thereof) against the Hotel and the release of Owner and any
affiliates of Owner from any guarantees securing any such mortgage
indebtedness (excluding any mortgage indebtedness held by Owner, or
any affiliate of Owner, or its general partner) and shall not
include any portion of the purchase price which may be payable on a
deferred basis after the closing whether or not the deferred portion
of the said purchase price bears interest or is secured by the
Hotel, or any portion of the purchase price contingent on Hotel
performance or the occurrence of any future circumstance or event,
nor shall there be included in the Purchase Price any "Transaction
Costs" paid by the buyer, nor deducted from the Purchase Price any
Transaction Costs paid by the seller. For purposes hereof, the term
"Transaction Costs" shall mean and include brokerage commissions,
documentary and transfer taxes, real estate tax and other prorations
or adjustments, attorney's fees, appraisal costs, financing charges,
survey, title insurance or other title abstract and examination
charges, recording fees, charges or taxes, cost of engineering
studies including environmental and structural studies, and other
similar costs of acquisition.
In the event Hyatt shall contract to purchase the
Hotel pursuant to the provisions of this Section 15.4 either in
accordance with the provisions of the Sale Notice or Revised Sale
Notice, or pursuant to the Hyatt Counteroffer, the terms and
provisions applicable to such sale (in addition to the provisions
regarding Purchase Price and closing date set for above) shall be as
follows: (a) the Hotel shall be conveyed free and clear of all
liens, claims, charges or encumbrances securing the payment of
money, and any other form of encumbrance not existing as of the date
hereof (excluding (i) encumbrances for the personal property leased
after the date hereof with the consent of Hyatt, and (ii) any other
encumbrance which does not materially affect the value of the Hotel
or its operations substantially in accordance with its method of
operation as of the date hereof); (b) any brokers engaged by Owner
shall be paid by Owner and any brokers engaged by Hyatt shall be
paid by Hyatt; (c) the Purchase Price shall be payable by wire
transfer of immediately available funds at the closing; (d) title
insurance premiums, documentary and transfer taxes, recording fees
and taxes, escrow charges, and survey costs shall be allocated
between buyer and seller in accordance with the customary practices
for the sale of similar properties in the local area in which the
Hotel is located; (e) seller shall be responsible for delivery of a
title insurance commitment (the cost to be allocated between buyer
and seller as provided in (d) above), in the amount of the Purchase
Price showing the condition of title to the real property comprising
the Hotel, and it shall be a condition to the obligations of Hyatt
to purchase the Hotel that the said title insurance commitment shall
show title to the Hotel in Owner, or a nominee acting on behalf of
Owner, free and clear of all liens, claims, charges or encumbrances
of any kind or nature other than as provided in (a) above and/or
liens or encumbrances which can be removed at the closing by the
payment of money in an aggregate amount not greater than the
Purchase Price and which seller shall be obligated to remove at such
time, said title insurance commitment, as between buyer and seller,
to be conclusive evidence as to the then condition of title; (f)
closing shall take place in Hillsborough County, Florida, at a place
designated by seller and mutually convenient to buyer and seller;
(g) seller shall deliver to buyer, at the closing, special warranty
deeds, bills of sale with special warranties excluding implied
warranties of merchantability and fitness of purpose, and such other
instruments of transfer and conveyance as shall be reasonably
necessary in order to vest title to the Hotel in buyer (or its
designee), all of which documents shall be in form and substance
reasonably satisfactory to buyer, and, with respect to documents
conveying real property, shall be in recordable form; (h) the
Purchase Price shall be subject to adjustment for usual and
customary prorations, including prorations of real estate taxes,
employee charges and other similar items, and seller shall receive
a credit for the amount of current assets acquired by buyer (and not
otherwise included in the Purchase Price), and buyer shall receive
a credit for any liabilities which are expressly assumed by buyer;
(i) all FFE, and all operating equipment and inventories of
consumables in the Hotel on the closing date shall be transferred to
buyer and included in the assets comprising the Hotel to be
purchased as part of the Purchase Price; (j) Hotel will be sold to
seller on an "as-is" basis without representation or warranty with
respect to the physical condition of the property, the income or
expenses of the Hotel or its future earnings prospects; provided,
however, seller shall warrant its good standing as an entity and it
right, power, and authority to sell the Hotel in accordance with the
provisions herein set forth; (k) closing shall be subject to there
being no material damage or destruction to the property that shall
not have been repaired or replaced substantially to its condition as
before such damage or destruction and no pending, or to the
knowledge of either buyer or seller, threatened condemnation
proceedings; (l) in connection with the closing, buyer shall assume
all leases and service contracts theretofore entered into with the
knowledge or consent of Hyatt; (m) Hyatt shall not purchase any
accounts receivable of the Hotel, other than guest ledger
receivables which shall be purchased by Hyatt, as an addition to the
Purchase Price, at their full face value; (n) revenues for the
evening preceding the closing shall be allocated equally between
buyer and seller, and cutoffs of restaurant and other revenues shall
be made as of 12:01 a.m on the closing date; (o) any fee payable to
a third party, unaffiliated with the seller, in connection with the
assumption of any then existing indebtedness (if permitted by the
holder thereof), and/or for the release of any guaranty securing
such indebtedness (if permitted by the holder thereof), shall be
paid by Hyatt to the extent a portion of the Purchase Price is paid
by assumption of such indebtedness as herein contemplated; (p) Hyatt
shall have the right to designate any other corporation, partnership
or other entity to take title to the Hotel, but no such designation
shall relieve Hyatt of any of its liabilities or obligations to
Owner hereunder; (q) neither Hyatt nor its designee taking title to
the Hotel shall be liable for any liabilities or obligations of the
Hotel other than those expressly assumed by Hyatt or its said
designee in accordance with the provisions of this Section 5.4; (r)
the balance of any escrows or reserves held by Hyatt in accordance
with the provisions of this Management Agreement shall be paid to
Owner as of the closing date and any such payments shall not reduce
the Purchase Price; and (s) seller shall not have any
indemnification obligations under the contract of sale or otherwise
assume or remain liable for any liabilities or obligations which,
under the provisions of this Management Agreement, are expressly
assumed at the closing by Hyatt or its designee except those
indemnification obligations arising under the express provisions of
this Management Agreement and applicable in connection with any
termination of this Management Agreement, including, without
limitation, liabilities and obligations of Owner under Section 19
hereof. After the closing, Hyatt will continue to collect
receivables and remit the proceeds to seller with respect to those
receivables arising prior to the closing date (excluding guest
ledger receivables purchased by Hyatt), it being understood and
agreed, however, that any amounts collected from a customer shall be
applied first to receivables due and owing by such customer and
arising after the closing date, with any excess then being applied
to previously arising receivables.
In the event Hyatt becomes obligated to purchase the
Hotel pursuant to any of the above provisions of this Section 15.4
including, without limitation, pursuant to any Acceptance Notice or
Revised Acceptance Notice, then (i) Owner shall have and may
exercise against Hyatt all rights and remedies it may have for
breach of the contract between Owner and Hyatt, at law or in equity;
(ii) in connection with any proceedings brought by Owner against
Hyatt for enforcement of Owner's rights, Owner shall be entitled to
reimbursement for its expenses, including, without limitation, legal
fees and expenses; and (iii) Owner shall thereafter be free to sell
the Hotel and terminate the Management Agreement in connection
therewith without payment of any termination fee to Hyatt,
including, without limitation, the Termination Fee, and free and
clear of any rights of Hyatt arising under any of Sections 15.2,
15.4 or 15.5.
15.5 Right of First Refusal.
In lieu of the provisions of Section 15.4, Owner shall
have the right, without complying with the provisions of Sections
15.2 or 15.4, to sell the Hotel in accordance with the provisions of
this Section 15.5; provided, however, the provisions of this Section
15.5 shall not apply (i) to any sale made in accordance with the
provisions of Section 15.4, it being the understanding of the
parties hereto that a sale of the Hotel may be made either pursuant
to the provisions of Section 15.4 or pursuant to the provisions of
this Section 15.5, at Owner's election, but in no event shall both
sections be applicable to any particular sale transaction; or (ii)
to a sale of the Hotel to a person or entity which shall, by written
instrument reasonably satisfactory in form and substance to Hyatt,
assume all of the liabilities and obligations of Owner which accrue
or are otherwise attributable to the period after the sale, and
shall agree to be substituted for all purposes as the Owner, under
this Management Agreement for all the rest and remainder of the
Term.
If at any time during the Term, Owner shall receive
an offer (the "Offer"), which must be in writing, to purchase the
Hotel, or any part thereof or interest therein, which Owner desires
to accept and which would, if accepted, result at the closing in a
termination of the Agreement pursuant to Section 3.5, Owner shall
give prompt written notice thereof to Hyatt (the "Offer Notice")
accompanied by a copy of the Offer. Hyatt shall have the right at
any time within twenty-five (25) days after receipt of the Offer
Notice, in which to elect to purchase the Hotel upon the terms and
conditions set forth in the Offer, which right may be exercised by
Hyatt by written notice to that effect to Owner (the "Offer
Acceptance Notice") delivered at any time within the aforesaid
period of twenty-five (25) days, and, if the Offer provides for a
deposit, accompanied by a deposit in the amount provided for in the
Offer Notice or evidence that said deposit has been made to the
party contemplated in the Offer Notice as the holder thereof. Upon
delivery of the Offer Acceptance Notice together with any deposit
required pursuant to the preceding sentence, the same shall
constitute a binding contract between Owner and Hyatt for the
purchase and sale of the Hotel (or interest therein, or part
thereof, or controlling interest in Owner, as applicable) upon the
terms and conditions set forth in the Offer, which shall be
consummated on the later to occur of (i) twenty (20) days after the
delivery of the Offer Acceptance Notice or, if such twentieth (20th)
day is not a business day, the first business day thereafter; or
(ii) the date for closing set forth in the Offer.
In the event the Offer contemplates the delivery of
consideration other than cash, or other than purchase money
financing obligation (whether or not secured), or both, (i) there
shall be no delay or extension for Hyatt to accept or reject the
Offer; and (ii) upon acceptance of the Offer Hyatt shall be bound to
purchase the Hotel and obligated to deliver, in lieu of the non-cash
consideration, cash equal in value to the non-cash consideration set
forth in the Offer Notice. At the closing, if the parties are
unable to agree (after each having used their best reasonable
efforts to so agree) upon the cash value of the non-cash
consideration on or prior to the closing, Hyatt shall deliver an
amount in cash equal to the value thereof as determined by Hyatt and
the difference between said amount and the value as determined by
Owner shall be deposited by Hyatt in an escrow with First American
Title Insurance Company (or such other title company as may be
agreed by Owner and Hyatt), as escrow agent, and Hyatt and Owner
shall execute at the closing an escrow agreement in the customary
form required by the said escrowee and containing provisions not
inconsistent herewith, providing for, among other things, such
deposit to be held by the said escrowee pending resolution of the
valuation dispute between Hyatt and Owner in accordance with the
arbitration provisions of Section 14 hereof, with interest earned on
amounts in escrow to be for the party entitled to receive the
principal thereof, and in proportion to the respective amount of
principal each party is entitled to receive.
In the event Hyatt fails to deliver an Offer
Acceptance Notice within the aforesaid period of twenty-five (25)
days, Owner shall have the right to sell the Hotel upon terms and
conditions not materially less favorable to Owner than those set
forth in the Offer, and to the person (or its designee) delivering
the Offer, not later than the later to occur of (i) the date for
closing set forth in the Offer Notice, or (ii) one hundred eighty
(180) days after expiration of the aforesaid period of twenty-five
(25) days. If the Offer contains any contingencies, such as,
without limitation, financing contingencies or due diligence
contingencies, delivery of the Offer Acceptance Notice by Hyatt
shall not be subject to such contingencies, Hyatt's obligation to
purchase to be the same as it would have been had all such
contingencies been favorably satisfied or waived.
Any sale made pursuant to the provisions of this
Section 15.5 shall be subject to the rights of Owner under Section
3.5, except that no Termination Fee shall be payable to Hyatt in
connection with a sale to Hyatt pursuant to this Section 15.5.
In the event Hyatt becomes obligated to purchase the
Hotel pursuant to any of the above provisions of this Section 15.5,
then (i) Owner shall have and may exercise against Hyatt all rights
and remedies it may have for breach of the contract between Owner
and Hyatt, at law or in equity; (ii) in connection with any
proceedings brought by Owner against Hyatt for enforcement of
Owner's rights, Owner shall be entitled to reimbursement for its
expenses, including, without limitation, legal fees and expenses;
and (iii) Owner shall thereafter be free to sell the Hotel and
terminate the Management Agreement in connection therewith without
payment of any termination fee to Hyatt and free and clear of any
rights of Hyatt arising under any of Sections 15.2, 15.4 or 15.5.
Section 16. NOTICES.
All notices required or permitted to be delivered
hereunder shall be in writing and shall be given by: (a) registered
or certified mail, return receipt requested; (b) personal
delivery; (c) delivery by a reputable private air freight service;
or (d) electronic telecopy communication. All notices shall be
addressed to the recipient at the following addresses:
If to Owner: c/o The Wilson Company
5404 Cypress Center Drive
Suite 200
Tampa, Florida 33609
With copies to: Stephen J. Mitchell, Esq.
Annis, Mitchell, Cockey, Edwards &
Rohen
Suite 2100
One Tampa City Center Building
P.O. Box 3433
Tampa, Florida 33601
- and -
Dean Witter Realty Inc.
Two World Trade Center
New York, New York 10048
Attention: E. Davisson Hardman, Jr.
and John McNamara
If to Hyatt: Madison Plaza
200 West Madison Street
39th Floor
Chicago, IL 60606
Attention: General Counsel
Any party may designate another address (or change its address) for
notices hereunder by delivery of a written notice to all other
parties in accordance with the provisions of this section. Any
notice sent in compliance with the above provisions shall be deemed
delivered and received on the actual date received by the other
party. Costs of delivery shall be borne by the sending party, and
no notice shall be deemed delivered unless delivered prepaid. If
Hyatt is given the name and address of any mortgagees it will give
copies of all notice given to owner to such mortgagees in the manner
set forth in this Section 16.
Section 17. APPROVALS.
If a party shall desire the approval of the other
party hereto to any matter, such party may give notice to such other
party that it requests such approval, specifying in such notice the
matter as to which such approval is requested and reasonable detail
respecting such matter. If such other party shall not respond
negatively in writing to such notice within twenty (20) days after
receipt thereof, such other party shall be deemed to have approved
the matter referred to in such notice.
Section 18. FURTHER INSTRUMENTS.
Upon notice from either party to the other, Hyatt and
Owner shall execute (in recordable form) and deliver to the party
requesting the same an appropriate instrument, in form and substance
reasonably satisfactory to Owner and Hyatt, which, when recorded,
will impart constructive notice to third parties of the rights of
Hyatt under this Agreement. Each party hereto shall further execute
and deliver all such other appropriate supplemental agreements and
other instruments and take such other action as may be necessary to
make this Agreement fully and legally effective, binding and
enforceable as between the parties hereto and as against third
parties, or as the other party may reasonably request.
Section 19. INDEMNIFICATION OF HYATT.
(a) Upon termination of this Agreement, whether
by lapse of time or otherwise, Owner shall indemnify and hold
harmless Hyatt and its directors, officers, employees and agents
from and against any and all liability, loss, damages, costs and
expenses ("Liabilities") arising out of, or incurred in connection
with the management and operation of the Hotel, but excluding those
Liabilities caused by the gross negligence or willful misconduct of,
or willful violations of Legal Requirements by, Hyatt or its
employees or agents occurring during the Term.
(b) With regard to Liabilities arising out of,
or relating to, the provisions of the Employee Retirement Income
Security Act of 1974 and/or the Multi-employer Pension Plan
Amendments Act of 1980 ("MEPPA"), Owner shall indemnify and hold
harmless Hyatt and its directors, officers, employees, and agents
from and against (i) any withdrawal liability (as described in
Section 4201 of MEPPA) incurred in connection with the
discontinuance of contributions to any multi-employer pension plan
to which Hyatt may make contributions on behalf of persons employed
at the Hotel pursuant to the provisions of an applicable collective
bargaining agreement, but only to the extent that such withdrawal
liability is attributable to benefits accrued by employees of Hyatt
in respect to services performed on behalf of the Hotel, (ii) any
other Liabilities arising out of, or relating to, any other funding
provisions of said statutes unless such Liabilities are due to the
gross negligence or willful misconduct of Hyatt, and (iii) any
fines, interest, excise taxes or penalties which may be assessed
against Hyatt in respect of the operation and administration of any
employee benefit plan to the extent attributable to such plans made
available to employees of the Hotel unless such fines, interest,
excise taxes or penalties are due to the gross negligence or willful
misconduct of Hyatt.
Section 20. APPLICABLE LAW.
This Agreement shall be governed in all respects by
the internal laws of the State of Florida.
Section 21. PAYMENT OF AMOUNTS DUE TO HYATT.
If, pursuant to the terms of this Agreement, the Term
and Hyatt's management of the Hotel are terminated, Owner's
obligations to pay to Hyatt any other amounts due to Hyatt
hereunder, shall survive such termination and shall continue until
all such amounts, with interest, are paid in full. If such
termination is the result of condemnation of, or a casualty to the
Hotel, these amounts due to Hyatt shall be paid out of any
condemnation award or insurance proceeds available to Owner after
satisfaction of the holder of the first mortgage.
If the condemnation award or any insurance proceeds
are insufficient, Owner shall be obligated to pay all such amounts
to Hyatt from other funds of Owner.
Section 22. SURVIVAL AND CONTINUATION.
Notwithstanding the termination of the Term or Hyatt's
management of the Hotel in accordance with this Agreement, all
terms, provisions and obligations of either party contained herein,
which in order to give them effect and accomplish their intent and
purpose need to survive such termination (e.g. Sections 19 and 21)
shall, by agreement between Owner and Hyatt, survive and continue
until they have been fully satisfied or performed.
Section 23. HYATT APPROVALS.
Owner and Hyatt agree that in each instance in this
Agreement or elsewhere wherein Hyatt is required to give its
approval of plans, specifications, budgets and/or financing, no such
approval shall imply or be deemed to constitute an opinion by Hyatt,
nor impose upon Hyatt any responsibility for the design or
construction of building elements, including but not limited to
structural integrity or life/safety requirements or adequacy of
budgets and/or financing. The scope of Hyatt's review and approval
of plans and specifications is limited solely to the adequacy and
relationship of spaces and esthetics of the Improvements for use as
a hotel.
All reviews and approvals by Hyatt under the terms of
the Management Agreement are for the sole and exclusive benefit of
Hyatt and no other person or party shall have the right to rely on
any such reviews or approvals by Hyatt. Hyatt shall have the
absolute right, in its sole discretion, to waive any such reviews or
approvals as a condition to its performance under the Management
Agreement.
Section 24. SALE OF SECURITIES.
In the event Owner, or any person controlling Owner,
shall, at any time, sell or offer to sell any securities issued by
Owner through the medium of any prospectus or otherwise, it shall do
so only in compliance with all applicable federal and state
securities laws, and shall clearly disclose to all purchasers and
offerees that (i) neither Hyatt nor any of its officers, directors,
agents or employees shall in any way be deemed an issuer or
underwriter of said securities, and that (ii) Hyatt and said
officers, directors, agents and employees have not assumed and shall
not have any liability arising out of or related to the sale or
offer of said securities, including, without limitation, any
liability or responsibility for any financial statements,
projections or other financial information contained in any
prospectus or similar written or oral communication. Hyatt shall
have the right to approve any description of Hyatt, or any
description of this Agreement or of Owner's relationship with Hyatt
hereunder, which may be contained in any prospectus or other
communication, and Owner agrees to furnish copies of all such
materials to Hyatt for such purpose not less than twenty (20) days
prior to the delivery thereof to any prospective purchaser. Owner
agrees to indemnify, defend and hold Hyatt, and its officers,
directors, agents and employees, free and harmless of and from any
and all liabilities, costs, damages, claims or expenses arising out
of or related to the sale or offer of any securities of Owner,
except for any such liabilities, costs, damages, claims or expenses
arising out of or based upon any untrue statement of a material fact
or omission of a material fact made in reliance upon, and in
conformity with, information furnished by Hyatt to Owner in writing,
provided that (i) Hyatt has expressly acknowledged in writing its
understanding and consent to use of such information in Owner's
prospectus or other placement materials, (ii) Hyatt shall be under
no obligation to furnish any such information and will furnish the
same, if at all, only in response to specific written requests
therefor from Owner but shall, in any event and upon request from
Owner, furnish to Owner such relevant information, if any, as is
otherwise made publicly available by Hyatt (which for this purpose
shall not include information furnished to potential lenders, joint
venture partners or merger prospects); and (iii) Owner has no
knowledge that the information furnished by Hyatt is untrue in any
material respect.
Section 25. NON-COMPETITION.
Hyatt agrees that during the periods of time, and
within the areas, described below, it shall not operate or mange any
other hotel or hotels having the word "Hyatt" or "Regency" included
in its trade name, other than the existing Hyatt Regency Tampa (or
any additions thereto or expansions thereof) and other than hotels
hereafter acquired through merger, consolidation or other similar
form of corporate acquisition; provided, however, in any event the
provisions of this Section 25 shall terminate concurrently with any
termination of this Management Agreement. The foregoing covenant
shall be effective in the following areas and during the following
periods of time:
(a) Until the first to occur of (i) the
refinancing of the existing mortgage of indebtedness of the
Hotel, (ii) sale of the Hotel to an unaffiliated third party
which assumes the obligations of Owner under this Agreement
and elects to continue this Agreement in effect, and (iii)
March 31, 1997, anywhere within a radius of four (4) miles
from the Hotel;
(b) After expiration of the period
referred to in subsection (a) above, and to and
including November 14, 1999, anywhere within a radius of
ten (10) miles from the Hotel (excluding any hotels
located more than four (4) miles but less then ten (10)
miles from the Hotel which Hyatt undertook to manage or
operate after the date hereof but prior to expiration of
the period referred to in subsection (a) above), and
(c) During the period from November 15,
1999 to and including the expiration or earlier
termination of this Agreement, anywhere within a radius
of four (4) miles from the Hotel, except that this
subparagraph (c) shall not apply in the event, at any
time, Hyatt exercises its right under Section 13 to
change the name of the Hotel by reason of its being
excused from its obligation to operate the Hotel in
conformity with the first-class hotel standard. In the
event Hyatt operates or manages a hotel or hotels after
the date hereof but prior to expiration of the period
referred to in subsection (a) above in the area more
then four (4) but less then ten (10) miles from the
Hotel, (i) Hyatt shall give written notice thereof to
Owner, and (ii) Owner shall have the right, which shall
be exercised not later than six (6) months after the
receipt of such notice from Hyatt (and without prejudice
to the rights of Hyatt under Section 3.6) to terminate
this Agreement by notice thereof to Hyatt effective as
of the date set forth in said notice but in no event
sooner than sixty-five (65) days after delivery thereof
to Hyatt. No termination fee, including, without
limitation, the Termination Fee, shall be due or payable
to Hyatt in connection with any termination pursuant to
the Section 25.
Section 26. EXCULPATION.
Notwithstanding anything to the contrary set forth in
this Management Agreement and except as expressly set forth in any
document, instrument, certificate or agreement delivered now or
subsequently in connection with this Management Agreement (the
"Management Documents"), Hyatt agrees that no recourse shall be had,
whether by levy or execution or otherwise, for the payment or
performance of any obligation of Owner or for any claim based on
this Agreement or any Management Document or in respect thereof
against any partner in the Owner or any predecessor, successor or
affiliate of any partner in the Owner or any of their assets or
against any principal, partner, shareholder, officer, director,
agent or employee of any of the aforesaid persons, under any rule of
law, statute or constitution, or by the enforcement of any
assessment or penalty, or otherwise, nor shall any of such persons
be personally liable for any such obligations or claims, or liable
for any deficiency judgment based thereon or with respect thereto,
it being expressly understood that the sole remedies of Hyatt with
respect to such obligations and claims shall be against the assets
of Owner (it being understood that the obligations of the partners
in the Owner to make capital contributions in accordance with the
partnership agreement of Owner are assets of the Owner and are
enforceable against the partners in Owner) and all such liability of
the aforesaid persons is expressly waived and released by Hyatt as
a condition of and as consideration for the execution of this
Agreement.
Section 27. ESTOPPEL.
Owner and Hyatt each hereby represent and warrant to
the other that, as of the date hereof, neither has any knowledge of
any default by the other under the terms of the Management
Agreement, nor any knowledge of the occurrence of any event which,
with notice or the lapse of time or both, would constitute a default
or an event of default under the Management Agreement, as of the
date hereof.
Section 28. LENDER APPROVAL.
This Management Agreement is subject in all respects
to, and shall not become effective until receipt, on or prior to
April 15, 1995, of, written instruments from the holders of all
mortgage indebtedness on the Hotel consenting to the execution and
delivery hereof by Owner and Hyatt and to the amendment to the
Management Agreement as herein provided, and confirming to Hyatt, in
a written instrument reasonably satisfactory to Owner and Hyatt, the
continuing validity, binding effect and enforceability of any
subordination, non-disturbance and attornment agreements heretofore
entered into by Hyatt and the said lenders and confirming further
that the "Management Agreement" referred to in any such
subordination, non-disturbance and attornment agreement shall mean
the this Management Agreement. Owner agrees to use reasonable
efforts to seek the consent of all holders of mortgage indebtedness
and the confirmation with respect to the subordination, non-
disturbance and attornment agreements herein referred to, and, to
the extent any such mortgage indebtedness is held by Owner, any
affiliate of Owner, or any affiliate of the general partner of
Owner, Owner agrees that it shall cause such consent and
confirmation to be executed and delivered. Until such time as such
consent shall have been received, the Original Management Agreement
shall continue in full force and effect without regard to the
provisions of this Management Agreement. If such consent shall not
have been received on or prior to April 15, 1995, then, at any time
thereafter, either Owner or Hyatt may elect to terminate this
Management Agreement, and in that event, to continue to be governed
by the Original Management Agreement. If, however, such consent
shall have been received on or prior to April 15, 1995, then
this Management Agreement shall be fully operative, and Hyatt shall
adjust any Annual Management Fees it shall have previously received
which exceeded the amounts required to be paid to Hyatt pursuant
hereto.
IN WITNESS WHEREOF, Owner and Hyatt have executed this
Second Amended and Restated Management Agreement as of the day and
year first above set forth.
HYATT CORPORATION, a Delaware corporation
By:
_____ President
TWC ELEVEN, LTD., by its general
partners:
TWC FOURTEEN, LTD., a Florida
limited partnership, by its
general partner
TWC ELEVEN, INC., a
Florida corporation
By:
_____ President
BAYPORT, LTD., a Florida
limited partnership, by its
general partner:
DEAN WITTER REALTY GROWTH
PROPERTIES, L.P., a
Delaware limited
partnership, by its
general partner
DEAN WITTER REALTY
GROWTH PROPERTIES,
INC., a Delaware
corporation
By:
______ President
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION - Parcel #3 Other-Media
A tract of land lying within Section 13 Township 29 South Range 17
East and Section 18 Township 29 South Range 18 East, Hillsborough
County, Florida being more particularly described as follows:
Commence at the Northeast corner of said Section 13 also being the
Northwest corner of said Section 18; thence S 01 00' 16" W for
163.87 feet to a point on the southerly right-of-way line of
COURTNEY CAMPBELL PARKWAY (S.R. 60); thence along said right-of-way
line N 72 32' 24" E, for 117.63 feet; thence S 88 13' 01" E, for
116.73 feet to a point on a curve concave to the South; thence
easterly along the arc of said curve, having a radius of 1,180.24
feet, a central angle of 2 52' 25", an arc length of 59.19 feet and
a chord, bearing S 81 00' 29" E for 59.19 feet to the point of
compound curvature of a curve concave to the Southwest; thence
southeasterly along the arc of said curve, having a radius of 653.24
feet, a central angle of 27 30' 20", an arc length of 313.60 feet
and a chord, bearing S 65 49' 07" E, for 310.59 feet; thence s 41
50' 23" E, for 93.96 feet; thence S 27 20' 20" E for 59.23 thence,
leaving said right-of-way line, S 01 03' 39" W, for 395.36 feet to
the POINT OF BEGINNING; thence continue S 01 03' 39" W, for 179.74
feet; thence S 19 01' 35" W, for 549.94 feet to a point on the MEAN
HIGH WATER Line of TAMPA BAY as shown on a MEAN HIGH WATER SURVEY by
Heldt & Associates on March 9 1983 also being 1.25 foot contour
line; thence meandering along said line N 50 40' 27" W, for 112.99
feet; thence N 78 47' 26" W, for 62.40 feet; thence N 19 55' 56"
W, for 92.24 feet; thence N 50 06' 29" W, for 123.42 feet; thence
N 49 15' 04" W, for 43.70 feet; thence N 35 08' 35" W, for 64.42
feet; thence N 46 59' 38" W, for 46.989 feet; thence N 23 43' 56"
W, for 85.80 feet; thence N 45 43' 18" W, for 51.49 feet; thence N
48 37' 56" W, for 24.66 feet; thence N 79 57' 21" W, for 68.18
feet; thence S 70 57' 39" W, for 43.01 feet; thence S 70 41' 53"
W, for 60.88 feet; thence S 72 18' 38" W, for 69.44 feet; thence S
68 36' 22" W, for 75.53 feet; thence S 86 47' 18" W, for 33.55
feet; thence N 60 48' 01" W, for 25.72 feet; thence N 16 58' 02"
W, for 34.61 feet; thence N 28 06' 56" E, for 22.96 feet; thence N
76 00' 19" E, for 24.05 feet; thence S 65 18' 22" E, for 43.85
feet; thence S 87 18' 38" E, for 47.22 feet; thence N 64 15' 23"
E, for 61.27 feet; thence N 70 06' 57" E, for 65.95 feet; thence N
70 44' 26" E, for 53.44 feet; thence N 63 41' 27" E, for 67.74
feet; thence N 47 08' 52" E, for 15.41 feet; thence N 39 51' 15"
W, for 36.22 feet; thence S 84 37' 25" W, for 38.89 feet; thence S
83 01' 42" W, for 114.83 feet; thence N 35 06' 41" W, for 84.56
feet; thence N 23 46' 40" W, for 74.09 feet; thence N 29 53' 08"
W, for 103.89 feet; thence N 03 09' 16" W, for 76.96 feet; thence
N 64 55' 39" W, for 122.30 feet; thence N 52 31' 56" W, for 91.62
feet; thence leaving said line S 86 21' 11" E, for 439.57 feet;
thence S 88 59' 44" E, for 443.58 feet; thence S 01 00' 16" W, for
117.81 feet; thence S 88 59' 44" E, for 32.00 feet; thence S 01
00' 16" W, for 15.83 feet; thence N 88 59' 44" E, for 82.20 feet;
thence S 01 00' 16" W, for 127.01 feet; thence S 88 59' 44" E, for
334.19 feet to the POINT OF BEGINNING.
<PAGE>
LEGAL DESCRIPTION - Parcel #4 Other-Burpee
A tract of land lying within Section 18 Township 29 South Range 18
East, Hillsborough County, Florida being more particularly described
as follows:
Commence at the Northwest corner of said Section 18; thence S 01
00' 16" W for 163.87 feet to a point on the southerly right-of-way
line of COURTNEY CAMPBELL PARKWAY (S.R. 60); thence along said
right-of way line N 72 32' 24" E, for 117.63 feet; thence S 88 43'
01" E, for 116.73 feet to a point on a curve concave to the South;
thence easterly along the arc of said curve, have a radius of
1,180.24 feet, central angle of 2 52' 25", an arc length of 59.19
feet and a chord, bearing 881 00' 29" E for 59.19 feet to the point
of compound curvature of a curve concave to the Southwest; thence
southeasterly along the arc of said curve, having a radius of 653.24
feet, a central angle of 27 30' 20", an arc length of 313.60 feet
and a chord bearing S 65 49' 07" E, for 310.59 feet; thence S 41
50' 23" E, for 93,96 feet; thence S 27 20' 20" E, for 93.42 to a
point on a curve concave to the Southwest, thence southeasterly
along the arc of said curve, having a radius of 623.24 feet, a
central angle of 15 18' 27", an arc length of 166.51 feet and a
chord, bearing S 27 52' 56" E, for 166.01 feet; thence S 20 13'
42" E, for 114.79 feet; thence S 24 31' 03" E, for 125.12 feet to
the POINT OF BEGINNING; said point henceforth to be known as "POINT
A" thence continue S 24 31' 03" E, for 75.44 feet; thence S 20 13'
42" E, for 600.00 feet; thence S 14 31; 04" E, for 100.50 feet;
thence S 20 13' 42" E for 441.22 feet to a point on the MEAN HIGH
WATER line of TAMPA BAY as shown on a MEAN HIGH WATER SURVEY by
Heldt & Associates on March 9, 1983 also being the 1.25 foot contour
line; thence meandering along said line; thence S 16 40' 36" W, for
14.18 feet; thence N 84 05' 39" W, for 60.54 feet; thence N 79 15'
43" W. for 64.24 feet; thence N 84 09' 22" W, for 44.63 feet;
thence N 84 53' 24" W, for 29.81 feet; thence S 88 4?' 33" W, for
77.10 feet; thence N 80 40' 25" W, for 48.07 feet' thence N 71 06'
22" W, for 50.59 feet; thence N 88 45' 53" W, for 67.84 feet'
thence N 82 18' 28" W, for 71.72 feet; thence S 85 35' 23" W, for
63.02 feet; thence S 81 19' 59" W, for 34.97 feet; thence S 28 59'
05" W, for 63.26 feet; thence S 69 42' 40" W, for 51.44 feet;
thence S 63 32' 58" W, for 63.14 feet; thence S 77 19' 18" W, for
44.46 feet; thence N 50 54' 26" W, for 40.46 feet; thence N 50 51'
39" W, for 45.20 feet; thence N 77 23' 32" W, for 25.21 feet;
thence N 02 41' 56" E, for 19.07 feet; thence N 19 12' 15" W, for
15.85 feet; thence N 34 12' 47" W, for 28.62 feet; thence N 13 50'
10" W, for 87.55 feet; thence N 41 47' 10" E, for 16.53 feet;
thence N 41 34' 23" W, for 13.50 feet; thence N 15 27' 21" W, for
21.24 feet; thence N 10 42' 23" W, for 71.88 feet; thence N 06 35'
07" W, for 57.71 feet; thence N 05 52' 20" W, for 45.97 feet;
thence N 53 04' 36" E, for 22.88 feet; thence S 74 17' 20" E, for
45.12 feet; thence S 85 55' 36" E, for 53.17 feet; thence S 80 21'
43" E, for 68.44 feet; thence S 76 08' 38" E, for 49.05 feet;
thence S 63 26' 29" E, for 58.47 feet; thence S 85 24' 03" E, for
42.00 feet; thence N 19 49' 47" W, for 107.83 feet; thence N 49
47' 06" W, for 14.98 feet; thence N 70 31' 28" W, for 87.83 feet;
thence N 50 40' 27" W, for 28.34 feet; thence leaving said line N
19 01' 35" E, for 549.94 feet; thence N 01 03' 39" E, for 179.74
feet; thence S 88 59' 44" E, for 192.30 feet to the POINT OF
BEGINNING.<PAGE>
LESS AND EXCEPT:
LEGAL DESCRIPTION- POND A
A tract of land lying within Section 18 Township 29 South Range 18
East, Hillsborough County, Florida being more particularly described
as follows:
Commence at the Northeast corner of said Section 13 also being the
Northwest corner of said Section 18; thence S 01 00' 16" W for
163.87 feet to a point on the southerly right-of-way line of
COURTNEY CAMPBELL PARKWAY (S.R. 60) also being the POINT OF
BEGINNING; thence along said right-of-way line N 72 32' 24" E, for
117.63 feet; thence S 88 43' 01" E, for 116.73 feet to a point on
a curve concave to the south; thence easterly along the arc of said
curve, having a radius of 1,180.24 feet, a central angle of 2 52'
25", an arc length of 59.19 feet and chord, bearing S 81 00' 29" E
for 59.19 feet to the point of compound curvature of a curve concave
to the Southwest; thence Southeasterly along the arc of said curve,
having a radius of 653.24 feet, a central angle of 27 30' 20", an
arc length of 313.60 feet and a chord, bearing S 65 49' 07" E, for
310.59 feet; thence S 41 50' 23" E, for 93.96 feet; thence S 27
20' 20" E for 93.42 feet to a point on a curve concave to the
Southwest, thence southeasterly along the arc of said curve, having
a radius of 623.23 feet, a central angle of 5 18' 27", an arc
length of 166.51 feet and a chord, bearing S 27 52' 56" E, for
166.01 feet; thence S 20 13' 42" E, for 114.79 feet; thence S 24
31' 03" E, for 125.12 feet; to the POINT OF BEGINNING, said point
also being on the northerly water line of POND A, also being on the
1.83 foot contour line; thence continue S 24 31' 03" E, for 75.44
feet; thence S 20 13' 42" E, for 600.00 feet; thence S 14 31' 04"
E, for 100.50 feet to a point on the southerly water line of said
POND A; thence, meandering along said contour line westerly for 350
feet; thence northerly for 450 feet; thence northeasterly for 450
feet to said "POINT A" and said POINT OF BEGINNING.<PAGE>
EXHIBIT B
BEST PRACTICES REPORT
<PAGE>
<TABLE>
STATEMENT OF INCOME
(Short Form)
<CAPTION>
Current
Period
<S> <C> <C>
DEPARTMENTAL PROFIT (Loss)
Rooms Schedule B- I $_____
Foods B-2
Beverages B-2
Telephone B-3
Barber Shop B-4
Beauty Parlor B-5
Checkrooms and Washrooms B-6
Cigar and Newsstand B-7
Fountain and Gift Shop 8-8
Garage--Parking Lot B-9
Guest Laundry B-10
Swimming Pool--Cabanas--Baths B-11
Valet B-12 ______
$_____
Profit from Operated Departments
OTHER INCOME B-13 ______
GROSS OPERATING INCOME $_____
DEDUCTIONS FROM INCOME
Administrative and General Expense B-14 $_____
Advertising and Sales Promotion B-15
Heat, Light and Power B-16
Repairs and Maintenance B-17
Total Deductions from Income
HOUSE PROFIT $_____
STORE RENTALS B-18 ______
GROSS OPERATING PROFIT $_____
RENT, MUNICIPAL TAXES AND INSURANCE B-19 ______
PROFIT BEFORE INTEREST AND DEPRECIATION $_____
INTEREST B-19 ______
PROFIT BEFORE DEPRECIATION $_____
DEPRECIATION AND EXPENSE AUTHORIZATION B-19 ______
NET OPERATING PROFIT (LOSS) $_____
OTHER ADDITIONS AND DEDUCTIONS B-20 ______
NET INCOME (Loss) -- TO RETAINED EARNINGS $_____
EXHIBIT C
/TABLE
<PAGE>
EXHIBIT D
ADDITIONAL REPORTS AND INFORMATION
(A) Additional Monthly Reports:
(1) General Manager Operations Report
(2) Sales Pace Report
(3) Rooms Unavailable for Occupancy Due to Maintenance
Report
(4) EST-1 90-day Schedule
(B) Quarterly Reports:
(1) Status Report on Best Practices Savings
(2) Summary of Related Party Payments
(3) Variance Report for Each Line Item from the Operating
Forecast for Variances in Excess of $1,000 and 5%
(4) Full Time Equivalent Employee Status Report
(C) As Relevant or Requested:
(1) Copies of Operating Leases (including copier, van,
computer and space leases)
(2) Copies of Personal Property Leases
(3) Copies of Insurance Policies<PAGE>
I.Comprehensive General Liability
Premises Operations
Elevators
Independent Contractors
Blanket Contractual
Worldwide Products Liability (U.S. Suit or Foreign
Indemnity)
Personal Injury (including Contractual) Exclusion C
deleted
Amendment of "Bodily Injury" to include Mental Anguish,
Mental Injury, or illness whether or not accompanied by
physical injury or illness suffered by any person or
persons
Employees as Additional Insureds
Broad Form Property Damage
Fire Legal Liability ($50,000 per location)
Host Liquor Liability (including Loss of Means of
Support)
Liquor Liability
XCU exclusion deleted
Incidental Malpractice
II. Innkeepers Liability Including Safe Deposit Box Liability
III. Comprehensive Automobile Liability Limits:
Includes all owned, hired, leased (or substitute) automobiles.
Use of other auto - broad form - Blanket coverage for all
Hyatt officers and/or employees while acting within the scope
of their duties, including an individual while a resident of
the household, and spouse and dependent children of such
individual.
IV. Garagekeepers Legal Liability
Fire and Explosion
Theft
Riot, Civil Commotion, Malicious Mischief and Vandalism
Collision or upset
Including coverage for personal property left in insured
vehicle
EXHIBIT E<PAGE>
ATTACHMENT 1
Operating Forecasts and Capital Budget Formats
<PAGE>
SECOND AMENDED AND RESTATED
MANAGEMENT AGREEMENT
(Tampa)
between
TWC ELEVEN, LTD.
and
HYATT CORPORATION,
a Delaware corporation
DATED: January 26, 1995
<PAGE>
