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EXHIBIT 10.2
PROPERTY MANAGEMENT AGREEMENT
Dated:
Between:
And: Territorial Inns Management Company Inc., an Oregon Corporation
________________________ (hereinafter referred to as "Owner") is the owner of
the _________________________________________ (hereinafter referred to as
"Property"). References to "Owner" in this agreement recognizes the owner as
with whom this agreement is made.
Territorial Inns Inc. (hereinafter referred to as "Manager") is a management
company whose stockholders are in the business of owning and operating motels.
Whereas, the Owner desires to employ the Manager for the management of the
Property, and the Manager is willing to accept such employment subject to the
terms and conditions hereinafter set forth;
Now Therefore, in consideration of the foregoing and of the terms and conditions
hereinafter set forth, the Manager and the Owner hereby agree to the following:
1. Employment of the Manager. The Owner hereby employs the Manager to
act as the general operating manager of the Property, and grants to the Manager
the authority to direct, supervise, and manage the operation of the property on
behalf of the Owner and for the owner's account, in conjunction with the Owner's
board of directors.
2. Term of Agreement The term of this agreement shall be from
________________ until ____________________.
3. Management Fee. The management fee paid by the Owner to the Manager
each month shall be __% of the gross room revenue of the Property for the
immediately preceding month. Fees are to be paid after debt service and
operating expenses but before Owner's draws. Management fees will accrue in any
event. Management fees are to be paid monthly and are due by the 5th day of the
month based on the revenues of the preceding month.
4. Ownership of Property, Description. The Owner owns the property and
agrees to provide all equipment, furniture, fixtures, inventory, and other
personal property appurtenant to and necessary for the operation of the lodging
facility and restaurant.
5. Manager's Duties. During the term of this agreement , the Manager
shall use it's best efforts in the management and operation of the business,
services and sales of the Property. The Manager's right to manage and operate
the Property shall be exclusive to the Manager except that the Manager shall be
subject to policy and procedures approval by the Owner's board of directors. In
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pursuance of the foregoing, the Manager shall have the following duties and
perform the following services:
5.1 Use its best efforts and due diligence in the renting of all rooms
and facilities to desirable guests and tenants.
5.2 Receive, consider, and handle the complaints of all tenants, guests,
or users of any of the services of the facilities of the property.
5.3 Establish and maintain price and rate schedules for all services and
facilities of every kind or nature connected with the operation of the
Property and to collect all receipts and income derived from the same.
5.4 Hire, promote, discharge, and in all other ways supervise the work
of all employees and staff connected with the property pursuant to
paragraph 12 below.
5.5 Establish and maintain an accounting system for the purpose of
bookkeeping, cost control, budget, payroll records, all reports and
taxes incident thereto, and such other accounting and clerical services
as are necessary for the proper management of the Property.
5.6 Pay in the Owners name all labor expenses at property and maintain
payroll records.
5.7 Enter into contracts in the name of and at the expense of the Owner
for the furnishings to the Property of electricity, gas, water, steam,
telephone, cleaning, pest control, elevator and boiler maintenance, air
conditioning maintenance, television maintenance, and for any other
utilities or services which the Manager determines are necessary and
proper to conduct the business at the Property.
5.8 With prior consent of the Owner, arrange of the making or
installing, at Owner's expense and in the name of the Owner, of
alterations, repairs, maintenance, replacements, equipment, or the
installation and the purchasing of materials and supplies incidental to
the property.
5.9 Keep and maintain such accounts of deposit in a banking
institution(s), pursuant to paragraph 6 below, as the Manager deems
appropriate for the orderly control of all funds and monies received by
the Manager for or on behalf of the Owner, with the Owner's approval in
connection with the business of the property.
5.10 Generally do all things and take all actions which the Manager, in
its sole discretion, deems necessary or appropriate for the operation
and management of the Property within the terms of this agreement.
Owner's board of directors reserve the following management rights without
obligation to Manager:
5.11 To ask for reports on and review the complaints of tenants, guests,
or users of any of the services or facilities of the property and make
suggestions to the Manager for handling the complaints.
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5.12 Review the bookkeeping system.
5.13 Review requests for alterations, repairs, maintenance,
replacements, equipment, or the installation and the purchasing of
materials and supplies incidental to the operation of the property.
5.14 Review bank accounts, receipts and deposits.
5.15 Review all contracts, expenditures, payments and disbursements
approved by the Manager.
5.16 Review periodic reports required under paragraph 11.
5.17 Make periodic inspections of the property pursuant to paragraph 18.
6. Deposit of Funds/Books of Account. Subject to the terms and
conditions of this agreement, all revenues from Property operation shall be
deposited in one or more accounts established by the Owner. Accounts shall be
maintained exclusively for the benefit of Owner and not commingled with any of
Manager's funds.
7. Expenditures. Out of such accounts, Owner will pay for all
obligations and expenditures properly incurred for and on the account of the
property, including Manager's compensation and expense reimbursement, insurance
premiums, taxes, and expenses for supplies, repairs, maintenance and
improvements.
8. Business Name. The business name shall be conducted under the name of
the _________________.
9. Advertising. The Manager shall arrange and contract for, at the
Owner's expense, all advertising and promotion which the Manager may deem
necessary for the operation of the property, not to exceed $10,000 (plus
billboard advertising) annually without the Owner's written consent. If any
advertising is done in conjunction with advertising of other lodging
establishments owned or managed by the Manager, the cost of such advertising
shall be prorated among the various businesses and properties benefited.
10. Credit Cards. The Owner authorizes the Manager to accept such credit
cards as the Manager may determined from time to time and establish and maintain
an appropriate credit card billing system.
11. Books of Account. Owner shall keep and maintain the Property's book
of account in accordance with GAAP so as to properly reflect the Property's
receipts and disbursements.
12. Employees. The Manager shall hire, promote, discharge, and supervise
the work of the executive staff, including a general manager, assistant
managers, department heads, auditors, accountants and the like. Through such
executive staff, the Manager the Manager shall supervise the hiring, promotion,
discharge and work of all other operating and service employees performing
services in or about the property, all in the name of the Owner's payroll. The
Manager shall not be liable to any employees for their wages or compensation,
nor to the Owner or others for any act or omission of the
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part of such employees. The Manager will properly file in a timely manner all
operational reports for payroll, taxes and insurance. In the event that the
Manager pays any employee from it's own funds, it will be reimbursed, in full,
by Owner. The Manager may, with the Owner's approval, assign one or more of the
Manager's employees to the property on a temporary basis, in which event the
Owner agrees to reimburse the Manager for all the actual expenses of that
employee, including salary, transportation to and from the Property and for all
room and board of such employee while at the Property.
13. Legal Action The Manager may institute , in it's own name or in the
name of the Owner, at the expense of the Owner, with Owner's approval, any
necessary legal action or proceedings to collect charges, rent or other income
from the property or oust or dispossess guests, tenants, or other persons in
possession, or to cancel or terminate any tenancy. The Manager may, but shall
not be required to, pursue or defend any other legal actions or proceedings in
any way connected with the operations of business of the property.
14. Licenses. The Owner owns or possesses all necessary licenses and
permits required for the operation of the Property. At it's own expense, the
Owner will keep all such necessary licenses and permits in full force and effect
during the term of this agreement, and agrees to execute and deliver all
applications necessary to keep such permits and licenses current.
15. Insurance. The Owner shall obtain and the Manager shall maintain at
Owner's expense, through companies agreed upon by parties hereto, such policies
of insurance, including but not limited to public and employer's liability,
workman's compensation, fire and extended coverage, liability and such other
customary insurance as the Manager deems necessary for the protection of the
interests of the Property, the Owner and the Manager. All policies of insurance
shall name the Owner and the Manager and such other parties as may be required
by the provisions of any mortgage as the insured thereunder as their respective
interests may appear.
16. Debt Service and Ad valorem Taxes. From Owner funds, Manager shall
make all payments of real and personal property taxes and principal and interest
on notes, mortgages, contracts, and capital leases. Evidence of payment shall be
submitted to the Owner upon request.
17. Compliance with Laws and Regulations. The Manager and the Owner
agree that each shall make all reasonable efforts, but only at the Owner's
expense, to comply with all applicable laws, rules, regulations, requirements,
and ordinances of any federal, state or municipal authority, and the
requirements of any insurance companies covering any of the risks against which
the property is insured. The Owner agrees to keep in full force and effect any
franchise or licensing agreements relating to the business of the Property, and
the Manager agrees to operate the Property in keeping with such franchise or
licensing agreement.
18. Inspection by Owner. The Manager shall accord to the Owner and it's
duly authorized agents the right to enter upon any part of the Property at all
reasonable times for the purpose of examining or inspecting the Property, it's
records or its operation or for any other purpose which Owner, in it's
discretion, shall deem advisable.
19. Owner's Credit. The Manager shall not pledge the Owner's credit
without the Owner's prior consent except as may be in keeping with the terms and
scope of this agreement. The Manager shall not, in the name of the Owner, borrow
any money or execute any promissory note or other encumbrance without the prior
consent of the Owner.
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20. Travel Expense. Parties hereto agree that expenses of travel to and
from the property that is made by Management personnel and appointees for the
purpose of management business shall be paid by owner within 30 days from
completion of travel.
21. Liability/Indemnity. The Manager shall not be liable to Owner or to
any other person for any act or omission, negligent, tortious, or otherwise, of
the Manager or any agent or employee of the Manager or the Owner in the
performance of this agreement, except only in the case of fraud or gross
negligence of the Manager. The Owner hereby agrees to indemnify and hold
harmless the Manager from and against any liability, loss, damage, cost or
expense, (including attorney's fees) which might be incurred by or maintained
against the Manager by reason of any such act or omission, or from any other
cause arising out of the Manager's association with the Property.
23. Termination. Either party may terminate this agreement by giving 60
days notice of such termination to the other party. Such notices shall be in
written form and delivered to the other party at the following addresses:
___________________________________________________Owner
___________________________________________________Manager
24. Applicable Law. This agreement shall be governed by and construed
pursuant to the laws of the State of Texas.
25. Amendment. This agreement shall not be changed, amended or otherwise
modified except by another agreement in writing signed by Owner and Manager.
26. Assignment, Binding Effect. This agreement may not be assigned by
either party without the prior consent of the other party. This agreement shall
be binding upon and inure to the benefit of the respective parties hereto and
their heirs, personal representatives, successors and permitted assigns.
27. Supplemental Schedule. The Supplemental Schedule attached to this
agreement shall be deemed to be a part of this agreement for all purposes.
Agreed to and dated this_______day of ________, 199________
Manager Owner
Territorial Inns Management Company Inc.
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SUPPLEMENTAL SCHEDULE
This Supplemental Schedule is attached to the Territorial Inns
Management Co Inc. contract dated_________________________and is to be a part
thereof for all purposes.
Owner
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Address
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Name of Property
--------------------------------
Address of Property
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Term of Agreement:
Banking Institution for Owner's account (s)
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Minimum working funds balance in Manager's Accounts $
Management Fee: The Management fee to be paid to the Manager each month shall be
____ of the gross room revenue, as defined in the Management Contract.
Manager: Owner
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SCHEDULE OF TERMS OF AGREEMENTS
UNDER FORM OF PROPERTY MANAGEMENT AGREEMENT (EXHIBIT 10.2)
(1) Nendels Inn, Kennewick, WA
Effective date: January 1, 1994
Term: Terminable upon 60 days written notice
Management Fee: 2.5% of gross room revenue
(2) Colonial Motor Inn, Yakima, WA
Effective date: January 1, 1994
Term: January 1, 1994 to December 31, 1999
Management Fee: 5% of gross room revenue
(3) Village Inn, Cotulla, TX
Effective date: June 14, 1994
Term: June 14, 1994 to December 31, 1999
Management Fee: 5% of gross room revenue
(4) Nendels Inn, Dodge City, KS
Effective Date: April 29, 1996
Term: 5 years commencing April 29, 1996
Management Fee: 5% of gross room revenue
Additional provisions:
Additional paragraph in Section 3:
If the Property has a food and/or beverage operation, and the Owner
wishes to retain the Manager to conduct the operation of that business,
the management fee shall be calculated at the rate of 3% of the gross
food sales and 3% of the gross beverage sales. If the Owner has leased
such an operation to a third party, then the Manager shall receive 3% of
the lease amount monthly.
Property Rehabilitation:
If requested, the Manager agrees to plan, arrange for, order and oversee
installation of capital expense and rehabilitation at the property in
the amount of $50,000. per year. This service shall be included in the
management fee agreed to in separate paragraph of this agreement. If
such expenses exceed $50,000 in any given year the Manager will then be
paid 3% of the cost of any amount over $50,000. If additional staff is
needed for such installation, Owner agrees to pay salary and expenses
over and above the 3% named above.
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