EXHIBIT 10.3
AMENDED AND RESTATED CORPORATE SERVICES AGREEMENT
THIS AMENDED AND RESTATED CORPORATE SERVICES AGREEMENT (the "Agreement"),
dated as of January 24, 1996, amends and restates the Corporate Services
Agreement, dated as of November 22, 1994 (the "Original Agreement"), by and
among HFS Incorporated, a Delaware corporation formerly known as Hospitality
Franchise Systems, Inc. ("HFS") and National Lodging Corp., a Delaware
corporation formerly known as National Gaming Corp. ("NALC").
WHEREAS, pursuant to the Original Agreement, HFS provides NALC with certain
corporate support services, including, without limitation, executive services,
accounting services, management information systems services and employee
benefits administration; and
WHEREAS, the board of directors of NALC has determined that NALC's best
interests would be served by pursuing investments in the lodging industry; and
WHEREAS, in accordance with NALC's new investment strategy, the Board of
Directors of NALC has appointed and hired officers and employees to provide
certain corporate services that have been provided by HFS to NALC under the
Original Agreement; and
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and conditions hereinafter contained, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, capitalized terms
defined immediately after their use shall have the respective meanings thereby
provided and the following terms shall have the meanings set forth below (in
each case, such meaning to be equally applicable to both the singular and plural
forms of the term defined). In addition, capitalized terms that are not
otherwise defined in this Agreement shall have the meanings assigned to them in
the Transfer and Distribution Agreement, dated as of November 22, 1994, between
HFS and NALC (the "Distribution Agreement").
Accounting Services: general internal accounting services substantially of
the type provided by HFS to NALC immediately prior to the date of this
Agreement.
Administrative Services: general corporate administrative services
substantially of the type provided by HFS to NALC immediately prior to the date
of this Agreement.
Advisory Services: general advisory services in connection with all
business acquisitions, financings and other transactions by NALC, including,
without limitation, corporate or other acquisitions, mergers, consolidations,
joint ventures and similar transactions considered by NALC, including assistance
in site identification and selection, contract negotiation and analyses of and
advice regarding the financing and structuring of proposed acquisitions,
mergers, consolidations, joint ventures and other transactions, securities
offerings, borrowings and recapitalizations.
Change in Control: (i) during any period of not more than 24 months,
individuals who at the beginning of such period constituted NALC's Board of
Directors, together with any new directors (other than directors designated by
any third party (other than either of Chartwell Leisure Associates L.P. II
("Chartwell") or FSNL LLC ("FSNL") or their Affiliates) who have entered into an
agreement to effect a transaction of the type described in clause (ii) or (iii)
below) whose election by the Board of Directors or nomination for such election
was approved by a vote of at least a majority of the directors then still in
office who were directors at the beginning of such period or whose election or
nomination for election was previously so approved (other than approval given in
connection with an actual or threatened proxy or election contest), cease for
any reason to constitute at least a majority of NALC's Board of Directors; (ii)
beneficial ownership of 50% or more of NALC's common stock (or other securities
generally having the right to vote for the election of directors of NALC) shall
be acquired by, or sold, assigned or otherwise transferred to, directly or
indirectly (other than pursuant to a public offering), any third party or Group
(other than Chartwell or FSNL or their Affiliates), whether by sale or issuance
of common stock or otherwise; or (iii) NALC or any subsidiary of NALC shall
sell, assign or otherwise transfer to any third party or Group (other than
Chartwell or FSNL or their Affiliates), directly or indirectly, assets
(including stock or other securities of subsidiaries) having a fair market
value, book value or earning power of 50% or more of the assets of NALC and its
subsidiaries taken as a whole.
Corporate Services: general corporate support services consisting of the
Accounting Services, Administrative Services, Employee Benefits Services,
Executive Services, Financial Reporting Services, MIS Services and Treasury
Services.
Employee Benefits Services: general administration services substantially
of the type provided by HFS to NALC immediately prior to the date of this
Agreement with respect to employee benefit and compensation plans, programs and
arrangements.
Executive Services: services to be provided by HFS's executive officers and
other senior employees in connection with the Corporate Services to be provided
to NALC hereunder.
Financial Reporting Services: financial reporting services substantially of
the type provided by HFS to NALC immediately prior to the date of this
Agreement.
Group: two or more persons who agree to act together for purposes of
holding or acquiring securities, assets or control of NALC; provided, however,
that the shareholders of a publicly-held company that is merged with or into
NALC (or a subsidiary thereof) in a transaction approved by NALC's Board of
Directors shall not be a Group with respect to any NALC securities received by
such shareholders in connection with such transaction.
MIS Services: general management information processing services
substantially of the type provided by HFS with respect to the Transferred
Business prior to the Effective Date.
Treasury Services: general treasury and cashier services substantially of
the type provided by HFS to NALC immediately prior to the date of this
Agreement.
ARTICLE II
PROVISION OF ADVISORY SERVICES
Section 2.1 Engagement of HFS. Subject to the terms and conditions of this
Agreement, NALC hereby engages HFS to provide the Advisory Services during the
term of this Agreement and HFS hereby agrees to provide the Advisory Services
during the term of this Agreement.
Section 2.2 Cooperation. NALC shall at all times during the term of this
Agreement fully and actively cooperate with HFS in connection with HFS's
performance of the Advisory Services.
ARTICLE III
PROVISION OF CORPORATE SERVICES
Section 3.1 Corporate Services to be Provided. Through September 30, 1996,
HFS agrees to provide any or all of the Corporate Services that NALC reasonably
requests HFS to perform. All such requests to perform the Corporate Services
shall be made by NALC in writing.
Section 3.2 Limitations on Corporate Services to be Provided. In providing
Corporate Services hereunder, HFS and NALC agree that, except as otherwise
provided in Section 3.3 of this Agreement, HFS shall not be required to provide
Corporate Services to the extent that the nature or scope of such Corporate
Services is greater than that which was provided by HFS to NALC immediately
prior to the date of this Agreement.
Section 3.3 Cooperation. NALC shall at all times during the term of this
Agreement fully and actively cooperate with HFS in connection with HFS's
performance of the Corporate Services.
ARTICLE IV
FEES AND PAYMENT
4.1 Corporate Services Fee; Payment. In consideration of the Advisory
Services and Corporate Services to be provided by HFS to NALC hereunder, NALC
shall pay to HFS an annual fee (the "Corporate Services Fee") in an amount equal
to $1,500,000. The Corporate Services Fee shall be payable in advance in equal
quarterly installments.
Section 4.2 Expense and Tax Reimbursement. NALC agrees to promptly
reimburse HFS for (i) all out-of-pocket costs and expenses (other than employee
compensation and benefits) incurred by HFS in connection with providing
Corporate Services hereunder and (ii) all federal, state and local taxes,
excises or other charges (other than income taxes) that HFS becomes obligated to
pay by reason of performing any Corporate Services hereunder. NALC's obligation
to reimburse HFS for such out-of-pocket costs and expenses and taxes shall be in
addition to its obligation to pay the Corporate Services Fee. NALC shall
reimburse HFS for such out-of- pocket costs and expenses and taxes promptly upon
receipt of HFS's invoice therefor.
ARTICLE V
TERM: TERMINATION
Section 5.1 Term of Agreement. Subject to earlier termination pursuant to
Section 5.2 or 5.3 below, this Agreement shall continue in full force and effect
until the twenty-fifth anniversary of the Effective Date. The provisions of
Sections 6.3, 6.4 and 6.5 of this Agreement shall survive the expiration or
termination of this Agreement in perpetuity.
Section 5.2 Termination by HFS. HFS shall have the right to terminate this
Agreement at any time, without penalty or further obligation of HFS to NALC
hereunder (other than any obligation arising out of a breach of this Agreement
by HFS) and without prejudice to any accrued rights of HFS hereunder (including,
without limitation, any right to damages arising out of a breach of this
Agreement by NALC and any right to fees and/or expenses in respect of Advisory
Services and Corporate Services provided by HFS prior to such termination):
(a) upon ninety days' written notice to NALC;
(b) immediately upon a Change in Control;
(c) upon thirty days' written notice to NALC if NALC is in material breach
of any of its obligations hereunder, unless NALC remedies such breach within
such thirty-day period or, in the case of a breach that cannot reasonably be
remedied within a thirty-day period, NALC initiates and diligently pursues
action that can reasonably be expected to remedy such breach within a reasonable
period of time; or
(d) immediately if NALC becomes bankrupt or insolvent or makes an
assignment for the benefit of creditors, or if a receiver is appointed to take
charge of NALC's business.
Section 5.3 Termination by NALC. NALC shall have the right to terminate
this Agreement at any time, without penalty or further obligation of NALC to HFS
hereunder (other than any obligation arising out of a breach of this Agreement
by NALC or any obligation to pay fees and/or expenses to HFS with respect to
services provided by HFS prior to such termination) and without prejudice to any
accrued rights of NALC hereunder (including, without limitation, any right to
damages arising out of a breach of this Agreement by HFS):
(a) upon thirty days' written notice to HFS if HFS is in material breach of
any of its obligations, unless HFS remedies such breach within such thirty-day
period or, in the case of a breach that cannot reasonably be remedied within a
thirty-day period, HFS initiates and diligently pursues action that can
reasonably be expected to remedy such breach within a reasonable period of time;
or
(b) immediately if HFS becomes bankrupt or insolvent or makes an assignment
for the benefit of creditors, or if a receiver is appointed to take charge of
HFS's business.
ARTICLE VI
CERTAIN ADDITIONAL MATTERS
6.1 Standard of Performance.
(a) In all material respects, HFS will perform the Advisory Services and
the Corporate Services in a competent manner, in accordance with applicable
statutes, rules and regulations of governmental and regulatory authorities
having jurisdiction. HFS shall be presumed to have met the standard of
performance required by this Section 6.1(a) if it performs such services in
accordance with its standard practices and procedures.
(b) The Advisory Services and the Corporate Services shall be provided at
HFS's offices in Parsippany, New Jersey or at such other location or locations
as HFS may from time to time deem appropriate.
(c) Performance of the Advisory Services and the Corporate Services shall
include the assignment on a full or part-time basis of such executive,
professional, managerial, administrative, technical and clerical employees of
HFS as shall reasonably be deemed necessary by HFS.
Section 6.2 Relationship of the Parties. In performing the Advisory
Services and the Corporate Services, HFS shall at all times be an independent
contractor, free to exercise its discretion and independent judgment as to the
methods and means of performance hereunder. Nothing herein is intended, nor
shall anything herein be construed or applied, to create a principal/agent or
employer/employee relationship between HFS and NALC.
Section 6.3 Confidentiality. HFS and NALC shall hold, and shall cause their
respective officers, employees, agents, consultants and advisors to hold, in
strict confidence unless compelled to disclose by judicial or administrative
process or, in the opinion of independent legal counsel, by other requirements
of law, all confidential or proprietary information concerning the other party
or any of its Affiliates and furnished by such other party, its Affiliates or
their respective representatives in connection with this Agreement (except to
the extent that such information can be shown to have been (a) in the public
domain through no fault of the party to whom such information was provided or
(b) later lawfully acquired from a third party not bound by an obligation or
duty of confidentiality to HFS (or any of its Affiliates) or NALC (or any of its
Affiliates), as the case may be). Each party shall be deemed to have satisfied
its obligations under this Section 6.3 if it exercises the same care with
respect to such confidential or proprietary information as it takes to preserve
the confidentiality of its own similar information.
Section 6.4 Indemnification.
(a) HFS shall indemnify NALC against any claim or liability for wages of
HFS personnel engaged in the performance of Advisory Services or Corporate
Services or for taxes or related charges imposed upon such HFS personnel or upon
their compensation, and against any claim or liability for failure by HFS to
withhold any such taxes or charges from such compensation.
(b) NALC agrees to indemnify, defend and hold harmless HFS, its
subsidiaries and Affiliates and their respective directors, officers, employees,
agents and representatives against any and all Losses incurred by any of them
and arising out of (i) the performance by HFS of Advisory Services or Corporate
Services, except to the extent that such Losses result from the gross negligence
or willful misconduct of HFS or (ii) the breach by NALC of any of its
obligations under this Agreement.
(c) HFS agrees to indemnify, defend and hold harmless NALC, its
subsidiaries and Affiliates and their respective directors, officers, employees,
agents and representatives against any and all Losses incurred by any of them
and arising out of the breach by HFS of any of its obligations under this
Agreement.
Section 6.5 Disclaimer of Warranties; Limitation of Liability.
(a) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREE MENT, HFS MAKES NO
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, ANY REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, ARISING OUT OF THIS AGREEMENT OR THE SERVICES TO BE
PROVIDED HEREUNDER.
(b) In no event shall HFS or NALC be liable for any indirect, special or
consequential damages arising out of or in connection with this Agreement.
Section 6.6 Excuses for Nonperformance. If performance by HFS of any of the
Advisory Services or Corporate Services is prevented, restricted, or interfered
with in whole or in part by reason of any event or cause whatsoever beyond the
reasonable control of HFS and NALC, then in any such event, HFS shall be excused
from such performance to the extent of such prevention, restriction or
interference, and the Corporate Services Fees payable to HFS by NALC in respect
of such Advisory Services or Corporate Services shall be reduced
proportionately.
Section 6.7 Subcontracting. HFS will not subcontract to any third party the
performance of any Advisory Services or Corporate Services without NALC's prior
consent, which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, HFS shall be permitted to engage, in connection with the performance
of the Advisory Services and the Corporate Services hereunder, such attorneys,
independent accountants, financial advisors and consultants as HFS may, from
time to time, deem necessary or appropriate.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Complete Agreement. This Agreement shall constitute the entire
agreement between HFS and NALC with respect to the subject matter hereof and
shall supersede all previous negotiations, commitments, writings and
understandings with respect thereto.
Section 7.2 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
(regardless of the laws that might otherwise govern under applicable principles
of conflicts law) as to all matters, including, without limitation, matters of
validity, construction, effect, performance and remedies.
Section 7.3 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and, unless otherwise
provided herein, shall be deemed to have been duly given (i) on the date of
service if served personally on the party to whom notice is given, (ii) on the
day of transmission if sent via facsimile transmission to the facsimile number
given below, provided telephonic confirmation of receipt is obtained promptly
after completion of transmission, (iii) on the business day after delivery to an
overnight courier service, provided that receipt of delivery to the party to
whom notice is to be given has been confirmed, or (iv) on the fifth day after
mailing, provided receipt of delivery is confirmed, if mailed to the party to
whom notice is to be given by first class mail, registered or certified, postage
prepaid, properly addressed and return-receipt requested, to HFS or NALC, as the
case may be, as follows:
If to HFS:
Hospital Franchise Systems, Inc.
339 Jefferson Road
Parsippany, New Jersey 07054
Attn: General Counsel
Fax No.: (201) 428-5269
If to NALC:
National Lodging Corp.
605 Third Avenue
New York, New York 10158
Attn: General Counsel
Fax No.: (212) 867-4644
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attn: Martin L. Edelman
Fax No.: (212) 856-7808
Any party may change its address or fax number by giving the other party written
notice of its new address in the manner set forth above.
Section 7.4 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of the parties.
Section 7.5 Successors and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party without the prior written consent of the other party.
Section 7.6 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and is not intended to confer any rights or
remedies upon any person other than the parties hereto, except to the extent
that any of the persons identified in Section 7.4 may be entitled to
indemnification hereunder.
Section 7.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
Section 7.8 Interpretation. The Article and Section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, the term "Person"
shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
Section 7.9 Legal Enforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision or any other provision hereof in any other
jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the day and year first written above
HFS INCORPORATED
By:
Name:
Title:
NATIONAL LODGING CORP.
By:
Name:
Title: