OPERATING AGREEMENT
BY AND BETWEEN
AMERICAN LEISURE HOSPITALTY GROUP, INC. A FLORIDA CORPORATION,
AS "MASTER MANAGER"
AND
SONESTA ORLANDO, INC., A FLORIDA CORPORATION, AS "OPERATOR"
SONESTA ORLANDO AT TIERRA DEL SOL RESORT
American Leisure Hospitality Group, Inc.
Operating Agreement
Sonesta Orlando, Inc.
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TABLE OF CONTENTS
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Article 1 Definitions Page 4
Article 2 Appointment of Operator Page 19
Article 3 Operating Standard; Maintenance Page 24
Article 4 Rental Program Page 36
Article 5 Termination Page 39
Article 6 Compensation Page 43
Article 7 Damage and Destruction Page 45
Article 8 Condemnation Page 46
Article 9 Insurance Page 47
Article 10 Indemnification Page 48
Article 11 Master Manager's and Operator's Covenants Page 52
Article 12 Americans with Disabilities Act Page 59
Article 13 SONESTA Proprietary Marks Page 57
Article 14 Arbitration Page 60
Article 15 General Provisions Page 61
THIS OPERATING AGREEMENT (this "Agreement") is made as of January 29, 2005,
by and between AMERICAN LEISURE HOSPITALITY GROUP, INC., a Florida corporation
with its main office located in Orlando, Florida ("Master Manager") and SONESTA
ORLANDO, INC., a Florida corporation with its main office at c/o Sonesta
International Hotels Corporation, in Boston, Massachusetts ("Operator").
R E C I T A L S:
WHEREAS, Master Manager is in contract(1) with Tierra Del Sol Resort, Inc.
("Owner"), the party that holds fee simple title to that certain real property
located in Davenport, Florida, totaling approximately 120+/- acres, which is
legally described in Exhibit "A" attached hereto (the "Land") to provide current
and ongoing services during and after the construction of the Tierra Del Sol
Resort ("Resort"); and
WHEREAS, Owner has contracted with AMERICAN LEISURE REAL ESTATE GROUP, INC.
("Developer") to construct a full-service resort upon the Land, as more
particularly described in Exhibit "B": Resort Description; and
WHEREAS, the Resort will contain Associations appertaining to the owners of
commercial and residential properties within the Resort that detail the various
rights, responsibilities and economic contributions to the maintenance and
upkeep of the Resort Elements within the control of each such association as
same are defined and described in the body of this Agreement and the
declarations that empower them. All such associations are referred to herein
collectively as Associations;
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(1) Master Manager's authority to engage the Operator for the Term of this
Agreement is based upon the rights Master Manager has or will obtain from the
entities that own or control the assets that are to be used in the operation of
the hospitality business described herein. Notwithstanding the forgoing, Master
Manager discloses that it does not intend to acquire agreements with the various
owners' associations for longer than 3 years (or less) at any one time. Were any
such contract not to be renewed or extended, the resulting lack of a management
relationship with a homeowners association , or all of them, would not impair
Master Manager or Operator as to their respective performance(s) under this
Agreement. All contracts permit the sub-contracting of its duties and
responsibilities. Renewal of such contracts will be based on the desires and
intentions of the parties to any contract.
WHEREAS, Master Manager will, by appropriate contracts, be the initial
manager of the entirety(2) of the Resort including but not limited to those
assets and services controlled or delegated by the various Associations and
individual owners of property within the Resort; and
WHEREAS, Master Manager desires to subcontract and assign certain of its
management duties and responsibilities regarding the Resort to Operator, and
Operator desires to assume and perform such duties and responsibilities; and
WHEREAS, Master Manager and Operator further desire to enter into this
Agreement to establish the terms and scope of the responsibilities of the
Parties, the compensation for all services rendered and the division (and the
method of such division) of the net revenues afforded by this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained in this Agreement and other good and valuable consideration,
the receipt of which is hereby acknowledged, the Parties agree as follows:
ARTICLE I.
DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the following
terms shall have the meanings assigned to them herein, unless the context
otherwise indicates:
1.1 "Accounting Standards" shall mean generally accepted accounting
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principles, consistently applied. Such standards and procedures are sometimes
referred to herein as "GAAP".
1.2 "ADA" shall have the meaning set forth in SECTION 12.1.
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1.3 "ADA Compliant Units" shall have the meaning set forth in SECTION 12.2.
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1.4 "Affiliate" shall mean any person or entity that directly or indirectly,
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through one or more intermediaries, controls, is controlled by or is under
common control with another person or entity. The term "control" shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a person, whether through the ownership of voting
securities, by contract or otherwise, and shall in any event include the
ownership or power to vote a minimum of fifty percent (50%) or more of the
outstanding equity interest of such other person.
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(2) Master Manager is a controlled subsidiary of American Leisure Holdings,
Inc., the public company that owns and controls Owner. It shall receive the
initial contracts from all Associations and the owners of the Resort Commercial
Lots.
1.5 "Annual Plan" shall mean the forecast of Resort Operations on a Fiscal
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Year basis, which shall include the information referenced in SCHEDULE 1.5.
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1.6 "Associations" Associations shall mean the Homeowners Association or
HOA, the various corporate owners' associations of the condominiums and town
home neighborhoods within the Resort and the Master owners corporate entity, all
of which have specific authority and jurisdiction defined by their charters,
by-laws, constituencies and real property assets.
1.7 "Base Management and Marketing Fee" shall have the meaning set forth in
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SECTION 6.1.1.
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1.8 "Budget Guaranty" shall have the meaning set forth in SECTION 3.10.
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1.9 "Capital Budget" shall mean an estimate of the Capital Expenditures to
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be made for replacement of and additions to Furniture, Fixtures and Equipment
and for improvements and renovations to the Resort on a Fiscal Year basis.
1.10 "Capital Expenditures" shall mean any expenditure that would be
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capitalized or amortized in accordance with the Accounting Standards.
1.11 "CDD" shall mean WESTRIDGE COMMUNITY DEVELOPMENT DISTRICT, an existing
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community development district, which, as a special taxing district, will
finance, construct, purchase and own the CDD Facilities and will assess all
owners of real property within the District, including the Project, for their
share of the cost of the capital installation of the CDD Facilities and the
maintenance, operation and insurance thereof.
1.12 "CDD Board" shall mean the board of directors of the CDD, which shall
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be the governing body of the CDD.
1.13 "CDD Facilities" shall mean the facilities within the Project that will
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be financed, constructed and owned by the CDD as depicted on "Exhibit C".
1.14 "Claimant" shall have the meaning set forth in SECTION 4.5.
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1.15 "Claim" shall have the meaning set forth in SECTION 10.1.
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1.16 "Clubhouse" shall mean and refer to the 84,000 +/- square foot
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luxury clubhouse that will include, among other things, the front office
facilities, bars and restaurants, an exercise facility and spa, offices and
storage facilities.
1.17 "Commencement Date" shall mean the date upon which Operator
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assumes the responsibilities for the full business operation of the Resort under
this Agreement. The following items, a-g, comprise the conditions precedent to
the declaration by Master Manager of the Commencement Date.
(a) Operator has reviewed and accepted: (i) the Master Declaration,
(ii) the initial proposed Master Association Budget and Master Association
Assessments, (iii) the initial proposed Resort Services Budget and Resort
Services Assessments, (iv) the Prospectus for the Condominium, including,
without limitation, the Declaration of Condominium, (v) the initial proposed
Condominium Budget and Condominium Assessments, (vi) any changes to the form
Rental Management Agreement attached hereto as "Exhibit D".
(b) Operator has received a Certificate of Substantial Completion (AIA
Document G704) signed by Owner's architect, certifying that Phase One of the
Resort has been constructed and completed in substantial compliance with the
Plans and Specifications accepted by Operator, and in accordance with all
applicable laws, ordinances, rules and regulations; and
(c) A temporary or final certificate of occupancy has been issued for Phase
One of the Resort and Resort Services Commercial Lots and all parties who are
required to be licensed for all business activities to be conducted at the
Resort have obtained the required licenses and permits; and
(d) The initial Furniture, Fixtures and Equipment have been provided and
installed in Phase One of the Resort (including the Resort Services Commercial
Lots); and
(e) There are at least one hundred fifty (150) Participating Units in the
Rental Program that contain the initial Furniture, Fixtures and Equipment and in
all respects are ready for guest use; and
(f) Phase One of the Resort (as defined in 'g', below) is in all respects
ready for occupancy and full business operation by Operator, except for minor
details (i.e. "punch list" items) which, in Operator's reasonable judgment, do
not materially interfere with the full normal operations of the Resort.
(g) The following elements of Phase One of the Resort, defined for purposes
of this Agreement as: roadways and landscaping of the roadways (including the
roadways to and from US 27), pool, accessories and pool decks, food service
facilities in the pool area, Clubhouse, including the first floor office
facilities for Operator, Resort exterior paths and lighting therefore, parking
areas with sufficient spaces to support the buildings for which certificates of
occupancy are sought and acquired, water drainage, retention, distribution and
irrigation and the Resort signage, are completed but for punch list items, and
are in all respects ready for guest use.
Master Manager and Operator shall make scheduled weekly inspections
starting 8 weeks from the date that Phase One of the Resort is expected to be
completed based on notification of same from the Owner ("Owner's Projected
Completion Date"). Master Manager shall be responsible for procuring the
Owner's Projected Completion Date. Upon each inspection, Master Manager and
Operator shall compile a list of incomplete items and submit it to Owner for a
more specific completion schedule.
When the conditions precedent to the occurrence of the Commencement Date
have been met, Master Manager shall provide official written notice to Operator
that the Commencement Date shall occur 7 days from the date of said official
notice.
1.18 "Condominium" shall mean a residential condominium that will be
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constructed and established by the Declarant thereof, upon portions of the Land
that will be governed by the Declaration of Condominium and operated by the
Condominium Association formed for that purpose. The Costa Del Sol Condominium
at Tierra Del Sol, the first of such Condominiums, shall consist of One Hundred
Eighty (180) residential condominium units located within Five (5) separate
freestanding buildings.
1.19 "Condominium Association" shall mean a Florida not-for-profit
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corporation comprised of the Condominium Unit Owners for the purpose of
operating the Condominium such as the Association entitled ▇▇▇▇▇ ▇▇▇▇▇▇ At
Tierra Del Sol Condominium Association, Inc.
1.20 "Condominium Association Dues And Assessments" shall mean the
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assessments to be imposed by a Condominium Association to pay for the costs and
expenses of maintaining, operating, insuring and replacing the property owned
and or operated by a Condominium Association as well as the costs allocated to
the Unit Owners for the properties and services of the HOA and the RSP.
1.21 "Condominium Association Budget" shall mean the budget to be prepared
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annually by a Condominium Association with respect to the costs and expenses of
maintaining, operating, insuring and replacing the property owned and/or
operated by a Condominium Association.
1.22 "Condominium Unit" shall mean a condominium unit within a Condominium.
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1.23 "Condominium Unit Owner(s)" shall mean the record owner(s) of legal
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title to a Condominium Unit.
1.24 "Confidential Information" shall have the meaning set forth in SECTION
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3.9.
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1.25 "Construction Defects" shall have the meaning set forth in SECTION
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10.1.
1.26 "Consumable Supplies" shall mean office supplies, cleaning supplies,
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laundry and valet supplies, engineering supplies, guest supplies, collateral and
such other supplies as are consumed customarily on a daily basis with respect to
the Resort Operations, together with food and beverages that are to be offered
for sale to guests and to the public.
1.27 "Declaration of Condominium" shall mean the Declaration of Condominium,
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which will establish the Condominium such as the Condominium to be known as
"▇▇▇▇▇ ▇▇▇▇▇▇ AT TIERRA DEL SOL, A CONDOMINIUM.
1.28 "Effective Date" shall mean the date that the last of Owner or Operator
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executes this Agreement and delivers it to the other party.
1.29 "Environmental Law" shall mean those laws of the State of Florida and
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its authorized agencies and the United States of America and its authorized
agencies and the regulations, orders and rules promulgated or issued by any of
the forgoing that regulate the use or condition of the Land.
1.30 "Equipment Lease" shall mean any lease or rental agreement for
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Furniture, Fixtures and Equipment used in the Resort and/or in connection with
the Resort Operations hereunder that has been approved by Master Manager.
1.31 "Expenses" shall mean any and all expenses paid or incurred by Operator
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or, to the extent specifically authorized by this Agreement, Master Manager in
connection with the operation of the Resort, which are to be included in
determining Net Income, as determined in accordance with the Uniform System of
Accounts on the accrual basis in accordance with generally accepted accounting
principles consistently applied, except that Expenses shall not include income
taxes, depreciation and amortization, interest, personal property and equipment
lease payments on leases over 4 years in original length or lease payments for
any single item of equipment over $40,000 in retail value. Lease payments as
Expenses shall not exceed a maximum per year of $100,000.00. Without limiting
the generality of the foregoing, Expenses shall include the following: (a) the
Base Management and Licensing Fee, (b) any Marketing and Licensing Fee, (c)
out-of-pocket expenses incurred specifically for, on account of or in connection
with the operation of the Resort, including reasonable travel expenses of
employees and executives of any of the Sonesta Group, consistent with the Annual
Plan, (d) commission payments made to personnel of the Sonesta Group's regional
sales offices for group reservations made for the Resort (currently at 5% of
revenues), (e) a reservation fee to the Sonesta Group for every guestroom
booking, which is made through the Sonesta Group's reservations system
(currently at $16 per guestroom reservation), (f) Taxes (as defined in Section
6.4), (g) property and liability insurance premiums with respect to the Resort
and Resort Operations, (h) payments to a "shopping" service as part of a program
of quality assurance, (i) amounts contributed and/or credited to the FF&E
Reserve Accounts for Resort Services Commercial Lots, (j) payments to Operator
for services provided to the Resort by the Sonesta Group's in-house executives
and/or staff, as permitted herein, including payments of purchasing fees
(pursuant to Article 11.8), fees for training, public relations, and such other
services which are provided by Operator on an arms length basis, and which are
provided for in the Annual Plan (k) amounts paid to Unit Owners in the Rental
Program pursuant to their Rental Management Agreements, (l) Owner's share of any
and all Association assessments, Shared Services Assessments and assessments
imposed by the CDD and the rental payments made on account of the leases of the
Resort Services Commercial Lots by Master Manager from the owners of said
properties in an amount equal to Ten Per Cent (10%) of the total capitalized
cost of such a Commercial Lot or property per year, for twenty (20) years(3).
The following shall not be treated as Expenses if paid out of the FF&E Reserve
Account: (1) payment for the design fees, if and when rendered specifically to
the Resort, and (2) a ▇▇▇▇-up on sales to the Resort by Operator or its
purchasing subsidiary or affiliate, presently seven percent (7%), on such
capital items as are normally purchased by Operator or such purchasing
subsidiary or affiliate for use by hotels or resorts in the Sonesta Group.
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(3) Master Manager's lease payment obligations are set forth on Exhibit E.
1.32 "FF&E Reserve" shall mean a book account established by Master Manager
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and Operator to fund expenditures for the replacement of Furniture, Fixtures and
Equipment and other Capital Expenditures for the Resort, excluding the Units,
and further described in SECTIONS 3.5 AND 3.6.
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1.33 "Fiscal Month" shall mean a calendar month.
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1.34 "Fiscal Year" shall mean a calendar year.
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1.35 "Force Majeure" shall mean acts of God, war, insurrection, civil
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commotion, riots, strikes, lockouts, embargoes, shortages of labor or materials
specified or reasonably necessary in connection with the refurbishment,
equipping, ownership or management of the Resort, fire, acts of terrorism,
failure of any applicable governmental authority to issue required governmental
permits (not applicable to the party at fault , if any, for the failure to
acquire the governmental permit) other than matters caused by economic
conditions, or any other similar event beyond a party's control or commercially
reasonable duty to plan for that prevents that party from performing its
obligations under this Agreement.
1.36 "Fractional Year" shall mean and refer to the period from the
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Commencement Date to and including the last day of the Fiscal Year within which
such Commencement Date shall occur and, if this Agreement shall terminate upon
any date other than the last day of the Fiscal Year, the period from the first
day of the Fiscal Year during which the Term terminates to and including the
date of such termination.
1.37 "Furniture, Fixtures, and Equipment" shall mean all furniture,
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fixtures, furnishings and specialized equipment and systems, including Operating
Equipment necessary as of the Commencement Date, in the judgment of Operator,
necessary or customary (now or in the future) with respect to the Resort
Operations, but excluding furniture, fixtures and equipment that are used in
Participating Units, or is to be supplied by sub-tenants or other parties
pursuant to agreements with such other parties, in accordance with the terms of
this Agreement, including, but not limited to, all equipment required for the
operation of housekeeping, kitchens, laundries, restaurants and bars, and other
equipment, such as signs, carpets, drapes, shades, tapestries, pictures, art
work, chairs, desks, tables, sofas, wall coverings, televisions, radios,
intercoms, vehicles, spas, exercise equipment, pool furniture, recreational
equipment, telephone systems, A/V equipment, sound and security systems, on-site
computer property management systems, office furniture, equipment and machinery
and designer fees incurred with the reasonable approval of Master Manager and
Operator after the Effective Date of this Agreement.
1.38 "Gross Rental Revenues" shall mean all rental revenues derived from the
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rental of Participating Units as part of the Rental Program, excluding sales,
county, tourist, room and all other taxes collected in such room rentals.
1.39 "Gross Revenues" during any period shall mean any and all revenues,
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fees or income of any kind (net of allowances and returns) properly accrued
during such period and derived, directly or indirectly, from the Resort during
such period, including, without limitation, (i) the Gross Rental Revenues during
such period from all rooms; (ii) all revenues derived from other operating
departments, including but not limited to food and beverage; and (iii) revenues
from Resort facilities and services for which a charge is imposed upon the
customer on a per-use basis, including without limitation admission fees to
attractions within the Resort operated by staff that report to Operator. There
shall be excluded in determining "Gross Revenues" for any period: (a) gross
receipts of any commercial tenant, subtenant or concessionaire, (b) sales,
occupancy and excise taxes on transient rentals of rooms, meals or services and
any other taxes collected from customers of the Resort, and (c) proceeds from
the sales of Condominium Units and Town Homes and any Timeshare or Vacation Club
sales therein Notwithstanding any of the forgoing, for purposes of calculating
Operator's Base Management and Marketing Fee there shall be excluded from Gross
Revenues six per cent (6%) of any departmental revenue if the Net Operating
Profit from the department or sub-department generating said revenue is less
than 3.0% of said revenue.
1.40 "Hazardous Substances" shall have the meaning set forth in the laws,
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regulations, rules and orders promulgated under the laws described in Section
1.29.
1.41 "Incentive Share" shall have the meaning set forth in Section 6.1.2.
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1.42 "Independent Auditor" shall mean independent certified public
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accountants selected by Operator from time to time and approved by Master
Manager, such approval not to be unreasonably withheld or delayed. Initially,
the Independent Auditor shall be jointly decided.
1.43 "Land" shall mean the real property upon which the Project is to be
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constructed, which land is legally described on the attached EXHIBIT "A".
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1.44 "Licenses" shall have the meaning set forth in SECTION 3.3.
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1.45 "Management and Licensing Fee" shall have the meaning set forth in
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SECTION 4.1.
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1.46 "Master Declaration" shall mean the "Declaration of Covenants,
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Restrictions And Easements for Tierra del Sol" to be recorded in the Public
Records of Polk County, Florida, which shall impose upon all current and future
owners of any portion of the Land and/or improvements thereon certain
conditions, covenants, restrictions, easements and assessment obligations
designed to preserve the value and conformity of the community and to provide a
mechanism for charging and collecting funds required to maintain, operate and
insure multiple components of the community and enable it to be operated as an
integrated resort.
1.47 "Master Association" shall mean the not-for-profit property owners'
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association to be created by the Master Declaration, which shall be known as
TIERRA DEL SOL OWNERS' ASSOCIATION, INC., and which shall have the right and
obligation, as set forth in the Master Declaration, to impose assessments
against all of the owners of the of any portion of the Land encumbered by the
Master Declaration (including, without limitation, the Condominium Unit Owners,
and Town Home Owners, and owner of the Resort Services Commercial Lots), for
their share of the costs and expenses of maintaining, operating, replacing and
insuring, and providing services in connection with, all of the property owned
and/or operated by the Master Association.
1.48 "Master Association Dues Or Assessments" shall mean the assessments to
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be imposed by the Master Association to pay for the costs and expenses of
maintaining, operating and insuring the property owned, used, leased or operated
by the Master Association and its members.
1.49 "Master Association Budget" shall mean the budget to be prepared
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annually by the Master Association with respect to the costs and expenses of
maintaining, operating, insuring the property owned and/or operated by the
Master Association.
1.50 "Net Operating Profit" shall mean for any period the amount by which
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Gross Revenues exceed expenses as realized by Master Manager from all Resort
sources, as determined by GAAP.
1.51 "Non-Rooms Gross Revenue" shall mean Gross Revenues minus Gross Rental
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Revenues.
1.52 "Operating Equipment" shall mean chinaware, glassware, linens,
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silverware, utensils and other items of a like or similar nature used in the
Resort Operations, which shall be selected by Operator and subject to the
approval of Master Manager
1.53 "Operating Standard" shall have the meaning set forth in SECTION 3.1.
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1.54 "Optional Services" shall mean the optional, Resort-related services,
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if any, that may be provided by the Resort operation to those Resort guests,
owners of and guests in Condominium Units and Town Homes requesting such
services for a fee per service to be established from time to time by Master
Manager and Operator.
1.55 "Optional Services Agreements" shall mean those agreements, if any,
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executed by and between Master Manager and a Condominium Unit Owner of a
Condominium Unit or Town Home setting forth the terms and conditions upon which
the Resort operation may provide Optional Services upon request and for a fee to
be established from time to time by Master Manager.
1.56 "Owner" refers to a private entity (or multiple entities) that will own
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the Clubhouse, including but not limited to the front desk, lobby,
back-of-the-house, main pools and pool deck, hotel bars and restaurants, fitness
center and other critical components (such as any profit center) of the Resort
(referred to in this draft as the "Resort Services Commercial Lots") and that
these components will not be owned by any property owners' Association or CDD.
1.57 "Participating Condominium Unit" shall mean a Condominium Unit that is
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participating at the time in question in the Rental Program.
1.58 "Participating Town Home" shall mean a Town Home that is participating
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at the time in question in the Rental Program.
1.59 "Participating Units" shall mean, collectively, Participating
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Condominium Units and Participating Town Homes.
1.60 "Participating Owner" shall mean an owner of a Participating
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Condominium Unit or a Participating Town Home.
1.61 "Pre-Opening Budget" shall mean the budget to be prepared by the
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Operator and submitted to and approved by Master Manager to cover the period
between execution hereof through the Commencement Date (the "Pre-Opening
Period"). Operator shall deliver this budget not later than eight (8) months
prior to the anticipated Commencement Date, which sets forth the estimated costs
and expenses to be incurred in opening the Resort and operating for the first
thirty (30) days, as set forth in SECTION 11.5.
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1.62 "Pre-Opening Expenses" shall mean all costs and expenses included in
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the Pre-Opening Budget and the Pre-Opening Agreement and incurred by Operator in
connection with preparing the Resort for business operation including without
limitation those for staffing the Resort, advertising, promotion, literature,
opening ceremonies, and travel and business entertainment, whether incurred
prior to or concurrently with the beginning of business operation of the Resort.
Pre-Opening Expenses shall also include payments to be made to Operator for the
services of its employees, if and when rendered with the prior approval of
Master Manager in connection with the opening of the Resort. All Pre-Opening
Expenses shall be in accordance with the Pre-Opening Budget, which shall be
reviewed and approved by Master Manager. Pre-Opening Expenses shall include a
fee to Operator equal to $24,000.00 for the month of February, 2005 and an
amount equal to $8,000.00 per month after February, 2005 through the end of the
Pre-Opening Period. Operator shall invoice for such fees and any expenses
incurred pursuant thereto. Invoices shall be paid on a 30-day cycle.
1.63 "Project" shall mean the Land and all improvements now existing or
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hereafter constructed on the Land, including, without limitation: (a) the
infrastructure, roadways, entrance feature and other improvements to be owned
and governed by the CDD, (b) the Condominium Units and other improvements that
are or will be part of a Condominium and governed by a Condominium Association,
(c) the Town Homes and community improvements that will be governed by the
Master Association, (d) the Resort Services Commercial Lots, (e) the Resort
Facilities and (f) all other improvements now or hereafter constructed upon the
Land.
1.64 "Quarterly Accounting Period" shall mean each calendar quarter or any
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portion thereof, if applicable, during the Term of this Agreement.
1.65 "Rental Management Agreement and Unit Management Agreement: "Rental
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Management Agreement" shall mean a written agreement between Master Manager and
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Operator detailing the rights and responsibilities of the parties in the
operation of the Rental Program. "Unit Management Agreement" shall mean that
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written agreement between Master Manager and a Participating Owner that may
authorize and direct Master Manager to include the Participating Owner's
Condominium Unit or Town Home in the Rental Program for rental to guests of the
Resort (for a daily or extended period of time) as part of the Resort
Operations. The initial form of Rental Management Agreement approved by Master
Manager and Operator is attached hereto as EXHIBITS D-1 AND D-2.
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1.66 "Rental Program" shall mean the voluntary rental program to be offered
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to all Condominium Unit Owners and Town Home Owners, pursuant to which Operator,
as agent for Master Manager, will offer for rent the Participating Units to the
public to be guests of the Resort (for a daily or extended period of time) as
part of the Resort Operations in accordance with the terms and conditions set
forth in the Rental Management Agreement between Master Manager and Operator and
the Unit Management Agreements to be signed by all Participating Unit Owners.
1.67 "Resort" shall mean the hotel and resort to be constructed and operated
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upon the Land, initially to be named "SONESTA ORLANDO RESORT AT TIERRA DEL SOL"
and all improvements now or hereafter constructed that are used and operated as
part of the hotel and resort together with all Furniture, Fixtures and Equipment
and other property located therein, including, without limitation: (a) the
Resort Services Commercial Lots, which will include the Resort Facilities
(including the Clubhouse and a housekeeping and maintenance support facility)
(b) the Participating Units within the Rental Program (at any time and from time
to time) and the applicable Rental Management Agreements, (c) the improvements
owned and operated by an Association, if Operator is under contract to manage
the Association, (d) the improvements owned and operated by the Master
Association, if Operator is under contract to manage them as agent for the
Master Manager, (e) the improvements owned and operated by the CDD, if Operator
is under contract to manage them as agent for the CDD Board, (c) and any further
residential or transient residential structures that will be used by guests of
the Resort and operated by Operator in conjunction with and/or as part of the
Resort Commercial Lots.
1.68 "Resort Services" shall mean those services to be provided by Operator
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pursuant to this Agreement.
1.69 "Resort Operations" shall mean Operator's operation and management of
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the Resort and Resort Facilities, and provision of the Resort Services. "Resort
Operations" shall not include the following services, (a) management of the
Master Association and/or Condominium Association, if operated by anyone other
than Operator, (b) management of the CDD, if operated by anyone other than
Operator, (c) sales and marketing through TraveLeaders and Hickory Travel
Systems and any other subsidiary of AMLH, (d) managing of all sales, resales,
timeshare or Vacation Club sales of Condominium Units and Town Homes in the
Project and (e) management of any Unit that is not a Participating Unit.
1.70 "Master Manager Share" shall mean and refer to Master Manager's net
-----------------------
share after the payment of the Operator's Incentive Share pursuant to either
Section 6.1 or 6.2, plus, the excess of the Management and Licensing Fee
referenced in SECTION 4.1 over the Base Management and Licensing Fee.
------------
1.71 "Resort Services Assessments" shall mean the assessments to be imposed
---------------------------
by the Master Association (HOA) for the costs of the Resort Services Commercial
Lots to pay for the costs and expenses of the Resort Facilities, which
assessments, when added to the Condominium Association dues or assessments,
Master Association dues or assessments and CDD taxes must be sufficient to
cover, without limitation, all costs and expenses of maintaining, administering,
operating, marketing and insuring the Resort facilities.
1.72 "Resort Facilities Budget" shall mean the budget to be prepared
--------------------------
annually by Master Manager and Operator for the Owners of the Resort Services
Commercial Lots with respect to the costs and expenses of the Resort Operations,
excluding those covered by the Condominium Budget, Master Budget, CDD Budget or
Rental Program for Participating Units.
1.73 "Resort Operating Accounts" shall mean those bank accounts maintained
in trust by Operator for Master Manager, including the F, F & E reserve
accounts, into which the revenues from all sources of the Master Manager and the
Resort are deposited and from which the Expenses, replacement costs, taxes, the
Operator's fees and Incentive Share and the Master Manager's Share are paid.
1.74 "Resort Services Commercial Lots" shall mean the commercial lots
----------------------------------
described on the attached EXHIBIT "F" which are to be leased to Master Manager
-----------
from the Owners at ten per cent (10%) of the installed capital cost per annum
and will be managed by Operator pursuant to this Agreement as part of the
Resort, including, without limitation, the Welcome Center, Resort front desk,
Resort concierge areas, Resort lobby, Resort administrative offices and
back-of-the-house areas, Clubhouse restaurants and bars and all other food and
beverage outlets within the Project, Clubhouse sundries shop, Clubhouse
conference and group facilities, Clubhouse business center area, Clubhouse
fitness center, pools and pool deck, poolside food and beverage pavilion,
certain resort maintenance and housekeeping facilities including Commercial
Condominium and Town Home Units dedicated to maintenance and housekeeping, all
parking areas assigned to Operator, spa, kids arcade, kids activities and
supervised programs area, laundry facilities, private theater, lazy river,
interactive water play area, beach volleyball area, miniature golf, sing-along
fire pit and amphitheater, and shuttle service fleet and vehicle parking and
maintenance areas.
1.75 "Sales Office" shall have the meaning set forth in SECTION 11.6.
-------------- ------------
1.76 "Sonesta Group" shall mean Operator and its Affiliates.
---------------
1.77 "Sonesta Proprietary Marks" shall mean "Sonesta" and all other
----------------------------
trademarks, service marks, trade names, copyrights, insignia, emblems, slogans,
logos, commercial symbols, signs, designs, trade dress and all other visual
identification, whether in English or any other language, by which members of
the Operator, the Sonesta Group and the Sonesta Hotels are identified and
publicized, including the good will associated with all of them (the "Sonesta
Proprietary Marks"). A roster of the Sonesta Proprietary Marks as of the date
of this Agreement is attached hereto as Exhibit"J". Operator may add to this
----------
Exhibit as new Sonesta Proprietary Marks are created subsequent to the date of
this Agreement.
1.78 "Taxes" shall have the meaning set forth in SECTION 6.4.
------ ------------
1.79 "Term" shall have the meaning set forth in SECTION 2.2.
----- ------------
1.80 "Termination Date" shall mean the date on which the Term terminates.
------------------
1.81 "Tierra Del Sol Proprietary Marks" shall mean the names Tierra Del Sol,
--------------------------------
Sonesta Tierra Del Sol Resort(4) and Tierra Del Sol Resort, the images used to
present and market Tierra Del Sol Resort, its various associations by name and
logo design and the images used to present and market such associations together
with all trademarks, service marks, trade names, copyrights, insignia, emblems,
slogans, logos, commercial symbols, signs, designs, trade dress and all other
visual identification, whether in English or any other language, by which Tierra
Del Sol is identified and publicized, including the good will associated with
the forgoing names and marks, logos and images.
1.82 "Town Home" shall mean a single family style, attached town house
----------
constructed by Developer upon a portion of the Land as part of the Project. All
of the Town Homes shall be subject to the Master Declaration and will be
governed by the Master Association. Developer intends to construct Two Hundred
Seventy Four (274) three and four bedroom Town Home Units in Phase One, which
shall be located in forty (40) separate freestanding two-story buildings.
1.83 "Town Home Owner(s)" shall mean the record owner(s) of legal title to a
------------------
Town Home Unit.
1.84 "Uniform System of Accounts" shall mean the Uniform System of Accounts
----------------------------
for Hotels, Ninth Revised Edition, 1996, as adopted by the American Resort and
Motel Association and all future amendments and supplements thereto approved by
Operator.
------------------------
(4) The proprietary marks of Master Manager discussed in this section can only
include the word 'Sonesta' when used in conjunction with the words 'Tierra Del
Sol Resort'.
1.85 "Units" shall mean, collectively, Condominium Units and Town Home
-----
Units.
ARTICLE 2
APPOINTMENT OF OPERATOR
2.1 Appointment of Operator. Master Manager hereby appoints Operator
-------------------------
as its sole and exclusive agent to manage and operate the Resort during the Term
in accordance with the terms and conditions set forth in this Agreement.
Operator agrees to manage the Resort during the Term as the agent of Master
Manager in accordance with the terms and conditions of this Agreement. Master
Manager hereby delegates to Operator, effective upon the Commencement Date,
those selected rights, duties, obligations and remedies of Master Manager set
forth in the Rental Management Agreement and Optional Services Agreements that
are required for Operator to perform, on behalf of Master Manager, the
obligations of Master Manager under said Agreements and exercise the rights and
remedies of Master Manager as are delegated to Operator in this Agreement. All
such rights, duties, obligations and remedies shall be exercised by Operator in
accordance with the terms of the applicable instrument under which they arise
and this Agreement. Master Manager covenants and agrees that Operator shall and
may peaceably manage and operate the Resort throughout the Term, free from
molestation, eviction or disturbance by Master Manager or any person or entity
claiming by, through or under Owner or Master Manager, subject to the terms and
provisions of this Agreement. Master Manager further covenants to pay and
discharge, promptly when due, all charges and other sums payable by Owner and/or
Master Manager in respect of the Resort.
2.2 Term. The term of this Agreement (the "Term") shall commence on
----
the Effective Date and expire at the end of the twentieth (20th) full Fiscal
Year after the Commencement Date, unless sooner terminated or extended as herein
provided, in which case the word "Term" shall mean such lesser or extended
period of time. Provided it is not then in default of its obligations
hereunder, Operator shall have the right to extend the Term, separately, for
two (2) additional five (5) year periods, such right to be exercised by Operator
delivering written notice to Owner not less than one (1) year prior to the date
this Agreement, or an extended Term, would otherwise expire.
2.3 Operator's Duties. Subject to the provisions of this Agreement,
-----------------
including, without limitation, the provisions herein regarding the Annual Plan,
Operator shall have control and discretion in the management and operation of
the Resort and of all properties in the Resort. Without limiting the generality
of the foregoing, said control and discretion shall include the use of the
Resort for all customary purposes, and shall permit and obligate Operator to do
the following with respect to the Resort in the name and for the account of
Master Manager and to charge any cost thereof as an Expense as defined herein:
2.3.1 Employ, pay, supervise and discharge all Resort employees and
personnel, including the General Manager of the Resort, any or all of whom shall
be employees of Master Manager or of Operator, as Operator shall determine;
provided, however, that the employees of the Resort shall not include any
persons who are properly the personnel of the Sonesta Group's central office.
Such authority or any part thereof may be delegated by Operator to one or more
persons employed by Operator. Subject to provision in the Annual Plan, Operator
shall be entitled to charge reasonable amounts as Expenses for any services
provided to the Resort by the Sonesta Group's in-house executives and/or staff,
which services would have been provided by third parties had such executives
and/or staff not been available. Such services may include, without limitation,
advertising, public relations, purchasing, design, specialized training, and
computer programming and installation;
2.3.2 Supervise and maintain complete and accurate books and records of
Resort Operations in accordance with GAAP, including, without limitation, the
books of account and accounting procedures of the Resort;
2.3.3 Negotiate and enter into service contracts which Operator deems
prudent in the ordinary course of business in operating the Resort, including
without limitation, contracts for gas, security, waste removal and other
services which Operator deems advisable as referenced in the Annual Plan; all of
which shall be subject to the reasonable approval of Master Manager; for
purposes of this Agreement, the approval of Master Manager shall not be required
for service contracts with an annual cost of less than $500,000 unless the
contract is let to an Affiliate of Operator;
2.3.4 Determine jointly with Master Manager and purchase the choices for
Furniture, Fixtures and Equipment and Operating Equipment that are appropriate
for the maintenance and operation of the Resort in the normal course of
business, and consume the same in the operation of the Resort as provided in the
Annual Plan;
2.3.5 Determine the charges to be made for guest rooms, function rooms,
commercial space, privileges, recreation facilities, entertainment, food and
beverages and all other services and facilities of the Resort as projected in
the Annual Plan; such charges are subject to periodic review and comment by
Master Manager; upon a demonstration of compelling factors, Master Manager shall
permit Operator to readjust the effected charges 21 days from a change by Master
Manager;
2.3.6 Determine and carry out the labor policies of the Resort relating to,
among other things, wage rates, hours and conditions of employment, hire and
discharge of employees, and institution in the Resort of such profit sharing or
other retirement plans as Operator may deem advisable upon the consent of Master
Manager. The institution of any employee pension plan at the Resort that is to
be an Expense of the Resort shall be subject to Master Manager's sole discretion
if the pension plan which Operator intends to institute would (i) be instituted
during the last three (3) years of the Term, or (ii) gives credit for past
service except for employees transferring from other Sonesta Hotels. Any plan
that requires a financial contribution from Master Manager, Owner or Unit Owners
shall provide that such a contribution obligation shall terminate as and when
Operator ceases to perform services under this Agreement and shall be provided
to Master Manager in advance for review for compliance with this sub-section.
2.3.7 Determine and carry out promotion and publicity in accordance with
the Annual Plan;
2.3.8 Develop and implement food and beverage concepts and entertainment
policies along with related policies and procedures in accordance with the
Annual Plan;
2.3.9 Cause the Resort to join such industry associations and organizations
as Operator considers appropriate;
2.3.10 Hire third party professionals or specialists to advise Owner and/or
Master Manager and Operator with respect to the operation, maintenance and
improvement of the Resort (including, without limitation, the selection of
attorneys for the handling of routine legal matters, including tort litigation
instituted against Operator in connection with the operations of the Resort);
and
2.3.11 Establish procedures that Operator deems appropriate with
respect to the providing of Optional Services (if applicable) in order to assure
timely and full payment of the Optional Services.
2.4 Handling of Funds. Subject to this Agreement, Operator shall have
-------------------
possession and control of all Gross Revenues, including Gross Rental Revenues,
and other moneys involved in the operation of the Resort, all of which will be
the property of Master Manager, and of any bank accounts in which any such
moneys may be deposited. Operator will be responsible for disbursing such
moneys on behalf of Master Manager and directly to the obligees but only in
accordance with the terms of this Agreement. To qualify for this Agreement,
Operator shall be a single purpose entity. All funds used in the operation of
the Resort, and all receipts and disbursements thereof (except insofar as funds
are maintained in the Resort) shall be deposited in and withdrawn from one or
more Resort Operating Accounts from time to time established in the name of
Operator at such bank or banks in Orlando, Florida and elsewhere as Master
Manager may select. Operator shall maintain a minimum of three (3) Operating
Accounts: an account into which revenues are received and Expenses paid, a
Payroll Account and a Reserves Account. Operator shall acquire and maintain
such policies of insurance or fidelity bond that insure the Master Manager from
any misuse of funds. Policy benefit limits shall at all time be sufficient to
cover the balances in the insured accounts. Operator shall pay over to Master
Manager any sums in excess of the insurance policy benefits. Operator shall only
retain in the forgoing accounts those sums it reasonably deems necessary
exercising reasonable business judgment to meet the economic needs of the Resort
for the period of time specified in the Annual Plan. Operator shall keep
separate accounts showing all income, FF&E Reserves and all expenses on its
books and records for each Condominium Unit and Town Home Unit that is
participating in the Rental Program. The revenues of the Rental Program shall
not be pooled with any other Resort operation. To the extent that resources of
the Master Manager, Owners, or Operator are used by Operator in connection with
the provision of Rental Program services (including, without limitation,
personnel, supplies, equipment, systems, services or facilities), Operator may
fairly allocate such expenditures to the Participating Owners' accounts for such
sharing of resources with approval of Master Manager, which approval shall not
be unreasonably withheld. The only person or persons authorized to withdraw
funds from the Resort Operating Accounts shall be individuals approved by
Operator.
2.41 Shortfalls. In the event that funds in the Resort Operating Accounts
----------
are insufficient for payment of Resort-related expenditures (excluding
expenditures pertaining to Participating Units) required in order for Operator
to maintain, operate or insure the Resort in accordance with the Operating
Standard and this Agreement (including, without limitation, payment of sums owed
by Owner and/or Master Manager for Resort Services Assessments, Master
Association Assessments and/or CDD Assessments), Operator shall request that
Master Manager provide funds to cover the shortfall, in which event such funds
shall be provided by Master Manager to Operator within seven (7) days after
receipt of Operator's request subject, however, to reimbursement to the extent
amounts with respect to such insufficiency are subsequently collected by
Operator from any source. Notwithstanding the forgoing, Operator shall engage
in the function of Cash Flow Management that shall require Operator to maintain
a rolling Cash Flow Statement that shows the expected status of the flow of cash
over a 90 period, or such longer period as set forth in the Annual Plan. Said
Cash Flow Statement shall be prepared using all historic and advance reservation
data, together with known and forecast cash expenses and shall be updated on a
continual basis as better information becomes available. Operator shall provide
such Cash Flow Statement to Master Manager by the end of the eighth (8th) fiscal
day of each month showing the cash flow status of the Resort and the cash flow
needs for the following 90 days.
2.5 Payment of Master Manager's Share. Operator shall distribute the
-------------------------------------
Master Manager's Share pursuant to the terms of distribution of this Agreement,
net of reserves deemed appropriate by agreement of Master Manager and Operator.
ARTICLE 3
OPERATING STANDARD; MAINTENANCE
3.1 Operating Standard. Operator shall operate, manage and maintain
-------------------
the Resort in a prudent manner as a high quality Resort operating at a "4-
Diamond"(5) standard, and shall provide or cause to be provided all activities
in connection therewith which are customary and usual to such an operation, to
the extent consistent with the available facilities and to the extent Operator
has control over the applicable facilities (the "Operating Standard"). Provided
Operator complies with the Operating Standard and the provisions of this
Agreement, subject to the limitations expressed in this Agreement, Operator
shall have absolute control and discretion with respect to the Resort Operations
as defined in the Annual Plan. The Parties acknowledge, however, that (a) the
Condominium Associations shall be responsible for maintaining and insuring the
exterior portions of the Condominium, including the building exteriors, roofs,
lighting and signage and the common areas of the Condominium, (b) the Master
Association shall be responsible for maintaining and insuring the exterior walls
and roof of each of the Town Home buildings, as well as the landscaping,
lighting, signage and common areas appurtenant to the Town Homes (c) the CDD
shall be responsible for maintaining and insuring the land and improvements
submitted to the jurisdiction of the CDD, and (d) there may be components of the
Project that are not part of the Resort, even though they are located within the
boundaries of the Resort and may appear to the public to be part of the Resort.
For the reasons described in subsections (a) - (d) above, Operator shall not be
responsible for failure to comply with the Operating Standard to the extent such
failure arises from the failure of the Condominium Association, Master
Association, CDD, or owner of components of the Project not part of the Resort
to maintain, operate or insure their respective properties or facilities in
compliance with the Operating Standard or, if Operator is managing such
properties or facilities on behalf of the owner thereof pursuant to a separate
agreement with such owner, to the extent the owner thereof does not allow
Operator or does not provide sufficient funds to enable Operator to manage such
properties or facilities in a manner that complies with the Operating Standard.
------------------------
(5) As defined by the AAA standard.
3.2 Maintenance.
--- -----------
3.2.1 By Master Manager. Master Manager, at its expense, subject to
----- -------------------
whatever reimbursement it be entitled to under the Master Declaration, shall be
the Party within this Agreement that is responsible for compelling the legally
responsible entity to make or pay for all repairs to and replacements of, but
not for the day-to-day maintenance of, the various elements of the Resort (other
than the Units) necessary or advisable in order to keep the Resort (other than
the Units) in good operating order and condition and in compliance with the
Operating Standard including, without limitation, (i) all "structural
components" (for purposes hereof, "structural components" shall be deemed to be
those which involve or affect any concrete or cement elements (functional or
decorative) or any supporting steel or wooden elements including, without
limitation, all pilings, columns, beams, joists, slabs, weight bearing walls,
roofs, decks, facades, balconies and planters), and (ii) all major mechanical
systems including, without limitation, the heating, ventilation and air
conditioning systems, and the plumbing, electrical and emergency generator
systems but only to the extent permitted by law. In the event that the legally
responsible entity fails to make repairs or replacements that it is obligated
to make pursuant to its enabling documents and its contractual obligations and
the obligations hereunder and such failure shall continue for a period of thirty
(30) days after written notice from Operator delivered to Master Manager, or in
the event of an emergency, Operator shall have the right to perform such repairs
or replacements as an Expense of the responsible party using funds of the
Resort. Master Manager shall be responsible for the collection of the amounts
so expended whether by invoice or by assessment.
3.2.2 By Operator. Operator shall perform the day-to-day maintenance
----- ------------
and cleaning of the Resort Facilities as necessary or advisable in order to keep
them in good operating order and condition and in accordance with the Operating
Standard, subject to the obligations of Master Manager set forth in SECTION 3.1,
-----------
and reasonable use and wear, and all such expenses shall be Expenses of the
Resort.
3.2.3 Structural Defects. If any structural repairs, alterations or changes
----- ------------------
in or to the Resort shall be required, whether by reason of ordinary use and
wear, structural defects, any laws, ordinances, rules, regulations or orders of
any governmental or municipal authority, or otherwise, such repairs, alterations
or changes shall be the responsibility of Owner and shall promptly be cured by
Owner at Owner's expense (or, at Owner's request, by Operator as Owner's agent
and at Owner's expense). For purposes of this Agreement, "structural" repairs,
alterations or defects shall be those which involve or affect the concrete and
cement elements (functional and decorative), and any supporting steel or wooden
elements including, without limitation, pilings, columns, beams, joists, slabs,
walls, roofs, decks, facades, balconies and planters. "Structural defects"
shall include, without limitation, cracking (except for normal cracking that
does not threaten the structural integrity of the improvement), heaving,
buckling, abnormal movement and other signs of distress as well as inadequate
anchorage, inability to withstand a computed load which the element was or
should have been designed to withstand and, for the purposes, hereof,
ineffective waterproofing. In the event Owner fails to make structural repairs
or cure structural defects, and such failure shall continue for a period of
thirty (30) days after written notice delivered to Owner and Master Manager, or
in the event of an emergency, Operator shall have the right (but not the
obligation) to perform such structural repairs or cure such structural defects
with Resort funds as an Expense of the appropriate party. Master Manager shall
be responsible for the collection of the amount so expended whether by invoice
or by assessment.
3.2.4 Liens. Operator shall endeavor to prevent any liens from being filed
----- -----
against any portion of the Resort or Land which arise from any maintenance,
repairs, alterations, improvements, renewals, or replacements made in or to the
Resort by contractors hired by Operator. Operator shall have the right to
contest by appropriate proceedings conducted diligently and in good faith the
amount or validity of any lien arising from the maintenance, repairs,
alterations, improvements, renewals, or replacements in and to the Resort or
Resort Services Commercial Lots.
3.2.5 Surrender. At the Termination Date, Operator shall vacate and
----- ---------
surrender the Resort (including all Furniture, Fixtures and Equipment belonging
to Owner and replacements and additions thereto made after the commencement of
this Agreement) in the same condition in which it was received, or may be put
in, excepting reasonable wear and tear and damage by fire or casualty, and
otherwise in the condition required by this SECTION 3.2.
------------
3.2.6 Inspection by Owner: Owner and Owner's agents shall have the right to
----- ---------------------
enter upon any part of the Resort, at all reasonable times upon reasonable
notice during the Term, for the purpose of examining or inspecting the same,
preventing damage to the Resort, or showing the Resort to prospective
purchasers, operators or mortgagees, provided same shall not unreasonably
interfere with the Resort Operations and provided further that the Resort may
only be shown to prospective operators within one year prior to expiration or
termination of this Agreement.
3.2.7 Master Association and Condominium Association Management. The
----- --------------------------------------------------------------
Association management agreements shall require Master Manager, for as long as
Master Manager is engaged as the manager of such associations, to prepare the
annual Association budget and to assess, ▇▇▇▇ and collect from the Association
members the applicable assessments. The annual Budget of each Association shall
contain a line item for the annual management fee to Master Manager, which fee
shall be payable to Master Manager on a monthly basis. Operator shall be
authorized and directed to pay such fee to Master Manager from the applicable
Resort Operating Account or sub account. As long as Owner controls the Master
Association, Master Manager shall manage the Master Association pursuant to a
separate written management agreement between Master Manager and the Master
Association (the "Master Association Management Agreement"). As long as Owner
controls the Condominium Association, Master Manager shall manage the
Condominium Association pursuant to a separate written management agreement
between Master Manager and the Condominium Association (the "Condominium
Association Management Agreement"). By operation of the Agreements, Master
Manager hereby delegates those privileges and responsibilities as contained
herein to Operator.
3.2.8 Budgeting and Collection of Resort Services Assessments. Master
----- -------------------------------------------------------------
Manager and Operator shall budget and Master Manager will assess, ▇▇▇▇ and
collect for the Resort Services Assessments from the members of the Master
Association in accordance with the provisions of the Master Declaration. The
initial Resort Services Budget and all subsequent Resort Services Budgets shall
include all known or foreseeable expenses of the Resort that are not covered by
other budgets and shall reflect amounts that are adequate, in the opinion of
Master Manager and Operator, to cover all such expenses of the Resort. Operator
shall have the right of prior review and approval of the initial Resort
Services Budget prior to it being provided to any potential purchasers or filed
with the Florida Department of Business and Professional Regulation as part of a
Condominium Prospectus. The Resort Services Budget shall include, without
limitation, line items for general and administrative expenses (including
accounting, general management, information systems and human resources
expenses), repair, maintenance and refurbishment expenses of the Resort
(excluding those borne by Participating Units, the Condominium Association, the
Master Association or the CDD, which expenses shall appear in their respective
budgets), sales and marketing expenses, insurance premiums (including, without
limitation, property, liability and ▇▇▇▇▇▇▇'▇ compensation coverages), front
desk and concierge service, shuttle service throughout the Resort,
Resort-sponsored activities for children and adults, Resort security, access
control systems, housekeeping services for the Resort and Participating Units,
and linen service and Consumable Supplies for Participating Units. All Resort
Services Assessments collected shall be used by Master Manager to offset the
cost of administering, managing, maintaining, repairing, insuring, replacing,
improving and operating (including without limitation the payment of taxes and
establishment of reserves for) the Resort in accordance with this Agreement and
the Master Declaration. If Resort Service Assessments collected are
insufficient to cover cost of all the expenses related to the management of the
Resort and Resort Facilities, Operator will notify Master Manager of same. No
later than 10 days after receiving such notice, Master Manager shall provide
Operator with sufficient funds to cover shortfalls.
3.2.9 Budgeting and Collection of Master Association Assessments. The
----- ----------------------------------------------------------------
Master Association shall budget for, assess, ▇▇▇▇ and collect the Master
Association Assessments from the members of the Master Association in accordance
with the provisions of the Master Declaration. As long as Owner controls the
Master Association, Master Manager shall cause the initial Master Association
Budget and subsequent Master Association Budgets to include all known and
foreseeable expenses of the Master Association, and to reflect estimates for
each line item that are adequate, in Master Manager's reasonable opinion, to
cover the listed expense. Operator shall have the right of prior review and
approval of the initial Master Association Budget prior to it being provided to
any potential purchasers or filed with the Florida Department of Business and
Professional Regulation as part of the Condominium Prospectus. The Master
Association Budget shall include, without limitation, line items for the
reasonable costs of administering, maintaining, operating and insuring the
general common areas that benefit all owners of any portion of the Project
(residential or otherwise) and their guests and invitees, the reasonable costs
of administering, maintaining, operating and insuring the common areas that
benefit all owners of Units within the Project and their guests and invitees,
and the reasonable costs of maintaining, operating and insuring the exterior,
balconies, windows, roof, signage, landscaping and common areas appurtenant to
the Town Homes. All other costs and expenses of administering, maintaining,
operating and insuring the Resort and providing the Resort Services shall be
reflected in the separate Resort Services Budget. All amounts collected by the
Master Association for the costs of administering, managing, maintaining,
repairing, insuring, replacing, improving and operating (including without
limitation the payment of taxes and establishment of reserves for) any part of
the Resort shall be delivered to Master Manager and used by Master Manager to
offset such costs and expenses. The failure of the Master Association to
collect and receive in a timely manner from the members of the Master
Association or to deliver to Master Manager any or all of the billed and
assessed Master Association Assessments shall not relieve Master Manager from
paying in a timely manner any amounts required to be paid by Owner under this
Agreement.
3.2.10 Budgeting and Collection of Condominium Association Assessments.
------ --------------------------------------------------------------------
The Condominium Associations shall budget for, assess, ▇▇▇▇ and collect the
Condominium Association Assessments from the members of the Condominium
Association in accordance with the provisions of the Declaration of Condominium.
As long as Owner controls a Condominium Association, Owner shall cause the
initial Condominium Association Budget and subsequent Condominium Association
Budgets to include all known and foreseeable expenses of the Condominium
Association, and to reflect estimates for each line item that are adequate, in
Operator's opinion, to cover the listed expense. Operator shall have the right
of prior review and approval of the initial Condominium Association Budget prior
to it being provided to any potential purchasers or filed with the Florida
Department of Business and Professional Regulation as part of the Condominium
Prospectus. The Condominium Association Budget shall include, without
limitation, line items for the reasonable costs of administering, maintaining,
operating and insuring the common elements of the Condominium, including the
reasonable costs of maintaining the exterior, balconies, windows, roof, signage
and landscaping of the Condominium Units and Condominium buildings. The failure
of the Condominium Association to collect and receive in a timely manner from
the members of the Condominium Association any or all of the billed and assessed
Condominium Association Assessments shall not relieve Master Manager from paying
in a timely manner any amounts required to be paid by Owner under this
Agreement.
3.2.11 CDD Management, Budgeting and Collection of CDD Assessments. The
------ ---------------------------------------------------------------
CDD shall budget for, assess, ▇▇▇▇ and collect the CDD Assessments from all
owners of real property within the Project in accordance with Florida Statutes
Chapters 170 and 190. The CDD Budget shall include, without limitation, line
items for the reasonable costs of administering, maintaining, operating and
insuring the portions of the Project included in the CDD. The failure of the
CDD to collect and receive in a timely manner any or all of the billed and
assessed CDD Assessments shall not relieve Master Manager from paying in a
timely manner any amounts required to be paid by Owner under this Agreement.
The CDD management agreement shall require the designated manager to prepare
the annual CDD budget and to assess, ▇▇▇▇ and collect the CDD Assessments from
the owners of real property in the Project. The annual budget of the CDD shall
contain a line item for the annual management fee to the manager, which fee
shall be payable to manager in arrears on a monthly basis.
3.3 Licenses and Permits. Master Manager and Operator shall apply and
--- ---------------------
take all action necessary to obtain prior to the Commencement Date and
thereafter maintain all licenses and permits required by law in connection with
the Resort Operations (excluding certificates of occupancy).
3.4 Compliance with Law. Operator shall use reasonable efforts to
--- ---------------------
comply with all laws, ordinances, rules, regulations, orders, decisions and
requirements of any federal, state, or municipal government that affect the use
of the Resort; provided that Operator's obligations shall be subject to Master
Manager's obligations under SECTION 3.2 and ARTICLE XII. Operator shall have
----------- -----------
the right, after notice to Owner, to contest in the name of Owner by proper
legal proceedings, the validity of any such law, ordinance, rule, regulation,
order, decision or requirement and may postpone compliance therewith to the
extent and in the manner provided by law until final determination of any such
proceedings.
3.5 FF&E Resort Reserve Account. Operator shall create a separate book
--- ------------------------------
account (such account being herein called the "FF&E Resort Reserve Account") and
shall monthly credit to such account, out of Non-Rooms Revenue, an initial
amount not less than two percent (2%) of the product of the Gross Revenues less
Gross Rental Revenues but not more than as provided in the Annual Plan, for the
preceding Fiscal Month, subject to increase or decrease in Operator's discretion
based on operating requirements. The FF&E Resort Reserve Account shall be used
for capital additions and replacements in and to the Resort, but not the Units,
and any amount not expended shall be carried forward to subsequent periods.
3.6 Notwithstanding the foregoing paragraph, the parties acknowledge that
---
(a) the budget for capital additions and replacements for each Fiscal Year (or
Fractional Year) is based on revenue projections made prior to the beginning of
the year and actual revenues will be different and (b) capital additions are
made during the year before the actual revenues for the year are known,
therefore the amount actually spent or incurred by Operator for capital
additions and replacements in and to the Resort (other than the Units) shall be
deemed to be the amount allocated to the FF&E Resort Reserve Account.
Notwithstanding anything to the contrary contained in this Agreement,
Operator may from time to time use the funds in the FF&E Resort Reserve Account
for routine capital expenditures as it deems necessary, up to the balance of the
FF&E Reserve, for purposes set forth in the current Annual Plan or otherwise
approved by Master Manager and may from time to time sell or dispose of any
Furniture, Fixtures and Equipment, which Operator reasonably deems to have
become worn out or obsolete; provided that the proceeds of any such sale shall
be credited to the FF&E Resort Reserve Account in accordance with the Annual
Plan and Capital Replacements Budget. Even when not included in the Annual Plan
or otherwise approved by Owner, Operator may use the funds in the FF&E Reserve
to repair or correct any condition on or about the Resort or Resort Services
Commercial Lots which results from casualty or extraordinary events, constitutes
a violation of applicable laws or presents a threat to life or property of
Owner, Operator or any guest, employee or invitee on or about the Resort.
Operator shall have the right to make loans to fund the Furniture, Fixtures
and Equipment requirements of the Resort in excess of funds in the FF&E Resort
Reserve Account and to repay itself with interest from the next available
deposits to the FF&E Reserve Account, or, in the alternative, at Operator's
election, Expenses shall include amounts in excess of funds in the FF&E Resort
Reserve Account that Operator spends on capital items that are in the Annual
Plan or are required in order to comply with applicable law, to cure safety
conditions or to maintain the Operating Standard.
3.7 Books and Records. Operator shall keep or cause to be kept
--- -------------------
complete and adequate books of account and other records reflecting the results
of occupancy of the Resort and the Resort Operations, in accordance with
generally accepted principles of accounting consistently applied and applicable
to the operation of Resorts. Owner may, at its own expense and through its duly
appointed agents, after providing at least 24 hours notice to Operator, inspect
such books and records at reasonable times and during normal business hours, at
the Resort. All such books and records shall belong to Owner. If Operator
expends any sums of money for maintenance, repair or replacement of the Resort
Services Commercial Lots, Operator shall keep track of and account for such
expenditures separately.
3.8 Financial Reporting. Operator shall use all reasonable efforts to
--- --------------------
deliver to Master Manager and Owner the following statements:
3.8.1 Monthly Reports. Within twenty (20) days after the end of each
----- ----------------
calendar month, a profit and loss statement of the Resort operations, providing
revenues and expenses by department, in reasonable detail.
3.8.2 Annual Profit and Loss Statement. On or before January 31st of
----- ----------------------------------
each Fiscal Year or Fractional Year, Operator shall provide an "Annual Profit
and Loss Statement" for the Resort for delivery to the Independent Auditor. The
Annual Profit and Loss Statement shall be prepared in accordance with the
Uniform System of Accounts, on the accrual basis in accordance with generally
accepted principles of accounting applicable to the operation of resorts (except
as this Agreement may otherwise provide), and shall set forth the profit or loss
of the operation of Resort (including for this purpose the Rental Program) for
the prior Fiscal Year or Fractional Year. If Master Manager questions any of
the amounts for any period as shown by the Annual Profit and Loss Statement, or
the computations used in determining the same, and if Operator and Master
Manager are unable to agree thereon, then the matter in dispute shall be
submitted for a binding decision to a Certified Public Accountant selected by
the parties hereto. If Operator and Master Manager are unable to agree on the
selection of a Certified Public Accountant for this purpose within thirty (30)
days after their failure to agree upon such questions, the matter shall be
referred to arbitration pursuant to the provisions of ARTICLE XV hereof.
----------
Notwithstanding anything contained herein to the contrary, Master Manager shall
be conclusively deemed to have accepted the said accounts and the accuracy
thereof as shown in any Annual Profit and Loss Statement, and the computations
used in determining the same, unless, within sixty (60) days after the receipt
of any such Annual Profit and Loss Statement, Master Manager notifies Operator
that Master Manager questions the amount of such items shown thereon or the
computations used therein and specifies the items or other computations in
issue.
3.8.3 Annual Plans. Not later than sixty (60) days before the beginning
----- -------------
of each Fiscal Year or Fractional Year, Operator shall submit to Master Manager
an Annual Plan for the Resort, which shall include a repairs and maintenance
budget and details of proposed capital refurbishing programs, and otherwise
contain the information referenced in SCHEDULE 1.5.
--------------
3.8.3.1 Master Manager shall notify Operator in writing of any comments
-------
Master Manager has regarding the Annual Plan. Such comments shall be received
by Operator not later than twenty (20) days after Master Manager's receipt of
the Annual Plan. If no such comments are provided by Master Manager to Operator
within such twenty (20) day period, then Master Manager shall be deemed to have
accepted without comments the Annual Plan as submitted by Operator. If Master
Manager provides comments regarding the Annual Plan within such twenty (20) day
period, the comments shall include detailed reasons for any objections to the
Annual Plan and Master Manager and Operator shall attempt to agree in respect of
the items to which Master Manager objects within twenty-one (21) days after
Operator's receipt of the comments, and if such agreement is not reached within
such time, then either of the parties may refer the matter to arbitration
pursuant to the provisions of ARTICLE XV hereof. Pending the arbitration
-----------
decision, the undisputed parts of the Annual Plan submitted by the Operator
shall be deemed to be the Annual Plan for the Fiscal Year insofar as those parts
are concerned and the disputed parts shall be dealt with as follows: (i) if an
Expense item appeared on the Annual Plan for the preceding Fiscal Year, that
item shall be increased by ten percent (10%) over the previous year and shall be
deemed to be part of the Annual Plan for the Fiscal Year, and (ii) for all other
items, comparable provisions covering the disputed items which appear in other
approved annual plans for similar Resorts or resorts managed by Operator or its
Affiliates shall be deemed to be part of the Annual Plan for the Fiscal Year.
3.8.3.2 Notwithstanding any of the foregoing, Master Manager
-------
acknowledges that, despite Operator's experience and expertise in relation to
the operation of hotels and resorts, the projections contained in each Annual
Plan are subject to and may be affected by changes in financial, economic and
other conditions and circumstances.
3.8.3.3 Except for during the first Fractional Year and first Calendar
-------
Year if any major category of income or expense for operations during any year
shall be materially different from the results envisioned by the Annual Plan for
such year, Operator shall submit revisions to the Annual Plan for the remainder
of such year, in reasonable detail, which revised Annual Plan shall be subject
to comment by Master Manager with respect to matters that will, or are likely
to, impact the revenue to Master Manager, in the same manner as the original
Annual Plan and shall be subject to arbitration of disputes in the same manner
as the original Annual Plan. "Materially different" shall mean as to any major
category of income a decrease of more than twenty percent (20%) that is not
offset by a corresponding decrease in expenses and as to any major category of
expense an increase of more than fifteen percent (15%) that is not offset by a
corresponding increase in revenues. Operator shall engage in the function of
Cash Flow Management that shall require Operator to maintain a rolling Cash Flow
Statement that shows the expected status of the flow of cash over a 90 period.
Said Cash Flow Statement shall be prepared using all historic and advance
reservation data, together with known and forecast cash expenses and shall be
updated on a continual basis as better information becomes available. Operator
shall provide such Cash Flow Statement to Master Manager by the end of the
eighth (8th) day of each Fiscal Month.
3.9 Confidential Information. Operator, and Master Manager, for itself
--- ------------------------
and on behalf of Owner, on behalf of themselves and their employees, shall use
their best efforts to hold all Confidential Information in trust and confidence
and, except as may be authorized by the owner of such Confidential Information
in writing, and shall not disclose any Confidential Information to any person or
party, except on an "as necessary basis" to Operator's and Master Manager's
accountants, attorneys or lenders or as required by law or if required to comply
with this Agreement. "Confidential Information" means any and all financial
information, reports, operating plans or forecasts, or statements relating to
Operator, Master Manager and/or the Resort, as disclosed to each other, or
obtained by Operator and Master Manager in the performance under this Agreement,
which relate to the real estate or business activities of Operator or its
Affiliates and to Master Manager and its Affiliates. Operator is authorized to
share financial information regarding the Resort with ▇▇▇▇▇ Travel Research.
3.10 Budget Guaranty. Master Manager shall cause the Resort (including
---- ---------------
the Units, Resort Services Commercial Lots, common elements of a Condominium
Association ("Common Elements"), all property belonging to the Master
----------------
Association and/or a Condominium Association ("Association Property") and all
--------------------
property belonging to the CDD) to be initially constructed and furnished in
accordance with the Operating Standard. Throughout the Term of this Agreement,
Owner and/or Master Manager shall assure that the owners of the Resort Services
Commercial Lots, the Condominium Association and the Master Association shall
adopt budgets and maintain reserve accounts which are adequate to cover all of
the reasonable expenses of administering, maintaining, operating and insuring
the Resort Services Commercial Lots, Association Property and Common Elements in
accordance with the Operating Standard and the Annual Plan, and to recommend
special assessments, as and when necessary, to cover such expenses ("Budget
------
Guaranty").
----
4
RENTAL PROGRAM
4.1 Terms of Rental Program. The Rental Program shall initially be
--------------------------
embodied in the terms and provisions set forth in a form of Rental Management
Agreement to be mutually agreed upon by Master Manager and Operator and attached
hereto as EXHIBIT "D-1". It is contemplated that the form Management Agreement
-------------
will provide for certain costs, reserves and expenses of the Unit that can be
charged to the Participating Owner to be so charged by deducting the costs and
expenses from the rental revenues generated by use of the Unit including,
without limitation, the following:
- Management and Licensing Fee - 7% of Gross Rental Revenues
-------------------------------
- Marketing reserve - 3% of Gross Rental Revenues
- All travel agency and other third party commissions and reservations fees
- All Credit and debit card costs;
- A capital reserve for replacement of the FF&E for each Unit.
The form Management Agreement may be modified at any time by Master Manager in
its exclusive discretion. Operator shall have the right of reasonable approval
regarding any change planned by Master Manager that could result in a change to
the revenue forecasted from the Rental Program, and any such change shall be
subject to Operator's prior approval if the Incentive Share (Section 6.1.2) is
in effect. All Unit Owners that want to commence or renew participation in the
Rental Program shall execute the form of Management Agreement then being offered
to Unit Owners by Master Manager.
4.2 Other Rental Programs. Master Manager, on behalf of itself and its
---------------------
Affiliates, agrees that it shall not enter into Unit management agreements or
lease agreements for the commercial rental of residential Units in competition
with Operator and shall not encourage or solicit any other person or entity to
enter into management agreements or lease agreements with Unit Owners for the
commercial rental of the Resort's residential Units.
4.3 Disclaimers and Closing Certificate. At Operator's request, Owner
--------------------------------------
shall include (or cause to be included) such disclaimers and disclosures as
Operator shall reasonably require from time to time to be printed and displayed
in any and all offering, marketing and sales materials, documents and scripts
relating to the Units, Condominium or Rental Program, and in the sales center
and the model units (if any). Owner agrees to include the disclaimers set forth
in EXHIBIT "G-1" of this Agreement in all purchase and sale agreements for the
--------------
purchase and sale of a Unit and further agrees to require every purchaser of a
Unit to sign at the closing of the Unit the certificate attached hereto as
EXHIBIT "G-2".
4.4 Indemnity By Master Manager. Master Manager hereby indemnifies each
------------------------------
member of the Sonesta Group and their officers, agents, salaried attorneys and
employees against any and all claims, damages, losses and expenses of any nature
(including reasonable third party legal fees(7) and expenses) asserted against
or incurred by any member of the Sonesta Group (except to the extent that such
indemnified party has actual liability therefore) in any legal proceeding or
claim of any kind or nature brought by any third party ("Claimant") arising from
--------
or relating to (a) the use by any agents, employees or other representatives of
Owner and Master Manager of the Sonesta Proprietary Marks (as such term is
defined in SECTION 1.77 hereof), or (b) the violation or breach by any agent,
------------
employee or other representative of Owner and Master Manager of any term or
provision set forth in this ARTICLE IV, or (c) the violation or breach by any
----------
agent, employee or other representative of Owner and Master Manager of the laws,
rules and regulations of the United States and/or the State of Florida governing
the sale, offering for sale or registration of securities, or (d) the violation
or breach by any agent, employee or other representative of Owner and Master
Manager of the laws, rules and regulations of the State of Florida governing the
sale, offering for sale and administration of condominium interests or the sale,
offering for sale or registration of securities, or (e) any other applicable
laws, unless the subject indemnified claim is caused solely and proximately by
fraud, willful misconduct and/or negligence on the part of a member of the
Sonesta Group. This indemnification shall survive termination of this Agreement
or expiration of the Term as well as the purchase of the Resort and/or Resort
Services Commercial Lots by Operator or any Affiliate of Operator.
------------------------
(7) This indemnity for reasonable legal fee requires that Operator be
represented by the attorneys chosen or approved by Master Manager.
4.5 Indemnity by Operator. Operator hereby indemnifies each member of
-----------------------
the Master Manager, its Affiliates, and their officers, employees, agents and
salaried attorneys against any and all claims, damages, losses and expenses of
any nature (including legal fees5foot8 This indemnity for reasonable legal fee
requires that Operator be represented by the attorneys chosen or approved by
Master Manager and expenses) asserted against or incurred by any member of the
Master Manager (except to the extent that such indemnified party has actual
liability therefore) in any legal proceeding or claim of any kind or nature
brought by any third party ("Claimant") arising from or relating to (a) the use
--------
by any agents, employees or other representatives of Sonesta Group of the
Proprietary Marks of Owner and Master Manager (as such term is defined in
SECTION 14.2 hereof), or (b) the violation or breach by any agent, employee or
-------
other representative of Operator (or its Affiliates) of any term or provision
set forth in this ARTICLE IV, or (c) the violation or breach by any agent,
-----------
employee or other representative of Operator of the laws, rules and regulations
of the United States and/or the State of Florida governing the sale, offering
for sale or registration of securities, or (d) the violation or breach by any
agent, employee or other representative of Operator of the laws, rules and
regulations of the State of Florida governing the sale, offering for sale and
administration of condominium interests or the sale, offering for sale or
registration of securities, or (e) any other applicable laws, unless the subject
indemnified claim is caused solely and proximately by fraud, willful misconduct
and/or negligence on the part of a member of the Owner or Master Manager. This
indemnification shall survive termination of this Agreement or expiration of the
Term as well as the purchase of the Resort and/or Resort Services Commercial
Lots by Operator or any Affiliate of Operator.
4.6 Branded Products. Except for ordinary guestroom supplies and
-----------------
collateral materials, no items containing the Sonesta name or other Sonesta
Proprietary Marks may be displayed in model units (if any) or offered for sale
or otherwise sold in connection with the sale of any Unit. Except upon the
receipt of explicit, written permission, after a thorough review by Master
Manager, Operator shall not use or disclose the names or Proprietary Marks of
Owner, Associations and Master Manager in Operator's promotion and advertising
of the Sonesta Group of any of its Affiliates.
5
TERMINATION
5.1 Termination by Operator. If (i) either construction of the Resort
-------------------------
Project is not underway by April 1, 2005, or the Commencement Date has not
occurred (or cannot as a practical matter occur) by January 5, 2007; or (ii)
Owner fails to construct the Resort Project in substantial conformance with the
plans and specifications and design criteria accepted by Operator; or (iii) the
number of Units available to be managed by Operator under the Rental Program
drops below one hundred fifty (150) Units at any time during the Term of this
Agreement for a period of 4 consecutive months; or (iv) as the result of actions
or conduct of the Developer, Owner, Master Manager, a Condominium Association or
the Master Association or as a result of amendment of a Declaration of
Condominium or the Master Declaration without notice to Operator, the Net
Operating Profit of Project is materially reduced(8), or Operator's control over
the management or operation of the Rental Program or other material component of
the Resort is materially diminished, or Operator's ability to conduct the Resort
Operations at the Resort is otherwise materially restricted by Master Manager;
or (v) Master Manager shall be in default of the due performance of any material
term, covenant or condition which this Agreement requires it to perform, and
shall fail to cure, correct or remedy such default within the period of time
specified in the provision relating to such term, covenant or condition (or, if
there shall be none, then within ten (10) business days after written notice
from Operator specifying the default if the default is monetary, or within
thirty (30) days after written notice from Operator specifying the default if
the default is non-monetary, or such longer period, not to exceed a total of
ninety (90) days, as may be necessary to cure any such non-monetary default
using due diligence); or (vi) if Owner or Master Manager shall make any
assignment of its property for the benefit of creditors; or (vii) if Master
Manager's interest under this Agreement shall be taken on execution and Owner
does not accede to its position; or (viii) if Owner or Master Manager files a
petition for adjudication as a bankrupt, for reorganization or for an
arrangement under any bankruptcy or insolvency law, or if a receiver or trustee
in bankruptcy shall be appointed to take over the affairs of Owner or Master
Manager; or (ix) if any involuntary petition under any such law is filed against
Owner or Master Manager and not dismissed within ninety (90) days thereafter;
then, so long as any such event is continuing(9), Operator may by notice in
writing to Owner terminate this Agreement forthwith, and the parties shall be
released from all further rights and obligations hereunder except those which
survive termination. In the event of Termination pursuant hereto, Operator shall
provide up to sixty (60) days of Transition Services to the entity in control of
the Resort Elements on the same terms and conditions as are contained in this
Agreement. The rights of termination granted Operator in this Section shall be
in addition to any other rights or remedies that may otherwise be available to
Operator at law or in equity including, without limitation, rights to damages or
specific performance.
------------------------
(8) Applicable only after Operator has elected the compensation described in
Section 6.1b, herein and is in that compensation mode.
(9) For any of the listed grievances to give rise to the rights of Operator in
this Section, Operator must demonstrate, in the manner set forth in this
Agreement to resolve budgetary issues, that it will be at risk to suffer
material economic harm.
5.2 Termination by Master Manager. If one or more of the following events
--------------------------------
shall occur: (i) if Operator shall be in default in the performance of any
material term, covenant or condition which this Agreement requires it to
perform, and shall fail to cure such default within sixty (60) days (ten (10)
business days for monetary defaults) after receipt of written notice from Master
Manager specifying such default, or such longer period as may be necessary to
cure any such default using due diligence (provided Operator has commenced said
cure within sixty (60) days of such notice from Master Manager and diligently
pursues such cure to completion; provided, however, that the cure period
regarding payment of sums of money to Master Manager shall be ten (10) business
days); or (ii) if Operator shall make any assignment of its property for the
benefit of creditors; or (iii) if Operator's interest under this Agreement shall
be taken on execution; or (iv) if Operator files a petition for adjudication as
a bankrupt, for reorganization or for an arrangement under any bankruptcy or
insolvency law, or if a receiver or trustee in bankruptcy shall be appointed to
take over the affairs of Operator; or (v) if any involuntary petition under any
such law is filed against Operator and not dismissed within ninety (90) days
thereafter; or (vi) if Operator shall undergo a change in control (by virtue of
a change in the ownership or control of the voting stock of Operator or its
parent company) ; or (vii) if 20% of the Participating Units owned or
controlled by parties not affiliated with Master Manager or Owner shall drop out
of Rental Program for in excess of sixty (60) continuous days in any running 12
month period as the result of operational concerns, then, so long as any such
event is continuing, Master Manager may by notice in writing to Operator
terminate the Term, in which case the Option shall likewise terminate. The
rights of termination granted Master Manager in this Section shall be in
addition to any other right or remedy available to Master Manager in law or in
equity including, without limitation, rights to damages or specific performance.
5.3 Effect of Termination.
-----------------------
5.3.1 The termination of the Term for any reason shall not affect (i) any
right, obligation or liability which has accrued under this Agreement on or
before the effective date of such termination or (ii) the indemnification
obligations set forth in this Agreement.
5.3.2 Upon the termination of this Agreement for any reason, Master Manager
and Operator shall cooperate with each other in an effort to achieve an
efficient transition to new Resort management and shall take all steps necessary
or desirable to put Master Manager in full control of the Resort. All Sonesta
signs and logos shall be removed from the Resort promptly by Master Manager
following the termination of this Agreement.
5.3.3 Upon the termination of this Agreement for any reason, Operator and
Master Manager shall cooperate with each other and take all steps reasonably
necessary to cause a smooth and orderly transition of control of the Resort to
Master Manager or the replacement for Operator including, without limitation,
Operator's delivery of each of the following items if in Operator's possession:
(i) contracts for the provision of services to the Resort or in connection with
the Resort Operations, (ii) insurance policies with respect to the Resort, (iii)
records relating to current or prospective guests relating to Units and records
related to the financial obligations of Operator pursuant to such agreements,
(iv) all deposits for the rental of Units not previously earned by virtue of the
use of such Units, (v) all keys, combinations to locks and other security
devices for the Resort and/or Units, and (vi) all equipment, furniture,
furnishings and other property of Owner and Master Manager in the possession of
Operator.
5.3.4. Operator shall, within sixty (60) days after termination of this
Agreement, prepare and deliver to Master Manager a final accounting statement
(prepared under GAAP) with respect to the Resort Operations, along with a
statement of any sums due from or to Master Manager and Operator pursuant hereto
as of the date of termination. All amounts due from or unpaid to Operator shall
be paid no later than thirty (30) days after receipt of the final accounting
statement.
6
COMPENSATION
6.1 Fees. Operator shall be paid the following fees as compensation for
----
its services hereunder, at the time and in the manner hereafter provided:
6.1.1 Base Management and Marketing Fee. A base management and marketing
----------------------------------
fee equal to five percent(10) (5%) of Gross Rental Revenues (the "Base
----
Management and Marketing Fee") shall be paid to Operator on or before the tenth
----------------------------
day of each calendar month for each preceding calendar month provided that the
minimum payment on this account shall be an average of the monthly amounts of
the Base Management and Marketing Fee paid for the previous six months or
$15,000, whichever is greater(11). The minimum fee of $15,000 per month shall be
paid regardless of the formula contained in this section but only for the first
18 months of the Term. Thereafter the minimum payment of $15,000 per month shall
be deemed a draw against the earned fee.
6.1.2 Incentive Share. An Incentive Share equal to 25% of Net Operating
---------------
GAAP Profit or Loss of the Master Manager (excluding the sum of 2% of the Unit
rental revenue paid to Master Manager by Operator) (the "Incentive Share") shall
---------------
be paid to Operator in arrears, in quarterly installments on the 25th day of the
month following each Quarterly Accounting Period, and will be based on the
"projected Net Operating Profit" for the Fiscal Year or Fractional Year,
prorated based on the number of Quarterly Accounting Periods that have passed.
The "projected Net Operating Profit or Loss" will be calculated based on the
actual results of the Quarterly Accounting Period(s) that have passed, and the
projected results of the remaining Quarterly Accounting Period(s) pursuant to
the Annual Plan. As the result of the payment of such Incentive Share on a
quarterly basis, the parties acknowledge that subsequent months' operations may
make the amount of the Incentive Share previously paid result in an overpayment
or underpayment on a year-to-date basis. In such event, an appropriate
adjustment shall be made against subsequent quarterly payments of the Incentive
Share, with an annual reconciliation as provided in SECTION 6.2 with any
overpayment to Operator being reimbursed to Master Manager within 30 days of
such annual reconciliation.
------------------------
(10) Operator will be paid, out of Gross Rental Revenues, the sum equal to 7% of
the Unit rental revenue. This fee is to be debited from the Participating Unit
Owner's revenues. Operator shall then pay to Master Manager the sum of 2% of the
Unit rental revenue as a Facilitation Fee.
(11) As soon as the exact amount of the Base Management and Marketing Fee is
ascertained , there shall be an adjustment made to increase or decrease the next
succeeding payments until the exact amount owed is fully paid.
6.2 Annual Reconciliation. At the end of each Fiscal Year, following the
----------------------
rendition of the Annual Profit and Loss Statement, Master Manager and Operator
shall promptly (and in all events within thirty (30) days after rendition of
such Annual Profit and Loss Statement) make such adjustments as are necessary to
ensure that the proper amounts of Master Manager's Share and Operator's
Incentive Share have been paid for said Fiscal Year.
6.3 Alternative Compensation: Notwithstanding the terms of Section 6.1,
-------------------------
above, Operator may elect to be paid, in lieu of the compensation recited in
6.1, Two and One Half per cent (2.5%) of the annual Gross Revenues of the
Resort. Operator must make this election to receive this Alternative
Compensation prior to the Commencement Date and such Alternative Compensation
shall continue until Operator makes an election to convert to the compensation
plan described in Section 6.1. Operator must make the election by July 31st of
the Fiscal Year to which the change will apply. Once said election is made,
Operator may not ever elect to re-convert to Alternative Compensation. For
purposes of this section, the 2.5% fee shall be applied to Gross Revenues minus
the sum of the following: a) revenue associated with the Communications Package
to Unit Owners or to Resort Guests; and b) sums paid to and retained by Operator
for the Base Management And Licensing Fee. For purposes of this section, the
Gross Rental Revenues component of Gross Revenues shall not include all taxes to
local, county, state and tourist districts.
6.4 Real Estate Taxes. If directed, Operator shall, on behalf of Master
-------------------
Manager and Owner, pay all real estate taxes, personal property taxes, excise or
sales taxes, special improvements and other assessments (ordinary and
extraordinary) and all other taxes, duties, charges, fees and payments imposed
by any governmental or public authority which shall be imposed, assessed or
levied upon, or arise in connection with the ownership, use, occupancy or
possession of the Resort Services Commercial Lots during and in respect of the
term of this Agreement (all of which are herein called "Taxes"); provided,
however, nothing herein shall require Operator to pay income taxes imposed on
Owner and/or Master Manager in respect of Owner's and/or Master Manager's income
or in respect of any federal or state estate tax, succession tax, maritime tax
or transfer taxes of Owner and/or Master Manager or corporate franchise taxes
imposed upon Owner's and/or Master Manager's interest in the Resort Services
Commercial Lots. Operator shall, at Owner's and/or Master Manager's request and
as Owner's and/or Master Manager's agent, contest any Taxes by appropriate
proceedings, the costs of which shall be deemed Expenses provided that the cost
of contesting such taxes does not exceed twenty per cent of the taxes for 2
years. All refunds of Taxes shall be added to Net Operating Profit of the
Resort for the year in which it is received.
7
DAMAGE AND DESTRUCTION
7.1 Restoration. Subject to the rights of any mortgagee to receive and
-----------
apply available insurance proceeds to discharge Owner's indebtedness, and
provided all or a sufficient number (in Operator's reasonable opinion) of Units
will be rebuilt and adequate parking will be available, Master Manager shall
cause the owners of damaged property to repair, restore, rebuild and replace any
damage to the Resort or the Resort Services Commercial Lots caused by fire or
insured casualty provided available insurance proceeds and funds otherwise
available to cover the costs of rebuilding (i.e. as a loan(s) on reasonable
terms) are sufficient to cover the entire costs thereof. The parties shall
cooperate in good faith to maximize the insurance adjustment. All business
interruption insurance proceeds received by Master Manager, Owner and Operator
shall be considered Gross Revenues and applied to pay the ongoing expenses of
the Resort. The Base Management Fee shall continue to be paid to Operator each
month during the period from the occurrence of the casualty until restoration is
completed (the "Restoration Period"), less what Operator has received from the
proceeds of business interruption insurance, and shall be based on the revenues
realized for the most recent comparable period(s) of a calendar year in which
there occurred no extraordinary event (such as a casualty). No Incentive Fee
shall be paid to Operator during the Restoration Period until the Resort has
received the proceeds of the business interruption insurance (which shall be
treated as Gross Revenues). Any deductible paid shall not be treated as an
Expense hereunder. In the event there are insufficient insurance proceeds to
cover the entire costs of rebuilding, Master Manager shall be responsible for
the excess costs, which shall not be treated as Expenses hereunder. If the
Resort has not reopened, or can not reasonably be expected to reopen, within two
years from the date of the casualty, as a Resort of the same type and class and
in substantially the same condition as the Resort prior to the casualty, then
either Master Manager or Operator may terminate this Agreement by delivering
thirty (30) days written notice of termination to the other party.
7.2 Termination. Notwithstanding the foregoing, if the damage to the Resort is
-----------
so extensive that the Resort is no longer useable as a Resort of the type and
class immediately preceding such taking or condemnation, either Operator or
Master Manager may terminate this Agreement by delivering written notice of
termination to the other party to take effect thirty (30) days from the date of
the notice.
ARTICLE 8.
CONDEMNATION
8.1 Termination. If all or such a portion of the Resort shall be taken or
-----------
condemned as to make it imprudent or unreasonable, in Operator's reasonable
opinion, to use the remaining portion as a Resort of the type and class
immediately preceding such taking or condemnation, then in either event this
Agreement shall cease and terminate as of the date that is thirty (30) days from
the issuance of notice by either party.
8.2 Compensation. Operator shall be entitled to submit and process a claim for
------------
damages, including moving expenses and damages to fixtures and equipment owned
by Operator, if any. Master Manager agrees to cooperate with Operator to the
extent necessary to enable Operator to present and process a claim for such
items.
ARTICLE 9
INSURANCE
9.1 Insurance Requirements.
-----------------------
9.1.1 Operator will obtain and maintain comprehensive general and/or
-----
umbrella liability insurance for the Resort and the Resort Services Commercial
Lots, with minimum coverage in the amount of $25,000,000(12) combined single
limit for injury to or death of one or more people in any single occurrence and
for damage to or destruction or loss of property, which shall name Owner, Master
Manager, Operator, the Condominium Associations, the Property Associations, and
the Unit Owners that are part of the Rental Program as additional insureds. In
addition, Operator shall maintain the following types of insurance at such times
and in such amounts as Operator deems necessary or advisable, and provided same
is available on usual terms and at customary rates: (i) comprehensive crime
bond, (ii) innkeeper's insurance, and (iii) automobile, bodily injury and
property damage liability and physical damage insurance, all of which shall name
Owner, Master Manager, and Operator as an additional insured parties. Owner will
obtain and maintain, in the name and for the account of Owner, property
insurance insuring the Resort against damage or loss by fire or other casualty
covered by the broad form, comprehensive perils, on a replacement cost basis, in
an amount equal to at least the full replacement value of the Resort (less any
customary deductible amount), including business interruption insurance and
boiler and machinery insurance, which policy shall name Master Manager and
Operator as additional insureds. Master Manager shall have the right, but not
the obligation, to maintain insurance with respect to Units in the Rental
Program and charge the premiums to the owners of the Units (subject to the terms
and provision set forth in the applicable Management Agreement). Operator shall
assist Master Manager in obtaining property insurance, if so requested.
------------------------
(12) The parties agree to consider the recommendation of the insurance agency,
broker or carrier that Master Manager employs to underwrite and place this
insurance. The Parties acknowledge that the institutional lender(s) that provide
financing to the Resort may dictate the insurance requirements.
9.1.2 Operator may maintain any insurance permitted or required by this
Agreement under a blanket policy covering the Resort and other properties
operated by Operator or its Affiliates, in which case the premiums may be
allocated by Operator on a reasonable basis among the various properties. All
insurance required to be maintained pursuant to this Article 9 shall be placed
with companies reasonably acceptable to Master Manager and Operator and shall
include as additional insured the holder of any mortgage instrument, if
requested by Master Manager.
9.1.3 Within fifteen (15) days of the inception or renewal of all policies
required herein, Operator shall deliver to Master Manager certificates
evidencing that all insurance required to be maintained under this Agreement is
in full force and effect. In addition, at least thirty (30) days prior to the
date on which any insurance premiums must be paid to prevent delinquency
thereof, Operator will, upon request of Master Manager, deliver to Master
Manager a statement or statements showing the amount of the premiums required to
be paid, the name and mailing address of the party to whom the same is payable
and receipts reflecting that all such amounts have been fully paid.
9.1.4 Master Manager and Operator shall consult each other with regards to
a reasonable allocation of insurance premiums between Owner, Condominium
Associations, Property Associations, and the Unit Owners that are part of the
Rental Program.
9.2 Worker's Compensation Insurance. Master Manager and Operator shall
---------------------------------
maintain Worker's Compensation Insurance for its respective employees of the
Resort, up to the statutory limit, including broad form all states coverage and
Employer's Liability; the costs thereof shall be treated as Expenses hereunder.
Within fifteen (15) days of receipt of a written request, each party shall
furnish the other with an insurance certificate evidencing that it has obtained
such required Worker's Compensation Insurance.
10
INDEMNIFICATION
10.1 Indemnification of Operator. Master Manager assumes sole and
-----------------------------
complete responsibility for, and will indemnify and hold harmless Operator and
its Affiliates and their respective partners, members, shareholders, directors,
officers, employees and agents from and against all payments of money, including
those with respect to fines, penalties, taxes, losses, damages, costs and
expenses, such as reasonable attorney fees(13), investigation expenses, court
costs, deposition expenses, and travel and living expenses ("Payments"), due to
--------
any claim, demand, challenge, cause of action, lawsuit, dispute or controversy,
investigation or administrative proceeding made by any person or entity
("Claim") with respect to (A) this Agreement (to the extent that this Agreement
-----
is the link to the Operator for a cause of action arising out of the following
events or documents), the Rental Management Agreement, any Management Agreement,
the Rental Program, the Master Association Management Agreement, the Master
Association, the Master Declaration and other governing documents of the Master
Association, the Condominium Association Management Agreement, the Condominium
Association, the Declaration of Condominium and other governing documents of the
Condominium, the CDD, the CDD Management Agreement, the governing documents,
legal requirements and taxation/assessment procedures of the CDD, the Optional
Services Agreements, the Optional Services and any other services provided under
this Agreement, and any and all matters arising in connection with any of the
foregoing, (B) the operation of the Resort (including, without limitation, the
administration, operation and management of: the Rental Program as directed by
Master Manager, Participating Units, property owned by the Master Association,
Condominium Associations and/or CDD, the Resort Services Commercial Lots,
property owned by Owners or its Affiliates, and operation of all other Resort
facilities and amenities, and including the providing of Resort Services and
Optional Services) by Operator or any Affiliate of Operator, (C) sales and
marketing activities of Owner and its Affiliates, Master Manager, agents and
employees regarding the Condominium Units, Town Homes, Resort Services
Commercial Lots, Rental Program, Rental Management Agreements, timeshare
offerings and/or any other portion of the Project including, without limitation,
------------------------
(13) This indemnification for reasonable attorneys' fees requires that Master
Manager shall designate the attorneys to represent and defend Operator's
interests.
any alleged or actual violations of federal or state securities laws, (D) any
alleged or actual misrepresentation or fraud by Owner or its Affiliates, agents
and employees, (E) any alleged or actual breach or default by Owner or its
Affiliate of any covenant, term or provision set forth in this Agreement or any
breach or inaccuracy of any representation or warranty of Owner set forth in
this Agreement, (F) development, financing, construction and operational
activities of Owner and its Affiliates, agents and employees as to the Project
or any portion thereof including, without limitation, latent conditions and
defects in design, "structural defects" (as such term is defined in Section
-------
3.2.3 hereof), defects in materials or workmanship, non-conformance with the
-----
final plans and specifications approved by Operator, and failure to comply with
applicable laws in relation to design, construction or materials, ("Construction
Defects") (G) any responsibility, liability or obligation of Owner as the
developer of the Project, developer of the Resort, Declarant under the Master
Declaration, Declarant under the Declaration of Condominium or creator /
declarant of the CDD, (H) Owner's failure to comply with the requirements of the
ADA, or (I) any acts or omissions of Owner or anyone associated with Owner,
including those caused by or based on: (1) violation of any law, ordinance,
code, regulation, judgment or decision; (2) theories of vicarious liability
(including agency, apparent agency and employment); (3) Operator's failure to
compel Owner's compliance with the provisions of this Agreement; and (4)
Payments made by Operator, or for which Operator is responsible, in connection
with Operator enforcing Owner's obligations. Notwithstanding the preceding
language of this subsection (a), Owner shall not be liable for the Payment of
any indemnified Claim to the extent such Claim is caused by or results from
Operator's gross negligence or willful misconduct occurring during the Term
(including gross negligence or willful misconduct based on theories of vicarious
liability). The provisions of this SECTION 10.1 shall not constitute a release
------------
of any rights of Operator arising as a result of any breach or default by Owner
of a provision of this Agreement and shall not supersede any right of
termination belonging to Operator. If Operator causes loss to the Resort by
virtue of any negligent act, Operator shall not be personally liable for the
loss unless and until the negligent act or omission is repeated two (2) more
times within 36 months. In the event that a negligent act or omission is
repeated as aforesaid, such third repeated act or omission shall constitute
gross negligence and Operator shall be responsible for all direct costs
resulting therefrom.
10.2 Defense Against Claims. Operator shall provide reasonable notice to Owner
----------------------
and Master Manager of any Claim in respect of which Operator intends to seek
indemnification from Master Manager; provided, however, that Operator's failure
to give such notice shall not relieve Master Manager from its indemnification
obligations hereunder except to the extent that Master Manager or Owner is
actually prejudiced thereby. Master Manager will defend Operator against all
Claims covered by Master Manager's indemnification obligations under this
Agreement. The indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall not be at the expense of Master Manager
if Master Manager has assumed the defense of and responsibility for the action
with counsel reasonably satisfactory to indemnified party; provided that the
fees and expenses of indemnified party's counsel shall be at the expense of
Master Manager if (i) the employment of such counsel has been specifically
authorized in writing by Master Manager or (ii) indemnified party shall have
been advised by Master Manager's legal counsel that there is a conflict of
interest or issue conflict involved in the representation by counsel employed by
Master Manager in the defense of such action on behalf of indemnified party or
that there may be one or more legal defenses available to indemnified party
which are not available to Master Manager that preclude joint representation by
the same law firm (in which case Master Manager shall not have the right to
assume the defense of such action on behalf of indemnified party, it being
understood, however, that Master Manager shall not, in connection with any one
such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys for indemnified party, which firm shall be designated in writing by
indemnified party and approved by Master Manager; and, Master Manager has
entered into a written fee agreement with said firm).
10.3 Survival. The provisions of this Article shall survive any cancellation,
--------
termination or expiration of this Agreement or the Term, whether by lapse of
time or otherwise, and shall be binding upon Master Manager and Operator and
their respective successors and assigns but only to the extent of the statute of
limitations applicable to the claim.
ARTICLE 11
MASTER MANAGER'S AND OPERATOR'S COVENANTS
11.1 Initial Construction.
---------------------
11.1.1 Timing and Construction Standards. Master Manager will cause
------------------------------------
Developer to use diligent efforts to complete construction of the Project as
quickly as practicable. Without limiting the generality of the foregoing, from
and after the Commencement Date (which, by definition will not occur until at
least One Hundred Fifty (150) Units have enrolled in the Rental Program, Master
Manager shall cause Developer to use diligent efforts to obtain Certificates of
Occupancy or the local equivalent on all remaining Units in Phase One as quickly
as possible, but in no event later than one hundred and eighty (180) days after
the Commencement Date. Master Manager shall cause the Resort to be constructed
(a) subject to the Operating Standard, in a good and workmanlike manner, with
finishes and workmanship comparable in quality to the finishes and workmanship
of Hilton Grand Vacation Resort, Orlando, Florida (b) in accordance with all
applicable laws, regulations, codes and ordinances and (c) in accordance with
the plans and specifications approved by Operator. Master Manager shall ensure
that all units that are included in its Rental Program for management by
Operator are finished to the specifications as attached hereto and all said
units become members of the Tierra Del Sol Club. Operator acknowledges that all
Town-Home units sold by Owner up to August 31, 2004 do not comply with these
specifications and did not include membership of the Tierra Del Sol Club. Master
Manager will use its best endeavors to sell unit buyers an upgrade package so
that they will comply with this clause.
11.1.2 Construction Oversight and Punch List. Master Manager shall cause
--------------------------------------
Developer to deliver to Operator, for Operator's review and comment, the plans
and specifications pertaining to the original construction of the Resort, and
any subsequent expansion or other construction in connection with same, together
with all change orders unless the proposed changes and modifications are not
material as to their effect. For purposes of this paragraph, a change or
modification shall be deemed to be material as to its effect if it causes any
item or feature of the Resort to differ from what is customary in the Resort
industry for "4-Diamond" resorts, increases the expense of maintaining or
operating the Resort, diminishes the usefulness or practicality of any item or
feature of the Resort, or may affect the operation of the Resort, the Rental
Program or the other Resort Operations, financially or otherwise. On or about
the time of issuance of the certificates of occupancy for the Resort Services
Commercial Lots, Master Manager and Operator and the project architect shall
jointly inspect the parts of the Project to be utilized in the Resort
Operations, including the Resort Services Commercial Lots, and shall create a
punch list of items to be finished or corrected. Master Manager covenants to
cause Developer to promptly finish or correct, or cause the contractors to
promptly finish or correct, all punch list items. The Commencement Date shall
not occur until Master Manager and Operator are satisfied that the parts of the
Project to be utilized in the Resort Operators are in all respects ready for
occupancy and full business operation by Operator, except for minor punch list
items which, in Operator's reasonable judgment, do not materially interfere with
the full normal operations of the Resort. Operator acknowledges that some of
the interiors of certain Town Homes sold prior to August 31, 2004 do not comply
with the standards required of this clause and as such shall not be offered
inclusion in the Master Manager's Rental Program until they are in compliance.
11.1.3 Defects. After Operator takes occupancy of the Resort and Resort
-------
Services Commercial Lots, it shall provide Master Manager and the Owner(s)
thereof with notice of matters related to Construction Defects, although failure
to provide such notice will not constitute a waiver of claims with regard to the
defects. Master Manager shall cause Developer to remedy the defects with as
little impact to the Resort Operations as reasonably possible.
11.2 Initial FF&E. The design plans and initial budget to furnish the
-------------
Resort, including the Resort Services Commercial Lots (the "Initial FF&E
------------
Budget"), shall be subject to Master Manager's and Operator's prior, written
approval and to compliance with the Operating Standard. All items of the
initial Furniture, Fixtures and Equipment, including Operating Equipment, to
furnish the Resort and the Resort Services Commercial Lots (the "Initial FF&E"),
------------
shall be subject to the approval of Master Manager and Operator prior to the
purchase of any item of the Initial FF&E. The Initial FF&E Budget shall include
sufficient quantities of Operating Equipment (including linens, china and
glassware etc.), in Master Manager's and Operator's reasonable judgment, to
operate the Resort. Owner recognizes that artwork forms an important part of
the image of Sonesta properties. As such, the artwork which is part of the
Initial FF&E shall be selected by Operator but is subject to the approval of the
Master Manager, however, in the event of a disagreement over the selection of
the artwork, the opinion of the Operator shall prevail, unless the disagreement
is budgetary, in which said event the final decision rests with Master Manager,
subject to the artwork selected by Operator being commensurate with artwork for
a first class Resort in a metropolitan area in the United States.
In order to participate in the Rental Program, each Participating Unit
shall be required to contain the standard package of Furniture, Fixtures and
Equipment sold by or provided by Master Manager in various arrangements and
approved by Operator for compliance with the quality standard package of
Operating Equipment approved by Master Manager and Operator, the initial cost of
which shall be borne by the Participating Unit Owner or Master Manager as the
Management Agreement will dictate. The initial Furniture, Fixtures and
Equipment package and Operating Equipment package for Participating Units will
be comparable to the furniture, fixtures and equipment and the operating
equipment and supplies contained in units at the Hilton Grand Vacations Resort,
Orlando, Florida in terms of style and quality. The design plans and budgets
for the furniture, fixtures and equipment and the operating equipment and
supplies to be furnished initially to the Participating Units, and selection and
purchase of same, shall be subject to Operator's prior written approval, which
shall not unreasonably be withheld.
11.3 Amendments To Declaration of Condominium or Master Declaration or
--------------------------------------------------------------------
Related Documents. The current versions of the Declaration of Condominium and
------------------
the Master Declaration, as of the Effective Date, are attached hereto as
EXHIBITS "H" AND "I", respectively. Master Manager covenants that, as long as
---------------
Owner, or its Affiliate, maintains control over the Condominium Association or
the Master Association, it will not propose, consent to or otherwise finalize or
record any amendment to the Declaration of Condominium, the Master Declaration
or the Articles or By-Laws of the Condominium Association or the Master
Association that is "material and detrimental as to its effect" upon Operator or
that adversely affects the Resort or the Resort Operations or the Resort
Services Commercial Lots without reviewing the proposed amendment with the
Operator and obtaining Operator's consent thereto. Master Manager covenants
that, after Master Manager no longer maintains control over the Condominium
Association or the Master Association, it will not propose, consent, approve or
otherwise finalize or record any amendment to the Declaration of Condominium,
the Master Declaration or the Articles or By-Laws of the Condominium Association
or the Master Association that is material and detrimental as to its effect
without advising the Operator. Master Manager agrees to insert into the several
management agreements, including but not limited to the association and rental
association management agreements, a clause that requires the association to
fund a capital reserve account for purposes of viability. In this context,
viability means that the viability of the manager's ability to properly manage
the association is dependent on the viability of the annual budgets. For
purposes of this paragraph, an amendment shall be "material and detrimental as
to its effect" only if it can reasonably be expected to have an adverse
financial effect on the Resort, the Rental Program or the Resort Operations or
if it can reasonably be expected to have more than a de minimus adverse effect
in any other respect (other than financially). The provisions of this SECTION
-------
11.3 shall not survive termination of this Agreement or expiration of the Term.
---
11.4 Title Covenants. Master Manager covenants and agrees:(a) to promptly
----------------
remove, discharge or bond or cause to be removed, discharged or bonded any and
all liens suffered to be placed on the Resort Services Commercial Lots or any
part thereof or any other real property owned by Owner or its Affiliates within
the Project that is operated as part of the Resort, not caused by Operator, in
order that the possession by Operator of the Resort Services Commercial Lots and
other such real property shall not be disturbed; (b) to incur no encumbrances,
easements, liens, covenants, charges, burdens, claims, restrictions or other
rights of third persons with respect to the Land or Resort or Resort Services
Commercial Lots, including rights and obligations secured thereby, which may, in
Operator's reasonable judgment, materially adversely affect the Resort
Operations, title to the Land or the Resort or Resort Services Commercial Lots;
(c) not to do or fail to do anything that would violate the terms, covenants,
conditions and obligations to be made, kept, observed or performed by Owner
under any concession, security instrument or other agreement in respect of the
Resort or Resort Services Commercial Lots that would adversely affect the Resort
Operations.
11.5 Pre-Opening Services. No later than eight (8) months prior to the
---------------------
anticipated Commencement Date, the Pre-Opening Budget shall be prepared by
Operator and approved by Master Manager. Master Manager shall be responsible
for all costs and expenses in the Pre-Opening Budget, as the same may be amended
as set forth herein and will reimburse Operator promptly, on a monthly basis for
any and all expenditures under the Pre-Opening Budget. Master Manager recognizes
that Operator, with written notice to Master Manager, may incur certain
pre-opening expenditures before the Pre-Opening Budget has been prepared and
approved. Master Manager agrees that the Pre-Opening Budget will be intended
only to be a reasonable estimate and may need to be amended should opening
conditions or circumstances change. Master Manager acknowledges that the
Pre-Opening Budget will be premised upon an assumed soft opening and subsequent
Commencement Date. If the actual Commencement Date is later than the assumed
date or if opening conditions materially change, certain line items of the
Pre-Opening Budget will need to be adjusted in order to ensure a successful
opening of the Resort. Master Manager agrees to reasonably consider and approve
requests from Operator for such changes in the Pre-Opening Budget. Operator,
for and on behalf of Master Manager, is authorized to take all action deemed
reasonably necessary by Operator to implement, perform and/or cause the
performance of the items set forth in the Pre-Opening Budget.
During the period prior to the Commencement Date, regular periodic
inspections, including the required periodic pre-opening inspections, shall be
conducted jointly by Master Manager and Operator for the purpose of insuring
substantial compliance with the plans and specifications for the Resort Project
and to maintain a current punch list. Owner agrees to take all reasonable
measures necessary to remedy or cause Developer to remedy any deficiencies
pursuant to the plans and specifications and requirements of this Agreement
indicated by such pre-opening inspection. Should Operator elect, it may accept
the Resort and/or Resort Services Commercial Lots conditionally, subject to such
deficiencies being remedied by Master Manager. Any acceptance of the Resort
and/or Resort Services Commercial Lots by Operator shall have no binding effect
and may be rescinded by Operator if any such deficiency or deficiencies shall
subsequently be discovered or Owner fails to cause any identified discrepancies
to be remedied to Operator's reasonable satisfaction. In addition, Owner shall
cause the Resort and Resort Services Commercial Lots to be made available for
Operator's performance of the Pre-Opening Services.
11.6 Sales Office. Operator acknowledges and agrees that Owner and Master
------------
Manager will occupy offices in the Resort in the area where the other commercial
spaces are located, at a specific location within such area for use as a real
estate sales office for the sale and resale of the Condominium Units and Town
Home Units and Timeshare and Vacation Club memberships and other real estate
activities (the "Sales Office") and Master Manager shall occupy offices to
---------------
perform its duties and responsibilities in managing its affairs, the affairs of
the Condominium and Homeowners' Associations, the CDD and duties and
responsibilities related to this Agreement.
11.7 Exclusivity. During the Term of this Agreement, Operator shall not
------------
operate another hotel, resort, time-share or like facility (including any other
hospitality or leisure-related concepts) under the name "Sonesta" within 50
miles of the Resort, or otherwise license the name "Sonesta" for such use.
11.8 Purchasing. As requested by Master Manager, Operator shall supervise and
----------
purchase or arrange for the purchase of capital items (including Initial FF&E),
Operating Equipment, food, beverages, inventories, provisions and supplies which
in the normal course of business are necessary and proper for the maintenance
and operation of the Resort and shall be entitled to collect its then-current
▇▇▇▇-up with respect to such purchased items, which ▇▇▇▇-up shall not exceed
seven percent (7%). Operator shall use reasonable efforts to purchase the
Furniture, Fixtures and Equipment, Operating Equipment and other goods and
supplies on competitive terms, including price, giving due regard to maintaining
the Quality Standards.
ARTICLE 12
AMERICANS WITH DISABILITIES ACT
12.1 Requirements of ADA. The parties acknowledge that the Americans With
-------------------
Disabilities Act of 1990 (42 ▇.▇.▇. ▇▇▇.▇▇▇▇▇ et seq.) and regulations and
guidelines promulgated thereunder, as all of the same may be amended and
supplemented from time to time (collectively referred to herein as the "ADA")
----
establishes requirements for business operations, accessibility and barrier
removal, and that such requirements may or may not apply to the Resort depending
on, among other things: (1) whether the Resort Operations and/or the Resort
and/or each Unit and/or the Resort Services Commercial Lots is deemed a "public
accommodation" or "commercial facility," (2) whether such requirements are
"readily achievable," and (3) whether a given alteration affects a "primary
function area" or triggers "path of travel" requirements.
12.2 Master Manager Compliance with ADA. Master Manager and Operator
--------------------------------------
hereby agree that Master Manager shall be responsible for compliance with all
requirements of the ADA with respect to the initial construction of the Resort
and all components thereof and Master Manager agrees that it or another entity
controlled by Owner will retain title to or control over a sufficient number of
Units that comply with the use and access requirements of the ADA (the "ADA
---
Compliant Units") to ensure compliance by the Resort with the ADA, and will make
--------------
the ADA Complaint Units available at all times for use as part of the Rental
Program, or will otherwise guaranty that there will be sufficient ADA Compliant
Units in the Rental Program at all times.
12.3 Delivery of Compliance Certificate. As soon as reasonably practicable
-------------------------------------
after substantial completion of the Resort, Master Manager shall obtain and
deliver to Operator a certification by the project architect certifying that the
initial construction of the Resort complies with the then-current ADA
requirements. Master Manager shall be responsible for compliance with all
requirements of the ADA with respect to any alterations to the Resort and/or
Resort Services Commercial Lots made during the Term (including repair and
restoration performed in connection with a casualty event or Condemnation),
including the cost of ADA Title III "path of travel" requirements triggered by
such alterations. Operator shall be solely responsible for requirements under
Title I of the ADA relating to hiring and firing of Resort employees.
ARTICLE 13
SONESTA PROPRIETARY MARKS
13.1 Ownership of Sonesta Marks. Operator shall demonstrate its ownership
--------------------------
of and shall use Sonesta Proprietary Marks in the performance of its
responsibilities pursuant to this Agreement. No other party acquires rights to
the Sonesta Proprietary Marks pursuant to this Agreement or otherwise. No other
party will assert any ownership or other rights in the Sonesta Marks and will
take no action whatsoever to contest Operator's proprietary interest in any of
them.
13.2 Changes. Operator, from time to time in its discretion, may modify
-------
all or any part of the Sonesta Proprietary Marks. As soon as reasonably
possible, Operator will cease using the former Sonesta Proprietary Marks and
commence using the modified Sonesta Proprietary Marks with respect to the
operation of the Resort. Operator shall be solely responsible for any expenses
associated with the modifications of Sonesta Proprietary Marks.
13.3 Defense or Enforcement of the Sonesta Proprietary Marks. Master
----------------------------------------------------------
Manager will immediately notify Operator of anything that Master Manager
reasonably believes may affect Operator's ownership or use of the Sonesta
Proprietary Marks ("Sonesta Proprietary Marks Claim"). If Owner or Master
----------------------------------
Manager is named as a party in any proceedings with respect to any Sonesta
Proprietary Marks Claim, Master Manager must deliver copies of all relevant
documents to Operator within seven days after receipt of them by any affiliate
of Master Manager, and tender the defense to Operator. Operator, at its expense,
will defend against such Sonesta Proprietary Marks Claim resulting solely with
respect to the use of the Sonesta Proprietary Marks. If Operator makes a
determination with respect to any proceedings or negotiations in connection
with the Sonesta Proprietary Marks through legal counsel, or there is an
adjudication by a court of competent jurisdiction, that a third party's right to
all or any part of the Sonesta Proprietary Marks is superior to Operator's,
Operator will cease using that part of or all of the Sonesta Marks with respect
to the operation of the Resort.
13.4 Master Manager's and Owner's use of Sonesta Marks. Master Manager
--------------------------------------------------
and Owner shall have the limited right to use the Sonesta Proprietary Marks in
(a) promotional, marketing, sales, or advertising literature pertaining to the
Resort, (b) legal documents or agreements pertaining to the Resort, and (c)
official documents or instruments to be filed with governmental or municipal
departments or offices pertaining to the Resort, subject to obtaining, in all
cases, Operator's prior written approval, which approval may be withheld in
Operator's sole discretion, and subject to compliance with the other terms and
conditions of this Agreement.
ARTICLE 14
ARBITRATION
14.1 Any dispute arising hereunder between Master Manager and Operator
shall be referred for decision to arbitration as follows. Within twenty (20)
days of the receipt by one party of written notice from the other requesting
arbitration and describing in detail the dispute to be resolved, each party
shall choose an arbiter with at least ten (10) years' experience in or in
connection with the hospitality industry, and both of said arbiters shall
together resolve said dispute. If either party fails to appoint an arbiter
within the period of time set forth herein for appointment of an arbiter, then
the other party may apply to the American Arbitration Association, Orlando
Office, for the appointment of such arbiter. In the event that said arbiters
are unable to resolve said dispute within thirty (30) days of the date the last
of them was appointed, they shall together select a third arbiter. Within
thirty (30) days of the selection of said third arbiter with like experience in
or in connection with the hospitality industry, said third arbiter shall issue
written notice to all Parties choosing the position advocated by either one of
the parties' arbiters, without compromise. If the parties' arbiters are unable
to agree on a third arbiter within twenty (20) days, then either party may apply
to the American Arbitration Association, Orlando Office, for the appointment of
a third arbiter to decide the dispute. Any arbitration hereunder shall be
conducted in Orlando, Florida and the representatives of the respective parties
shall have the opportunity to submit written or documentary evidence and oral
testimony for the consideration of said third arbiter.
14.2 The decision in writing of the third arbiter so selected or appointed
shall be final and conclusive upon both parties. The costs and expenses of such
arbitration, including the compensation and expenses of such third arbiter, but
excluding attorneys' fees, shall be borne by the parties as the arbiters may
determine, but failing such determination, as an Expense; provided, however,
that if the third arbiter finds that a claim submitted for arbitration was
frivolous or that a party's conduct during the arbitration procedure was
unreasonable, the party making said claim or conducting itself unreasonably
shall bear all such costs and expenses. Either party may apply to any court of
competent jurisdiction for an order confirming the award; judgment of the court
shall be entered upon the award unless the award is vacated, modified or
corrected as provided by law.
14.3 All arbiters shall be bound by the provisions of this Agreement and shall
not have the power to subtract from, add to, or modify same. If requested by
either party, an arbitration shall be conducted in accordance with the Expedited
Procedures provisions of the Commercial Arbitration Rules of the American
Arbitration Association (or any similar successor rules) applicable as of the
date of the initiation of arbitration.
14.4 The pendency of arbitration proceedings hereunder shall stay the rights
and/or obligations of the parties as to the matter in dispute.
14.5 Pending the decision of the arbiters, the parties shall endeavor to
operate under this Agreement with as little disruption to the operation of the
Resort as possible.
ARTICLE 15
GENERAL PROVISIONS
15.1 Subordination to Financing.
----------------------------
15.1.1 Owner or its Affiliates may borrow money from one or more lenders
for the acquisition, development and/or construction of the Project (or portions
thereof). Operator shall, upon written request from Owner, attorney to any
mortgagee who enters into a non-disturbance agreement with Operator.
15.2 Nature of Relationship. Owner acknowledges that the relationship of
-----------------------
the parties established by this Agreement is an agency coupled with an interest.
This Agreement is not terminable absent default of Operator or the occurrence of
other events as specified in SECTION 5.2. Operator shall not be deemed or
------------
construed to be, and shall not be, under any circumstance or for any purpose, a
partner or joint venturer of or with Owner or any Affiliate of Owner including
Master Manager by virtue of, or under, this Agreement or otherwise in respect of
the Project, Resort, Town Homes and/or Condominiums.
15.3 Notice. All notices, requests, consents and other communications
------
required or permitted under this Agreement shall be in writing (including
electronic transmission) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, electronically
transmitted, or mailed (airmail if international) by registered or certified
mail (postage prepaid), return receipt requested, addressed to:
If to the Owner at: Tierra del Sol Resort, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
With a copy to:
If to the Master Manager at: c/o American Leisure Hospitality Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
e-mail:
If to the Operator at: Sonesta International Hotels Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Office of the Treasurer
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: and
▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
With a copy to: Gunster, Yoakley & ▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. and
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may designate by notice complying with the
terms of this Section. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date of transmission with
confirmed answer back if by electronic transmission; and (c) on the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed.
15.4 Amendments. The provisions of this Agreement may not be amended,
----------
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
15.5 Severability. If any provision of this Agreement is contrary to,
------------
prohibited by or deemed invalid under applicable law or regulation, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given full force and effect so far as possible. If any provision
of this Agreement may be construed in two or more ways, one of which would
render the provision invalid or otherwise voidable or unenforceable and another
of which would render the provision valid and enforceable, such provision shall
have the meaning which renders it valid and enforceable.
15.6 Governing Law. This Agreement and all transactions contemplated by
--------------
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Florida.
15.7 Jurisdiction and Venue. The parties acknowledge that a substantial
------------------------
portion of the negotiations and anticipated performance of this Agreement
occurred or shall occur in Orlando, Florida. Any civil action or legal
proceeding arising out of or relating to this Agreement shall be brought in the
courts of record of the State of Florida in Orange County or the United States
District Court, Southern District of Florida, Orlando Division. Each party
consents to the jurisdiction of such court in any such civil action or legal
proceeding and waives any objection to the laying of venue of any such civil
action or legal proceeding in such court.
15.8 Further Assurances. The parties hereby agree from time to time to
-------------------
execute and deliver such further and other transfers, assignments and documents
and do all matters and things, which may be convenient or necessary to more
effectively and completely carry out the intentions of this Agreement.
15.9 Headings. The headings contained in this Agreement are for
--------
convenience of reference only, are not to be considered a part of this Agreement
and shall not limit or otherwise affect in any way the meaning or interpretation
of this Agreement.
15.10 Binding Effect. All of the terms and provisions of this Agreement
---------------
shall be binding upon, inure to the benefit of, and be enforceable by the
parties and their respective legal representatives, successors and permitted
assigns, whether so expressed or not.
15.11 Assignment. Operator shall have the right to assign its interest in
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this Agreement, with Master Manager's written consent, to any Affiliate of
Operator or to any person or entity with which or into which Operator may be
merged or to which it may transfer substantially all of its assets, provided
that any such assignee enjoys the same rights to the Sonesta Marks as Operator
enjoyed and provided, further, that such assignee assumes Operator's obligations
hereunder pursuant to an assumption agreement which is satisfactory to Master
Manager and provided further that such assignee has the same or better operating
experience and standards as the assignor. Neither Operator nor Master Manager
shall have the right to make any other assignment of this Agreement or any
interest herein without the prior written consent of the other.
15.12 Enforcement Costs. Subject only to the provisions of Article XIV, if
-----------------
any civil action, arbitration or other legal proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach, default
or misrepresentation in connection with any provision of this Agreement, the
successful or prevailing party or parties shall be entitled to recover from the
non-prevailing party reasonable attorneys' fees, sales and use taxes, court
costs and all expenses even if not taxable as court costs (including, without
limitation, all such fees, taxes, costs and expenses incident to arbitration,
appellate, bankruptcy and post-judgment proceedings), incurred in that civil
action, arbitration or legal proceeding, in addition to any other relief to
which such party or parties may be entitled. Attorneys' fees shall include,
without limitation, paralegal fees, investigative fees, administrative costs,
sales and use taxes and all other charges billed by the attorney to the
prevailing party.
15.13 Remedies Cumulative. Except as otherwise expressly provided herein, no
--------------------
remedy herein conferred upon any party is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. No single or partial exercise by
any party of any right, power or remedy hereunder shall preclude any other or
further exercise thereof.
15.14 Force Majeure. Neither party shall be liable to the other in damages,
--------------
nor shall this Agreement be terminated, because of any Force Majeure.
15.15 Consents or Approvals. Except as otherwise provided herein, whenever in
----------------------
this Agreement the consent or approval of Owner, Master Manager or Operator is
requested by the other party in writing, and provided this Section is
specifically referenced in such request, such consent or approval shall be
deemed granted unless Operator, Master Manager or Owner (as the case may be)
delivers a written denial thereof to the requesting party within ten (10) days
of its receipt of the request. Unless provided to the contrary in this
Agreement, any such denial must be reasonable and must set forth the reason(s)
for denial in reasonable detail.
15.16 No Recording of Memorandum of Agreement. No party shall have the right
-----------------------------------------
to record a Memorandum of Agreement with respect to this Agreement in the Public
Records of Polk County or Orange County, Florida.
15.17 Master Manager's Representations. Master Manager represents and
--------------------------------
warrants that it is authorized by the fee owner of the Resort Services
Commercial Lots and has full right and authority to enter into this Agreement on
the terms and conditions set forth herein, and no other person or entity has any
right of possession in or to the Resort Services Commercial Lots, and that the
provisions of this Agreement do not conflict with or violate the provisions of
existing agreements with any third parties. These representations and warranties
shall survive termination of this Agreement or expiration of the Term.
15.18 Providing Information. Operator shall cooperate with Master Manager in
----------------------
providing financial and other information reasonably requested by Owner's
lender(s) regarding the operation of the Resort.
15.19 Time of the Essence. Time is of the essence with respect to Operator's
---------------------
and Master Manager's respective obligations hereunder; provided, however, that
any delay in the performance of any such obligations due to causes set forth in
SECTION 15.14 shall be deemed to extend the time for performance of such
--------------
obligations for the period of such delay; and provided further that the
inadvertent or incidental failure of either party to meet a deadline that has no
material effect shall not result in termination of this Agreement.
15.22 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Confirmation of
execution by telex or by telecopy or telefax of a facsimile signature page shall
be binding upon any party so confirming.
15.23 Days. Any reference in this Agreement to "days" shall mean calendar
----
days, unless a contrary intent is clearly set forth.
15.24 Entire Agreement. This Agreement and the Exhibits and Schedules
----------------
attached hereto represent the entire understanding and agreement between the
parties with respect to the subject matter hereof, and supersedes all other
negotiations, understandings and representations (if any) made by and between
such parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
BALANCE OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE
--------------
OPERATING AGREEMENT
AMERICAN LEISUREHOSPITALITY GROUP, INC.
AND SONESTA ORLANDO, INC.
JANUARY 29, 2005
OPERATOR:
WITNESSES: SONESTA ORLANDO, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------- By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------- -------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title: Vice President
--------------------------------- ------------------
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Date: January 29, 2005
--------------------- -------------------
MASTER MANAGER:
AMERICAN LEISURE HOSPITALITY
GROUP, INC.
WITNESSES:
-----------------------------------
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------- By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Print Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------ --------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title: Chief Executive Officer
-----------------------------------
Date: January 29, 2005
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ------------------------
-------------------------
ROSTER OF EXHIBITS AND SCHEDULES CITATIONS
------------------------------------ ---------
Exhibit A - Legal Description (Preamble) 1.43
Exhibit B - Resort Description (Preamble)
Exhibit C - CDD Facilities - Need 1.13
Exhibit D - (1) Rental Management Agreement 1.17 (a)
(2) Unit Management Agreement 1.65, 4.1
Exhibit E - Roster of Leases by Master Manager from Footnote 3
Owners of Resort Commercial Lots
Exhibit F - Roster of Resort Commercial Lots 1.74
Exhibit G-1 - Form of Disclaimer 4.3
Exhibit G-2 - Certificate of Disclaimer 4.3
Exhibit H - Declaration of Condominium 11.3
▇▇▇▇▇ ▇▇▇▇▇▇ at Tierra del Sol, A Condominium
Exhibit I - Master Declaration of Tierra del Sol Resort 11.3
HOA, Inc.
Exhibit J - Roster of Sonesta Proprietary Marks 1.77
Schedule 1.5 Section 1.5
Data Summary of the Resort Operation As Shall Be Depicted in the Annual Plan
EXHIBIT B
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RESORT DESCRIPTION
------------------
TIERRA DEL SOL RESORT
- 972 Condominiums and Townhomes Vacation Homes
- 100,000 sq. ft. +/- Clubhouse featuring
Registration & Concierge Facilities
Full Service Restaurant, Kitchen & Lounge
Lobby Lounge
Deli Market
Spa & Salon
Fitness Center
Video Arcade
Private Multi-purpose Rooms
Special Programs Room
Tierra del Sol Owner's Club
Administrative Offices
Master Association Administrative Office
Sales & Marketing Offices
- Swimming Pool and Deck with Lazy River and Waterslides
- Pool Snack Bars and Restroom Facilities
- Mini-golf (future)
- Interactive Water Park with Wave Pool and Rapid River (future)
- Wakeboard Water Attraction Facility (future)
- Administration Building
- Operations and Maintenance Center
- Housekeeping and Trash Storage Kiosks
EXHIBIT C
---------
ROSTER OF COMPONENTS
WESTRIDGE COMMUNITY DEVELOPMENT DISTRICT
("CDD FACILITIES")
Road & Street Lighting
- Offsite Sewer & Water Improvements
- US 27 Improvements (accel-decel lanes)
- Curbs, Asphalt, Striping & Signage (Collector Roadways and certain Common
Area Parking Areas)
- Arbors at various Sidewalk Locations
- Main Boulevard (4-lane) and Bike Lane & Landscaped Median
- Sidewalks
- Site Electrical & Progress Energy Transformers
- Fire Hydrants
Water & Wastewater
- Water, Sewer & Reclaimed (Re-use) Water Lines, Stormwater System
- Sanitary Sewer Lift Station
Landscaping & Common Areas
- Entrance Lighting
- ▇▇ ▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇
- ▇▇▇▇▇▇ ▇▇▇▇ Fountains & Hardscape
- Common Area Seed, Sod & Irrigation
- Entrance Sign & Hardscape
- Landscaping Facilities & Building
- Landscaping Equipment
- Bus Shelter & Bus Stop Improvements
- Grading
- Survey & Layout
- Wayfinding Signage (other than entrance)
Utilities & Fire Safety
- Burying Existing Power Lines
- Site Fire Protection System & Backflow Preventers
- Security & Fire Control Head-in Building
- Trash Compactor & Enclosure
Land
- Common Area Land
Professional Consultants
- Civil Engineering
- Landscape Architecture
- Building Architecture
Boundary, Topographical and Jurisdictional Boundary Surveying
