ADMINISTRATIVE SERVICES AGREEMENT Exhibit 10.11
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THIS ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement") is made and
entered into as of this 17th day of October, 1996, by and between Homestead
Village Incorporated, a Maryland corporation ("Homestead"), and SC Group
Incorporated, a Texas corporation ("SC Group").
WHEREAS, Homestead wishes to purchase from SC Group certain administrative
services designed to assist Homestead in the cost-efficient management of
Homestead's corporate and business affairs in the manner and pursuant to terms
and conditions as more specifically described herein; and
WHEREAS, SC Group desires to provide or cause to be provided those services
requested by Homestead under such terms and conditions; and
WHEREAS, SC Group will perform similar administrative services for other
entities (collectively "SC Group Clients") which may vary from time to time.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
Section 1. Services.
1.1 Services to be Rendered. SC Group shall provide Homestead with
the services described below (each, a "Service", and collectively, the
"Services"):
(a) Insurance Administration. Assistance in securing all forms of
insurance, including property, casualty, workers' compensation and
directors' and officers' liability coverage; managing insurance policies;
negotiation of premiums; arranging payment terms; managing claims; and
preparation of loss fund analysis. The amount and levels of insurance
shall be determined in the sole and absolute discretion of Homestead.
(b) Accounts Payable. Provision of all accounts payable functions
(currently all non site-level invoices); processing of all employee expense
reports and reimbursements of travel and entertainment expenses; and
maintenance of accounts payable and cash disbursement systems, including
reasonable internal controls.
(c) Internal Audit. Provision of internal audit coverage and audit
support, including property audits, financial audits, operational audits
and information system audits, as requested and authorized in advance by
Homestead.
(d) Cash Management. Operation and maintenance of collection systems,
concentration systems, and electronic disbursements (including wire
transfers, ACH payments and short term investing); maintenance of bank
accounts, including opening and closing of operating, security deposits,
local depository and xxxxx cash accounts; bank administration, and
maintenance of bank relationships.
(e) Human Resources.
(i) Benefit Administration. Negotiation and administration of
all health, dental, vision, life and long-term and short-term
disability insurance plans as well as 401(k) and flexible spending
plans; and administration of other miscellaneous employee benefits.
(ii) Human Resources Information Systems. Administration and
employee and labor relations including statutory compliance with all
governmental agencies, affirmative action, work force demographics;
processing wage and hour claims and utilization and EEO charges; and
compliance with annual reporting requirements.
(iii) Payroll. Production of payroll and related items;
maintenance of required records; compliance with federal and state
wage and hour regulations; tracking benefit hours; tracking and paying
wage garnishments and related orders; maintenance of Forms W-2; and
production and processing of special payroll checks.
(iv) Pre-Employment. Development of employment policies and
procedures; verification of applicant information such as drivers
license numbers, social security numbers, education, criminal
offenses, and past employment; and drug testing.
(v) Recruiting. Recruiting and retaining employees of Homestead
for the El Paso Operations Center who will perform services for
Homestead, including placement of newspaper advertisements,
contracting and negotiating with search consultants, screening of
candidates, interviews and employee orientation; processing new hires,
terminations, transfers, leaves of absence and miscellaneous status
changes as requested and authorized in advance by Homestead.
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(f) Management Information Systems.
(i) Applications Development. Development, maintenance and
continuing evolution of system applications to provide technology
solutions to business needs and problems, as requested and authorized
in advance by Homestead.
(ii) Telecommunications. Design, operation and maintenance of
network infrastructure, including telephone and data transmission
lines, voice mail, facsimile machines, cellular phones, pager, etc.;
negotiation of contracts with third party vendors and suppliers; and
local area network and wide area network communications support.
(iii) Operations/Technical Support and User Support. Design,
maintenance and operation of the computing environment, including
business specific applications, network wide applications, electronic
mail and other systems; purchase and maintenance of equipment,
including hardware and software; configuration, installation and
support of computer equipment; and education and training of the user
community.
(g) Tax Administration. Supervision and direction of the preparation,
review and filing of all federal, state and other required tax returns;
supervision and direction of ad hoc requests for assistance on tax related
matters; and coordination of all activities with Homestead's outside tax
preparer, as requested and authorized in advance by Homestead. All tax
matters shall be determined by Homestead in its absolute and sole
discretion.
(h) Special Projects. Direction and support of all special projects,
as requested and authorized in advance by Homestead.
(i) Legal. Coordination and supervision of all third party legal
services; assistance in the preparation of public filings and registration
statement; and oversee processing of claims against Homestead.
(j) Research. Provision of periodic market research reports and
special research assignments as requested by management of Homestead.
(k) Investor Relations/Communications.
(i) Capital Markets. Advice and services relating to capital
raising transactions and relationship with shareholders, but not
including solicitation of investors as a broker, dealer or underwriter
in any capital raising transactions of Homestead.
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(ii) Communications. Preparation and coordination of annual and
quarterly reports to shareholders; presentations to public; public
relations; preparation of marketing materials; and investor relations
services.
(l) Debt Financing. Advice and services relating to revolving lines
of credit and other issuances of indebtedness.
1.2 Scope of Services and Charges. The parties will agree from time
to time on the scope of Services listed in Section 1.1 and the charges for such
Services. The scope of Services shall consist of the estimated amount of items
to be processed or hours to be spent for a category of the Services in any year
as agreed to by the parties. The charges for Services shall consist of an
amount equal to SC Group's costs incurred in providing such Services, multiplied
by 120%. If the scope of Services actually performed by SC Group in any
category of Services is different than that agreed to by the parties, or if the
scope of Services is increased at the request of Homestead, then the parties
shall negotiate in good faith to revise the scope of Services and to adjust the
charges for such Services. The parties shall review annually the scope of
Services and the charges for such Services and negotiate in good faith and make
appropriate adjustments. The parties agree to complete each annual review not
later than November 30 in each year of this Agreement.
1.3 Performance of Services. SC Group covenants that it will perform
or cause to be performed the Services in a timely, efficient and workmanlike
manner. SC Group further covenants that it will maintain or contract for a
sufficient staff of trained personnel to enable it to perform the Services
hereunder. SC Group may retain third parties or its affiliates to provide
certain of the Services hereunder. In such cases, and notwithstanding anything
herein to the contrary, Homestead shall reimburse SC Group for its actual cost
for arranging for such Services. Any arrangements between SC Group and its
affiliates for the provision of Services hereunder shall be commercially
reasonable and on terms not less favorable than those which could be obtained
from unaffiliated third parties.
1.4 Payment for Services. SC Group shall xxxx Homestead, at the end
of each calendar month, one-twelfth of the amount agreed to from time to time
pursuant to Section 1.2 for the applicable Service. Such amount shall be
payable by Homestead in full within 30 days of receipt thereof by Homestead. On
the forty-fifth day following the end of each calendar quarter, SC Group shall
provide to Homestead a statement, certified by a senior officer of SC Group,
setting forth by category of Service the amount and nature of such Services
actually performed during the period covered by such statement. Such statement
shall also set forth the dollar amount, if any, by which the amounts previously
paid by Homestead for the provision of each specific category of Services for
such period is greater than the charges agreed for such Services (in each such
case, an "excess", and, if a shortfall, a "shortfall"). Any such excess or
shortfall shall be reflected in an adjustment to the invoice amount for the next
succeeding invoice; provided, that no such adjustment shall be made to an
invoice for any shortfall or excess arising in the last calendar quarter of any
fiscal year during the term of this Agreement.
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1.5 Reimbursement. Homestead shall reimburse SC Group for all third
party out-of-pocket expenses it incurs on behalf of Homestead not billed
directly to Homestead within 30 days of receipt of the invoice therefor.
Section 2. Facilities. SC Group hereby grants to Homestead the right to
use the Facilities set forth on Exhibit A. Homestead shall not pay any
additional compensation to SC Group for the use of such Facilities during the
twelve-month period following the date of this Agreement. From and after the
expiration of such twelve-month period, Homestead shall pay SC Group rental for
the use of such Facilities as may be agreed between the parties negotiating in
good faith. SC Group and Homestead agree that during the term of this Agreement
they shall cooperate and use reasonable efforts in order to allocate the
Facilities in accordance with the reasonable requests (based on their business
needs) of each of SC Group, Homestead and other SC Group Clients. Homestead
acknowledges and agrees that within 60 days of the expiration of the term of
this Agreement, it shall leave the Facilities in the same condition as at the
commencement of the term of the Agreement, ordinary wear and tear and damage by
casualty excepted.
Section 3. Term. The initial term of this Agreement shall commence on the
date hereof and shall be through December 31, 1997 (the "Initial Term") and
shall be renewable by Homestead every year thereafter, subject to a
determination by a majority of the Independent Directors that SC Group's
performance hereunder has been satisfactory and that the compensation payable to
SC Group hereunder is fair to Homestead. Absent written notice of non-renewal as
provided in this Section 3, this Agreement shall be automatically renewed for
successive one-year terms (each, a "Renewal Term") upon the expiration of the
Initial Term and each Renewal Term. Notice of non-renewal, if given, shall be
given in writing by either party hereto not less than ninety (90) calendar days
before the expiration of the Initial Term or any Renewal Term. As used herein,
the term "Independent Directors" means each member of Homestead's Board of
Directors who is not an employee or officer of Homestead, any person or entity
primarily controlling Homestead or their respective affiliates and performs no
other services for Homestead, any person or entity primarily controlling
Homestead or their respective affiliates, except as a director or trustee.
Section 4. Audit of Services. At any time during regular business hours
and as often as reasonably requested by Homestead's officers, SC Group shall
permit Homestead or its authorized representatives to examine and make copies
and abstracts form the records and books of SC Group for the purpose of auditing
the performance of, and the charges of, SC Group under the terms of this
Agreement; provided, that all costs and expenses of such inspection shall be
borne by Homestead.
Section 5. Prevention of Performance. SC Group shall not be determined to
be in violation of this Agreement if it is prevented from performing any
Services hereunder for any reason beyond its reasonable control, including
without limitation, acts of God, nature, or of
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public enemy, strikes, or limitations of law, regulations or rules of the
Federal or of any state or local government or of any agency thereof.
Section 6. Indemnification.
6.1 By Homestead. Homestead shall indemnify, defend and hold SC
Group, and its directors, officers, and employees harmless from and against all
damages, losses and out-of-pocket expenses (including fees) incurred by them in
the course of performing the duties on behalf of Homestead and its subsidiaries
as prescribed hereby, except for matters covered by subsection 6.2 hereof.
6.2 By SC Group. SC Group shall indemnify, defend and hold
Homestead, its directors, officers and employees harmless from and against all
damages, losses and out-of-pocket expenses (including fees) caused by or arising
out of any willful misconduct or gross negligence in the performance of any
obligation or agreement of SC Group herein.
6.3 Remedy. Except as otherwise provided in subsection 6.2 hereof,
SC Group does not assume any responsibility under this Agreement other than to
render the services called for under this Agreement in good faith. Except as
otherwise provided in subsection 6.2 hereof, Homestead's sole remedy on account
of the failure of SC Group to render the services as and when required hereunder
shall be to procure services elsewhere and to charge SC Group the difference
between the reasonable increased cost, if any, to procure new services, and the
current cost to Homestead to procure services under this Agreement.
Section 7. Notices.
7.1 Manner of Delivery. Each notice, demand, request, consent,
report, approval or communication (each a "Notice") which is or may be required
to be given by either party to the other party in connection with this Agreement
and the transactions contemplated hereby, shall be in writing, and given by
telecopy, personal delivery, receipted delivery service, or by certified mail,
return receipt requested, prepaid and properly addressed to the party to be
served.
7.2 Addresses. Notices shall be addressed as follows:
If to Homestead:
Homestead Village Incorporated
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Xx.
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If to SC Group:
SC Group Incorporated
0000 Xxxxxx Xxxxxx Xxxxxx
Xx Xxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
7.3 Effective Date. Notices shall be effective on the date sent via
telecopy, the date delivered personally or by receipted delivery service, or
three (3) days after the date mailed.
7.4 Change of Address. Each party may designate by notice to the
others in writing, given in the foregoing manner, a new address to which any
notice may thereafter be so given, served or sent.
Section 8. Entire Agreement. This Agreement, together with the Exhibit
hereto, constitutes and sets forth the entire agreement and understanding of the
parties pertaining to the subject matter hereof, and no prior or contemporaneous
written or oral agreements, understandings, undertakings, negotiations,
promises, discussions, warranties or covenants not specifically referred to or
contained herein or attached hereto shall be valid and enforceable. No
supplement, modification, termination in whole or in part, or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision hereof (whether or not
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
Section 9. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, each of their respective successors
and permitted assigns, but may not be assigned by either party without the prior
written consent of the other party, and no other persons shall have or derive
any right, benefit or obligation hereunder.
Section 10. Headings. The headings and titles of the various paragraphs
of this Agreement are inserted merely for the purpose of convenience, and do not
expressly or by implication limit, define, extend or affect the meaning or
interpretation of this Agreement or the specific terms or text of the paragraph
so designated.
Section 11. Governing Law. This Agreement shall be governed in all
respects, whether as to validity, construction, capacity, performance or
otherwise, by the laws of the State of Texas.
Section 12. Severability. If any provision of this Agreement shall be
held invalid by a court with jurisdiction over the parties to this Agreement,
then and in that event such provision shall be deleted from the Agreement, which
shall then be construed to give effect to the
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remaining provisions thereof. If any one or more of the provisions contained in
this Agreement or in any other instrument referred to herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, then in
that event, to the maximum extent permitted by law, such invalidity, illegality
or enforceability shall not affect any other provisions of this Agreement or any
other such instrument.
Section 13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall be considered one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HOMESTEAD VILLAGE INCORPORATED
By:/s/ Xxxxx X. Xxxxxxxx, Xx.
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Xxxxx X. Xxxxxxxx, Xx.
Chairman
SC GROUP INCORPORATED
By:/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Senior Vice President
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EXHIBIT A
DESCRIPTION OF FACILITIES
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For purposes of the Administrative Services Agreement, Facilities shall
mean the facilities maintained by SC Group or one of its affiliates at the
following addresses:
0000 Xxxxxx Xxxxxx Xxxxxx
Xx Xxxx, Xxxxx 00000
000 Xxxxxxx Xxxxxx
Xxxxx Xx, Xxx Xxxxxx 00000
Facilities shall also include any other premises owned, leased or subleased
by SC Group at which Homestead desires to utilize such premises as well as the
fixtures, furniture and equipment used in connection with the operation of such
premises.
