MAINTAIN OPERATING SUPPLIES, LESS ACCOUNTS PAYABLE
AND ACCRUED CURRENT LIABILITIES, EXCLUSIVE OF ANY FUNDS IN THE RESERVE ACCOUNT.
1.150
"YEARLY BUDGET"
SHALL MEAN, WITH RESPECT TO EACH HOTEL, THE ANNUAL
OPERATING BUDGET OF SUCH HOTEL, COVERING A FISCAL YEAR, AS PREPARED BY MANAGER
IN ACCORDANCE WITH THE ACCOUNTING PRINCIPLES AND APPROVED BY OWNER.
SUCH BUDGET
SHALL INCLUDE AN OPERATING BUDGET, A BUSINESS PLAN AND A CAPITAL REPLACEMENTS
BUDGET.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE YEARLY BUDGET
SHALL INCLUDE A PROJECTION OF THE ESTIMATED FINANCIAL RESULTS OF THE OPERATION
OF EACH HOTEL FOR THE FISCAL YEAR.
SUCH PROJECTION SHALL PROJECT THE ESTIMATED
GROSS REVENUES, DEPARTMENTAL PROFITS, OPERATING COSTS AND OPERATING PROFIT FOR
THE FISCAL YEAR FOR EACH HOTEL.
ARTICLE 2
SCOPE OF AGREEMENT
2.1
ENGAGEMENT OF MANAGER.
SUBJECT TO THE TERMS OF THIS AGREEMENT,
OWNER HEREBY GRANTS TO MANAGER THE SOLE AND EXCLUSIVE
25
RIGHT TO SUPERVISE AND DIRECT THE MANAGEMENT AND OPERATION OF THE HOTELS FOR THE
TERM AS OWNER'S AGENT COUPLED WITH AN INTEREST.
MANAGER HEREBY ACCEPTS SAID
GRANT AND AGREES THAT IT WILL CONTROL, SUPERVISE AND DIRECT THE MANAGEMENT AND
OPERATION OF THE HOTELS, ALL SUBJECT TO THE TERMS, REQUIREMENTS AND CONDITIONS
OF THIS AGREEMENT, WITH COMMERCIALLY REASONABLE EFFORTS IN DOING SO, AND IN AN
EFFICIENT AND ECONOMICAL MANNER CONSISTENT WITH STANDARDS PREVAILING IN WELL
MANAGED HOTELS SIMILAR TO THE HOTELS, INCLUDING ALL ACTIVITIES IN CONNECTION
THEREWITH WHICH ARE CUSTOMARY AND USUAL TO SUCH AN OPERATION (THE FOREGOING
STANDARDS CONSTITUTING THE "OPERATING STANDARDS").
WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, AND IN ADDITION TO THE OTHER FUNCTIONS TO BE
PERFORMED BY MANAGER PURSUANT TO THIS AGREEMENT, MANAGER SHALL PERFORM (OR SHALL
CAUSE ITS AFFILIATES TO PERFORM), IN CONNECTION WITH THE HOTELS IN ITS CAPACITY
AS "MANAGER" HEREUNDER AND IN ACCORDANCE WITH THE APPLICABLE BRAND STANDARDS,
THE OPERATING STANDARDS AND THE TERMS OF THIS AGREEMENT, EACH OF THE FOLLOWING
FUNCTIONS, PROVIDED, HOWEVER, EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT,
THE COSTS AND EXPENSES OF PERFORMING THE FOLLOWING FUNCTIONS SHALL BE OPERATING
COSTS:
(A)
ESTABLISH AND REVISE, AS NECESSARY, ADMINISTRATIVE POLICIES AND
PROCEDURES, INCLUDING POLICIES AND PROCEDURES FOR THE CONTROL OF REVENUE AND
EXPENDITURES, FOR THE PURCHASING OF SUPPLIES AND SERVICES, FOR THE CONTROL OF
CREDIT, AND FOR THE SCHEDULING OF MAINTENANCE, AND VERIFY THAT THE FOREGOING
PROCEDURES ARE OPERATING IN A SOUND MANNER.
(B)
MANAGE EXPENDITURES TO REPLENISH OPERATING SUPPLIES AND OPERATING
EQUIPMENT, MAKE PAYMENTS ON ACCOUNTS PAYABLE AND COLLECT ACCOUNTS RECEIVABLE.
(C)
ARRANGE FOR AND SUPERVISE PUBLIC RELATIONS AND ADVERTISING AND
PREPARE MARKETING PLANS.
(D)
PROCURE ALL OPERATING SUPPLIES AND REPLACEMENT OPERATING
EQUIPMENT.
(E)
PROVIDE, OR CAUSE TO BE PROVIDED, RISK MANAGEMENT SERVICES
RELATING TO THE TYPES OF INSURANCE REQUIRED TO BE OBTAINED OR PROVIDED BY
MANAGER UNDER THIS AGREEMENT.
(F)
REASONABLY COOPERATE (PROVIDED THAT EXCEPT AS HEREIN EXPRESSLY
PROVIDED MANAGER SHALL NOT BE OBLIGATED TO ENTER INTO ANY AMENDMENTS OF THIS
AGREEMENT OR, UNLESS OWNER AGREES TO REIMBURSE MANAGER THEREFOR, TO INCUR ANY
MATERIAL EXPENSE INCLUDING ANY INTERNAL EXPENSES) IN ANY ATTEMPT(S) TO: