How The Operating Partner Program Works

Application Process
All candidates for the Operating Partner Program must complete a confidential application which serves to outline career experience, educational background and personal information such as your short and long-term goals. The application will be reviewed by the Selection Committee to determine if proceeding to the interview process is warranted. If the Operating Partner candidate is selected to continue the process, interviews will be conducted leading to the final approval, rejection or deferral of the application.

Induction Meeting
Once a General Manager is invited to participate in the Operating Partner Program, he or she will be presented to the Generation Board of Advisors. During this induction the GM will receive their Operating Partner recognition plaque which will be displayed in the hotel lobby indicating the property name, the name of the Operating Partner, and a corporate guest service telephone number.

Operating Partner Compensation
Each Operating Partner has the same brand-based arrangement with performance thresholds (that are subject to change) customized for each hotel. A fixed base salary has been determined for each brand managed by The Generation Companies and will be property expense. Each quarter the Operating Partner receives an Operating Partner Distribution that is calculated after all property expenses are paid and the Profit Participation Threshold NOI ("PPT") has been exceeded. This amount (minus a 25% quarterly hold-back) will be paid each quarter to the Operating Partner as a payroll Distribution. The hold-back will be used to true-up the appropriate amount distributed at the end of the year. This fourth quarter Distribution will be based on the year-end, after-audit, final financial statements are produced. Operating Partners do not build equity in the business and their contractual agreement is not transferable.

What about insurance?
Operating Partners are eligible to purchase a comprehensive group health, life and disability insurance plan. The cost of the insurance is property expense. Generation will continue to share payment of the major portion of insurance premiums. Generation participation in this expense is subject to review and change from year to year.

Other Benefits
Aside from the benefit of Operating Partner status with The Generation Companies, there are other advantages. Generation sponsors a SIMPLE IRA program for Operating Partners that pays 2% of base salary and Operating Partner Distributions into an IRA account on your behalf. You can make additional tax-deferred contributions up to $6,000/yr. total. The Operating Partner continues to receive vacation, personal and holiday pay benefits.

In addition, each year Operating Partners are entitled to:

• Special events with the President and Generation Board of Advisors
  
• Access to confidential business partnership information
  
• A special plaque prominently displayed at the property indicating your Operating Partner status
  
• Use of a new leased vehicle for one year when a 20% year-over-year annual net operating income increase is achieved!

Financial Commitment
A $5,000 application fee is required with each application. If the General Manager is accepted as an Operating Partner, the funds serve as a good faith commitment between the OP and The Generation Companies and are held in escrow. If the OP decides to leave or is released from the program, The Generation Companies will refund the $5,000, as long as the hotel's finances are in order (accounts receivable, payables, petty cash, etc.). The deposit will not accrue interest.

Other Provisions
The Operating Partner's participation in the profit of the business does not convey any actual title or legal rights of ownership to any of the assets of the property or company. The Operating Partners investment into the Plan or rights to payments under the Plan cannot be transferred or pledged as security for a debt.

The Operating Partner is expected to think and make decisions like an owner in building the business. However, Generation will retain full and final authority for all management, operating, and investment decisions affecting the business, real estate and staff.

Thank you for your interest in Generation's Operating Partner Program.

If you would like more information or and application for the Operating Partner Program,
Contact: Ron Jacobsen; V.P of Operations at rjacobsen@generationcompanies.com in your subject please input "Operating Partner Information Request."