MANAGEMENT AGREEMENT
(Holiday Inn Hurstbourne, Louisville, Kentucky)
This AGREEMENT dated as of this 16th day of August, 1995 by and
between RW HOTEL PARTNERS, L.P., a Delaware limited partnership,
(hereinafter called "Owner") and RIDGEWOOD PROPERTIES, INC.,
a Delaware corporation (hereinafter called "Manager").
WHEREAS, Owner is the owner of that certain property described
in Exhibit"A" attached hereto and by this reference made a part
hereof (the"Property"), and Owner desires to engage Manager to
manage and operate the same.
NOW, THEREFORE, in consideration of Ten ($10.00) Dollars and
other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
ARTICLE 1. THE APPOINTMENT
1.1 MANAGEMENT. Owner hereby appoints Manager and Manager
hereby accepts such appointment, to manage the Property in
accordance with the terms of this Agreement for the term set forth
in Article 2. Manager shall fully and faithfully discharge its
obligations and responsibilities hereunder, and shall devote
sufficient time and attention to ensure the full and prompt
discharge of its duties under this Agreement. Manager shall at all
times use diligent and professional efforts to promote and protect
the best interests of Owner and the Property.
1.2 RENTAL. Owner hereby appoints Manager, and Manager hereby
accepts the appointment, as the sole and exclusive rental agent of
the Property to rent rooms and other facilities on a daily basis in
order to further the hotel business being conducted on the Property.
ARTICLE 2. TERM
2.1 TERM. The Manager's duties and responsibilities under
this Agreement shall commence on the date hereof and shall expire on
the earlier of December 31, 2005 or the expiration of the term of
the "License Agreement" (as defined below). This Agreement shall be
subject to early termination by Owner pursuant to Section 2.2 below.
2.2 TERMINATION BY OWNER. Owner may terminate this Agreement
by written notice to Manager at any time after any of the following
events:
(a) DEFAULT. Default by Manager under this Agreement or the
default by Manager or any "Affiliate" (as defined below) of Manager
under any Ancillary Agreement, provided such default is not cured
within the "Cure Period" (as defined below), if any.
(b) BANKRUPTCY/DISSOLUTION. A "Bankruptcy/Dissolution Event"
(as defined below) occurs with respect to Manager or an Affiliate of
Manager.
(c) REMOVAL OF RHI AS GENERAL PARTNER IN OWNER. The removal
of Ridgewood Hotels, Inc., a Georgia corporation ("RHI"), which is a
wholly owned subsidiary of Manager, as general partner of Owner
under the partnership agreement of Owner.
(d) CERTAIN EVENTS WITH RESPECT TO KEY INDIVIDUAL. N. Russell
Walden (1) is dead, insane, incapacitated or the subject of a
Bankruptcy/Dissolution Event; or (2) ceases to be actively involved
in the management and affairs of Manager or the Property.
(e) FAILURE OF REQUIRED OWNERSHIP. N. Russell Walden and
Karen Hughes cease to own at least 43.5% of the ownership interests
in Manager and RHI, directly or indirectly.
(f) SALE. All or a substantial part of the land and
improvements included in the Property shall have been disposed of or
sold by Owner.
(g) CASUALTY OR CONDEMNATION. Owner permanently discontinues
the operation of the Property on account of damage to or destruction
of, or a taking by (or sale under threat of) eminent domain of, all
or a substantial part of the Property.
The termination of this Agreement in connection with a default
shall be in addition to any other right or remedy available to Owner
at law or equity in connection therewith.
ARTICLE 3. MANAGER'S RESPONSIBILITIES
3.1 MANAGEMENT. Manager shall manage, operate and maintain
the Property in an efficient and satisfactory manner in accordance
with all "Requirements" (as defined below). Manager accepts the
relationship of trust and confidence established between it and
Owner by this Agreement and covenants with Owner to furnish its best
skill and prudent business judgment in furthering the interests of
Owner, and Manager shall act in a fiduciary capacity with respect to
the proper protection of and accounting for Owner's assets. Manager
shall not do business with any "Affiliate" (as defined below) of
Manager without Owner's prior written consent. Manager's duties
shall include those set forth below in this Article III.
3.2 EMPLOYEES. Manager shall be responsible for employing a
sufficient number of capable employees to enable it to properly,
adequately, safely and economically manage, operate, maintain, and
account for the Property. All matters pertaining to the employment,
supervision, training (including attendance at meetings and
seminars, if set forth in the "Approved Operating Budget" [as
defined below]), compensation, promotion and discharge of such
employees are the responsibility of Manager (with respect to which
Manager shall exercise reasonable care); and Manager is in all
respects the employer of such employees, subject to the last
sentence of this Section 3.2. Manager shall negotiate with any
union lawfully entitled to represent such employees and may execute
in its own name, and not as agent for Owner, collective bargaining
agreements or labor contracts resulting therefrom. Manager
acknowledges that Owner has acquired the Property on the date hereof
and Manager shall comply with the Worker Adjustment and Retraining
Notification Act and successor or similar laws in all respects.
Manager shall assure compliance with all "Laws" (as defined below)
with respect to worker's compensation, social security, unemployment
insurance, hours of labor, wages, working conditions, and other
employer-employee related subjects. Manager represents that it is
and will continue to be an equal opportunity employer and must
advertise as such. This Agreement is not one of agency by Manager
for Owner, but one with Manager engaged independently in the
business of managing properties on its own behalf as an independent
contractor. All employment arrangements are therefore solely
Manager's responsibility and Owner shall have no liability with
respect thereto. Nothing contained herein, however, shall be deemed
to permit Manager to charge Owner, or to use the income of the
Property to pay, for the services of Manager's employees (except to
the extent provided in the "On-Site Expense Schedule" [as defined
below] included in the Approved Operating Budget). Owner
acknowledges and agrees that, notwithstanding the foregoing, Manager
may delegate to RHI the obligation to hire the on-site employees
listed on the On-Site Expense Schedule, so long as such employees'
sole responsibilities to RHI are as on-site employees of the
Property and such employees are not the employees of Owner. Such
delegation by Manager shall not relieve Manager for its primary
responsibilities to Owner under this Section 3.2, and the
reimbursement for the costs of such employees shall remain subject
to the terms and conditions of this Agreement.
3.3 COMPLIANCE WITH REQUIREMENTS. Manager shall comply with
and shall be responsible for causing the Property and the use,
operation and maintenance thereof to be in full compliance with the
Requirements. Manager shall promptly notify Owner of any violation
of any Requirements which comes to Manager's attention and, at
Owner's expense and with Owner's prior approval, promptly remedy any
such violation. Manager shall not be required to make any payment
required under the Requirements to the extent that the income from
the Property is insufficient for such purpose, Manager promptly
notifies Owner of such deficiency, and Owner fails to provide the
needed funds. Manager shall, as an expense under the Approved
Operating Budget, keep in full force and effect all licenses and
permits necessary or convenient to operate the Property as a hotel
similar to other hotels of comparable size, class and standing,
including licenses and permits required for the rental of rooms,
sale of food and alcoholic beverages, for signage and for all other
business to be conducted as part of the hotel. Manager shall also
obtain all new and renewal licenses and permits necessary to
accomplish the foregoing. Actions in remedying violations of the
Requirements may be implemented prior to obtaining Owner's approval
if the estimated expenses to be incurred are contemplated and are
within the Approved Operating Budget or "Approved Capital Budget"
(as defined below), or are otherwise permitted as "Permitted Budget
Deviations" under Section 3.4(d). When more than such amount is
required, or if the violation is one for which the Owner might be
subject to penalty, Manager shall notify Owner within five (5)
business days so that prompt arrangements may be made to remedy the
violation.
3.4 BUDGETS.
(a) PREPARATION OF BUDGETS. At least thirty (30) days prior
to the first day of each whole or partial calendar year during the
Term, Manager shall prepare and submit to Owner for its approval the
following: (1) a proposed operating budget ("Operating Budget")
which shall set forth, among other matters, anticipated income,
expenditures (including promotion, operation, repair, management and
maintenance and reserves) for the Property for such year; and (2) a
proposed capital budget ("Capital Budget") which shall set forth,
among other matters, anticipated and proposed capital expenditures
for such year and the source of funds in respect thereto (including
the amount and timing of expenditures to be made from the FF&E
Reserve and the projected time and amount for any required advances
by Owner for expenditures not contemplated by the FF&E Reserve).
The Operating Budget and Capital Budget shall be in the form of the
partial year 1995 budget attached hereto as Exhibit "B". The
Operating Budget shall include a separate schedule of anticipated
expenses to be reimbursable to Manager as contemplated by Section
5.4, including the costs of on-site employees ("On-Site Expense
Schedule"), and a price schedule for room sales, licensing,
concessions and other services provided by the hotel business being
conducted on the Property. Manager shall include in the proposed
Operating Budget and Capital Budget all expenditures for
maintenance, repairs and capital improvements required by the
License Agreement (except that the Capital Budget shall not include
the cost of the improvements contemplated under the Construction
Management Agreement). Owner will consider the proposed Operating
Budget and Capital Budget and will consult with Manager prior to the
commencement of the forthcoming calendar year, and the Operating
Budget and Capital Budget for any calendar year which is approved by
Owner in writing shall be referred to herein as the "Approved
Operating Budget" and an "Approved Capital Budget".
(b) MONTHLY UPDATES. Concurrently with its submission of the
"Monthly Report" (as defined below), Manager shall provide Owner
with a monthly variance report to reflect any changes indicated by
the actual results of operations, and comparing actual costs and
expenses and revenues with budgeted costs and expenses and revenues
on a line-item basis and on a category basis along with an
explanation of all material or significant variances and all changes
in any time schedules relating thereto. However, nothing in this
subsection (b) shall be construed as releasing Manager from its
obligation to manage the Property in strict accordance with the
Approved Operating Budget and Approved Capital Budget.
(c) OBLIGATION AND AUTHORITY TO IMPLEMENT APPROVED BUDGETS.
Manager shall implement the Approved Operating Budget and Approved
Capital Budget and shall be authorized, without the need for further
approval by Owner, to make the specified expenditures and incur the
specified obligations provided for in the Approved Operating Budget
and Approved Capital Budget, but only if Manager acts in strict
conformance with (i) the Approved Operating Budget and Approved
Capital Budget in all respects [with respect to, among other
matters, the nature, amount and timing of each such expenditure or
obligation] except as provided in subsection (d) below, and (ii) the
other provisions of this Agreement. All expenses must be charged to
the proper account in accordance with the Uniform System of Accounts
for Hotels, as approved and adopted by the American Hotel & Motel
Association (the "Uniform Accounting System").
(d) PERMITTED DEVIATIONS FROM APPROVED OPERATING BUDGET.
Notwithstanding subsection (c), Owner's consent to an expenditure
relating to the Property payable to a third party exceeding the
amount specified for such expenditure in the Approved Operating
Budget shall not be required in any of the following circumstances
("Permitted Budget Deviations"): (1) Manager, in its reasonable
judgment, deems to constitute an emergency requiring immediate
action for the protection of the Property or persons; (2) such
expenditure is contemplated by the Approved Operating Budget, is not
reimbursable under Section 5.2, and when combined with the amount of
all expenditures made or reasonably expected to be made in
connection with the Property for such calendar year (other than the
expenditures under the Construction Management Agreement,
expenditures under the Approved Capital Budget, or expenditures
described in clause (3) below), would not cause the total amount of
expenditures for the Property for such calendar year (other than the
expenditures under the Construction Management Agreement,
expenditures under the Approved Capital Budget, or expenditures
described in clause (3) below), to exceed one hundred five percent
(105%) of the total amount of expenditures for such calendar year
set forth in such Approved Operating Budget (other than the
expenditures under the Construction Management Agreement,
expenditures under the Approved Capital Budget, or expenditures
described in clause (3) below); (3) expenditures for real property
taxes and assessments, utilities and insurance for the Property; and
(4) expenditures permitted to be made without Owner's consent as
contemplated by Section 5.3. Manager shall immediately notify Owner
orally of each expenditure made pursuant to this subsection (d) and
shall promptly supply Owner with written notice of the same together
with such information with respect thereto as Owner may reasonably
request.
3.5 REPORTS; BOOKS AND RECORDS.
(a) MONTHLY REPORT. Within fifteen (15) days after the end of
each full or partial calendar month during the term of this
Agreement, Manager shall prepare and submit to Owner a monthly
operating statement and report of financial condition ("Monthly
Report") in a manner and form acceptable to Owner summarizing the
operations of the Property for the previous month, certified by
Manager to be true, accurate and complete in all material respects.
Owner will review each Monthly Report with Manager at a mutually
convenient time. The Monthly Report shall include the information
set forth in Exhibit "C".
(b) ANNUAL REPORT. Within sixty (60) days after the end of
each full or partial calendar year during the term of this
Agreement, Manager shall prepare and submit to Owner an annual
report of all income and all expenses of the Property, which shall
be certified by Manager to be true, accurate and complete in all
material respects, and prepared in accordance with the Uniform
Accounting System; together with such additional information as may
be necessary for the preparation of Owner's annual federal and state
income tax returns. Within ninety (90) days after the end of each
full or partial calendar year during the term of this Agreement,
Manager shall cause the report delivered pursuant to the immediately
preceding sentence to be audited by an independent accounting firm
reasonably satisfactory to Owner and delivered to Owner.
(c) BOOKS AND RECORDS. Manager shall also keep accurate books
and records of the Property in accordance with the Uniform
Accounting System consistently applied. Owner shall have the right
from time to time to inspect and audit the books and records of the
Property in the Manager's office at the Property or at the Manager's
main office. All books and records of accounts are and shall remain
the property of Owner and shall be delivered to Owner upon
termination of this Agreement or within five (5) business days after
any written demand by Owner. Provided Owner has given prior notice
to Manager of such reporting requirements, Manager shall prepare all
reports and financial statements required by any financing
encumbering the Property, and deliver the same to Owner within a
time period such that Owner will be able to satisfy its reporting
obligations under the loan documents relating to such financing.
3.6 COLLECTION OF RENTS AND OTHER INCOME. Manager shall use
diligent efforts to collect all room rents, food and beverage
charges and other charges due from guests, tenants, and
concessionaires and other charges which may become due at any time
from any tenant or from others for services provided in connection
with or for the use of the Property or any portion thereof. Manager
shall collect and identify any income due the Owner from
miscellaneous services provided to tenants or the public including,
but not limited to, parking income, tenant storage, and coin
operated machines of all types (e.g., vending machines, pay
telephones, etc.). All monies will be deposited immediately in a
separate checking account in the Manager's name maintained by the
Manager in trust for Owner at a bank approved by the Owner (the
"Owner's Account"). No funds of the Manager shall be deposited in
the Owner's Account, and the funds in Owner's Account shall not be
commingled with Manager's funds. Either Manager (provided Owner is
not then entitled to terminate this Agreement pursuant to Article
III) or Owner shall be entitled to draw upon such Owner's Account,
but all such money shall be deemed to be the property of Owner.
Manager may withdraw from such Owner's Account (subject to the
limitations set forth in this Agreement) disbursements required to
be made under this Agreement.
3.7 SERVICE CONTRACTS. Manager shall enter into service
contracts for cleaning, maintaining, repairing or servicing the
Property and any of the constituent parts of the Property consistent
with the Approved Operating Budget. All service contracts shall:
(a) be in the name of the Manager, (b) be assignable, at Owner's
option, to Owner's nominee, (c) not be for a term of more than one
year and include a provision for cancellation thereof by Owner upon
not more than thirty (30) days' written notice without charge, and
upon three (3) days' notice for cause without charge, (d) shall
require that all contractors provide evidence of sufficient
insurance and (e) shall be within the guidelines set forth in the
Approved Operating Budget. The entry into any service or other
agreement which provides for an aggregate amount to be spent by
Owner under such agreement in excess of $100,000 (and a series of
related agreements for amounts less than $100,000 shall be construed
as a single agreement for purposes of this subsection), or any
termination or material modification thereto, shall require the
prior written consent of Owner. A copy of each service contract
shall be delivered to Owner immediately after it is executed by
Manager.
3.8 REPAIRS. In accordance with Section 3.13 below, Manager
shall administer and coordinate all ordinary and extraordinary
repairs, decorations, alterations, capital improvements, remodeling
and tenant improvements, all subject to the terms of this Agreement;
provided that the management of the construction of the improvements
required by the current PIP inspection shall be conducted pursuant
to the Construction Management Agreement.
3.9 MORTGAGES; TAXES; UTILITIES, BUSINESS AGREEMENTS. Manager
shall obtain and pay bills for (a) all mortgages, deeds of trust,
and other liens approved by Owner; (b) all real estate and personal
property taxes, improvement assessments and other like charges which
are or may become liens against the Property; (c) all charges for or
related to water, electricity, telephone service or other
commodities or services furnished the Property or any part thereof
during the Term; and (d) all amounts otherwise required to be paid
under any Business Agreement to which the Property is or may be
subject during the Term. Owner shall forward to Manager all copies
of any tax assessments it may receive. Manager shall obtain, verify
and pay such bills in time to permit Owner to avoid penalty for late
payment and to permit Owner to take advantage of discounts. Manager
will recommend and pursue tax abatements for the Property with
approval of Owner.
3.10 OCCUPANCY; ADVERTISING. Manager shall use its best
efforts to rent and keep the rooms and facilities at the Property
rented on a daily basis by procuring occupants, guests and tenants
on the best terms available for Owner. Manager acknowledges that it
has a fiduciary duty to Owner not to divert (and Manager shall not
divert) any potential occupants, guests and tenants of the Property
to any other hotel or motel. Manager shall prepare advertising
plans and promotional material for the benefit of the Property.
Such plans and materials shall be used only if approved in advance
in writing by Owner and in conformance with such approval. Manager
shall not use Owner's name in any advertising or promotional
material without Owner's prior written consent in each instance.
Advertising and promotional materials shall be prepared in full
compliance with the Requirements.
3.11 COOPERATION. Manager shall have the right to institute
legal proceedings with regard to the Property or the operation of
the Property in its own name, but only if the prior written consent
of Owner is first obtained. Manager shall keep Owner regularly
informed with respect to any such legal proceedings and shall take
such action in connection therewith (or refrain from taking such
action) that may be requested by Owner from time to time. Should
any claims, demands, suits or other legal proceedings be made or
instituted by any person against Owner, Manager shall give Owner all
pertinent information and reasonable assistance in the defense or
other disposition thereof.
3.12 COMPLIANCE WITH LICENSE AGREEMENT. Manager shall be
responsible to keep in full force and effect and comply with all
obligations under the License Agreement between Manager and Holiday
Inns Franchising, Inc. ("Licensor") to operate the Property as a
"Holiday Inn" (the "License Agreement"), which has been approved by
Owner and a copy of which is attached as Exhibit "D". If there is
any conflict between the terms of this Agreement and the terms of
the License Agreement pertaining to the Property, the terms of the
License Agreement shall govern and control; provided, however, that
the foregoing shall not reduce Manager's obligations or Owner's
rights hereunder (and, without limitation, shall not limit Owner's
rights to terminate this Agreement in accordance with the terms
hereof). Manager shall operate the Property as required by the
License Agreement and the regulations of Licensor to the extent
permitted hereunder and shall send to Owner all notices, reports and
other information received by the Manager under the License
Agreement, promptly upon receipt of the same. The parties
acknowledge that the License Agreement is not assignable. Without
limitation on the foregoing, Manager shall not modify, amend, renew
or extend the License Agreement, or make any transfer, sale,
hypothecation, or assignment of its rights and obligations
thereunder, without the prior written consent of Owner. Manager
shall deliver to Owner all reports, notices and other information
delivered to the Licensor under the License Agreement, concurrently
with their delivery to Licensor. Although the License Agreement is
an obligation of Manager, in consideration of the benefits to the
Property by reason of the existence of the License Agreement, Owner
consents to Manager's use of the income from the Property in
connection with expenditures required for the performance by Manager
of its obligations thereunder (including its obligation to pay
certain license fees to Licensor), but only to the extent set forth
in an Approved Operating Budget or Approved Capital Budget, or as
otherwise permitted to be spent by Manager pursuant to Section
3.4(d).
3.13 RESERVE FOR FF&E REPLACEMENT.
(a) Owner shall maintain during the term a reserve (the "FF&E
Reserve") from which Manager shall draw funds for replacements and
renewals to the Hotel's FF&E in accordance with the Capital Budget.
The funds in the FF&E Reserve shall be maintained by Owner in
Owner's general accounts in addition to working capital and any
other amounts therein (and, accordingly, may be commingled), but
Owner shall maintain on its books a separate accounting of such
funds. As used in this Agreement, the term "FF&E" shall mean the
furniture, fixtures and equipment typically used in the operation of
a hotel, and shall include, without limitation, guest room,
corridor, restaurant and lounge furnishings, office furniture and
equipment, carpeting, computers and other on-site electronic data
processing equipment, telephones, televisions, radios, signs and
vehicles.
(b) Amounts shall be accrued on, and Funds shall be
transferred into, the FF&E Reserve during each calendar year at the
rate of four percent (4%) of the gross revenues from the Property,
to the extent of available cash flow from the Property.
(c) Interest, if any, accruing on any funds on deposit in the
FF&E Reserve will be not be credited to the FF&E Reserve. If, at
any time, the accumulated funds in the FF&E Reserve exceed 8% of the
gross revenue from the prior calendar year, further accruals and
contributions will be temporarily suspended until they can be made
without causing the accumulated funds in the FF&E Reserve (less all
amounts then or thereafter payable under existing contracts or other
known or reasonably anticipated FF&E expenditures within the
following six months) to exceed 8% of the greater of (x) the gross
revenue from the prior calendar year or (y) the gross revenue
projected in the Approved Operating Budget for the then current
calendar year.
(d) Any proceeds from sale(s) of FF&E shall be transferred to
the FF&E Reserve, and the amount that would otherwise be transferred
to the FF&E Reserve shall be reduced by such proceeds. At the end
of each calendar year, any amounts remaining in the FF&E Reserve
shall be carried forward to the next calendar year.
(e) Subject to the Approved Capital Budget and Approved
Operating Budget in effect from time to time, and to the extent
sufficient working capital is made available, Manager will make such
expenditures for repairs and maintenance as it deems necessary to
keep the Hotel in good operating condition, provided that Owner's
prior approval shall be required for any individual expenditure (or
group of related expenditures covered by one contract) in excess of
$50,000.00.
(f) In accordance with the Approved Capital Budget, Manager
shall make such substitutions and replacements or renewals to FF&E
as it deems necessary or desirable, up to the balance in the FF&E
Reserve. No expenditure will be made in excess of said balance or
for any other capital improvement without the approval of Owner.
(g) If the FF&E component of the Approved Capital Budget
exceeds the available funds in the FF&E Reserve, or if said Budget
includes contemplated expenditures for capital improvements other
than FF&E, and in any such case Owner approves such amounts, Owner
shall provide Manager with monies sufficient to fund the
contemplated expenditures.
ARTICLE 4. INSURANCE
4.1 INSURANCE. During the Term, Manager shall procure and
maintain insurance (in form and with endorsements, waivers and
deductibles and with insurance companies designated or approved by
Owner) naming Owner and Manager (and, if requested by Owner, Owner's
lenders) as insureds thereunder, as follows:
(a) REQUIRED COVERAGE.
(1) ALL-RISK INSURANCE Broad form "all-risk" insurance
covering all real and personal property, covering at least 100% of
the replacement value with a stipulated amount or agreed valuation
endorsement.
(2) PUBLIC LIABILITY INSURANCE Comprehensive general
public liability and automobile liability insurance with liability
limits of not less than $5,000,000 combined bodily injury and broad
form property damage.
(3) BUSINESS INTERRUPTION INSURANCE Rental income and
business interruption insurance in an amount not less than 100% of
the projected gross income for 12 months from the Property.
(4) MANDATORY INSURANCE Workers' compensation and all
other insurance required by any ordinance, law or governmental
regulation, or any lender.
Notwithstanding the foregoing, if the insurance coverage provided by
or available under the policies intended by Manager to satisfy, in
whole or in part, its obligations under the foregoing provisions of
this subsection 4.1(a) shall be greater than specified in such
provisions, then Manager shall be deemed required under this
subsection 4.1(a) to provide such greater coverage.
(b) PLACEMENT. Except as otherwise hereinafter provided, all
insurance coverage required to be provided by the foregoing
provisions of this Section 4.1 shall be placed with or through such
insurance broker or agency as Owner may from time to time hereafter
designate by written notice to Manager.
(c) WAIVER OF SUBROGATION. The insurance policies required
under subsection 4.1(a)(1) above shall contain a provision, if
available at a cost approved by Owner, to the effect that such
insurance shall not be invalidated or limited if any one or more of
the insureds thereunder waive any or all claims for recovery from
the other insureds thereunder; and, in addition to any other
limitation of liability expressly set forth in this Agreement, so
long as such provision is in effect, each of Manager and Owner
hereby waives all claims for recovery from the other for any loss or
damage insured under such policies to the extent of any recovery
collected by Manager or Owner, respectively, under such policies for
such loss or damage.
(d) EVIDENCE OF INSURANCE. Manager shall provide Owner with
the original policies of insurance or certificates thereof on the
date of this Agreement and shall provide evidence of renewal
insurance prior to the expiration of the then existing policies upon
request.
Nothing herein shall affect the general requirement of this
Agreement that the Property shall be managed, operated and
maintained in a safe condition and in a proper and careful manner.
Manager shall furnish whatever information is requested by Owner for
the purpose of establishing the placement of insurance coverage and
shall aid and cooperate in every reasonable way with respect to such
insurance and any loss thereunder.
4.2 MANAGER'S INSURANCE. Manager shall maintain casualty
insurance policies for its furniture, furnishings or fixtures
situated at the Property including waiver of subrogation clause with
respect to losses payable under such policies. Manager shall obtain
at its expense and deliver to Owner a fidelity bond covering General
Partner and its employees and agents with a liability amount of at
least $1,000,000, which such bond shall be maintained by Manager
throughout the term of this Agreement. Owner, in the exercise of
its reasonable discretion, may require Manager to increase the
amount of such bond at Manager's expense if Owner determines that
circumstances (including the anticipated average balance of Owner's
Account) reasonably warrant such increase in view of the risks
involved.
4.3 SUBCONTRACTOR'S INSURANCE. Manager shall require that all
subcontractors have insurance coverage at the subcontractor's
expense, in the following minimum amounts:
(a) Worker's compensation Statutory Amount
(b) Employer's Liability $100,000.00 minimum
(c) Comprehensive General Liability
i. $1,000,000.00 Bodily Injury each occurrence and
aggregate $100,000.00 Property Damage
ii. $1,000,000.00 Combined Single Limit
(d) Employee Dishonesty $20,000.00
(e) Business Auto Policy "Non-owned Autos Only"
Higher amounts may be required if the work to be performed is
sufficiently hazardous. The Manager shall obtain and keep on file a
Certificate of Insurance which shows that the subcontractor is so
insured.
ARTICLE 5. PAYMENT OF EXPENSES
5.1 PROCESSING OF INVOICES. Manager shall receive, review and
approve all invoices for expenses incurred in operating the Property
and shall timely pay such invoices if they are within the Approved
Operating Budget or Approved Capital Budget or if they have
otherwise been approved by the Owner in writing.
5.2 MANAGER'S REIMBURSABLE COSTS. To the extent advanced by
Manager and not described in Section 5.3, Manager shall be entitled
to reimbursement from Owner of its reasonable, out-of-pocket third
party expenses in connection with the performance of its duties
under this Agreement, including the expenses set forth in the
On-Site Expense Schedule, but only to the extent the same are
described in and are within the limits set forth in the Approved
Operating Budget.
5.3 NON-REIMBURSABLE COSTS. The following expenses or costs
incurred by Manager in connection with management of the Property
shall be at the sole cost and expense of Manager and shall not be
reimbursable by Owner:
(a) Cost of gross salary and wages, payroll taxes,
insurance, worker's compensation and other benefits of Manager's
office personnel located at the central office in Atlanta, Georgia.
(b) General accounting and reporting services which are
within Manager's office overhead.
(c) Political or charitable contributions, except that
charitable contributions will be reimbursable if the prior written
consent of Owner is obtained or if they are part of the Approved
Operating Budget.
(d) Manager's office overhead.
5.4 METHOD OF REIMBURSEMENT. Manager may write checks on the
Owner's Account to pay all costs and expenses permitted under
Section 5.2. Manager shall also be entitled to the payment of fees
referred to in Section 6.1 from the Owner's Account. If the funds
in the Owner's Account are not sufficient to pay amounts approved
for payment under this Agreement, Manager will give Owner at least
ten (10) days' written notice of any additional funds Owner must
deposit in the Owner's Account.
ARTICLE 6. COMPENSATION
6.1 MANAGEMENT FEES.
(a) MONTHLY FEE. On the 15th day of each calendar month,
Manager shall be entitled to a monthly fee ("Monthly Fee") equal to
2.5% of the gross revenues from the Property for the prior calendar
month, such Monthly Fee to be paid to Manager concurrently with the
delivery by Manager to Owner of the "Monthly Report" (as defined
below) for such prior calendar month. The Monthly Fee for any
partial calendar month during the term of this Agreement shall be
equitably prorated.
(b) INCENTIVE FEE. Concurrently with the delivery of the
"Annual Report" (as defined below) to Owner for each whole or
partial calendar year during the term of this Agreement, Manager
shall be entitled to an incentive fee ("Incentive Fee) equal to 1%
of the gross revenues from the Property for such whole or partial
year. The Incentive Fee for any partial calendar year during the
term of this Agreement shall be equitably prorated. Notwithstanding
the foregoing, the Incentive Fee for any particular whole or partial
calendar year shall only be payable to Manager if the "Net Operating
Income" (as defined below) for such whole or partial calendar year
equals or exceeds 13.5% of then "Acquisition Costs" (as defined
below) for the Property (calculated as of the last day of such
calendar year). For the purpose of calculating the Net Operating
Income for any partial calendar year during the term of this
Agreement, such Net Operating Income shall be annualized.
(c) FEE ABATEMENT. Notwithstanding the foregoing, Manager
shall not be entitled to any fees under subsections (a) or (b) above
for the period ending on the date which is one year after the date
hereof.
(d) FEE OFFSET. Any cost overruns for the "Project" (as
defined below) under the Construction Management Agreement shall be
offset on a dollar-for-dollar basis against the fees otherwise
payable to Manager pursuant to subsections (a) and (b) above.
However, any subsequent cost savings under the Construction
Management Agreement shall result in reimbursement of any fees
previously offset under this subsection (d) to the extent of such
savings.
(e) ACCOUNTING FEE. Manager shall be entitled to an
accounting fee equal to $1,500.00 per month for the Property, in
order to compensate Manager for the accounting services required of
Manager in connection with the performance of its obligations under
this Agreement. Accordingly, notwithstanding anything to the
contrary contained herein, Manager is not entitled to a separate
reimbursement of its accounting costs in connection with this
Agreement; provided, however, that the cost of the annual audit by
an independent accountant required by Section 3.5(b) shall be the
responsibility of Owner.
(f) NO LEASING, BROKERAGE FEES OR OTHER COMPENSATION. No fee
will be paid to the Manager for entering into any lease, license,
concession agreement or service contract. All discounts, rebates
and other inducements shall belong to Owner. No other compensation
shall be payable to Manager or its Affiliates in connection with
this Agreement, except as expressly set forth in this Agreement.
ARTICLE 7. TERMINATION
7.1 FINAL ACTION. Upon the expiration or sooner termination
of this Agreement pursuant to Article 2 for any reason, Manager
shall (a) complete the necessary accounting work for the Property
upon its departure and deliver to Owner a final accounting;
(b) surrender and deliver up to Owner possession of the Property and
all rents and income, including deposits, of the Property and other
monies of Owner on hand and in any bank account; (c) deliver to
Owner, as received, any monies due Owner under this Agreement but
received after such termination; (d) deliver to Owner all materials
and supplies, keys, contracts and documents, and such other
accounting papers and records pertaining to this Agreement as Owner
shall request; (e) assign to Owner or its designee any right Manager
may have in and to any existing contracts relating to the operation
and maintenance of the Property as Owner shall require, excluding
the License Agreement, but including any service agreement entered
into pursuant to Section 3.7 (and Manager shall indemnify, defend,
protect and hold harmless Owner for any defaults [and all resulting
costs, expenses and liabilities, including attorneys fees, arising
therefrom] under such contracts arising from Manager's acts or
omissions prior to the date of such assignment, except to the extent
caused by Owner's default in providing funds required to be provided
hereunder for payments to be made under such service contracts); and
(f) deliver to Owner, or Owner's duly appointed agent, all records,
books, accounts, contracts, leases, receipts for deposits, unpaid
bills and other papers or documents which pertain to the Property
with the exception of employee records which must be retained by
Manager according to law. Manager shall have the right to keep and
maintain copies of any records which it delivers to Owner, provided
that the same be kept in confidence by Manager. Owner shall have
the right to obtain access during normal business hours to inspect
Manager's employee records. In the alternative, the Manager shall
provide Owner with copies of these records, upon Owner's request.
Upon such termination Owner will assume responsibility for payment
of all approved or authorized unpaid bills of the Property.
EFFECT OF TERMINATION. Termination of this Agreement shall
terminate all rights and obligations of the parties hereunder,
except that such termination shall not prejudice the rights of
either party against the other for any breach of this Agreement.
Without limitation on the generality of the foregoing, Owner's
termination of this Agreement shall terminate any and all rights of
Manager to act on behalf of or with respect to the Property (and
Manager shall, if Owner so requests, execute a notice to third
parties, in form reasonably satisfactory to Owner, to the effect
that Manager's rights have been so terminated). Owner and Manager
acknowledge that the termination of this Agreement for any reason
shall result in a termination of the License Agreement in accordance
with its terms.
COOPERATION. In the event this Agreement is terminated,
Manager shall cooperate with Owner to allow Owner to effectively and
productively continue the leasing and other management activities of
Manager. Without limitation on the foregoing, Manager shall (a)
cooperate with Owner in order to obtain a replacement license
agreement to be granted to Owner or an agent or designee designated
by Owner (and, if this Agreement is terminated by reason of a
default by Manager or any of its Affiliates under this Agreement or
any Ancillary Agreement, Manager shall be solely responsible for all
costs and expenses associated with such issuance of the replacement
License Agreement); and (b) deliver to Owner such information and
documentation as Owner may reasonably request concerning potential
tenants or guests for the Property. In connection with a sale of
the Property, Owner acknowledges that the License Agreement shall
terminate pursuant to its terms upon the sale of the Property,
unless the terms of the sale of the Property (which such terms shall
be as approved by Owner) provide for the continued management of the
Property by Manager under this Agreement.
ARTICLE 8. MISCELLANEOUS
8.1 NOTICES: Any notice which a party is required or may
desire to give another party shall be in writing and may be
delivered (1) personally, (2) by United States registered or
certified mail, postage prepaid, (3) by Federal Express or other
reputable courier service regularly providing evidence of delivery
(with charges paid by the party sending the notice), or (4) by
telecopy, provided that such telecopy shall be immediately followed
by delivery of such notice pursuant to clause (1), (2) or (3) above.
Any such notice shall be addressed as follows (subject to the right
of a party to designate a different address for itself by notice
similarly given):
TO OWNER:
RW Hotel Partners, L.P.
c/o Ridgewood Hotels, Inc.
2859 Paces Ferry Road
Suite 700
Atlanta, Georgia 30339
Attention: Mr. N. Russell Walden
Telephone No.: (770) 434 3670
Facsimile No.: (770) 433 8935
WITH A COPY TO:
c/o Farallon Capital Management, Inc.
One Maritime Plaza
Suite 1325
San Francisco, California 94111
Attention: Mr. Jason M. Fish
Telephone No.: (415) 421 2132
Facsimile No.: (415) 421 2133
WITH A COPY TO:
Pircher, Nichols & Meeks
1999 Avenue of the Stars, Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (SAC/RCS)
Telephone No.: (310) 201 8900
Facsimile No.: (310) 201 8922
TO MANAGER:
Ridgewood Properties, Inc.
2859 Paces Ferry Road
Suite 700
Atlanta, Georgia 30339
Attention: Mr. N. Russell Walden
Telephone No.: (770) 434 3670
Facsimile No.: (770) 433 8935
WITH A COPY TO:
Troutman Sanders
Suite 5200
600 Peachtree Street, N.E.
Atlanta, Georgia 30308/2216
Attention: John W. Moore, Esq.
Telephone No.: (404) 885 3188
Facsimile No.: (404) 885 3900
Any notice so given by mail or courier service shall be deemed to
have been given as of the date of delivery (whether accepted or
refused) established by U.S. Post Office return receipt or other
proof of delivery. Any such notice not so given (including
facsimile transmission) shall be deemed given upon receipt of the
same by the party to whom the same is to be given.
8.2 CONSENT AND APPROVALS. Except as otherwise expressly
provided herein, any approval or consent provided to be given by a
party hereunder may be given or withheld in the absolute discretion
of such party and shall not be deemed to have been given unless
given in writing.
8.3 AMENDMENTS. Except as otherwise herein provided, any and
all amendments, additions or deletions to this Agreement shall be
null and void unless approved by the parties (and Investor pursuant
to Section 8.16). A change in the Monthly Report Forms set forth in
Exhibit "C" or the Uniform Accounting System may be made by Owner,
effective upon written notice thereof by Owner to Manager; upon
receipt of such notice by Manager, such Exhibit "C" shall be deemed
to have been amended.
8.4 HEADINGS. All headings herein are inserted only for
convenience of reference and are not to be considered in the
construction or interpretation of any provision of this Agreement.
8.5 REPRESENTATIONS. Manager represents and warrants that it
is fully qualified and licensed, to the extent required by law, to
manage hotels and perform all obligations assumed by Manager
hereunder and is fully capable of performing such obligations.
Manager agrees to comply with all such laws now or hereafter in
effect.
8.6 INDEMNIFICATION BY MANAGER. Manager shall indemnify,
protect, defend and hold Owner, each partner of Owner and each of
their respective officers, directors, members, partners and
employees harmless from and against any and all claims, demands,
losses, damages, liabilities, actions, lawsuits and other
proceedings, judgments and awards, and costs and expenses (including
reasonable attorneys' fees) (collectively, "Claims"), arising
directly or indirectly, in whole or in part, out of any act or
omission of Manager or of any of its agents, officers, employees or
representatives, but only to the extent such act or omission
constitutes willful misconduct, a material breach of this Agreement,
an intentional act outside Manager's scope of authority or gross
negligence. Such indemnification shall not apply to Manager's
performance of its obligations under the License Agreement to the
extent a default under the License Agreement is caused, directly or
indirectly, by Owner's failure to provide the necessary funds for
capital improvements or alterations reasonably required under the
License Agreement within a reasonable time after written notice from
Manager of such requirement. The provisions of this Section shall
survive termination of this Agreement and the completion of
Manager's services hereunder.
8.7 INDEMNIFICATION BY OWNER. Owner shall indemnify, protect,
defend and hold Manager (in its capacity as Manager [but not in any
other capacity, including its capacity as the parent of RHI]) and
all officers, directors, and employees of Manager harmless from any
and all Claims arising out of the performance by Manager of its
obligations and duties hereunder in accordance with the terms
hereof; provided, however, that Owner does not hereby agree, and
shall not be obligated to, so indemnify Manager from any such loss,
cost, damage, liability or expense arising out of any act or
omission of Manager or any of its agents, officers, employees or
representatives, which act or omission constitutes willful
misconduct, a material breach of this Agreement, an intentional act
outside Manager's scope of authority or gross negligence. The
provisions of this Section shall survive termination of this
Agreement and the completion of Manager's services hereunder.
8.8 ENTIRE AGREEMENT: This Agreement contains the entire
understanding among the parties with respect to the matters
contained herein, and supersedes any prior understanding and
agreements between them respecting the within subject matter. There
are no representations, agreements, arrangements, or understandings,
oral or written, between or among the parties hereto relating to the
subject matter of this Agreement which are not fully expressed
herein.
8.9 GOVERNING LAW. This Agreement shall be governed,
construed and interpreted by the laws of the State of Kentucky,
without regard to conflicts of law principles.
8.10 ATTORNEYS' FEES: If any party obtains a judgment against
any other party by reason of breach of this Agreement (whether in an
action or through arbitration), such party shall be entitled to
recover its court (or arbitration) costs, and reasonable attorneys'
fees (including the reasonable value of in-house attorney services)
and disbursements incurred in connection therewith and in any appeal
or enforcement proceeding thereafter, in addition to all other
recoverable costs.
8.11 CERTAIN DEFINITIONS: As used herein:
"Acquisition Costs" as of a particular date means the sum
of the following: (a) Owner's aggregate acquisition cost of the
Property, including all due diligence costs and closing costs, which
the parties hereby agree is equal to [$16,191,571.94] as of the date
hereof; (b) the aggregate of all costs paid or incurred by Owner
under the Construction Management Agreement on or prior to such
date, including PIP costs; and (c) the aggregate of any other
expenditures paid or incurred by Owner in connection with the
Property on or prior to such date that would normally be capitalized
under generally accepted accounting principles.
"Affiliate" of a person or entity (or words of similar import,
whether or not capitalized) includes (1) any officer, director,
employee, shareholder, partner, member or relative within the third
degree of kindred of the person or entity in question; (2) any
corporation, partnership, limited liability company, trust or other
person or entity controlling, controlled by or under common control
with (a) the person or entity in question or (b) any affiliate of
the person or entity in question (whether directly or indirectly
through one or more intermediaries); and (3) any officer, director,
trustee, partner, member or employee of any person or entity
described in (2) above. For the purpose of this definition,
"control" means the possession, directly or indirectly, of the power
to direct or cause the direction of management and policies, whether
through the ownership of voting securities or by contract or
otherwise. Without limitation on the foregoing, RHI shall be deemed
to be an Affiliate of Manager.
"Ancillary Agreement" means any agreement, instrument, document
or covenant made or entered into under, pursuant to, or in
connection or concurrently with this Agreement and any amendment or
amendments made at any time or times heretofore or hereafter to any
of the same (including the License Agreement, the partnership
agreement of Owner and the "Basic Agreement" and "Construction
Management Agreement" therein defined).
"Bankruptcy/Dissolution Event" with respect to a person or
entity, means the commencement or occurrence of any of the following
with respect to such person or entity: (1) a case under Title 11 of
the U.S. Code, as now constituted or hereafter amended, or under any
other applicable federal or state bankruptcy law or other similar
law; (2) the appointment of (or a proceeding to appoint) a trustee
or receiver of any property interest; (3) an attachment, execution
or other judicial seizure of (or a proceeding to attach, execute or
seize) a substantial property interest; (4) an assignment for the
benefit of creditors; (5) the taking of, failure to take, or
submission to any action indicating (after reasonable investigation)
an inability to meet its financial obligations as they accrue; or
(6) a dissolution or liquidation; provided, however, that the events
described in clauses (1), (2) or (3) shall not be included if the
same are (a) involuntary and not at any time consented to,
(b) contested within 30 days of commencement and thereafter
diligently and continuously contested, and (c) dismissed or set
aside, as the case may be, within 90 days of commencement.
"Business Agreement" means any lease, rental agreement, loan
agreement, mortgage, easement, covenant, restriction or other
agreement or instrument at any time or times affecting all or a
portion of the Property.
"Business Plan" means the business plan for the Property of
Owner, as the same may be amended from time to time.
"Cure Period" means (1) fifteen (15) days after written notice
specifying the nature of a default or breach in connection with a
monetary default that is not a "Noncurable Default" (as hereinafter
defined); (2) thirty (30) days after written notice specifying the
nature of a default or breach under this Agreement, in connection
with a non-monetary default that is not a Noncurable Default
(provided, however, that if such non-monetary default cannot
reasonably be cured within such 30-day period, and the defaulting
party promptly commences the cure of such default and diligently
pursues such cure to completion, then such 30-day period shall be
extended to the extent reasonably necessary, but in no event after
the date that is 45 days after such written notice); and (3) no
period at all for a Noncurable Default. A "Noncurable Default"
means any of the following: (a) a breach of a representation or
warranty, (b) a breach of any restriction upon transfer or
hypothecation, (c) an intentional breach, (d) a breach of fiduciary
duty or a breach constituting fraud, bad faith or willful
misconduct, (e) a breach of Section 8.12 or any other exclusive or
non-competition covenant, (f) a breach of an obligation if there
have been two prior breaches of such obligation or a similar
obligation within the immediately preceding two-year period (e.g., a
failure to timely deliver information if there have been at least
two failures to timely deliver the same or different information
within the immediately preceding 2-year period), (g) taking action
on behalf of Owner that is beyond the scope of authority established
by this Agreement (or in the case of a default under a Ancillary
Agreement, such Ancillary Agreement), or (h) a
Bankruptcy/Dissolution Event.
"Governmental Requirements" means all permits, licenses,
approvals, entitlements and other governmental authorizations
required in connection with the ownership, construction, use,
operation or maintenance of the Property, including any development
agreement, indemnity, surety or performance bond or other similar
assurances to governmental agencies in connection with the obtaining
of entitlements and other governmental approvals for the Property.
"Laws" means all procedural and substantive federal, state and
local laws, moratoria, initiatives, referenda, ordinances, rules,
regulations, standards, orders and other governmental requirements
(including those relating to the environment, health and safety, or
handicapped persons), applicable to Property, or the ownership, use,
operation, maintenance, sale, lease or other disposition thereof.
"Net Operating Income" for a particular period means the
"Distributable Cash" (as defined in the partnership agreement of
Owner) for such period with the following adjustments: (a) no sale
or financing proceeds shall be included in Distributable Cash; and
(b) there shall be no deduction for the following in order to arrive
at Distributable Cash: (i) principal or interest payments under any
indebtedness of Owner; and (ii) costs that are capitalized and
included in Acquisition Costs.
"Requirements" means this Agreement, the Business Plan, the
Approved Operating Budget, the Approved Capital Budget, the Business
Agreements, the License Agreement, all plans and specifications
approved by Owner, Laws and Governmental Requirements, collectively.
8.12 COMPETITION: Without limitation on the obligations of
Manager and its Affiliates under Ancillary Agreements, during the
term of this Agreement, Manager shall not engage in activities which
would adversely affect Manager's ability to perform its obligations
under this Agreement or which are competitive with the Property.
8.13 COUNTERPARTS: This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same Agreement.
8.14 TERMINOLOGY: Section headings are for reference only and
do not modify or affect this Agreement. When the context requires,
any gender includes any other gender, the singular includes the
plural, and the plural includes the singular. Whenever the words
"including", "include" or "includes" are used in this Agreement,
they should be interpreted in a non-exclusive manner as though the
words ", without limitation," immediately followed the same.
Except as otherwise indicated, all Section and Exhibit references in
this Agreement shall be deemed to refer to the Sections in and
Exhibits to this Agreement.
8.15 TIME: Time is of the essence of this Agreement.
8.16 INVESTOR: It is understood that Manager is the parent of
RHI, which is the general partner of Owner and, in light of this
affiliation, all notices, reports, and other documents and
information required to be provided to Owner hereunder shall be
provided simultaneously by Manager to both RHI and the other limited
partner in Owner ("Investor"), and any approval, consent or other
determination or judgment to be made by Owner hereunder shall not be
effective unless approved in writing by Investor. Without
limitation on the foregoing, this Agreement shall not be amended
without the prior written consent of Investor.
8.17 ASSIGNMENT: Manager may not directly or indirectly
transfer, sell, assign, or hypothecate its interest under this
Agreement or any rights hereunder to any other entity or person,
without the written consent of Owner. Any assignment of this
Agreement by Manager is subject to approval by Holiday Inns
Franchising, Inc.
8.18 ILLEGALITY: If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid
or unenforceable to any extent, the remainder of this Agreement and
the application of such provisions to other persons or circumstances
shall not be affected thereby and shall be enforceable to the
greatest extent permitted by law.
8.19 NO JOINT VENTURE. This Agreement shall not be construed
as effecting a partnership or joint venture between Owner and
Manager.
8.20 CUMULATIVE REMEDIES. The rights and remedies of the
parties hereto shall not be mutually exclusive, i.e., the exercise
of one or more of the provisions hereof shall not preclude the
exercise of any other provision hereof.
8.21 LIMITATION OF LIABILITY. Owner shall not be personally
liable in any manner or to any extent under or in connection with
this Agreement, and Manager and its successors and assigns and,
without limitation, all other persons, partnerships, limited
liability companies, corporations and entities shall look solely to
the Property for the satisfaction of any claims or judgments against
Owner. The limitation of liability provided in this Section is in
addition to, and not in limitation of, any limitation on liability
applicable to Owner provided by law or by any other contract,
agreement or instrument.
8.22 BINDING EFFECT; WAIVER: This Agreement shall be binding
upon the parties hereto and their respective permitted successors
and assigns. Except as expressly provided in Sections 8.6 and 8.16,
this Agreement shall not benefit or be enforceable by any other
person or entity. No waiver of any breach of any covenant,
condition or agreement contained herein shall be construed to be a
subsequent waiver of that covenant, condition or agreement or of any
subsequent breach thereof or of this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement under seal as of the date first written above.
OWNER:
RW HOTEL PARTNERS, L.P.,
a Delaware limited partnership
By: RIDGEWOOD HOTELS, INC.,
a Georgia corporation
General Partner
By: ________________________
Name: _______________________
Title: ______________________
MANAGER:
RIDGEWOOD PROPERTIES, INC.,
a Delaware corporation
By: _________________________
Name: ________________________
Title: ______________________
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
Property situated in the City of Jeffersontown, County of Jefferson,
State of Kentucky, and more particularly described as follows:
BEGINNING at a point in the East right of way line of Hurstbourne
Lane, which point is 400 feet North of the intersection of the North
line of Ramp No. 1 of I-64, as measured along the East line of
Hurstbourne Lane; thence South 79 degrees 31 minutes 29 seconds East
250 feet; thence South 10 degrees 28 minutes 31 seconds West 543.83
feet to a point in the North right of way line of said Ramp No. 1 of
I-64; thence with the said right of way line South 56 degrees 52
minutes 3 seconds East 364.70 feet to a pipe; thence continuing with
said right of way line, South 71 degrees 27 minutes 23 seocnds East
255.13 feet to a pipe; thence leaving the said right of way line,
North 40 degrees 24 minutes East 502.19 feet to a pipe; thence North
56 degrees 39 minutes 48 seconds West 900.57 feet to a pipe; thence
North 79 degrees 31 minutes 29 seconds West 259.86 feet to a pipe in
the East right of way line of Hursbourne Lane; thence with said
right of way line, South 10 degrees 28 minutes 31 seconds West 65
feet to the point of beginning.
EXHIBIT B
FORM OF OPERATING BUDGET AND CAPITAL BUDGET
LVIBUD95.ssf
09/25/95
Holiday Inn - Louisville
Operating Budget for 1995
($000)
AUG-16 SEP95 OCT95 NOV95 DEC95 1995
Rooms Available 4405 8010 8277 8010 8277 36979
Rooms Occupied 3381 6090 6378 4827 4318 24994
Average Rate 74.00 73.02 72.97 72.26 71.45 72.71
Occupancy % 76.8% 76.0% 77.1% 60.3% 52.2% 67.6%
Gross Revenue 330.5 615.7 643.3 503.1 447.4 2540.0
Rooms Revenue 250.2 444.7 465.4 348.4 308.5 1817.2
Labor Cost 32.6 61.2 63.1 52.8 50.3 260.0
Other Exp 16.8 29.3 33.2 27.1 22.1 128.5
Total Expenses 49.4 90.5 96.3 79.9 72.4 388.5
Dept Profit 200.8 354.2 369.1 268.5 236.1 1428.7
Telephone Revenue 7.5 15.4 16.1 14.7 12.0 65.7
Cost 2.5 5.3 6.2 4.6 5.7 24.3
Dept Profit 5.0 10.1 9.9 10.1 6.3 41.4
Food Revenue 61.7 126.8 133.5 116.3 101.3 539.6
Food Cost 16.8 35.1 37.0 31.5 29.0 149.4
Labor Cost 21.0 42.8 45.2 40.7 39.7 189.4
Other 5.0 11.2 13.1 9.5 8.2 47.0
Total Expenses 42.8 89.1 95.3 81.7 76.9 385.8
Dept Profit 18.9 37.7 38.2 34.6 24.4 153.8
Bar Revenue 9.8 25.5 26.4 21.5 23.4 106.5
Beverage Cost 2.0 5.3 5.4 4.4 4.9 22.0
Labor Cost 1.2 2.4 2.4 2.1 1.9 10.0
Entertn Cost 0.0 0.6 0.0 0.0 4.7 5.3
Other 0.6 1.1 1.1 1.0 0.8 4.6
Total Expenses 3.8 9.4 8.9 7.5 12.3 41.9
Dept Profit 6.0 16.1 17.5 14.0 11.1 64.6
Food & Bev Dept Profit 24.9 53.8 55.7 48.6 35.5 218.4
Other Income 1.3 3.3 1.9 2.2 2.2 10.9
Gross Operating Income 232.0 421.4 436.6 329.4 280.1 1699.5
Admin & Genl 27.0 50.7 52.4 46.9 50.8 227.7
Franchise Fee 10.1 17.8 18.9 13.3 12.3 72.4
Marketing 20.6 37.2 40.3 32.6 33.2 163.9
Utilities 11.8 18.5 18.8 17.1 22.2 88.4
R&M Labor 9.0 17.1 17.4 15.7 17.5 76.7
R&M Other 7.5 12.1 15.5 15.3 14.5 64.9
Total Expenses 86.0 153.4 163.3 140.9 150.5 694.1
Profit before Fixed Exp 146.0 268.0 273.3 188.5 129.6 1005.3
Taxes & Insurance 10.4 15.5 20.2 18.1 16.0 80.2
FF&E Reserve 13.2 24.6 25.7 20.1 17.9 101.6
Income before Deprn (NOI) 122.3 227.9 227.3 150.3 95.7 823.5
Holiday Inn - Louisville
Capital Budget for 1995
($000)
Capital Budget for balance of 1995:
Modernization budget 443.0
Other capital items:
Computer equipment 4.2
Dance floor & stage riser 12.6
Kitchen equipment 9.0
Leased equipment:
Van, $25K, operating lease 0.0
_____
Total capital budget 468.8
EXHIBIT C
MONTHLY REPORTS
Manager shall generate, update and maintain the following reports,
using the Uniform Accounting System:
Income Recaps
Rents Receivable Report
Property Profit and Loss Statement
Capital Expenditure and Leasing Commissions Report
Management Reports
Variance Analysis
Departmental Schedules
INCOME RECAP: Identify all income and security deposits billed
and amounts collected. The ending accounts receivable balance
equals the sum of: 1) the beginning accounts receivable, plus
2) the billing of the current month, less 3) amounts collected.
The ending accounts receivable balance should agree to the
Accounts Receivable Report. The advance deposit report should
reflect the Owner's total liability for advance deposits
outstanding at report date.
PROPERTY PROFIT & LOSS STATEMENT: Report monthly and year to
date property income and expenses using Uniform Code of
Accounts Schedules and Chart of Accounts. Prepare budget
variance analysis. Explain any significant operating issues
and significant budget to actual variances. Include reconciled
bank statements and reconciliations. Reconcile the bank
statement cash balance to the operating statement ending
balance. Indicates the amount available to be available to the
Owner (Owner's Cash Flow).
CAPITAL EXPENDITURE: Describe and cost all capitalized
disbursement items.
EXHIBIT D
LICENSE AGREEMENT
LOCATION: 1325 Hurstbourne Lane Louisville, KY 40222
LOCATION No.: #3013
DATE:_________________________
HOLIDAY INNS FRANCHISING, INC.
HOLIDAY INN r CHANGE OF OWNERSHIP AGREEMENT
WITH
RIDGEWOOD PROPERTIES, INC.
LICENSEE
HOLIDAY INNS FRANCHISING, INC.
LICENSE AGREEMENT
TABLE OF CONTENTS
1. THE LICENSE
A. The Hotel
B. The System
2. GRANT OF LICENSE
3. LICENSEE'S RESPONSIBILITIES
A. Operational and Other Requirements
B. Upgrading of the Hotel
C. Fees
4. LICENSOR'S RESPONSIBILITIES
A. Training
B. Reservation Services
C. Consultation on Operations, Facilities and Marketing
D. Use of Marketing, and Reservation Contribution
E. Maintenance of Standards
F. Application of Manual
G. Other Arrangements for Marketing, Etc.
H. Licensor's Use of Other Advertising/Promotional Support
Funds
5. APPEALS, CHANGES IN THE MANUAL
A. Appeals
B. Changes in the Manual
C. Decisions on Appeal
D. Limitation on Appeal Rights
6. IAHI
A. Membership
B. Function of Committees
7. PROPRIETARY RIGHTS
A. Ownership of System
B. Trademark Disputes
C. Protection of Name and Marks
8. RECORDS AND AUDITS
A. Monthly Statements
B. Preparation and Maintenance of Records
C. Audit
D. Annual Financial Statements
9. INDEMNITY AND INSURANCE
A. Indemnity
B. Insurance
C. Evidence of Insurance
10. TRANSFER
A. Transfer by Licensor
B. Transfer by Licensee
C. Transfer of Equity Interests That Are Not Publicly Traded
D. Transfers of Publicly-Traded Equity Interests
E. Transfer of the License
F. Transfers of the License or Equity Interest
in the License Upon Death
G. Registration of a Proposed Transfer of Equity Interests
H. Transfer of Real Estate
I. Management of the Hotel
11. CONDEMNATION AND CASUALTY
A. Condemnation
B. Casualty
C. No Extensions of Term
12. TERMINATION
A. Expiration of Term
B. Termination by Licensee on Advance Notice
C. Termination by Licensor on Advance Notice
D. Immediate Termination by Licensor
E. De-Identification of Hotel Upon Termination
F. Payment of Liquidated Damages
13. RELATIONSHIP OF PARTIES
A. No Agency Relationship
14. MISCELLANEOUS
A. Severability and Interpretation
B. Binding Effect
C. Exclusive Benefit
D. Entire Agreement
E. Licensor Withholding Consent
F. Notices
G. General Release and Covenant Not to Sue
H. Performance of the Work
I. Reimbursement of Expenses
J. Descriptive Headings
SPECIAL STIPULATIONS
GUARANTY
ATTACHMENT A
HOLIDAY INNS FRANCHISING, INC. THREE RAVINIA DRIVE,
ATLANTA, GEORGIA 30346 HOLIDAY INN r CHANGE OF OWNERSHIP
AGREEMENT
This License Agreement dated___________________, 19 between
Holiday Inns Franchising, Inc., a Delaware corporation ("Licensor"),
and Ridgewood Properties, Inc. a Delaware corporation ("Licensee")
whose address is 2859 Paces Ferry Road, Suite 700, Atlanta, GA
30339.
THE PARTIES AGREE AS FOLLOWS:
1. THE LICENSE:
Licensor owns, operates and licenses a system designed to
provide a distinctive, high quality hotel service to the public
under the name "Holiday Innr", (the "System"). High standards
established by Licensor are the essence of the System. Future
investments may be required of Licensee under this License Agreement
("License"). Licensee has independently investigated the risks of
the business to be operated hereunder, including current and
potential market conditions, competitive factors and risks, has
read Licensor's Offering Circular for Prospective Franchisees; and
has made an independent evaluation of all such facts. Neither
Licensor nor any other person on Licensor's behalf has made any
representation to Licensee concerning this License not fully set
forth herein. Aware of the relevant facts, Licensee desires to
enter into this License in order to obtain a license to use the
System in the operation of a Holiday Inn hotel (the "Hotel") located
at 1325 Hurstbourne Lane, Louisville, KY 40222.
A. The Hotel. The Hotel comprises all structures,
facilities, appurtenances, furniture, fixtures, equipment, and
entry, exit, parking and other areas from time to time located on
the land identified by Licensee to Licensor in anticipation of this
License, or located on any land from time to time approved by
Licensor for additions, signs or other facilities. The Hotel now
includes the facilities listed on Attachment "A" hereto. No change
in the number of approved guest rooms and no other significant
change in the Hotel may be made without Licensor's approval.
Licensee represents that it is entitled to possession of the Hotel
during the entire license term without restrictions that would
interfere with anything contemplated in this License.
B. The System. The System is composed of elements, as
designated from time to time by Licensor, designed to identify
"Holiday Inn hotels" to the consuming public and/or to contribute to
such identification and its association with quality standards. The
System at present includes the service marks "Holiday Innr",
"Holiday Inn Garden Courtsm", "Crowne Plazar", "Holiday Inn
Expressr", "Holiday Inn Hotel & Suites," Holiday Inn Selectsm",
"Holiday Inn SunSpree Resort", and "Crowne Plazar Resort hotels",
(as appropriate to the specific hotel operation to which it
pertains) "Holidexr", and such other service marks and such
copyrights, trademarks and similar property rights as may be
designated from time to time by Licensor in accordance with
Licensor's specifications to be part of the System; access to a
reservation service; distribution of advertising, publicity and
other marketing programs and materials; the furnishing of training
programs and materials; standards, specifications and policies for
construction, furnishing, operation, appearance and service of the
Hotel, and other requirements as stated or referred to in this
License and from time to time in Licensor's Holiday Inn Standards
Manual (the "Manual") or in other communications to Licensee; and
programs for inspecting the Hotel and consulting with Licensee.
Licensor may add elements to the System or modify, alter or delete
elements of the System in its sole discretion from time to time.
2. GRANT OF LICENSE:
Licensor hereby grants to Licensee a non-exclusive license to
use the System only at the Hotel, but only in accordance with this
License and only during the "License Term" beginning with the date
hereof and terminating under paragraph 12 hereof. The License
applies to the location specified herein and to no other location.
Licensee acknowledges that Licensor, its divisions, subsidiaries,
affiliates and parent are and may in the future be engaged in other
business activities including activities involving transient lodging
and related activities, and that Licensee is acquiring no rights
hereunder other than the right to use the System as specifically
defined herein in accordance with the terms of this License. This
License does not limit Licensor's right or the rights of any parent,
subsidiary or affiliate of Licensor, to use or license the System or
any part thereof or to engage in or license any business activity at
any other location.
3. LICENSEE'S RESPONSIBILITIES:
A. Operational and Other Requirements. During the License
Term, Licensee will:
(1) maintain a high moral and ethical standard
and atmosphere at the Hotel;
(2) maintain the Hotel in a clean, safe and orderly
manner and in first class condition;
(3) provide efficient, courteous and high-quality
service to the public;
(4) operate the Hotel 24 hours a day every day except as
otherwise permitted by Licensor based on special
circumstances;
(5) strictly comply in all respects with the Manual and
with all other general, company-wide policies, procedures and
requirements of Licensor which may be from time to time
communicated to Licensee in writing by Licensor;
(6) strictly comply with all of Licensor's general,
company-wide standards and specifications for goods and
services used in the operation of the Hotel and other
reasonable requirements to protect the System and the Hotel
from unreliable sources of supply;
(7) strictly comply with Licensor's general, company
wide requirements for licensees as to:
(a) the types of services and products that may be
used, promoted or offered at the Hotel;
(b) the types and quality of services and products
that, to supplement services listed on Attachment A, must be
used, promoted or offered at the Hotel;
(c) use, display, style and type of signage;
(d) directory and reservation service listings of
the Hotel;
(e) training of persons to be involved in the
operation of the Hotel;
(f) participation in all marketing, reservation
service, advertising, training and operating programs
designated by Licensor as System-wide (or area-wide) programs
in the best interests of hotels using the System, provided
that with regard to area-wide programs, Licensee may request
Licensor's approval that Licensee need not participate,
reasonable approval not to be withheld;
(g) maintenance, appearance and condition of the
Hotel; and
(h) quality and types of services offered to
customers at the Hotel.
(8) use such automated guest service and/or hotel
management and/or telephone or telecommunication system(s)
which Licensor deems to be in the best interests of the
System, including any additions, enhancements, supplements, or
variants thereof which may be developed during the term
hereof; provided that, if compliance with the requirements of
this paragraph will cause Licensee undue hardship, Licensee
may terminate the License by complying with the provisions of
paragraph 12.B;
(9) participate in and use those reservation services
which Licensor deems to be in the best interests of the
System, including any additions, enhancements, supplements or
variants thereof which may be developed during the term
hereof;
(10) adopt all improvements or changes to the System as
may be from time to time designated by Licensor;
(11) strictly comply with all governmental requirements,
pay all taxes, and maintain all governmental licenses and
permits necessary to operate the Hotel in accordance with the
System;
(12) permit inspection of the Hotel by Licensor's
representatives at any time and give them free lodging for
such time as may be reasonably necessary to complete their
inspections;
(13) promote the Hotel on a local or regional basis
subject to Licensor's requirements as to form, content and
prior approvals;
(14) insure that no part of the Hotel or the System is
used to further or promote a competing business or other
lodging facility, except as Licensor may approve for
businesses or lodging facilities owned, licensed, operated or
otherwise approved by Licensor or its parent, divisions,
subsidiaries, and affiliates;
(15) use every reasonable means to encourage use of
Holiday Inn Express facilities everywhere by the public;
(16) in all respects use Licensee's best efforts to
reflect credit upon and create favorable public response to
the name "Holiday Inn"; and
(17) promptly pay to Licensor all amounts due Licensor,
its parent, subsidiaries and affiliates as royalties or fees,
whether or not arising out of this License, or for goods or
services purchased by Licensee for use at the Hotel.
B. Upgrading of the Hotel. Using the same standards
applicable generally to hotels under the System operated by Licensor
and its licensees in the same category as the Hotel, Licensor may
at any time during the term hereof require substantial
modernization, renovation and other upgrading of the Hotel. Limited
exceptions from those standards may be made by Licensor based on
local conditions or special circumstances. If the upgrading
requirements contained in this paragraph 3.B cause Licensee undue
hardship, Licensee may terminate the License by complying with
paragraph 12.B.
C. Fees.
(1) For each month (or part of a month) during the License Term,
Licensee will pay to Licensor by the 15th of the following
month:
(a) a royalty of 5% of the gross rooms revenues attributable
to or payable for rental of guest rooms at the Hotel with
deductions for sales and room taxes only ("Gross Rooms
Revenue"); and
(b) a "Marketing Contribution" of 1.5% of Gross Rooms
Revenue, this contribution being subject to change by
Licensor from time to time if either approved by:
(i) a majority of members (which shall be counted on the
basis of one hotel, one vote) of the System who
represent a majority of the hotels to be subject to
the increase; or
(ii)approved by a majority of the members of the System
or the "IAHI" (the International Association of
Holiday Inns, Inc. or successor sanctioned as such by
Licensor) at a meeting of System licensees or at an
annual IAHI meeting either as may be convened by
Licensor upon no less than 45 days' advance notice;
Licensor may, in its sole discretion upon 30 days' prior
written notice, increase this Contribution by an amount
not to exceed .5% of Gross Rooms Revenue and such
increase shall be effective for a period no longer than
12 months provided that, in the event of such increase,
Licensor shall not make such a discretionary increase
again for a period of 24 months after the expiration date
of any such increase; and
(c) a "Reservation Contribution" of 1% of Gross Rooms
Revenue, this contribution being subject to change in the
same manner as provided above for the Marketing
Contribution; and
(d) a monthly Holidex fee of $6.12 for each guest room at the
Hotel plus such increases as Licensor may judge
reasonable, but in no case exceeding in any calendar year
10% of the fee in effect at the beginning of that year;
and
(e) all fees due for Travel Agent Commission Programs and
Hotel Marketing Association and Field Marketing Co-op
Programs attributable to the Hotel if Licensee uses the
same or if such programs are mandatory on a company-wide
basis; and
(f) an amount equal to any sales, gross receipts or similar
tax imposed on Licensor and calculated solely on payments
required hereunder, unless the tax is an optional
alternative to an income tax otherwise payable by
Licensor.
Licensee will operate the Hotel so as to maximize gross rooms
revenues of the Hotel consistent with sound marketing and
industry practice and will not engage in any conduct which
reduces gross rooms revenues of the Hotel in order to further
other business activities.
(2) A standard initial fee as set forth in Licensor's then current
Offering Circular for Prospective Franchisees will be charged
upon application for any guest rooms to be added to the Hotel.
(3) Additional royalties may be charged on revenues (or upon any
other basis, if so determined by Licensor) from any activity
if it is added at the Hotel by mutual agreement and:
(a) it is not now offered at System hotels generally and is
likely to benefit significantly from or be identified
significantly with the Holiday Inn name or other aspects
of the System; or
(b) it is designed or developed by or for Licensor.
(4) Charges may be made for optional products or services accepted
by Licensee from Licensor, either in accordance with current
practice or as developed in the future.
(5) Each payment under this paragraph 3.C, except the standard
initial fee, shall be accompanied by the monthly statement
referred to in paragraph 8.A. Licensor may apply any amounts
received under this paragraph 3.C. to any amounts due under
this License. If any amounts are not paid when due, such
non-payment shall constitute a breach of this License and in
addition, such unpaid amounts, will accrue interest beginning
on the first day of the month following the due date at 1 1/2%
per month or the maximum interest permitted by applicable law,
whichever is less.
(6) Local and regional marketing programs and related activities
may be conducted by Licensee, but only at Licensee's expense
and subject to Licensor's requirements. Reasonable charges
may be made for optional advertising materials ordered or
supplied by Licensor to Licensee for such programs and
activities.
(7) Licensor and Licensee shall comply with each other's
reasonable requirements concerning confidentiality of
information.
4. LICENSOR'S RESPONSIBILITIES:
A. Training. During the License Term, Licensor will continue
to specify and provide required and optional training services and
programs at various locations. A fee will be charged for required
training with respect to certain computer systems provided by
Licensor or its affiliates in accordance with the terms of the
agreements relating to those systems, however, no charge will be
made for other required training services and programs. Travel,
lodging and other expenses of Licensee and its employees will be
borne by Licensee. Reasonable charges may be made for training
materials.
B. Reservation Services. During the License Term, so long as
Licensee is in full compliance with its material obligations
hereunder, Licensor will afford Licensee access to Reservation
Service for the Hotel on terms consistent with this License.
C. Consultation on Operations, Facilities and Marketing.
During the License Term, Licensor will, from time to time at
Licensor's discretion, make available to Licensee consultation and
advice in connection with operations, facilities and marketing.
D. Use of Marketing, and Reservation Contribution. The
Marketing Contribution will be used by Licensor for costs associated
with advertising, promotion, publicity, market research and other
marketing programs and related activities for the System. The
Reservation Contribution will be used by Licensor exclusively for
costs associated with reservation programs and related activities
for the System. Licensor will make available and use for the same
purposes, marketing and reservation funds computed on the basis
generally applicable to licensees of the System. Licensor is not
obligated to expend funds for marketing or reservation services in
excess of the amounts received from licensees using the System and
those funds made available by Licensor as set out hereinabove.
Local and regional marketing programs and related activities may be
conducted by Licensee, but only at Licensee's expense and subject to
Licensor's requirements. Reasonable charges may be made for
optional advertising materials ordered or used by Licensee for such
programs and activities.
E. Maintenance of Standards. Licensor will conscientiously
seek to maintain high standards of quality, cleanliness, appearance
and service at all hotels using the System so as to promote, protect
and enhance the public image and reputation of the Holiday Inn name
and to increase the demand for services offered by the System.
Licensor's judgment in such matters shall be controlling in all
respects, and it shall have wide latitude in making such judgments.
F. Application of Manual. All hotels operated under the
System will be subject to the Manual, as it may from time to time be
modified or revised by Licensor, including limited exceptions from
compliance which may be made based on local conditions, type of
hotel or special circumstances.
G. Other Arrangements for Marketing, Etc. Licensor may enter
into arrangements for development, reservation services, marketing,
operations, administrative, technical and support functions,
facilities, programs, services and/or personnel with any other
entity, and may use any facilities, programs, services or personnel
used in connection with the System, in connection with any business
activities of its parent, subsidiaries, divisions or affiliates.
H. Licensor's Use of Other Advertising/Promotional Support
Funds. To the extent that advertising and/or promotional support
and/or funding may become available to Licensor's parent, affiliates
or subsidiaries and/or Licensor from third parties on account of the
totality of the activities of Licensor's parent, affiliates and
subsidiaries, including hotels operated under the System, such
support and/or funding may be used or designated by Licensor's
parent, affiliates or subsidiaries, or Licensor, to benefit such
enterprises in the aggregate, in such proportion and manner as
Licensor's parent, affiliates or subsidiaries, or Licensor
determines reasonably promotes the totality of such enterprises,
exercising reasonable good faith business judgment with respect to
such determination, provided that any such support or funding coming
from activities of the System shall be used for the benefit of the
System.
5. APPEALS, CHANGES IN THE MANUAL:
A. Appeals. Decisions, other than termination notices, made
on behalf of Licensor specifically with reference to the Hotel may
be appealed to Licensor's Franchise Committee if done promptly after
Licensee has diligently sought relief through Licensor's normal
channels of authority. With the approval in writing of any member of
the Franchisee Committee, the decision may be further appealed to
the Executive Committee of Licensor's Board of Directors.
B. Changes in the Manual. Each change in the Manual must be
explained in writing to Licensee at least 30 days before it goes
into effect. Licensor's Franchise Committee or its equivalent must
approve any such change and must determine that the change was
formulated in good faith in the best interests of the System, after
seeking the advice and counsel of the Rules of Operation Committee
of the IAHI.
C. Decisions on Appeal. Licensor shall have the right to
decide appeals under this paragraph 5, solely on the basis of
written submissions. No appeal will suspend a decision or change,
until and unless the appeal is successful. Any action taken by
Licensor in the enforcement of this Agreement that is shown to be
arbitrary or capricious will be rescinded by Licensor to the extent
feasible, but wide discretion and latitude will be allowed to the
judgment of Licensor in the discharge of its overriding
responsibility to maintain and improve the standards, performance
and facilities of the hotels using the Holiday Inn, Crowne Plaza,
Holiday Inn Express, Holiday Inn Hotel & Suites, Holiday Inn Select,
Holiday Inn SunSpree Resort, Crowne Plaza Resort, or any other
Holiday Inn hotel brand or Holiday Inn name. Licensor will
conscientiously seek to maintain high standards of quality,
cleanliness, appearance and service at all hotels using the System
so as to promote, protect and enhance the public image and
reputation of all Holiday Inn hotel brand names or any other Holiday
Inn name, and to increase the demand for services offered by the
System. The Manual will apply to all hotels operated under the
System by Licensor and its licensees. Limited exceptions from
compliance may be made based on local conditions or special
circumstances.
D. Limitation on Appeal Rights. Licensee will not be
arbitrary, capricious or unreasonable in exercising its appeal (or
any other) rights under this License, and will use them only for the
purpose for which intended.
6. IAHI:
A. Membership. Licensee, other licensees of the System, and
Licensor are eligible for membership in the IAHI and are entitled to
vote at its meetings on the basis of one hotel, one vote, provided
that Licensee or Licensor, as the case may be, has paid all its dues
and fees owing to the IAHI. The purposes of the IAHI will be to
consider and discuss, and make recommendations on common problems
relating to the operation of System hotels. Licensor will seek the
advice and counsel of the IAHI Board of Directors and its Rules of
Operations, Advertising and Reservation Committees.
B. Function of Committees. IAHI committees, their functions
and their members will be subject to approval in writing by
Licensor, which approval will not be unreasonably withheld.
Recognizing that the IAHI must function in a manner consistent with
the best interests of all persons using the System, the Licensee and
Licensor will use their best efforts to cause the governing rules of
the IAHI to be consistent with this License.
7. PROPRIETARY RIGHTS:
A. Ownership of System. The Licensee acknowledges and will
not contest, either directly or indirectly Licensor's unrestricted
and exclusive ownership of the System and any element(s) or
component(s) thereof, or that Licensor has the sole right to grant
licenses to use all or any element(s) or component(s) of the System.
Licensee specifically agrees and acknowledges that Licensor is the
owner of all right, title and interest in and to the marks "Holiday
Inn," "Crowne Plaza," "Holiday Inn Express," "Holiday Inn Hotel &
Suites", "Holiday Inn Select," "Holiday Inn SunSpree Resort,"
"Crowne Plaza Resort," and all other marks associated with the
System together with the goodwill symbolized thereby, and that
Licensee will not contest directly or indirectly the validity or
ownership of the marks either during the term of this License or
after its termination. All improvements and additions whenever made
to or associated with the System by the parties hereto or anyone
else, and all service marks, trademarks, copyrights, and service
mark and trademark registrations at any time used, applied for or
granted in connection with the System, and all goodwill arising from
Licensee's use of Licensor's marks shall inure to the benefit of and
become the property of Licensor. Upon expiration or termination of
this License, no monetary amount shall be assigned as attributable
to any goodwill associated with Licensee's use of the System or any
element(s) or component(s) of the System including any trademarks or
service marks licensed hereunder.
B. Trademark Disputes. Licensor will have the sole right and
responsibility to handle disputes with third parties concerning use
of all or any part of the System, and Licensee will, at its
reasonable expense, extend its full cooperation to Licensor in all
such matters, provided that Licensee shall have the right to defend
itself against a claim of infringement should Licensor decline to do
so. All recoveries made as a result of disputes with third parties
regarding use of the System or any part thereof shall be for the
account of Licensor. Licensor need not initiate suit against
alleged imitators or infringers, and may settle any dispute by grant
of a license or otherwise. Licensee will not initiate any suit or
proceeding against alleged imitators or infringers, or any other
suit or proceeding to enforce or protect the System.
C. Protection of Name and Marks. Both parties will make
every effort consistent with the foregoing to protect and maintain
the name and mark "Holiday Inn" and its distinguishing
characteristics (and the other service marks, trademarks, slogans,
etc., associated with the System). Licensee agrees to execute any
documents deemed necessary by Licensor or its counsel to obtain
protection for Licensor's marks or to maintain their continued
validity and enforceability. Licensee agrees to use the names and
marks associated with the System only in the manner authorized by
Licensor and acknowledges that any unauthorized use thereof shall
constitute infringement of Licensor's rights.
8. RECORDS AND AUDITS:
A. Monthly Statements. At least monthly, Licensee shall
prepare a statement which will include all information concerning
Gross Rooms Revenue, other revenues generated at the Hotel, room
occupancy rates, reservation data and other information required by
Licensor that may be useful in connection with marketing and other
functions of Licensor, its parent, subsidiaries, divisions or
affiliates (the "Data"). The Data shall be the property of
Licensor. The Data will be permanently recorded and retained by
Licensee as may be reasonably required by Licensor. By the 3rd of
each month, Licensee will submit to Licensor a statement setting
forth the Data and reflecting the computation of the amounts then
due under paragraph 3.C. The statement will be in such form and
detail as Licensor may reasonably request from time to time, and may
be used by Licensor for its reasonable purposes.
B. Preparation and Maintenance of Records. Licensee will, in
a manner and form satisfactory to Licensor and utilizing accounting
and reporting standards as reasonably required by Licensor, prepare
on a current basis (and preserve for no less than 4 years), complete
and accurate records concerning Gross Rooms Revenue and all
financial, operating, marketing and other aspects of the Hotel, and
maintain an accounting system which fully and accurately reflects
all financial aspects of the Hotel and its business. Such records
shall include but not be limited to books of account, tax returns,
governmental reports, register tapes, daily reports, and complete
quarterly and annual financial statements (profit and loss
statements, balance sheets and cash flow statements).
C. Audit. Licensor may require Licensee to have the Gross
Rooms Revenue or other monies due hereunder computed and certified
as accurate by a certified public accountant. During the License
Term and for two years afterward, Licensor and its authorized agents
will have the right to verify information required under this
License by requesting, receiving, inspecting and auditing, at all
reasonable times, any and all records referred to above wherever
they may be located (or elsewhere if reasonably requested by
Licensor). If any such inspection or audit discloses a deficiency
in any payments due hereunder, and the deficiency in any payment is
willful or exceeds 5% of the correct amount and is not offset by
overpayment, Licensee shall immediately pay to Licensor the
deficiency and interest thereon as provided in paragraph 3.C(5) and
Licensee shall also immediately pay to Licensor the entire cost of
the inspection and audit, including but not limited to travel,
lodging, meals, salaries and other expenses of the inspecting or
auditing personnel. If the audit discloses an overpayment, Licensor
will immediately refund it to Licensee.
D. Annual Financial Statements. Licensee will submit to
Licensor as soon as available but not later than 90 days after the
end of Licensee's fiscal year, and in a format as reasonably
required by Licensor, complete financial statements for such year.
Licensee will certify them to be true and correct and to have been
prepared in accordance with generally accepted accounting principles
consistently applied, and any false certification will be a breach
of this License.
9. INDEMNITY AND INSURANCE:
A. Indemnity. Licensee will indemnify Licensor, its parent,
and its subsidiaries and affiliates and their officers, directors,
employees, agents, successors and assigns against, hold them
harmless from, and promptly reimburse them for, all payments of
money (fines, damages, legal fees, expenses, etc.) by reason of any
claim, demand, tax, penalty, or judicial or administrative
investigation or proceeding (even where negligence of Licensor
and/or its parent, subsidiaries and affiliates is alleged) arising
from and after the date of this License any claimed occurrence at
the Hotel or any act, omission or obligation of Licensee or anyone
associated or affiliated with Licensee or the Hotel. At the
election of Licensor, Licensee will also defend Licensor and/or its
parent, subsidiaries and affiliates and their officers, directors,
employees, agents, successors and assigns against same. In any
event, Licensor will have the right, through counsel of its choice,
to control any matter to the extent it could directly or indirectly
affect Licensor and/or its parent, subsidiaries or affiliates or
their officers, directors, employees, agents, successors or assigns.
Licensee agrees to pay Licensor all expenses including attorney's
fees and court costs, incurred by Licensor, its parent,
subsidiaries, affiliates, and their successors and assigns to remedy
any defaults of or enforce any rights under the License; effect
termination of the License or collect any amounts due under the
License. Notwithstanding anything else herein to the contrary,
Licensee does not indemnify Licensor hereunder when any damages
result due to Licensor's sole negligence, as determined by a court
of competent jurisdiction.
B. Insurance. During the License Term, Licensee will comply
with all insurance requirements of any lease or mortgage covering
the Hotel, and Licensor's specifications for insurance as to the
amount and type of coverage as may be reasonably specified by
Licensor from time to time in writing, and will in any event
maintain on the Hotel as a minimum, the following insurance
underwritten by an insurer approved by Licensor:
(1) employer's liability with minimum limits of $10,000,000 per
occurrence; and
(2) Statutory worker's compensation insurance as prescribed by
applicable law; and
(3) the holder of the liquor license will maintain liquor
liability insurance with single limit coverage for personal
and bodily injury and property damage of at least $10,000,000
for each occurrence naming Licensor and its parent,
subsidiaries and affiliates (and Licensee if applicable) as
additional insureds; and
(4) comprehensive-commercial general liability insurance,
(including coverage for product liability, completed
operations, contractual liability, host liquor liability and
fire legal liability) and comprehensive automobile liability
insurance (including hired and non-owned liability) with
single-limit coverage for personal and bodily injury and
property damage of at least $10,000,000 for each occurrence,
naming Licensor and its parent, subsidiaries and affiliates as
additional insureds. In connection with all construction at
the Hotel during the License Term, Licensee will cause the
general contractor to maintain comprehensive general liability
insurance (including coverage for product liability, completed
operations and contractual liability) and comprehensive
automobile liability insurance (including hired and non-owned
liability) with limits of at least $10,000,000 per occurrence
for personal and bodily injury and property damage
underwritten with insurers approved by Licensor. Licensor and
its parent , subsidiaries and affiliates will be named as
additional insureds.
All policies must be written on a fully insured basis.
Deductibles or self-insured retentions are subject to approval on an
individual basis.
C. Evidence of Insurance. At all times during the License
Term, Licensee will furnish to Licensor certificates of insurance
evidencing the term and limits of coverage in force, names of
applicable insurers and persons insured, and a statement that
coverage may not be canceled, altered or permitted to lapse or
expire without 30 days' advance written notice to Licensor. Revised
certificates of insurance shall be forwarded to Licensor each time a
change in coverage or insurance carrier is made by Licensee, and/or
upon renewal of expired coverages. At Licensor's option, Licensee
may be required to provide certified insurance policy copies.
10. TRANSFER:
A. Transfer by Licensor. Licensor shall have the right to
transfer or assign this License or any of Licensor's rights or
obligations hereunder to any person or legal entity.
B. Transfer by Licensee. Licensee understands and
acknowledges that the rights and duties set forth in this License
are personal to Licensee, and that Licensor has granted this License
in reliance on the business skill, financial status, and personal
character of Licensee (if Licensee is an individual), and upon the
partners or stockholders of Licensee (if Licensee is a partnership
or corporation). Accordingly, neither Licensee nor any immediate or
remote successor to any part of Licensee's interest in the License,
nor any individual, partnership, corporation, or other legal entity
which directly or indirectly owns an equity interest (as that term
is defined herein) in Licensee or the License, shall sell, assign,
transfer, convey, pledge, mortgage, encumber, or give away, any
direct or indirect interest in the License or equity interest in
Licensee, except as provided in this License. Any purported sale,
assignment, transfer, conveyance, pledge, mortgage, or encumbrance
by operation of law or otherwise, of any interest in the License or
any equity interest in Licensee not in accordance with the
provisions of this License, shall be null and void and shall
constitute a material breach of this License, for which Licensor may
terminate upon notice without opportunity to cure pursuant to
paragraph 12. C(1) of this License.
(1) For the purposes of this paragraph 10, the term "equity
interests" shall mean any stock or partnership interests in
Licensee, the interests of any partner, whether general or
limited, in any partnership, with respect to such partnership,
and any stockholder of any corporation with respect to such
corporation, which partnership or corporation is the Licensee
hereunder or which partnership or corporation owns a direct or
indirect beneficial interest in Licensee. References in this
License to "publicly-traded equity interests" shall mean any
equity interests which are traded on any securities exchange
or are quoted in any publication or electronic reporting
service maintained by the National Association of Securities
Dealers, Inc. or any of its successors.
(2) If Licensee is a partnership or corporation, Licensee
represents that the equity interests in Licensee are directly
and (if applicable) indirectly owned, as shown in Attachment
A.
C. Transfer of Equity Interests That Are Not Publicly Traded.
(1) Except where otherwise provided in this License, equity
interests in the Licensee that are not publicly-traded may be
transferred, issued, or eliminated with Licensor's prior
written consent, which will not be unreasonably withheld;
provided that after the transaction:
(a) 50% or less of all equity interests in Licensee will have
changed hands since Licensee first became a party to this
License, or
(b) 80% or less of all equity interest in Licensee will have
changed hands since Licensee first became a party to this
License, and no equity interest(s) will be held by other
than those who held them when Licensee first became a
party to this License.
(2) In computing the percentages referred to in paragraph 10.C(1)
above, limited partners will not be distinguished from general
partners, and Licensor's judgment will be final if there is
any question as to the definition of "equity interests" or as
to the computation of relative equity interests, the principal
considerations being:
(a) direct and indirect power to exercise control over the
affairs of Licensee;
(b) direct and indirect right to share in Licensee's profits;
and
(c) amounts directly or indirectly exposed at risk in the
Licensee's business.
D. Transfers of Publicly-Traded Equity Interests.
(1) Except as otherwise provided in this License, publicly-traded
equity interests in the Licensee may be transferred without
Licensor's consent but only if:
(a) immediately before the proposed transfer, the transferor
owns less than 25% of the equity interest of Licensee;
and
(b) immediately after the transfer, the transferee will own
less than 25% of the equity interest of Licensee; and
(c) the transfer is exempt from registration under federal
securities law.
(2) Publicly-traded equity interests may be transferred with
Licensor's written consent, which may not be unreasonably
withheld, if the transfer is exempt from registration under
federal securities law.
(3) The chief financial officer of Licensee shall certify annually
to Licensor that Licensee is in compliance with the provisions
of this paragraph 10.D. Such certification shall be delivered
to Licensor with the Annual Financial Statements referred to in
paragraph 8.D.
E. Transfer of the License.
(1) Licensee, if a natural person, may with Licensor's consent,
which will not be unreasonably withheld, transfer the License
to Licensee's spouse, parent, sibling, niece, nephew,
descendant, or spouse's descendant, provided that:
(a) adequate provision is made for the management of the
Hotel; and
(b) the transferee executes a new license agreement for the
unexpired term of this License, on the standard form then
being used to license new Hotels under the System, except
the fees charged then shall be the same as those
contained herein including any adjustments to such fees
as may have been implemented from time to time in
accordance with the terms of this License; and
(c) Licensee guarantees, in Licensor's usual form the
performance of the transferee's obligations under the
newly executed License.
(2) If Licensee is a natural person, he may, without the consent
of Licensor, upon 30 days' prior written notice to Licensor,
transfer the License to a corporation entirely owned by him,
provided that:
(a) adequate provision is made for the management of the
Hotel; and
(b) the transferee executes a new license agreement for the
unexpired term of this License, on the standard form then
being used to license new Hotels under the System, except
the fees charged then shall be the same as those
contained herein including any adjustments to such fees
as may have been implemented from time to time in
accordance with the terms of this License; and
(c) the Licensee guarantees, in Licensor's usual form, the
performance of the new licensee's obligations hereunder.
F. Transfers of the License or Equity Interest in the License Upon
Death.
(1) If Licensee is a natural person, upon Licensee's death, the
License will pass in accordance with Licensee's will, or, if
Licensee dies intestate, in accordance with laws governing the
distribution of Licensee's estate, provided that:
(a) adequate provision has been made for management of the
Hotel; and
(b) Licensor gives written consent, which consent will not be
unreasonably withheld; and
(c) the transferee is one or more of the decedent's spouse,
parent, siblings, nieces, nephews, descendants, or
spouse's descendants and;
(d) Licensee's heirs or legatees promptly advise Licensor and
promptly execute a new license agreement for the
unexpired term of this License, on the standard form then
being used to license new Hotels under the System, except
the fees charged thereunder shall be the same as
contained herein including any adjustments to such fees
as may have been implemented from time to time in
accordance with the terms of this License.
(2) If an equity interest is owned by a natural person, subject to
paragraph 10.D above, the equity interest will pass upon such
person's death, in accordance with such person's will or, if
such person dies intestate, in accordance with the laws of
intestacy governing the distribution of Licensee's estate,
provided that:
(a) adequate provision is made for management of the Hotel;
and
(b) Licensor gives written consent, which consent will not be
unreasonably withheld; and
(c) the transferee is one or more of the decedent's spouse,
parent, siblings, nieces, nephews, descendants, or
spouse's descendants and;
(d) transferee assumes, in writing, on a continuing basis,
the decedent's guarantee, if any, of the Licensee's
obligations hereunder.
G. Registration of a Proposed Transfer of Equity Interests. If a
proposed transfer of an equity interest in the Licensee requires registration
under any federal or state securities law, Licensee shall:
(1) Request the Licensor's consent at least 45 days before the
proposed effective date of the registration; and
(2) Accompany such request with one payment of a non-refundable
fee of $25,000; and
(3) Reimburse Licensor for expenses incurred by Licensor in
connection with review of the materials concerning the
proposed registration, including without limitation,
attorney's fees and travel expenses; and
(4) Agree in writing, and all participants in the proposed
offering subject to registration agree in writing, to fully
indemnify Licensor in connection with the registration;
furnish the Licensor all information requested by Licensor,
avoid any implication of Licensor's participation in, or
endorsing the offering; and use the Licensor's service marks
and trademarks only as authorized by Licensor.
H. Transfer of Real Estate. If the real property used in the
operation of the Hotel is owned, directly or indirectly by Licensee and
Licensee proposes to transfer all or a substantial part of such property to a
third party, such transfer shall constitute a transfer under the provisions
of this License requiring an application for a new License Agreement, unless
Licensee receives Licensor's prior written consent for the transaction.
I. Management of the Hotel. Licensee must at all times,
retain and exercise direct management control over the Hotel's
business. Licensee shall not enter into any lease, management
agreement, or other similar arrangement for the operation of the
Hotel or any part thereof (including without limitation, food and/or
beverage service facilities) with any entity other than Licensee,
without the prior written consent of Licensor.
11. CONDEMNATION AND CASUALTY:
A. Condemnation. Licensee shall, at the earliest possible
time, give Licensor full notice of any proposed taking by eminent
domain. If Licensor acknowledges that the Hotel or a substantial
part thereof is to be taken, Licensor will give due and prompt
consideration without any obligation, to transferring the License to
a nearby location selected by Licensee and approved by Licensor as
promptly as reasonably possible and in any event within four months
of the taking, provided that Licensee has promptly filed an
application to transfer the License to such new location. If the new
location is approved by Licensor, and the transfer authorized by
Licensor, and if Licensee opens a new hotel at the new location in
accordance with Licensor's specifications within two years of the
closing of the Hotel, the new hotel will thenceforth be deemed to be
the Hotel licensed under this License. If a condemnation takes
place and a new hotel does not, for whatever reason, become the
Hotel under this License in strict accordance with this paragraph
(or if it is reasonably evident to Licensor that such will be the
case), the License will terminate forthwith upon notice thereof by
Licensor to Licensee.
B. Casualty. If the Hotel is damaged by fire or other
casualty, Licensee will expeditiously repair the damage. If the
damage or repair requires closing the Hotel, Licensee will
immediately notify Licensor; will repair or rebuild the Hotel in
accordance with Licensor's standards; will commence reconstruction
within four months after closing; will expeditiously continue on an
uninterrupted basis with such reconstruction and will reopen the
Hotel for continuous business operations as soon as practicable (but
in any event within 24 months after closing of the Hotel), giving
Licensor ample advance notice of the date of reopening. If the
Hotel is not reopened in accordance with this paragraph, the License
will forthwith terminate upon notice thereof by Licensor to
Licensee.
The License may be replaced by a new license agreement as provided
in paragraph 10 and the License may terminate as provided in this
paragraph 11 without liquidated damages.
C. No Extensions of Term. Nothing in this paragraph 11 will
extend the License Term but Licensee shall not be required to make
any payments pursuant to paragraph 3.C.(1) and (3) for periods
during which the Hotel is closed by reason of condemnation or
casualty.
12. TERMINATION:
A. Expiration of Term. This License and the license granted
hereunder will expire without notice 10 years from the date hereof,
subject to earlier termination as set forth herein. The parties
recognize the difficulty of ascertaining damages to Licensor
resulting from premature termination of the License, and have
provided for liquidated damages which represent their best estimate
as to the damages arising from the circumstances in which they are
provided.
B. Termination by Licensee on Advance Notice. If the
License Term exceeds 10 years, Licensee may terminate the License on
its 10th anniversary, or otherwise as provided in paragraph 3.A(8)
or paragraph 3.B, by giving at least 12 but less than 15 months'
advance notice to Licensor accompanied by a lump sum payment as an
early termination fee, and not as a penalty or in lieu of any other
payments required under this License, equal to the total of all
amounts required under paragraph 3.C for the 12 calendar months of
operation preceding the notice or if the Hotel has been in operation
in the System for less than 12 months, the greater of (i) 12 times
the monthly average of such amounts for the period during which the
Hotel has been in operation in the System, or (ii) 12 times such
amounts as are due for the one month preceding the termination.
C. Termination by Licensor on Advance Notice.
(1) In accordance with notice from Licensor to Licensee, this
License and the license granted hereunder will terminate
(without any further notice unless required by law), provided
that:
(a) the notice is mailed at least 30 days (or longer, if
required by law) in advance of the termination date;
(b) the notice reasonably identifies one or more breaches of
the Licensee's obligations; and
(c) the breach(es) are not fully remedied within the time
period specified in the notice.
(2) If during the then preceding 12 months Licensee shall have
engaged in a violation of this License for which a notice of
termination was given and termination failed to take effect
because the default was remedied, the period given to remedy
defaults will, if and to the extent permitted by law,
thereafter be 10 days instead of 30.
(3) In any judicial proceeding in which the validity of
termination is at issue, Licensor will not be limited to the
reasons set forth in any notice sent under this paragraph.
(4) Licensor's notice of termination or suspension of services
shall not relieve Licensee of its obligations under this
License.
D. Immediate Termination by Licensor.
This License and the license granted hereunder may be immediately
terminated upon notice from Licensor to Licensee (or at the
earliest time permitted by applicable law) if:
(1) (a) Licensee or any guarantor of Licensee's obligations
hereunder shall generally not pay its debts as they
become due, or shall admit in writing its inability to
pay its debts, or shall make a general assignment for the
benefit of creditors; or
(b) Licensee or any such guarantor shall commence any case,
proceeding or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of
debtors, or seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or
any substantial part of its property; or
(c) Licensee or any such guarantor shall take any corporate
or other action to authorize any of the actions set forth
above in paragraphs (a) or (b); or
(d) any case proceeding or other action against Licensee or
any such guarantor shall be commenced seeking to have an
order for relief entered against it as debtor, or seeking
reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any
law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking appointment of a receiver,
trustee, custodian or other similar official for it or
for all or any substantial part of its property, and such
case, proceeding or other action; (i) results in the
entry of any order for relief against it which is not
fully stayed within seven business days after the entry
thereof; or (ii) remains undismissed for a period of 90
days; or
(e) an attachment remains on all or a substantial part of the
Hotel or of Licensee's or any such guarantor's assets for
90 days; or
(f) Licensee or any such guarantor fails, within 90 days of
the entry of a final judgment against Licensee in any
amount exceeding $50,000, to discharge, vacate or reverse
the judgment, or to stay execution of it, or if appealed,
to discharge the judgment within 30 days after a final
adverse decision in the appeal; or
(2) Licensee loses possession or the right to possession of all or
a significant part of the Hotel, except as otherwise provided
in paragraph 11; or
(3) Licensee contests in any court or proceeding Licensor's
ownership of the System or any part of it, or the validity of
any service marks or trademarks associated with Licensor's
business; or
(4) A breach of paragraph 10 occurs; or
(5) Licensee fails to continue to identify itself to the public as
a System hotel; or
(6) Any action is taken toward dissolving or liquidating Licensee
or any guarantor hereunder, if it is a corporation or
partnership, except for any such actions resulting from the
death of a partner; or
(7) Licensee (or any principal stockholder or partner of Licensee
as the case may be) is, or is discovered to have been,
convicted of a felony (or any other offense if it is likely to
adversely reflect upon or affect the Hotel, the System or
Licensor in any way); or
(8) Licensee maintains false books and records of account or
submits false reports or information to Licensor.
(9) Licensee knowingly fails to comply with the requirements of
the Manual on safety, security, or privacy for its guests at
the Hotel, and such failure may significantly adversely
reflect upon or affect the Hotel, the Holiday Inn System or
Licensor, its parent, subsidiaries and affiliates in any way.
E. De-Identification of Hotel Upon Termination. Licensee
will take whatever action is necessary to assure that no use is made
of any part of the System at or in connection with the Hotel after
the License Term ends. This will involve, among other things,
returning to Licensor the Manual and all other materials proprietary
to Licensor, ceasing the use of any of Licensor's trademarks or
service marks, physical changes of distinctive System features of
the Hotel, including removal of the primary freestanding sign down
to the structural steel, and all other actions required to preclude
any possibility of confusion on the part of the public that the
Hotel is no longer using all or any part of the System or otherwise
holding itself out to the public as a Holiday Inn hotel. Anything
not done by Licensee in this regard within 30 days after
termination, may be done at Licensee's expense by Licensor or its
agents who may enter upon the premises of the Hotel for that
purpose.
F. Payment of Liquidated Damages. If the License terminates
pursuant to paragraph 12. C or 12. D above, Licensee will promptly
pay Licensor (as liquidated damages for the premature termination
only, and not as a penalty nor as damages for breaching the License
nor in lieu of any other payment) a lump sum equal to the total
amounts required under paragraph 3.C (1) (3) and (4) during the 36
calendar months of operation preceding the termination, but not more
than the number of months then remaining in the License Term; or if
the Hotel has not been in operation in the System for 36 months, the
greater of:
(i) 36 times the monthly average of such amounts for the period
during which the Hotel has been in operation in the System, or
(ii) 36 times such amounts as are due for the one month preceding
such termination.
13. RELATIONSHIP OF PARTIES:
A. No Agency Relationship. Licensee is an independent
contractor. Neither party is the legal representative or agent of,
or has the power to obligate (or has the right to direct or
supervise the daily affairs of) the other for any purpose
whatsoever. Licensor and Licensee expressly acknowledge that the
relationship intended by them is a business relationship based
entirely on and circumscribed by the express provisions of this
License and that no partnership, joint venture, agency, fiduciary or
employment relationship is intended or created by reason of this
License.
B. Licensee's Notices to Public Concerning Independent
Status. Licensee will take such steps as are necessary and such
steps as Licensor may from time to time reasonably request, to
minimize the chance of a claim being made against Licensor for
anything that occurs at the Hotel or for acts, omissions or
obligations of Licensee or anyone associated or affiliated with
Licensee or the Hotel. Such steps may, for example, include giving
notice in guest rooms, public rooms and advertisements, on business
forms and stationery, etc., making clear to the public that Licensor
is not the owner or operator of the Hotel and is not accountable for
what happens at the Hotel. Unless required by law, Licensee will
not use the word "Holiday," or any similar word in its corporate,
partnership, or trade name, nor authorize or permit such use by
anyone else. Licensee will not use the words, "Holiday" or "Holiday
Inn" or any other name or mark associated with the System, to incur
any obligation or indebtedness on behalf of Licensor.
14. MISCELLANEOUS:
A. Severability and Interpretation. The remedies provided in
this License are not exclusive. In the event any provision of this
License is held to be unenforceable, void or voidable as being
contrary to the law or public policy of the United States or any
other jurisdiction entitled to exercise authority hereunder, all
remaining provisions shall nevertheless continue in full force and
effect, unless deletion of the provision(s) deemed unenforceable,
void or voidable impairs the consideration for this License in a
manner which frustrates the purpose of the parties or makes
performance commercially impracticable. In the event any provision
of this License requires interpretation, such interpretation shall
be based on the reasonable intention of the parties in the context
of this transaction without interpreting any provision in favor of,
or against, any party hereto by reason of the draftsmanship of the
party or its position relative to the other party.
B. Binding Effect. This License shall become valid when
executed and accepted by Licensor at Atlanta, Georgia. It shall be
deemed made and entered into in the State of Georgia, and shall be
governed and construed under, and in accordance with the laws of the
State of Georgia. In entering into this License, Licensee
acknowledges that it has sought, voluntarily accepted and become
associated with Licensor who is headquartered in Atlanta, Georgia.
The choice of law designation permits, but does not require that all
suits concerning this License shall be filed in the State of
Georgia.
C. Exclusive Benefit. This License is exclusively for the
benefit of the parties hereto, and it may not give rise to liability
to a third party. No agreement between Licensor and anyone else is
for the benefit of Licensee.
D. Entire Agreement. This is the entire Agreement and
supersedes all previous agreements pertaining to the licensing of
the Hotel to be operated as a Holiday Inn Hotel. No change in this
License will be valid unless in writing signed by both parties. No
failure to require strict performance or to exercise any right or
remedy hereunder will preclude requiring strict performance or
exercising any right or remedy in the future.
E. Licensor Withholding Consent. Licensor's consent,
whenever required, may be withheld if any default by Licensee exists
under this License. Approvals and consents by Licensor will not be
effective unless evidenced by a writing duly executed on behalf of
Licensor.
F. Notices. Notices will be effective hereunder when and
only when they are reduced to writing and delivered personally or
mailed by Federal Express or comparable overnight delivery service,
by facsimile transmission or certified mail to the appropriate party
at its address, hereinafter set forth, or to such person and at such
address as may subsequently be designated by one party to the other.
Licensor:
Holiday Inns Franchising, Inc. Three Ravinia Drive Suite 2000
Atlanta, GA 30346-2149 Attn: Vice President - Franchise
Administration
Licensee:
Ridgewood Properties, Inc. 2859 Paces Ferry Road Suite 700 Atlanta,
GA 30339 Attn: N. Russell Walden
H. Performance of the Work. Licensee agrees to perform the
construction, upgrading and renovation work, including the purchase
of furniture, fixtures and equipment set forth on Attachment "B"
attached hereto and incorporated herein by reference (the "Work").
Licensee acknowledges that its agreement to perform the Work is an
essential element of the consideration relied upon by Licensor in
entering into the License and agrees that, notwithstanding any other
provision of the License, Licensee may be authorized to use the
System at the Hotel prior to completion of the Work only during such
time as Licensee is actively meeting its performance obligations in
full compliance with the requirements of Attachment "B." Licensee's
failure to perform the Work in accordance with Licensor's
requirements and specifications (including the progress, milestone,
completion and other dates specified in Attachment "B") shall
constitute a material breach of Licensee's obligations under the
License.
I. Reimbursement of Expenses. Licensee agrees to pay
Licensor all expenses including attorney's fees and court costs,
incurred by Licensor, its parent, subsidiaries, affiliates, and
their successors and assigns to remedy any defaults of or enforce
any rights under the License; effect termination of the license or
collect any amounts due under the License.
J. Descriptive Headings. The descriptive headings in this
License are for convenience only and shall not control or affect the
meaning or construction of any provision in this License.
15. SPECIAL STIPULATIONS.
A. Change of Ownership Rights. Notwithstanding Paragraph 10,
if Licensee is not then in default under this License, a new license
agreement may be issued to a new applicant upon Licensee's written
request, the applicant's submission of a completed application on
Licensor's then current form, the applicant's qualification under
Licensor's then current standards for new licensees, and Licensor's
approval of the application including market viability, with payment
of one - half of the then current application fee but only if the
request is received and the Hotel is sold within the Holiday Inn
System within twenty-four (24) months from the date hereof.
Licensor may require the execution of its then current standard form
of license agreement, which agreement shall have a term equal to the
remaining balance of the original term of this License, a new or
supplemental guarantee agreement and related agreements by the
applicant and its principals, payment of all System Fees and other
amounts due under this License, payment of other amounts then owed
Licensor, Holiday Inns and their affiliates by Licensee, the
applicant, or their respective affiliates and principals, reasonable
renovation and upgrading of the Hotel to System standards applicable
to entering conversion Hotels at that time, and execution of general
releases by Licensee and each of its principals as conditions
precedent to the execution of the Change of Ownership License
Agreement. Under no circumstances shall any such Change of
Ownership have the effect of releasing Licensee from its obligations
hereunder or releasing the liability of any guarantor of Licensee's
obligations, arising or accruing prior to, or in respect of events
occurring prior to, the execution of the Change of Ownership License
Agreement with the new applicant.
(Signatures on following page)
IN WITNESS WHEREOF, the parties have executed this
License, under Seal, as of the date first stated above.
Licensee:
RIDGEWOOD PROPERTIES, INC.
By:______________________________ N. Russell Walden President
Attest:__________________________ Secretary
Licensor:
HOLIDAY INNS FRANCHISING, INC.
By:______________________________ Jim Darby Vice President Franchise
Administration
Attest:___________________________ Assistant Secretary
GUARANTY
As an inducement to Holiday Inns Franchising, Inc.
("Licensor") to execute the above License, the undersigned, jointly
and severally, hereby unconditionally warrant to Licensor and its
successors and assigns that all of Licensee's representations in the
License and the application submitted by Licensee to obtain the
License are true, and guarantee that all of Licensee's obligations
under the above License, including any amendments thereto whenever
made (the "License"), will be punctually paid and performed.
Upon default by the Licensee and notice from Licensor, the
undersigned will immediately make each payment and perform each
obligation required of Licensee under the License. Without
affecting the obligations of the undersigned under this Guaranty,
Licensor may without notice to the undersigned extend, modify or
release any indebtedness or obligation of Licensee, or settle,
adjust or compromise any claims against Licensee. The undersigned
waive notice of amendment of the License and notice of demand for
payment or performance by Licensee.
Upon the death of an individual guarantor, the estate of such
guarantor will be bound by this Guaranty but only for defaults and
obligations hereunder existing at the time of death, and the
obligations of the other guarantors will continue in full force and
effect.
The Guaranty constitutes a guaranty of payment and performance
and not of collection, and each of the guarantors specifically
waives any obligation of Licensor to proceed against Licensee on any
money or property held by Licensee or by any other person or entity
as collateral security, by way of set off or otherwise. The
undersigned further agree that this Guaranty shall continue to be
effective or be reinstated as the case may be, if at any time
payment of any of the guaranteed obligations is rescinded or must
otherwise be restored or returned by Licensor upon the insolvency,
bankruptcy or reorganization of Licensee or any of the undersigned,
all as though such payment has not been made.
This Guaranty shall be governed and construed under, and in
accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, each of the undersigned has signed this
Guaranty, under Seal, as of the date of the above License.
Witnesses Guarantors:
(No Signatures Required)
ATTACHMENT A
Facilities and Services (paragraph 1):
Site-Area and general description: Seven story interior corridor
hotel.
Fee owners (names and addresses): R.W. Hotel Partners,
L.P. 2859 Paces Ferry Road, Suite 700 Atlanta, GA
30339
Leases (parties, terms, etc.) if any: Management Agreement
dated __________ between R.W. Hotel Partners,
L.P.("Owner") and Ridgewood Properties, Inc. ("Manager") for a term
of _____ years.
Separate parcels for signs: None
Number of approved guest rooms: 266
Restaurants and lounges (number, seating capacity, names and
description): Restaurant - "Terrace Bistro" - seats 165. Lounge -
"Filly's"
Holidome indoor recreation center: No
Gift shop: Yes
Other concessions and shops:
Parking facilities (number of spaces, description):
Swimming pool: Indoor pool
Other facilities and services: Fitness center, Eight
Meeting/Banquet rooms to accommodate up to 800.
ATTACHMENT A-continued
Ownership of Licensee (paragraph 10):
Ridgewood Properties, Inc., 100% a Delaware corporation (publicly
traded corporation)